Philadelphia-based Independence Blue Cross (IBC) says a pay-for-performance payment initiative with Abington Health, launched a year ago, is on track for success primarily because its physicians are engaged.
Doug Chaet, senior vice president of contracting and provider networks for IBC, says Abington is committed to the new model of healthcare that coordinates care to keep patients healthier.
"They really are taking this seriously from a practitioner perspective. One of the problems, historically, I think, with pay-for-performance programs in general is that a provider and a payer can reach agreement and they agree to hit a certain target, but the providers aren't always engaged and as committed to the performance as Abington has been, and that in and of itself is a big success."
Chaet is careful to call IBC's Integrated Provider Performance Incentive Plan (IPPIP), an accountable care payment model, not an accountable care organization.
"A lot of people these days refer to accountable care as any kind of program where providers are accountable for the cost and quality of care delivered, and I think that's why we have termed IPPIP an accountable care payment model because that's exactly what it does," he says.
The health insurer's IPPIP pays participating physicians and hospitals "substantial sums" above the standard reimbursement rate when they meet quality and medical cost targets. Chaet didn't give details about the incentive payment amounts, but he says the model is deployed to 85% of physicians and hospitals within its network, including Abington Health, a nonprofit system with two hospitals, two outpatient care facilities and a physician group.
Abington will find out soon whether it will receive a bonus payment from IBC. Its first full year operating with the IPPIP is this June. IBC provides the system with quarterly reports on how the system is progressing. Keith Sweigard, MD, chief of internal medicine for Abington and director for the system's medical group, Abington Health Physicians, says he's pleased with the improvements so far, but that it is mainly process driven.
"I think the outcomes will bear themselves out of a little bit longer period of time. I think that in this first year we were still working a lot on the infrastructure," says Sweigard.
One key to that infrastructure is a new component to Abington's partnership with IBC. The two announced in February it would be using Lumeris to help integrate data to give Abington's physicians a more complete view of its patient population.
"IBC has a claims database and Abington's hospital and physicians have electronic medical records," says Sweigard. "Lumeris basically pairs the claims data with clinical data and produces reports with the capability for additional drilldown."
IBC claims this three-way partnership is one of the first of its kind, and Chaet says the reporting function Lumeris will deliver sets Abington Health apart.
"Historically, the big data gap in our industry is that physicians didn't have access to the claims data or hospital EMR. This pulls it all together for them and arms them with more information than they typically ever had, and it really is painting such a broad picture," says Chaet.
Abington will start using the aggregated reports in May. Sweigard says the system has been building the infrastructure to move toward a more coordinate care approach by hiring care managers and scheduling advocates for its outpatient clinics. Sweigard also says its designing a new workflow that is team oriented and includes the physicians, medical assistants, schedulers, and care managers.
These aggregated data reports are expected to show Abington's physicians where there are opportunities for catching what Sweigard calls the "unworried sick." He says the reports will assign a risk score to patient populations who are the most vulnerable to complications or hospitalizations.
"We can get resources into those patients' homes to make sure they're getting the maximum care so that, frankly, they're getting the best outcomes and we're actually addressing the costs of care," says Swiegard.
"In our current world, which is transactional, we are always focused on the patient that is sitting in front of us, and many times they are the worried well, and we need to address the unworried sick at home that are not coming in for care, and through the reports, we'll be able to follow these people with really more impact on their health outcomes."
Once the new system is up and running this summer, IBC will measure Abington's hospital readmission rate, hospital acquired infections, as well as core measures from the Centers for Medicare and Medicaid Services (CMS).
Sweigard says Abington is aiming toward a goal of reducing readmission rates by 15% for high risk conditions.
"We're energized by the idea that we would be providing the kind of care to a patient that reliably gets them out correctly the first time and [having] programs in place to keep them comfortable in their homes," says Sweigard.
Health plans are prepared to partner with health insurance exchanges (HIX), but are not optimistic the state and federal government will have the new exchanges ready by the October deadline.
Edifecs, a Bellevue, WA-based healthcare information technology firm, surveyed 100+ healthcare executives from commercial insurance plans, providers, government agencies, and other healthcare-related organizations at its three-day Healthcare Mandate Summit in Austin, TX, this month. The results show that 80% of respondents plan to participate in exchanges in 2014; only 5% said they would opt out of participating entirely.
An accompanying report (PDF) to the survey indicates health plans are not only planning to participate, but they are putting resources into getting ready for the exchanges. Seventy-eight percent of respondents report having an HIX project team on board to work with the different exchange models.
As of now, most states are shunning federally run exchanges. Only seven have decided to pursue a partnership with the feds, while 16 states, plus the District of Columbia, will operate a state-based exchange.
Representatives from Colorado and Washington held a presentation on the status of their exchanges, both of which will be a state-run model. Jamie Gier, vice president of corporate marketing at Edifecs, says participants at the summit wanted to find out how to get information from states about how their exchanges will be run.
"To date, most payers haven't received much information from the state HIXs, and this is incredibly problematic for those insurers planning to participate in 2014. They have IT system and business process changes to implement to ensure they are ready on day one, and those changes depend on information," says Gier.
That uncertainty bears out in the survey, which shows a significant number of survey respondents—70%—saying they feel confident that they are prepared or will be prepared for open enrollment in October, but their confidence does not extend to the readiness of the federal government or other exchange models.
Only 29% reported being certain that the exchanges would be ready to launch October 1. Overwhelmingly, 70% indicated concern over the issue of whether exchanges would be ready to enroll millions of Americans who are expected to use the exchange to find insurance.
Gier says states and insurers can learn from Colorado and Washington. She holds them up as good examples of seamless collaboration with the insurers in their states, saying they took a "share early, share often" approach with payers.
Another reason insurers have doubts about the federal and state readiness is likely due to the rolling deadlines for several key components needed to build an HIX, including states committing to one of three models: state-run, state-federal partnership, and federally run.
The Centers for Medicare & Medicaid Services (CMS) extended the deadline for states at least twice, and even now, if states wanted to change models they could. The federal government did not envision running most of the exchanges and some states may be poised to take advantage of the government's willingness to hand off some of the responsibility.
States and insurers have also been waiting on other key details, such as the final rule for essential health benefits, which only got released a week ago. These are the benefits that, under the Patient Protection and Affordable Care Act (PPACA), insurers have to give patients who participate in the individual and small-group market next year.
According to the final rule, an EHB package must be "equal in scope" to benefits offered by a typical employer plan and must include at least the following 10 EHB categories:
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder services, including behavioral health treatment
Prescription drugs
Rehabilitative and habilitative services and devices
Laboratory services
Preventive, wellness services, and chronic disease management
Pediatric services, including oral and vision care
States will still maintain regulatory control over how the plans that participate in the exchanges will meet the EHB requirements, but now that the final rule has been issued, insurers can start to design the plans they will offer and set prices.
The building blocks of the plans, prices, and infrastructure depends on data, and that, says Gier, is something insurers are worried about, specifically, reconciling records.
"Historically, insurers have maintained a single system of record for member enrollment, claim and payment information," says Gier. "Now, however, insurers will need to reconcile their detailed member records with those maintained by the HIX on at least a monthly basis. They also have to verify that the information contained in both systems is accurate to confirm eligibility, credit premiums, ensure correct payments and provide good customer service."
Digging into the daily details of how these exchanges will work illustrates the complexity of the systems needed to keep the numerous networks of information running smoothly. The collaborations required also illustrate the delicate balance states have to maintain with insurers and providers.
"Another concern is the potential for ongoing change to HIX formats and standards. As each HIX gets up and running, there will be fixes and changes to make things run more smoothly," says Gier.
"All of those will require adjustments by the insurers to maintain interoperability with the HIX systems and business processes. Insurers will need to make sure whatever system they use is flexible enough to accommodate all of the inevitable changes coming down the road after implementation."
The survey also reports that most health insurers (55%) plan on being part of more than one HIX. That means an even heavier reliance on IT systems that can maintain interacting with multiple sets of requirements, based on the HIX model. However, most insurers saying they'll participate in more than one exchange is a key take away, and perhaps an indication of the confidence healthcare organizations have in finding more opportunities than challenges in the new health insurance exchanges.
By most accounts seven is considered to be a lucky number. How that luck will play out among the seven states who have decided to partner with the federal government on running health insurance exchanges remains to be seen.
Friday was the deadline for states to decide whether or not to partner with the feds on exchanges; the seven who decided to do so include:
As unlikely as it may have seemed to the feds in the early planning stages of health insurance exchanges, a federally run exchange is what most states—27—will use. Sixteen states plus the District of Columbia will take on the job of implementing and running exchanges themselves.
"We thought there would be nearly 50 state exchanges," says Caroline Pearson, vice president for Avalere Health, "At the time, the thought of a federal exchange was considered to be really an outlier and truly a fallback, not the majority as it looks like the case will be."
"It is definitely a lot lower than what policymakers envisioned when the law was passed." Pearson is tracking the implementation of the Patient Protection and Affordable Care Act at the state level.
There are no real surprises on the list of states pursuing a federal partnership model. Delaware was an early adopter to the idea, and the others all indicated earlier they would follow suit.
The bigger surprise comes from Virginia and Ohio. Both states are defaulting to a federally run exchange while at the same time indicating they will continue to oversee plan management activities, which is a key characteristic of a partnership arrangement. Confused? So is Pearson.
"The whole thing is a bit befuddling," she says. "Much of the responsibilities that they are citing they want to maintain control over are things that are components of that partnership option."
Virginia's legislature is on track to pass a bill giving its insurance department the authority to collect information on plan rates and benefits, ensure compliance, resolve customer complaints, provide technical assistance and decertify providers who participate in the federally run exchange.
Ohio sent similar overtures to HHS, and Pearson says it is uncertain how those states' actions will affect their exchanges.
"Until we get more guidance from HHS on whether this is permissible or what the legal authority is, I'm not sure we're going to have a clear understanding of it," says Pearson.
It's unlikely either state will forego grant money. HHS has made it clear that states who chose a federally run model will not be exempt from grants.
Another state is also attempting to set its own ground rules on a federally run exchange. South Dakota legislators are considering a bill that would require a person buying health insurance on the exchange to use an agent.
In general, states have broad authority over brokers and agents interacting with the exchanges, but South Dakota's actions, if passed, could potentially drive up the cost and complexity since the exchange is meant to be mostly an online experience for the user.
"The idea that South Dakota would mandate the use of a broker, would be quite novel, but that would be in their jurisdiction," says Pearson.
Friday's deadline is likely a soft one. The federal government, possibly anxious to get out from under the unexpected heavy lifting it's left with for crafting and running these exchanges, has said states can change their exchange model at any time. Depending on its response to Virginia, Ohio, and South Dakota, more states may seek accommodations rather than a change in status.
With states' insurance exchange models settled for now, Pearson says she expects a strong response from health plans despite the plans being a "little wary" of a federally run exchange.
"I have definitely heard some plans express concern because the federal government has said things like 'We may apply a meaningful differences policy in future years,' where they would actually limit the number of products they offered," says Pearson.
"It's that kind of propensity to take a more active approach in the future or change the rules that makes them uncertain of the federal exchange. On the flip side, there is some efficiency for a plan to engage with the federal exchange because it's going to have a standard application template, a standard way of doing things."
Blue Cross Blue Shield of North Carolina has just started testing out its bundled payment model for knee replacement surgeries, and if performs well, the model could be pushed out to include hip replacements.
Elaine Daniels, the plan's senior strategic network consultant, says BCBSNC started modeling orthopedic bundles in 2010, began a pilot project in 2011, and recently announced two bundled payment initiatives with physician-owned Triangle Orthopaedic Associates (TOA) and Duke University Health System.
"When you're looking at doing bundles on a first pass, orthopedic procedures were easier for us because there aren't that many complications," says Daniels. "There's not a lot of leakage, you know who the care team is going to be, so there's more continuity of care for that member or patient."
Both bundled payment arrangements were announced within the last two months and apply to BCBSNC members who have knee surgeries performed at North Carolina Specialty Hospital, a facility jointly-owned by TOA, as well two Duke-affiliated hospitals, Duke University and Durham Regional.
Orthopedic procedures are generally seen as one of the easier episodes of care to fit in a bundled payment model, says Minoo Javanmardian, PhD, and co-author of a recent study showing strong consumer support for bundled healthcare.
"It appeals to patients and to providers and payers," she says. "If you get a knee replacement, there is beginning, there is a middle, and there is an end. Ortho bundles are attractive to patients because they want the problem solved and they're more likely to take a risk with a new payment model... it's easier for them [patients] to wrap their heads around it, 'I walk in, I get my surgery, my rehab, then walk away.' "
The way BCBSNC structured its knee replacement bundle includes more pre-operative care. Daniels describes the process as a "roadmap" for patients. She says the plan's utilization management nurses and TOA's pre-operative care team work together to determine the date of surgery as well as several things to reduce variability and cost while increasing quality.
"TOA has a physical therapist go into the patient's home look at the home setting to see how they're going to navigate at their home after the surgery," says Daniels. "They give them [patients] PT exercises to strengthen their core, and they've got a special prep kit [for patients]... to reduce infection."
The new payment model means patients will pay one, fixed-rate bill for 30-days pre- and 90-days post-surgery for knee replacements.
Daniels gives credit to a prospective payment model for easing payment negotiations between BCBSNC and Duke and TOA, as well as determining appropriate measurement targets.
"We're using the PROMETHEUS model; it does a potentially avoidable complication analysis, and... the contract we have is we want to see a reduction in the percentage of patients who have potentially avoidable complications, also patient satisfaction is key," says Daniels. "We've got outcome measures that are built into the hospital stay, and then we've got outcome measures that are built into the contract post-discharge."
Daniels says BCBSNC is looking at other bundles, including chronic conditions, which is trickier because of the increased variability. But Daniels says chronic conditions "dovetail" with Accountable Care Organizations and Patient Centered Medical Homes.
"We still have a start and end date with our chronics—it's a one-year time period—and we're just starting to model it, but when you're contracting with an ACO, you're basically looking at episodes of care."
Daniels also says the plan is looking to bundle payment initiatives with outpatient care, particularly arthroscopy. In the meantime, BCBSNC is focusing on knee replacements, with hips not too far down the road.
"At TOA, we're going to review after 60 days how the knee is going, but they're right on board with moving forward on hip replacements," she says.
The reason BCBSNC decided to partner with Duke and TOA on its bundled is because it had a good working relationship with both organizations. She says getting senior management on board early on in the process helped the negotiations along, as well as in-depth study of who was likely to work best as a partner.
"We did an analysis to see 'Where's the biggest bang for our buck?' We wanted to choose partners that were doing a fair number of these procedures to begin with, and folks that we had a really good, strong working relationship, and then also those that kind of think outside the box," says Daniels.
Daniels cites TOA's place of setting and care innovations as "ahead of the curve," and Duke University is one of only seven sites in North Carolina participating in the federal government's massive bundled payment care initiative (BPCI) announced by the Centers for Medicare & Medicaid Services recently. Duke will participate as a Model 2 site, which will look at the retrospective care for an acute hospital stay plus post-acute care for percutaneous coronary interventions.
"We're still in the early stages," says Daniels. "We're going through a learning curve. We are wide open to looking at new ideas."
Health insurer Aetna is leading in its development of accountable care partnerships. In the last month alone, its Accountable Care Solutions division has announced three such collaborations, and more are likely on the way.
Ralph Holmes, President of Aetna's operations in Texas, where two ACOs were announced in late January, one with Dallas-based Texas Health Resources and the other with Houston-based MHMD Memorial Herman Physician Network (MHMD), says its ACO partnership with MHMD took a year of planning.
"It took a while," says Holmes. "We think we've partnered with the right system because they're the largest system in town. But, I think because the size of the system, it actually made the agreement more complex in trying to bring all the pieces together. They have more at stake than a smaller player might."
MHMD is one of the largest independent physician networks in Texas with 3,900 clinically integrated, primary care and specialty physicians. Its clinically integrated physicians already collaborate with Memorial Hermann Health System's inpatient and outpatient sites to practice evidenced-based medicine, which Chris Lloyd, CEO of MHMD, says will help the ACO hit the ground running on April 1.
"I think there was increasing complexity on one hand," says Lloyd. "On the other hand, we weren't starting from the same point that a lot of organizations would be starting from. Evidenced-based medicine and protocol becomes the basis for how we start to move the underlying metrics and risk models."
Moving past hurdles, building trust
Lloyd and Holmes both say that initially the two organizations struggled to trust that they were on the same page. One hurdle was laying aside the memories of attempts to change healthcare in the 1990s, which left organizations wary of sharing risk.
"Those early meetings were sort of the traditional looking-across-the-table-at-your-foe and you're trying to see what you can get for both your interests," says Holmes. "And it took a little while before we both began to say, 'Okay, we have to trust one another; we have to share information at a level we've not done before.' That transparency, I think created some trust."
Holmes also calls the level of transparency between Aetna and MHMD "unprecedented." Sharing data is part of a long list of other shared responsibilities, but it is crucial to maintaining the trust the two have established. It also plays an important role in figuring out best practices with a relatively new model of care.
Learning from claims data And data sharing is key to the biggest variable in any healthcare arrangement, especially ACOs—the patient. Lloyd is confident it will lead to better engagement with patients because physicians will know them better.
"We [will] know a lot more about these patients because we'll get claims data from Aetna passed to us, and we'll look at that together," says Lloyd. "Physicians and physician organizations and hospital organizations simply do not have access to that information. Now we do. I know how many diabetics have co-morbid conditions. I know who their primary care physician is."
Along with predictive modeling tools, those extra pieces of patient information, says Lloyd, will help physicians and care managers understand when to call patients, or at least be alerted to the probability of an emergency department visit.
While the patient engagement piece starts with the physician, Holmes says the agreement Aetna has with MHMD is collaborative.
"It is our intent, depending on the size, with some customers, that AETNA, MHMD, and Memorial will engage plan sponsors where they are," says Holmes. "We'll work in tandem to attack issues with specific plan sponsors that are willing to have us come out and engage directly with their employees."
Lloyd believes the "rubber meets the road" at care delivery, or rather changing the model of care delivery.
Aligning incentives "Historically the firewalls between what a payer would do as a plan and what a hospital or physician network would do were typically pretty well defined," says Lloyd. "We have sort of stepped back and taken a look at that and said 'Aetna's willing to do this piece, MHMD is willing to do this piece,' and then test whether we're doing well—that's a very big shared responsibility. And then, ultimately how do we align our incentives so that we're all encouraged to advance the model. That's a tricky dynamic."
The specific details of the financial incentives have not been disclosed, but under the agreement, Aetna will reward MHMD physicians for quality, efficiency, and patient satisfaction, as well as:
Raising the percentage of Aetna members who get recommended preventive care and screenings
Better management of patients with chronic conditions such as diabetes and heart failure
Reductions in avoidable hospital readmission rates
Reductions in emergency room visits
Measuring success Aetna and MHMD are expecting to see promising results six months after the ACO launches. They say patient volumes as well as positive quality outcomes are positioned to increase. Ahead of the launch, the two organizations are meeting monthly to prepare, and it's clear both Lloyd and Holmes are excited.
"We see a lot of cities and towns who are strapped by the budget constraints looking for a solution," says Holmes.
"They don't want to ration care for their employees. What they want to do is improve the care in a way that allows them to stay healthy and on the job... and we think if we deliver that in partnership with Memorial Hermann and the physicians that will create something that has value to the market and will attract more members to Aetna."
Three out of four consumers surveyed say they find bundled care plans "appealing." The promise of transparency is tantalizing, but consumers are clear-eyed and armed with a list of essential benefits.
Bundled payment arrangements still aren't the norm, but they soon might be. Two important announcements about bundling took place last week within days of each other. First, Booz & Company issued results of a survey showing 78% of U.S. consumers found the idea of bundled healthcare "appealing."
Then, the Centers for Medicare & Medicaid Services announced four models of bundled payments in which 500 hospitals will participate during various phases of its Bundled Payments for Care Improvement program.
One of the authors of the Booz survey, MinooJavanmardian, PhD, says consumers are ready for healthcare organizations to start offering bundled care for many reasons, including the possibility of having care and payment for care be more transparent.
"Consumers right now, score healthcare low in satisfaction, and that is partly because they don't have information to be able to make decisions," says Javanmardian. "So, [it's] the whole notion of telling the consumer that under this construct there will be someone, other than you, who will stitch all the things you need to do together and deliver to you an end-to-end product. That doesn't exist today."
Javanmardian says polling shows consumer interest in bundling extends across care settings, beyond physicians. Consumers want bundled coverage to include hospital and facility costs, testing, readmissions, and specialists. And in addition to an increase in transparency, at least 50% of those polled named three benefits essential to making a bundled care arrangement work.
Ability to provide input on care
Single, coordinated team care
Care warranty
In fact, according to one of the survey's male respondents in the 50-65 year old age category, "One-price-covers-all is attractive, but even more attractive is the promise of a coordinated team providing care and treatment."
The results also revealed what consumers were not willing to do that could impact the structure of a potential bundle: travel for care and give up their primary care physicians. More than half, 64%, said they would not change physicians or choose a physician based on a bundled healthcare option.
Overall, 74% reported they were only willing to travel within their own city for care; 23% would travel within the region, while only 3% would go out of state for care. That last number is a variable Javanmardian says she will be looking at as Wal-Mart rolls out its bundled care arrangement with six hospitals for cardiac and spine surgery.
The retail giant is paying for the care, the travel, and the expenses entailed during travel for its employees and dependents.
The further away from an urban center a person lives, the more likely they are to travel further. For example, 35% of those polled who live in a rural area say they would leave the state for care. Javanmardian also hypothesizes that a person's willingness to travel also depended on their medical condition.
"I've seen it anecdotally," she says. "When people have cancer you'll see [them] go to Sloan-Kettering or MD Anderson, the places that have a brand."
Which care is bundled could become a competitive advantage, similar to the brand standing that hospitals have cultivated. Javanmardian says the advantage could be had by any stakeholder—physicians, hospitals, and payers, because half of those surveyed said they would switch hospitals and specialists if the cost of treatment were 10% less.
"Insurance companies who offer these kinds of products can position it in a market in a way that the consumers will understand it, and will get the choices that they need at an affordable or a competitive pricing. That's going to be the next step for the foundation of the beginning is just to create a bundle... and move from there," she says.
The survey is the first in a series Booz will release this year to quantify the interest in bundled payment arrangements. The company says it plans on talking to physicians, hospitals, payers, and employers.
Tiny Delaware is one of only seven states to date committed to setting up a partnership-based insurance exchange with the federal government. It was one of the first states to receive federal approval for its exchange model, and was an early adopter to the idea of health insurance exchanges, reaching out years ago to neighboring states to gauge interest in setting up a regional exchange.
Rita Landgraf is Secretary of the Delaware Department of Health and Social Services, the agency overseeing the development of Delaware's State Partnership Health Insurance Exchange, which is estimated to cover 35,000 state residents. She recently spoke with HealthLeaders about the benefits and challenges of this new insurance model.
HLM: When did Delaware commit to setting up what is now known an insurance exchange? Landgraf: The minute the law passed. That was just our philosophy early on. I would never want to say that we could predict what the Supreme Court was going to do, we had a federal mandate, we needed to get things going to meet the aggressive timeline, and even when it was challenged we weren't stopping to see what the Supreme Court was going to do.
Even within the challenges, we know that the cost of healthcare in the United States is far greater than any other country, and we also know that our outcomes are not good.
From my perspective, we started right at the time law passed and I think it was a great motivator, quite honestly, to pull us to the table to really look at this from a problem solving perspective. And, if the Supreme Court overturned it, I will tell you, I think in Delaware we would still be identifying what we need to do for this paradigm shift.
HLM: How would you characterize the progress of Delaware's state-federal insurance exchange? Landgraf: Delaware is rather unique because of our size, and that presented challenges as we looked at what model we wanted to use. We initially evaluated doing our own state-based exchange. Because of our population being less than a million, when we did the modeling from a cost perspective, it really was cost prohibitive for us. We really felt like that [state based model] would drive up the premium cost.
We sat down early on with primarily CMS and HHS and started talking about some of those challenges, and, I believe, that's when the idea of a state-federal partnership began taking shape. Delaware was one of the first states that committed to that, and I really think Delaware was really poised to craft what this hybrid will look like.
The thing we're concentrating on right now are the Marketplace Assisters. As part of the implementation, the Marketplace Assisters are that consumer outreach identity that we will be contracting with—probably organizations.
Those organizations will hire Marketplace Assisters; the state will need to certify them. The federal government will have some standards that the Marketplace Assisters will need to have in order to become certified. But their role is to assist that consumer base that is shopping on the exchange and then if the consumer actually wants to have more details, they'll hand that over to a broker.
PPACA also provides for Navigators. The difference between the Marketplace Assisters and the Navigators is the population you are outreaching to.
I believe the Navigators will be outreaching to the high risk population and we're still waiting for guidance as to how to define that population. That's why I think you see us getting a little anxious because we really want to be able to start training individuals, getting them on the ground.
HLM: What is it about the federal partnership that prevents premiums from going as high as they would had Delaware decided to run a state-based exchange? Landgraf: We're going to get economy of scale. When the federal government actually builds that level of infrastructure for an exchange, they will be able to leverage that across populations that are either going to do a full federal exchange or will elect to go to the partnership model.
Originally they were looking at regional exchanges. And early on I did outreach to the larger states... and what I found early on [was] the states that were interested in what we thought would be regional exchanges were states very much like Delaware. It was the low population states. The higher populations states, they don't need us. They can create their own state based exchange and don't have to worry about what's happening across state boundaries.
What we really believe is important for the state of Delaware is to retain that regulatory responsibility. We also wanted to retain responsibility to the consumers, too.
HLM: Will it be easier to replicate better health outcomes in certain populations in Delaware because your population across the state is smaller? Landgraf: I think so. The benefit for Delaware is we can literally bring everybody to the table. I can travel the state in two and a half hours so we can touch every county. We also think of ourselves as an incubator state because we also have a rather large rural population as well as a rather large urban population.
HLM: How responsive have insurance plans been to Delaware?
Landgraf: Like any new program, we rely heavily on the ability to have information in a timely fashion; many times that's challenging. Many times, I will go back to HHS and say, "In order for us to really implement by October 2013, the plans will need certain information to be able to have time to return to us how their costing out their premiums and how they want to promote the plans on this exchange, and then for us to be able to certify them."
Some of that has presented challenges; however, I've had to personally make those calls to HHS and HHS has always been responsive in trying to secure that information for us.
HLM: How many health plans are you hoping will participate in Delaware's exchange? Landgraf: I'm hoping that enough to give our consumers choice. I have been asking our Department of Insurance if there are any concerns relative to the volume of the plans, and the feedback I'm getting—they're not overly concerned that we would not have plans participating on the exchange.
HLM: Are you surprised more states are not participating in a state-federal partnership? Landgraf: Every state has to look at the constraints of their own system. I can't speak on behalf of other states, but I believe what might start happening is those states that decide they indeed do not want to go up against the federal law will possibly will elect the state-federal partnership.
I think it would also depend what the plans may be doing. The plans might prefer to have the state-federal partnership, depending on the state, as opposed to going fully to that federal partnership, just from a regulatory point of view.
I think that we've been very fortunate with our relationship with HHS and the goals that we've been trying to achieve here in Delaware. They've been very responsive. Again, sometimes it's challenging, but I think it's challenging for them as well. We try to problem solve this together.
Last week, Department of Health and Human Services Secretary Kathleen Sebelius started using the term health insurance marketplaces instead of health insurance exchanges, and critics pounced. For the purposes of this column, I will refer to them the same way the Patient Protection and Affordable Care Act does—health insurance exchanges.
The PPACA-mandated exchanges are due to be up and running by October for open enrollment and the regulations being formulated to help guide their development are still, as one state official put it, "very fluid" just eight months out.
The exchanges are unpopular among Republicans. Nearly every state leaving the planning and operation of the health insurance exchanges is led by a GOP governor. And, it is true that states are not clamoring to run the exchanges on their own or partner with the federal government.
Anti-Obama groups such as FreedomWorks characterize the department's departure from using the term "exchanges" as a desperate attempt to attract states to partner with the federal government on operating health insurance exchanges.
Ed Haislmaier, senior research fellow and the conservative-leaning Heritage Foundation calls it a public relations move. "It's the corporate theory of 'We'll get the dogs to eat the dog food if we change the name of the brand'... this is all PR. That's what's going on here," he says.
HHS shed no light on the subject of why it started calling exchanges marketplaces, pointing only to the January 16 blog post by Sebelius that started the dust up. Sebelius writes: "January is the perfect month for looking forward to new and great things around the corner. I'm feeling that way about the new Health Insurance Marketplace."
For policy wonks and those who follow the industry (myself included), there was a resounding, "huh?" after reading that sentence. But, on closer inspection of previous information released about exchanges by HHS, there were references to the term marketplace to describe the exchanges earlier than January 16. The first one I found was dated from February 2011. In describing the consumer-operated and -oriented plans, the release explains:
"By January 1, 2014, you may be able to buy a CO-OP health plan through a new competitive health care marketplace in your state, called an Affordable Insurance Exchange. You may also be able to buy a CO-OP health plan outside of an Exchange." Now that information about insurance exchanges is getting out to Americans who will be eligible for coverage, it may be that HHS is trying out the term marketplace to better describe how the exchanges will work. That's the theory of one state working closely with HHS to get its state insurance exchange ready for October.
"I think the [term] marketplace—it may have resonated when we started talking about marketplace assisters," says Rita Landgraf, Delaware's Secretary of the Department of Health and Social Services.
Landgraf is referring to the In-Person Assisters (IPA) the law calls for to help consumers understand the exchanges and their options. Delaware, which will partner with the federal government to run its insurance exchange, is calling its IPAs marketplace assisters.
Landgraf doesn't know why HHS started using the term marketplace, but she says it does do a better job of describing what exchanges are to the average consumer.
"If they're going to call that entity a marketplace assister... what are they assisting? They're assisting that consumer in that marketplace."
It's difficult to say where the public stands on health insurance exchanges. Nebraska attempted to gauge the opinion of its state's residents on the issue through public hearings, but in a letter explaining why the state would opt for a federally run exchange, Governor Dave Heinman wrote that he had heard all sides, and found the issue "polarizing."
Critics, like Haislmaier, say regardless of whether HHS uses marketplace or exchange, it won't change the opinion of detractors.
"I don't think it's going to have much effect, and I don't think it's going to stick. If you go to their website, they're still calling them affordable insurance exchanges," he says.
"There's a large swath of the public who's rightfully distrustful of the whole structure of it, and this is one of the more visible pieces of the structure of the legislation."
Nearly a dozen states will share $1.5 billion in federal money to help build state insurance exchanges, a new marketplace created by the Patient Protection and Affordable Care Act, which will give millions of Americans access to health insurance by October.
Health and Human Services Secretary Kathleen Sebelius announced the grants Thursday, just days after announcing that the department will overlook the January deadline for states to determine whether they will set up their own insurance exchange.
This is an effort to woo more states away from having the federal government set up and run an exchange. There remains, however, the February 15 deadline for states to decide if they will partner with the federal government to run the exchanges.
In a statement, Sebelius said, "These states are working to implement the health care law and we continue to support them as they build new affordable insurance marketplaces. Starting in 2014, Americans in all states will have access to quality, affordable health insurance and these grants are helping to make that a reality."
Six states will receive Level One Exchange Establishment Grants; North Carolina stands to get the largest share:
Delaware: $8.5 million
Iowa: $6.8 million
Michigan: $30.6 million
Minnesota: $39.3 million
North Carolina: $73.9 million
Vermont: $2.1 million
Most of the states receiving a Level One grant, which is money awarded for one year, will spend it on consumer education and awareness, including in-person assistance programs.
North Carolina says it also plans to invest in IT infrastructure, as does Minnesota. Nearly all of the Level One grants also went to states that have decided to partner with the federal government to run their health insurance exchanges. Only Minnesota and Vermont will set up state-run exchanges.
In contrast, all five states awarded Level Two Exchange Establishment grants, which last for more than a year, are setting up state-based exchanges. The amount awarded with Level Two grants is also much larger.
California: $673 million
Kentucky: $182 million
Massachusetts: $81 million
New York: $185 million
Oregon: $226 million
Just as the states receiving Level One grants, the Level Two states say they will use the money to increase consumer awareness and invest in infrastructure.
California officials say it will use its massive $673 million grant to accomplish nine goals for its exchange, 'Covered California,' which includes hiring an outside vendor to help small businesses choose a health insurance plan, and building a "multi-site customer service center."
Oregon's $226 million grant will go to similar efforts, though state officials were more specific about some of their plans on how its exchange will be run. For example, Oregon will run its own service call center, and advertise the exchange with materials that focus on visual images and "fewer words," to accommodate its plan to have promotional media translated into three or four languages.
The insurance exchanges won't insure people until 2014, but they need to be ready for open enrollment in October, which is just nine months away.
This isn't the first time these states have received a federal grant aimed at insurance exchanges.
HHS started handing out grant money in 2010; nearly all states have received some funds to study the feasibility and challenges of setting up exchanges. Alaska is the only state without any financial awards because it didn't apply for any of the grants.
States may continue to apply for grants to help run the insurance exchanges through 2014. After that, the exchanges will be funded through an administrative tax on health plans.
So far, 25 states have decided to let the federal government set up and run their insurance exchanges, though states can decide at any time to ease out of that decision and instead partner with the federal government.
There is one state whose insurance exchange leadership has yet to be decided. Two Mississippi officials—Governor Phil Bryant and Insurance Commissioner Mike Chaney—are at odds over having the state run its own exchange.
Chaney wants the state to carry out its plans to run one and sent in Mississippi's application to federal officials, though they have held off granting approval. Chaney went so far as to have the state's attorney general weigh in on the issue. The Clarion Ledger reports the AG issued an opinion stating the insurance commissioner does have the right to create and run an insurance exchange.
New evidence examining the correlation between the Centers for Medicare & Medicaid Services Star Quality Rating System for Medicare Advantage health plans and actual enrollment puts to rest some of the doubt that has lingered about whether the quality rating system really matters to beneficiaries.
A study in the Journal of the American Medical Association looked at 2011 enrollment among two groups of Medicare beneficiaries: first-time enrollees and beneficiaries who switched plans. Most beneficiaries in both groups (62.5% of first timers; 67.2% of switchers) enrolled in a plan with a 3–3.5 star rating.
Here's the payoff: Health plans receive bonus payments beginning at the three-star rating benchmark. In 2011, those payments totaled $3 billion.
The study also found that if a plan was rated one star higher, the likelihood that a first-time beneficiary would enroll increased by 9.5%. The likelihood of enrolling in a plan with one more star also increased by 4.4% among those who switched Medicare Advantage plans.
One of the authors of the study, William Shrank, MD, director of the rapid cycle evaluation group at the Centers for Medicare and Medicaid Innovation, called the positive association between enrollment and star ratings reassuring.
"The previous research has been mixed," says Shrank. "It wasn't as though it was all in one direction or the other. And we can't say for sure in our study that it was the star ratings... we can just comment on the association, but we do see a strong association that tells a compelling story."
The "mixed" results Shrank refers to is a 2011 Kaiser Permanente poll that showed 59% of Medicare-eligible seniors knew nothing about the star rating system. Among those who had heard of it, only 32% said the star rating of a health plan had a bearing on their enrollment decision; half did not consider the star rating at all.
The JAMA study seems to contradict the Kaiser study definitively, because the JAMA authors looked at real-time enrollment data in 2011 and studied behavior patterns among those who enrolled in Medicare Advantage plans. The Kaiser study was a random sample of 483 Medicare-eligible seniors.
However, the JAMA study authors admit limitations and do not make an absolute conclusion on the link between enrollment and the quality ranking.
That's because other factors may also play into the decision-making process, such as help from family and friends and year-round marketing tactics. One of the advantages of being a coveted five-star Medicare Advantage plan is that advertising to seniors is allowable all year, not just the period around fall's open enrollment.
Medicare Advantage plans are becoming more popular. In 2011, the year that JAMA study authors looked at, 11.9 million seniors enrolled in a Medicare Advantage plan making up 25% of the total Medicare population. Last year, enrollment in Medicare Advantage plans grew by 10% to 13.1 million.
With the aging baby boomer population as one of the major projected healthcare cost drivers, health plans that can maintain a high star quality rating may fare better in the future. An earlier report noted however, getting the top rating—five stars—is no easy feat. Only 15 health plans reached that apex in 2012.
If there are still doubters of the impact of the quality rating system, health plans aren't noticing. They're investing in processes to make maintain or improve its "star" standing. The JAMA study reinforces this belief, and could even cross marketplaces, especially with growing consumerism and quality scores of hospitals becoming public.
An accompanying editorial on the JAMA study from Jack Hoadley, PhD, from Georgetown University's Health Policy Institute, notes a star rating type system can help control costs and increase quality if it is presented to consumers in a way they can use it.
"In this spirit, it is important to think about better ways to present performance ratings, along with information on costs, to consumers," writes Hoadley.
In the study, the authors suggest that CMS consider "communicating information specific to plans or service areas within the larger, contract-level star rating to enhance their relevance."
"There is no question that we certainly want to continue to raise awareness about star ratings and about public reporting of quality to try to continue to empower and inform our beneficiaries," says Shrank.
Another key take away from the JAMA study suggests that CMS is accomplishing its goal of steering beneficiaries to higher quality health plans by publicly reporting the star quality data. If public reporting of quality data leads Medicare beneficiaries to pick higher quality health plans, then there are important implications for health plans as they begin to decide how to participate and communicate their participation in state health insurance exchanges.
The study's conclusion that the star quality ranking system provides verifiable confirmation of a link between quality and enrollment gives payers "additional justification to pursue higher quality."
It's advice, Shrank says, the healthcare industry as a whole could use.
"In the setting where there may be more public reporting of quality, this helps to build a business context for promoting quality."