The Centers for Medicare & Medicaid Services denied on Friday a request from the Texas Department of Insurance to allow health insurers in the state more time to meet new MLR standards. CMS rejected what has become a standard argument among waiver applicants, that the 80% medical loss ratio requirement would destabilize the state's individual market and cause insurers to withdraw.
In the waiver request filed with CMS in July 2011, Texas officials asked for an adjustment of the MLR standard to 71%, 74%, and 77% for the reporting years 2011, 2012, and 2013, respectively. At issue is a requirement in the Patient Protection and Affordable Care Act that health insurers spend no more than 15 cents to 20 cents of every premium dollar collected on administrative expenses.
Health insurers that don't meet the MLR requirement will have to pay a rebate to their members. CMS estimates that up to $158.8 million in rebates could be payable to Texas health insurance customers.
Gary Cohen, acting director of oversight at the CMS Center for Consumer Information and Insurance Oversight, noted in a press conference that with 34 carriers Texas has a "robust individual market and there is no indication that insurers will leave". He added that most insurers have "are adjusting their business models to meet the 80% requirement." Others, he said, are "sufficiently profitable" that paying the rebate "will not be a hardship."
The CMS letter announcing the decision noted that Texas has a state-operated high-risk pool that provides guaranteed coverage to Texas residents with qualifying medical conditions. "We conclude that the remaining insurers in Texas' robust individual market and the Pool would be able to offer comparable products to the enrollees of any withdrawing issuer," says the letter.
A statement on the TDIweb site says, "In denying Texas' application, HHS stated that it took into account each carrier's MLR and profitability…and asserted that few issuers are reasonably likely to exit the individual market in Texas. The department's application clearly showed otherwise.
Of the 34 Texas carriers subject to the law, 23 will pay rebates based on 2010 data; at the 80% MLR threshold, these rebates will absorb the net underwriting profit for the entire individual market.
"HHS' decision does not allow sufficient time for carriers to adjust their operating models, nor does it contemplate the effects on small and mid-level carriers that lack the resources and administrative economies of scale to compete in the individual market under PPACA. A reasonable, responsible phased-in approach would still have afforded rebates to Texas consumers without risking disruption, dislocation and withdrawal of carriers in the individual market. The department will continue to work to ensure the availability of high-quality, high-value health insurance to this important underserved segment of the market."
Texas officials now have 10 days to appeal the CMS decision. Officials at the Texas DOI did not reply to questions regarding any appeal prospects.
Only 17 states and Guam filed MLR waiver requests for 2011 and CMS has acted on all but two: North Carolina and Wisconsin. Those decisions are expected by February 8 unless CMS extends the deadline by 30 days.
CMS has granted six waivers: Georgia, Iowa, Kentucky, Maine, New Hampshire, and Nevada. It denied a waiver for Guam and eight states: Delaware, Florida, Indiana, Kansas, Louisiana, Michigan, Oklahoma, North Dakota, and Texas.
Three states have appealed the denial of their MLR waiver requests. The appeals of Indiana, Louisiana, and most recently Florida were also denied. In a January 19 letter to Kevin McCarty, the Florida insurance commissioner, CMS's Steve Larsen said "we have found no basis to modify our previous determination."
Florida hinged its appeal efforts on three standard arguments:
The implementation of the new MLR requirement creates a barrier to entry
New MLR ratios would hurt the agent and broker workforce
Some insurers would potentially depart if the 80% MLR rate were upheld
In making the appeal McCarty contended that "failure to obtain the requested adjustment will cause permanent, irreparable harm to our market and the distribution channel for health products and services."
In the appeal denial letter Larsen noted that the appeal provided "no evidence that insurers would be unwilling to enter the market due to their inability to meet the 80% MLR standard," or that the new standard was responsible for driving several insurers from the market.
"Evidence presented by the (Office of Insurance Regulation's) application suggests that these six issuers' withdrawals were not caused by the 80% MLR standard," says the letter. In regards to the agent and broker workforce, Larsen states in the letter that no evidence was presents that "consumers would be unable to access agents and brokers absent an adjustment to the MLR standard."
"We are disappointed to learn about HHS' determination made on January 19. The Office continues to be concerned about the impact the MLR ratios have had, and will continue to have on the individual health insurance market in Florida," Jack McDermott, spokesperson for the Florida Office of Insurance Regulation, told HealthLeaders Media in an e-mail exchange.
Florida will have another chance to convince CMS that its needs relief from the MLR standards. Any state that wants to can begin filing requests now to adjust the 2012 MLR standard. However, to use 2011 data as the basis for the request states may need to wait until after April 1, when most issuers will file their supplemental health care exhibits with the National Association of Insurance Commissioners.
Merger and acquisition activity in rehabilitation facilities, laboratories, and managed care contributed to an 11% increase in the dollar value of M&A deals in the healthcare industry in 2011, according to Norwalk, CT-based Irving Levin Associates Inc.
The $227.4 billion in deals makes 2011 the fourth-largest M&A year since 2001, in terms of dollars spent. A total of 980 transactions in 13 sectors of the healthcare industry were announced for the year. The figures are preliminary, pending review of additional information such as annual 10-K filings in March.
Sanford Steever, editor of The Health Care M&A Report, told HealthLeaders Media in an interview that the numbers dispute some media stories that have suggested that interest in M&A in declining. That outlook "doesn't reflect reality," he says. A recent HealthLeaders Media survey on M&A interest among C-suite executives indicates that activity will continue at a brisk pace in the coming year. Nearly 80% of healthcare leaders say they will have M&A deals under way or will be exploring deals over the next 12–18 months.
Interest in rehabilitation facilities, which posted an enormous 465% increase in M&A dollar volume to $1.3 billion, is something of a surprise because of declining government reimbursements. But Steever says there are "opportunistic deals" available for companies that are large enough to have their own provider networks, adding that "Companies want to get out of this business, so if you're big enough it's a chance to fill out your provider network."
The lab segment, which also includes MRI and dialysis facilities, reported $5.6 billion in deals—a 145% increase—driven almost entirely by several large deals for dialysis clinics.
The 87% boost in the dollar volume for managed care M&A, from $4.2 billion to $7.9 billion, probably reflects Cigna's $3.8 billion acquisition of HealthSpring, a Medicare Advantage health plan. Several other insurers also purchased established Medicare Advantage health plans in 2011. "When regulations are involved it's always easier to purchase existing operations than to try and build from the ground up," Steever explains. Interest in Medicare Advantage is driven at least in part by the aging baby boomer population.
The survey results from HealthLeaders Media suggest that the managed care segment may be primed to continue to grow in importance. Among C-suite respondents, nearly one in five (18%) listed insurance/payer plans as a high interest. Hospitals facing declining patient volumes as well as declining case mixes want to be more involved in the healthcare financing piece of healthcare delivery.
In terms of the total dollar value, medical devices ($63.5 billion), pharmaceuticals ($44.5 billion), and biotechnology ($32.7 billion) were the leaders of M&A deals in 2011. Steever says he expects interest in pharma to shift as more and more drugs hit their patent cliffs. That means they'll need to develop more blockbuster drugs or acquire interest in biotechs or generic drug companies.
The dollar value of biotech deals fell by 46%, while the number of deals dropped by 39% in 2011. Steever says that may reflect a shift in equity funding from start-up and early stage biotechs to other areas.
The availability of capital is not expected to constrain the M&A markets. Steever notes that many large companies have strong cash flow with funds available for acquisitions. Things are tighter for smaller companies, though.
Steever does point to the election year and the European economy as influencing the M&A market. The possible change to another government makes providers nervous about reimbursements and makes potentials deals more difficult to assess. He says the European economy still "has some healing to do. The markets can be volatile, investors are nervous, and due diligence takes more time."
If you watched the annual State of the Union address Tuesday night to hear President Obama talk about his healthcare accomplishments and what he plans to do next then you came away disappointed. Ditto if you thought he might make the case for the individual mandate while he had five of the Supreme Court justices sitting in the room.
The president was almost three-quarters of the way through his speech before he made this quick statement: "I will not go back to the days when health insurance companies had unchecked power to cancel your policy, deny you coverage, or charge women differently from men." You'd have to be a good listener and something of a healthcare/political junkie to recognize that reference to the Affordable Care Act.
About 1,300 words later the president linked in a single paragraph Abraham Lincoln, small government and a quick mention of the healthcare reform's reliance on "a reformed private market, not a Government program."
Oh, and there was this pro forma comment about controlling entitlement program costs: "I'm prepared to make more reforms that rein in the long-term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors."
As a reporter I am inundated with government information about how the ACA is reducing healthcare costs. None of that made it into the president's speech. What gives?
Off the record, one source suggested that healthcare reform just doesn't resonate with the public. "The bad economy affects almost everyone; the lack of health insurance not so much."
Stakeholders and policy analysts, who are usually chomping at the bit to comment on speeches, rules, regulations, etc., have been more or less silenced by what one group described as the "dearth of references to health reform or healthcare policies" in the speech.
I did collect some comments about what was said or not said about healthcare in the State of the Union address. Here is a sample of perspectives on the speech:
Paul Keckley, Ph.D., executive director Deloitte Center for Health Solutions
"During his State of the Union, the President chose not to connect the dots important to the public debate about health reform. Since the downturn, the healthcare industry added 1 million jobs while the rest of the economy dropped 7 million. Health spending increases over the past 2 years—3.8% and 3.9%—were the lowest in decades."
"The healthcare industry is facing growing demand by being innovative, efficient and responsive to its challenge to provide better value to consumers. With or without the Affordable Care Act, it will continue its transformative journey from patients to consumers, volume-based incentives to value, and fragmentation to connectivity and coordination."
Ethan Rome, executive director of Health Care for America Now, a grassroots healthcare advocacy group
"President Obama laid out a clear, sensible vision to restore the health of America's economy, create jobs and address the income inequality that is weakening our nation. America needs to rally around this plan. Indiana Gov. Mitch Daniels, who took a break from his campaign to silence workers' voices on the job, …can't hide the record."
"The Republicans have opposed making healthcare affordable, they've blocked every effort to create jobs, they've been trying to undermine the laws that hold banks accountable and they've rejected every step needed to revitalize the U.S. economy…President Obama outlined concrete plans to give everyone a fair shot at achieving the American Dream."
Chip Kahn, CEO of the Federation of American Hospitals.
"Healthcare reform was totally absent from the speech. He used the speech to develop the equality issue, which will be the theme of his re-election campaign. I think that means that in this election year we're going to see stealth healthcare reform from the Democrats. They'll try to unbridle Republicans from the seniors on the Medicare issue. Republicans will try to talk about the Medicare and the deficit. Everyone will be talking past each other."
David Kendall, Senior Fellow for Health and Fiscal Policy, Third Way
"The President made healthcare cost control a permanent part of his agenda. He wants to go beyond healthcare reform and achieve additional savings in Medicare and Medicaid. Washington now has a once-in-a-generation opportunity to align the federal interest in controlling costs with efforts already underway in the private sector to make healthcare affordable in the long run."
Mark Parkinson, president and CEO of the American Health Care Association and the National Center for Assisted Living
"Our profession has made great strides, yet we are struggling to meet growing demand in the light of diminishing federal and state funding. We have improved in quality. Many of our facilities are hiring doctors and reducing hospital readmissions. We have improved in delivering a variety of health care options for seniors. That significant progress could all be put at risk if policymakers continue to avoid serious discussions centering on how we are reimbursed."
Curtis Rooney, president of the Healthcare Supply Chain Association (HSCA).
"HSCA and the group purchasing industry applaud Pres. Obama for his commitment to preserving the Medicare and Medicaid programs while also reducing costs across the healthcare system…Hospitals face mounting financial pressures, and continued implementation of federal healthcare reform will likely increase the strain."
Cyndy Nayer, President/CEO Center for Health Value Innovation
"Mr. Obama's references to health care were spot on for his agenda. He said he was not going back, and, in many ways, the country cannot go back: health information technologies are being rapidly deployed, 26 states have exchanges in process, and the system has ingested the rules for improved prevention and wellness strategies."
"Can the Congress, or the Courts, pull back the individual mandate? Of course, but that will not change the focus on wellness and prevention including the better management of chronic care. The bigger point may be the incredible focus he made on job creation and keeping private insurance in the 'game.' The big message of building a healthier, prosperous U.S. cannot be missed: health and business improvement are intrinsically tied, as we know."
Naples Community Hospital in Naples, FL. is waiting to learn if its immediate jeopardy status has been lifted and whether it can remain in the federal Medicare program, according to information provided by the Florida Agency for Health Care Administration.
In a December 21, 2011 letter, officials from the Atlanta office of the Centers for Medicare & Medicaid Services notified the 420-bed hospital that a full Medicare survey conducted in mid-December identified deficiencies in three broad categories: governing body, quality assessment performance improvement, and infection control.
The letter asked NCH to submit a plan of correction and warned that "failure to achieve compliance will result in the hospital's termination under Medicare effective March 14, 2012."
The POC was submitted on Jan 15, 2012.
According to state and federal documents, Naples Community Health faced a number of complaint and follow-up surveys in 2011 involving both federal and state deficiencies. Most of the problems uncovered by AHCA, which contracts with CMS to perform the surveys, involved minor deficiencies that were quickly resolved.
However, a complaint survey conducted in mid-October was allegedly related to the death of a patient and resulted in NCH being placed under immediate jeopardy status for deficiencies in emergency services and its governing body.
According to CMS documents, proper procedures were not followed in the transfer of an 80-year old patient from an urgent care center to a nearby hospital for a higher level of care. "Transport orders contributed to the confusion as to the transport entity and where the patient was to be transported," says the survey.
In a POC submitted on October 28, Naples Community Health said it would audit emergency center transfers for 90 days to review its procedures related to patient transfers. A follow-up survey conducted in November determined that NCH was in compliance with Medicare participation rules and its immediate jeopardy status was lifted.
At that time, AHCA told hospital officials that the agency would return to "conduct a full Medicare survey."
That survey, conducted in December, re-imposed Naples Community Hospital’s immediate jeopardy status. In the POC submitted January 15, NCH officials outlined the steps it had already taken to meet the Medicare conditions of participation, including the establishment of a board quality committee to coordinate the hospital’s clinical improvement activities, creation of a multi-disciplinary quality assurance committee, and revision of its medications security procedures.
Since August 2011 HealthLeaders Media has reported on five hospitals or health systems that have faced the loss of the Medicare funds because of survey findings resulting in immediate jeopardy status: Parkland Memorial Hospital (Dallas), Methodist Dallas Medical Center, Grady Memorial Hospital (Atlanta), Cape Fear Valley Medical Center (Fayetteville, NC) and now Naples Community Hospital (FL).
As President Obama puts his final touches the State of the Union speech, governors across the country are wrapping up their own annual assessments. This is State of the State speech season.
Across the country, governors are opening legislative sessions with a look back at their accomplishments and a look forward to their goals for the upcoming year. We've rounded up several and taken a look at how healthcare has fared in these speeches. It's definitely a mixed bag.
There's a lot of worry about Medicaid expenses and negative talk about healthcare reform. But there's also plenty of insight into state priorities such as eliminating pill mills, increasing rural access to healthcare professionals, introducing care coordination to Medicaid and the development of health insurance exchanges.
Here, in alphabetical order, are excerpts from some of the speeches that governors have delivered so far:
Gov. Jan Brewer (R-Arizona)
"Arizonans and Americans are saying to Washington, D.C.: We don't like an ever-expanding government threatening our personal liberties. We don't like government living beyond its means and trying to be everything to everyone. We don't like unconstitutional—and unfunded—healthcare mandates."
Gov. John Hickenlooper (D-Colorado)
"We are well on our way to establishing a Colorado Health Benefits Exchange. We are doing it Colorado's way and it will be ready at the end of 2013 to support small businesses and provide health insurance for 300,000 Coloradans who presently do not have it.
"We are committed to bending the Medicaid cost curve and pursuing strategies that will cut Medicaid costs. We are tackling fraud, over-payments and eligibility. We want to move away from the expensive fee-for-service system to one that drives toward value and rewards healthier outcomes. We have already started to make progress by focusing on preventive care, reducing obesity rates and improving the technology that links people to services. These efforts will all result in important cost savings."
Gov. Jack Markell (D-Delaware)
"The incentives we have in place in our healthcare system reward neither efficiency nor quality. These incentives encourage more services and tests, not better results. We have a system that doesn't encourage healthy behavior in patients and doesn't discourage unhealthy behavior. In essence, we don't have a healthcare system; we have a sick care system.
"Delaware's biggest purchaser of healthcare, the state (government), needs to insist on incentives for providers that are aligned to improve quality and discourage waste. Our Medicaid population, and our state employees and retirees represent nearly 40% percent of the health insurance market here, accounting for a total of $1.7 billion of taxpayer expenditures. We look forward to working with the provider community to get these incentives right because the incentives at work today are the wrong ones. We are pleased that the Delaware Medical Society and Delaware Healthcare Association are already active on this issue and have agreed to work with us."
Gov. Nathan Deal's (R-Georgia)
"Georgians deserve a world-class, public medical university, and it will be a priority of this administration to have a medical college among the top 50 nationally. The Georgia Health Sciences University will seek to become the state's second National Cancer Institute designated Cancer Center. This designation would mean greater access to research dollars and enhance our ability to recruit top cancer specialists. To support this goal, my budget proposal includes an investment of $5 million.
"To address the need for additional health professionals in Georgia, we have been investing in the expansion of undergraduate medical education for several years. We must now take the next step in this process by increasing the number of graduate residency slots. My budget funds 400 new residency slots in hospitals across the state. We must ensure that no doctor trained in Georgia is forced to leave the state to complete his or her medical education."
Gov. C. L. "Butch" Otter (R-Idaho)
"The Obama administration's so-called Patient Protection and Affordable Care Act mandated establishment of a health insurance exchange in each state. I have struggled with the federal imposition of this mandate, in part because Idaho was exploring ways to create its own market-based health insurance exchange long before the federal law was adopted.
Still, last September I allowed State agencies to apply for a grant to prepare for the federal law while we continue fighting it in court. My decision to allow the application to be submitted simply preserved the opportunity for you and all Idahoans to discuss our options and decide what's best for our citizens.
"In the next few weeks we will continue to have those discussions—weighing all our options and the potential outcomes associated with each of them. It's important to remember that those discussions will be taking place in the context of the U.S. Supreme Court agreeing to consider the lawsuit that Idaho and 25 other states filed to protect the 10th Amendment rights of Idaho, and of the people, to choose."
Gov. Sam Brownback (R-Kansas)
"Medicaid spending continues to skyrocket, and it continues to place stress on funding for education, public safety, and other essential services. With additional funding cuts expected from the federal government, Kansas must transform Medicaid into a system that improves services while managing costs. Many states have made the choice to either kick people off Medicaid or pay doctors less. Neither of those choices provides better outcomes. Kansas has a better solution. (We) have produced a measured, innovative and compassionate proposal. Unlike the current one-size-fits-all system, we will offer all Kansans a choice of plans that best fit their needs.
"For years Medicaid was spread among several cabinet agencies. This year we will continue to make government smaller and better focused by consolidating multiple agencies into a restructured Department of Aging and Disability Services. By running government more efficiently and effectively, we can save money and provide better service."
Gov. Steven L. Beshear (D-Kentucky)
"A recent report from the Kentucky Department for Public Health showed that more Kentuckians die from prescription drug overdoses than from car accidents. Think about that: Our medicine cabinets are deadlier than our highways. My friends, this is a scourge. We have to stop it.
"In the last year, we persuaded Florida to begin shutting down its pill pipeline into Kentucky. We created an interstate task force with officials from Ohio, Tennessee and West Virginia to
better identify those who exploit our borders in order to abuse, misuse or divert prescription
drugs.
And we've also strengthened our ability to identify irregular and improper prescribing habits through Kentucky's electronic monitoring system, called KASPER. But KASPER isn't as effective as it could be. During this session, you will be asked to consider a wide-ranging package of legislation designed to strengthen KASPER, including making participation mandatory, and cracking down on pill pushers in white coats and on pill mills in Kentucky."
Gov. Dave Heineman (R-Nebraska)
"Our state has been working hard for nearly two years to protect Nebraska's interests, and I want to assure you and our citizens that Nebraska will not default to the federal government regarding a health insurance exchange. However, it is important to recognize that the U.S. Supreme Court will decide whether this law is constitutional or not by June 29 of this year. The simple truth is it would be a costly mistake to spend millions of taxpayer dollars to begin implementing Obamacare until the U.S. Supreme Court makes its decision."
Gov. Susana Martinez (R-New Mexico)
"As we continue to do more with less, we must never forget that our budget is a statement about our values. That's why my budget invests $45 million more in Medicaid, providing healthcare for the poor and the disabled."
Gov. Andrew Cuomo (D-New York)
"Almost 16 percent of New Yorkers under the age of 65—2.7 million people—are uninsured. Most are working people and their dependents. We have a unique opportunity to address this challenge by developing a New York State Health Insurance Exchange that will be financed entirely by the federal government.
When the Exchange is implemented, more than one million New Yorkers will gain health coverage and individuals who currently buy their coverage directly will see their cost drop by 66%. Small businesses will see the cost of providing coverage to their employees drop by 22%. In addition to the benefits to the uninsured and small businesses, the Exchange will benefit New York's taxpayers. The $1.7 billion that taxpayers currently contribute to offset the cost of providing care to the uninsured will be significantly reduced. The increased federal Medicaid match that recognizes New York's higher Medicaid eligibility levels will bring an additional $18 billion in funds to the state over 10 years."
Gov. John Kitzhaber (D-Oregon)
"All of our job creation and economic development strategies will be futile in the long run unless we are successful in transforming…our healthcare system. We can no longer simply stand by while businesses, families, and your state government are forced to spend more and more every year on an inefficient, hyper-inflationary system that is not making us healthier as a population—dollars that otherwise businesses could be using to create new jobs; families could be using to get out of debt and pay off their mortgages; and the state could be using to invest in children and education.
"In last year's legislative session we set the state stage for fundamental changes to our health care system. We created the state's first health insurance exchange to provide individuals and small businesses with easy to compare information on the quality and price of various health plans. We committed to transforming the delivery of healthcare to reduce year-over-year cost increases while improving health outcomes for Oregonians."
"The business plan for our new Coordinated Care Organization shifts the focus and financial incentives from the emergency room and after-the-fact acute care to prevention, early intervention, and community-based management of chronic conditions. The potential cost savings for the state are substantial – more than $3 billion in the next five years."
Gov. Nikki Haley (R-South Carolina)
"We are tackling the root causes of our problems, not just the symptoms. Healthcare providers are now working in partnership with us to improve quality and lower costs. We identified payment reform to align incentives between healthcare providers, payers, and patients as a top priority and are implementing strategies to do just that."
"We are shifting towards Medicaid managed care, which independent studies show saves us money and delivers better quality than traditional Medicaid. And for the first time, we are giving managed care companies a financial stake in improving quality year after year. No longer will the State of South Carolina bear the costs of poorly managed healthcare alone. We will continue to push back against the federal takeover of our healthcare system. South Carolina does not want, and cannot afford, the President's healthcare plan. Not now and not ever."
Gov. Dennis Daugaard (R-South Dakota)
"I formed the Medicaid Solutions Workgroup during the last legislative session to see what we could do to control the growth of Medicaid spending. What they found was that South Dakota's Medicaid program is an efficient and conservative program. We have never had many of the expensive options that now burden other states, and there are not many things to cut."
A Congressional Budget Office report critical of the Medicare fee-for-service demonstration projects in disease management, care coordination, and value-based payments has received mixed reviews from stakeholders who acknowledge the report's significance while contending that it contains no surprises for the healthcare industry.
Meanwhile, officials at the Centers for Medicare & Medicaid Services, which oversees the demonstration projects, have remained almost silent. CMS provided only a short e-mail statement to HealthLeaders Media on Friday night.
The 30-page CBO report, released last week, reviews the independent evaluations of 10 major demonstration projects—six in disease management and care coordination, and four in value-based payments. According to the CBO, "the evaluations show that most programs have not reduced Medicare spending."
Among the mixed bag of findings:
Disease management and care coordination programs where physicians had direct interaction with care managers, as well as their patients, were more likely to reduce Medicare spending.
On average the programs did not produce enough savings to offset their fees.
The programs had little or no effect on hospital admissions.
Three of the four value-based payment (VBP) demonstrations produced almost no savings for Medicare.
A heart bypass VBP demo that bundled Medicare payments to cover hospital and physician services reduced Medicare spending for those services by about 10%.
The report "is important for the industry because it provides a rich level of detail for each demonstration project. It's information we just haven't seen before," says Tracey Moorhead, president and CEO, of Care Continuum Alliance, an advocacy and research group whose members are involved in population health, including disease and care management, wellness and prevention, health information technology, and pharmacy benefits.
Morehead adds that despite some of the findings, the report reinforces what works, including greater integration and support for physician-led care models. "We're on the right track. We're developing a road map of what works with the Medicare population."
She says the big takeaway for the healthcare industry is that to be successful in managing the health of the Medicare population "we need more patient data on a timely basis." The report notes that demonstrations that were able to collect timely data were "better able to coordinate and manage their patients' care." It adds that "those efforts could be strengthened if CMS improved its ability to provide programs with timely data on their patients' use of services."
Blair Childs, the senior vice president of public affairs for Premier Healthcare Alliance, which participated in one of the VBP demonstrations, says he wasn't surprised by the report. "I could have told you what it would say," he told HealthLeaders Media. "We're in the very early phases of changing the broken fee-for-service system. It will take time to get all the parts to work property to achieve lower costs and higher quality."
He challenged some of the report findings noting that "how much the government paid for healthcare and what the demonstration projects were designed to do are different. The CBO report doesn't look at the goals of the demos and if those goals were achieved."
The Premier Hospital Quality Incentive Demonstration (HQID) tested whether incentives would make a difference in improving the quality of care. According to an e-mail from Alven Weil, the Premier spokesperson, the demo "was never designed to determine whether incentives would lower overall Medicare costs." He added that "we did see a reduction in costs in the hospitals participating in HQID, (but) those did not directly translate to Medicare savings, at least (not) in the short term."
The report does concede that "demonstrations aimed at reducing spending and increasing quality of care face significant challenges in overcoming the incentives inherent in Medicare's fee-for-service payment system, which rewards providers for delivering more care but does not pay them for coordinating with other providers."
It suggests that "substantial changes to payment and delivery systems will probably be necessary for programs involving disease management and care coordination or value-based payment to significantly reduce spending and either maintain or improve the quality of care provided to patients."
The CBO report also identifies three improvements CMS could make in the design and evaluation of the demonstration projects program:
Use randomized designs or well-matched comparison groups to identify the effects of any particular intervention, and to identify what strategies are effective.
Report evaluation findings quickly and consistently. If demonstrations are meant to be models for practice, the results should be current and comparable.
Make sure the number of Medicare beneficiaries in a demonstration project is large enough to yield meaningful results.
Neither CMS or the Department of Health and Human Services provided specific comments on the report findings. In an e-mail statement Erin Shields, director of communications for healthcare at HHS, said: "The Department tests a wide range of demos, not just for cost savings but also for quality improvement.
These demos were started under prior administrations and while not all of these demos have been successful, there are important lessons learned for what works and what doesn't. As the Obama Administration moves forward testing new, stronger payment models in partnership with private industry, we're confident that they will achieve cost savings and quality improvements."
Cape Fear Valley Medical Center in Fayetteville, NC has entered into a systems improvement agreement with the Centers for Medicare & Medicaid Services that will allow the 485-bed safety-net hospital to retain its Medicare funding while it works to correct deficiencies that have resulted in three immediate jeopardy status reports since October 2011.
"The SIA agreement is effective immediately and outstanding notice of termination for this facility is stayed/lifted," CMS said in an email Thursday night.
CMS confirmed that until reaching the "rare agreement" with CFVMC, it had intended to publish a public notice that "the Medicare provider agreement between Cape Fear Valley Medical Center (CFVMC) and the Secretary of Health and Human Services (HHS) would be terminated effective January 19, 2012."
In an e-mail exchange, Vince Benbenek, vice president of marketing and outreach at CFVMC, said the agreement "is not a typical SIA. CMS has accepted Cape Fear Valley Medical Center's Plans of Corrections. Cape Fear Valley has voluntarily entered into this SIA to allow us the opportunity to step back and take a methodical, comprehensive review of all policies and procedures before completing a CMS survey. We estimate our review will take around 180 days, after which we will have a Medicare certification survey."
Benbenek declined to release any additional details of the agreement.
CFVMC has engaged The Greeley Company to consult on the review process. Cape Fear Valley has been working with Greeley since December to make improvements in its emergency department and the discharge documentation process. According to CFVMS, improvements include the addition of a physician in the triage area and the addition of a clinical person in the emergency department waiting room to perform reassessments on patients. (Full disclosure: The Greeley Company is a division of HCPro, as is HealthLeaders Media.)
CFVMC has faced a series of CMS surveys in recent months. The first, in October 2011, stemmed from an April 2011 incident that involved the death of a patient. According to CMS documents released to HealthLeaders Media as part of a request under the Freedom of Information Act, a 27-year-old behavioral health patient was physically restrained on the floor of his emergency department room by two contracted police officers "who were not trained in patient de-escalation or therapeutic hold techniques."
After the October survey visit, CMS notified CFVMC that it faced immediate jeopardy status in four broad categories: governing body, patient rights, quality assessment/performance improvement and nursing services. While the immediate jeopardy status put Cape Fear Valley's Medicare participation at risk, its status as a safety-net hospital made it unlikely that CMS would take that step.
At that time, the medical center developed a corrective action plan, but in a November 29 letter, CMS notified Cape Fear Valley that a follow-up survey indicated that the four original deficiencies remained. And new deficiencies in physical environment and emergency services were identified.
Before CFVMC could respond to that letter, CMS received a complaint allegation related to a patient who died in November within an hour of his involuntary discharge from Cape Fear Valley. According to CMS documents, the nursing staff failed to reassess the patient after dispensing pain medication and at discharge, and failed to initiate the hospital's rapid response team after receiving telephone calls from two sources concerned about the patient's condition.
A survey noted additional deficiencies in the categories of patient rights, nursing services, and patient rights. The medical center's CAP, submitted on December 8, noted the hiring of The Greeley Company.
A second complaint allegation related to the death of a patient in CFVMC's telemetry unit was received in December. A complaint investigation conducted by CMS between December 20 and December 22 found that the nursing staff failed to report, respond and assess a change in the patient's heart monitor.
In a January 3, 2012 letter, CMS said the follow-up survey found the medical center in compliance for emergency services, quality assessment and performance, and physical environment, but that it remained in immediate jeopardy status for governing body, patient rights, and nursing services.
Parkland Memorial Hospital in Dallas faced a similar set of circumstances late last summer and signed an SIA in late September. At that time, officials in the Dallas office at CMS said Parkland was provided with "an opportunity to enter into a systems improvement agreement" in recognition of the hospital's importance to the community it serves.
The House Ways and Means Committee voted Wednesday to repeal the controversial CLASS program. The 23-14 vote was primarily along party lines with one Democrat, Rep. Ron Kind (D-WI), joining the repeal effort. A vote by the full House of Representatives is expected in February.
The Community Living Assistance Services and Supports Act, which is part of the Patient Protection and Affordable Care Act, is supposed to provide for voluntary, self-funded, long-term care insurance through the workplace.
The program was expected to go into effect this year, but in October 2011 the Department of Health and Human Services announced that CLASS, which features unlimited lifetime benefits, was not financially sustainable and halted its implementation.
Since then Republicans in both the House and the Senate have aggressively pursued its repeal.
Members of the House Ways & Means Committee spent more than an hour discussing HR 1173, which was first introduced in March 2011 by Rep. Charles Boustany Jr. (R-LA), and boasts 110 cosponsors. In his opening remarks, Boustany described CLASS as "a new unfunded entitlement that we cannot afford." He cited a Congressional Budget Office report that said CLASS "cannot be operated without mandatory participation to ensure its solvency."
CLASS is set up as a voluntary program with participants paying premiums for five years before becoming eligible to collect benefits, which would be at least $50 per day.
The committee chair, Rep. Dave Camp (R-MI), quoted an unnamed Democratic Senator as describing CLASS as a "Ponzi scheme of the first order, the kind of thing Bernie Madoff would be proud of."
In their hearing statements, Republican and Democratic committee members touched on familiar themes: the potential for lawsuits to require the implementation of CLASS, the program's affect on the budget, and the importance of identifying solutions to the long term care issue. Democrats favored restructuring CLASS while Republicans spoke about repealing the program.
"We need to wipe the slate clean," explained Rep. Diane Black (R-TN), who cited her experience as a state legislator in developing a solution to Tennessee's long term care crisis. "When I first arrived here, I read the entire Affordable Care Act. As soon as I read about CLASS, I knew we could never sustain the structure. We need to start all over to develop a workable solution."
Rep. Lloyd Doggett (D-TX) acknowledged that the CLASS "is not a well-done solution" and asked committee members to work together on a bipartisan solution. He contended that Republicans were more interested in repealing another part of the ACA rather than stepping forward to address the problems. "Let's replace not repeal."
Republicans cited a study by the Congressional Research Services that presented the possibility of lawsuits forcing the implementation of CLASS if it remains a part of the ACA. "CLASS could return," stated Rep. Boustany. "A federal judge could bring it back."
Rep. Thompson (D-CA) dismissed the possibility of lawsuits. "Anything and everything is subject to lawsuits. We could spend all of our time repealing laws because they might mean a lawsuit."
Although HR 1173 is expected to pass in the Republican-led House, an effort to repeal CLASS in the Senate has failed to gain any serious traction. AARP, the powerful seniors lobby, has joined forces with about 50 other groups to fight any repeal efforts.
With Supreme Court challenges to the individual mandate filed, arguments scheduled to be heard March, and a final decision expected sometime this summer, it seems like a good time to step back and assess what the loss of the individual mandate could mean for health insurance premiums, coverage, and uncompensated care.
That's precisely the analysis applied in a January report from the nonpartisan Robert Wood Johnson Foundation. You may have seen some news stories about the report. The headlines have referenced how premiums could increase by 25% without the Patient Protection Affordable Care Act mandate.
That's certainly eye-catching, but it's only part of the story. A look at some of the other numbers included in the report helps put into perspective why there is so much opposition to healthcare reform and the individual mandate. Here's a hint: Government and employer spending will increase.
With the individual mandate in place, spending will increase because more people will have coverage. But if you're opposed to healthcare reform, you'll focus on the $98 billion increase in government and employer spending and gloss over the estimated 24 million formerly uninsured who will now have health insurance coverage.
Researchers at RWJF compared healthcare spending and enrollment under four ACA scenarios, one with the individual mandate and three without. Here's a look at some of the numbers:
1. The ACA as enacted (including the individual mandate). Compared with the era before healthcare reform, the number of people with private coverage increases by 7.4 million because the ACA significantly increases the demand for private insurance. Medicaid gains 16.4 million members. The number of uninsured is cut almost in half to 26.4 million and the cost of uncompensated care drops by 50% to $39 billion. As enrollment increases, spending is up across the board. Government spending increases by $87 billion to $340 billion. Employers and individuals each spend $11 billion more or $540 billion and $371 billion, respectively.
2. High interest in HIX and enrollment is strong. State-base health insurance exchanges, (HIX) where individuals and small businesses can purchase insurance coverage, are supposed to be up and running by 2014. Private coverage loses 3.6 million members as many shift to HIX; Medicaid posts smaller enrollment gains than with the individual mandate adding about 13.9 million members. Nearly 40 million remain uninsured; the cost of uncompensated care is $59 billion. Without the mandate and with lower enrollment, healthcare spending is down across the board. Government spending decreases by $10 billion. Employers slash spending by $34 billion, and individuals spend $29 billion less.
3. Low interest in HIX and low enrollment. This scenario looks at how a lack of publicity and low carrier participation could affect enrollment and spending. Without the individual mandate, private coverage loses an estimated 10.7 million enrollees; Medicaid loses 2.9 million members. The number of uninsured is 40 million and the cost of uncompensated care remains at $59 billion. The government spends $14 billion less on healthcare. Employers and individuals see their spending drop by $30 billion and $25 billion, respectively.
4. Low interest in HIX, low enrollment, and less subsidized coverage available. Private coverage and Medicaid lose 12.3 million and 3.5 million members, respectively. The number of uninsured grows to 42.2 million and the cost of uncompensated care increases to $61 billion. Without the individual mandate, government spends $26 billion less on healthcare. Employers and individuals see their spending drop by $26 billion and $30 billion, respectively.
If you're opposed to healthcare reform, these are some compelling numbers that appear to make the case to jettison the individual mandate. But here's the deal: it's complicated.
A case in point is the Medicaid Disproportionate Share Hospital payment. A reduction in the DSH payments in the ACA is based on a 45% reduction in the number of uninsured. According to the report, without the mandate, that condition might not be met "in which case there would be no Medicaid DSH savings to the federal government."
Sure my eyes glaze over when I look at all the tables and numbers in the nine-page report, but this is some of the crucial analysis that state governments and Congress need to consider—oops—make that should have considered.
The fate of the individual mandate now sits with nine Supreme Court justices.
Cape Fear Valley Medical Center in Fayetteville, NC has received notification from the Atlanta office of the Centers for Medicare & Medicaid Services that it faces its third immediate jeopardy status in as many months.
The 485-bed medical center, which is a safety-net hospital, must submit a corrective action plan to CMS by Jan. 19. Another survey will be performed to confirm that the CAP has been implemented and is successful.
Although the exact nature of the new problem is unknown, CMS applies the immediate jeopardy designation to situations that represent an immediate and serious threat to patient health and safety. In an e-mail statement, Vince Benbenek, a CFVMC spokesperson, referenced a telemetry problem. "The deficiency found in the Dec 22 survey relates to our policy for telemetry. Our practice was consistent with national guidelines. Our policy however, was not in line with our practice. Therefore we have updated our policy to match our practice."
While Benbenek confirmed that the medical center has been under immediate jeopardy status three separate times, he declined to comment on CMS's findings or what precipitated the CMS surveys. He did confirm that the findings date back to October. "These are individual situations that involve patients, and HIPPA prevents us from discussing patient information."
On December 4th, however the medical center's CEO, Michael Nagowski, published an open letter in a local paper that referred to a review that involved "our process for discharging patients." Benbenek would not confirm that the review involved a patient who was involuntarily discharged from CFVMC and died on his way home.
He did note that the medical center "would face Medicare termination only if the surveyors do not validate our plan upon their return. We are confident that the upcoming survey will once again validate our plan and Medicare and Medicaid funding will not be terminated."
Officials at CMS's office in Atlanta declined to release any documents related to the three immediate jeopardy findings. HealthLeaders Media filed a FOIA (Freedom of Information Act) request for the documents but was told it could take two weeks to receive the requested information.
Problems at CFVMC have attracted the attention of the Joint Commission, a nonprofit group that accredits and certifies thousands of hospitals nationwide. Bret Coons, a Joint Commission spokesperson, told HealthLeadersMedia in an e-mail exchange that the commission "is aware of an incident at Cape Fear Medical Center that is similar to what you described, but we can neither confirm nor deny the details. The Joint Commission's Office of Quality Monitoring is in communication with Cape Fear Medical Center and is evaluating the incident."
Coons explained that the Joint Commission reviews every complaint and potential adverse event that it has been made aware of regarding its accredited organizations. The source of any complaint is confidential.
