The Centers for Medicare & Medicaid Services denied on Thursday Florida's medical loss ratio waiver request to allow health insurers more time to meet new MLR standards. CMS rejected Florida's argument that meeting the new 80% requirement would destabilize the state's individual market and cause insurers to withdraw.
In the waiver request filed with CMS in March 2011, Florida officials asked for an adjustment of the MLR standard to 68%, 72%, and 76% for 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% to 20% of their premium dollars on administrative expenses. The idea is to limit administrative spending so that 80 cents to 85 cents of every premium dollar is spent on patient medical care.
Health insurers that don't meet the MLR requirement will have to pay a rebate to their members. That's money insurers are anxious to hold onto, so they have appealed to their state departments of insurance to request state waivers to delay implementation of the MLR requirement.
Steve Larsen, director of the CMS Center for Consumer Information and Insurance Oversight, noted in a press conference that with more than 20 carriers Florida has a very competitive individual health insurance market and that the state provided no evidence that meeting the 80% standard would create a hardship for the insurers.
"Most of them already meet that standard and the ones that don't are sufficiently profitable to provide rebate payments," he said.
Larsen also took issue with Florida's contention that four health insurance providers will leave the state if the 80% MLR rate was upheld. He noted that based on enrollment, none of the insurers would even be subject to the MLR rebate requirement in the first place.
"Most insurers in the state have told us that they will be adapting their business models and pricing to the 80% MLR so consumers will receive a better value for their premium dollar," Larsen said.
The Florida waiver application drew early criticism for its lack of substance. Citi analyst Carl MacDonald said in a March report "in our view, Florida's minimum MLR waiver request is pretty weak, and we don't think it's likely that the waiver request will be granted, mainly because the state didn't present a real convincing argument that the individual market will be meaningfully disrupted."
Larsen made a point of mentioning the "unprecedented level of public comment that was uniformly in opposition to the adjustment."
State officials, who now have 10 days to appeal the CMS decision, declined to reveal if they will continue to pursue the waiver. "We are not going to make that decision until we have had time to review and evaluate the letter," Jack McDermott, spokesperson for the Florida Office of Insurance Regulation, told HealthLeaders Media in an e-mail exchange.
State politics may favor an appeal. Healthcare reform is unpopular in the state and Gov. Rick Scott has declined to implement provisions of the act.
Florida is one of 17 states have filed MLR waiver requests. CMS has granted waivers to Georgia, Iowa, Kentucky, Maine, New Hampshire and Nevada. It denied waivers for Delaware, Florida, Indiana, Louisiana and North Dakota. Waiver decisions for Kansas, Michigan, Oklahoma, and Texas are pending. North Carolina and Wisconsin are waiting to hear if their applications are complete so the review process can begin.
The Department of Health & Human Services announced on Tuesday that it will award $218 million to 26 hospitals and hospital associations for the creation of learning collaboratives that will target preventable injuries and complications from hospital-acquired conditions.
Hospital Engagement Networks (HENs) will identify best practices that can be used to improve patient safety. HENs will work to share the best practices with other hospitals and healthcare providers to improve patient safety in 10 focus areas:
Adverse drug events
Catheter-associated urinary tract infections
Central line–associated blood stream infections
Injuries from falls and immobility
Obstetrical adverse events
Pressure ulcers
Surgical site infections
Venous thromboembolism
Ventilator-associated pneumonia
Preventable readmissions
The networks will be developed at the regional, state, national, or hospital system level. Intermountain Healthcare in Salt Lake City will lead a HEN that includes a multi-state group of health systems: Mayo Clinic (Minnesota), Baylor Health Care System (Texas), Dartmouth-Hitchcock Medical Center (New Hampshire), Denver Health (Colorado), Providence Health & Services (Washington), and the Salt Lake City Veteran's Affairs Medical Center.
Other organizations receiving awards include the American Hospital Association, Michigan Health & Hospital Association, Premier, VHA, and the Washington State Hospital Association.
"In just the past eight months we've seen an overwhelming response from doctors, employers, patient advocates, and other partners who believe the time is now to improve patient safety. As a former ICU nurse and hospital administrator, I'm proud to see hospitals stepping up to the plate," said Marilyn Tavenner, acting administrator of the Centers for Medicare & Medicaid Services, the HHS agency sponsoring the program.
HEN participants were selected based on a competitive process that included an assessment of the applicant's technical capabilities, past experiences, and its key personnel and staff. The initial contracts are for two years but may be extended for one additional year.
Hospital Engagement Networks will be required to conduct training and technical assistance to help hospitals meet the quality measurement goals set by the Partnership for Patients, a public-private patient safety initiative whose goals include reducing the incidence of preventable hospital-acquired infections by 40% and reducing hospital readmissions by 20% over the next three years.
CMS will monitor HENs to ensure that patient safety is actually being improved. The networks will be required to provide reports to CMS that describe their activities and the progress of their quality improvement efforts.
The New Democrat Coalition, which promotes itself as a group of centrist House Democrats, released a white paper Friday that describes its healthcare policy priorities for 2012.
Cue the soaring music as the New Dems go way out on a political limb (not) and declare their support for a new Medicare payment system that rewards quality, new delivery models that increase efficiency, an FDA approval process that moves more quickly, and widespread adoption of health IT systems.
The list may sound familiar because it encompasses many of the tenets of the 2010 Patient Protection and Affordable Care Act. So what's the point? A Congressional insider, who asked not to be identified, calls the 900+-page PPACA a "work in progress," with the Department of Health and Human Services and the Centers for Medicare & Medicaid charged with connecting the dots to develop a coordinated care system that emphasizes quality and efficiency. "The coalition will continue to put out proposals and weigh in at the regulatory level," my source says.
So think of this white paper, New Democrat Coalition Principles for Supporting Innovation in our Nation's Health Care System, as a political line in the sand. It puts Republicans and other Democrats, as well as HHS and CMS, on notice that the 42-member coalition is united in its focus on this shortlist of priorities to advance the continued implementation and refinement of PPACA. With the exception of the FDA proposals, the coalition won't be fighting for new legislation. Mostly it will hold committee hearings and schedule dialogue with regulatory agencies.
In general, the proposals call for closer cooperation between the public and private sectors to achieve innovative healthcare solutions. There is also an emphasis on not reinventing the wheel by getting the public sector to quickly incorporate best practices that have already been tested in the private sector. The Blue Cross and Blue Shield Association, for example, has touted a series of steps its health plans have taken that could result in $319 billion in savings for the Medicare and Medicaid programs.
And although it isn't clearly stated in the white paper, the innovation emphasis is apparently a warning to Republicans that the group supports the work of the CMS Center for Medicare and Medicaid Innovation. The GOP has made noise about cutting the center's funding.
1.Structure the Medicare payment system to reward quality and value while reducing costs for patients and providers.
Phase out the sustainable growth rate and replace it with a value-driven system that emphasizes quality of care over volume.
Transition from the fee-for-service reimbursement model to create a variety of physician payment models, including bundled payments, risk-adjusted capitation, and global payments.
Consider the impact of Medicare, Medicaid, and private insurance reimbursement policies on current and projected workforce shortages in the health professions.
2.Facilitate cooperation between the public and private sectors to promote successful implementation of healthcare delivery models that increase efficiency and improve patient care.
Facilitate participation in new Medicare delivery models by allowing successful multi-payer demonstrations to expand to traditional Medicare fee-for-service beneficiaries.
Enable private payers to invest in infrastructure development for smaller practices that want to develop or participate in innovative care delivery models.
Improve consistency in data collection and analysis across Medicare shared savings programs.
Consolidate elements of various shared savings programs such as quality reporting systems and technical assistance to conserve resources.
While protecting patient privacy, increase de-identified data sharing across the Medicare program to allow for more accurate comparisons of spending and outcomes.
Invest in enhanced research, better care coordination, and disease management through continued support for providers and third-party payers to reduce the burden of ICD-10 conversion.
3.Modernize the FDA approval process to foster innovation, growth through competition, and timely patient access to new treatments and technologies.
Ensure that the FDA has the funding and Congressional support to carry out its mission.
Ensure that the FDA uses its funding more efficiently to meet its performance targets and keeps a concentrated, top-to-bottom focus on innovation.
Engage industry stakeholders to better assess the cost of moving products through the FDA approval process.
Build on the successful practices demonstrated through FDA's 510(k) approval process that allow safe and effective technology and innovations to get to market in the most efficient way possible.
Address uncertainties in the FDA approval process by setting explicit and transparent guidelines for drug and device manufacturers.
Foster an open dialogue between regulators and the private sector to reduce administrative burdens on both sides.
4.Promote widespread adoption of interoperable health information technology (HIT) systems across healthcare settings to reduce costs and provide savings for patients and businesses.
Foster an HIT marketplace where small providers and hospitals, as well as providers in disadvantaged communities, can reduce financial risks associated with HIT investments and become meaningful users of comprehensive, affordable HIT systems.
Make sure meaningful use standards are focused on outcomes as well as inputs.
What will happen to this list of priorities is anyone's guess. Efforts to garner a comment on the white paper from Rep. Joe Pitts (R-PA) were unsuccessful. Pitts chairs the House Energy and Commerce Committee's Subcommittee on Health, which regularly holds hearings on many of the topics on the agenda of the New Democrats. There is general agreement across the political aisle that quality and efficiency are important to the success of our healthcare system—but how to pay for everything is always a stumbling block.
Each year more than 1,000 hospitals voluntarily complete an extensive nine-part survey that they hope will lead to them being named to The Leapfrog Group's top hospital list.
The survey, launched in 2001, focuses on four critical areas of patient safety: the use of computer physician order entry (CPOE) to prevent medication errors; standards for performing high-risk procedures such as heart surgery; protocols and policies to reduce medical errors and other safe practices recommended by the National Quality Forum; and adequate nurse and physician staffing.
Hospitals are also measured on their progress in preventing infections and other hospital-acquired conditions and adopting policies on the handling of serious medical errors. Criteria are weighted, value scores are applied, and then the hospitals face the toughest standard.
"We ask ourselves where we would send our children," Leah Binder, Leapfrog Group CEO, told HealthLeaders Media.
Hospitals that participate in the Leapfrog survey include academic medical centers, children's hospitals, and community acute care hospitals in urban, suburban, and rural settings. This year 65 hospitals made the cut and earned The Leapfrog Group's annual "Top Hospital" designation.
Virginia Mason Medical Center in Seattle has made the list six times.
The 336-bed medical center fully meets Leapfrog standards in five of seven patient safety ratings:
Reducing in-hospital injuries
Preventing medical errors
Managing serious errors
Maintaining appropriate ICU staffing
Reducing preventable medical mistakes
Virginia Mason has made some progress in meeting Leapfrog standards for reducing pressure ulcers and has made substantial progress in meeting the standards to reduce ICU infections.
In addition the medical center fully meets Leapfrog surgical quality and cost standards in seven of nine treatments, including heart bypass surgery and pancreatic resection. It has made substantial progress to meet the standards for aortic valve replacement and heart attack treatments.
In an e-mail exchange, Gary Kaplan, MD, chair and CEO of Virginia Mason, explained that its focus on Leapfrog indicators began about 10 years ago, when The Boeing Company became the lead employer for The Leapfrog Group's roll-out in the Puget Sound region.
The medical center was already looking at new management models to help improve its healthcare delivery system and improve quality. Boeing used the Toyota production system, which and Kaplan and his team adapted to healthcare.
Similar to the Toyota system, the Virginia Mason production system is based on eliminating waste—anything not having value as defined by the customer. "We realized that our systems weren't designed for the safety and convenience of our customer, the patient, but based on the preferences of our providers, managers, and technicians and those of us working in healthcare," explained Kaplan.
He added that "the Leapfrog Group became an early priority because its measures provided tangible evidence of both performance and improvement over time, and because the pillars of the Virginia Mason production system and The Leapfrog Group are complementary."
In a November 2011 speech before the U.S. Senate's Committee on Health, Education, Labor and Pensions, Kaplan noted several organizational and departmental improvements since implementing the VMPS, including:
Saving $11 million in planned capital investment by using space more efficiently.
Reducing inventory costs by $2 million through supply chain expense reduction and standardization efforts.
Reducing labor expense in overtime and temporary labor by $500,000 in one year.
Reducing professional liability insurance 59% from 2004 to 2010.
Improving medication distribution from physician order to availability for administration from 2.5 hours to 10 minutes, and reducing incomplete inpatient medication orders from 20% to 40% to less than 0.2% through process improvement and CPOE implementation.
In 2010 The Leapfrog Group recognized Virginia Mason and the University of Maryland Medical Center as The Leapfrog Group's "Top Hospitals of the Decade" in recognition of their achievements in reducing medical errors and their innovations in patient safety and quality.
The Leapfrog hospital survey is adjusted each year to reflect new research about quality, safety, and efficiency measures. The 2011 survey added a section on the patient experience. Changes under consideration for the 2012 survey include the removing hospital-acquired pressure ulcers and injuries measurements and expanding the list of ICUs for which hospitals will be asked to report their rates of central line associated bloodstream infections.
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. All of them are playing a crucial role in making the healthcare industry better. This is the story of Nicholas Christakis.
This profile was published in the December, 2011 issue of HealthLeaders magazine.
"People are connected, so their health is connected … We need to think about health interventions in a way that's more collective and not as individualistic."
Trained as both a physician and a social scientist, Nicholas Christakis, MD, PhD, MPH, says his intellectual toolkit spans a broad set of concepts and materials. "I live my life at the intersection of different ideas. I try to see if there are ways to bring knowledge from disparate fields to improve public health and public policy."
Christakis is a professor of medicine and medical sociology at Harvard Medical School, and is the scientific founder of Activate Networks, Inc. (formerly Mednetworks.)
For the past decade Christakis, along with his long-time collaborator, James Fowler, PhD, professor of political science and medical genetics at the University of California, San Diego, has been studying human social networks and their effects on health. These aren't Facebook networks. Christakis analyzes the old-fashioned face-to-face networks that people form with friends, families, neighbors, coworkers, and others.
"We look at how human beings connect to one another, how we create these elaborate networks, and what it means for our lives. We're trying to understand, for example, the social determinants of ill health. How is it that social phenomena can be more responsible for how we as a society or as individuals live or die than clinical or biological factors?"
His work in the areas of depression, obesity, and smoking has been published in the New England Journal of Medicine and the Proceedings of the National Academy of Sciences. Christakis is co-author with Fowler of Connected: The Surprising Power of Our Social Networks and How They Shape Our Lives.
Most of the network research takes place at The Christakis Lab at Harvard University in Boston and involves elaborate computer modeling.
In one of the lab's best known studies, data from the famous Framingham Heart Study was used to demonstrate how weight gain in one person might ripple though a social network. In looking at the relationships of 12,000 people, Christakis and Fowler found that a person's chances of becoming obese increase by 57% when a friend becomes obese; by 40% if a sibling becomes obese; and by 37% if a spouse becomes obese.
"When people around you gain weight, your attitude about what constitutes an acceptable body size can change, and you might gain weight, too," Christakis explains.
One of his favorite studies involves a new way to predict epidemics. It uses the friendship paradox (in 25 words or less: A given person's friends are probably more popular than that person) to identify who's at the center of a social network and who's at the margins. Think of the people in the center as trendsetters or, as Christakis likes to call them, "early warning systems." Just as this group might be early adopters for fashion, technology, music, etc., they also get sick first and the illness spreads through the entire network.
Christakis says the overarching idea of his social network research is that "people are connected, so their health is connected." Your individual health depends not only on your own choices and behaviors but also on the people who surround you, including people you know and people you don't know.
Within a network, the fact that a person unknown to you has the flu has meaning for you, explains Christakis. "What this suggests is that we need to think about health interventions in a way that's more collective and not as individualistic."
Christakis says studying networks is not just an intellectual exercise. "What can we do with this knowledge? We know that germs flow though networks, ideas about drug prescriptions and health practices flow through networks, and behavioral phenomena such as weight gain or smoking cessation flow through networks. How can we exploit this knowledge to intervene in the network to make the world a better place?"
Christakis and Fowler are interested in how they can take a network of people in a school or workplace and identify the influencers to target for behavior change. "Who can influence people to wear their safety helmets or take their blood pressure medication or quit smoking?"
Harvard has licensed information from Christakis Lab to a start-up called Activate Networks Inc., which was cofounded by Christakis. Companies interested in tapping in to the power of social networks include Accenture, Cardinal Health, Humana, Merck, Nortel, P&G, and UBS.
Among ANI's projects is a deal with Healthways, a disease management company, to use social networks to improve wellness in the workplace. A pharmaceutical company is working with ANI to see how social networks can be used get physicians to adopt innovations and superior prescribing behaviors.
Christakis admits that he sees networks everywhere. "When I began studying networks, it was like I put on different glasses. I see how my actions affect others and their actions affect me."
This article appears in the December 2011 issue of HealthLeaders magazine.
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. All of them are playing a crucial role in making the healthcare industry better. This is the story of Chris Nowinski.
This profile was published in the December, 2011 issue of HealthLeaders magazine.
"I hope to reform football, ice hockey, soccer, and lacrosse by the time I have a child old enough to play."
Chris Nowinski collects brains—specifically, the brains of deceased athletes.
Nowinski is the president, CEO, and cofounder of the Sports Legacy Institute, a Boston-based nonprofit that works to raise awareness about concussions and their long-term effects on athletes.
His interest stems from personal experience. As a Harvard football player and then a professional wrestler with World Wrestling Entertainment, Nowinski says he's had six concussions. Make that six concussions he can remember.
"I started playing contact sports when I was six years old. Based on the data, I'm sure that I had more bell ringers and dings but I just can't remember them. There were times when I hit my head, but I was one of those unlucky guys—I never lost consciousness long enough for anyone to notice."
His wrestling career ended in 2003 when he caught a boot to the chin during a routine tag-team match. He says he struggled with that particular concussion for several years, visiting doctor after doctor in search of relief. Those were dark days, he says. "They were pure misery."
Nowinski credits Robert Cantu, MD—the eighth doctor he saw for his concussion problems—with his turnaround. Cantu, who is known as the "godfather of sports concussions," explained to Nowinski that athletes don't need to play through concussions, but instead need to rest their concussions. And for the first time he learned that many of his health problems were among the long-term consequences of multiple concussions.
The 33-year-old says he still struggles with some of the effects of multiple concussions. "I can't exercise at 100% without getting a headache. I take medication for my headaches that also enhances my cognition. I'm still highly functional but I'm definitely different," Nowinski says. He doesn't have any trouble reading or driving, but concentrating can be a problem when he doesn't take his medication.
Nowinski spent hours in the Harvard library reading about concussions. His research led him to conclude that athletes were "all just being lied to about the consequences of playing some sports."
He realized he had been "recklessly hitting my head for 19 years" without ever hearing about concussions. "No one talked to the athletes about [concussions], so we never said anything when we were dizzy or seeing double."
His research led him to write Head Games: Football's Concussion Crisis to educate parents, coaches, medical professionals, and others about the long-term effects of brain trauma.
He realized that people needed physical evidence to change their minds and started actively pursuing brains for study. He began calling families of deceased athletes asking for brain donations for research.
His first brain—or rather brain tissue—came from Andre Waters, a former NFL defensive back who committed suicide in 2006. Examination of Waters' brain tissue produced evidence that the 44-year-old suffered from chronic traumatic encephalopathy or CTE, which is a progressive degenerative disease related to repetitive brain trauma.
Nowinski's campaign to publicize those results is credited with driving the national discussion about the effect of repetitive brain trauma on athletes.
With Cantu, Nowinski founded the Sports Legacy Institute, which is now affiliated with Boston University School of Medicine. In 2008 SLI and BU created The Center for the Study of Traumatic Encephalopathy to conduct state-of-the art medical research on CTE. The center maintains a brain bank of more 90 donated brains. Nowinski is codirector of the center and serves as its chief brain recruiter.
While Nowinski still makes the difficult call to families asking for brain donations, his work is becoming so well known that families of deceased athletes often initiate the contact. He says he's amazed at how brain donations are becoming an accepted part of sports. "People tell me that they were expecting my call and that the player discussed wanting to make a brain donation." Several hundred athletes have already agreed to donate their brains to CSTE when they die.
One of CSTE's best known cases involves the brain of former NFL player Dave Duerson. The 50-year-old committed suicide in February 2011. He left a note and text message directing his family to donate his brain for research. He was diagnosed with a moderately advanced case of CTE overall but the pathology was severe in areas of the brain that influence impulse control, inhibition, emotion, and memory.
Deaths like Waters' and Duerson's used to be attributed to emotional problems, notes Nowinski. "Every athlete that lost their mind just missed their sport. Now we're discovering that they have degenerative brain disease."
Much of Nowinski's time is spent trying to make sure young athletes don't end up like Waters or Duerson. He travels about 100 days each year speaking to communities, colleges, high schools, and even elementary schools. He tells his personal story and leads SLI's Advanced Concussion Training program to help coaches, players, and parents recognize symptoms and provide the correct treatment for concussions.
He says protecting young players is his motivation "Adults need to understand the risk of the sports we are signing up [youngsters] to play. They need to see how trauma has destroyed the lives of so many athletes. I am willing to travel around and to try to make sure it doesn't happen to the next generation. You always have to remember that these are just children who are playing a sport meant to develop them as human beings. Wins and losses truly do not matter."
Repetition is the biggest issue in brain trauma. Nowinski explains that research now says that every hit to the head counts and is potentially destructive. He cited statistics for a high school football player in Illinois, who wore a helmet with sensors and took more than 2,200 hits to the head in a single season.
He said football and soccer have the highest number of hits repetitions. "In football 75% of the hits come in practice so now there's a big bulls-eye on practice and radically changing it."
Nowinski limits his own sports playing to basketball. When he has a family he wants his children to play sports, but "we'll have to talk about contact sports. I hope to reform football, ice hockey, soccer, and lacrosse by the time I have a child old enough to play."
This article appears in the December 2011 issue of HealthLeaders magazine.
Last week the Department of Health and Human Services issued its final rule for the medical loss ratio (MLR) in the Patient Protection and Affordable Care Act. The response was surprisingly reserved considering that the much-maligned MLR ranks second only to the Independent Payment Advisory Board as a flashpoint for Congress, where hearings have focused on potential economic chaos created by MLR.
There was none of the anticipated rage from health plans, which are now required to spend 80% to 85% of their premium dollars on enrollee medical care. The National Association of Insurance Commissioners seemed content to just thank HHS for including most of its recommendations.
Even insurance brokers and insurance agents, who have bitterly complained in congressional hearings that the MLR requirement will cost them their livelihood, provided a somewhat restrained response.
So what gives? I think it was the timely release of a General Accounting Office report that contains some unexpected news: At least 64% of all healthcare insurers in 2010 would have met or exceeded the 2011 MLR requirements contained in PPACA. Hmmm. Seems like there may not be that much to complain about, at least in terms of hitting the numbers.
The success rate is even higher when only insurers in the large and small group markets are considered: 70% and 77%, respectively, would have met the standard. Individual plans will have a tougher time?only 43% hit the PPACA requirement.
The report is based on preliminary MLR data submitted to NAIC in April 2010. It covers almost 1,800 insurers and more than 67 million lives. It seems to kick a few holes in the argument that the MLR requirement will undermine the very fabric of the healthcare industry.
What is lost amid much of the MLR rhetoric is that PPACA expands the MLR definition to include not only clinical services but also expenses associated with improving healthcare quality. That means programs like case management for chronic diseases, care coordination, and even the IT necessary to support the programs can be counted in the loss ratio.
Quality initiatives such as efforts to reduce medical errors and increase patient safety can also be counted in the new MLR formula. Also included are certain federal and state taxes, licensing, and regulatory fees paid by health insurers.
It looks as if HHS designed the MLR to help achieve the vaunted triple aim of healthcare: better care, better health, and lower cost!
According to the GAO report, the inclusion of these extra items will "generally increase insurers' MLRs." Using the PPACA formula results in MLRs that were between 4.8 and 7.5 percentage points higher than ratios based on the traditional formula. Insurers credit the tax breaks as the biggest factor in helping punch up the MLR.
Health insurers have been busy adjusting their company operations to reflect the new MLR reality. A July 2011 report issued by the GAO looked at the early experiences of health insurers as they began to implement the new requirements. Just as HHS hoped would happen, health insurers have been taking a hard look at their quality programs?although the actions insurers decide to take may not always reflect HHS's intentions.
According to the report, some insurers may reduce their expenses on activities that
HHS does not consider quality improvement activities in the PPACA MLR formula, such as retrospective utilization review (a review of a patient's records after the medical treatment has occurred) and preauthorization for inpatient admissions. But others are adding new quality programs and beefing up the ones that meet HHS guidelines to increase their MLRs.
And get this—some insurers said they reduced premiums in 2012. That move is partly in response to the PPACA MLR requirements but also includes other MLR-lowering strategies, such as smaller physician networks and lower commissions for insurance brokers and agents.
Of course that's not good news for brokers and agents. The National Association of Health Underwriters lobbied hard to get HHS to exclude broker and agent fees from MLR administrative cost calculations, but HHS declined to make the change in the final rules.
While it's true that some insurers are exiting markets and discontinuing some products, the overall message of the GAO reports is that whether they like the new rules or not, most health insurers are making the necessary adjustments to meet the new MLR requirements.
After three state surveys to follow up on deficiencies discovered over the summer, Methodist Dallas Medical Center has received notification from the Centers for Medicare & Medicaid Services that the facility is now in full compliance with all Medicare conditions of participation.
The notice from the Dallas office of CMS, dated December 2, is based on a November 8 inspection by the Texas Department of State Health Services. It confirms that Methodist Dallas has resolved all of the problems first uncovered at the medical center during a surprise August inspection.
That visit uncovered deficiencies in 10 broad categories, including medical screening, emergency services, and medical records, that placed patients in immediate jeopardy of endangerment.
At that time Methodist Dallas officials attributed the deficiencies to "increased volume and space limitations in our emergency department" and announced a $108 million expansion to its emergency, critical care, and surgery departments.
A follow-up survey conducted in October confirmed that although the initial problems had been resolved, two new problems had been discovered in the areas of nursing services and infection control.
Among the findings: unattended patients, multiple patients cared for by one nurse, violations of handwashing protocols and hospital personnel wearing personal fanny packs in the surgical services area.
In a statement e-mailed to Healthleaders Media after the second survey, officials at Methodist Dallas noted that the 515-bed hospital followed national standards for nurse staffing and infection control protocols. It said the hospital has already taken action to correct the problems, including "instituting additional nursing education, strengthening surveillance to ensure adherence to policies and protocols, and reinforcing adherence through annual education and performance reviews."
Methodist Dallas also received notification last week that its accrediting organization, The Joint Commission, has granted the medical center full accreditation for continued Medicare certification until its next regularly scheduled survey in December, 2014. The 515-bed medical center is part of the five-hospital Methodist Health System.
"Surveyors from both TDSHS and Joint Commission were complimentary of our employees and medical staff, and our response to and preparation for the surveys," said Laura Irvine, president of Methodist Dallas Medical Center in a press statement. "I am proud that as evidenced by these surveys and other publicly-available local, regional, and national quality measurements, Methodist Dallas Medical Center has demonstrated our commitment to providing compassionate, quality care for the patients we serve."
Broker and insurance agent fees will continue to be counted administrative costs when healthcare insurers calculate their medical loss ratios. That's the word from the Centers for Medicare & Medicaid Services, which released on Friday the final rule for medical loss ratio requirements under the Patient Protection and Affordable Care Act.
The healthcare law requires insurers to spend 80% to 85% of premium dollars collected on direct medical care. Health plans that don't meet the MLR threshold must provide rebates to their customers. The Department of Health and Human Services estimates that 9 million members could be eligible to share rebates worth as much as $1.4 billion.
"If your insurance company doesn't spend enough of your premium dollars on medical care or quality improvement this year, they'll have to give you rebates next year," said Marilyn Tavenner, the acting administrator of CMS, in a press statement. "This will bring costs down and give insurance companies the incentive to focus on what matters for patients— high quality health care."
The inclusion of broker and insurance agent fees in administrative costs has been the subject of much industry and political debate. At a June House committee hearing Janet Trautwein, CEO of the National Association of Health Underwriters (NAHU), said agents and brokers face a "desperate economic situation" because of the MLR requirement. She testified that because agents are mostly self-employed, their commissions shouldn't be considered as part of administrative expenses.
Just two weeks ago the National Association of Insurance Commissioners, in a controversial vote that reversed its initial support, asked HHS and Congress to amend the ACA to exempt commissions from the MLR calculations.
But consumer groups argued that the broker and agent fees and commissions are indeed administrative costs and to treat them any other way could potentially reduce the rebates due consumers.
In an e-mail statement, Ethan Rome, executive director of Health Care for America Now, called the final MLR rule "a great victory for consumers because it maintains the integrity of incredibly important consumer protections that hold the insurance industry accountable and because it puts money in the pockets of families. They need it a lot more than insurance companies awash in record profits."
The final rule doesn't address the controversy; it just maintains the calculation of administrative costs included in the interim rule.
In anticipation of this outcome, Rep. Mike Rogers (R-MI) and John Darrow (D-GA) introduced HR 1206, which would exclude agent and broker compensation from the MLR calculation. On Friday the NAHU issued a press statement asking Congress to pass HR 1206.
The bill has 140 co-sponsors and is assigned to the House Energy and Commerce Committee's sub-committee on health, which held hearings on the matter last summer and has been waiting for the final rule before taking any action. In an e-mail statement to HealthLeaders Media Rep. Joe Pitts (R-PA), who chairs the sub-committee, left little doubt where he stands. "The final rule does nothing to address the jobs crushing effects of the regulation on the agent and broker community. In addition, we've heard at hearings dire warnings of how the IFR (interim final report) will damage healthcare quality and promote fraud in our system. The final rule issued by HHS cements these flawed policies into law."
In addition to defining administrative costs the final MLR rule makes these modifications based on public comments:
Requires that consumers receive an explanation of their rebate, including how it was calculated.
Makes tax free any MLR rebate received by consumers
Allows the special circumstances adjustment for so-called "mini-med" plans to be phased out rather than abruptly halted
In-store retail clinics are playing a growing role in the delivery of ambulatory care, according to a study, which finds that proximity and convenience are the main draws. Access to primary care is not a factor in the use of retail clinics.
Retail clinics, those in-store locations that focus on the delivery of preventive care such as flu shots, as well the treatment of minor health problems, are playing a growing role in the delivery of ambulatory care, according to the latest RAND Corporation study on the retail clinic trend.
People are "voting with their feet," says Scott Ashwood, a RAND researcher who is the report's lead author. With more health plans covering visits to retail clinics, and with copayments equal to those at a physician's office, convenience and proximity are drawing patients to retail clinics.
That's all good news for healthcare insurers, because according to earlier RAND studies, the clinics offer quality services for routine illnesses at prices that are lower than even the cost of physician office visits. And here's an added bottom-line bonus: RAND researchers estimate that 17% of ER visits could be handled at retail clinics or urgent care centers, with a potential total savings of $4.4 billion annually.
The latest RAND study in the retail clinic series looks at the demographics of the clinic patients and what drives utilization by the commercially insured. It appears in the American Journal of Managed Care.
Researchers studied claims in 2007-2009 and enrollment data for more than 13 million Aetna enrollees in 22 markets where retail clinics provide a treatment option. About 29% of the enrollees visited a retail clinic during the study period.
The study focused on 11 acute conditions that account for 88% of retail clinic visits: allergic rhinitis, bronchitis, conjunctivitis, influenza, otitis externa, otitis media, pharyngitis, upper respiratory infections, urinary tract infections, sinusitis, and viral infections.
Retail clinic visits for those 11 conditions increased 10-fold from January 2007 (less than one visit per 1,000 enrollees) to December 2009 (almost six visits per 1,000 enrollees). Researchers don't know if the enrollees selected retail clinics for treatment over a physician office visit or a trip to the ER, but care initiated at retail clinics is 30% to 40% cheaper than similar care at a doctor's office and a whopping 80% less expensive than care received at the local ER. That has to make health plan executives smile.
According to the report, distance from the retail clinic was the strongest predictor of use. Aetna enrollees living less than one mile away were significantly more likely to use a retail clinic than someone living one to five miles away. The most common users were young adults with no chronic diseases. That demographic is less likely to have a relationship with a primary care provider and may visit a retail clinic because they have no alternative. It may also indicate that "retail clinics continue to appeal to a more select group of patients rather than to a more general population," the report says.
Women were more likely than men to visit a retail clinic. People with incomes of more than $59,000 were also more like likely to use a retail clinic for medical services. That may reflect the adage that time is money. Retail clinics offer walk-in appointments and there is usually no waiting.
One surprising discovery: while conventional wisdom suggests that retail clinics fill unmet demand in areas with a shortage of primary care, RAND researchers found no relationship between the use of the clinics and access to primary care.
There are about 1,200 retail clinics across the country, most are located in suburban and urban settings. According to the report, 2007 was the boom year for retail clinic expansion. There has been little growth since then.
That may change with healthcare reform. As millions of uninsured are set to enter the health insurance market, providers are looking for new ways to control the cost curve. CVS's MinuteClinic and Emory Healthcare just announced a clinical affiliation that will make Emory physicians the medical directors for the 31 MinuteClinics in the metro-Atlanta area. The two will integrate their electronic health records to streamline care coordination.
Of course the big news right now is a memo leaked to National Public Radio that describes Walmart's plans to become "the largest provider of primary healthcare services in the nation," by expanding its retail clinic presence into diagnostic services and chronic care management. The giant retailer currently operates around 150 clinics but has more than 4,000 Walmart and Sam's Club stores nationwide. Add a health insurance plan to the mix and the mind boggles at the potential.
