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Analysis: Is healthcare spending growth past the ACA bump?

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http://www.healthcaredive.com/news/analysis-is-healthcare-spending-growth-past-the-aca-bump/507073/

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Dive Brief:

  • A new Robert Wood Johnson Foundation blog post questions whether healthcare spending growth will return to pre-Affordable Care Act (ACA) levels.
  • Katherine Hempstead, who leads the foundation’s health insurance coverage, pointed to a recent Altarum Institute healthcare spending trend report that showed spending growth reached 4% in the second quarter of 2017, which was the lowest quarterly increase since 2014.
  • She said recent spending growth has been powered by ambulatory care utilization, which has also had an effect on job growth.

Dive Insight:

Altarum’s Center for Sustainable Health Spending’s Health Sector Economic Indicators released last month said a major reason for the growth slowdown in the second quarter was hospital spending, which grew just 1.3% rather than the expected 4% growth rate. Year-over-year hospital spending only increased by 1.1% in July. June saw the slowest growth rate year-over-year (0.8%) since January 1989.

Payer efforts to reduce hospital spending seem to be working. Insurers continue to look for more ways to reduce hospital utilization. Anthem said recently it will no longer pay for MRIs and CT scans at hospitals in 13 states unless the tests are an emergency, and that it would no longer cover “unnecessary” emergency department visits. The CMS is also proposing to make costs more site neutral by paying services at off-campus hospital outpatient departments at 25% of regular outpatients rates. The same proposal also includes a small increase (1.75%) for outpatient payments.

All of these efforts look to reduce hospital spending growth and utilization further and move that business to outpatient services, which are less expensive. This spending growth slowdown and move to outpatient services are affecting hospitals, which have responded through M&A activity and by cutting services, outsourcing and laying off staff.

In her blog post, Hempstead said ambulatory care has seen both utilization and job growth, as payers push patients to outpatient care rather than hospitals. “It remains to be seen whether there will need to be some recalibration on the ambulatory side as growth in demand levels off, financial pressures potentially intensify, and the delivery system continues to evolve,” she wrote.

Healthcare spending peaked in Q1 2015, as more Americans with insurance increased utilization of services, prescription drug use and the net cost of insurance, wrote Hempstead. However, that spending leveled off last year and continues to slow this year. She questioned whether we will soon return to pre-ACA spending growth levels.

In addition to ambulatory care, Hempstead said urgent care is a sector to watch. There are more than 7,500 urgent care centers and the sector has grown into a $25 billion industry. Plus, providers such as HCA Healthcare, Community Health Systems and Tenet Healthcare are all investing in urgent care centers and freestanding emergency departments.

However, Hempstead raises the questions: Has the urgent care industry grown too quickly? And is telemedicine a less costly and better alternative?

 

BREAKING: Trump undercuts ACA with new plan options

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http://www.healthcaredive.com/news/trump-healthcare-executive-order/507148/

Image result for pre existing conditions

Dive Brief:

  • President Donald Trump signed an executive order Thursday that rolls back a number of Affordable Care Act (ACA) provisions that set minimum requirements for health plans.
  • The order will allow small businesses and groups of people to band together and buy insurance as an association. The association health plans (AHP) available to them do not have to meet the requirements of the ACA, such as protection for people with pre-existing conditions and essential health benefits.
  • In addition, the order expands the use of short-term plans that also have looser requirements and allows plans to be sold across state lines.

Dive Insight:

Broadly, the executive order loosens the requirements health plans must meet and shifts regulation away from federal levels. This could lower out-of-pocket costs for people who don’t use much care, but would likely result in major cost increases for people with pre-existing conditions.

The biggest concern with offering these plans is that it would lead payers to cherry pick young, healthy people who are less expensive for payers. But separating them from people who will need services creates an unbalanced risk pool. That can quickly lead to prohibitive out-of-pocket costs for people who have a pre-existing condition or who unexpectedly need high-cost care.

There are still several steps to be taken before the order could have a real impact. HHS and the Department of Labor have been instructed to write new regulations which will go through the regular notice and comment process. The specifics of those regulations will be important to how the order ultimately plays out. Also, the order will almost certainly see a legal challenge. Still, it signals that Trump’s White House is ready to find ways of undercutting the ACA despite the high-profile legislative failures earlier this year.

It’s far from the first sign, though. HHS has drastically cut back efforts to promote this year’s open enrollment period, which begins Nov. 1. The ACA’s overall advertising budget was slashed by 90%, community groups that receive federal funding to help people enroll have been devastated by cuts and HHS recently barred regional directors from participating in enrollment events.

Short-term plans are inexpensive for people who are healthy, but they can exclude people with pre-existing conditions. They have previously been allowed for a limited stretch, such as three months, but extending that time and allowing these plans to count toward the individual mandate will mean an unstable risk pool.

Allowing plans to be sold across state lines is a staple of conservative health policy, but there is little reason to believe it would actually lower costs. There are also many unanswered questions about how these plans would be relegated.

 

Trump’s executive order would mean cheaper insurance premiums for healthy Obamacare customers

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http://www.washingtonexaminer.com/trumps-executive-order-would-mean-cheaper-insurance-premiums-for-healthy-obamacare-customers/article/2637105

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President Trump is expected to sign an executive order on Obamacare this week that would allow people to buy cheaper health insurance with fewer regulations, targeting healthcare goals that eluded congressional Republicans all year.

The full details of the executive order have not been released, but enough information has been reported to reveal its overall framework. Trump would direct the Departments of Labor, Treasury and Health and Human Services to make changes to regulations so more people could band together to buy “association health plans” which would allow individuals or small businesses to band together, such as members of a Chamber of Commerce, to buy plans sold across state lines. The order also would allow people to buy short-term health insurance plans for longer than the Obama administration allowed and would encourage the use of health savings accounts.

Both association health plans and short-term plans are less expensive than Obamacare plans because they offer limited coverage. They don’t guarantee same-cost coverage, or any coverage, for people with pre-existing illnesses and they do not cover a broad range of medical care, from addiction treatment to maternity care.

Critics have referred to the plans as “junk insurance,” warning that expanding access to them would take customers back to the days before the passage of Obamacare, formally known as the Affordable Care Act. They also warn that providing such options would peel more people from Obamacare’s exchanges, leaving an even sicker — and costly — population with Obamacare plans.

But people who don’t receive federal help paying for their premiums, meaning people who make more than $48,240 for an individual or $98,400 for a family of four, and who do not have a pre-existing illness, may look to use one of the options. Many of those customers are facing double-digit premium increases in 2018. The number of people who have unsubsidized health insurance is pegged at anywhere from 6 to 9 million people. Some will face insurance that is so expensive that under Obamacare they will not be required to pay the law’s penalty if they decide not to get coverage.

The executive order could offer an alternative, but it’s not clear how quickly the plans will become available to customers. Open enrollment for Obamacare begins Nov. 1 and runs through Dec. 15, and officials at the different agencies may not be able to change regulations in time for the start of 2018. The White House declined to provide details about the timeline for implementing the executive order.

Kathy Bakich, national health compliance practice leader at Segal Consulting, said the association health plan regulations may take longer than the short-term plans because the administration may have to propose new rules and take public comments, which could take months. The original rules took more than a decade to create, she said.

“There is a legitimate need in the marketplace for new types of systems to allow small employers to band together,” she said. “Whether this is the right way to do it is a tough question.”

It’s not clear how far the changes to the regulations can go. Depending on how they are written, they raise potential openings for fraud or for insolvency if claims exceed an association’s ability to pay them out, because states won’t be able to regulate plans that are sold elsewhere to crack down on problems or revoke licensing. Bakich raised the possibility of another option, known as reinsurance, that would inject federal funding into the exchanges so that higher-cost claims were paid for while others who have coverage would not see premium increases, but there is little appetite among most Republicans for such a proposal.

Instead, association health plans have been pushed even among House members, who passed a bill to allow more of them earlier this year.

“Unlike larger organizations, America’s small businesses are limited in their ability to negotiate for lower healthcare costs for their millions of employees,” said Rep. Virginia Foxx, R-N.C., chairwoman of the House Education and the Workforce Committee. “It’s time to level the playing field. That’s why the committee advanced and the House passed common-sense legislation to allow small businesses to band together through association health plans.”

Trump had been discussing the idea of association health plans with Sen. Rand Paul, R-Ky., for months. On Tuesday he said on Twitter that he was moving to act because Congress “can’t get its act together on healthcare.” Paul chimed in as well, sharing Trump’s tweet and calling it a “great plan” and a “big deal for millions of Americans.”

“Sen. Paul brought this idea to President Trump as a way to fix many problems in the individual market without more regulations and spending,” Doug Stafford, chief strategist for Paul’s political action committee, said in an email. “They have worked on this for quite some time now and are pleased it will be enacted soon.”

The association health plans could allow members of different industries to band together or allow individuals to join in. The proposal has been billed as one that would allow people to buy insurance across state lines because health plans could be located in states with fewer regulations, which would make them less expensive.

The proposal on short-term plans may be easier to tackle. The Obama administration changed the rules for short-term plans in fall 2016, saying they could be offered for only 90 days at a time, meaning that a customer’s deductible would renew if he were to purchase a plan again at a later date. Prior to that, insurers stretched the definition of “short-term,” with some providing coverage for as long as 364 days. It’s not clear what the difference in pricing will be, but in 2016 the average price for an Obamacare premium was $393 a month and short-term plans averaged about $124 a month. By 2017 unsubsidized premiums for mid-level Obamacare plans had risen across the country by an average of 22 percent and are expected to rise in the double-digits again next year.

Insurers have said that the increases are a result of uncertainty over how the Trump administration or Congress would change Obamacare, but also from incurring losses from selling the plans, which younger, healthier and cheaper enrollees haven’t flocked to.

Obamacare, Bakich said, left a gap in terms of dealing with people who don’t think they can afford the robust coverage and also say they don’t want a wide range of services.

“They just want to be protected from bankruptcy and buy the catastrophic plan and be protected from losing everything in a medical crisis,” she said.

Kev Coleman, head of research and data for HealthPocket, a website that helps consumers compare and buy health plans, said he is a proponent of allowing short-term plans to be used for a longer period, saying that industry data show people use them for about six months and that they are meant to be transitional.

Short-term plans and Obamacare plans have locked in rates with states for 2018 and that will not change the individual market, he said.

He also disputed that the short-term plans would be destabilizing to the Obamacare exchange, noting that the Obama-era regulations went into effect in April and that the number of people who used them previously were small. Data from 2015 peg customers at 148,100.

“This market has been around for decades and it hasn’t been a destabilizing force,” Coleman said.

Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation, said on Twitter that people who don’t receive subsidies but who have pre-existing illnesses such as cancer or diabetes would be particularly vulnerable because the short-term and association plans wouldn’t cover their medical needs.

“Short-term insurance plans can offer inexpensive coverage to currently healthy people, but they would exclude people with pre-existing conditions,” he wrote. “If healthy people can enroll in short-term plans and avoid the individual mandate penalty, the ACA marketplaces could collapse. Anything that creates a parallel insurance market for healthy people will lead to unaffordable coverage for sick people.”

But Coleman said working within the existing Obamacare system hasn’t worked.

“Politicians interested in optimizing the health of ACA risk pools would be well-advised to work backwards from consumers’ insurance priorities in order to arrive at a compelling market solution,” Coleman said. “You can’t achieve healthy risk pools without a product that has broad appeal.”

Changes in 2017 Federal Navigator Funding

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Data Note: Changes in 2017 Federal Navigator Funding

Image result for ACA Navigators

The Affordable Care Act (ACA) created Navigator programs to provide outreach, education, and enrollment assistance to consumers eligible for coverage through the Marketplaces and through Medicaid and requires that they be funded by the marketplaces.  For the past two years, the Centers for Medicare and Medicaid Services (CMS) has funded Navigator programs in the 34 states that use the federal marketplace through a multi-year agreement that was expected to continue for the current budget year.  In August, CMS officials announced significant reductions to Navigator funding for the 2018 budget year.  These funding reductions coming so close to the start of the 2018 open enrollment period will affect the help many Navigators can provide to consumers seeking to enroll in coverage.

This data note analyzes funding changes and discusses the implications for Navigators and consumers.  It presents results of a Kaiser Family Foundation online survey of federal marketplace (FFM) Navigator programs conducted from September 22, 2017 – October 4, 2017 about 2017 funding awards (for the 2018 open enrollment period), the relationship between funding amounts and program performance, and the likely impact of funding changes on programs and the consumers they serve. It also includes insights from a roundtable meeting of more than 40 Navigators co-hosted by the Robert Wood Johnson Foundation and Kaiser Family Foundation held on September 15, 2017, as well as analysis of administrative data.

BACKGROUND

In 2015, CMS signed three-year agreements with Navigator organizations to provide consumer assistance to residents of federal marketplace states.  The multi-year agreements promoted continuity and experience among Navigator professionals.  Multi-year agreement also spared CMS and Navigators the time and expense involved in reissuing grants during critical weeks leading up to open enrollment.  Under the agreements, Navigator programs in the FFM states are required to set goals and report performance data throughout the year relating to specific duties and activities.

Funding amounts under the multi-year agreements have been determined annually — $60 million for the first budget year (which runs September through August), and $63 million for the second budget year.  CMS notified continuing programs of the grant amount available to them for the coming year in late spring; programs then submitted work plans, budgets, and performance goals based on that amount.  Once CMS approved these plans, final awards were made in late August.

In May 2017, continuing Navigator programs were notified of available third-year funding amounts, which totaled $60 million, with grants for most programs similar to the year-two funding amount. In June, programs submitted their work plans and budgets corresponding to these amounts. The Navigator programs expected final Notice of Awards (NOA) by September 1, 2017.

On August 31, one day prior to the end of the second budget period of the grants, CMS announced it would reduce Navigator funding by more than 40%. CMS issued a bulletin stating that funding for the third year would be based on program performance on its enrollment goals for the second budget period.  On September 13, 2017, two weeks into the third budget year of the grant, FFM Navigator programs received preliminary NOAs for third-year funding, which totaled $36.8 million, or 58% of the year-two awards. (See Appendix A for funding awards by program.)

DISCUSSION

The Administration’s decision to reduce funding for Navigator programs comes at a challenging time for consumers who rely on coverage through the marketplaces. High-profile insurer exits from the marketplaces, rising premiums, and uncertainty over the federal commitment to funding the cost sharing subsidies are likely sowing confusion among consumers about whether coverage and financial assistance remain available. This confusion, coupled with a shortened open enrollment period, increases demand for the consumer education and in-person enrollment assistance Navigators provide. At a time when more help may be needed, the funding reductions are likely to reduce the level of in-person help available to consumers during this fall’s open enrollment and throughout the 2018 coverage year.

Navigator programs generally report that they do not understand the basis for the funding decisions, and our survey results suggest that there is not a clear link between funding and performance of programs relative to goals on the measures they are required to track and self-report. This ambiguity makes it difficult for programs to plan for the future.

Both the magnitude of the reductions and the timing has caused disruption to Navigator program planning and operations.  Programs plan to adopt various strategies in response to the reductions, including reducing their geographic service area and cutting services, such as outreach and assisting with complex cases. Three programs report they will terminate operations, leaving consumers in their states with very limited access to in-person help. While consumers may be able to turn to other assister programs or brokers, less in-person assistance will be available in some areas, especially for people with complex situations or who live in remote or rural communities.

9 Vermont hospitals join state’s all-payer program

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http://www.fiercehealthcare.com/finance/9-vermont-hospitals-join-state-s-all-payer-program?utm_medium=nl&utm_source=internal&mrkid=959610&mkt_tok=eyJpIjoiWkRSalkyTXpOV0V4WkRkayIsInQiOiJHQUVNRTJhUmhhSkpXVk80NkJoOWo5R21nNW5iV0hQS3NxRzc4SUQrbmRyMFwveXlBUFEwRm83TXFUemp0ZE9aNWlBTmYzSVJWb0dzbXV0RTczYnZSTEFMaGhEeFZKYk9LMWJuaXNxUlRUd2V6WEZnZ3lqRUpYaWp6SU0rbUhUd0cifQ==

sign that says "welcome to vermont"

Nine hospitals in Vermont have signed on to participate next year in the state’s all-payer pilot.

OneCare Vermont, the accountable care organization that is heading the effort, estimated that 120,000 Vermont residents will be covered under the program in its second year, according to an article from Seven Days, compared with 30,000 in year one.

In all-payer models, providers are reimbursed based on patient outcomes, not on how many procedures are performed.

“It’s a huge step—120,000. I’m happy with it,” OneCare CEO Todd Moore told the publication.

OneCare announced that a variety of providers would be joining the model for 2018 in addition to the hospitals, according to an article from Vermont Business Magazine. The all-payer program will also include one hospital in New Hampshire, two federally qualified health centers and 19 skilled nursing facilities.

Twenty-four independent physician practices and 30 independent specialty practices have signed on as well, the magazine reports.

However, some major Vermont providers are hesitant, Seven Days reports. Community Health Centers of Burlington, for instance, has passed on joining the program for 2018 because it’s not prepared yet. Peter Gunther, the system’s chief medical officer, told the publication that joining would “take a lot of work” and officials are concerned that the program could increase the administrative burden on providers.

Vermont isn’t the only state to test an all-payer system; Maryland has operated under one for several years. By 2014, 95% of hospital revenue in the state had shifted to alternative payment models. Much of the success was related to its ability to form effective partnerships early on.

But the outlook isn’t completely sunny. Economists have argued that the program should shut down, as it’s more expensive than other models for operating healthcare.The head of the state’s hospital association has also noted that challenges, like allocating resources to mitigate risk, remain for providers.