The medical loss ratio has fans among policy experts, who say it pushes insurers to be more efficient and creates a better value. But insurers consider the MLR onerous, and some had to change the way they do business because of it.

This article first appeared July 05, 2017 on Kaiser Health News.

By Julie Appleby

If Senate GOP leaders have their way, the check may not be in the mail.

Many consumers collected unexpected rebates after the Affordable Care Act became law, possibly with a note explaining why: Their insurer spent more of their revenue from premiums on administration and profits than the law allowed, so it was payback time.

More than $2.4 billion has been returned to customers since the provision went into effect in 2011, averaging about $138 per family in 2015.

Those rebates could end under the Senate proposal — now on hold until after the July Fourth holiday — to repeal the ACA.

Insurers consider the requirement — known as the medical loss ratio (MLR) — onerous, and some had to change the way they do business because of it. To be sure, the rule didn’t resonate much with consumers, even if they received a rebate, because the amounts were relatively small, possibly enough to cover a family dinner out.

The MLR has fans among policy experts, who say it pushes insurers to be more efficient and creates a better value.

“When they struggle to pay premiums, when they’re making those sacrifices, [consumers] want most of the value of those premiums to go to actual medical care,” said Mila Kofman, a former insurance commissioner in Maine, who now runs the D.C. Health Benefit Exchange Authority.

Like much else related to the ACA, the provision was controversial from the start. It states that insurers can spend no more than 15 percent of their customer revenue on administration and profits when selling large group plans to employers, or 20 percent for individual coverage. If plans exceed this mark, they have to pay back the excess, either to employers or to people who bought coverage from them on the individual market. Employers who got rebates for their work-based plans could decide how to redistribute the money as long as it was used to benefit employees.

The Senate GOP health proposal, the Better Care Reconciliation Act, would end that requirement in 2019 and let states decide whether to continue such limits and rebates.

In some ways, this change would be a gift to insurers.

The provision, as is, “limits their profitability” and, along with other factors, may have contributed to an exodus of plans from some markets, explained Christopher Condeluci, of CC Law & Policy in Washington.

“By allowing states to craft more flexible” rules, the Senate measure may make it “easier for insurers to operate,” said Condeluci, who served as tax and benefits counsel to the U.S. Senate Finance Committee when the ACA was being drafted.

From the start, insurers argued the one-size-fits-all rule was too strict and sought the broadest possible definition of medical expenses. Supporters maintained it could help slow premium increases or at least make them more in line with the underlying growth of medical costs. This point is “really important,” said Tim Jost, an emeritus law professor who studies the health care law and serves as a consumer advocate before the National Association of Insurance Commissioners.

When the ACA took effect, health care inflation had slowed, but “insurers were still regularly raising premiums far above the actual growth in claims,” he said. “They were making a huge profit.”

The first year the provision was in effect, insurers paid more than $591 million in rebates for policies covering more than 8.8 million customers, averaging $98 per family. Not all insurers exceeded the limit, and the amount of rebates varied by insurer and state.

Over time, the number of customers in plans that exceeded the limit fell but was still nearly 5 million at last count.

The reason: Insurers both trimmed administrative costs and, in some cases — especially in the individual market — saw their spending on sicker-than-expected customers rise, making it less likely they would exceed limits. Indeed, some insurers were spending more than 90 percent of revenue on medical costs by 2014, according to a report by the Urban Institute and the Robert Wood Johnson Foundation. Some insurers have also reported losses on their individual market coverage.

Before the ACA, many states set rules on how much of their premium revenue insurers must spend on medical care — although those rules often did not apply to job-based insurance. The amounts varied, and they were often lower than what the ACA requires. North Dakota, for example, required 55 percent of revenue be spent on medical care, while New Jersey set the percentage at 80, according to a 2010 issue brief in the journal Health Affairs.

Like many other aspects of the Senate bill, the impact on consumers would vary by state.

The Congressional Budget Office, in its review of the bill, predicted that about half of people live in states that would maintain the current requirement. Others would loosen it and allow a greater share of premium costs to go toward administrative costs and profits. “In those states, in areas with little competition among insurers, the provision would cause insurers to raise premiums and would increase federal costs for subsidies through the marketplaces,” noted the CBO. The analysis also said the provision would have “little effect” on the number of people who have insurance.

California would face the biggest losses of any state. Federal funding would drop by 26 percent over 10 years, one analysis finds.

This article first appeared June 28, 2017 on Kaiser Health News.

By Anna Gorman

California risks losing $114.6 billion in federal funds within a decade for its Medicaid program under the Senate health care bill, a decline that would require the state to completely dismantle and rebuild the public insurance program that now serves one-third of the state, health leaders said Wednesday.

The reductions in the nation’s largest Medicaid program would start at $3 billion in 2020 and would escalate to $30.3 billion annually by 2027, according to an analysis released by the state departments of finance and health care services.

“It is not Medicaid reform,” Jennifer Kent, director of the state Department of Health Care Services, said in an interview. “It is not entitlement reform. It is simply a huge funding reduction in the Medicaid program. We are deeply concerned what that means for the long-term viability of the program as it stands today.”

Medicaid covers a staggering 13.5 million low-income Californians — children, people with disabilities, nursing home residents and others. About 3.8 million of them, many of whom are chronically ill, became eligible for coverage under the Affordable Care Act, informally known as Obamacare.

California would face the biggest losses of any state, according to a report issued Wednesday by the consulting firm Avalere Health. Federal funding would drop by 26 percent over 10 years, the report said. Many states, including Alabama, Georgia, Texas and Florida, would face a drop of less than 10 percent.

The Senate bill to repeal and replace the ACA would be a “massive and significant fiscal shift” of responsibility from the federal government to states, according to the analysis. It would force difficult decisions about who and what to cover and how much to pay doctors, hospitals and clinics, the report said.

In addition to expanding its Medicaid population early and vigorously under Obamacare, the state began covering undocumented immigrant children last year. California’s program, known as Medi-Cal, also provides dental care and other services that are optional under federal Medicaid rules.

The state’s Medicaid director, Mari Cantwell, said Republican proposals present a fundamental problem that can’t be solved by making cuts around the edges.

“Nothing is safe — no population, no services,” Cantwell said. “It is really disheartening and honestly horrifying to think about the world under this Senate bill and what it would mean.”

The losses are more than what was predicted under the House bill. The analysis said that’s because the cost shift increases over time under the Senate proposal.

GOP leaders in Congress have been trying to repeal the ACA for seven years, deeming it disastrous public policy that costs too much and leaves consumers with rising premiums and too few choices for care.

The Senate bill would overhaul Obamacare in several ways. Besides revamping the Medicaid program, it would dramatically change the system of tax credits used to help low-income Americans get health coverage. The Congressional Budget Office concluded that the bill would cut the federal deficit by $321 billion over the next decade while leaving 22 million more Americans without health insurance.

Unable to lock down the support he needs in the Senate, Majority Leader Mitch McConnell on Tuesday postponed a vote on the bill until after the July Fourth holiday. Its fate remains uncertain as senators head back to their districts for a weeklong recess.

Under the legislation, the federal government would pay a fixed amount to states for Medicaid expenditures, a per capita rate, instead of paying for a share of all expenses incurred.

State health leaders predict that the state’s costs would outpace the federal government’s allocation, meaning California would have to come up with an additional $37.3 billion between 2020 and 2027.

“Whether it’s drugs or cost of living going up or new technologies in health care, there are costs we can’t control,” Cantwell said. “And if you have a trend factor that doesn’t really reflect the reality of what health care looks like, the state is always going to be in a place of not being able to bring the costs within that target.”

The proposed financial caps would have a “devastating and chilling effect” on spending in the Medicaid program and would pinch providers further, the analysis said. California already ranks near the bottom for how much it pays Medicaid providers.

The Senate’s overhaul of Obamacare would also force hospitals and clinics serving the poor and uninsured to live within the new financial limits, leading to “uncompensated care in the hundreds of millions, if not billions annually,” according to the analysis.

In addition, the Senate bill would phase out funding for the expansion of Medicaid, which enabled 3.8 million single, childless adults and others in the state to qualify. Under the Affordable Care Act, the federal government pledged to pay for 90 percent of their costs. But the Senate bill would reduce that to 50 percent beginning in 2024.

Without the promised federal funds, California would have to spend five times more than previously estimated to continue covering those newly eligible. By 2027, the cumulative cost to California would be $74.1 billion, according to the analysis.

California leaders vowed Tuesday to fight the bill, known as the Better Care Reconciliation Act. “Simply stated, this is a terrible bill and we must defeat it,” said Democratic Sen. Dianne Feinstein in a call with reporters.

Sen. Kamala Harris, also a Democrat, added that the most vulnerable populations are the ones who have most to lose: children, people with disabilities, seniors. “This bill is nothing short of a disaster, and it’s no wonder they did it in secret because they have nothing to be proud of,” said Harris, who aims to kill the bill before it hits the Senate floor.

The fallout would be particularly bad in Los Angeles County, home to 1 of every 20 Medicaid recipients in the nation, county officials said Tuesday.

“L.A. County will be ground zero for the plan’s deadly consequences,” said county Supervisor Sheila Kuehl during a press conference. “This is not just about money. … This is about the people who count on us for health care.”

During the conference, several Los Angeles County residents and union members held up signs that read “Healthcare is a Human Right” and, in Spanish, “SALUD para todos,” or “Health for everyone.”

Ken Bascom, 62, who lives in Venice, Calif., and attended the gathering, said he lost his job and his employer-based insurance during the recession. Soon after Bascom became eligible for Medi-Cal in 2014, he was diagnosed with kidney cancer. Now cancer-free, Bascom said he often thinks about what would have happened if he hadn’t been able to get health care.

“More likely than not, I would’ve been dead,” said Bascom, who gets care at Venice Family Clinic. “It’s very scary.”

Also in attendance was Steven Martin, 27, who said he depends on insurance he got through Obamacare to pay for his leukemia treatment. Martin, who has private insurance through Covered California, the state’s exchange, said his medication costs tens of thousands of dollars each year.

“Without insurance, I’m not going to have access to my medication,” he said.

Los Angeles County Health Agency Director Mitch Katz said the ACA made a “huge difference” in the county — dramatically cutting the uninsured rate, reducing wait times at emergency rooms and helping connect patients to primary care doctors.

“The emergency rooms themselves often had two- and three-day waits,” he said. “Because of the ACA, that is no longer the case. … The emergency room now is back to what is should be — for emergencies.”

Katz said he feared all of that would change if the Republicans succeed in overhauling the health law.

Ana Ibarra contributed to this report.

Some experts say hyperbaric therapy’s increased use for diabetic wounds owes more to hospitals’ pursuit of Medicare revenue than to the treatment’s proven value. The American Diabetes Association does not recommend the treatment.

This article first appeared June 28, 2017 on Kaiser Health News.

By Phil Galewitz

The Villages Regional Hospital did not sweat its decision to add hyperbaric oxygen therapy in 2013.

Hyperbaric treatment, increasingly given to diabetics — many of them elderly with persistent wounds — involves breathing pure oxygen inside a pressurized air chamber typically for two hours each weekday, often for more than a month. Twenty outpatient sessions can bring a hospital $9,000 in revenue.

Villages serves a central Florida retirement community that supplied nearly half of the hyperbaric patients at another hospital 30 minutes away. Hospital officials knew their clientele preferred their medical appointments only a golf-cart’s ride from home.

“Wound care was a service line we saw as low-hanging fruit,” said Todd Powell, who oversees hyperbaric therapy at Villages hospital.

Many hospitals seem to agree. Enticed by healthy Medicare payments — about $450 for a two-hour session — and for-profit management companies that do much of the work, nearly 1,300 U.S. hospitals have installed hyperbaric facilities. That’s triple the number that an industry group says offered the service in 2002, when Medicare first decided to pay for the therapy for certain diabetic wounds.

Medicare — the largest payer of hyperbaric services — has flagged evidence of overuse in at least some parts of the country. Medicare officials declined to comment for this story, but they have retained coverage for more than 15 years, even as studies have questioned the therapy’s effectiveness.

The American Diabetes Association does not recommend the treatment. After an ADA committee of experts in diabetes care reviewed the available research last year, it concluded there was “not enough supporting data on the efficacy of this treatment to recommend its use,” said William Cefalu, the association’s chief medical officer.

Some experts say hyperbaric therapy’s increased use for diabetic wounds owes more to hospitals’ pursuit of Medicare revenue than to the treatment’s proven value.

“The science remains poor to support its use, but it is being widely used [in the United States], and one possible explanation to this may be related to reimbursement,” explained Dr. Andrew Boulton, an internationally recognized expert on hyperbaric therapy, and a professor of medicine at University of Manchester medical school in Great Britain.

“Some folks are chasing the money. It’s seen as a money grab because reimbursement has been favorable,” acknowledged John Peters, executive director of the Undersea & Hyperbaric Medical Society, which accredits 200 hyperbaric oxygen facilities nationally and has inspected 500 for accreditation in the past 15 years.

Offered at a handful of hospitals in the last decades of the 20th century, hyperbaric chambers were a niche treatment for deep-sea divers suffering with the bends — a painful and potentially fatal condition where gas bubbles accumulate in the bloodstream during too-rapid ascents from depth. In 2002 — after industry lobbying and some suggestive research — Medicare approved hyperbaric therapy for certain diabetic wounds that did not respond to conventional treatments.

That decision drove a building boom in outpatient wound care centers over the next half-decade, featuring hyperbaric therapy. Medicare covers the treatment for more than a dozen conditions in which skin fails to heal, such as failing grafts and tissue damage from anti-cancer from radiation, but the USA’s rising diabetic population supplies much of the demand.

It costs about $500,000 to install a hyperbaric unit with two chambers. With Medicare’s lucrative reimbursement policies, “hospitals can generate cash almost immediately,” Peters said. During hyperbaric sessions, patients merely lie on a bed in a glass-enclosed tube containing high-pressure oxygen under a physician’s supervision.

The business model is so compelling that management companies typically pay for the equipment and staff. Hospitals provide space for the chamber, make patient referrals and handle billing. The companies and the hospitals split revenue from insurers.

Because of poor blood circulation, diabetics are susceptible to developing ulcers in their lower legs and feet that heal poorly and can sometimes lead to amputations. Hyperbaric oxygen therapy, in theory, works by stimulating the body’s creation of new blood vessels and aiding the formation of new skin around a wound. Side effects are uncommon but include ear and sinus pressure, paralysis and air embolisms.

In 2015, Medicare imposed stricter billing procedures in three states where its expenses for hyperbaric services were 21 percent above the national average — possible evidence of overuse or overbilling. Providers in Illinois, Michigan and New Jersey must get regulators’ preauthorization of expenses before treating Medicare patients for the most commonly approved conditions in non-emergency cases. Elsewhere, Medicare requires documentation supporting hyperbaric therapy’s need only after services begin.

Signs of abusive industry practices predate the 2015 action. A critical report by the Health and Human Services Department’s inspector general in 2000 disclosed that Medicare was billed millions of dollars for non-diabetic wound care treatments that were inappropriate or excessive. The office has promised a follow-up report before Oct. 1 — its first since 2000.

The Justice Department alleged fraud or other wrongdoing involving hyperbaric therapy in at least five cases from 2008 to 2014. It has won more than $11 million in penalties and restitution — along with some jail sentences — in court rulings and settlements.

(The FDA warned in 2013 about some treatment centers’ falsely promoting the therapy for unapproved uses, including as a cure for cancer, autism and diabetes.)

Medicare’s crackdown on billing in three states saved $5.3 million in its first 13 months, the government said in November. Medicare’s total spending on hyperbaric therapy — including all approved conditions — in 2015 fell about 10 percent to $230 million. That was the first annual decline in a decade.

Debates about the utility of the treatment continue despite decades of use.

In fact, few large, controlled studies have explored hyperbaric oxygen therapy for diabetic wounds — and nearly all were done outside the United States.

Some studies have found the treatment benefits certain patients while others have concluded it neither increases a wound’s chances of healing nor prevents amputations. The problem is knowing which wounds would have healed over time on their own.

Businesses and individuals invested in the facilities remain unalloyed boosters. The treatment “used to be considered voodoo medicine. But today more doctors have been swayed, and it’s now seen as mainstream therapy,” said Marc Kaiser, owner of Precision Health Care, which manages hyperbaric centers at five hospitals in New York and Connecticut.

Based on studies and anecdotal experience, Dr. Geoffrey Gurtner, a plastic surgeon who helped establish the Stanford University Wound Care Center in 2014, believes the therapy has some merit. But he said that research is needed to understand how the treatment works, which patients need it and the right number of sessions for each wound.

And, critics say, companies are profiting from and abusing the current state of uncertainty. Medicare pays for hyperbaric therapy for diabetic wounds that have not healed after 30 days of standard treatments. If hospitals provide more than 30 treatments, they must document that patients’ wounds are improving.

Twenty to 30 sessions of hyperbaric therapy should heal diabetic wounds, but radiation-damaged skin might require 40 treatments, said Dr. Phi-Nga Jeannie Le, a Houston physician.

“The problem is, we see these financially motivated centers keep doing the treatment into the hundreds of visits,” she said.

Also, Medicare pays nearly double the standard rate when the treatment is performed at hospital-affiliated facilities, which can add on a “facility fee.” Because of this quirk in the rules, hyperbaric management companies tend to court hospitals to install their devices.

April Hall underwent 50 sessions of hyperbaric oxygen therapy at MedStar Good Samaritan Hospital in Baltimore last summer.

Stretched out in one of the hospital’s four hyperbaric chambers, wrapped in blankets with her head propped up to watch television, Hall breathed pure oxygen for two hours at a time.

One wound on the bottom of her left foot healed. The other did not.

“I did what I had to do to save my foot,” said Hall, 50, who is on Medicare disability.

Sometimes even dozens of treatments do not avert amputations, as diabetic William Padgett Jr., 65, of Culpeper, Va., can attest. He lost his right leg in 2013 after nearly 90 hyperbaric sessions failed to heal a wound.

Last year, he tried hyperbaric oxygen again to close a wound on his left leg, taking about 80 sessions over four months at a hospital in Arlington, Va. The wound healed. “It’s been a slow process … but well worth the time,” he said.

In any one case, it is hard to say whether the treatment was key to success.

A 2014 federal whistleblower lawsuit against Healogics, which manages about half — 750 — of the nation’s hospital-owned wound-care and hyperbaric centers, raised other concerns. Two doctors and a third employee who worked for Healogics alleged a company conspiracy to defraud the federal government by billing it for unnecessary wound care and hyperbaric services.

Healogics denied the claims in its court-filed responses, and a judge dismissed the case for lack of detail. It is under appeal.

The lawsuit alleged Healogics “actively targeted each and every [wound care] patient for conversion” to hyperbaric therapy and set benchmarks for each center on the amount of hyperbaric care that would be provided.

According to Healogics, 5 percent of its 326,000 patients last year had hyperbaric treatment. Only 2 percent of those received more than 50 sessions.

Researcher suggests that physicians consider using different criteria when prescribing opioids for people with mental illness.

This article first appeared June 26, 2017 on Kaiser Health News.

By Vickie Connor

Adults with a mental illness receive more than 50 percent of the 115 million opioid prescriptions in the United States annually, according to a study released Monday. The results prompted researchers to suggest that improving pain management for people with mental health problems “is critical to reduce national dependency on opioids.”

People with mental health disorders represent 16 percent of the U.S. population.

The findings are worrisome, the researchers reported. They had expected that physicians were more conservative in prescribing these painkillers to people with mental illness.

“We are prescribing way too much opioids,” said Dr. Brian Sites, an anesthesiologist at Dartmouth-Hitchcock Medical Center in New Hampshire and one of the study’s researchers. “And that prescription behavior is resulting in significant morbidity in the country.”

“Because patients with mental health disorders are a vulnerable population, [they’re] probably more likely to develop addiction and abuse,” he added. Sites suggested that physicians consider using different criteria when prescribing opioids for people with mental illness.

“The opioids are prescribed primarily for pain,” but patients with mental illness find that the drugs alleviate their mental issues too, said Dr. Edwin Salsitz, an attending physician in the Division of Chemical Dependency of Mount Sinai Beth Israel Medical Center in New York who was not involved in the study. And this, he said, is what can lead to long-term use.

The study, published in the Journal of the American Board of Family Medicine, found that nearly 19 percent of Americans with a mental health illness use prescription opioids, while the same is true for only 5 percent of those without a mental health condition.

According to the federal Centers for Disease Control and Prevention, the number of opioid sales in the U.S. quadrupled from 1999 to 2015, yet the amount of pain adults experience remained the same. In addition to that, more than 183,000 people died from overdoses related to prescription opioid use during this time.

With no objective scale for measuring pain, doctors are hampered in treating patients with chronic discomfort.

“Since [pain is] a subjective phenomenon, it’s very difficult to measure those things and to treat because some patients [report] 10-out-of-10 pain forever,” Sites said.

Dr. Andrew Saxon, director of the Addiction Psychiatry Residency Program at the University of Washington, said that “most people with chronic pain who end up on opioids do have a co-occurring psychiatric disorder.” Yet too often the drugs don’t provide lasting relief, he said.

“We have found that opioids for most of these people in the long term improve their subjective sense of pain for a little bit, but they don’t usually improve people’s level of function,” said Saxon, who was not involved in this study.

Many opioid patients, and especially those with mental health issues, should be offered an alternative treatment, Saxon said.

“It actually turns out … that the best treatment for chronic pain is going to be behavioral interventions, not medications,” he explained. That involves teaching people to understand the underlying cause of their pain and skills to better cope with it, the psychiatrist said.

Sites said alternatives to opioids could include cognitive behavioral therapy, acupuncture, meditation techniques and physical therapy.

“The idea is that we want to improve the health and well-being of the patient. And if that’s not occurring, we need alternatives to opioids,” Sites said.