The CBO analyzed what it would take to shift to a single-payer system. Here are 5 takeaways

https://www.fiercehealthcare.com/payer/5-takeaways-from-cbo-s-analysis-a-single-payer-system?mkt_tok=eyJpIjoiTURRNU5HTmpZbU5tT1RFeiIsInQiOiJLcVdxN0dKUU5iaEdMTGtaMG9xbFdtdEgxdXJBbndhTUNyMWN6UTZzbGJhTHFkS3Z4eTRBZkFGNUxcLzlyZUxvMHpOUDRDbmptdGE4aHVoMk4wS1NTYUlWMFVPMmFxNEEzTkJcL1RDODhYa3psN0VkNFhFdTVqYjlDSHltaTdPMUFxIn0%3D&mrkid=959610

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As chatter about “Medicare-for-All” ideas heats up—at least among the field of Democratic presidential hopefuls—the Congressional Budget Office decided to offer its own take.

Well, sort of.

Wednesday, the CBO issued a report that dove into the key considerations policymakers might want to think about before they overhaul the U.S. healthcare into a single-payer system. Putting it mildly, they said, the endeavor would be a “major undertaking.”

They don’t actually offer up specific cost estimates on any of the Medicare-for-All bills floating around, though other researchers put Bernie Sanders’ Medicare-for-All plan at between $32.6 trillion and $38.8 trillion over the first decade.

But the CBO analysts did weigh in on a slew of different approaches to financing, coverage, enrollment and reimbursement that could be built into a single-payer plan.

“Establishing a single-payer system would be a major undertaking that would involve substantial changes in the sources and extent of coverage, provider payment rates and financing methods of healthcare in the United States,” the CBO said.

So what exactly did the CBO have to say about what it would take to create a single-payer system? Here are some key takeaways:

1. There could be a role for private insurance—or not

There has been plenty of heated debate around Medicare for All focused on the role that existing private coverage could—or could not—play in that system. Most insured Americans are enrolled in a private plan today, including about one-third of Medicare beneficiaries.

If they’re allowed, commercial plans could play one of three roles in a single-payer system, according to the report: as supplemental coverage, as an alternative plan or to offer “enhanced” services to members in the government plan. 

Allowing private insurers to offer substitutive plans is unlikely, because they could potentially offer broader provider networks or more generous benefits, which would draw people into them. A solution to this issue could be mandating that providers treat a minimum number of patients who are enrolled in a single-payer plan.

Private payers could also offer coverage for care that is traditionally outside of the purview of government programs, such as dental care, vision care and hearing care.

Supplemental plans like these are offered in the existing Medicare program, and several countries with single-payer systems allow this additional coverage.

For example, in England, private plans offer “enhancements” to members of the government plan, including shorter wait times and access to alternative therapies, But members of these plans must pay for it in addition to tax contributions to the country’s National Health Service. 

2. Other government programs could stick around

In addition to Medicare and Medicaid, the federal government operates several health programs targeting individual populations: the Veterans Affairs health system, TRICARE and Indian Health Services.

A single-payer system could be designed in a way that also maintains these individualized programs, the CBO said. Canada does this today, where its provinces operate the national system while it offers specific programs outside that for indigenous people, veterans, federal police officers and others.

There could also be a continuing role for Medicaid, according to the report. 

“Those public programs were created to serve populations with special needs,” the CBO said. “Under a single-payer system, some components of those programs could continue to operate separately and provide benefits for services not covered by the single-payer health plan.”

On the flip side, though, a single-payer plan could choose to fold members of those programs into the broader, national program as well, the office said. 

3. A simplified system could also mean simplified tech

Taiwan’s government-run health system has a robust technology system that can monitor patients’ use of services and healthcare costs in near real-time, according to the report.  

Residents are issued a National Health Insurance card that can store key information about them, including personal identifiers, recent visits for care, what prescriptions they use and any chronic conditions they may have.  Providers also submit daily data updates to a government databank on service use, which is used to closely monitor utilization and cost. Other technology platforms in Taiwan can track prescription drug use and patients’ medical histories.

However, getting to a streamlined system like this in the U.S. would be bumpy, the CBO said. It would face many of the same challenges the health system is already up against today, such as straddling many federal and state agencies and addressing the needs of both rural and urban providers.

But the payoffs could be significant, according to the report. 

“A standardized IT system could help a single-payer system coordinate patient care by implementing portable electronic medical records and reducing duplicated services,” the agency wrote. 

4. How to structure payments to providers? Likely global budgets

Most existing single-payer systems use a global budget to pay providers, and may also apply in tandem other payment approaches such as capitation or bundled payments according to the report.

How these global budgets operate varies between countries. Canada’s hospitals operate under such a model, while Taiwan sets a national healthcare budget and then issues fee-for-service payments to individual providers. England also uses a national global budget.

Global budgets are rare in the U.S., though Maryland hospitals operate under an all-payer system. These models put more of the financial risk on providers to keep costs within the budget constraints. 

Many international single-payer systems pay based on volume, but the CBO said value-based contracting could be built into any of these payment arrangements.

5. Premiums and cost-sharing are still in play, especially depending on tax structures

A government-run health system would, by its nature, need to be funded by tax dollars, but some countries with a single-payer system do charge premiums or other cost-sharing to offset some of those expenditures.

Canada and England operate on general tax revenues, while Taiwan and Denmark include other types of financing. Danes pay a dedicated, income tax to back the health system, while the Taiwanese have a payroll-based premium. 

The type of tax considered would have different implications on financing, according to the CBO. A progressive tax rate, for instance, would impose higher levies on people with higher incomes, while a consumption tax, such as one added to cigarettes, would affect people more evenly.

Policymakers will also have to weigh when to impose new taxes, shifting the economic burden between generations. 

The CBO did not offer any cost estimates in terms of the amount the federal government would need to raise in taxes to fund a single-payer program.

 

 

 

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

http://www.healthcarefinancenews.com/news/site-neutral-payments-called-assault-financial-stability-hospitals?mkt_tok=eyJpIjoiWVdWa1lXTTBORFJpWTJSayIsInQiOiJndXNTdWM2czNvZzR6dDlRVXA4N3ZZWUhiV29FTzZ4VndOT3VGeUkzSGtGcms1QnlhSnNRTTlQbGRmcmY5UEpEY2VuWWg1UHIwTXVQUkg1ZklLZGN6SGYxMmpwc3lmZGJtK1pBcTNDNnZZZ0FmYzQ3Q2R2YWloNjVJSlorWStcL3QifQ%3D%3D

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.”

 

9 Vermont hospitals join state’s all-payer program

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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.

California Cost & Quality Atlas Helps Map Path to Higher-Value Care

http://www.chcf.org/articles/2017/04/ca-cost-quality-atlas

Bringing Together California Commercial Quality-Cost Performance, by Region, 2013

California is often celebrated for its rich diversity. Geographic, population, and cultural differences are embraced as key ingredients that make our state successful. But when it comes to health care services, differences are neither expected nor valued.

Study after study indicates that where you live has a direct impact on your health and well-being. In fact, as Dr. Tony Iton of The California Endowment has said about determinants of health status, your zip code is probably more important than your genetic code. One look at the results from an Integrated Healthcare Association online tool, the California Regional Health Care Cost & Quality Atlas, confirms wide geographic variation in health care measures across the state — and the tremendous opportunities that exist to improve quality and contain costs.

What drives this variation? More importantly, what can be done to minimize it? While some of the variation in care delivery may reflect differences in patient populations and needs, other differences are unexplained and likely unwarranted.

Benchmarking and tracking performance on key health care quality and cost measures is a critical first step in reducing unwarranted variation.

Dramatic Variations Across the State

As shown in the table below, quality gaps for people enrolled in commercial insurance products are common across the state’s 19 geographic regions, and the atlas data pinpoint significant opportunities to improve care for hundreds of thousands of people.

 

Consensus builds that GOP will keep value-based focus for healthcare reimbursement

http://www.healthcarefinancenews.com/news/insurers-seek-market-stabilization-prior-april-rate-setting-deadline

Health Affairs report suggests new HHS leadership should expand state all-payer models, fine-tune accountable care organizations.

Another report suggest value-based payment models will continue even, if in a different form, under the new administration’s governance of the U.S. Department of Health and Human Services, according to a Health Affairs report.

“The election of Donald Trump might change the strategy of advancing healthcare reform, but the movement toward value-based care both preceded the Affordable Care Act and has bipartisan support,” the authors said.

If Tom Price is confirmed as secretary and Seema Verma administrator of the Centers for Medicare and Medicaid Services Administrator, the agencies will support new value-based payment models said authors David Muhlestein, Natalie Burton and Lia Winfield.

But Price has already voiced his opposition to mandatory models such as bundled payments.

CMS, which has 74 healthcare initiatives and programs in different stages of research, testing, and adoption, recently proposed to make its cardiac care bundle mandatory and said opportunities exist for bundles that consider multiple chronic conditions.

While payment innovation may continue, the agency needs to articulate its overall strategy in four focus areas, the authors said.

The first is the expansion of the population-based model and disease-specific model.

CBO: Hospitals’ future finances depend on increasing productivity

http://www.healthcaredive.com/news/cbo-hospitals-future-finances-depend-on-increasing-productivity/426036/

  • A new analysis from the Congressional Budget Office (CBO) has recognized that changes in laws and regulations, prompted primarily by the ACA–notablyreduced Medicare payment updates and expanded insurance coverage–can be expected to significantly impact hospitals’ future finances.
  • To help provide a sense of the impacts, the CBO’s working paper predicted hospitals’ profit margins, and the share of hospitals that could lose money in 2025 under several different scenarios.
  • The researchers noted that they provided a wide range of estimates due to “substantial uncertainty” around the predictions and how hospitals will respond to the pressures of the federal healthcare law.