Category Archives: Health System

Attorneys’ Fees Doom Dignity Health’s $100 Million ERISA Deal

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https://news.bloomberglaw.com/class-action/attorneys-fees-doom-dignity-healths-100-million-erisa-deal

Dignity Health’s $100 million class settlement with workers covered by its pension plan won’t get court approval until the parties rethink how the workers’ attorneys are paid, a federal judge in the Northern District of California ruled.

The deal is flawed because it contains a “kicker” clause allowing Dignity to keep any difference between the $6.15 million in attorneys’ fees authorized by the settlement and the amount of fees actually awarded by the court, Judge Jon S. Tigar said.

“Although the fact is not explicitly stated in the Settlement, if the Court awards less than $6.15 million in fees, Defendants keep the amount of the difference and those funds are not distributed to the class,” Tigar said. “The Court concludes that this arrangement, which potentially denies the class money that Defendants were willing to pay in settlement—with no apparent countervailing benefit to the class—renders the Settlement unreasonable.”

The proposed deal, which was slated to benefit more than 91,000 people, requires the hospital to put $50 million in its pension plan in 2020 and at least that much in 2021. Required contributions in the following three years will be based on recommendations from the plan’s actuaries, according to settlement papers filed in June.

Tiger also expressed concerns about Dignity’s agreement to make direct payments to certain plan participants. This has the potential to “shortchange or disproportionately favor these claims relative to classwide claims,” Tigar said.

Tiger withheld preliminary approval from the deal in an Oct. 29 order while giving the parties an opportunity to revise and try again.

Dignity Health is one of dozens of religiously affiliated hospitals that have been accused of wrongly treating their pension plans as “church plans” exempt from the Employee Retirement Income Security Act. The lawsuits claim that hospitals misuse ERISA’s church plan exemption in order to underfund their plans by tens or hundreds of millions of dollars.

The U.S. Supreme Court addressed ERISA’s church plan exemption in 2017, issuing a ruling that favored Dignity and other hospitals while leaving several questions open for further litigation.

The plan participants are represented by Keller Rohrback LLP and Cohen Milstein Sellers & Toll PLLC. Dignity is represented by Manatt Phelps & Phillips LLP, Trucker Huss APC, and Nixon Peabody LLP.

The case is Rollins v. Dignity Health, N.D. Cal., No. 4:13-cv-01450-JST, 10/29/19.

 

 

 

The Huge Waste in the U.S. Health System

Posted on by • Posted in 2020 Election Issues, Cost Management, Health Policy, Health System, High Drug Prices, High Premiums, High Prices, Patient Outcomes, Patient Satisfaction, Single Payer Healthcare System • Leave a comment

A study finds evidence for how to reduce some of it, but also a large blind spot on how to remove the rest.

Even a divided America can agree on this goal: a health system that is cheaper but doesn’t sacrifice quality. In other words, just get rid of the waste.

A new study, published Monday in JAMA, finds that roughly 20 percent to 25 percent of American health care spending is wasteful. It’s a startling number but not a new finding. What is surprising is how little we know about how to prevent it.

William Shrank, a physician who is chief medical officer of the health insurer Humana and the lead author of the study, said, “One contribution of our study is that we show that we have good evidence on how to eliminate some kinds of waste, but not all of it.”

Following the best available evidence, as reviewed in the study, would eliminate only one-quarter of the waste — reducing health spending by about 5 percent.

Teresa Rogstad of Humana and Natasha Parekh, a physician with the University of Pittsburgh, were co-authors of the study, which combed through 54 studies and reports published since 2012 that estimated the waste or savings from changes in practice and policy.

Because American health spending is so high — almost 18 percent of the economy and over $10,000 per person per year — even small percentages in savings translate into huge dollars.

The estimated waste is at least $760 billion per year. That’s comparable to government spending on Medicare and exceeds national military spending, as well as total primary and secondary education spending.

If we followed the evidence available, we would save about $200 billion per year, about what is spent on the medical care for veterans, the Department of Education and the Department of Energy, combined. That amount could provide health insurance for at least 20 million Americans, or three-quarters of the currently uninsured population.

The largest source of waste, according to the study, is administrative costs, totaling $266 billion a year. This includes time and resources devoted to billing and reporting to insurers and public programs. Despite this high cost, the authors found no studies that evaluate approaches to reducing it.

“That doesn’t mean we have no ideas about how to reduce administrative costs,” said Don Berwick, a physician and senior fellow at the Institute for Healthcare Improvement and author of an editorial on the JAMA study.

Moving to a single-payer system, he suggested, would largely eliminate the vast administrative complexity required by attending to the payment and reporting requirements of various private payers and public programs. But doing so would run up against powerful stakeholders whose incomes derive from the status quo. “What stands in the way of reducing waste — especially administrative waste and out-of-control prices — is much more a lack of political will than a lack of ideas about how to do it.”

While the lead author works for Humana, he also has experience in government and academia, and this is being seen as a major attempt to refine previous studies of health care waste. Reflecting the study’s importance, JAMA published several accompanying editorials. A co-author of one editorial, Ashish Jha of the Harvard Global Health Institute and the Harvard T.H. Chan School of Public Health, said: “It’s perfectly possible to reduce administrative waste in a system with private insurance. In fact, Switzerland, the Netherlands and other countries with private payers have much lower administrative costs than we do. We should focus our energies on administrative simplification, not whether it’s in a single-payer system or not.”

After administrative costs, prices are the next largest area that the JAMA study identified as waste. The authors’ estimate for this is $231 billion to $241 billion per year, on prices that are higher than what would be expected in more competitive health care markets or if we imposed price controls common in many other countries. The study points to high brand drug prices as the major contributor. Although not explicitly raised in the study, consolidated hospital markets also contribute to higher prices.

A variety of approaches could push prices downward, but something might be lost in doing so. “High drug prices do motivate investment and innovation,” said Rachel Sachs, an associate professor of law at Washington University in St. Louis.

That doesn’t mean all innovation is good or worth the price. “It means we should be aware of how we reduce prices, taking into consideration which kinds of products and which populations it might affect,” she said.

Likewise, studies show that when hospitals are paid less, quality can degrade, even leading to higher mortality rates.

Other categories of waste examined by the JAMA study encompass inefficient, low-value and uncoordinated care. Together, these total at least $205 billion.

With more than half of medical treatments lacking solid evidence of effectiveness, it’s not surprising that these areas add up to a large total. They include things like hospital-acquired infections; use of high-cost services when lower-cost ones would suffice; low rates of preventive care; avoidable complications and avoidable hospital admissions and readmissions; and services that provide little to no benefit.

In addition to wasting money, these problems can have direct adverse health effects; lead to unwarranted patient anxiety and stress; and lower patient satisfaction and trust in the health system.

Here the study’s findings are relatively more optimistic. It found evidence on approaches that could eliminate up to half of waste in these categories. The current movement toward value-based payment, promoted by the Affordable Care Act, is intended to address these issues while removing their associated waste. The idea is to pay hospitals and doctors in ways that incentivize efficiency and good outcomes, rather than paying for every service regardless of need or results.

Putting this theory into practice has proved difficult. “Value-based payment hasn’t been as effective as people had hoped,” said Karen Joynt Maddox, a physician and co-director of the Center for Health Economics and Policy at Washington University in St. Louis and a co-author of another editorial of the JAMA study.

So far, only a few value-based payment approaches seem to produce savings, and not a lot. Some of the more promising approaches are those that give hospitals and doctors a single payment “as opposed to paying for individual services,” said Zirui Song, a physician and a health economist with Harvard Medical School.

“Savings tend to come from physicians referring patients to lower-priced facilities or cutting back on potentially lower-value care in areas such as procedures, tests or post-acute service,” he said.

There is evidence of savings from some bundled payment programs. These provide a fixed overall budget for care related to a procedure over a specific period, like 90 days of hip replacement care. Accountable care organizations also seem to drive out a little waste. These give health groups the chance to earn bonuses for accepting financial risk and if they reach some targets on quality of care.

The final area of waste illuminated by the JAMA study is fraud and abuse, accounting for $59 billion to $84 billion a year. As much as politicians love to say they’ll tackle this, it’s a relatively small fraction of overall health care waste, around 10 percent. More could be spent on reducing it, but there’s an obvious drawback if it costs more than a dollar to save a dollar in fraud.

Because health care waste comes from many sources, no single policy will address it. Most important, we have evidence on how to reduce only a small fraction of the waste — we need to do a better job of amassing evidence about what works.

 

 

 

Oregon insurer sues, says 3 health systems have locked it out of Portland market

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https://www.beckershospitalreview.com/legal-regulatory-issues/oregon-insurer-sues-says-3-health-systems-have-locked-it-out-of-portland-market.html?oly_enc_id=2893H2397267F7G

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Trillium Community Health Plan has filed a federal antitrust suit against three of the largest hospital systems in Portland, Ore., claiming they colluded to block the insurer from operating in the area, according to The Oreonian. 

The Eugene, Ore.-based health plan filed the suit against Legacy Health, Providence Health and Services and OHSU Health System, all based in Portland. 

Trillium alleges that the Portland health systems have engaged in a “group boycott” that if left unchecked, “would have a significant negative impact on Oregon Health Plan members, limiting the healthcare choices of some of the most vulnerable members of Oregon’s community,” according to The Portland Business Journal. 

In July, the Oregon Health Authority named Trillium a “next generation” coordinated care organization and awarded it the contract to serve Medicaid patients in the Portland area. CCOs, as they are known as, work together to provide healthcare services and benefits to patients enrolled in the state’s Medicaid program.

Since then, Trillium claims that it “pursued every avenue” to work with the three health systems without success, and without them, it is unable to break into the metro area Medicaid market.

Legacy, Providence and OHSU are all founding members of Health Share, the existing CCO in the area that will compete against Trillium.

“The hospitals’ anticompetitive behavior leaves Trillium no choice but to file an antitrust action in the hopes that the collusion will stop and that Trillium will be granted the ability to work with the Portland area hospitals,” the suit reads, according to the Business Journal. 

 

Assessing Responses to Increased Provider Consolidation in Six Markets: Final Report

Posted on by • Posted in 2020 Election Issues, Antitrust, Centers of Excellence, Certificate of Need, Certificates of Public Advantage (COPAs), Federal Trade Commission (FTC), Health Insurance Industry, Health Policy, Health System, Hospital, Hospital Industry, Market Consolidation, Market Exclusivity, Mergers & Acquisitions, Monopoly, Monopoly Behavior, Narrow Network, Network Design, Noncompete, Out of Pocket Expenses, State Attorney Generals (AG), Third Party Administrators • Leave a comment

https://georgetown.app.box.com/s/65qfhbzz7fabx9oypsteg6d1aghz4fsj

INTRODUCTION

Few communities in the United States have been exempt from the recent wave of consolidation among health care providers, whether it is hospital-to-hospital mergers and acquisitions (horizontal consolidation) or hospital acquisitions of physician groups and other ambulatory service providers (vertical consolidation). Increased provider concentration has been demonstrated to lead to higher provider reimbursement rates and thus higher premiums for people with private insurance, although outcomes vary, market to market.

To examine the strategies that private insurance companies and employer-purchasers use to constrain health care cost growth and how they are affected by increased provider consolidation, we conducted six market level, qualitative case studies, focusing on mid-sized health care markets in which there had been recent consolidation activity

These are: Detroit, Michigan; Syracuse, New York; Northern Virginia; Indianapolis, Indiana; Asheville, North Carolina; and Colorado Springs, Colorado.

BACKGROUND

Hospital and hospital-physician consolidation has accelerated in recent years, creating dominant local and regional health care systems. In nine out of ten metropolitan areas, the provider market is considered highly concentrated. Although merging hospitals and health systems claim they can achieve greater efficiencies and better care coordination through their consolidation, the economic literature almost universally finds that hospitals that merge charge prices above those of surrounding hospitals. Indeed, hospital mergers have been found to increase the average price of hospital services by 6 to 40 percent.  Another study found that hospital acquisition of physician practices increased outpatient prices by 14 percent. At the same time, increased market concentration is strongly associated with lower quality care. There is also evidence that the prices of independent, non-acquired hospitals also increase in the wake of a rival’s acquisition.

Increases in provider prices have been a key factor driving the growth of commercial health insurance costs over the past decade. Annual family premiums have now surpassed $20,000, and the average annual deductible has increased 100 percent over the last 10 years. While policymakers have focused attention on rising health insurance premiums and out-of-pocket costs (for employers and employees alike), provider consolidation—and its role as a major health care cost driver—has received less attention in the media and among policymakers.

APPROACH

In a series of six market-level, qualitative case studies, we assessed the impact of recent provider consolidations, the resulting provider concentration, the ability of market participants (and, where relevant, regulators) to respond to those consolidations, and strategies for constraining cost growth while maintaining high-quality care. Our case studies focus on the employer-sponsored group insurance market, though we recognize that providers and insurers are often operating across multiple sources of insurance, including Medicare Advantage, Medicaid managed care, and the Affordable Care Act (ACA) marketplaces.  We do not attempt to quantify the effect of provider consolidation in these markets, such as through provider rate or premium changes.

For each case study, we conducted an environmental scan of local media and published literature about market conditions and structured interviews with insurer, provider, and employer representatives, as well as other experts on the health care market. We also interviewed 10 national experts on provider consolidation and payer-provider network negotiations. Over the six case studies, we conducted 77 interviews with local respondents. Each case study, as well as an interim cross-cutting report, can be found at https://chir georgetown edu/provider-consolidation-case-studies/ .

We focused on mid-sized markets that had experienced recent horizontal or vertical consolidation. We identified these through an environmental scan of local media and research literature and a review of trends in market concentration indices, primarily via the Herfindahl-Hirschman Index (HHI). The six study markets were chosen to reflect geographic diversity as well as a range of market dynamics (see Table).

In markets such as Asheville, for instance, hospital mergers and acquisitions over the last decade have left the Mission Health System virtually without competition.

Observers describe other markets, such as Colorado Springs and Detroit, as relatively competitive even with recent provider consolidation. Across all six markets, hospitals purchased or entered into clinical affiliations with physician group practices. In some markets, such as Northern Virginia and Colorado Springs, hospital systems faced competition for physician practices from outside private equity firms and practice management companies.

In four out of our six markets, the Blue Cross Blue Shield affiliate was the dominant insurer in the commercial group market, with well over half the market share. Their dominance extended to all types of employers, including for third-party administrator contracts with self-funded employer plans. In two of our markets, the local health care system or systems were the largest private employers. In the other four, the health systems were among the top three or four employers. The states in our case studies were evenly split in having Certificate of Need laws, the lack of which some stakeholders suggested contributed to significant health system construction and concomitant increases in utilization and, less intuitively, prices (explained further, below).

FINDINGS

1. Hospitals are in various phases of empire-building

Across the six markets, the hospitals’ motivations for consolidation are similar, with stakeholders reporting a pursuit of greater market share and a desire to increase their negotiating leverage with payers to demand higher reimbursement. These observations run counter to the justifications often cited by hospital systems that consolidation is needed to create efficiencies and improve care coordination. Following consolidation, the hospitals and hospital systems in our studied markets have engaged in various phases of empire building.

While approaches varied, providers had similar goals in expanding their empire: to increase their geographic footprint, acquire points of referral (such as free-standing emergency departments and physician practices), or build new facilities in areas with a higher proportion of commercially insured residents. In all study markets except Indianapolis, a larger multi-state health system acquired or merged with a local independent provider to gain new entry or additional market share in a particular region Hospital system expansion was also not limited only to study markets: many hospital systems were expanding their footprint across the state.

In addition to consolidation, hospitals have pursued other strategies to gain greater leverage in negotiations with payers. For example, the Syracuse hospital systems have developed clinical niches, so that they are perceived by local residents as the best facility for certain services, such as orthopedics or cancer care In Indianapolis, each of the four health systems carved out “mini-monopolies” within geographic boundaries that have historically been respected by the other systems. For many years, systems largely did not compete directly, although this de facto arrangement has broken down recently.

2. Providers are exercising their increased market clout

Consolidation appears to be having the providers’ desired effect in our study markets: hospital systems reportedly use their market clout to seek higher reimbursement from payers. For example, a payer representative in Colorado noted that when an independent hospital is acquired by one of the major health systems: “the next thing I know, I see a 100 percent increase [in prices] ”. Similarly, payers in Detroit noted a “toughened stance” from a local hospital system following a recent consolidation.  They, along with payers in other markets, also noted that when independent local hospitals are acquired by large national systems, negotiations shift from the local provider to the central corporate office, where there are fewer long-standing relationships, less understanding of local needs, and often a demand to take all or none of the hospitals in the system.

Even non-dominant hospitals appear to benefit from the consolidation of their rivals. For example, a small hospital in Northern Virginia was able leverage its position as an alternative to the dominant Inova Health System, effectively telling insurers: “If you think it’s healthy to have independent health systems in this market, then give us [higher prices] ”. In other cases, hospitals appear to use their market power to build more market power. For example, Asheville’s Mission hospital reportedly used its dominance to pressure physician groups to join their accountable care organization (ACO).

At the same time, our case studies provide examples of constraints on market power. The local nature of health care delivery sometimes demands that providers “play nice” in the sandbox. In Syracuse, executives of the providers and payers have longstanding personal and professional relationships. “Everyone knows each other and we all go to the same meetings,” said one observer, who believed the tight-knit nature of the community contributed to less-than-hardball tactics in the negotiating room. In Northern Virginia, some thought Inova, based just outside of D C , had been relatively restrained in its demands for increased reimbursement in part to avoid raising red flags with federal regulators.

3. Payers have tools to constrain cost growth, but lack the incentive and ability to deploy them effectively

As third-party administrators for self-insured employer-sponsored group health plans, insurers are typically paid a percentage of the overall cost of the plan. As a result, these insurers have a perverse incentive to keep costs high and growing, limiting their motivation to pursue aggressive strategies to reduce provider prices, a phenomenon one respondent called “middleman economics.” This incentive for payers is compounded by the fact that some of the more obvious strategies to contain costs (cutting or threatening to cut a high-cost hospital from their plan networks, for example) are likely to result in negative publicity and resistance from employers and their employees. The result is a strong incentive for commercial insurers to agree to providers’ demands for price increases each year, which employers and their employees will feel more gradually over time than a provider termination. The result is that employers and employees become the proverbial “frogs in the pot of water.”

Payers identify several cost containment strategies, but all come with downsides. Payers in our study markets do negotiate to limit price increases and are pursuing some cost containment strategies, but none identified a “magic bullet” approach that would moderate price growth while minimizing negative feedback from employers and employees.

Network design

One obvious strategy for insurers in response to a provider’s demand for a price increase would be to decline to contract with that provider and terminate them from their network. However, most payers and purchasers described this as a non-viable “nuclear option.” In addition to concerns about bad publicity, unhappy employer customers, and lost competitive advantage over other payers, quite often the provider at issue is essential to an adequate network, either because it is the sole provider within a reasonable geographic distance or because of its dominance in a particular clinical specialty.

Payers in several markets also noted that, more often than not, employers “don’t have their back” during provider negotiations, taking away their ability to credibly threaten to drop the provider from the network. Many large employers were loath to limit their employees’ choice of providers. Without the ability to credibly cite demand for lower prices from employers, insurers have less leverage in their negotiations with providers.

There are exceptions to this rule, but they were quite rare in the study markets. The only exception we observed was when Blue Cross Blue Shield of North Carolina (BCBSNC) terminated Mission Health System, Asheville’s only hospital system, from its network for two months in 2018. When BCBSNC, the dominant insurer in North Carolina, did so, it reportedly faced little public backlash. Rather, the public largely took BCBSNC’s side in the dispute Mission was forced to rejoin the network without the hoped-for price increases.

Designing “narrow” network product is another option for payers. By offering to drive more patient volume to a limited set of providers, payers can, in theory, extract greater price concessions. But payers across our study markets have found little interest among employer customers in narrow network products. As with the “nuclear option,” employers were typically not willing to restrict their employees’ choice, with several noting that the savings rarely outweigh the perceived limits on employees’ choices.  At the same time, several payers are successfully marketing narrow network products in the individual market, where consumers may be more price sensitive and appear more willing to accept a constraint on their choice of providers in exchange for a lower premium.

Provider tiering and centers of excellence

A few payers in our markets offer plans that tier providers based on cost and quality, so that enrollees who choose lower cost providers will pay lower cost-sharing. However, the strategy is limited to markets in which there is sufficient competition so that lower-cost options are available. Payers and purchasers also noted that they often lacked the necessary data to effectively tier providers, and that patients lacked access to real-time pricing tools to enable them to make cost-effective choices.

In Asheville, a tiering strategy is difficult because the Mission Health System is so dominant. However, at least one large, self-funded employer in Asheville has designated out-of-state “centers of excellence” hospital systems that can offer lower prices and high quality for certain elective procedures. Even after reimbursing enrollees’ travel costs, this employer said, it is still more cost effective than receiving the care at Mission. However, there is a small set of elective procedures that can be performed at these facilities, and the bulk of enrollees’ care must be delivered locally.

Risk-sharing arrangements

Payers in Detroit and Northern Virginia suggested they were pinning at least some cost-containment hopes on risk-sharing arrangements with providers. In this they are following the Medicare program, and several hospital systems in our study markets participate in Medicare risk-sharing programs. However, most payers acknowledged that risk-sharing arrangements they have implemented to date have had only a limited impact. Current arrangements have largely involved only upside risk for providers, with the aim of having the provider take on more downside financial risk at a future date. Payers reported deploying risk-sharing arrangements with physician group practices more than hospitals, likely because they have greater leverage with physicians in most of the studied markets. For example, while hospital executives in Northern Virginia told us they had been presented with possible risk-sharing payment models, they declined to participate due to their lack of “economic incentive.”

Provider-payer partnerships

In some cases, payers have taken a “if you can’t beat ‘em, join ‘em” tactic, by entering into partnerships or joint ventures with health systems. For example, in 2012 Aetna entered into a joint venture with Inova in Northern Virginia to create Innovation Health. More recently, the self-insured General Motors plan entered into an exclusive partnership with the Henry Ford Health System in Detroit. While it is too early to say what the impact of the GM-Henry Ford partnership will have, observers in Northern Virginia largely dismissed Innovation Health’s impact on the market, noting that Aetna had obtained no discernible competitive advantage from the venture.

4. Employers’ tools to help control costs are limited

Unable (or unwilling) to push back on high and rising provider prices, employers have historically looked elsewhere to contain costs. Across our six markets, the most widespread strategy among employers to constrain their health plan costs has been to shift them to employees, largely through higher deductibles Increasing deductibles and other enrollee cost-sharing has been an attractive strategy because it can be ratcheted up slowly over time, limiting employee pushback. At the same time, several employer respondents in our study markets observed that this cost-shifting strategy may have been tapped out, noting that many of their employees can no longer afford the deductibles. One also observed that, because of high provider prices, employees often exceed their deductible after just one imaging service or ER visit, limiting its utility as a cost-containment tactic.

Employers reported investing in employee wellness programs. However, they were unable to document whether these programs generated savings. This is not surprising given that the weight of the evidence to date suggests minimal, if any, return on investment. Employers also touted on-site primary care as a promising strategy in Indianapolis, in part because they offer a subscription-based (capitated) model for the delivery of primary care services. However, not all employers have the requisite size or centralized location to offer this service.

Another strategy, direct contracting, is similarly limited to employers with sufficient size and human resources capacity to bypass payers and negotiate with providers. But this trend may be catching on among some Large employers in both Detroit and Indianapolis are actively considering direct contracting, and as noted above, General Motors directly contracted with the Henry Ford system in 2018. In 2019, the Peak Health Alliance, a coalition of employers and citizens of Summit County, Colorado, successfully negotiated price discounts from local providers, lowering 2020 premiums an estimated 11 percent. It remains to be seen whether such efforts are replicable outside of Summit County and if employers will, over the long term, be able to strike better bargains than private payers.

Employers also differ dramatically in their level of engagement and willingness to push insurers to deliver lower prices. One significant impediment is the lack of access to claims data, which would enable them to identify and address cost drivers.  Indeed, in Indiana, a coalition of large, self-funded employers was forced to take Anthem to court in order to obtain access to their claims data, even though they bear the financial risk of their plans. For many other employers, the expertise and knowledge needed to negotiate effectively with sophisticated provider systems are well outside their core competency; they have delegated that responsibility to their third-party administrators and will continue to do so.

5. Public policy strategies have had limited effectiveness

Across our six markets, anti-trust and other public policy strategies have been deployed to constrain the ill-effects of market concentration, but they have had limited effectiveness.

Anti-trust enforcement

Stakeholders in Northern Virginia suggested that the Federal Trade Commission’s (FTC’s) intervention in Inova’s attempted acquisition of a smaller independent hospital in Prince William County has had a dampening effect on what had been a region-wide buying spree. However, respondents suggested perhaps the FTC intervention was too little, too late, noting that it would be hard for the “super concentrated” region to become any more concentrated. Nationwide, a lack of resources, a narrow focus on horizontal consolidation within local markets, and some negative court decisions have limited the FTC’s ability to be more than a speed bump to the consolidation boom of the past 10 years.

State attorneys general (AGs) have also played a role in our markets. When the for-profit hospital chain HCA acquired Mission Health System in Asheville, the state AG demanded a 10-year commitment that HCA will not close rural hospitals or require major cuts to services. Similarly, in the wake of Optum’s acquisition of the DaVita Medical Group, which owned many of the largest primary care practices in Colorado Springs, that state’s AG imposed time-limited restrictions on Optum and its owner UnitedHealthCare to mitigate anti-trust concerns in the Colorado Springs market. Specifically, UnitedHealthCare had to lift its exclusive Medicare Advantage contract with one of the two major hospital systems for at least 3.5 years and honor DaVita’s prior agreement with Humana (the main Medicare Advantage competitor in Colorado Springs) through at least 2020.

The “Certificate of Public Advantage” or COPA, has been another tool used by states to limit anti-competitive behavior, post-merger. A COPA allows a state, rather than the FTC, to oversee antitrust issues after a consolidation among providers. In North Carolina, the state legislature granted a COPA to Mission after it merged with the competing hospital system in Asheville in 1998. However, COPAs can be subject to “regulatory capture,” where regulators become overly influenced by the industry they are meant to police At least in North Carolina, the COPA appeared to do little to limit Mission’s acquisition of other nearby hospitals or physician groups. In 2015, Mission lobbyists convinced the legislature to repeal the COPA, paving the way for its purchase by the for-profit HCA system.

Certificate of Need laws

Stakeholders offered competing views on the value of state certificate of need (CON) laws. These laws generally require the state’s review and approval of new hospital facilities. Some observers argued that lifting these laws would encourage competing hospitals to enter the market, potentially putting pressure on the dominant hospital system to lower prices However, while Indianapolis experienced a hospital building boom after it repealed its CON law, payers and purchasers alike report that the increase in capacity not only led to a spike in utilization, it also, somewhat counterintuitively, drove hospitals to hike their unit prices. With more competition, hospitals had fewer patients but the same (or higher) overhead costs, leading them to demand higher prices from commercial insurers.

Rate setting and purchasing alliances

Market and public policy failure to adequately counter rising costs has prompted policymakers in some states to consider using the power of the government to set provider payment rates or to encourage the formation of multi-purchaser alliances to demand price concessions from providers. For example, a bill promoted by the Colorado insurance department would have linked some hospital reimbursement to the amount reimbursed by Medicare, while the administrator of North Carolina’s state employee health plan has proposed setting rates via reference to the Medicare program. Although Maryland was not part of our market case study, stakeholders in Northern Virginia attributed that state’s lower hospital prices to its all-payer rate setting program.

As noted above, Colorado leaders have also encouraged the formation of locally based purchasing alliances—built on the Peak Health Alliance model—that could combine the purchasing power of multiple employers to directly negotiate with hospitals.  Although a payer would be sought to administer the plan, their role in contracting with providers would be greatly diminished.  The concept of employer purchasing pools is not new: past efforts, such as California’s PacAdvantage program, ultimately floundered But it is too soon to tell if these nascent efforts to harness government—or employers’—purchasing power will generate significant cost savings or the type of political support needed to initiate and sustain them.

LOOKING AHEAD

As the literature and our case studies show, consolidation leads to higher provider prices and ultimately higher premiums for consumers. Any policy discussion about improving health care affordability will need to confront the limits of the market to constrain provider monopolies and their resulting increased negotiation leverage.

Misaligned incentives among commercial payers and the “must have” status of many hospital systems mean that market-based tools to hold health care costs down have been largely ineffective or difficult to replicate. And, with 90 percent of markets in the country already highly consolidated, the prospect of greater anti-trust enforcement is “too little, too late.”

In addition to the public policies discussed above, states have implemented or are considering requiring providers to work within cost growth targets and leveraging the power of state agencies to demand price concessions from providers. For example, Delaware and Massachusetts have set targets for annual increases in health care spending, while Montana’s state employee plan recently began setting a Medicare-based “reference price” for covered hospitalizations. In California, state agencies are consolidating their pharmacy purchasing authorities to negotiate lower drug prices, pursuant to a 2019 executive order by Governor Newsom. Also, in litigation that has been closely watched because it could embolden more post-consolidation anti-trust lawsuits nationwide, the California AG and a coalition of roughly 1,500 self-funded employers reached a settlement agreement with one of that state’s largest health systems, Sutter Health, over allegations that Sutter used its market power to drive up prices.

Policymakers can also do more to activate or assist employers in demanding lower prices. The first step is to help inform employers about the true drivers of health care costs by banning clauses in payer-provider contracts that prohibit the sharing of data on reimbursement rates. Employers, particularly those that self-fund their plans, should not have to sue their third-party administrator (as they did in Indiana) to gain access to their own data. Being able to clearly see the data on hospital prices has sparked a number of Indiana employers to demand change. However, if incremental steps such as data sharing don’t ultimately reduce provider prices, it could increase the support for more dramatic steps, such as rate-setting, in response to provider consolidation. “The status quo isn’t an option anymore,” one large employer told us. Indeed, the status quo is no longer an option for most employers, and certainly not for their employees, who are bearing an ever greater burden of the cost of care.

 

 

PBGH CEO ON SUTTER HEALTH ANTITRUST SETTLEMENT: ‘I DON’T THINK THIS ISSUE WILL GO AWAY’

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https://www.healthleadersmedia.com/finance/pbgh-ceo-sutter-health-antitrust-settlement-i-dont-think-issue-will-go-away

Elizabeth Mitchell, CEO of the Pacific Business Group on Health, weighs in on the recent settlement between Sutter Health and the California Attorney General’s office.

Despite a recent settlement between Sutter Health and a group of self-funded employers along with the California Attorney General’s office, the issue of high healthcare costs and pricing concerns is likely to continue in the Golden State, according to an industry observer.

The Sutter Health antitrust case was settled in mid-October, bringing a sudden end to a healthcare trial that garnered widespread attention from provider organizations.

Sutter Health was accused of violating state antitrust laws by wielding its massive market power in Northern California to drive up prices. The Sacramento-based nonprofit health system, which reported an operating revenue of $13 billion in 2018, was expected to face up to $2.7 billion in damages before a settlement was reached just ahead of when opening arguments were slated to begin.

While the final details of the case have not been released yet, there is still interest in the healthcare industry about what concessions were made by each side in the case and how the settlement may impact the industry at large. 

Elizabeth Mitchell, CEO of the Pacific Business Group on Health (PBGH), told HealthLeaders that the case was another example of how important it is for employers to review pricing practices, especially for hospital services.

“We think that there will be a lot to be learned from this case when we understand what the injunctive release will include,” Mitchell said. “There is a need to ensure a functional marketplace for healthcare purchasing and this could create that opportunity for California and potentially the rest of the country.”

Provider consolidation has become a focus of California’s healthcare market in recent years, with several reports pointing to significant market concentrations in counties across the state.

A September 2018 study conducted by RAND Corporation and the Nicholas C. Petris Center on Health Care Markets and Consumer Welfare School of Public Health at the University of California, Berkeley found that more than a dozen California counties were deemed “hot spots,” or markets that deserve additional regulatory review.

Researchers urged state legislators to pass additional oversight measures to address the potential negative consequences of healthcare M&A activity.

As it relates to large employers, Mitchell said that businesses are continually looking for innovative arrangements that prioritize quality care options and affordability, which may require providers who have been “seeking to maximize prices” to rethink that approach.

She pointed to PBGH’s Employers Centers of Excellence Network, which has allowed businesses to contract with certain providers for affordable care options that improve health outcomes.

However, Mitchell said that some contracting practices from large integrated systems prohibit such approaches by employers to identify and discern quality variation, which ultimately impacts patients.

Despite the ruling in the Sutter case, Mitchell said that the larger issue around pricing for medical care in California is not fully resolved.  

“I don’t think this issue will go away, it will remain front and center for a lot of folks paying for medical care,” Mitchell said. “There’s a lot of interest in partnering with clinicians for high value care, but these anti-competitive practices really inhibit that.”

 

 

 

NY Local employers predict 3.6% increase in health benefit costs in 2020

Posted on by • Posted in Chronic Care Management, Chronic Diseases, Consumerism, Cost Management, Health Insurance Coverage Adequacy, Health Insurance Industry, Health System, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Highly Specialized Drugs, Hospital, Hospital Industry, Out of Pocket Expenses, Telemedicine • Leave a comment

https://www.crainsnewyork.com/health-pulse/local-employers-predict-36-increase-health-benefit-costs-2020?utm_source=health-pulse-tuesday&utm_medium=email&utm_campaign=20191028&utm_content=hero-readmore

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Employers in the metro area expect their spending on benefits to rise 3.6% next year after accounting for changes designed to hold down costs, according to an analysis by Mercer.

That trend would be lower than the 3.9% increase employers experienced this year, with local organizations spending $16,059 per active employee. That’s more than 20% higher than the average cost per employee nationwide.

The benefits consultant broke out the responses of 170 employers in New York City, its surrounding counties, northern New Jersey and southern Connecticut for Crain’s from its 2019 National Survey of Employer-Sponsored Health Plans.

In the area, the average contribution to premiums for an individual employee is $199 a month in a PPO plan, $169 a month in an HMO and $107 a month in a consumer-directed health plan, which tends to have a higher deductible.

The median deductible for members in a PPO plan was $500 locally.

Nationwide, there was a split, with the average deductible for businesses between 10 and 499 employees increasing nearly 13%, to $2,285, while employers with 500 or more workers raised the average deductible in a PPO plan just $10, or 1%, to $992.

Companies are looking to telemedicine and management programs for their highest-cost members as ways to keep fees down, said Mary Lamattina, a senior consultant at Mercer. She said most clients she works with have at least one beneficiary with $1 million in annual medical expenses.

“Employers are getting away from cost shifting and looking at other ways to tackle affordability,” she said.

Nationwide, employers spent 3% more on health costs this year, driven in part by specialty drug spending. Costs for specialty drugs rose 10.5% this year.

Ninety percent of employers with 500 workers or more said they viewed monitoring or managing high-cost claimants as important or very important. One strategy companies reported using was introducing a tech-enabled chronic care management program for conditions such as diabetes.

About 88% of large employers said they offer telemedicine as an option, but only 9% of eligible employees had taken advantage of the programs.

Lamattina pointed out that utilization was nearly four times higher at organizations that waived a copay for telemedicine use, compared with employers that charged a $40 copay. “

“Utilization can be driven by the cost,” she said. “Convenience is really key to getting people to use the benefit.” —Jonathan LaMantia

 

Gainesville health system paying patients’ out-of-network costs

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https://www.albanyherald.com/news/gainesville-health-system-paying-patients-out-of-network-costs/article_5a82d58a-f4f1-11e9-b7b5-8bebc4253708.html

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With a contract impasse in its third week, a Gainesville-based health system is spending millions of dollars so that thousands of patients are not having to pay more when visiting the system’s doctors and hospitals.

Northeast Georgia Health System’s contract with Anthem ended Sept. 30, which means that since then, Georgians with Anthem insurance have been out of network for NGHS facilities and physicians.

But in an unusual move, the Northeast Georgia system is making up the financial difference between in-network and out-of-network prices through Dec. 31. That way, Anthem patients won’t pay higher fees when visiting NGHS medical providers, the system said.

“While it will cost millions of dollars per month to protect our patients from out-of-network costs, we’d rather do that than agree to a proposal that would jeopardize the health of our community for years to come,’’ Steve McNeilly, vice president of managed care for NGHS, said.

Most contract disputes between health systems and insurers get resolved before the end of the previous deal, although some agreements come just hours before the end of the expiring pact. The terminated contract between NGHS and Anthem is an exception, and this particular stalemate doesn’t show any sign of progress. Neither side has mentioned any negotiations or even indicated that talks are being scheduled.

The standoff comes at a time when many Georgians are entering their open enrollment period for the 2020 health plan year.

Anthem is by far the state’s biggest health insurer. Northeast Georgia’s hospitals in Gainesville, Braselton, Winder and Dahlonega, as well as its urgent care facilities and many physician group locations, are now out of network for Anthem patients.

“Anthem has only contacted NGHS once since the end of September – and that was only to inform us that they would be processing all claims as out-of-network,’’ McNeilly said. He said Northeast Georgia has proposed a contract with concessions, but that Anthem “refuses to take any meaningful action.’’

“Unfortunately, it appears that Anthem intends for us to be out of network for an extended period of time, so we’re urging patients to switch to a different health insurance plan during open enrollment,’’ McNeilly added.

Northeast Georgia said patients can call its Patient Access Service Center at (770) 219-7678 to get a personalized estimate of hospital charges for upcoming surgeries or procedures. If patients have questions about charges for physician office visits, they can call their physician’s office for more information, NGHS said.

Anthem said Monday that it is “standing firm for our consumers who need greater affordability.’’

The latest proposals from NGHS would increase costs “well above other health systems in the state,’’ Christina Gaines, an Anthem spokeswoman, said. “These increases place a significant burden on consumers because any substantial price increase in the services at these facilities would be directly reflected in increases in medical expenses covered by employer-sponsored group health plans, as well as to member premiums and cost share amounts.’’

What NGHS proposed “was simply not sustainable’’ for Anthem members, she said.

“We provided a revised proposal to them two days before the contract expired and did not receive a response,’’ Gaines said. “We are willing to resume talks so we can come to a new agreement that is fair, provides flexibility and protects affordability.”

Anthem said it can’t guarantee that Northeast Georgia will continue to charge patients the same rates as under the previous contract.

“To protect against unexpected balance billing, and other expenses associated with out-of-network providers, we are urging members to use in-network physicians and facilities,’’ Gaines said. “Anthem continues to have a broad, statewide provider network that delivers access to other quality health care options that remain in-network for our consumers.” Anthem directed consumers to visit www.anthem.com/nghs for information.

Craig Savage, a consultant with CMBC Advisors in North Carolina, said he had not heard previously of a hospital-based system covering the cost gap for patients who are forced out of network by a contract dispute.

“I think it’s a demonstration of good faith to patients,’’ Savage said. “It puts a little marketing pressure on Anthem.’’

But he added that even losing the business of 40,000 patients is “not going to have a huge [financial] impact on Anthem in Georgia.’’

And Savage said the contract standoff may put pressure on local physicians who could lose many patients to another insurer during open enrollment season.

 

 

 

5 WAYS HEALTHCARE ORGANIZATIONS CAN ADDRESS SOCIAL DETERMINANTS OF HEALTH

Posted on by • Posted in Adjustment, Alignment, Assistance, Awareness, Health Policy, Health System, Hospital, Hospital Industry, Outcomes, Patient Outcomes, Social Determinants of Health, Strategy • Leave a comment

https://www.healthleadersmedia.com/clinical-care/5-ways-healthcare-organizations-can-address-social-determinants-health

The National Academies of Sciences, Engineering, and Medicine has published a detailed report on implementing efforts to address the social needs of patients.

KEY TAKEAWAYS

Social needs play a pivotal role in patient outcomes.

Before setting strategies to address social determinants of health, healthcare organizations should assess their level of existing social needs activities.

Partnerships are a crucial component of addressing the social needs of patients.

Healthcare providers can address social determinants of health through five approaches—awareness, adjustment, assistance, alignment, and advocacy, according to a report from the National Academies of Sciences, Engineering, and Medicine.

Social determinants of health (SDOH) such as housing, food security, and transportation can have a pivotal impact on the physical and mental health of patients. By making direct investments in initiatives designed to address SDOHs and working with community partners, healthcare organizations can help their patients in profound ways beyond the traditional provision of medical services.

“The consistent and compelling evidence concerning how social determinants shape health has led to a growing recognition throughout the healthcare sector that improvements in overall health metrics are likely to depend—at least in part—on attention being paid to these social determinants,” the National Academies report says.

The report outlines the “5As” strategies that healthcare organizations can implement to address SDOHs in the communities they serve. The strategies were developed by the National Academies’ Committee on Integrating Social Needs Care into the Delivery of Healthcare to Improve the Nation’s Health, Board on Health Care Services, Health and Medicine Division.

1. AWARENESS

The committee says awareness should focus on identifying the social risks and assets of specific patients and populations of patients.

“On the clinical side, patients visiting healthcare organizations are increasingly being asked to answer social risk screening questions in the context of their care and care planning. In some places, screening is incentivized by payers. As part of the MassHealth Medicaid program, for instance, Massachusetts accountable care organizations now include social screening as a measure of care quality,” the report says.

2. ADJUSTMENT

Instead of addressing social needs directly, healthcare organizations can pursue a strategy that focuses on adjusting clinical care to address social determinants of health.

“Many examples of adjustment strategies were identified in the literature, including the delivery of language- and literacy-concordant services; smaller doctor-patient panel sizes for cases with socially complex needs (e.g., teams caring for homeless patients in the U.S. Department of Veterans Affairs health system have panel sizes smaller than the size of other VA care teams); offering open-access scheduling or evening and weekend clinic access; and providing telehealth services, especially in rural areas,” the report says.

3. ASSISTANCE

Healthcare organizations can pursue strategies to connect patients with social needs to government and community resources.

“The literature contains descriptions of a variety of assistance activities that have been undertaken by health systems and communities. These assistance activities vary in intensity, from lighter touch (one-time provision of resources, information, or referrals) to longer and more intensive interventions that attempt to assess and address patient-prioritized social needs more comprehensively,” the report says.

Intensive interventions include relationship building, comprehensive biopsychosocial needs assessments, care planning, motivational interviewing, and long-term community-based supports.

4. ALIGNMENT

Healthcare providers can pursue an alignment strategy that assesses the social care assets in the community, organizes those assets to promote teamwork across organizations, and invests in assets to impact health outcomes.

“The committee defined alignment activities to include those undertaken by healthcare systems to understand existing social care assets in the community, organize them in such a way as to encourage synergy among the various activities, and invest in and deploy them to prevent emerging social needs and improve health outcomes,” the report says.

5. ADVOCACY

Healthcare providers can form alliances with social care organizations to advocate for policies that promote the creation and distribution of assets or resources to address social determinants of health. For example, healthcare organizations can call for policy changes to overhaul transportation services in a community.

“In both the alignment and advocacy categories, healthcare organizations leverage their political, social, and economic capital within a community or local environment to encourage and enable healthcare and social care organizations to partner and pool resources, such as services and information, to achieve greater net benefit from the healthcare and social care services available in the community,” the report says.

IMPLEMENTING THE FIVE STRATEGIES

Assessing the level of existing social needs activities should be a starting point for healthcare organizations that want to address social determinants of health, the chairperson of the National Academies committee told HealthLeaders.

One of the first steps healthcare organizations can take is identifying activities they may already have underway that fit the 5As, then expand or enhance those activities through greater commitment from leadership, investment of resources into supporting infrastructure, and strengthening of engagement with patients and community stakeholders, said Kirsten Bibbins-Domingo, PhD, MD, MAS, professor and chair, Department of Epidemiology and Biostatistics, UCSF School of Medicine, University of California, San Francisco.

“Healthcare organizations may not have activities in all of the 5As and should use this framework to develop strategies that will work within their local context. In all cases, it is critical to be aware that addressing health-related social needs of their patients is essential to achieving goals of high quality and high-value care,” she said.

“Partnerships are crucial,” Bibbins-Domingo said.

“Activities in the clinical setting should be designed and implemented in a way that engages patients, community partners, frontline staff, social care workers, and clinicians in planning and evaluation, as well as in incorporating the preferences of patients and communities. Establishing linkages and communication pathways between healthcare and social service providers is critical, including personal care aides, home care aides, and others who provide care and support for seriously ill and disabled patients.”

 

 

 

FTC to probe impacts of state antitrust protections for local hospital mergers

Posted on by • Posted in 2020 Election Issues, Antitrust, Certificates of Public Advantage (COPAs), Federal Trade Commission (FTC), Health Insurance Industry, Health Policy, Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Monopoly • Leave a comment

https://www.fiercehealthcare.com/hospitals-health-systems/ftc-to-probe-impacts-state-antitrust-protections-for-local-hospital?mkt_tok=eyJpIjoiT0RZNE4yTm1PV1psTmpNeSIsInQiOiJ5R3gxMEwrdUhPWUdZVlBTZ3NWWkdMV08xOCtObDdFaGdHaE1hN0o4Z2p5WnBaN3hjd2lDVm5ybnBhWUtUNFdlTW1LcndtaTN1WUtNVzg1NmUrQjJmWEhqTWpJR3BkUmVuZmVNS2FzdmRWdENuMEtNT0tJMXozUW93N0lVQmZ5WSJ9&mrkid=959610

The Federal Trade Commission (FTC) issued orders to five health insurance companies and two health systems seeking data to study the effects of state-level regulatory approvals known as certificates of public advantage (COPAs) that protect local hospital mergers from antitrust scrutiny.

Federal officials said they want to study the impact of COPAs and hospital consolidation on prices, quality, access, the innovation of healthcare services and employee wages.

The FTC issued orders to Aetna, Anthem, BlueCross BlueShield of Tennessee, Cigna and United Healthcare for patient-level commerical claims data. 

Orders were also issued to Ballad Health in Tennessee and Virginia as well as Cabell Huntington Hospital in West Virginia for aggregated patient billing and discharge data, along with health system employee wage data and other information relevant for analyzing the health systems’ prices, quality, access and innovation. Both health systems were approved for COPAs last year.

Ballad Health was formed in 2018 through the merger of Mountain States Health Alliance and Wellmont Health System. Under a COPA in Tennessee and a similar agreement in Virginia, officials said they agreed to serve oversight and enforceable commitments that include investing $308 million over 10 years to improve population health, expanding access to care and supporting health research and medical education.

Cabell Huntington Hospital was allowed to acquire nearby St. Mary’s Medical Center under a similar cooperative agreement with the state that was initially challenged by federal regulators.

Tennessee regulators describe COPAs as written approvals governing mergers among two or more hospitals that provide “state action immunity to the hospitals from state and federal antitrust laws by replacing competition with state regulation and active supervision. The goal of the COPA process is to protect the interests of the public in the region affected and the state.”

However, the feds say while COPAs “purport to immunize mergers and collaborations from antitrust scrutiny under the state action doctrine,” the approvals are in need of further study. As Kaiser Health News reported, the federal antitrust exemption dates back to a Supreme Court ruling in the 1940s and has been rarely used to allow hospital mergers. There has been little research (PDF) on the impacts of COPAs.

In June, the FTC held a public workshop examining research on the price effects of three COPAs approved in the 1990s—including Benefis Health System in Montana, Palmetto Health in South Carolina and Mission Health in North Carolina—to inform the current study design. Officials said they intend to collect information over the next several years to conduct retrospective analyses of the Ballad Health and Cabell COPAs.

Once the study is complete, the FTC intends to report publicly the study’s findings and will use them to help in future advocacy and enforcement by the agency and to better inform stakeholders about COPAs. 

 

 

 

A group of Republicans has unveiled its healthcare plan. Here is what’s new and what isn’t

Posted on by • Posted in 2020 Election Issues, ACA, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, Health Savings Accounts, Health System, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, High Risk Pools, Hospital, Hospital Industry, Medicaid, Medicaid Block Grants, Medicaid Expansion, Out of Pocket Expenses, Preexisting Conditions • Leave a comment

https://www.fiercehealthcare.com/payer/a-group-republicans-have-a-new-healthcare-plan-here-what-new-and-what-isn-t?mkt_tok=eyJpIjoiT0RZNE4yTm1PV1psTmpNeSIsInQiOiJ5R3gxMEwrdUhPWUdZVlBTZ3NWWkdMV08xOCtObDdFaGdHaE1hN0o4Z2p5WnBaN3hjd2lDVm5ybnBhWUtUNFdlTW1LcndtaTN1WUtNVzg1NmUrQjJmWEhqTWpJR3BkUmVuZmVNS2FzdmRWdENuMEtNT0tJMXozUW93N0lVQmZ5WSJ9&mrkid=959610

Capitol building in Washington

The Republican Study Committee (RSC), a group of 145 House GOP lawmakers, rolled out a new healthcare plan to counter Democrats’ call for “Medicare for All.”

However, the plan itself closely resembles the Affordable Care Act (ACA) repeal bill called the American Health Care Act (AHCA) that the House passed in 2017 and contributed greatly to the loss of the GOP House majority in 2018.

For the plan to become law, Republicans would have to retake the House in 2020, and President Donald Trump would need to be reelected. However, if those victories happen, the plan could be a blueprint for how a GOP-controlled Congress would move forward on healthcare, as the committee counts among its members both GOP leadership and rank and file.

Here are three takeaways from the plan:

Shifting to high-risk pools

The plan would retain the ACA’s requirement that individual market plans cover pre-existing conditions. However, it takes out provisions that ensure patients with pre-existing conditions get affordable coverage such as requirements that prevent plans from charging sicker people higher premiums than healthy customers.

The plan does introduce high-risk pools that would be used by people with high healthcare costs, a commonly deployed tactic by states for the individual market before the ACA. The high-risk pools would be funded by repackaging the funding used for the ACA’s subsidies and the Medicaid expansion.

However, the plan doesn’t identify the full amount that should be devoted to high-risk pools, which segregate high-cost customers on the individual market.

The plan cites a 2017 report from consulting firm Milliman that estimated a federally supported high-risk pool could require $3.3 billion to $16.7 billion a year. The AHCA also called for high-risk pools but only gave $2.5 billion a year to help states fund them.

While the “$17 billion annual price tag may not seem ideal, it sets up a sustainable path for the individual market,” the RSC report said.

The desire for more funding for high-risk pools is likely a nod to Democratic attacks during the 2018 midterms that the AHCA threatened pre-existing condition protections. The nonpartisan Congressional Budget Office said the AHCA, which let states waive pre-existing condition protections, would lead to people in those states not getting affordable coverage for their pre-existing conditions.

While the AHCA had funding for high-risk pools, experts across the healthcare spectrum said that it wasn’t enough. It would remain to be seen how much more funding would be needed.

Doubling down again on health savings accounts

Bolstering health savings accounts has been a very popular reform idea among Republicans, and that enthusiasm is clear in the RSC plan.

The plan proposes to increase how much an employee can contribute to a health savings account. Currently, an individual can contribute $3,500 and a family can contribute $7,000.

A 2018 bill that passed out of the House but didn’t make it through Congress increased the contribution cap to $6,650 for an individual and $13,300 for a family.

Now, the RSC plan wants to increase the figures again, this time to $9,000 per individual and $18,000 for families, in line with a proposal from libertarian think tank Cato Institute.

“The RSC plan would also expand health savings accounts so that they could be used for a number of health services and products that currently must be paid for with after-tax dollars,” the plan said.

Replace Medicaid expansion with a block grant

This is another common reform in ACA repeal plans. The bill would phase out the enhanced federal matching rate for the Medicaid expansion to pre-expansion levels.

In addition, the bill would replace the existing open-ended federal match with a fixed amount in a block grant.

But the plan has a new twist in a new “flex-grant” that would give more funding to states that adopt a work requirement. However, half of the funding for any flex-grant must go toward supporting the purchase of private plans for low-income individuals.

So far, 12 states have gotten approval from the Trump administration to install work requirements for their Medicaid expansion population. But of those 12 states, three have had their work requirement programs struck down by legal challenges.

Some states are also considering installing their own block grants. Tennessee has released a draft proposal for a block grant but has yet to get federal approval.