Cartoon – My Goals vs Your Goals
Monthly Archives: April 2018
Cartoon – Your Compensation Basis
For Better Outcomes and Significant Savings, Medi-Cal Must Pay Health Plans Differently
For Better Outcomes and Significant Savings, Medi-Cal Must Pay Health Plans Differently
Four years ago, the Health Plan of San Mateo (HPSM) set out to improve care for its members who are older and have disabilities. The Community Care Settings Pilot (CCSP) provided extensive case management, housing-related services, and other supports that were above and beyond the traditional Medi-Cal benefits that HPSM was required to provide. The goal was to enable members living in nursing homes, or those at risk of moving into a nursing home, to stay at home instead — the option patients generally prefer.
The investment paid off. Within six months of participating in the pilot, members were more satisfied with their care, and health care costs to the health plan were cut in half, largely because of reductions in avoidable nursing home care.
Payment is one of the best tools at our disposal to drive improvements forward.
We need health plans to invest more in innovations like this if we are to improve the health outcomes of Medi-Cal enrollees and slow the growth of health care costs to providers, and ultimately, the system at large. Unfortunately, despite the obvious potential of the CCSP pilot, HPSM is reluctant to expand it. The reason for this reluctance reveals a major unintended consequence of the way managed care plans are currently paid.
Financial (Dis)incentives
While the California Department of Health Care Services (DHCS) considers multiple factors when it sets a Medi-Cal health plan’s rate for a given year, one of the most significant is the health plan’s costs in previous years. If a health plan invests in services outside of Medi-Cal’s required benefits, and those services successfully lower costs, the plan could essentially be penalized by receiving a lower rate in the future. In other words, DHCS has created a financial disincentive for health plans to make investments that could improve the health and well-being of Medi-Cal enrollees and reduce spending.
This financial disincentive has hampered HPSM and other plans in bringing innovative programs to scale or maintaining them over time. That’s not what’s best for Medi-Cal enrollees, and it’s not what’s best for California as the state strives to bend the health care cost curve in Medi-Cal.
Harnessing Payment as a Tool
As I highlighted during a recent presentation before the California Assembly Select Committee on Health Care Delivery Systems and Universal Coverage, large-scale improvements in quality and access across the entire Medi-Cal managed care system are hard to find. DHCS uses six quality metrics to assign enrollees to health plans if they don’t choose one themselves. There has been major, program-wide improvement over the past decade in only one metric: blood-glucose testing for diabetes care. Lack of improvement in the other five quality measures means too many low-income women aren’t getting timely prenatal care or screenings for cervical cancer; children are missing well-child visits or immunizations; and many people with high blood pressure aren’t being helped to control their condition.
The Medi-Cal Managed Care Performance Dashboard shows that quality varies widely among plans, as shown by managed care plans’ aggregate clinical quality scores. (See page 11 of the dashboard for a complete list by plan.) While some differences across counties are to be expected given local variation in health care resources and constraints, we should all be concerned about the wide range in scores. Moreover, large differences in quality scores between plans operating in the same county (such as in Contra Costa and San Diego) should not be acceptable.
There’s clearly room for improvement — and payment is one of the best tools at our disposal to drive improvements forward.
Modernizing the Rate-Setting Process
Over several months in 2017, the California Health Care Foundation brought together a group of leaders from several health plans participating in Medi-Cal, and two leading national health care consulting firms — Manatt Health and Optumas Healthcare. Their goal was to recommend a better way to set rates that would align with the state’s goals to improve health and quality, while reducing the long-term cost trend within Medi-Cal. Mari Cantwell, Medi-Cal’s chief deputy director of health care programs, was an advisor to the work group.
The work group studied options from other states and modeled various scenarios. An important parameter was that the final recommendations couldn’t require additional funding from the state. The recommendations were released today in Intended Consequences: Modernizing Medi-Cal Rate Setting to Improve Health and Manage Costs.
The core of the recommended approach is a rate adjustment, similar to one currently being implemented in Oregon. It would allow plans to share in some of the savings generated when investing in health-related services and interventions, such as meal services, sobering stations, home improvements, and investments in integrating physical and behavioral health. For the rate adjustment to kick in, a health plan would have to achieve savings above a defined threshold and hit quality targets, among other criteria. The methodology is described in further detail in the paper.
By allowing plans to keep some of the money saved, the rate adjustment is designed to help create a virtuous cycle: Plans are incentivized to keep investing in care improvements and health-related services that generate savings; Medi-Cal members get better service; and the state makes progress toward bending the program’s long-term cost curve.
Leveraging State Purchasing Power
Intended Consequences is part of a larger critical conversation around how California can better use payment as a tool to drive performance improvements and to create greater value in the Medi-Cal program. The rate adjustment proposed in Intended Consequences is one potential step forward, but there are a variety of other methods at the state’s disposal. These include setting clear expectations for performance improvement in managed care contracts and establishing a pay-for-performance program that puts plans at financial risk for not meeting performance targets.
The key to this approach is that we can more effectively leverage the power of DHCS as the largest purchaser of health care services in the state. While Medi-Cal has made huge strides in recent years, we can do better. Some say we get what we pay for. Let’s start paying health plans for the outcomes we want.
Where the ACA health insurance exchanges stand in 2018
http://www.modernhealthcare.com/reports/180411where-aca-exchanges-stand/
The Affordable Care Act’s health insurance exchanges have proven to be quite sturdy despite a barrage of federal actions that threatened to topple them. The picture of the exchanges that emerges from the CMS’ final open-enrollment data is far from the imploding market that the Trump administration and countless headlines over the past year warned about.
Though enrollment in the exchanges slipped and insurers hiked premiums by an average of 30%, the size of the premium tax credits available to most exchange enrollees ballooned enough that the average subsidized shopper paid a lower premium for coverage than the year before.
Even so, the individual on-exchange ACA plans remain unaffordable for millions of people who aren’t eligible for financial help. Congress has yet to pass legislation to bolster the market and bring down premiums, and is unlikely to do so before insurers must file 2019 rates later this spring. New threats, including the expansion of short-term medical and association health plans, are coming down the pike, promising to lure healthy people away and cause even higher premium hikes next year that unsubsidized enrollees may not accept. If consumers can’t afford coverage and drop it, insurers have a smaller incentive to keep selling plans in the individual market. The more people become uninsured, the more uncompensated care hospitals must swallow.
What’s left? “A weird mix of having a relatively persistent subsidized market, coupled with only the sickest nonsubsidized enrollees, which is not the way anyone would design this to work,” said Erin Trish, associate director of health policy at the University of Southern California’s Schaeffer Center.
Here’s a look at the current state of the ACA exchanges.
Enrollment dips modestly
Enrollment in the ACA exchanges dipped just 3.3% to 11.8 million this year from 12.2 million in 2017. Leading up to open-enrollment, which ran from Nov. 1 to Dec. 15 in most states, experts were expecting sign-ups to fall sharply. The Trump administration slashed funding for open enrollment advertisements as well as enrollment assistance. It also gave shoppers less time to pick a plan, truncating the open-enrollment period to 45 days from the usual 90 days.
Katherine Hempstead, who directs the Robert Wood Johnson Foundation’s work on health insurance coverage, said the fact that just 400,000 fewer people enrolled shows “health insurance is a need-to-have for most people. People who are subsidized are going to really stick with it as much as possible.”
The final enrollment tally bodes well for health insurers, who are more likely to keep selling coverage if a large group of consumers sign up. Insurers have a harder time turning a profit when selling plans to a smaller, sicker pool of enrollees with few healthy consumers to balance out the risk. If they don’t make a profit, insurers aren’t likely to keep selling individual coverage. Several large national insurers, UnitedHealth, Aetna and Humana, have already called it quits or scaled back their participation.
Where the exchanges are working and where they’re not
Some states’ exchanges are performing better than others. States that use the federal HealthCare.gov platform generally fared worse, with enrollment dropping an average 5%. Sign-ups in the 12 states that run their own exchanges were virtually flat compared with 2017. Many state-based marketplaces stepped up advertising in the face of federal marketing budget cuts, which could explain in part why they performed better.
Rhode Island, which operates a state-based marketplace known as HealthSource RI, experienced the largest enrollment growth at 12.1%. The state offered exchange plan members the lowest-cost benchmark plan in the country, according to HealthSource RI. At the same time, federal financial assistance to exchange members in the state increased by 46% to $7.5 million.
On the flip side, Louisiana, which uses the HealthCare.gov platform, saw the largest decrease in enrollment for the second year in a row at 23.5% over the previous year. Last year, Louisiana’s exchange enrollment plummeted by 33%. The enrollment drop isn’t necessarily a bad thing: Louisiana expanded Medicaid in mid-2016, so ACA plan members likely continued to switch to Medicaid for cheaper insurance.
Premiums vary widely across states
Premiums shot up more than 30% in the 39 HealthCare.gov states, averaging $621 per month, compared with $476 in 2017. An analysis of CMS data shows that the average 2018 premium across all states was a bit higher at $631 per month, but missing 2017 data for some states makes it difficult to show a comparison. Unsubsidized members across all states paid an average $522 per month for 2018 coverage. Increasing premiums—along with reducing their footprints—has helped many health insurers, such as Anthem, Cigna and Highmark Health, turn a profit on the insurance exchanges for the first time in 2017.
Many Americans who don’t receive financial assistance can’t afford those sticker-shock prices, and more and more are thinking about going uninsured or opting for a cheaper alternative, like a short-term medical plan. As the number of uninsured and under-insured rises, so does the amount of uncompensated care at hospitals.
Like enrollment rates, premiums varied widely by state. Exchange enrollees in Wyoming were hit with the highest premiums at an average $983 per month, while those in Massachusetts paid the lowest rates at $385 per month.
The effects of “silver-loading”
Most exchange enrollees didn’t pay those sky-high prices. About 83% of consumers across the nation had their premiums reduced by an advanced premium tax credit, which is one type of federal financial assistance available to people with incomes less than 400% of the federal poverty level (roughly $48,000 for an individual). The average HealthCare.gov enrollee who received a premium tax credit paid about $89 per month for coverage, down from $106 in 2016. In Oklahoma, the average subsidized enrollee paid just $37 a month—the lowest of any state.
Subsidized premiums dropped because tax credits increased. Last year, savvy state regulators and insurers deployed a strategy to offset the effects of the Trump administration’s decision to end another form of financial assistance—cost-sharing reduction payments—that lowers exchange enrollees’ out-of-pocket costs. CSRs have historically lowered copayments and deductibles for ACA plan members with incomes lower than 250% of the federal poverty level.
When President Donald Trump stopped paying the CSRs at the end of 2017, insurers built rate increases attributable to the CSR cutoff into only silver plan premiums, which are used to determine the premium tax credit. As premiums went up, so did the size of the tax credit consumers received, meaning that most subsidized enrollees never felt the effects of big price hikes.
Larger tax credits allowed some exchange shoppers to find zero-premium bronze plans or lower-cost gold plans. As a result, fewer people—62.6%—enrolled in silver plans in 2018, down from 71.1% in 2017. Enrollment in bronze and gold plans, on the other hand, increased. Metal tiers represent the actuarial value, or the average share of health costs covered, by the plan. Gold plans pay for a larger share of the patient’s health costs.
Experts worry that people switching to bronze plans may have higher out-of-pocket costs they can’t afford, prompting them to forgo care or take on debt. Bronze plans have higher deductibles and often don’t offer cost-sharing for services before the deductbile is met.
“When you enroll in plans with higher deductibles, you use less care,” Trish explained. “People dramatically reduce their use of healthcare and not necessarily in smart ways.”
Emerging threats
The zeroed-out individual mandate penalty, potential expansion of short-term and association health plans, and the CMS’ final rule allowing states greater flexibility in determining a menu of essential health benefits all threaten to destabilize the individual market and cause higher premiums and lower enrollment in 2019. Americans who don’t qualify for subsidies will bear the brunt of any premium hikes that stem from these challenges come the sixth open-enrollment period, kicking off in November.
With a federal administration and Congress unwilling to implement policies or pass legislation that would help to keep premiums lower, such as cost-sharing reduction payments or a reinsurance pool for high-risk consumers, experts say it will be up to states to bolster their markets. Some, particularly Democratic states, are considering their own coverage mandates, though such policies are unpopular. Others may work to put restrictions on short-term medical plans. But one thing is for certain: The pervasive uncertainty surrounding healthcare rules and regulations that was a hallmark of 2017 is not dissipating any time soon and will once again be a challenge for states, insurers and consumers come the sixth open-enrollment.
California Aims To Tackle Health Care Prices In Novel Rate-Setting Proposal
California Aims To Tackle Health Care Prices In Novel Rate-Setting Proposal
Backed by labor and consumer groups, a California lawmaker unveiled a proposal Monday calling for the state to set health care prices in the commercial insurance market.
Supporters of the legislation, called the Health Care Price Relief Act, say California has made major strides in expanding health insurance coverage, but recent changes haven’t addressed the cost increases squeezing too many families.
To remedy this, Assembly Bill 3087 calls for an independent, nine-member state commission to set health care reimbursements for hospitals, doctors and other providers in the private-insurance market serving employers and individuals.
The bill faces formidable opposition from physician groups and hospitals.
“No state in America has ever attempted such an unproven policy of inflexible, government-managed price caps across every health care service,” Ted Mazer, president of the California Medical Association, said in a statement.
At a press conference Monday, Assembly member Ash Kalra (D-San Jose) and other sponsors of the bill said the commission would use Medicare reimbursements as a benchmark and then factor in providers’ operating costs, geography and a reasonable amount of profit to establish rates. More details on the legislation are expected during committee hearings.
Across the country, some employers have tried a similar approach by mostly sidestepping insurers and instead paying providers 125 to 150 percent of the Medicare price for any service. Proponents of this idea say it eliminates the worst abuses in billing, reduces administrative costs and promotes price transparency.
The California legislation envisions a system similar to the rate-setting done for public utilities.
The proposal also borrows from Maryland, which has set prices for hospital services since the 1970s.
“We have given free rein to medical monopolies — to insurers, doctors and hospitals — to charge out-of-control prices,” said Sara Flocks, policy coordinator at the California Labor Federation, which is co-sponsoring the bill, at the Monday news conference. “It’s not that we go to the doctor too much. It’s because the price is too much.”
Kalra, the assemblyman who introduced the bill, said consumers deserve relief now because soaring medical costs are eating up workers’ wages and contributing to income inequality.
“The status quo is unacceptable and unsustainable. Californians struggling to keep up demand action rather than politics as usual,” Kalra said at the news conference.
Health care providers immediately slammed the proposal, saying it would reduce patients’ access to care and drive medical providers out of the state.
Mazer countered that the bill would cause “an exodus of practicing physicians, which would exacerbate our physician shortage and make California unattractive to new physician recruits.”
Chad Terhune, a senior correspondent at California Healthline and Kaiser Health News, discussed the latest proposal and its future prospects with A Martinez, host of the “Take Two” show on Southern California Public Radio.
Cartoon – And So It Begins
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Cartoon – Healthcare Industry M&A
Cartoon – Consolidation Today
Cartoon – Minor Surgery
HENRY KOTULA 