No Limit: Medicare Part D Enrollees Exposed to High Out-of-Pocket Drug Costs Without a Hard Cap on Spending

Posted on November 8, 2017 by henrykotula • Posted in Uncategorized • Tagged Catastrophic Cost Threshold, CMS, Coinsurance, Cost-Sharing Requirements, Deductibles, Health Policy, Medicare, Medicare Part D, MedPAC Commission, Out of Pocket Expenses, People with Disabilities, Prescription Drug Plans, Seniors • Leave a comment

No Limit: Medicare Part D Enrollees Exposed to High Out-of-Pocket Drug Costs Without a Hard Cap on Spending – Issue Brief

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Introduction

Prescription drugs play an important role in medical care for 59 million seniors and people with disabilities. Medicare beneficiaries have access to outpatient prescription drug coverage through the Part D prescription drug benefit, which is administered by private stand-alone prescription drug plans (PDPs) and Medicare Advantage drug plans (MA-PDs). Since the start of the Medicare Part D program in 2006, the drug benefit has helped to lower out-of-pocket drug spending for all enrollees. Beneficiaries in Part D plans with low incomes and modest assets are eligible for additional assistance with plan premiums and cost sharing through the Low-Income Subsidy (LIS) program, reducing out-of-pocket costs even further for this population.

The Centers for Medicare & Medicaid Services (CMS) establishes guidelines that all Part D plans must follow for the design of the drug benefit and the value of coverage that must be offered. Plans are allowed to vary, however, along dimensions that affect beneficiaries’ access to and costs for medications, including which drugs are covered and cost-sharing requirements. The standard Part D benefit in 2017 includes a deductible ($400), followed by 25 percent coinsurance for prescriptions up to an initial coverage limit ($3,700 in total costs), and then a coverage gap where enrollees without low-income subsidies pay a larger share of their drug costs until their out-of-pocket drug spending exceeds a catastrophic coverage threshold ($4,950). The Affordable Care Act (ACA) included a provision to phase out the Part D coverage gap by requiring plans to cover a growing share of total drug costs and providing a manufacturer price discount of 50 percent for brand-name drugs filled in the gap, with the amount of the manufacturer discount counting towards the out-of-pocket threshold that triggers catastrophic coverage. Once enrollees’ drug spending reaches the catastrophic threshold, those without the LIS pay up to 5 percent of their total drug costs; those who qualify for the full low-income subsidy pay nothing for their drugs in this phase of the benefit. Plans typically place drugs that cost over $670 per month on a specialty drug tier, with coinsurance that ranges from 25 percent to 33 percent.

Concern has been rising in recent years about the growing cost burden on Medicare and beneficiaries posed by new, unique, and expensive specialty drugs used to treat a range of diseases. The Medicare Boards of Trusteesand the Medicare Payment Advisory Commission have documented this rising cost burden on the Medicare program, which is reflected in higher Part D program spending overall, as well as higher spending for reinsurance of high-cost Part D enrollees who reach the catastrophic coverage phase of the benefit, where Medicare pays for 80 percent of drug costs. Although Part D provides coverage of catastrophic drug expenses, enrollees who do not receive the LIS are still responsible for up to 5 percent of their drug costs in this phase of the benefit. For very high-priced medications, this relatively small coinsurance rate can translate to a significant amount of out-of-pocket costs for beneficiaries who do not receive low-income subsidies.

This analysis examines the out-of-pocket prescription drug cost burden for Medicare beneficiaries in Part D plans who do not receive low-income subsidies, focusing on those enrollees who have drug costs that exceed the catastrophic coverage threshold. We refer to this group as Part D enrollees with high out-of-pocket drug costs. Although these enrollees do not comprise the entire group of enrollees who have high total drug spending that exceeds the catastrophic coverage threshold, they are exposed to a potentially large cost burden because they do not receive the financial protection of the low-income subsidies. We analyze Medicare prescription drug event claims data for 2015, the most recent year of publicly available Medicare claims data, and trends since 2007, the first full year of the Part D drug benefit. For detail on the data and methods, see the Methodology.

Discussion

In recent years, the high and rising cost of prescription drugs has emerged as a pressing issue for consumers, public programs, and private insurers. As our analysis shows, Medicare beneficiaries who do not receive the additional financial protection provided by low-income subsidies are not insulated from this cost burden and can incur substantial out-of-pocket costs for their medications. We find that one million Medicare beneficiaries in Part D plans who were not receiving low-income subsidies had high out-of-pocket costs in 2015—that is, drug spending above the catastrophic coverage threshold—and their annual out-of-pocket spending averaged over $3,000 in 2015.

Our analysis indicates that out-of-pocket costs above the catastrophic threshold represent a growing concern for people with Medicare, and both MedPAC and Medicare’s actuaries have shown that rising spending for catastrophic coverage has placed greater fiscal pressure on Medicare. Our analysis also shows that the number of Part D enrollees who did not receive low-income subsidies and had out-of-pocket spending above the catastrophic threshold has increased over time. Looking to the future, we would expect to see continued increases in the number of enrollees reaching the catastrophic coverage threshold in 2016 and later years, due in part to the ACA changes to the coverage gap as well as the greater availability and use of high-priced drugs. These trends have cost implications both for beneficiaries and, as the Medicare actuaries have projected, for Medicare.

Part D enrollees with high out-of-pocket costs in 2015 spent an average of $1,215 out of pocket on their prescriptions filled above the catastrophic threshold, or $1.2 billion in the aggregate. In other words, Part D enrollees would have collectively saved $1.2 billion if Part D had a hard cap on out-of-pocket spending, rather than requiring enrollees to pay up to 5 percent coinsurance in the catastrophic coverage phase. Placing a hard cap on out-of-pocket spending under Part D would save money for enrollees, but would increase costs to Medicare and would not address underlying concerns related to high-priced drugs.

While Part D has helped make drugs more affordable for people with Medicare, and the ACA has provided additional relief to enrollees with high drug costs by gradually closing the coverage gap, the absence of an annual out-of-pocket spending limit under Part D exposes enrollees to significant costs—unless their incomes and assets are low enough to qualify for low-income subsidies. Various proposals to reduce drug costs—including allowing the federal government to negotiate prices for Medicare beneficiaries, and allowing Americans to import drugs from Canada and other countries—enjoy broad, bipartisan public support. With a growing number of people on Medicare facing high out-of-pocket drug costs, alleviating this burden remains an issue for federal policymakers to address.

CMS finalizes 340B drug program cut

Posted on November 4, 2017 by henrykotula • Posted in Uncategorized • Tagged 340B Drug Discount Program, AHA, Charity Care, CMS, Health Policy, Healthcare Access, Medicare, Quality of Care, Total Knee Arthroplasty, Vulnerable Populations • Leave a comment

https://www.healthcaredive.com/news/cms-finalizes-340b-drug-program-cut/509892/

Dive Brief:

The CMS on Wednesday released a final rule that will significantly cut drug payments to hospitals that use the 340B Drug Pricing Program. The changes to the Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Program take effect Jan. 1, 2018.
The rule also puts a moratorium on enforcement of the direct supervision policy in certain cases, increases outpatient payments by 1.35%, removes six measures from the Outcome Reporting Program and removes total knee arthroplasty from the inpatient only list.
The American Hospital Association released a statement blasting the 340B cut, saying it “will dramatically threaten access to healthcare for many patients, including uninsured and other vulnerable populations.” AHA, America’s Essential Hospitals and the Association of American Medical Colleges plan to sue the administration over the change.

Dive Insight:

The cut to drug payments in the 340B program, which is mostly used by safety net hospitals, is dramatic. Instead of being paid the average sales price plus 6%, they will now be paid 22.5% less than the average price. Children’s hospitals and community hospitals in rural areas are exempt from the reduction.

Hospitals that use the program say it is necessary to helping them care for vulnerable populations, and have cautioned the cut will jeopardize that. There is little oversight, however, over how hospitals track and use the savings generating through 340B. Some lawmakers have said hospitals should be required to make this information readily available.

A controversial study released last month showed hospitals participating in 340B had more of a decline in charity care than other hospitals. AHA said the report is misleading and doesn’t take into account other community benefits hospitals provide.

Hospitals will also be angered by the CMS decision to allow total knee replacement surgeries to take place in outpatient settings. The agency is following the lead of commercial payers, who are pushing for care to move away from more expensive inpatient settings. CMS has said the change will let Medicare beneficiaries get a knee replacement at lower cost, but hospitals say the quality of care for those procedures could decrease.

Site-neutral payments called an assault on the financial stability of hospitals

Posted on November 3, 2017 by henrykotula • Posted in Uncategorized • Tagged CMS, Consumerism, Health Policy, Health System, Hospital, Loss of a Competitive Edge, Market Share, Medicare, MedPAC Commission, Micro-Hospital Development, Outpatient Competition, Site Neutral Reimbursement, Value-Based Healthcare • Leave a comment

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To integrate care, provide more services and stay competitive, hospitals are still building outpatient facilities.

Site-neutral payments all but stopped hospitals from building outpatient facilities in 2016.

Outpatient development effectively froze in 2016, down from $19.6 million in projects in 2015, to $16.4 million in 2016, according to Revista, a resource for healthcare property data.

Historically, hospital-owned outpatient centers received significantly higher reimbursement than private physician offices or ambulatory surgical centers performing the same procedures.

The Medicare Payment Advisory Commission recommended closing the gap between the rates. There was also concern that hospitals were buying up physician practices to take advantage of the higher reimbursement rate.

Congress enacted the Bipartisan Budget Act of 2015, putting site-neutral payments into effect.

New outpatient facilities that used to be paid on the outpatient prospective payment system are now reimbursed by Medicare on the physician fee schedule. The estimate on savings to Medicare runs into the billions.

Those hospitals that had new off-campus departments and began billing before Nov. 2, 2015, were still reimbursed at the higher outpatient rate. Outpatient facilities built later than the cut-off date are now paid under the less lucrative physician fee schedule.

The result of the legislation that went into effect on January 1, was to effectively freeze the geographic footprint of hospitals that rely heavily on Medicare reimbursement, according to Larry Vernaglia, an attorney and chairman of Foley & Lardner’s healthcare practice group in Boston.

For some hospitals, Medicare represents half of their operating revenue.

“It’s one more assault on the financial stability of hospitals,” Vernaglia said. “It definitely means the economics of outpatient services are dramatically different now. Hospitals have to work twice as hard to structure their outpatient buildings to get proper reimbursement.”

While some experts predicted a continued freeze in outpatient building, a surprising thing happened in 2017. The amount of outpatient projects soared to $22.9 million, the highest it has been in four years, according to Revista. However, that could be driven by the latest way skirt site-neutral rules.

“There was a big jump in 2017, that may come down a little bit,” said Revista principle Hilda Martin. “There was a sudden hold-off while systems wrapped their head around (the new policy). It is coming back. I’m wondering if this is beginning of a new trend, because so much inventory is starting this year.”

Martin said Revista is still analyzing the building boom, especially the new focus on micro-hospitals.

There’s been a significant uptick in micro-hospital development, she said. At medical real estate conferences, micro-hospitals are the hot topic because they offer a way to circle around the change in reimbursement, Martin said.

Also, the outpatient slowdown in 2016 may reflect in pause as providers submitted applications to the Centers for Medicare and Medicaid Services to show they were far enough along in planning to get an exemption and remain on the outpatient prospective payment system.

The 21st Century Cures Act provided exemptions. Hospitals in the middle of building an off-site facility could submit an application under the mid-build requirement by Feb. 13.

Many hospitals submitted mid-build applications before the deadline, including 40 in New York, seven in Massachusetts and five in Maine, Vernaglia said.

Applications are still being reviewed, and CMS did not respond to a request for information on the total number of submitted requests, or the names of the applicants.

“I’m familiar with at least 86 of them,” said Vernaglia, who also did not give specific information.

Exemptions allow hospitals to build new outpatient settings on-campus and be reimbursed at the outpatient rate.

“You’re going to see hub and spoke arrangements,” Vernaglia predicted of facility design.

Hospitals can also can build an emergency facility and still receive the higher reimbursement.

In a proposed 2017 payment rule, CMS originally required off-campus provider-based sites to offer the same services they did on Nov. 2, 2015, in order to be excluded from the site-neutral payment provisions, but opted not to include that requirement in the final rule.

For 2017, CMS finalized a Medicare physician fee schedule policy to pay non-excepted, off-campus provider-based departments at 50 percent of the outpatient rate for most services. For 2018, CMS proposed to reduce those payments further, by 25 percent.

Site neutrality creates hardships for hospitals trying to provide more services, integrate care and stay competitive in regions where patients have numerous choices for healthcare.

“There is quite a bit of cynicism in Congress and others that led to passage of Section 603 of the Bipartisan Budget Act of 2015,” Vernaglia said. “It assumed the only reason hospitals were developing these sites was to take advantage of preferential outpatient payment.”

Site neutrality also gave an advantage to hospitals that were early movers in getting their outpatient facilities built. The downside, said Vernaglia, is they’re stuck with what they’ve got. They can’t build another one or relocate. And if they don’t own the building, they can’t threaten to move if the landlord jacks up the rent.

“Soon we’ll see facilities getting long in the tooth,” he said. “There will be fewer outpatient facilities off-campus. I think you’ll see more on-campus. It’s status quo for sure, unless you do some creative things like off-campus emergency.”

Developer Henry Johnson, chief strategy officer for Freese Johnson in Atlanta, Georgia, said hospitals are still building, because not to do so would mean the loss of a competitive edge. The ambulatory facilities may be less profitable now, but there’s the risk that the gap for off-site care will be filled by another facility, or physician practice.

“There’s a greater impact not filling these gaps in the marketplace,” Johnson said. “Right now it’s a battle for marketshare, rather than site-neutral payments.

Johnson has been in the business for over 20 years, working with healthcare systems and large physician practices.

“We’re building micro hospitals, ambulatory surgery centers, outpatient surgery centers,” Johnson said. “Everyone is trying to build a network.”

Value-based care has also given incentives to have patients visit outpatient clinics, rather than the more expensive emergency room.

“They want to keep less expensive procedures in a less expensive environment,” Johnson said.

Providers are being cost-conscious on square-foot costs as well, he said.

“Most of our clients are saying, ‘This is expensive real estate. Let’s build a building that costs half as much, that’s what we want to do.'”

The two trends he’s seeing are micro hospitals, and smaller, acute care facilities, which he likens to “a hospital without beds.”

These freestanding ER facilities are still reimbursed at outpatient rates.

Patients would also rather go to a local, smaller facility, than drive to a hospital, try to find parking and walk the long hallways.

“They’re not going to go places if it’s inconvenient,” Johnson said.

Off-campus buildings, he said, invite people in.

“I’m personally seeing in healthcare, patients aren’t just patients now, they’re consumers,” Johnson said. “The biggest trend we’re seeing, is the consumerization of healthcare.”

Hospital groups to sue CMS over $1.6 billion cut to 340B payments

Posted on November 3, 2017 by henrykotula • Posted in Uncategorized • Tagged 340B Drug Discount Program, CMS, Critical Access Hospitals, Health Policy, Health System, High Drug Prices, Home Health, Hospital, Medicare, Medicare Part B, Rural Health • Leave a comment

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Credit: <a href="https://en.wikipedia.org/wiki/United_States_Department_of_Health_and_Human_Services#/media/File:DHHS2_by_Matthew_Bisanz.JPG">Matthew Bisanz</a>.

The final rule will also allow for higher payment when Medicare beneficiaries receive certain procedures in outpatient departments.

Several groups representing U.S. hospitals on Wednesday said they plan to sue the Centers for Medicare and Medicaid Services over a hospital outpatient prospective payment system final rule released Wednesday that reduces what hospitals are paid under the 340B drug program.

The rule lowers the cost of prescription drugs for seniors and other Medicare beneficiaries by reducing the payment rate to hospitals for certain Medicare Part B drugs purchased through the 340B program. The existing rule would have paid hospitals 6 percent above the sale price of drugs, but the final rule instead pays hospitals 22.5 percent less than sale prices, amounting to a $1.6 billion cut.

The American Hospital Association, Association of American Medical Collegesand America’s Essential Hospitals said they will seek litigation to prevent the cuts.

“CMS’s decision in today’s rule to cut Medicare payments to hospitals for drugs covered under the 340B program will dramatically threaten access to health care for many patients, including uninsured and other vulnerable populations,” AHA Executive Vice President Tom Nickels said in a statement. “We strongly urge CMS to abandon its misguided 340B rule, and instead take direct action to halt the unchecked, unsustainable increases in the cost of drugs.”

America’s Essential Hospitals CEO Bruce Siegel said the organization saw no reasonable rationale for diverting Medicare Part B reimbursement from hospitals in the 340B drug pricing program that are in the greatest need of support to providers not eligible for 340B discounts. CMS has no evidence that the policy will combat rising drug prices, he said.

“Congress clearly intended that the 340B program help hospitals that care for many vulnerable patients; this new policy subverts that goal,” Siegel said. “Essential hospitals operate with an average margin less than half that of other hospitals and depend on 340B program savings to stretch resources for patient care and community services. Given their fragile financial position, essential hospitals will not weather this policy’s 27 percent cut to Part B drug payments without scaling back services or jobs.”

340B Health said the rule is a backdoor effort to undermine an important drug discount program.

“Responding to a survey earlier this year, 340B hospitals were unanimous in saying implementation of the CMS rule would cause them to cut back services. For example, Genesis Healthcare System in Zanesville, Ohio, estimates a loss of $3 million in Medicare payments could force it to cancel critical services such as substance abuse treatment, cancer treatment, and behavioral health programs.The MetroHealth System Cancer Center in Cleveland, Ohio, estimates an $8 million loss would raise patients’ costs and reduce access to needed services including transportation and care navigation that are supported by 340B savings,” said 340B Health CEO Ted Slafsky.

However, the AIR340B Coalition said it would continue to advocate for regulatory action to better align the program with its original intent of helping vulnerable patients.

“We applaud the Administration for taking action to help address one aspect of the 340B program that has been leading to higher costs for Medicare and its beneficiaries,” the AIR340B Coalition said.

Areas of change it supports include clearly defining a 340B eligible patient, examination of hospital and satellite clinic eligibility criteria, and a more rational and legally supportable policy on contract pharmacy arrangements.

CMS said the savings will be reallocated equally to all hospitals paid under the hospital outpatient prospective payment system. Children’s hospitals, certain cancer hospitals, and rural sole community hospitals will be excluded from these drug payment reductions.

CMS will work with Congress for additional considerations on 340B for safety net hospitals, said CMS Administrator Seema Verma.

Consumers would save an estimated $320 million in copayments in 2018 under the new payment rule that gives Medicare beneficiaries the benefit of discounts hospitals receive under the 340B program, according to Verma.

“As part of the president’s priority to lower the cost of prescription drugs, Medicare is taking steps to lower the costs Medicare patients pay for certain drugs in the hospital outpatient setting,” Verma said.

The final rule will also allow outpatient payment to be made when Medicare beneficiaries receive certain procedures in a lower cost setting, the outpatient department. The new availability of the higher OPPS payment applies to six procedures, including total knee replacements, a common and costly Medicare surgical procedure, CMS said.

Starting in January 2018, Medicare beneficiaries undergoing any of the six procedures can opt to have them performed in a lower cost setting when a clinician believes such a setting is appropriate.

Additionally, the final rule provides relief to rural hospitals by placing a two-year moratorium on the direct physician supervision requirements for rural hospitals and critical access hospitals.

“CMS understands the importance of strengthening access to care, especially in rural areas,” Verma said. “This policy helps to ensure access to outpatient therapeutic services for seniors living in rural communities and provides regulatory relief to America’s rural hospitals.”

In a home health prospective payment system final rule, CMS is not finalizing the home health groupings model and will take additional time to further engage with stakeholders.

In New Test for Obamacare, Iowa Seeks to Abandon Marketplace

Posted on October 16, 2017 by henrykotula • Posted in Uncategorized • Tagged ACA, CMS, Essential Health Benefits, Health Insurance Coverage Adequacy, Health Insurance Exchanges, Health Insurance Individual Market, Health Insurance Market Uncertainty, Health Policy, High Deductible Health Plans, High Risk Pools, Innovation Waiver, Out of Pocket Expenses, Preexisting Conditions, Underinsured, Uninsured • Leave a comment

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With efforts to repeal the Affordable Care Act dead in Congress for now, a critical test for the law’s future is playing out in one small, conservative-leaning state.

Iowa is anxiously waiting for the Trump administration to rule on a request that is loaded with implications for the law’s survival. If approved by the federal Centers for Medicare and Medicaid Services, it would allow the state to jettison some of Obamacare’s main features next year — its federally run insurance marketplace, its system for providing subsidies, its focus on helping poorer people afford insurance and medical care — and could open the door for other states to do the same.

Iowa’s Republican leaders think their plan would save the state’s individual insurance market by making premiums cheaper for everyone. But critics say the lower prices come at the expense of much higher deductibles for many with modest incomes, and that approval of the plan would amount to another way of undermining the law. Already the administration has slashed funding for advertising and outreach to help people sign up for insurance, and President Trump is preparing to issue an executive order allowing more access to plans that don’t meet the law’s standards.

Adding to the uncertainty, the Washington Post reported last week that Mr. Trump in August asked Seema Verma, the federal official in charge of reviewing Iowa’s plan, to reject it. Some supporters of the law saw that as a deliberate effort to keep premiums high; Mr. Trump frequently cites sharply rising premiums as proof that the health law is failing.

Neither C.M.S. nor the White House would comment on whether Mr. Trump had pushed for the application to be denied. A spokeswoman for C.M.S. said only that the plan remains under review.

In Des Moines on Tuesday, Gov. Kim Reynolds told reporters that her team was in constant contact with the White House and C.M.S. about the plan, including a call with Ms. Verma this week, trying “to get to yes.” She said the administration has been “very receptive” to the plan as a solution to the “unaffordable,” “unworkable” health law until it can be repealed.

Iowa calls its request a stopgap plan that would allow the state to opt out of the federal health insurance marketplace, HealthCare.gov, for 2018 and create a state-run system that its insurance commissioner says would lower premiums for the 72,000 Iowans who currently have Obamacare health plans, including 28,000 who earn too much to get subsidies to help with the cost.

But the cheaper premiums would come with a big trade-off: higher out-of-pocket costs. The only option for customers would be a plan with deductibles of $7,350 for a single person and $14,700 for a family. The proposal would also reallocate millions of federal dollars that the health law dedicates to lowering costs for people with modest incomes and use the money for premium assistance to those with higher incomes, no matter how much money they make.

The individual insurance market is particularly fragile in Iowa, partly because the state has allowed tens of thousands of people to keep old plans that do not meet the health law’s standards. Aetna and Wellmark Blue Cross & Blue Shield, the state’s most popular insurer, are both withdrawing at the end of the year. The only insurer planning to remain, Medica, is seeking premium increases that average 56 percent, blaming Mr. Trump’s ongoing threats to stop paying subsidies known as cost-sharing reductions that lower many people’s deductibles and other out-of-pocket costs. Wellmark has said it will stay if the stopgap plan is approved.

“What we are trying to address is a really large number of people being priced out,” said Doug Ommen, the state’s Republican insurance commissioner.

Two other states, Alaska and Minnesota, have already won permission to shore up their Obamacare markets with waivers allowed under the law; they will use federal money to help insurers cover the claims of their most expensive customers next year. But Oklahoma abruptly withdrew a similar request in late September — one that state officials said would have reduced premiums by an average of 30 percent — saying that the Trump administration had reneged on a promise to approve it by Sept. 25 and they were out of time. (A C.M.S. spokeswoman said, “At no time was an approval package or an approval date ever agreed upon.”)

Iowa’s waiver request is more far-reaching, providing what Timothy S. Jost, an emeritus professor of health law at Washington and Lee University, has called a “watershed moment” for Obamacare.

“It’s a decision to abandon a number of key principles of the Affordable Care Act,” he said.

Under the law, people who don’t get insurance through work can buy it through the online marketplace. They get federal subsidies to help with the cost if their income is below 400 percent of the poverty level, or about $65,000 a year for a couple. Those whose incomes are below 250 percent of the poverty level — $40,600 a year for a couple — also get cost-sharing reductions.

Iowa’s plan would reallocate much of that federal assistance, using it to provide premium subsidies based on age and income for even the wealthiest individual market customers. It would also be used to create a “reinsurance” program, like Alaska’s and Minnesota’s, to help insurers cover their sickest customers. The law’s essential health benefits and protections for people with pre-existing conditions would remain in place, but every individual market customer would get the same standardized high-deductible plan.

Mr. Jost and other supporters of the law say Iowa’s proposal does not meet the requirements for so-called innovation waivers, including that the coverage they provide must be at least as comprehensive and affordable as Obamacare plans, because poorer people would face higher deductibles and other out-of-pocket costs. That, they say, leaves the plan open to almost-certain legal challenges.

Seemingly acknowledging that problem, Mr. Ommen has tweaked Iowa’s proposal — including with a supplemental filing to the Trump administration on Thursday — to preserve subsidies that reduce out-of-pocket costs for roughly 21,000 low-income Iowans.

But those at slightly higher income levels would lose cost-sharing assistance completely, facing the $7,350 deductible and other out-of-pocket expenses.

“You still have some real problems from the perspective of making sure low-income people can afford coverage,” said Joel Ario, a managing director at Manatt Health who worked on the Affordable Care Act at the Department of Health and Human Services during the Obama administration.

But for the roughly 28,000 Iowans who have Obamacare coverage but earn too much to get subsidies, the need for a shake-up is urgent. And with open enrollment starting in about three weeks, time is of the essence.

Dozens of them, including many farmers, submitted comments to Mr. Ommen or testified at public hearings in favor of the stopgap plan, with many saying they would be forced to drop their insurance next year if it were not approved.

“Fortunately both my husband and I have already prepaid our funeral expenses,” write a woman identified as Nancy K., of Bellevue, who said she could no longer afford her coverage. “Every single item, even our cemetery marker, is paid for or covered for my death in the event that we cannot afford insurance to pay for any so-called catastrophic health care.”

Landi Livingston, whose family raises beef cattle in rural southern Iowa, said she was paying almost $500 a month for a Wellmark plan and dreaded having to switch to Medica next year, with what she assumed would be significantly higher prices.

If the Trump administration approves the state’s request, Ms. Livingston’s premium would likely drop to around $350 a month, according to estimates from the state, saving her $1,800 next year. But her $3,000 deductible would more than double, meaning that if she had high medical expenses she could end up paying more toward those bills.

“I still think it’s the best thing on the table right now,” she said of the stopgap plan. “It’s high time the people in power get this figured out.”

For Tony Ross, a retired paralegal in Des Moines who has a subsidized marketplace plan from Aetna, the stopgap plan would lower his premiums to about $85 a month, from $220, according to the state estimates. But his deductible – currently $750 because his low income qualifies him for cost-sharing reductions – would balloon by almost tenfold. That would mean paying thousands more each year for his expensive blood pressure medication, he said.

“Obviously I need a way lower deductible than $7,350,” said Mr. Ross, 63. “This doesn’t seem like a fair way of fixing things.”

Trump administration ends cost-sharing reduction payments under ACA

Posted on October 13, 2017 by henrykotula • Posted in Uncategorized • Tagged ACA, Back Door Politics, CBO, CMS, Cost Sharing Reduction Payments, Essential Health Benefits, Federal Rulemaking Process, Health Insurance Coverage Adequacy, Health Insurance Individual Market, Health Insurance Market Uncertainty, Health Policy, HHS, High Premiums, High Risk Pools, Out of Pocket Expenses, Preexisting Conditions, Presidential Executive Orders, Sabotaging ACA, Supreme Court, Underinsured, Uninsured • Leave a comment

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Insurers have said the move will destabilize the individual market and increase premiums by at least 20 percent.

In a move insurers have long said would destabilize the individual market and increase premiums by at least 20 percent, the Department of Health and Human Services late Thursday ended cost-sharing reduction payments.

At least one state attorney general, AG Eric Schneiderman of New York, has said he would sue the decision. The court granted a request to continue funding for the subsidies, Schneiderman said.

California may also sue the administration over the decision.

“I am prepared to sue the #Trump Administration to protect #health subsidies, just as when we successfully intervened in #HousevPrice!” California AG Xavier Becerra tweeted Thursday night.

In May, Schneiderman and Becerra led a coalition of 18 attorneys general in intervening in House v. Price over the cost-sharing reduction payments.

The cost-sharing reductions payments will be discontinued immediately based on a legal opinion from Attorney General Jeff Sessions, said Acting HHS Secretary Eric Hargan and Centers for Medicare and Medicaid Services Administrator Seema Verma.

“It has been clear for many years that Obamacare is bad policy. It is also bad law,” HHS said. “The Obama Administration, unfortunately, went ahead and made CSR payments to insurance companies after requesting – but never ultimately receiving – an appropriation from Congress as required by law. In 2014, the House of Representatives was forced to sue the previous Administration to stop this unconstitutional executive action. In 2016, a federal court ruled that the Administration had circumvented the appropriations process, and was unlawfully using unappropriated money to fund reimbursements due to insurers. After a thorough legal review by HHS, Treasury, OMB, and an opinion from the Attorney General, we believe that the last Administration overstepped the legal boundaries drawn by our Constitution. Congress has not appropriated money for CSRs, and we will discontinue these payments immediately.”

Trump tweeted this morning, “The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”

Insurers reached and America’s Health Insurance Plans did not have an immediate comment on the ending of the subsidies.

The move to end CSRs comes weeks before the start of open enrollment on Nov. 1, but many insurers had submitted rates reflecting the end of the subsidies that allowed them to offer lower-income consumers lower deductibles and out-of-pocket costs.

America’s Essential Hospitals said it was alarmed by news of administration decisions that could create turmoil across insurance markets and threaten healthcare coverage for millions.

“This decision could leave many individuals and families with no options at all for affordable coverage,” said Bruce Siegel, MD, CEO of America’s Essential Hospitals. “We call on Congress to immediately shore up the ACA marketplace and to work in bipartisan fashion, with hospitals and other stakeholders, toward long-term and sustainable ways to give all people access to affordable, comprehensive care.”

Today’s CSR decision follows yesterday’s executive order from President Trump to allow for association health plans that could circumvent Affordable Care Actmandates on coverage. The executive order must go through the federal rulemaking process and may also face legal challenges.

AHIP was swift to react to Trump’s order.

“Health plans remain committed to certain principles. We believe that all Americans should have access to affordable coverage and care, including those with pre-existing conditions. We believe that reforms must stabilize the individual market for lower costs, higher consumer satisfaction, and better health outcomes for everyone. And we believe that we cannot jeopardize the stability of other markets that provide coverage for hundreds of millions of Americans,” said spokeswoman Kristine Grow. “We will follow these principles – competition, choice, patient protections and market stability – as we evaluate the potential impact of this executive order and the rules that will follow. We look forward to engaging in the rulemaking process to help lower premiums and improve access for all Americans.”

The American Academy of Family Physicians and five other medical associations representing more than 560,000 doctors have expressed serious concerns over the effect of President Trump’s executive order directing federal agencies to write regulations allowing small employers to buy low-cost insurance that provides minimal benefits.

In a joint statement, the AAFP, the American Academy of Pediatrics, the American College of Physicians, the American Congress of Obstetricians and Gynecologists, the American Osteopathic Association and the American Psychiatric Association strongly rejected the order they said would allow insurers to discriminate against patients based on their health status, age or gender.

Republicans tried to repeal and replace the ACA, and since that failed are trying to end consumer protections under the law, according to U.S. Representative Bill Pascrell Jr., a Democrat from New Jersey and a member of the Ways and Means Committee.

“Republicans have been on the warpath trying to end important consumer protections that the ACA affords, including protections for people with pre-existing conditions and required coverage for services that people actually need, like mental health care,” Pascrell said. “Now that they’ve failed in that endeavor, the Trump Administration is trying to use the back-door with this executive order.”

A Congressional Budget Office analysis released in August said the CSRs, which cost an estimated $7 billion a year, could end up costing the federal government $194 billion over a decade.

Changes in 2017 Federal Navigator Funding

Posted on October 11, 2017 by henrykotula • Posted in Uncategorized • Tagged ACA, ACA Enrollment Navigators, ACA Navigator, ACA Shortened Enrollment Periods, CMS, Federal Navigator Funding, Federal Navigator Funding Reductions, Health Insurance Coverage Options, Health Insurance Exchanges, Health Policy, In-Person Enrollment Assistance • Leave a comment

Data Note: Changes in 2017 Federal Navigator Funding

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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.

Health Care Costs Aren’t Just About Economics

Posted on October 10, 2017 by henrykotula • Posted in Uncategorized • Tagged Bundled Payment Trends, CMS, Collaborative-Based Decision Making, Health Policy, Healthcare Team Care, Reimbursement Incentives, Specialty Care Silos, US Healthcare Costs • Leave a comment

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Reimbursement incentives are crucial in health care. The bottom line is, well, the bottom line. But one reason we still have haven’t got a tight handle on health care costs is that they are too often treated only as an issue of economics, rather than medicine.

The limits of this approach are clear. Health care costs in the United States have been rising much faster than inflation for a long time. When Medicare was created in 1965, for example, the United States was spending about 6 percent of GOP on health care. Today the number is about 18 percent, or $3.4 trillion in 2016.

Much of that rise is, happily, due to life-changing and life-saving breakthroughs in care delivered to more people than ever before. Health care was cheaper before hip and knee replacements became common, for instance, but it was also common in the recent past to see the elderly walk with canes and confined to wheel chairs.

Nevertheless, health care costs remain troubling for the average patient. To develop new approaches to providing better and more affordable care, we can’t look just to economists to devise clever price structures and incentive systems. We must also look to caregivers working in the field. The good news is that this effort is underway. Medical schools and health-care systems around the country are quietly revolutionizing how health care is delivered in ways that are likely to reduce costs by improving care.

To see the difference between reforms advanced by doctors rather than economists consider the widespread concerns regarding the Trump administration’s plan to reconsider “bundled payment” mandates Bundled payments are, on the whole, a good idea that take a traditional economics-first approach. They seek to control costs by setting a single price for all of the care in a particular illness episode. But the Centers for Medicare & Medicaid Services (CMS) recently announced that it will allow many hospitals to opt out of bundled payment mandates for hip and joint replacements and will eliminate forthcoming mandates regarding certain aspects of cardiac care.

This move is certainly worth debate. CMS’s movement toward more voluntary models could allow more flexibility in trying to achieve the larger goals of transparency and cost containment. But, as critics have noted, it may also make it hard to collect enough data to know whether any approach can be effective across the broad spectrum of care.

Missing from this discussion is the broad effort now underway at medical schools across the country to achieve a central aim of bundled payments: having a wide range of health-care providers leave specialized silos and work in teams to provide comprehensive care.

Fostering such collaboration is the aim of the substantial investments universities are making in Inter-Professional Education programs. The University of Kansas, for example, opened an $82 million Health Education Building in July that will provide interdisciplinary training for all three of KU’s medical centers (medicine, nursing, and the health professions).

In 2015, the school I lead launched The Michigan Center for Interprofessional Education to bring faculty together from across a broad range of disciplines — including dentistry, medicine, nursing, pharmacy and social work — to develop and implement new curricula to allow students to collaborate case-based decision making. Our ambitious effort is one of dozens across the nation aimed at training tomorrow’s health-care providers to see themselves as members of teams who must coordinate care to deliver the best care to patients.

The need for such collaboration will only become wider going forward. As technology and the social sciences make their own discoveries, caregivers will increasingly have to understand and interact with highly accomplished engineers, mathematicians, statisticians, chemists, physicists, and computer scientists. As we better understand the influence of culture and lifestyle on health outcomes, the contributions of social workers and psychologist will only increase.

Most patients already know that medicine has become a team sport. Few people today have a single doctor. Many are treated by a group of primary care physicians, specialists, nurses, and pharmacists who must work together. Bringing these health-care professionals together, with their patients — to draw on their various areas of expertise and to identify the best course of treatment — should improve care and reduce costs.

It is still too early to state the full impact of this approach. But early signs are encouraging. Like bundled payments, such shared decision-making has already been shown to reduce costs by putting more options on the table. They also dovetail with efforts to provide patients with a wider range of treatments options, which has also led to cost savings.

These reforms are not being made with an eye toward the bottom line. The incentives driving them are our evolving knowledge about how to improve care. Nevertheless, these medical decisions will pay significant economic dividends.