Rep. Michael Burgess (R-TX) has a bone to pick with the Congressional Budget Office, the independent, nonpartisan agency that performs economic and budget analysis for government programs.
Congress relies on the CBO's analyses in making policy decisions. But the physician-turned-congressman is unhappy with the way the CBO scores legislation that deals with preventive healthcare spending.
In a telephone conversation, Burgess explains that by law, the CBO must only look 10 years out when it develops cost estimates on how a piece of legislation will affect spending and revenues.
The problem is that the advantages of preventive healthcare spending for chronic diseases do not always fit neatly into that time frame. Programs to reduce the obesity rate, or to trim the increase in diabetes cases, or to keep diabetic blood sugars under control may need longer than 10 years to begin to demonstrate their full economic value.
Burgess notes that chronic disease care accounts for 70% of healthcare spending, or about $1.6 trillion annually. In this era of care coordination and care management, he explains, the savings from preventive care is "undisputed" by experts. Now, Burgess says, it is time for CBO analysis to reflect how preventive healthcare spending can begin to contain costs and provide long-term savings.
His concerns are echoed by the Partnership to Fight Chronic Disease (PFCD), a coalition of advocates, providers, business groups, and health policy experts, which has identified three areas in which it says additional information is needed for policymakers to fully assess the effect of prevention programs:
Baseline assumptions. Healthcare expenditure estimates depend on baseline assumptions, including the current health status of a population and the impact of those trends. The CBO needs to be more transparent in indentifying its baseline for analysis.
For example, the PFCD contends that it is not clear how the rise in obesity is factored into the baseline for current or projected spending, although research has shown that Medicare spending is directly affected by the obesity status of people entering the program.
Broader perspective on impact. CBO scoring does not currently include analysis of the broader impact a policy change will have on healthcare and the economy. PFCD notes that because Medicare is the largest payer for healthcare services, changes to Medicare policy will likely impact the entire healthcare system. But for CBO purposes, only the impact on federal Medicare spending is captured. Wellness and prevention programs that impact population health affect healthcare spending in the private sector and have overall effects on the economy. Providing analysis of the overall impact of Medicare changes would provide lawmakers with important information.
Long-term analysis. The CBO scoring windows cannot sufficiently capture the long-term value of population health improvement programs. Without an understanding of the long-term value legislation may provide, lawmakers are not able to distinguish between federal spending without expectation of a return and federal spending as an investment.
Last week, Rep. Burgess and Rep. Donna Christenson (D-VI) submitted HR 6482 (Preventive Health Savings Act of 2012), which would allow the CBO to collect and analyze scientific data past the current 10-year window.
The bill defines preventive health as an action to avoid future healthcare costs "that is demonstrated by credible and publicly available epidemiological projection models, incorporating clinical trials or observational studies in humans."
The bill already has 16 co-sponsors, including some Democrats. Other supporters include the Healthcare Leadership Council, whose president, Mary R. Grealy, released a press statement praising the legislation.
"Congress needs to see the full picture of how wellness programs improve population health and not just the initial price tag," she said. "We shouldn't ignore the long-term savings to our healthcare system just because they don't show up within an arbitrary period of time."
This is the second time Rep. Burgess and Rep. Christenson have addressed this issue. A similar bill presented in 2009 died in committee. Back then the role of preventive services in healthcare was not as much a part of the national dialog as it is now.
It may seem like tilting at windmills to present a bill this late in the session with Congress focused more on elections that legislation, but HR 6482 will hopefully generate some interest in a topic that deserves our attention.
The CBO, which prides itself on its nonpartisanship, declined to comment.
Consumer Reports released on Monday its annual health plan rankings. For the third consecutive year an HMO operated by Massachusetts-based Harvard Pilgrim Health Care was the top-ranked private plan. Harvard Pilgrim has three plans in the top 10: its PPO ranked fifth and its New Hampshire HMO was ranked seventh.
The rankings are compiled by the National Committee for Quality Assurance, a nonprofit health care accreditation and quality measurement group. The scores take into account customer satisfaction, prevention, and treatment, including Healthcare Effectiveness Data and Information Set (HEDIS) and Consumer Assessment of Healthcare Providers and Systems (CAHPS) performance measures.
Each plan receives an overall score between 1 and 100. Prevention and treatment account for 60% of the score, consumer satisfaction for 25%, and NCQA accreditation for 15%.
This year's findings rank 978 health plans, including 474 private plans, 395 Medicare Advantage plans, and 115 Medicaid HMOs. NCQA accreditation is voluntary, although health plans pay for the process. Beginning in 2014, all health plans that participate in health insurance exchanges must be accredited.
In a press statement announcing its ranking, Harvard Pilgrim officials credited the health plan's clinical programs and customer service with its NCQA performance. "We are committed to encouraging exceptional patient/physician relationships and offering product innovations to address the many challenges faced by patients and providers today," Eric Schultz, president and CEO of Harvard Pilgrim, said in the statement.
Nonprofits once again claimed every spot on the top 10 list of private plans. NCQA officials attribute the nonprofit standing to their independence from investors. "Their nonprofit mission and member focus makes it easier for them to deliver care in ways that really benefit their members. They don't have to satisfy investors with growing profits," Sarah Thomas, vice president of public policy and communications for NCQA, told HealthLeaders Media during a telephone call.
CR's Top Health Plans In addition to Harvard Pilgrim, the top 10 list includes HMO/POS products from Tufts Health Plan (Massachusetts), Kaiser Foundation Health Plans (Colorado), and Northern and Southern California, Capital Health Plan (Florida), and Group Health Cooperative (Wisconsin).
Five of the top plans are integrated health systems (IHS) that employ physicians and even own hospitals that care for their customers. The IHS makes it somewhat easier to control the delivery of care as well as cost and quality because the system has physicians, nurses, and others "who talk to each other and work together toward quality goals," explains Thomas. The IHSs are Capital Health Plan, Group Health Cooperative, and the Kaiser Foundation Health Plans.
Major Non-Profit Plans
Among the major for-profit health insurers, only Anthem cracked the top 30. The POS offered by Anthem Blue Cross and Blue Shield New Hampshire is ranked at number 26. A Cigna HMO in Massachusetts is ranked 39, an Aetna HMO/POS in Massachusetts is ranked 57, UnitedHealthcare's PPO in Rhode Island is ranked 62, and Humana's HMO/POS in Wisconsin is ranked 141.
Medicare Plans NCQA also released rankings for Medicare Advantage plans and Medicaid HMOs. An HMO from Kaiser Foundation Health Plan of Southern California claimed the top Medicare spot while HMOs from Fallon Health Plan and Kaiser Foundation Health Plan of Hawaii shared the top Medicaid spot.
HMOs have been ranked for eight years, but this is only the second year for ranking PPOs. This year, private PPOs performed about the same as private HMOs overall, according to Nancy Metcalf, senior program editor for Consumer Reports.
Among the improvements: PPOs have caught up with HMOs in terms of appropriate use of medications for asthma and appropriate use of imaging for lower-back pain. Medicare HMOs perform only slightly better than PPOs, which actually outperform HMOs on some measures, such as managing antidepressant treatments and rheumatoid arthritis medications.
A bill that would amend two important medical loss ratio provisions of the Patient Protection and Affordable Care Act was passed by a House committee Thursday.
HR 1206 (Access to Professional Health Insurance Advisors Act of 2011) is best known as an effort to amend the MLR rule to exclude broker and agent fees and commissions from administrative expense calculations. However, the bill would also give states the final say on MLR waiver requests. That authority now rests with the Centers for Medicare & Medicaid Services.
The 24-14 vote by the House Energy and Commerce Committee clears the way for a potential full House vote.
The MLR is one of the most contentious provisions of the PPACA. It was conceived to force health insurers to spend more of their premium dollars on medical care and health quality improvements.
Insurers are required to spend no more than 20% of premium payments collected for the individual and small group market on administrative expenses such as salaries, overhead, and markets. The remainder, up to 80% of premium dollars, must be spent on direct patient care. Insurers that fail to meet that standard are required to make financial rebates to their members.
A waiver process permits individual states to apply for an MLR exception on behalf of insurers in their state.
PPACA includes an extensive list of items that can be counted under medical care for the MLR, such as case management, information technology, quality initiatives, and even certain taxes, but agent and broker fees remain an administrative expense for MLR calculations.
Citing job losses and lost income, agent and broker lobbying groups have fought to exclude those fees and commissions from MLR administrative expenses.
While Republicans and several Democrats embraced the cause, Jonathan Gruber, an MIT economist and an adviser to President Obama on the PPACA, challenged the exclusion in an e-mail exchange with HealthLeaders Media.
"It makes no sense to exclude broker and agent fees from the MLR. The entire idea of MLR regulation is to ensure that insurers are focusing their efforts on protecting us from risk, and not engaging in other activities around marketing and profit-taking."
Gruber suggested a more transparent approach: "Brokers should be priced separately when we purchase insurance, just as tax advisors are when we fill out our taxes. Then individuals who value those services can take advantage of the brokers, while those who do not will pass on their services."
HR 1206 would also require CMS to defer to state insurance commissioners regarding requests for MLR waivers. In his comments in support of the bill, Rep. Fred Upton (R-MI), who chairs the committee, noted that Michigan's request for a waiver was denied, despite the contention by state officials the MLR could destabilize the state's individual health insurance market.
"Michigan, not Washington, should make this decision," Upton stated.
While the committee vote clears the way for full House of Representatives consideration, HR 1206 still faces an uncertain future in this election year. Both the House and Senate are expected to recess in the next couple of days until after the November election.
There is a slim chance of a vote in the lame duck session if the bill is attached to a bigger package, but it's most likely dead until next year, explains Avram Goldstein, communications and research director for Health Care for America Now, a consumer advocacy group that opposes the bill.
A key waiver provision of the Patient Protection and Affordable Care Act would be amended under a medical loss ratio (MLR) bill scheduled for mark-up Thursday before the House Energy and Commerce Committee.
That provision of HR 1206 would give states the final say on MLR waiver requests. MLR waiver authority now rests with the Centers for Medicare & Medicaid Services.
The ACA requires insurers to spend no more than 20% of premium payments collected for the individual and small group market on administrative expenses such as salaries, overhead, and markets. The remainder, up to 80% of premium dollars, must be spent on direct patient care and efforts to improve care quality.
This year insurers rebated $1.1 billion to 12.8 million members.
A waiver process permits individual states to apply for an MLR exception (an implementation delay or reduction) if meeting the 80/20 standard could destabilize the state's individual and small group market. Only 17 states took that step in 2011. CMS has granted waivers for seven states and denied waivers for 10.
Supporters of the waiver move contend that states know more about their markets than federal government analysts sitting in Washington, DC.
Critics contend that the shift to state approval for MLR waivers will create a patchwork system that will take money out of the pockets of consumers and give it to insurers. They point to states like Florida, whose waiver application drew criticism for its lack of substance. Its initial application and appeal were both denied by CMS.
In an e-mail exchange, Rep. Henry Waxman (D-CA) noted that "if the 10 states that could not substantiate their waiver requests had actually gotten a waiver, premiums would have been $360 million higher for 3.8 million consumers in those states."
The waiver provision is discounted as a "totally political provision with no serious policy considerations behind it, " Ethan Rome, executive director of the advocacy group Health Care for America Now, told HealthLeaders Media. "This is not a case of state versus federal rights. Most state insurance offices don't have the capacity to do the necessary market analysis."
What seems to be lost amid a lot of political rhetoric is that health insurers have been taking the steps to adjust their company operations to reflect the new MLR reality. Still, there's no mistaking that they don't favor the MLR rule, which America's Health Insurance Plans says "completely ignores" the real driver of healthcare expenses—soaring medical costs.
The waiver provision hasn't received as much attention as the section of HR 1206 that would amend the PPACA MLR rule to exclude broker and agent fees and commissions from administrative expense calculations. That industry and political battle has been raging for more than a year.
Supporters of the exclusion, such as the National Association of Health Underwriters, say that agents and brokers face "a desperate economic situation" that can be attributed to job losses and lower incomes that it blames on MLR requirements. The group contends that because agents and brokers are mostly self-employed, their commissions shouldn't be considered administrative expenses.
In a committee hearing called to discuss HR 1206 Rep. Waxman noted a study from the nonpartisan Insurance Information Institute that estimates more than 7,000 jobs have been created in the agent and broker field since May 2011.
Others attribute any decline in agent income to industry forces put in motion well before the ACA. Commissions are often based on premiums paid so as premiums increase, so do commissions. Insurers have been working for several years to adjust rapidly increasing commissions.
The Consumers Union estimates that the exclusion of agent and broker fees from administrative expenses could reduce consumer rebates by at least 50%.
Support for HR 1206 generally falls along party lines. Republicans provide the lion's share of support, although about 20 Democrats have signed on as cosponsors of the bill. The mark-up is viewed by some as more theatrics by House Republicans in their continuing effort to discredit healthcare reform.
The bill is expected to easily pass through the committee, although an effort to strip out the waiver provision is expected, according to Tim Jost, a consumer representative on the National Association of Insurance Commissioners and a law professor at Washington & Lee University.
It is doubtful that the House calendar will allow for a full vote on HR 1206 before the November elections.
Neither Rep. Mike Rogers (R-MI) nor Rep. John Barrow (D-GA), the primary sponsors of HR 1206, responded to requests for information.
In 2009 WellPoint, the giant health insurer, began a patient-centered medical home pilot. It has developed 10 PCMHs across the country involving more than 100,000 WellPoint plan members and about 1,200 providers.
A recent report in Health Affairs highlights the promising results of the pilots in Colorado, New Hampshire, and New York. According to the report there was a significant drop in hospital admissions and emergency department visits. Specialty visits remained flat and measures of diabetic care improved.
And WellPoint scored a significant return on its investment. Every dollar pumped into the program returned between $2.50 and $4.50.
I spoke to Jill R. Hummel, WellPoint's vice president of patient innovation, about the program and what WellPoint learned along the way that will help the company as it launches its nationwide PCMH program across all line of business—commercial, Medicare, and Medicaid.
The key, she says, is leveraging resources and remaining actively engaged with the physicians. "It's not just congratulations, here's the money, and good luck. It's here's a new financial model, and here's information and resources to help you be successful."
She adds that a successful PCMH is all about keeping patients healthy and figuring out what happens when hospital stays or ED visits increase. The process requires the right payment structure to keep people healthy and a focus on care coordination.
Here's a look at five of the major takeaways WellPoint has developed over the course of the PCMH pilot:
1. Money matters There is no delivery system reform without payment system reform. Hummel cautions that payment reform is not just about aligning incentives for clinical interventions, it's also about providing physicians and other providers with the funds to invest in resources such as electronic medical records (EMR) or a disease registry.
Hummel notes that the fee-for-service system provides no compensation for physicians to conduct the clinical interventions that take place outside of a traditional patient encounter, such as helping a patient get an appointment with a specialist and then following up with that specialist.
WellPoint has designed a program that includes clinical coordination fees as well as shared savings. The fees are paid on a per-member-per-month basis and are not tied to patient visits or services. Payments for shared savings are based on projected medical expenses for a defined population supported by historical experience and trends. If physicians have performance that's less than the projected expenses and they meet quality projections then they participate in a portion of the savings.
Hummel explains that physicians compensated with clinical coordination fees are incentivized to dig deeper to optimize the health of their patients. "It's not just about the disease. It's also about socioeconomics, patient preferences, and the cultural issues that a patient brings to the table that can impact compliance."
2. Coordinated care and care management
Physicians should focus on patient numbers such as blood pressure and blood sugar and not just on numbers of patients.
The WellPoint pilot emphasized identifying patients with chronic conditions such as diabetes and congestive heart failure. Many hospital stays "are a reflection of the failure of our healthcare system. (The patients) are people who have conditions that aren't being managed," states Hummel.
An aligned approach that moved from care silos to care collaboration produced "phenomenal results in improving the health of our members and their quality of life, as well as reducing costs," she adds.
3. Meaningful and actionable information is important
Physicians aren't always able to identify the patients they need to focus on. Even physicians that have EMR systems may not know about a patient's emergency department visit or a hospital stay. Hummel says behavioral health conditions can also have a significant impact on patient compliance in terms of following treatment plans, but a primary care physician can't depend on patients to always share that type of information.
Physicians need a longitudinal patient record that includes behavioral health information, ED visits, and inpatient stays. By pulling together claims data, Hummel says insurers can help physicians focus on the patients that need the most attention. "It's incredibly important in supporting the change in delivery system from episodic intervention to true proactive population health management."
There is a time lag on some claims data, but Hummel says, "this is an example of when we can't let great get in the way of good. Even with the lag our information is better than what the physician has now."
WellPoint's pharmacy claims data is refreshed each night. Physician data is available within about two weeks. Hospital billing cycles contribute to a 30 to 60 day lag in making that information available to physicians.
4. Physician practices need help
Even with the money, coordination, and information, physicians practices need additional help making the shift to the new delivery model.
Transformation to the coordinated care model requires physicians to redesign how they deliver care in their offices. WellPointishiring patient-centered care consultants to help physicians learn the basic elements of patient centered care. "They need to understand how to interpret data, how to develop care plans, and how to develop strategies for frequent ER fliers," explains Hummel.
5. Access is important
If you don't address the access issues then the other stuff just doesn't matter. Hummel explains that many inpatient admissions and avoidable ER visits come about because patients don't have access to their physicians.
WellPoint requires that PCMH physicians be available 24/7 either themselves or through call arrangements.
But Hummel says the insurer also provides physicians with tools to help facilitate the afterhours access requirement, including:
Implementing web-based visits on Skype or Facetime for after-hours patients visits.
Providing a web-enabled tool that allows physician to access patient information from home. "If it's after hours and you don't have access to a patient's information, it's a little hard to give advice," states Hummel.
Using retail clinics as an extension of the physician's office. WellPoint is developing relationships with retail clinics located in stores such as Walmart, Walgreens and Rite Aid to provide physicians with treatment information when their patients visit a clinic. WellPoint is also developing information about clinic locations, hours, and services for physicians to provide patients who need after office hours care but not necessarily the full services of an ED.
WellPoint is a big enough player that it can drive market changes on its own, but Hummel says the process will be easier for physicians if other insurers in a market also shift from volume to value payments.
In sharing information about the success of the PCMH pilot WellPoint hopes it will help other insurers develop their PCMH programs. "We know we can make a difference," Hummel says.
Data released Wednesday by the U.S. Census Bureau holds good news for the Obama administration as it continues to work to convince a dubious electorate of the power of the Patient Protection and Affordable Care Act:
During 2011, the first full year of healthcare reform, fewer people were uninsured than in 2010. Some 48.6 million Americans representing 15.7% of the total population were uninsured compared to 49.9 million uninsured in 2010. The 2011 data also records the first drop in the number of the uninsured since the beginning of the recession in 2008.
The uninsured rate among 19 to 25 year olds dropped to 27.7% in 2011 from 29.8% in 2010. PPACA allows dependents under age 26 to remain on their parent's health insurance policies.
The percent of people covered by employer-sponsored health insurance held almost steady 55.1% (2011) and 55.3% (2010). With only one or two exceptions, the percentage of employment-based coverage has dropped each year since 2000 when the rate stood at 64%.
The number of people with health insurance increased to 260.2 million, which is up from 256.6 million in 2010.
The data is from the Census Bureau report, Income, Poverty and Health Insurance Coverage in the United States: 2011.
The 2011 data ilustrates the effects of the PPACA and hints at economic recovery, according to Stephen Zuckerman, PhD, a health economist with the Urban Institute, a Washington, D.C.-based non-partisan research institute.
He notes that a provision of the PPACA related to young adults remaining on their parent's health insurance coverage "seems to be showing through in the data" as more young people take advantage of this opportunity.
Attracting so-called "young invincibles" into the health insurance market is key to helping insurers spread risk as PPACA requirements to cover pre-existing conditions go into effect.
Zuckerman points to stability in the employer-sponsored health insurance market as among the indicators of an improved economy. While acknowledging that the recovery has "been tepid by historical standards," he says there has been some stability and employment has improved, which means fewer people are losing their insurance coverage.
He adds that the break in the upward trend in the number of uninsured also reflects improvement in the economy. "This is definitely a turnaround. Coming out of the recession it looks the number of people without coverage has stopped increasing."
As might be expected, household income influenced the uninsured rate with incomes of less than $50,000 accounting for 46.9% of uninsured. Households with more than $75,000 in income accounted for only 7.8% of the uninsured.
According to Census Bureau figures, Medicare and Medicaid enrolled a record number of beneficiaries in 2010, 46.9 million and 50.8 million, respectively. The percent of people covered by government health insurance has steadily increased from 24% in 2000 to 32% in 2010.
Zuckerman says the increased Medicaid enrollment indicates the important role this program plays as a backstop for many Americans. "Anyone who looks at this data will see how important Medicaid is for certain segments of the population."
Other Census Bureau findings on the health insurance market in 2011:
The uninsured rate for children posted a very slight decline to 9.4% from 9.8%.
The rate of full-time employees who are uninsured increased to 15.3% from 15%.
The rate of part-time employees who are uninsured declined to 27.7% from 28.5%.
Hispanics account for 15.7 million or 30.1% of the uninsured. The numbers are statistically unchanged from 2010.
Blacks account for 7.7 million or 19.5% of the uninsured, which is a slight decline from 2010.
Asians account for 2.7 million or 16.8% of the uninsured. While the number of uninsured Asians increased slightly, the rate dropped from 18.1% in 2010.
Non-Hispanic whites account for 21.7 million or 11.1% of the uninsured. The number of uninsured in this category posted a 1.4 million drop from 2010 while the rate declined from 11.7%.
It is widely accepted that a well run hospital discharge program can reduce hospital readmissions and save money. Health insurers are usually more than happy to tout how their programs trim hospital readmissions. But when it comes to the nitty gritty of actual cost savings, they tend to be a bit vague.
That is why I found a study from New York-based EmblemHealth so intriguing. The insurer lays out the results of a pilot program not only in terms of reduced readmissions, but also in terms of dollars and cents. The study is published in the American Journal of Managed Care.
With human and capital resources often stretched to their limit in busy physician offices, EmblemHealth looked at how a redeployment of its resources could affect patient care and produce a measurable savings in healthcare expenses, William Gillespie, MD, EmblemHealth’s chief medical officer, told me.
Although there is peer review evidence that care coordination and accountable care can make a difference not only in the quality of care, but also in the downstream costs, those systems are often based on predictive modeling that can be impacted by a claims lag.
Gillespie says by working directly with a physician group, EmblemHealth was able to immediately contact discharged patients. As a result of the study, readmissions for the pilot group fell below industry standards and the resulting savings "were more than sufficient to cover the costs of the program," he said.
In 2010 the New York-based health insurance company placed a dedicated healthcare treatment team consisting of a nurse, social worker, pharmacist, and two health navigators in one office of Manhattan’s Physician Group. MPG is a 70-physician multispecialty group with seven offices in Manhattan.
The study compares the 30-day hospital readmissions of a baseline group of 244 patients, who did not receive intervention services, with 298 patients who were part of the pilot program. The pilot participants included commercial, Medicaid and Medicare members.
The pilot participants were supported with point-of-care transition and case management services. The intervention team didn’t focus on patients with a particular disease or condition; rather all discharged patients were provided the opportunity to work with the team.
The services provided included:
Appointment scheduling and reminders
Follow up for missed appointments
Needs assessment for community services
Skills for communicating with healthcare providers
Indentify red flags for readmission
Indentify barriers to meeting treatment or medication plans
Medication reconciliation
The baseline group had a 30-day readmission rate of 17%, which Gillespie says is consistent with the industry average. The readmission rate for the pilot group was 12%. The total number of readmissions per member was reduced by almost 37% and the total number of hospitalized days was reduced by 43%.
The total cost of those readmissions for the base group was $673,103. For the intervention group the cost was $640,505. The $32,598 cost differential was more than enough to cover the monthly salaries and benefits of the five-member intervention team.
Although EmblemHealth set out to measure the effect on hospital readmissions, the intervention team’s physical presence in the physician office produced other, unanticipated advantages.
With access to the electronic health records of the discharged patients the team was able to identify other gaps in care for HEDIS quality measures such as a lack of annual screenings or immunizations. EmblemHealth and MPG were able to update those treatments as they worked through post hospitalization issues.
Gillespie says that getting patients on treatment plans and up to date with existing treatment plans produced savings that were not quantified within the study.
And he says the effort also helped improve patients' quality of life by looking at patient needs outside of medical care, such as transportation issues and living conditions. EmblemHealth worked with community service groups to meet those needs.
Along the way, the program has increased patient satisfaction for the participating physicians as well as the health plan.
With a few tweaks the program is being expanded to other large multispecialty physician groups with close ties to EmblemHealth. For instance, case management staff that used to contact patients by telephone is now deployed to have more face to face contact with the patients.
Dr. Navarra Rodriguez, chief medical officer at Manhattan's Physician Group, says the value of the intervention team extend well beyond reduced admissions and cost savings. "Our patients are dealing with a very complex healthcare system. They rave about intervention team and how it makes them feel connected to our doctors and the health plan."
State and federal insurance premium rate reviews resulted in the denial, withdrawal or modification of an estimated $1 billion in health insurance rate increases in the individual and small group markets, according to the 2012 Annual Rate Review Report released Tuesday by the Department of Health and Human Services.
The rate review program requires insurers to publically disclose proposed increases and justify any requests to raise premiums. Although many states have long supported review programs, the federal program only went into effect on Sept. 1, 2011, so the 2012 report reflects the first nationwide effort to assess healthcare insurance premium rates.
The program includes a includes a provision of the Patient Protection and Affordable Care Act that requires premium rate reviews for increases of 10% or more in the individual and small group markets. That provision accounted for $148.4 million of the denials.
"The healthcare law is holding insurance companies accountable and saving billions of dollars for families across the country," HHS Secretary Kathleen Sebelius stated during a press conference to announce the report's release. "Thanks to the law, our healthcare system is more transparent and more competitive."
She added that the results of premium increase rate reviews indicate that the health insurance market is now "working for consumers the way markets are supposed to work. Insurers are being forced to offer more competitive prices."
The rate reviews assess whether proposed increases in health insurance premiums are based on reasonable estimates of the next year's cost of providing services to enrollees and accurately reflect changes in medical expenses and healthcare utilization.
Of the double-digit increases reviewed, 36% were found to be reasonable, 26% were rejected, 12% were withdrawn, and 26% were modified to meet requirements.
The largest savings were recorded in California ($34.6 million), New York ($20.2 million), and Michigan ($15.5 million). According to the report, the implemented rate increases were reduced on average by 2.8 percentage points.
Officials declined to attribute any of the premium costs savings to either a slowing down of demand or increased competition among health insurers.
"It's not a reflection of the economy," explained Gary Cohen, Director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare & Medicaid Services. "The savings reflects the different in the increase they requested and the increase they received."
Some 44 states handle at least a portion of their own reviews, but HHS handles complete reviews in the individual and small group market for Alabama, Arizona, Louisiana, Missouri, Montana and Wyoming.
Some states such as Montana don't have the legal authority to review health insurance rates while others lack the resources to mount an effective review.
HHS initially earmarked $250 million in grants to help states expand the scope and quality of their rate review processes. Among the key steps taken by several states is the hiring of actuaries to review rate increases.
The HHS report was released on the same day that the Kaiser Family Foundation announced the results of a separate, unrelated study that found that a family with employer-sponsored healthcare saw their premiums increase 4.5% in 2012.
While HHS officials declined to specifically address that report's findings. Cohen said he was heartened by the fact that the premium increase over the past year was the "lowest in decades."
A proposed rule from the Centers for Medicare & Medicaid Services to set the Medicare physician fee schedule for 2013 drew more than 2,900 comments from a variety of stakeholders.
While there was general support for many of the provisions in the 765-page proposed rule, the comments provide insight into the complicated fee structure that providers must contend with in the delivery of healthcare services to Medicare beneficiaries. The comment period ended Sept. 6.
As first proposed in July, CMS says the changes to how fees are calculated would increase payments to family physicians by 7% while payments for other primary care practitioners would increase by 3% to 5%. On the surface that’s good news but commenters also took issue with the complicated calculations required to arrive at the payment increase.
Other provisions of the proposed rule would update payments for Medicare Part B drugs, add Medicare-covered services that can be provided via telehealth, clarify when Medicare will pay for interventional pain management provided by certified registered nurse anesthetists, and implement portions of the Patient Protection and Affordable Care Act by establishing a face-to-face encounter as a condition of payment for certain durable medical equipment items, and provide additional payments for care coordination.
Based on a sample review of 25 comments from a mix of stakeholders, comments focused on six broad areas: care coordination, misvalued codes, multiple procedure payment reductions, Medicare telehealth services, scope of practice for certified registered nurse anesthetists, and the physician value-based payment modifier. All comments are available on regulations.gov.
Care coordination
In an effort to advance care coordination and reduce hospital readmissions, the proposed rule calls for CMS to make a separate payments to coordinate patient care for those critical 30 days following a stay at a hospital or skilled nursing facility. Reaction to this proposal was surprisingly mixed. Stakeholders support the idea of care coordination but have some problems with its implementation.
While the Medical Group Management Association (MGMA) supports post-discharge care management, it is concerned that CMS will pay for this new service "by decreasing reimbursement to specialties outside of primary care." The group wants CMS to "explore ways to pay for this service using the actual savings it will achieve under Part A."
The Society of Nuclear Medicine and Molecular Imaging (SNMMI) is concerned that the proposed care transitions code is not well-defined enough to meet the goals of the program. "There is nothing to limit the billing of the code to only those clinicians providing comprehensive primary care…the code could be billed by any physician…with only limited or no prior contact with the beneficiary. Because the proposed rule does not require a face-to-face visit, beneficiaries may not be aware that a clinician is billing for coordinating their care."
Kaiser Permanente, a California-based integrated delivery system, also supports care coordination but opposes the requirement that the coordinating physician must have seen a patient 30 days before a hospitalization. "Large multi-specialty medical groups provide team-based care. Patients have a designated primary care physician, but they may be seen by other members of the care team or specialists before and after the hospitalization."
Misvalued codes
As part of healthcare reform, CMS is directed to periodically identify and review the fees paid for services to assess if increased use or new technologies may have affected the value of those services. For 2013 CMS proposed the review of evaluation and management service furnished as part of global surgical services.
In its comment letter, the American Academy of Family Physicians (AAFP) said it has "long argued" that global surgical packages are inflated in terms of "the number and level of post-operative visits" assumed to be included in the value of the codes.
MedPac,the independent Congressional agency established to advise Congress on issues affecting the Medicare program, expressed concern about the pace of validating the fee schedule's estimates of the time providers spend furnishing services.
MedPac noted that the estimates rely "on surveys conducted by physician specialty societies," which have a stake in the process. The commission suggests that CMS establish time estimates with data collected from physicians' offices and other settings where physicians and other healthcare professionals provide care.
Multiple procedure payment reductions (MPPR)
When outpatient or surgical services are furnished to the same patient on the same day, Medicare reduces payment for the second procedure to account for efficiencies. That process is in place for CT scans, MRIs, and some ultrasound and nuclear medicine studies. CMS wants to expand MPPR to include the technical component of additional cardiovascular and ophthalmology diagnostic procedures.
MedPac supports this step but wants CMS to also include the professional component of the services. "When multiple tests are performed together, certain physician activities…such as reviewing records…are likely to occur only once."
SNMMI opposes the expansion. It contends that the proposed policy is based on flawed assumptions regarding potential efficiencies. The group also said the CMS line item methodology to support payment reductions was not published in the proposed rule and is "necessary for complete public comment."
Concern about the negative impact on free-standing radiation oncology centers led the Rochester, MN-based Mayo Clinic to also oppose the change. "Before CMS makes significant reductions in the practice expense, CMS should be certain that it is using the most comprehensive and accurate information to value the full practice expense relative value weight."
Telehealth services
CMS proposes to expand telehealth services to include alcohol and substance abuse assessment and intervention services. This is especially important for rural areas where specialist may not be available onsite to see patients.
It comes as no surprise that theAmerican Psychiatric Association, representing more than 36,000 psychiatric physicians, supports allowing services such as annual depression screenings and behavioral counseling for obesity to be delivered via telehealth. The group noted that the "prevalence of psychiatric disorders in primary care is well-documented" and contends that providing PCPs with the opportunity to bill for these preventive services will "facilitate timely referral to specialists."
Kaiser Permanente would like CMS to use its regulatory authority to broaden "eligible telehealth settings, locations and services under Medicare." Kaiser sees opportunities to leverage the consumer adoption of mobile medical apps as a way to improve the delivery of healthcare services.
Scope of practice for certified registered nurse anesthetists (CRNA)
Physicians are very protective of their practices and adamantly oppose any effort to allow nonphysicians to encroach on the delivery of medical services. CMS has proposed to permit certified registered nurse anesthetists to furnish and bill for chronic care management in states that allow CRNAs to provide those services.
The California Medical Association and other physician groups oppose this move. Its comment letter noted that the change would "effectively allow the safety and welfare of Medicare beneficiaries to be determined on a state-by-state basis." The CMA presents familiar arguments ii opposing the move: interventional pain management is the practice of medicine and CRNAs do not have the education or the skills required to furnish chronic pain management services.
The American Nursing Association took a different approach. It stated that chronic pain "is a significant public health challenge" and that there is a "deficit of qualified professionals to treat chronic pain." With their advanced education, training and experience CRNAs are "uniquely qualified" to address the challenge.
The ANA cited the Council on Accreditation of Nurse Anesthesia Educational Programs standards, which mandate that nurse anesthesia programs provide content in anatomy, physiology and pathophysiology, pharmacology and pain management.
Rep. Jim Cooper (D-TN) also commented in support of direct reimbursements to licensed advanced practice nurse (APN), including CRNA for pain management procedures. "There is no evidence that trained and qualified APNs compromise patient safety or lead to over utilization of procedures. Research has shown that these providers increase access and decrease the cost of healthcare."
Physician value-based payment modifier (VBPM)
The ACA requires CMS to establish a value-based modifier that provides for differential payments based on the quality of care furnished compared to the cost of the care. The VBPM is required to be revenue neutral so increased payments to some physicians result in decreases for others
The AAFP is concerned that budget neutrality considerations limit CMS's ability to "specify the exact amount of the upward payment adjustment." The AAFP said it "will be challenging" for groups to subject themselves to "a new and untested program without prior knowledge of a potential award."
MGMA is concerned that several technical issues related to the VBPM have not been addressed. MGMA questions if the modifier can even be implemented for the first measurement year in 2013 and urges CMS "to withdraw this proposal until methodological and technical issues" are resolved. Among its concerns is that more time is needed to "test valid measures of cost, outcomes and quality as well as mechanisms to accurately adjust for risk before moving forward with a program that modifies physicians' payments based on CMS' definition of value."
CMS is expected to release the final physician fee schedule rule in November.
At the close of the public comment period, the proposed rule from the Centers for Medicare & Medicaid Services for the 2013 Outpatient Proposed Payment System garnered almost 300 comments.
Although the proposed rule made significant changes in how CMS calculates ambulatory payment classifications (APC) and how it reimburses hospitals for payable drugs and biologics, the lion’s share of the comments address the effect that assigning patients observation status could have on Medicare benefits.
A patient on observation status in an acute care hospital is classified as an outpatient even though the patient occupies a bed, stays overnight, and receives medical care. The outpatient classification could affect Medicare coverage of any subsequent stay in a skilled nursing facility (SNF) because CMS requires three days of inpatient status before covering an SNF stay.
In requesting comments on observation status CMS indicated that it is considering changing or clarifying its policies on that matter. It is conducting a Medicare Part A-to-Part B rebilling demonstration project.
Many comments from hospital, physicians, and private citizens shared the opinion that every day spent under observation should count toward the three-day minimum stay required for post-acute care coverage under Medicare.
In its comments Premier, a healthcare alliance of more than 2,600 hospitals, stated that "beneficiaries in this outpatient status face the possibility that their aggregate copayments for all outpatient services received will exceed the inpatient hospital deductible."
It noted that observation is often "used for complex cases when it is not clear what level of service the patient needs." Premier asked CMS to consider providing physician education on medical necessity and the changing trends in the standards of care.
The American Academy of Otolaryngology recommended that CMS "automatically define anyone who has received care in the facility setting for more than 48 hours as an inpatient." It asked CMS to "increase the transparency of patient status for both patients and physicians" and implement an appropriate and consistent payment policy for both outpatient and short inpatient hospital stays.
The New Jersey Hospital Association noted that clear guidance from CMS is necessary so hospitals and physicians "have more certainty that they are making the right decisions" so the "risk of audits and denials is minimized."
It also stated that "the treating physician's judgment, which takes into consideration both the patient's conditions and other risk factors, should be the primary determining factor for inpatient admission decisions, not external rules and criteria."
The American Hospital Association pointed the finger at recovery audit contractors (RAC) and Medicare administrative contractors (MACs), which it contends have started to "inappropriately second guess physician judgment, declaring that some patients who were admitted should not have been." It adds that "patients who thought they were admitted are surprised to learn that they were actually receiving outpatient services."
While the AHA is supportive of time-based admission policies where an observation outpatient would automatically be deemed inpatient status after one or two days, it cautioned that the system would expose hospitals "to increased risk of retrospective review and audit by RACs and MACs."
It noted that implementing a time-based policy also would "require a comprehensive review and revision of other Medicare requirements including other payment regulations and Medicare conditions of participation."
Among the AHA recommendations is that CMS implement a policy so that observation time beyond a specified time limit would not trigger an automatic admission but would become a new decision point for the attending physician to decide whether to admit the patient.
APC calculations
CMS proposes to change the way it calculates APC relative weights by shifting from median cost data to geometric mean cost. CMS contend that the new system will better capture the ranges of costs of services.
The AHA supports the proposal but urged CMS to proceed "cautiously and transparently to ensure that there are no unintended consequences for hospitals and their patients."
Outpatient drugs
Comments generally favored the CMS proposal to reimburse hospitals for separately payable drugs and biologicals without pass-through status at average sales price plus 6%.
The move has the strong support of the AHA, which commented that the change "would improve stability of drug and biological payments" and is less cumbersome that the current system which "involves complex calculations and an annual overhead adjustment in which costs are redistributed from packaged drugs to separately payable drugs."
American Academy of Otolaryngology also supports the change, which "more accurately reflect the actual costs incurred by hospitals in providing and administering drugs and biologics."
CMS is expected to release the final OPPS rule in November.