There's been some hand-wringing lately about the potential impact small employers could have on the health insurance market if they are able to skirt regulations under the federal Patient Protection and Affordable Care Act.
The concern is that cost sharing, which is among the central tenets of healthcare reform, could be undermined if small employers with relatively healthy workers and dependents are able to stay out of the Small Business Health Options Program (SHOP) or health insurance exchanges.
If that were to happen, then firms with sicker employees would find themselves stuck with ever increasing premiums because there wouldn't be enough healthy workers in the mix to balance the risk.
Weighing the Options That's a very real worry for the folks at the National Federation of Independent Businesses, explains Kevin Kuhlman, manager of legislative affairs for NFIB. "We're going to see businesses sitting down with their accountants and looking at their options to see what works for them." In Kuhlman's view there are still so many unknowns in the ACA, including essential benefits, that small businesses are likely to try and stay away from it.
The ACA allows small employers to avoid participating in healthcare reform by self insuring or by maintaining their grandfathered health insurance plans—the ones that were in place before March 23, 2010. But in both cases the ACA sets the bar pretty high.
The grandfathered health plans still have to meet some basic standards such as no coverage exclusions for children and no lifetime limits on coverage benefits. But they are free from other requirements, including those that mandate coverage of certain prevention services with no cost sharing.
Grandfathered health plans may make routine changes. For example, adding new benefits is OK, but cutting benefits or increasing out-of-pocket spending would dismantle the special status and invoke ACA regulations.
Self Insurance
To self insure, a small firm must be willing to bear the risk of its employees' health. This is common among big firms with hundreds of employees paying premiums and sharing risk. Small employers who test the self insurance market are usually happy to be back in the fully insured fold.
A recent RAND Corporation analysis that appears in the February issue of Health Affairs supports the idea that neither self-insuring nor grandfathered health plans would have a major impact on the future cost of health insurance because relatively few businesses are likely to take advantage of either option.
At least that's the case if the current rules remain intact. Keeping the rules as they are written, especially the limitations on maintaining grandfathered plans, is key to keeping premiums affordable in small business insurance exchanges explains Christine Eibner, the study's lead author and a senior economist at RAND, a nonprofit research organization.
Using a microsimulation model, Eibner and her team looked at how grandfathering and self-insurance options could impact coverage and premium costs for policies sold through insurance exchanges set up for small employers.
If the rules for grandfathered plans were relaxed, then premiums offered to small employers through health insurance exchanges could be as much as 50% higher, according to the study. Eibner says she's not aware of any effort to make changes in those provisions.
Financial Risk
She says most small employers will choose not to self-insure because of the financial risk of unknown employee medical expenses. Although the analysis demonstrates that the self-insure option would reduce enrollment in the small business insurance exchanges changes, it won't have a substantial impact on exchange premiums.
But Kuhlman counters that small businesses are often unable to predict many of the costs associated with the ACA. He says that stop-loss insurance and reinsurance can be priced into the future and that predictability may sway more small businesses to opt out of the ACA regulations.
And he points to an ACA tax provision on health insurers that kicks in in 2014 and is projected to raise $1 billion that year as another incentive for small businesses to turn to self insurance. "That cost will be passed on to fully insured small businesses in the form of higher premiums."
Eibner notes that under the status quo very few small businesses with fewer than 100 employees self-insure even though that option would allow them to avoid state rating regulations and state coverage mandates.
Some policy wonks argue that increased interest among small business could result in cost adjustments in stop-loss market that would make self insurance more affordable and attractive to small business. Eibner has looked into that scenario and says a high proportion of small businesses would be required to exercise that option to adversely affect premiums in health insurance exchanges. "We don't see that happening."
Consultants for the troubled Parkland Health and Hospital System submitted on Friday a corrective action plan it hopes will resolve ongoing deficiencies identified during an intensive three-month review of the hospital by Alvarez & Marsal Healthcare Industry Group, a New York-based management consulting firm that specializes in performance improvement.
Officials in the Dallas office of the Centers for Medicare & Medicaid Services are reviewing the CAP document. If they approve it, the document will be released to the hospital. That could happen early next week according to a CMS spokesperson. At that time the hospital or CMS will be free to publically release the CAP.
The CAP addresses a scathing gap analysis report also prepared A&M, which details a laundry list of shortcomings affecting almost every department in the health system. Both the CAP and the gap analysis are part of the systems improvement agreement between CMS and Parkland that allows the storied facility to remain open while it attempts to correct deficiencies that have threatened its closure.
A&M has a multi-million dollar contract with Parkland to guide the beleaguered hospital through the SIA process.
According to A&M's analysis, the safety-net hospital still has deficiencies that are significant enough to affect its Medicare participation. "If the deficiencies catalogued in this report are not addressed and remedied Parkland could not pass a CMS hospital survey and would not continue as Medicare participating hospital," the report reads.
A&M's report has not been formally released, but has been posted online. The report is currently under review by the CMS Freedom of Information Group office in Baltimore. No timeline for its release by CMS is available. Parkland officials cited legal concerns in declining to make the document available.
According to the document, serious deficiencies continue at Parkland in 20 broad categories, including nursing services, utilization review, infection control, discharge planning, lab, surgical and emergency services, and professional practice evaluation.
The analysis by A&M cites numerous specific incidences "that lead to an overall concern about the safety of the care environment at Parkland" such as:
An emergency department patient who was triaged and provided a medical screening exam but waited for 14 hours before a staff member noticed that the patient's care hadn't been completed.
House cleaning staff moved a patient to a hallway to clean the patient's room then took a lunch break without completing the cleaning or returning the patient to the room.
Some 250 medication errors over three months with 58% involving the wrong dose, wrong drug, wrong patient or wrong frequency.
Discharging psychiatric ER patients with only bus vouchers and instructions to call 911 in the event of recurring suicidal thoughts
Patients leaving the hospitals without having ports or other lines properly removed.
A patient whose surgery had to be terminated after anesthesia had been administered because of staff failed to obtain signed consent for the procedure.
Residents taking cell phone pictures of surgical procedures in violation of patient privacy rules
Missing supplies from crash carts that involved an eight minute delay in a code team's efforts to resuscitate a patient.
Lack of resident oversight by an attending physician that resulted in procedures being incorrectly performed. The report notes one incident when a resident made six failed attempts to place a peripheral arterial line.
Parkland has been under intense scrutiny by federal and state official since mid 2011 and the report authors expressed surprise at the number of negative patient events encountered there since Nov. 2011. "The frequency and number of potential trigger events suggest that self-corrective actions taken by the hospital in response to the CMS surveys…have not been effective in creating a safer care environment."
While Parkland officials have declined to comment on any specifics of the gap analysis, Tom Royer, MD, interim CEO of Parkland Health & Hospital System, told HealthLeaders Media in a recent telephone interview that he has already implemented several changes designed to address some of the consulting firm's concerns. Royer said the hospital has started
A daily huddle. The management team meets to review events of the past 24 hours to make sure any necessary corrective actions are taken, that the right policies are in place and that the staff is abiding by the policies. Royer says this has helped with what he calls "rapid cycle improvement."
Reorganization of nursing services. A new chief nursing officer is in place and charged with developing a systemic and consistent approach to nursing practices. Royer notes that about 75% of Parkland's problems involve inconsistent nursing practices across the system. He wants to see more empowerment for nurses and more team building among the nurses, lead physicians, department chairs, and administrators.
Reorganization of management team. The team now includes the head of human resources and the head of communications. Royer says human resources will make sure the hospital hires the right people, that employees are disciplined in a consistent fashion and that an accountable culture develops across the health system. Communications will help make sure that the health system has a consistent message across its departments.
Creation of a medical executive committee. This group has responsibility for physician improvement issues, including resident training. The gap analysis report is very critical of the resident training program and attributes the "current operation of Parkland's resident training program" as contributing to the hospital's deficiencies in meeting all standards of the conditions of participation."
Hiring of an Implementation officer. This position will be in place for the life of the SIA—six to 12 months—to make sure the improvement plan stays on track.
Royer says he plans to stage a mock CMS survey in a couple of months using two or three people familiar with the work of the CMS and Joint Commission. "Once we're satisfied that all of the improvements are in place we'll schedule a real survey," he said.
[UPDATED 12:50 PM ET: The U.S. House of Representatives voted 293-132 Friday morning to pass a compromise bill that would delay the impending 27% cut in Medicare pay rates for 10 months. The Senate voted 60-36 to pass the measure.]
Congress has passed a legislative package that would delay massive Medicare reimbursement cuts for physicians for 10 months. The deadline to resolve the sustainable growth rate formula issue is now postponed until the end of 2012.
A joint House-Senate conference committee charged with negotiating a resolution to the sustainable growth rate formula issue, reached a tentative agreement late Wednesday night to delay for 10 months 27.4% in Medicare provider reimbursement cuts scheduled to go into effect on March 1.
Lawmakers finalized on Thursday details of The Middle Class Tax Relief and Job Creation Act of 2012. The timing is critical. Congressional leaders want to vote on the package before Congress adjourns for a one-week recess beginning this weekend.
In addition to delaying the Medicare reimbursement cuts, the legislation extends the payroll tax holiday through to the end of 2012, eliminates the extended unemployment benefits program, and extends certain welfare benefits programs through to the end of the year. The legislative package, which is summarized here, carries an estimated price tag of $150 billion.
According to a summary document from the House Ways and Means Committee, a grab bag of healthcare cuts will be used to offset the delay in the Medicare reimbursement cuts, including:
$11.6 billion in funding from the Patient Protection and Affordable Care Act, including $5 billion from the prevention fund
$9.6 billion from Medicare bad debt and clinical laboratory payments
$4.1 billion from the Medicaid Disproportionate Share Hospital payments
$2.5 billion in enhanced Medicaid funds earmarked for Louisiana
In addition, the legislation eliminates the Medicare extender programs for mental health add-on payments as well as the increased payments for bone density scans. It also phases out Section 508 hospitals and special pathology payments, and extends the therapy cap exception process through 2012.
The legislation allows for additional oversight of some programs. Ambulance add-on payments and outpatient hospital hold harmless payments will be extended, but the Centers for Medicare & Medicaid Services and the General Accounting Office will be required to report to Congress on the effectiveness of the programs.
Congress has been wringing its collective hands for years over what to do about the sustainable growth rate, which was put in place as part of the Balanced Budget Act of 1997 to help control Medicare spending. It soon became apparent that significant cuts in physician reimbursements would be required to help reduce that spending, but for 10 years Congress has declined to implement the reimbursement reductions. Stakeholders have routinely asked that the SGR be repealed and replaced with a more practical system.
There was some hope in 2011 that the Congressional deficit-reduction super committee would act to repeal the SGR, but that committee failed to take any action. If passed, the latest 10-month extension would mean that a lame-duck Congress and possibly a lame-duck president would have to reconsider the SGR issue again.
It comes as no surprise that physicians and hospitals are unhappy with the proposed legislation. Peter W. Carmel, MD, president of the American Medical Association issued a statement saying the group was "deeply disappointed that Congress chose to just do another patch–kicking the can, growing the problem, and missing a clear opportunity to … permanently replace the flawed Medicare physician payment formula."
Meanwhile Rich Umbdenstock, president and CEO of the American Hospital Association, expressed disappointment that "Congress is putting seniors' access to hospital services in jeopardy through arbitrary reductions to hospitals" He says the proposal adds "an unnecessary strain to hospitals that care for vulnerable populations. It limits therapy services provided in hospitals and assistance that helps defray Medicare and Medicaid costs to low-income seniors. This is shortsighted and overlooks the critical role hospitals play in supporting a broad range of services to the elderly."
UPDATE: Lawmakers came to an agreement on the Medicare reimbursement rates for physicians in the early morning hours of Thursday. Details to come.
Agreement in Principle Reached Wednesday
House Speaker John Boehner (R-OH) announced Wednesday that a joint House-Senate conference committee had reached "an agreement in principle" on a proposal to once again delay the 27.4% in Medicare reimbursement cuts scheduled to go into effect on March 1.
The proposed deal would delay hefty Medicare provider reimbursement cuts and would include $27 billion in program cuts to hospitals, home health agencies, and clinical labs, according to a summary document received Wednesday by HealthLeaders Media.
The committee, which is charged with negotiating a resolution to the sustainable growth rate, the unpopular Medicare physician payment formula, reportedly proposed only a 10-month freeze—until Jan. 1, 2013—on any reimbursement cuts.
Let's say you're a health plan executive looking down the road at the future of your company in the age of healthcare reform. You realize that in a couple of years, many of your employer clients could walk away and join a state health insurance exchange with their employees. What do you do to hold onto your clients?
Take off your vendor hat, put on your employer hat—you're a company with employees, after all—and start asking yourself the same questions you ask any of your vendors: What are we getting for this investment? What's the value?
Then have your CFO reach out to your client's CFO for a conversation about healthcare value, why a healthier work force is important to their business, and what your health plan is going to do to drive that value for their employees.
CFO conversations are important because they speak the new language of healthcare sales, which is becoming less focused on the mechanics of disease management and copayments and more focused on how an investment in healthcare relates to worker productivity. In the new healthcare paradigm, employers want to know what's in it for them. Does their investment actually improve employee health?
Health plans don't need to be shy about this approach. "CFOs are ready to have this conversation with the health plans," says Andy Hunzeker, the CFO of Lincoln (NE) Industries. "I see the healthcare of our employees as a competitive advantage for our company, so I'm ready to talk." Focusing on the ROI of healthcare has already helped his company save about $3 million annually in healthcare costs, he says.
Thomas Parry, president of the Integrated Benefits Institute, likes to tell a story about a vice president of wellness preparing to make a 15-minute presentation for the leadership team at her company. In a practice session with the company CFO, she talked about wellness efforts in terms of fewer ER visits and shorter hospital stays. The CFO stopped her. "You'll lose them in five minutes," he said. He suggested that she focus on what an unhealthy worker could mean for lost worker productivity. Her revamped presentation began with a simple statistic: If wellness benefits helped the company's 60,000 employees save one day of lost time per person, it would translate into $19 million in productivity gains.
The point, says Parry, is that the CFO is emerging as a champion of the importance of workforce health in business, and health plans need to plug into that energy by becoming a partner in the effort rather than just remaining a vendor.
About 10 years ago, Parry's group began looking into the role CFOs play in healthcare decisions. The CFO view of healthcare benefits has shifted from one based on cost centers to a business strategy basis. Recent survey results from IBI demonstrate that CFOs view employee health as having an impact on financial performance and productivity, in both conventional measures (healthcare expenses, sick day absences, overtime, and temporary workers) and ways that are less conventional and more difficult to measure (missed revenue opportunities, reduced product and service quality, and excess labor costs).
As a result, CFOs today are playing a bigger role in healthcare benefit decisions. The breadth of information they consider in making health plan design and purchasing decisions has expanded well beyond monthly premiums and cost sharing.
CFOs are poring over claims data, employee sick leave, health risk assessments, and productivity impacts to assess various healthcare benefit decisions, Parry says. And there's more information they'd like to have, such as ROI from health interventions. Only 15% of CFOs say that ROI data is available to them. They are also interested in benchmark data from other companies.
Hunzeker says health plans need to provide some of this information, adding that plenty of population health data could be presented in meaningful ways without violating HIPAA policies. He points to WeightWatchers participation as an example. "There's data out there about how this program helps reduce health costs. CFOs need that information to extrapolate into other areas, such as how weight loss can reduce absenteeism and increase productivity," he says.
Health plans that can become a partner to CFOs will have an advantage as companies consider their coverage options.
The 2013 budget proposed by the Department of Health and Human Services reflects familiar ideas presented by President Obama to the debt reduction committee: fully fund the Affordable Care Act, reduce Medicare and Medicaid costs, and cut provider reimbursements.
Overall HHS spending is proposed to increase by about 8% from $871.9 billion to $940.9 billion. Only 8% of the HHS budget represents discretionary spending that can be shifted around, increased or eliminated. The 122-page HHS budget proposes increasing that spending by $0.3 billion to $76.4 billion.
The big winner in the HHS budget sweepstakes is the Centers for Medicare & Medicaid Services, which could see a $1 billion increase in funding to $4.8 billion for 2013. According to CMS officials about $860 million of those increased dollars are already earmarked for development of federal health insurance exchanges. The remainder will be applied to other ACA programs.
The bigger losers are Medicare providers, who would see their reimbursements slashed by $297 million over 10 years. The Obama administration projects that cuts to providers and other "improvements," will produce $366 billion in budget savings over 10 years.
The size of the reductions caught some industry observers off guard. "Cuts in Medicare and Medicaid are heavier than the industry was expecting," says Paul Keckley, executive director of the Deloitte Center for Health Solutions.
In an e-mail, Keckley noted that the cuts aren't "the only pressures docs and hospitals will feel. Remember, the sequester cuts from Medicare are 2% per year for 2013 through 2022. And, the physician pay formula (SGR) is likely to get only a temporary patch. So, the FY13 budget is one of several dark clouds hanging over hospitals."
He said this state of affairs helps explain why "Moody's downgraded the acute sector and why the majority of doctors are now transitioning from private practice to more security from jobs with health plans or hospitals."
The Medicare proposals are bad news for drug companies, rural providers, teaching hospitals and nursing homes, according to John Cousins, senior vice president of healthcare intelligence for CIT Healthcare. Here's why:
The budget calls for Medicare payment policies for pharmacy companies to align with the rebates Medicaid receives for brand name and generic drugs provided to beneficiaries who receive the Medicare low-income subsidy. That option is expected to slash payments to drug companies by $156 billion over 10 years.
Aligning Medicare's bad debt policy more closely with private sector policies will reduce bad debt payments to hospital and nursing homes from 70% to 25% of eligible charges. That will reduce payments by $35.9 billion over 10 years.
Reducing the indirect medical education adjustment by 10% beginning in fiscal year 2014 will post $9.7 billion in savings over 10 years. That's dollars teaching hospitals won't have to cover the cost of increased medical tests and other expenses associated with training physicians.
Aligning payments to rural providers with the cost of care will reduce critical access hospital (CAH) payments by $2 billion over 10 years. CAH payments are proposed to be reduced from 101% of reasonable costs to 100%.
While the bulk of savings proposals come from the healthcare industry, there are also proposals that would affect beneficiaries, says Dan Mendelson, CEO of Avalere Health. In an e-mail statement Mendelson points to the Part B premium surcharge on Medigap policies that offer first dollar coverage and copayments for home health services for new Medicare beneficiaries. Those changes are projected to save $2.5 billion and $350 million, respectively, over 10 years.
The common assessment is that "this budget is really about cuing up election year positioning, as well as a 2013 deficit reduction package," explains Mendelson.
One noteworthy omission in this year's proposed budget, says Cousins, is a fix for the sustainable growth rate. Last year the president proposed a two-year SGR fix; this year's budget is silent on the topic beyond presenting updated numbers that Congress can use as it debates the topic.
He notes that the budget is only a proposal until Congress acts. If early reactions are indications of future actions then the budget faces an uphill battle among Republicans in Congress. Republican reaction to President Obama's $3.8 trillion budget plan was swift with some suggesting that the U.S. could face a debt crisis similar to the one plaguing Greece. Others suggested that the budget is all smoke and mirrors, with many of the deficit reduction methods actually being used to disguise spending increases.
The Centers for Medicare & Medicaid Services is expected to decide if a consultant's report that details ongoing problems at Parkland Health and Hospital Sytem will be released to the public. The gap analysis is currently under review by the CMS Freedom of Information Group office in Baltimore.
Parkland Hospital's board of managers, which has been open about providing documents related to the facilitiy's safety problems, originally planned to release the report. But on Monday the board met in executive session with hospital attorneys and decided to withhold the document, citing legal concerns.
"While we have a duty to be as open as possible with the public, we also have a duty to protect the rights of our patients and Parkland as an institution," said board chair Lauren McDonald, MD, in a prepared statement. "The advice we have received from our legal counsel is that the board cannot bothrelease the report and protect those legal rights."
This is the latest episode in a tale that dates back to a July 2011 on-site review of Parkland by CMS. That review identified nine broad categories of deficiencies considered to be so severe that they presented "an immediate and serious threat to patient health and safety."
State health officials requested the review following the death of a patient in Parkland's psychiatric emergency department. The hospital had failed to report the death to federal and state regulators, as required by law.
Multiple subsequent reviews identified further serious problems at Parkland. The hospital remained under immediate jeopardy status and risked the loss of an estimated $417 million in annual Medicare and Medicaid contracts.
In September CMS tossed Parkland a lifeline. Citing the "devastating impact the termination of Parkland Hospital would have on the citizens of Dallas County and the Medicare/Medicaid patients it serves," CMS took the unusual step of entering into a systems improvement agreement with the hospital. The agreement has allowed Parkland to remain open while it attempts to correct its deficiencies.
The gap analysis is the first deliverable document required under the SIA signed in September 2011.
Under the terms of the agreement, Parkland is required to provide a:
Comprehensive analysis of Parkland's current operations compared to industry-accepted standards of practice that ensure Parkland's compliance with all the Medicare conditions of participation (CAP) for acute-care hospitals and the federal Emergency Treatment and Active Labor Act (EMTALA) related to the provision of patient care and services.
Analysis of the root cause of process and system failures
Recommendations for changes and improvement to ensure full compliance with all the Medicare CAPs for acute-care hospitals and EMTALA provisions.
The analysis was prepared by Alvarez & Marsal, a New York-based management consulting firm that specializes in performance improvement. A&M has a multi-million dollar contract with Parkland to guide the beleaguered hospital through the SIA process.
Tom Royer, MD, interim CEO of Parkland Health & Hospital System, told HealthLeaders Media in a telephone interview Wednesday that the gap analysis is humbling.
"It's most troubling because the same issues appear across multiple service lines. It shows that policies and procedures have not been uniformly abided by. There's a lack of accountability and not everyone is held to the same standard of performance," Royer said.
Royer declined to address specifics of the gap analysis. His did say that the report from Alvarez & Marsal looks at 15 services lines as well as quality and safety issues at the hospital. It also addresses some systemic issues such as inconsistencies in nursing practices. He explained that senior management has already begun to implement some of the policies and procedures necessary to address Parkland's problems. "I've been meeting with our consultants as they developed the report so we've been able to develop solutions to many of the issues in real time."
Some of his more public changes have involved senior personnel, including the hiring of a new chief nursing officer and a senior vice president of human resources. Parkland also added an implementation officer to make sure the improvement plan stays on pace.
Royer says the hospital staff and leadership need to take full ownership of the problems. He has little patience, he says, with people who want to blame the aging Parkland facility and its patient load for its poor review performance. "That's the environment in which we work and that's the environment where we must put improvement in place."
Royer joined the hospital in November 2011. He succeeded Ron Anderson, MD, who was the CEO for 29 years before the board removed him from that position in August. Anderson remains under contract with Parkland.
The Commonwealth Fund has announced an ambitious effort to track a fixed group of low- and moderate-income adults over the next two years to see how this population fares in terms of medical care and health insurance as the Patient Protection and Affordable Care Act is implemented.
The idea is to look at how access to healthcare insurance influences a host of medical issues, from access to preventive services, to ER use and physician relationships.
This week the Commonwealth Fund released the first in what it hopes will be a series of surveys involving 2,100 adults ages 19 to 64. It plans breakout studies on 19 to 29 year olds as well as 50 to 70 year olds later this year.
My kneejerk reaction when I first heard about this effort was to yawn. I mean we're all pretty familiar with the data documenting the struggles of this socio-economic group to access and afford healthcare—especially when they are uninsured.
But here's an interesting nugget from the first survey: The insured in this group have some of the same struggles as the uninsured.
Access to Primary Care Physicians
Finding a physician is a challenge for both the low- and moderate-income insured and uninsured. Some 51% of the uninsured reported problems finding a primary care physician over the past three years. That is understandable.
But here's the kicker: For the low- and moderate-income population, being insured doesn't mean you'll be able to see a doctor either. According to the report, 25% to 50% of the insured report that a physician or clinic wouldn't even take their health insurance.
Use of the ER
Using the ER was another problem for both the insured and uninsured among the low to moderate income population. According to the report, people with low incomes—with or without insurance—reported going to the ER at higher rates that adults with higher incomes.
At that income level, the uninsured and insured turn to the ER for medical emergencies at about the same rate (88% vs. 89%), and for the same reasons—when other facilities are closed (55% vs. 54%) or when they are directed by a physician (37% vs. 32%). No real surprises there.
Now let's consider diagnostic testing and access to prescription drugs. Persons with low- to moderate-incomes, whether they are insured or uninsured, visit the ER because they expect easier access to diagnostic testing there (50% vs. 48%). And both groups turn to the ER when they need prescription drugs, although there is more of spread there—50% vs. 35%.
These findings raise a lot of questions about the quality of health insurance coverage available to these families. The American Hospital Association is quite aware of health insurance shortcomings that continue to encourage using expensive ERs for medical basics.
In a comment letter about essential health benefits, AHA said it would like the Department of Health and Human Services to establish "a universal baseline of benefits, and prevent insurers from picking and choosing the benefits that are covered."
The Commonwealth Fund expects to dig into these issues more deeply as it tracks this survey group over the next couple of years. What it hopes to find in subsequent studies is that the ACA makes a difference in access to insurance, cost of care, and health improvement for the low to moderate income population.
I'm looking forward to seeing the results of this longitudinal study. I want to know if the ACA is accomplishing its goals or whether it's just another behemoth government program.
In December 2011 the Department of Health and Human Services surprised just about everyone when it announced via a bulletin that instead of establishing essential health benefits (EHB) at a federal level for the state health insurance exchanges, it was considering passing that job onto the states.
The immediate reaction was generally negative with consumer groups and some industry stakeholders expressing concern that the state approach would result patchwork interpretations of EHB. Political observers were more pragmatic, suggesting that HHS punted on the EHB decision in an attempt to blunt potential Supreme Court case arguments that the federal government was taking over the country's healthcare system.
The public was invited to formally comment on the bulletin but in an unusual step, the bulletin comments were not collected through the typical regulations.org site. Instead stakeholders and interest groups were directed to an e-mail address. There was no response to a HealthLeaders Media request that HHS identify the central location where all the comments are now stored.
But the comments have been leaking out via e-mail and press releases. Here is a sampling:
Several House committees, including Energy and Commerce and Ways and Means, along with Sen. Mike Enzi (R-WY) and Sen. Orrin Hatch (R-Utah) asks HHS to justify its decision to issue a bulletin rather than a proposed rule on EHB. HHS "is sidestepping several important disclosure requirements with the new healthcare law and is preventing Congress and the American public from being able to assess the true costs associated with the so-called essential health benefits."
The letter notes that Obama administration "is not required to respond to comments received regarding this bulletin. Publishing a bulletin rather a proposed rule is the antithesis of an open and transparent process."
National Women's Law Center notes that although the Affordable Care Act states that "the scope of the essential health benefits …is equal to the scope of benefits provided under a typical employer plan," other ACA requirements could mean that EHBs are intended to be different from the typical employer plan. "The statute requires categories of coverage, including behavioral health treatment, habilitative services and devices, and pediatric oral and vision (services), that are likely not in the typical employer plan."
The NWLC notes that the ACA requires HHS to take into account "the healthcare needs of diverse segments of the population, including women" and "prohibits discrimination based on the basis of race, color, national origin, sex, age and disability. It may be necessary to expand the scope of benefits in order to adjust for discriminatory practices in the current insurance market. It will not be possible for the EHB to meet these requirements and remain in the scope of the typical employer plan."
The American Hospital Association says the approach to defining EHB fails to reflect "the individual's need for a range of services grounded in evidence-based guidelines. The work of the Institute of Medicine on this subject and the recent issuance of the EHB bulletin suggest that in the struggle to balance affordability with comprehensiveness of health benefits, the recommendations consistently tilt in favor of affordability."
AHA recommends that HHS establish "a universal baseline of benefits, and prevent insurers from picking and choosing the benefits that are covered," adding that affordability of the EHBs "could be governed by the cost sharing amounts among the four levels of qualified health plans." AHA also asks HHS "to clarify that its benchmark plan approach to benefits is "limited to covered services and does not include the plan's underlying decisions regarding actuarial value and cost-sharing."
America's Health Insurance Plans says "affordability should be the cornerstone" of consideration in establishing EHB. It supports providing states with a two-year transition period to create an affordable EHB package. AHIP suggests that "HHS should examine the cost and medical evidence of mandates and develop a framework for excluding some state mandates from inclusion in the EHB package."
It recommends that "HHS establish a deadline—no later than June 30, 2012—for states to select an EHB benchmark. If states do not select the benchmark plan by the deadline, HHS should specify the fallback plan as the largest small-group plan in the state by the deadline."
Michigan Consumers for Healthcare, which represents more than 110 community and health advocacy organizations in the state, says the bulletin provides too much flexibility to the states by allowing them to benchmark to a reference plan. "This approach relies too heavily on a palette of inadequate options that insurance companies already provide, and would allow states to create EHB packages that fall short of the robust, comprehensive coverage contemplated by the Affordable Care Act."
The American Medical Association, while generally supportive of the HHS bulletin, raises several operational issues in its comments. "If each state is going to choose from among the four benchmarks suggested by HHS, what is the process that each state will use in choosing the standard and what will the criteria be? How will HHS review and provide the necessary oversight of potentially hundreds of state- and plan-defined benchmark standards?"
It notes that "consumers, physicians, and other providers, and other stakeholders will need to have access to all of the plans under consideration. This will be quite a daunting challenge and require substantial oversight resources by HHS and the states, which may be difficult given continuing budget constraints at both the federal and state levels.
It will also be essential for an appeals process to be established in every state, through the state department of insurance or other appropriate agency, regarding the coverage of EHBs to ensure fair and non-discriminatory practices."
The comment letter from the American Academy of Pediatrics and 13 other organizations involved in children's health expresses concern that the EHB bulletin doesn't address children's health issues as intended by the ACA. "Nine of the 10 potential benchmark plans are defined by their availability to employees, and the tenth, the largest HMO option, is also likely to be mostly employer-based.
Because these plans are built around working adult, they may lack important benefits for children." The letter notes that the ACA also requires that child-only plans be available in state exchanges but "the bulletin does not mention these plans."
The Essential Health Benefits Coalition, which consists of groups representing large and small employers such as the U.S. Chamber of Commerce and the National Federation of Independent Business, stresses cost and medical effectiveness in its comments. It also asks HHS to grant employers the same flexibility as states to "design and choose health coverage in a competitive marketplace that is most affordable for them and their employees."
EHBC recommends that only benefits in effect as of March 1, 2012 should be allowed to be considered for the benchmark EHB package and that new state benefit mandates not be added retroactively.
The Pharmaceutical Care Management Association says it is happy with the EHB bulletin. "PCMA is encouraged that the HHS bulletin notes that EHB plans will have some design flexibility on pharmacy benefits and other issues. PCMA hopes that as HHS moves forward with regulations, it recognizes that relying on a market-based approach used successfully in the commercial market allows for greater flexibility and innovation."
In a strategic move, President Obama devoted fewer than 100 words to healthcare reform in his State of the Union address. In the most recent GOP candidates' debate, Mitt Romney denounced the Affordable Care Act. But in the same breath he defended the healthcare reform that he enacted as Governor of Massachusetts.
In this election year, the complexity of delivering quality care at a lower cost has been reduced to tightly controlled messaging by the President and his political opponents.
Elsewhere in Washington recently, at the Centers for Medicare & Medicaid Services' day-long care innovation summit, attendees and speakers reveled in the possibilities of more pliable cost curves and incentives for better care.
An estimated 1,000 medical professionals, academic and policy wonks, and investors gathered for the summit, which featured key players from CMS' Center for Medicare and Medicaid Innovation, as well as popular healthcare speakers such as Dr. Atul Gawande.
I was still wondering about the SOTU address while I watched a couple of hours of the summit on my computer. As I listened to talk about performance payments, hospital readmissions, bending the cost-curve, and kicking up our innovation mojo, it occurred to me that the president might have been right to soft-pedal any mention of healthcare reform. It's more of an insider's game now. And I don't mean that in a negative way.
Healthcare reform has moved well past the point where mere mention of the reduction of the donut hole or elimination of pre-existing clauses in insurance policies can elicit a round of applause. For now, to the average Joe, healthcare reform is like sausage making. He doesn't want to know the details of what goes into it; he's just hungry for the results.
Take for example the infamous triple aim: better care, better health, lower cost. It's a clever six-word summary of healthcare reform, but actually getting there involves a journey into a complex world of quality measures, shared savings, bundled payments, etc.
Case in point: On the morning of the summit, CMS released an eight-page report, "One Year of Innovation," which details how the agency will spend more than $1 billion on initiatives it hopes will achieve the triple aim.
Here's a sampling of innovation initiatives it's promoting: the Innovation Advisors Program, the Multi-payer Advanced Primary Care Practice Demonstration, State Demonstrations to Integrate Care for Medicare-Medicaid Enrollees, and the Financial Alignment Model Demonstrations.
Talk about sausage making! Eventually some of these projects may produce results that help achieve the triple aim, but it's not likely that the average healthcare consumer will ever connect the dots between any of them and the care received in a doctor's office or at a hospital.
Atul Gawande, the Boston surgeon and author, probably captured the state of things best in his keynote speech at the summit. "We have been engaged in this battle over whether the problem is bureaucracy and government; whether the problem is business and insurance hassles. I can tell you as a physician that all of these things make it harder day-to-day to get the job done."
"But, they are only symptoms of the deeper, more vexing problems you really think about day-to-day as you are seeing patients, and that is the complexity of what it is to actually deliver good care. The innovations we're thinking about are really most deeply rooted in understanding how we handle the complexity."
Politicians may rail against healthcare reform, or opt to soft-pedal the issue, but it doesn't really matter to industry insiders. They work with ideas, not sound bites.
