States that plan to operate their own "state-based exchanges" for health insurance under the Patient Protection and Affordable Care Act were supposed to tell that to the federal government Friday.
The deadline, however, has been extended by a month.
Health and Human Services Secretary Kathleen Sebelius, in a letter Thursday to Louisiana Gov. Bobby Jindal and Virginia Gov. Bob McDonnell, announced that HHS has pushed until Dec. 14 what would have been the deadline for state-based exchanges to submit both the letter of declaration stating their intent and a "blueprint" detailing how they would work.
States that want to pursue a "partnership exchange" that relies on the federal government still have until Feb. 15, 2013 to submit a declaration letter and blueprint.
Timeline already tight
The extended SBE deadline, which came just days after President Barack Obama's re-election, compacts an already tight vetting and implementation schedule. HHS is supposed to certify HIX blueprints by Jan. 1, 2013. Those that are certified are supposed to be ready for open enrollment by Oct. 1, 2013 and operational on Jan. 1, 2014.
Observers say the delays and extensions do not necessarily mean that the January 2014 startup will be delayed, but the tight schedule allows little margin for error.
"It's ambitious," says Kansas Insurance Commissioner Sandy Praeger. "I know the health plans are concerned about the ability for HHS to get the products approved when we don't have any essential health benefits assigned. We know what they are in general categories but not specifically."
Praeger says health plans need to see the details around the assigned benefits before they can start their development process. "They have to develop the forms and marketing materials and rates that have to be justified and actuarially sound and approved. There is a lot of work left to be done," she says. "There is time to get it done but it is going to put a crunch on the states. Even if it is a federal exchange, states' departments of insurance have to approve those products after HHS has approved them. As states' departments are concerned, we are worried that we are going to get a flood of filings at the same time and not have the capacity to get it done in a timely fashion."
'I don't think it's panic'
Alan Weil, executive director of the National Academy for State Health Policy, says the deadline extension is not a signal that the process is in disarray, but more of an acknowledgement that states were waiting to see which party won the White House.
Republican challenger Mitt Romney had pledged to abolish "Obamacare" if he won the presidency, making moot any preparations for exchanges.
"I think everyone is realizing that 10 days after the election is a little too short for states that are trying to figure out what to do," Weil says. "For those states that already pretty much knew where they were going it didn't much matter. But there were a lot of state sitting on the fence that are now ready to get off but 10 days is too quick. HHS is just looking to ensure that the states who want to give this a closer look have that opportunity."
"I don't think it's panic," Weil says. "The administration wants all of the states that are ready and willing to take a role in implementation to do so. This is one more opportunity to let those who might be able to do that play that role."
HHS said it will stand by the Jan. 1, 2014 operational start up for the exchanges. Weil puts little credence in speculation that HHS would delay the startup, even though by some estimates the federal government could save $23 billion with a one-year pushback.
"There is something like 15 states that are planning to do this and they would not be happy to be told ‘Thanks for the hard work, but put it on ice for a year,'" he says.
"The other thing is it is easy to talk about how much money you'd save, but remember this was a political compromise piece of legislation that included significant payment reductions to providers that they were willing to accept with the promise that their uncompensated care burden would go down as people gained coverage," Weil says.
'A little more time to get ready'
If you keep all of the cuts but don't do the coverage, sure, you can save some money. But you are also reneging on a deal that was designed to make it possible to afford this coverage. You really can't just look at one side of the ledger and say this will save money. It's more complicated than that."
Praeger says delaying the exchanges may be considered as the lame duck Congress looks for a way to stave off the mandatory budget cuts and tax hikes that go into under the "fiscal cliff."
"It might be in the long run better for everyone if it could be delayed a year, except for the folks who are going to benefit from the financial assistance," she says. "I don't know if there is a way to accommodate them that also gives us a little more time to get ready. But it wouldn't surprise me if it is in the mix as the Congress re-convenes."
Weil acknowledges that reviewing and certifying the exchanges and monitoring their implementation over the next 13 months will prove challenging but he says federal officials have already known that for months.
"It's been clear for some time that there were going to be a bunch of states that wanted to do it themselves and a bunch of states that didn't want to do it at all and a bunch of states in the middle, which is why they created the partnership model," he says.
"It's been difficult to know the numbers of states in each category but the existence of the categories is no surprise. The hard part is now you have to make all three of those models work. But again, we've never been in a situation where it seemed like everyone was going to be in one thing or another."
Weil says he believes the exchanges will be "operational" by Jan. 1, 2014, but likely not without hiccups.
"There will be bugs just like there were with Medicare Part D and the prescription drug benefits," he says. "It's not going to be perfect the day it starts. But this is something that they have been working on for a long time. The deadlines have been clear for a long time. I think we know what it takes to get it done and they will be up and running."
This article appears in the October 2012 issue of HealthLeaders magazine.
In our annual Industry Survey of healthcare leaders, a majority (59%) said too much self-interest among the different stakeholders is the reason that the healthcare industry can't solve its own problems. Only 6% said the industry will be able to find a solution, given more time. What are the greatest opportunities and threats to improvement at the industry level and the organization level?
Marcia Donlon, RN, BSN, MS
Vice President, Medical Center, and CNO
Holy Family Memorial, Manitowoc, Wis.
The enemy within: A quote from Pogo comes to mind, and that is, "We have met the enemy and he is us." My honest answer is, I don't know how we are going to solve this. If any of us had that answer, we'd be rich and have speaking engagements all over the country. For one person, something is an opportunity, and another stakeholder sees that as a threat, and that is where we need to come together. If we don't find ways to build trust and collaborate and sacrifice, we are never going to get there. We can blame whoever we want, but we are all equal stakeholders.
The challenges ahead: Perhaps if we reduce duplication of services and reduce red tape and bureaucracy—whether it is an insurance company or the government, value-based purchasing, core measures—they seem to all have good intent but we get so bottlenecked in all the fine details. Some of it is game-playing. You set rules that are impossible to abide by or to meet the challenges and guidelines that are going to move us forward. Things like the RAC audits, value-based purchasing, and HCAHPS.
Rewarding quality: The idea is awesome. The concept, if it worked, is exactly where we need to go. We get excited to hear about the shift away from fee-for-service with quality and patient safety and outcomes involved here. But then you hear what the rules are and it is almost impossible to do. The other thing is it takes so many resources to meet the requirements that sometimes you ask, "Are we spending more to supply the data and to work on this initiative than we are ever going to get back for it?" Is it going to improve outcomes? Maybe. Maybe not. Some of them haven't been proven to do that.
The shifting political landscape: The other thing is the changing political landscape and healthcare reform. It's so nebulous that nobody knows where to go. Even when we do want to work together, it depends on who is going to be elected. We know the final ruling now on Obamacare, but what is it really going to be after the elections?
Scott D. Hayworth MD,
President and CEO
Mount Kisco (N.Y.) Medical Group
Up until now there have been too many stakeholders. With the consolidation going on, I am optimistic that we could solve our problems on our own. You are seeing doctors leaving smaller practices and joining either larger multispecialty groups like mine or joining hospital systems. It is much easier to transform a larger group of hospitals and doctors working together than it is changing multiple individuals.
The greatest opportunities come from working together. There is no more money in the system, so we all have to figure out how to provide better quality care for less money. We can do it more on the system level than on the individual level.
There is going to be a lot more regulation. Good regulation is excellent; unfortunately, a lot of regulation that comes down gets in the way of what we need to do. These mandates do nothing about liability and that is a key cost driver and a key issue for all of us taking care of patients.
Robert E. O'Connor, MD, MPH
Professor and Chair, Department of Emergency Medicine
University of Virginia School of Medicine, Charlottesville, Va.
It is imperative that providers are part of the solution for reducing healthcare costs but there is not an easy answer to it. It is such a complex matter to try to shift the paradigm of how services are paid for so that we can provide healthcare at the highest possible quality with the lowest possible costs. It is going to take a concerted effort between the healthcare providers and the insurers and regulators.
The first thing we have to look at is liability reform. A lot of defensive medicine is practiced at a cost of billions of dollars per year. If we were to protect providers who adhere to certain treatment protocols to a certain level of indemnity, while still allowing patients to recover damages when harmed, that would go a long way to reducing costs. It would also embed high-quality low-cost care into the system because providers would have guidelines to follow pretty much for every ailment. They'd know they would be protected from liability and they'd also follow proven and acceptable practices for everyone to provide reasonable healthcare.
Jerry Fingerut, MD
Medical Director
Blackstone Valley CHC, Pawtucket, R.I.
It will be very difficult and will take a considerable amount of time based on fragmentation silos and the history in healthcare. Even though healthcare may be viewed as a single industry at a macro level, when it gets into care delivery you have hospitals, specialists, primary care physicians, and long-term care vendors all appropriately with a level of self-interest, even with the end goal of common patient care. It is very difficult to align the goals and rewards when it's left to the individuals who have legitimate business and clinical interests. It is their livelihood as well as their mission and profession in wanting to do the right thing.
Bundled payments, in many ways, creates its own set of problems because you deal with the same silos in day-to-day operations. To do it in a timeframe where it will truly be redesigned is going to take an external pressure, which becomes the government or the political will to do it. That is difficult to do even regionally because of different practice patterns, public and private hospitals, not-for-profit and for-profit hospitals, and the disparity in payments that exist within the system.
Reprint HLR1012-1
This article appears in the October 2012 issue of HealthLeaders magazine.
When it comes to monitoring the smorgasbord of healthcare mandates from the federal government, rural providers already have a full plate.
There are questions about the Patient Protection and Affordable Care Act that include the future status of funding for critical access hospitals, expansion of the Medicaid rolls, how—and if—the health insurance exchanges will function, and who gets what under bundled payments for coordinated care.
From now until Jan. 7, 2013 the Department of Health and Human Services is asking for public comment on the methodology used to determine what exactly constitutes a Frontier and Remote (FAR) area.
Here's a snippet from the six pages of dust-dry verbiage filed Nov. 5 in the Federal Registry: "Using data from the Census Bureau, every census tract in the United States is assigned a (Rural-Urban Commuting Area) code. Codes range from 1 through 10, with 23 sub codes, with code 1 representing the most densely populated urban areas and code 10 representing rural areas with primary commuting to a tract outside an Urbanized Area or Cluster."
Nobody will mistake this prose for Tolstoy.
This is utterly arcane wonkery for most people, but it could be a very big deal to rural communities. The dry methodology that is eventually adopted will be used to determine appropriate levels of federal funding and grants for rural healthcare providers.
"We highly encourage anybody who could be impacted or who is considered remote or frontier to look closely at this definition and ask questions and provide content," says Susan Wilger, director of programs for the National Center for Frontier Communitie. "Is the definition appropriate? Does it need to be fixed? If it is a good definition, that is a possibility too. If it is going to have positive impacts on frontier and remote communities we want to get that feed back as well."
Right now, Wilger says rural healthcare advocates haven't come to a determination about the value of the new definition and whether or not it will help rural providers.
"We have a number of questions," Wilger says. "Our concerns fall within several areas. One is conceptual. How is this consistent with existing definitions to frontier? Is this going to be a dramatic change that could have implications if certain federal agencies adopt this definition?"
Wilger says there are also several questions about the methodology that is being used as the foundation for the definition. "Currently, you will see that it is still based on the 2000 census data, not 2010 and that not all 50 states are incorporated. It's still lacking Hawaii and Alaska," she says. "We wonder how often the data sets are going to be refreshed."
A preliminary review of federal data earlier this year found that there was no frontier or remote data available for at least 130 ZIP Codes in New Mexico. "We're not sure why. Maybe they are still loading the data into their data set," Wilger says. "This ran several months ago so we don't want to alarm people but we have to go back and rerun it based on what they have now on their website."
In the meantime, as long as there are more questions than answers about the proposed FAR definition, Wilger says it's imperative that rural providers defend their turf. "We don't want to water down the few resources that are available to rural, frontier and very remote healthcare service providers," she says. "They are already dealing with really sparse resources and unique challenges."
In our 2012 Industry Survey, one in five (19%) healthcare leaders report that they are not satisfied in their job, a figure that has steadily increased since 2009, when it was 13%. What is behind this trend and what are effective ways to address this lack of satisfaction? Organizationally, how do you track this?
Jeff Thompson, MD
CEO
Gundersen Health System, La Crosse, Wis.
On what's driving the dissatisfaction: Although there may be a trend of people less satisfied with their jobs I am not sure that is the same thing as engagement. I think people are still engaged. They're still working hard. But there are several issues at play. One is the complexity of the healthcare business, which it is only getting more complex. And the pace of change is accelerating. Then you have external factors that we struggle to control: the lingering effects of the economic downturn and the proliferation of insurance company and government regulations. I believe it is not too surprising that more leaders are feeling stressed than they were before.
On the new measures for success: There is increasing demand and an expectation for measurable performance. So whether it is quality, service, financial performance, or community connection, those organizations that have not been measuring for a long time may feel under a great deal of pressure as there is a move toward more transparency and clarity. It isn't reputation and billboards that win the day anymore. It's outcomes.
On reversing the trend: It can be reversed but it is going to take a behavior on the part of boards to not only select people but to assist people in being successful in this new world of greater complexity, fast change, and more transparency. It starts with the board and who they select and how they evaluate them, but senior leadership has to be clear about where the organizations need to go.
Alan J. Burgess
CEO
Tehachapi (Calif.) Valley Healthcare District
There is more pressure on public hospitals with CEO compensation. I am seeing some ratcheting down and restricting benefits. Some bad actors have caused significant problems for others of us in the public sector.
There is also more dependence on others. Hospitals are much more complex organizations than they were even five years ago, and I have been in the business now for 46 years. There is some frustration because there is less that the CEO level can do to guarantee that things are happening because you are relying on so many other people to do their part. In the old days it was much more of a one-man show.
One of the advantages and reasons that I am in small and rural hospitals is because I still know all of my employees, I know most of my patients, and I can work with them one on one. Another reason for the dissatisfaction is the quick turnover. In some states CEO tenure is down to two and three years.
I don't know if this trend can be reversed. Some of it is just the changing marketplace. There is a different culture moving into the C-suite these days than used to be. Some CEOs aren't willing to put in the hours or the effort and so they are going to have the frustration. I am hearing CEOs for the first time encouraging people not to enter the field. They just feel like the compensation no longer matches the level of responsibility and trust and accountability that they are held to.
Pam Harmon
Chief Nursing Officer
Rooks County Health Center, Plainville, Kan.
I'm surprised and in some ways I am not. A lot of time when people are new to leadership they are not taught how to be leaders. So, basically they are not prepared to deal with all of the turmoil and the fires that they are supposed to put out,. A lot of times they just give up. If somebody with the experience would just have a job of going to hospitals to teach people how to be leaders, if only for a few weeks, it would make a tremendous difference in satisfaction.
There is not the commitment to find good leaders. It's kind of like "Oh my! We need someone to fill this position. Let's put an ad out there." A lot of times, especially in rural America, they take whoever applies because it's better than leaving the position open.
Someone told me one time "You're not the CNO, you're the mother of 50." That's about how it really is. If you put it in that perspective—like how you would deal with your children—it makes things a little easier.
Terrence Deis
President and CEO
Parma (Ohio) Community General Hospital
Part of it is the general uncertainty. No one likes that. There is a certain lack of control and autonomy as more hospitals have become systematized.
If tomorrow we were purchased by an outside organization I am guessing you would still call me a "health leader" but now I've gone from running an organization to becoming a cog in a wheel. I have the same title but now I report to another healthcare guy, probably a COO or lower. I don't report to a board. I don't have the autonomy I once had.
These jobs are difficult, pressure-packed positions. These pressures as far as I can tell are going to continue to trend upwards. I don't think the landscape is going to change. To some degree the people will have to change and the attitude with have to change. Maybe it will attract people who are happier in that environment.
In one of the many ironies of the healthcare reform debate, several governors are citing the defense of state sovereignty as a reason why they won't build health insurance exchanges. It is a strategy that effectively cedes regulatory control of the exchanges to the federal government.
"It is ironic from both sides," says Alan Weil, executive director of the nonprofit, nonpartisan National Academy for State Health Policy. "The House Democrats wanted a national exchange and they are going to get their national exchange in the states that are generally most resistant to federal control. It is not how anyone would have planned."
The Republican governors of Texas, Kansas, Virginia, Georgia, South Carolina, and Florida have announced over the last several months that they have no intention of submitting plans for a state-run health insurance exchange under the Patient Protection and Affordable Care Act. Under the law, if states don't build the exchanges, the federal government will step in and do it.
"Neither a 'state' exchange nor the expansion of Medicaid under the Orwellian-named P.P.A.C.A. would result in better 'patient protection' or in more 'affordable care,'" Texas Gov. Rick Perry said in July in a letter to Health and Human Services Secretary Kathleen Sebelius. "What they would do is make Texas a mere appendage of the federal government when it comes to health care."
Last week, Kansas Gov. Sam Brownback said in a media release that "my administration will not partner with the federal government to create a state-federal partnership insurance exchange because we will not benefit from it and implementing it could costs Kansas taxpayers millions of dollars."
Instead, Brownback said elected officials who support the health insurance exchanges would have to bring the issue before the state legislature in 2013. Brownback's statement put the kibosh on a HIX "blueprint" that Kansas insurance regulators were preparing to submit to HHS this week.
"We were ready to file a declaration letter and file a blueprint by this Friday," said Kansas Insurance Commissioner Sandy Praeger, a Republican who is serving her third consecutive term in the elected post.
"We had all of the 'I's dotted and 'T's crossed. But obviously, without the support of the governor and his perceived lack of support from the new legislature that will be sworn in, there is no point in trying to move forward on something I can't deliver on. So, we are not moving forward."
Praeger says she and insurance commissioners in other states have expressed concerns about "abdicating" so easily the regulatory authority that states have fought for and crafted for so many years.
"It is a concern because traditionally over the years we have advocated and protected the ability of states to regulate all lines of insurance," she says. "Now what some states are doing, ours included, is abdicating that right and saying 'We don't want to regulate. We want the feds to do this.' Is that a slippery slope we are going down? Are we going to lose the ability to regulate other areas?"
"These states that are not moving forward (on exchanges) are major states' rights states, and yet we are abdicating to the federal government the right of the state to regulate itself," Praeger says.
"I still am hopeful because to me it just makes sense that this is what we should be doing. It's too bad that these decisions had to be made this closer to the election because there was a lot of fallout. I am just hoping calmer minds will prevail when the dust settles and people will have a sense of what potentially we are giving up."
What states are potentially giving up, Praeger says, is the authority to determine what insurance companies are allowed to sell on their exchanges and what those plans and their benefits packages will look like.
"I am concerned that we are not going to be there to answer questions from consumers," Praeger says. "And even from plan management standpoint HHS is not going to be able to look at every plan that is prepared for every state because these are still state-specific."
Praeger says she shares the frustrations that many healthcare providers in the state have expressed over the years-long political slugfest that has embroiled PPACA.
There are clear signals that resistance to "Obamacare" may be weakening. Florida Gov. Rick Scott, a strident and vocal opponent of PPACA, said in an interview this week that he was now open to negotiating with the federal government about implementing some of the reforms in his state. "The election is over and President Obama won," Scott told the Associated Press. "I'm responsible for the families of Florida ... If I can get to yes, I want to get to yes."
Says Praeger, "The medical community wants a system where people can get access to the services they need when they need them and not have to wait until they are so sick they end up in the emergency room. That's not a healthcare system. That is a sick care system and that is what we have and it's just wrong."
"I have been in public policy now and it's been the No. 1 thing I felt we should be dealing with in this country. It's not perfect, but at least let's quit fighting it and move forward and work to make it better and implement. So yes I am a little frustrated."
As the campaign rhetoric cools and the Patient Protection and Affordable Care Act settles in, there is speculation that governors who've been adamantly resistant to Medicaid expansion under the law's sweeping reforms, may find a way to drop their objections.
"Fall rhetoric does not always match with winter activity," says Ceci Connolly, managing director of the Health Research Institute at PwC. "I would not be surprised if we see more states now taking a second look at the possible Medicaid expansion, in part, because they have been hearing from providers in their states who are worried about uncompensated care costs."
The Supreme Court in its landmark 5-4 ruling on June 28 that upheld key provisions of PPACA also struck down as overly coercive the federal government's demands that states expand their Medicaid rolls.
Resistance to expanding the rolls, particularly among Republican governors, reached a fevered pitch in July when Texas Gov. Rick Perry sent a letter to Health and Human Services Secretary Kathleen Sebelius. Perry, who was running for president at the time, explained that the Lone Star State stood "proudly with the growing chorus of governors who reject the PPACA power grab.... Neither a state exchange nor the expansion of Medicaid under the Orwellian named PPACA would result in better patient protection or in more affordable care."
A lot has changed since then. President Obama was re-elected in a campaign that featured sharp criticisms of "Obamacare" from Republican challenger Mitt Romney, who vowed to repeal the law if elected. He was not elected.
And now, the states that decline to expand their Medicaid rolls risk losing some of the estimated $642 billion in direct federal aid that will be made available over the next decade.
Paul Keckley, executive director of the Deloitte Center for Health Solutions, says polls show that attitudes have calcified over the last two years since shrieking protesters disrupted town hall meetings across the nation after PPACA was signed into law.
Since then the America public has held firm in its views of Obamacare. "About one-third thinks it's the second coming and one-third thinks it is the apocalypse and one-third doesn't care," he says.
Obamacare supporters in Congress were buoyed by their strong performance in last week's elections and are expected to be more aggressive in promoting and defending the plan over the next two years.<
"The group that says it is important is dominated by women and urban professionals and lower-socio economic and labor groups and their numbers are big," Keckley says. "They took most of these races. They helped the Democrats increase their Senate cohort. You are going to see more support and proactive selling of health reform over the next couple of years. Its profile will be substantially higher than it has been in the last year."
Keckley says the Supreme Court ruling on the Medicaid expansion "actually forces into this discussion of Medicaid the notion of some level of flexibility. Getting something done maybe better than nothing, but every state is going to negotiate a different deal."
Keckley sees "two dynamics" playing out in the Medicaid expansion talks, especially as they relate to the eligibility threshold of 138% of the federal poverty level for new enrollees.
"One is there is an expectation that (the Centers for Medicare and Medicaid Services) will negotiate with the states and perhaps there will be some concessions made around the 138% threshold, with some states maybe going up to 100%," he says.
"Because of the Supreme Court's ruling there is a lot of deal making that will be made between CMS and the states. People have pretty much set aside 16 million new enrollees, which was the original number. But the thought now is we might pick up between 9 million and 12 million."
Keckley says the second dynamic surrounds states' negotiations with commercial plans to manage these expanded populations. "I don't think the line in the sand with the feds and the states is 'go' or 'no go,'" he says. "The line is 'we will go some of the way, you've got to come some of the way.' Once they reach some kind of deal you look to the commercial plans and say 'this is the deal we have cut and now we want you to bid on managing that.'"
PwC's Connolly says the Supreme Court's ruling that effectively makes the Medicaid expansion optional should help with the negotiations between the federal government and states. In addition, she says innovative states already have the ability to request waivers for their Medicaid programs.
"If there was a particular state that wanted to try something at a slightly different level they would probably start with attempting a waiver request first," she says.
On a related topic, the nation's safety net hospitals have complained that a failure to expand the Medicaid population could saddle them with $53.3 billion in uncompensated care costs over the next seven years. That's because the lower disproportionate share payments that the safety nets agreed to as part of PPACA were supposed to be offset by expanded Medicaid coverage.
With lawmakers now focused on the so-called "fiscal cliff," Connolly says safety net hospitals should brace themselves for renewed scrutiny of the disproportionate share payments. "We are about to get into a season where people are going to be scouring for every nickel and dime they can find," she says. "The safety net hospitals have a reason to be concerned."
Keckley thinks that DSH payments may not disappear quite as quickly as was originally forecasted, "but there will be offsetting that much more pressure through the back door."
"The front door is reimbursement and the feds will probably get a few of those dollars back, especially for safety net hospitals in light of the fact that not as many people are going to be insured through Medicaid," he says.
"But on the back end I suspect CMS will be more aggressive on fraud and necessary care and accelerate these pilots so they can get the money back in terms of penalties or that they simply don't have to payout as much because of under performers."
"The mood at CMS is that fraud is under-captured and they haven't figured out how to deal with it," he says. "They aren't going to do pay and chase anymore and they think this necessary care issue is big. That there is so much being done that the evidence says is unnecessary that they will have reason to go to the providers and the plans that have allowed it and say 'we need a give back. You can't get away with this anymore."
UPDATED Nov. 13: The deadline for states to submit blueprints for state-based exchanges has been extended to Dec. 14. The deadline for a state to declare it wants to pursue a State Partnership Exchange has moved to Friday, Feb. 15, 2013. The deadline for states to declare whether they plan run a state-based exchange remains Friday, Nov. 16. View details.
The re-election on Tuesday of President Barack Obama removed any lingering doubts about the staying power of the Patient Protection and Affordable Care Act.
With that question settled, states and the federal government are now focusing their attentions on the complex array of programs, policies, and deadlines that will have to be crafted, approved, tweaked, implemented and met before "Obamacare" begins in earnest on Jan. 1, 2014.
The most pressing deadline falls Nov. 16, when states are supposed to submit a "blueprint" of their proposed health insurance exchanges to the Department of Health and Human Services. By some estimates only about 15 states are expected to provide detailed plans for their exchanges by next week, despite having two years to prepare. HHS has said it will operate exchanges in states that cannot or will not do it for themselves but it's not immediately clear how many states that will involve.
"The conclusion we are reaching at this point is probably a couple dozen states will have a significant federal presence," Ceci Connolly, says managing director of the Health Research Institute at PwC.
"Some of them may just defer to the feds entirely and have a federal exchange. Many will have what is being dubbed a partnership model where the feds could be doing a lot of the back office work—technology, infrastructure, records—and the state could handle more of the direct engagement with their citizens, perhaps some of the work around the provider networks in that state that they have a better feel for and have some views on."
As for the federal government's own plans to craft back-up exchanges for states that can't do it, Connolly says "we don't know for certain what progress has been made on the federal level because it has been somewhat quiet about that. There is a ton to be done on the exchanges in a very short period of time."
"I have a suspicion that in the next week or two we will see a flurry of announcements. We will see more regulations being released, more guidance," she says. "There is a certainty in Washington during an election year that from Labor Day to Election Day things just quiet down, and so it's the natural flow of things in this town that post-election you get a flurry of activity. If we were to wait until the end of November, we will have a clearer picture of where we stand."
Paul Keckley, executive director of the Deloitte Center for Health Solutions, says a federal backstop for exchanges "may not have all the capabilities in place to manage enrollment and eligibility and capture people, and they have to have that capability in place by Oct. 1 2013."
"The federal government has a lot of catching up to do," he says. "The reality is 32 to 35 states will end up in a federal partnership and that is many more than originally thought. We may have seven or eight states that simply say ‘I want the federal government to do it for me.' The federal government is going to be ramping up its efforts to get ready because these exchange blueprints are going to come in and they are going to realize they have a lot to do for the states."
Connolly and Keckley say there is no way of knowing what these exchanges will look like or how much they will vary from state to state.
"You've got 30 Republican governors now and most of the Red persuasion will move towards that active shopper model," Keckley says. "It's all over the place on the other states, but the tendency in most states is to allow multiple plans to participate if they hit the metrics on essential health benefits and they can comply with enrollment and eligibility standards."
"I think the feds will relax some of those requirements so it is easier for states to see that plans are stepping up and putting products on the exchange. The worst outcome is if this effort is made but the commercial plans say ‘I'll pass.'"
Connolly predicts that some of the biggest state-to-state variances will center on what benefits are offered based on cultural and regional population health issues.
"There are different demographics in different states," she says. "I could see in Arizona or Florida you may want products geared toward the pre-retiree age group. If you are in Texas or California you might want to think more about an immigrant population."
"Once you begin to understand the specifics of an incoming group of new customers that is when you tailor the products in certain ways, you communicate and educate in different ways, and you help the customers navigate the system. They will require much more tailored, targeted activities by the healthcare sector than it has been forced to do in the past."
The so-called fiscal cliff, which Congress left unresolved, could prove problematic for exchanges. Lawmakers in the coming weeks and months will be looking everywhere for savings, and PwC estimates that delaying implementation of the exchanges for at least one year could save the federal government an estimated $23 billion.
"There will be some pressure on the Obama Administration to consider delay, either from players that are not yet prepared and want more time to prepare or from people that are focused on the federal deficit," Connolly says.
"We know that delay accrues some short-term budget savings because you have one year's worth of subsidies that won't go out the door. There are going to be a lot of different ideas kicked around in the next couple of months about where to save some money, so it's going to be under discussion."
Connolly says delays would not come without a downside.
"The administration will be reluctant to delay because so much work has gone into this and they're in a sense it wouldn't be fair to the insurance companies that have been working hard to compete on the exchanges and it wouldn't be fair to the states that have moved ahead putting everything in place. But that idea is going to be floated," she says.
The exchanges are supposed to generate about $55 billion in premiums in 2014, with most of that money coming from federal subsidies to help consumers offset costs.
"In that first year nine of 10 people shopping on the exchange will be shopping with a subsidy and that is revenue for insurance companies," Connolly says. "Also it's important money for providers because hospitals and large health systems that have big uncompensated care burdens want to transition those patients into coverage. So while there will be voices in support of delay there will be a number of voices on the other side."
Regular readers at HealthLeaders Media will note that we general avoid political stories and commentary related to healthcare.
There are several reasons why, not the least of which is the saturated political coverage elsewhere on the Internet. Most importantly, however, is that people who work in healthcare and those of us who cover it understand that economics, not politics, is the primary force behind the reforms we are fumbling through.
Regardless of who had won Tuesday's presidential election, or which party controls Congress and state governments, the growing cost of healthcare, at two or three times the rate of inflation, requires that our elected leaders in both parties at state and federal levels help the rest of us to keep healthcare affordable.
So, what does the re-election of President Obama mean for healthcare reform? For the most part, it means a continuation and entrenchment of the Patient Protection and Affordable Care Act, aka "Obamacare."
Love it or hate it, this landmark expansion of healthcare coverage has proven itself as sturdy as a supersized bariatric chair.
Since it was passed in March 2010, the PPACA has survived town hall shriek-a-thons, the rise of the Tea Party, emphatic and bitter Republican opposition in Congress, the 2010 mid-term elections that became a referendum on the PPACA, the attempts in Congress to repeal it that followed, an unsuccessful Supreme Court challenge last June, and vows over the summer and fall by just about every Republican presidential and Congressional candidate to repeal it if elected.
And yet, the PPACA remains standing, even as many of its political foes have fallen by the wayside.
Regardless of whether or not you support it, "Obamacare" is the law of the land and it isn't going away. Most people who work in healthcare have already accepted that reality.
Still, there remain nettlesome issues that will likely soon become political flashpoints that, depending upon a state's "Red" or "Blue" status, could leave healthcare providers in a lurch.
One big concern centers on states' efforts and their enthusiasm toward constructing health insurance exchanges that will allow consumers and small businesses to buy health insurance on the open market. The degree to which states are ready to implement these exchanges, which go into effect in 2014, varies wildly.
In May the Kaiser Family Foundation reported that 15 states would develop their own exchanges. Another Seven states said they had no plans to create exchanges, which means that the Department of Health and Human Services will step in to run the exchanges. Because a federal fallback plan is in place, the political intransigence of individual states should not be an insurmountable obstacle for the exchanges to operate.
The more pressing problem is with Medicaid.
Medicaid expansion
While the Supreme Court upheld key pieces of the PPACA in June, the justices struck down as overly coercive the federal government's demands that states expand their Medicaid rolls to millions of Americans who are now uninsured. With the high court's ruling, that expansion now becomes voluntary. At least six states have said they won't extend Medicaid, and another five states have signaled that they may not participate.
If that trend holds true, safety net hospitals estimate that they'll be smacked with about $53.3 billion in uncompensated care costs by 2019. That's because some states won't expand their Medicaid rolls even as the federal government cuts disproportionate share payments to safety nets as part of an agreement etched out in the ACA.
Not unexpectedly, there are signs that the vehement opposition to expanding Medicaid rolls may be cracking. The Wall Street Journal reported in September that several states are looking at a partial expansion of their Medicaid rolls. Expect to read more stories like this in the coming months and years.
Because the individual mandate was upheld by the Supreme Court, Medicaid expansion has become the defining political flash point for Obamacare. In most states the problem will resolve itself as election year rhetoric cools and state-level politicians find themselves staring at the prospect of losing hundreds of millions of dollars in direct federal aid.
In most states, public pressure will mount and opposition will crumble as healthcare providers, advocates and patients bombard the media with heart-wrenching stories about the otherwise preventable pain and suffering inflicted upon their poorest and most vulnerable citizens who can't get Medicaid. Fiscal watchdogs will complain about the money left on the table.
Resistance to Medicaid expansion may hold fast in Texas, Louisiana, and New Jersey, all of which have Republican governors who are expected to consider running for president in 2016.
However, even the most resolute opponent of Obamacare would be hard pressed to reject a windfall of federal dollars, especially as the rest of the nation comes to accept the notion that Obamacare is with us for good.
A federal study estimates that financial incentives tied to physicians' self-referrals for advanced imaging services cost Medicare an additional $109 million in 2010.
For CT services, utilization "more than doubled" with self-referrals, while non-self-referred CTs increased about 30%, the study found.
With the findings, GAO estimated that providers who self-referred ordered about 400,000 more advanced imaging services than they would have if they weren't self-referring, which cost Medicare an additional $109 million in 2010.
"To the extent that these additional referrals were unnecessary, they pose unacceptable risks for beneficiaries, particularly in the case of CT services, which involve the use of ionizing radiation that has been linked to an increased risk of developing cancer," GAO said.
The report got little notice in the media when it was released in the week before the election. However, House and Senate leaders from both parties said in a joint media release that self-referral abuses have to be addressed.
"The results of this report are eye opening," said Sen. Max Baucus, (D-MT), chairman of the Senate Finance Committee. "Self-referrals offer an incentive for providers to order more tests than they would otherwise. It's clear they are driving up costs. Providers' bottom lines shouldn't be getting in the way of their patients' care and best interests."
Sen. Chuck Grassley, (R-IA), the ranking member of the Senate Finance Committee, added that "Medicare payment policy shouldn't incentivize unnecessary tests that drive up costs and even jeopardize the well-being of patients."
"The challenge is to develop a payment system that safeguards beneficiary access to services while preventing self-referrals by physicians who abuse the system," Grassley said.
Rep. Pete Stark, D-CA, ranking Democrat on the House Ways and Means Health Subcommittee, said the report "should serve as a wakeup call to Congress that this is an arena where we can't afford to sit idly by and allow providers to continue these practices."
"It's costing taxpayers millions of dollars, increasing costs on beneficiaries, and exposing patients to radiation that has real health consequences. Once again, we're seeing how money drives behavior," Stark said.
Amy Nordeng, senior counsel in government affairs for the Medical Group Management Association, told HealthLeaders Media there is nothing in the GAO report that would indicate that the increased advanced imaging is inappropriate.
"It might very well be the case that the people who recognize the benefits of advanced imaging decided it just makes more sense to coordinate the care of their patients by having that imaging equipment in their own office or within their group practice," Nordeng says.
"We believe medical group practices are an excellent way for doctors to work together to provide comprehensive coordinated care to their patients. When you have a situation where a primary care physician, a cardiologist and a radiologist form a group practice and have imaging equipment in their practice, it doesn't make sense to say ‘we don't want you to use that imaging' or ‘we are concerned about the use of that imaging.'"
Nordeng says she cannot dispute the methodology of the GAO study. However, she notes that it ends at 2010, when the Centers for Medicare and Medicaid Services began working with providers to recognize efficiencies with multiple procedure payment reductions. In addition, she says the Affordable Care Act has since "locked in place a 75% equipment utilization assumption so reimbursement for all of these services is going down."
"Growth in these services is below the overall Medicare growth. So, while that time period may have reflected certain volume of imaging I don't think that volume will be consistent going forward," she says.
In addition, Nordeng predicts that many of the utilization issues cited in the GAO study will likely disappear as new payment and coordinated care models are rolled out.
"When folks have looked at this issue, they have noted that healthcare is transforming. As we move toward more accountable care-type organizations there will be incentives built into those arrangements to be efficient in the use of imaging," Nordeng says. "So in that sense as the market transforms and the policies transform this will be a non-issue."
"Everyone is interested in coordinated care to the benefit of the patient. To the extent that the payment moves away from fee-for-service, this will not be as big of an issue going forward. If you were to even take that same analysis that GAO did and look at 2011 and 2012 the numbers would be different."
In the meantime, Nordeng says MGMA will continue to advocate for the in-office ancillary services exemption, which provides accountability and review structures that exempt physicians from Stark Law rules against self-referrals. "We believe it provides huge benefits to patients and providers," she says.
One of the best was to a squelch persistent rumor is to acknowledge that it's true.
Last week Henry Ford Health System and Beaumont Health System did just that.
Two of the largest not-for-profit health systems in Michigan publicly confirmed long-swirling speculation that they're pursuing a merger that, if finalized early next year, will create a $6.4 billion integrated healthcare organization serving the southeastern part of the state.
"This kind of change is sweeping every kind of hospital in the United States," Gene Michalski, CEO of Royal Oak-based Beaumont said Thursday in a teleconference confirming the deal.
"Healthcare reform is not going to go away," Michalski said. "There are too many forces that want change in this country to get higher quality, lower cost healthcare for the populations we serve. It is clearly transformative and it is our belief that this collaboration, the joining of these two wonderful health systems, will be transformative in its own right."
"In short, we want to lead events not trail events. These are both strong health systems. We didn't have to partner. We chose to partner."
If the deal passes due diligence and state review, the two not-for-profit systems would combine 10 hospitals, two medical schools, and 200 other patient care sites. The health systems are in exclusive negotiations and a definitive agreement for the new, not-for-profit organization is expected to be completed in the first half of 2013.
Nancy Schlichting, CEO of Detroit-based Henry Ford, called Beaumont "the absolute ideal partner for us."
"We have a common vision for the future of healthcare," Schlichting said at the teleconference. "Patients and their families are the center of our universe. We are national leaders in quality and patient safety. … We like the fact that this is a pure Michigan organization that is going to improve the health of Michiganders and be a role model for the country."
Michalski said the merger talks reflect the "monumental shift" from inpatient care to outpatient care."
"Also there is a growing importance of transforming our organizations from providing sick care to taking care of populations and helping people stay out of hospitals," he said. "The need for strong partnerships has never been greater in our view and even strong industry leading health systems like ours are responding to these challenges by forming very creative relationships with like-minded peers."
South Jersey Health System, Underwood-Memorial Health Finalize Merger
Also last week, South Jersey Health System Inc. in Vineland, NJ, and Underwood-Memorial Health System in Woodbury, NJ signed a merger agreement that finalizes a deal first announced last January.
SJH has more than 3,500 employees and a medical staff of more than 600 physicians. It includes the SJH Regional Medical Center, a 262-bed facility in Vineland; SJH Elmer Hospital, a 96-bed hospital in Elmer; the SJH Bridgeton Health Center that houses 65 mental health and inpatient hospice beds; and outpatient sites in four counties in Southern New Jersey.
UMHS includes the flagship Underwood-Memorial Hospital, a 305-bed, acute care hospital in Woodbury, NJ, and assorted out-patient clinics.
Baptist (KY) Health Buys Trover Health System
Baptist Health announced that it has acquired Trover Health System in Western Kentucky. The Madisonville-based facility the eighth hospital in the Bluegrass state for the Louisville-based health system.
The 410-bed Trover hospital will now be called Baptist Health Madisonville.
No cash was exchanged but The Courier-Journal reports that the deal is valued at about $120 million.
"We couldn't have chosen a finer addition to our already strong, statewide network of hospitals," Baptist Health President/CEO Tommy J. Smith said. "And we're equally proud that Trover chose Baptist when looking for a partner."
The announcement caps a year of negotiations.
"This is a monumental day in the history of healthcare in Hopkins County and the surrounding communities," E. Berton Whitaker, president/CEO of Baptist Health Madisonville, said in a media release. "By joining the Baptist Health family, we are positioning our health system to address the ever-changing needs of providing healthcare in the years to come."
Baptist Health shortened its name from Baptist Healthcare System on Sept. 5.
CHI, Saint Clare's Health End Acquisition Talks with Ascension
Catholic Health Initiatives, Denville, NJ-based Saint Clare's Health System, and Ascension Health Care Network announced on Thursday that they have ended negotiations for the transfer of ownership of Saint Clare's.
In March CHI and SCHS announced they were in exclusive negotiations with Ascension for the transfer of ownership of SCHS to best meet the needs of the communities SCHS serves. CHI said last week it remains committed to Saint Clare's until new ownership is secured.
CHI said that the decision to sell the hospital "was based on the need to better meet the demands and requirements of the communities served by Saint Clare's and the recognition that, as health care reform rapidly evolves, it is critical for health care providers to be part of regional networks of coordinated health care delivery organizations including physicians, health facilities, payers and other related health care entities."
No explanation was given for why the talks broke off.
CHI and SCHS said they will continue to explore opportunities for regionally clinically integrated networks of providers and payers in New Jersey.
