Archive for November, 2011

Medicaid and the Children’s Health Insurance Program Buffer the Impact of the Recession on Children

Wednesday, November 30th, 2011

In most respects, children have not been exempt from the impacts of the current economic downturn. The number of children living in poverty in the United States rose to 15.7 million in 2010—a 19 percent increase from 2008. Despite this bleak picture, a new report shows that the rate of uninsured children actually dropped by 14 percent during this same time. What accounts for these counterintuitive findings?

The new report from our partners at the Georgetown University Health Policy Institute’s Center for Children and Families (CCF) (click here for the executive summary) provides strong evidence that the uninsured rate for children decreased in the midst of the worst recession in decades because Medicaid and the Children’s Health Insurance Program (CHIP) were in place to prevent children from failing through the cracks.

CCF found that private insurance coverage of children eroded during this period—dropping by 4.5 percent. This is no surprise, since the recession cost millions of families their jobs and their employer-sponsored insurance (ESI). But public insurance coverage of children increased by 5.8 percent during this same time, filling the gap left by declining ESI. This is simple, hard evidence that public coverage programs are irreplaceable sources of coverage that protect children’s access to care when the economy falters.

Ironically—maybe only in the Alanis Morissette meaning of the word—it’s during these hard economic times, when Medicaid and CHIP are most needed as a safety net, that their funding is most at risk. As policy makers scramble to fill state budget gaps, they too often turn to harmful Medicaid and CHIP cuts such as reductions in provider payments, restrictions on covered services, and increased premiums and co-payments. The findings in the report emphasize why it’s essential that policy makers turn instead to the dozens of delivery and payment system reform options that can achieve savings in Medicaid and CHIP without undermining—and often by actually strengthening—these programs. (See our Medicaid Report Card for ideas on how your state can save money in Medicaid.)

The report also highlights the importance of the maintenance of effort requirement in the Affordable Care Act, which prohibits state policymakers from cutting eligibility for children on Medicaid and CHIP until 2019. The heartening findings in the CCF report would simply not have been possible had states been permitted to slash eligibility in these programs.

The full report includes state-specific data on children’s insurance rates, so check it out and see how your state did (only one state, Minnesota, had a statistically significant increase in uninsured children). With our economic woes likely to continue for some time, this report should renew our commitment to protecting Medicaid and CHIP. The health of our children depends on it.

—Katherine Howitt, Senior Policy Analyst
and Patrick M. Tigue, Senior Policy Analyst

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Posted in Affordable Care Act implementation, children's health, Medicaid, Uncategorized | No Comments »

Super Committee Failure: It Could Have Been Worse!

Wednesday, November 23rd, 2011

Late Monday, the 12 members of the Joint Select Committee on Deficit Reduction (aka the “Super Committee”) announced their failure to agree to a debt-reduction package. How should consumer health advocates react to the news?

A Plague on Only One of Your Houses
“He said/she said” media accounts suggest that the Super Committee failed because the Republicans rejected any meaningful revenue increases and because Democrats were equally obstinate in refusing to cut entitlement programs, such as Medicare and Medicaid.

The truth is that Committee Democrats were willing (far too willing in our view) to consider ill-advised and unnecessary cuts to Medicare benefits and to Medicaid. For example, one of their final proposals involved $50 billion in Medicaid cuts, including a $13 billion reduction in the federal-matching dollars that help states fund the program. It also cut $350 billion from Medicare, including $100 billion from beneficiaries – most likely by imposing higher premiums and co-pays.

Republicans did not offer equivalent concessions on revenues. Their proposal included a largely regressive revenue increase: caps on tax expenditures, such as the tax exemption on employer-sponsored health insurance. And it squandered most of these new revenues paying for an income tax cut that would lock us into rates well below the Bush tax cut levels, largely to the benefit of the highest-income earners.

Reports suggest that a last-ditch effort at a deal failed because not one Super Committee Republican would agree to even a nominal tax hike on the wealthiest Americans. Democrats – to their credit – drew the line at asking low- and moderate-income Americans to bear the entire brunt of deficit-reduction.

A Mixed Bag for Health Care
The failure of the Super Committee to come up with a deficit-reduction package triggers across-the-board cuts, starting in 2013. These cuts are designed to achieve $1.2 trillion in savings over 10 years – half in defense spending and half in domestic spending.

Fortunately, many important health care programs are exempt from these cuts, including Medicaid, the Children’s Health Insurance Program (CHIP), and the premium tax credits that are slated to help families in the Exchange starting in 2014. Medicare benefits are also largely protected: across-the-board cuts to Medicare are limited to two percent of the programs’ costs, and can only come from cuts to providers and insurers.

But not all health care spending is protected. The sequester will increase low- and moderate-income families’ out-of-pocket health care costs starting in 2014 by cutting into the cost-sharing subsidies in the Exchange. Cuts will also impact Basic Health Program funding, threatening the viability of a program that has great potential to lower health care costs for very low-income families. And they will restrict funds for the Public Health and Prevention Fund, undermining its potential to improve the health of the American people. In addition the cuts in the sequester are expected to have a negative impact on employment, meaning fewer people with employer sponsored insurance and more people either uninsured or on Medicaid.

A silver lining?
One possible silver lining to the across-the-board Medicare cuts triggered by Super- Committee failure is that they could open the door to improvements in our payment system.

Billions of dollars every year are wasted on preventable hospital admissions and complications, such as hospital-acquired infections. The Affordable Care Act begins to tackle this problem by reducing payments to hospitals with high rates of preventable readmissions and complications, but much more remains to be done.

Rather than relying on across-the-board rate cuts to achieve the necessary savings in Medicare, policymakers could target cuts at providers with higher levels of this type of preventable health care spending. This would translate to better care for patients as well as lower cost for the system, and gives providers a chance to reduce costs by improving quality instead of just having to absorb another rate cut. Better care at lower cost is also a better alternative than the benefit cuts that were considered by the Super Committee and would put Congress on the side of the American people, who want to see Medicare and Medicaid protected, not gutted.

As Yogi Berra would say, “it Ain’t over ‘til it’s over” (and it Ain’t over)
Although the Super Committee has closed its case, advocates cannot rest easy. Congress is headed straight into another spending battle that puts health care funding at risk yet again.

Health care industry analysts had hoped the Super Committee’s deal would fix the Sustainable Growth Rate (SGR), a broken formula that automatically reduces Medicare physician payment rates every year. The failure of the Super Committee to reach a deal means Congress has only five weeks to override the scheduled 27 percent Medicare physician payment cut required by the SGR formula, and they are likely to look to savings in health care programs to foot the bill.

To pay for last year’s SGR fix, Congress weakened the ACA’s affordability protections for low- and moderate-income families. It’s entirely possible that bad ideas bandied about by the Super Committee will be back on the table as potential pay-fors for this year’s SGR fix. So advocates need to take a deep breath, and get ready to fight once more to protect these vital programs.

-Katherine Howitt, Senior Policy Analyst
and Michael Miller, Strategic Policy Director

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Posted in Affordable Care Act implementation, Medicaid | No Comments »

PBS NewsHour Explores The Growing Need for Better Access to Dental Care and Dental Therapist Solution

Tuesday, November 22nd, 2011

This week, PBS’ NewsHour highlighted that millions of Americans go without dental care and also profiled how alternative dental providers, known as dental therapists, have improved access to care in Alaska and have the potential to do the same in the lower 48.

The first report in the series highlights that millions of Americans go without regular dental care. According to the report, only one of every two Americans has dental insurance, which means cost is a barrier to getting care for too many Americans. The report also detailed that Americans, particularly those in rural or low-income communities, often have trouble finding dentists who will serve them – more than 50 million children and adults in the United States live in areas without enough dentists.

Unfortunately, not having dental care can have serious effects on your overall health. Due to poor access to dental care, tooth decay is the most common chronic childhood disease in the United States – five times more common than asthma. Left untreated, dental decay can set the stage for a lifetime of poor health. It is linked to such serious health problems as diabetes, stroke and heart disease.

In part two of the NewsHour series, the report highlighted how dental therapists are being used in Alaska to treat previously underserved Alaska Natives. The piece highlights how dental therapists are bringing care to 35,000 people who never had access to regular dental care before.

Dental therapists are effective in reaching previously underserved populations because they are able to deliver care in the community, which is more efficient and effective than relying on patients to travel far distances to see a dentist in a traditional dental home.

Also, dental therapists can provide preventive care and commonly needed services such as fillings and routine extractions. That way, dentists can see more patients, and midlevel providers can expand access further by practicing in remote areas where there are no dentists.

The dental therapist program in Alaska has worked so well that it is seen as an innovative way to better deliver care to the 83 million Americans going without regular dental care because there are not enough affordable providers in their community or there are no providers in their community to serve them.

In addition the dental therapists practicing in Alaska, dental therapists are already authorized and being trained in Minnesota. Alternative providers such as dental therapists are under consideration in 16 other states. Community Catalyst is working with the W. K. Kellogg Foundation to support the establishment of a new primary care dental provider in Kansas, New Mexico, Ohio, Vermont and Washington. The Pew Charitable Trusts is working on similar efforts in multiple states as well.

Momentum is growing based on the model’s history of success. Last month, the Kansas City Star endorsed the effort led by Kansas Action for Children, Kansas Association for the Medically Underserved and Kansas Health Consumer Coalition to establish a registered dental practitioner position. The registered dental practitioner would be able to provide routine and preventive care to underserved residents of the state – 93 of 105 Kansas counties do not have enough dentists and only 25 percent of Kansas dentists accept Medicaid patients. Registered dental practitioners could fill this void by helping dentists extend their reach into underserved communities and giving dentists who treat underserved populations an additional provider to help them see more patients.

As the Kansas City Star noted, Kansas has a chance to get out in front of a healthy trend. Lawmakers should get to work on a sound bill that enables well-trained clinicians to serve the basic dental needs of Kansas citizens.

There is significant research supporting the efficacy of dental therapists in increasing access to care and delivering quality care. Still, the ADA and organized dentistry, such as the Kansas Dental Association oppose this proven model despite admitting they have no evidence to support their position. In the Kansas City Star, Kevin Robertson, the Kansas Dental Association’s executive director, acknowledged that no research backs up the association’s contention that dental practitioners could compromise patient safety. The ADA’s President, Dr. William Calnon, made similar statements in the NewsHour report.

As one in five children suffer because they are unable to access regular dental care, we must move beyond turf fights and advocate for policies and providers such as dental therapists that can help improve access to care and the health of patients and communities. We have a real opportunity to place providers in communities where no one is available to offer care, which means less decay, fewer health problems, and lower health care costs. As you watch the NewsHour piece, envision how dental therapists could help better deliver care to your community, and please use Community Catalyst as a resource.

— David Jordan, Dental Access Project Director

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Posted in dental care | 6 Comments »

First Quarter: Supreme Court Ready to Tackle the ACA

Tuesday, November 15th, 2011

The awaited day is here. The Supreme Court announced that it will hear the case against the Affordable Care Act’s (ACA) individual responsibility requirement (and other related requests). For those immersed in football season, this is the Super Bowl of legal challenges.

Game time.
Be prepared, the oral arguments will last five and a half hours. Here’s a breakdown:

  • • The Court will devote two hours to the constitutionality of the individual responsibility requirement
  • • Ninety minutes will address “whether the ACA must be invalidated in its entirety because it is nonseverable from the individual mandate.”
  • • One hour is devoted to whether the Anti-Injunction Act (AIA) prevents a ruling before the individual responsibility requirement goes into effect in 2014.
  • • The final hour will address the constitutionality of the expansion of Medicaid

The Court will hear the case at the end of March 2012, releasing a decision sometime in the summer if not before. The ruling will come at the height of the presidential campaign, ensuring its outcome will affect the election.

What is at stake?
The Court will address three main issues:

Individual responsibility requirement. This is the centerpiece of the legal challenges to the ACA around the country. Anti-ACA supporters take issue with the requirement that most Americans purchase health insurance by 2014, if they can afford it. The Court will consider the constitutionality of the individual responsibility requirement and will subsequently review the severability of the mandate from the rest of the law. In other words, if the individual responsibility requirement fails, can the ACA stand?

Anti-Injunction Act (AIA). The Anti-Injunction Act states that consumers cannot challenge a tax law until they have paid the tax. This issue was raised in the 4th circuit opinion regarding the two Virginia cases. The argument is that jurisdiction to rule on the individual responsibility requirement is precluded by the AIA simply because it has not happened yet! This would lead to all cases against the individual responsibility requirement being thrown out until 2015. If the AIA is upheld, millions of Americans would have health insurance through Exchanges and Medicaid prior to a determination of the constitutionality of the individual responsibility requirement.

Medicaid expansion. Medicaid expansion as a threat to state autonomy was raised initially by the 26 states and National Federation of Independent Business (NFIB) case, originating in Florida. The group maintains that the Federal government is coercing states, essentially forcing them to participate in the Medicaid program. This coercion, the states maintain, is unconstitutional. The Medicaid question has yet to be supported by any lower court; however, analysts believe adding the Medicaid expansion issue has raised the profile of the case.

The decision to address the individual responsibility requirement was expected while the Medicaid expansion was not. However, the Court seems to be giving a nod to the concerns of all participants, agreeing to review the issues presented in the Florida case as well as the AIA, an issue raised in the 4th circuit.

Analysts agree that the main issue at stake remains the constitutionality of the individual responsibility requirement and further, whether or not it may be severed from the law. If the requirement is struck down while the rest of the law is left intact, it will raise a number of policy and political questions going forward. Analysts have explored the consequences of life without the individual responsibility requirement, concluding that the ACA could still function though it would not be as successful at expanding insurance coverage. Insurers, however, would be sure to raise a major outcry over guaranteed issue and community rating provisions if the requirement falls.

Place your bets.
The 26-state and NFIB case (often labeled the Florida case) dominates the spotlight as its arguments regarding the individual responsibility requirement won over 11th circuit Judge Roger Vinson. Vinson ruled against the individual responsibility requirement and threw out the ACA altogether, maintaining that the law was not viable without the requirement.

The Obama Administration, however, is feeling optimistic after having two conservative judges rule in their favor. The first is Judge Jeffrey Sutton of the 6th circuit, a former law clerk for Justice Antonin Scalia. The second is Judge Laurence Silberman of the DC Circuit who eloquently defended the individual responsibility requirement and is cited as a respected conservative.

In the end, the Obama Administration believes that they have a strong case in support of the individual responsibility requirement. Yet if SCOTUS embraces the Anti-Injunction Act, it could delay any decision until 2015. This path offers SCOTUS a way out of the political quagmire that they face in light of the 2012 elections. Yet, maybe not – with an early June decision, four months remain in the campaign season. As one analyst noted, “That’s a very long time in politics, especially for something that won’t have any immediate, tangible effect on people’s lives”

Game on.
Brief filings will begin as early as this December as all sides prepare for their legal Super Bowl. So, bring on the wings and get comfy – this is one of the longest oral hearings on record. We will all be watching for the last minute Hail Mary.

– Eva Marie Stahl, Policy Analyst

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Communities Create a Roadmap to Health

Monday, November 14th, 2011

When you think about improving the health of people in your community, what comes to mind? Improving access to and the quality of medical services? Yes. Increasing access to recreation opportunities or nutritious food? For sure. Cleaning the air or water? Absolutely. These all are critical ways to improve the health of community members.

But, do you think about supporting more students to attend college? Creating jobs? Helping families to achieve more financial stability? Improving your community’s safety? These factors may not come as readily to mind, yet they all have a significant impact on health.

That’s why we are enthused about our new role in the Robert Wood Johnson Foundation County Health Rankings & Roadmaps Program, an initiative to improve our nation’s health by thinking beyond health care, beyond the doctor’s office. County Health Rankings, which are issued annually by RWJF and the University of Wisconsin Population Health Institute, pinpoint what we know about what makes residents sick or healthy. The Roadmaps show how community partnerships are working to create healthier places to live, learn, work and play.

Community Catalyst will lead one element of the initiative – the Roadmaps to Health Community Grants program. We know that addressing the social, economic and other factors that affect health is critical to improving our health system and making it work for people. We will bring our expertise in advocacy to help those receiving grants to improve health by tackling social and economic concerns in their communities. Twelve grants were awarded in 2011 and more will be issued in 2012.

The Roadmaps to Health Community Grants supports positive change in areas that communities themselves have identified as ripe for action. For instance, grantee Rhode Island KIDS COUNT has a plan to promote education from ‘cradle to college.’ PedNet, in Columbia, Missouri, is advocating for changes in public transportation to give more people access to jobs, and the Alameda County, California Health Department is working with community partners to increase access to banks and quality financial products in the city’s most impoverished areas. All of the efforts are bringing together diverse partners from business, education, public health, faith organizations and community groups to increase opportunity and tackle factors that impede health.

We look forward to working with these exciting projects, as well as documenting and sharing their success stories. Take a look at all twelve projects here.

– Debbie Katz, Associate Director, Roadmaps to Health Community Grants

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Basic Health Program: Putting the “Affordable” in the Affordable Care Act

Thursday, November 10th, 2011

Last week, Community Catalyst submitted comments to HHS about the Basic Health Program (BHP) option in the Affordable Care Act (ACA.) While there are many reasons to be enthusiastic about BHP, its potential to dramatically lower health care costs for some of the most vulnerable members of our society is by far the most compelling.

The Heart of the Matter
Nothing illustrates the benefits of BHP more clearly than this chart from a report by the Urban Institute. It shows health care costs for low-income adults, with and without BHP:

Urban institute chart BHP blog

Urban Institute: "Using the Basic Health Program to Make Coverage More Affordable to Low-Income Households: A Promising Approach for Many States"

The bottom line? BHP can lower health care costs for near-poor families by $1,500 annually on average.

If you’re earning $15,000 a year, $1,500 can make the difference between being able to afford the coverage that you need, and simply going without. The Urban Institute confirms this: they find that if all states took up the Basic Health Plan, coverage rates would increase by 600,000 additional people.

And the benefits of lower health care costs under BHP extend beyond health. An annual survey of New York City residents confirms what those of us who work with this population already know: those earning less than 200 percent Federal Poverty Level (FPL) are just barely able to make ends meet. Forty percent had credit card debt, more than a quarter had unpaid medical bills, and more than a quarter fell behind in rent or mortgage in the last year. For families at this income level, $1,500 can relieve significant financial hardship.

The Basics of the Basic Health Plan
BHP is an option in the ACA that gives states the opportunity to provide alternative coverage to two groups of people who would otherwise get coverage through the Exchange:

  • • Adults earning just above Medicaid eligibility level but less than 200 percent FPL (about $15,000-$22,000 annually for an individual)
  • • Legal immigrants earning under the Medicaid eligibility level (less than $15,000 for an individual), but who do not qualify for Medicaid because of their immigration status

If a state chooses to take up the BHP option, the federal government will give that state 95 percent of the money it would have spent on subsidies for this population in the Exchange. The state can then use that money to contract with health plans (most likely Medicaid plans, which are much more cost-effective than most private plans) to offer coverage for that population that is at least as comprehensive as they would get in the Exchange.

What’s the Catch?
The most common concern about BHP is that it will shrink the pool of covered lives in the Exchange, lessening its negotiating leverage with insurers. While we’re interested in pursuing policy options to mitigate any adverse impact on the Exchange (see our comments for more details), we’re not convinced this threat is as significant as it’s been made out to be.

First, it is not clear to what extent states plan to aggressively use the negotiating leverage they have. According to a report by the Kaiser Family Foundation, of the 12 states with established exchanges only five explicitly empowered their Exchanges to act as active purchasers. Many of the remaining states seem reluctant to even establish an Exchange, let alone use it aggressively. And the Urban Report shows that BHP would decrease the number of total enrollees in the Exchange by 16 percent on average. In most states, this is probably not enough to significantly impact Exchange leverage.

Second, most people in the Exchange will not be impacted by a rise in premiums. Over 80 percent of people in the Exchange are receiving premium tax credits, so what they pay towards their premiums is based on a fixed percentage of their income. If the Exchange lowers premiums, the benefit will flow primarily to the federal government in the form of smaller tax credit liabilities.

Only those who don’t qualify for tax credits – primarily people earning above 400 percent FPL – face the full premium. To secure affordable premiums for this population, states can supplement Exchange negotiating leverage with active rate review and regulation of insurance markets both inside and outside the Exchange

At the end of the day, the ACA is about putting health care coverage within the reach of everyone. By lowering health care costs dramatically for the most vulnerable among us, BHP is an essential tool in helping us realize that promise.

–Katherine Howitt, Senior Policy Analyst

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Posted in Affordable Care Act implementation, Medicaid | 1 Comment »

Medicaid and State Budgets: Same As It Ever Was?

Wednesday, November 9th, 2011

Kaiser Family Foundation released a report last week, detailing results from a 50-state survey of Medicaid budgets. Kaiser’s results tell a classic story known as The Life and Times of a Countercyclical Program. Those of us who work in Medicaid policy have heard it many times. (Frankly, we’re getting a little sick of it, which is why we’ve created some new tools to help rewrite the story – but more on that later.) The story goes like this:

Chapter 1: States struggle to fill historic deficits brought on by a recession.
Declining revenues left states with an aggregate budget shortfall of $149 billion in the 2012 Fiscal Year (FY) alone. After already closing a staggering $430 billion in shortfalls in 2009-2011, state policymakers have few easy choices left for balancing their budgets.

Chapter 2: The recession drives Medicaid enrollment and spending growth.
As unemployment grows, more and more families lose their jobs and have to turn to Medicaid for health care coverage. At the height of the recession, Medicaid enrollment grew by about 8 percent annually. Although it’s dropped down to a 4 percent growth rate in FY2012, that is no consolation to states who are still desperately trying to fill budget gaps.

The American Recovery and Relief Act of 2009 (ARRA) offered temporary enhanced federal Medicaid funding to states, relieving some of the fiscal pressure created by this enrollment growth. The infusion of federal funds was a lifeline to strained state budgets. For example, while overall (federal plus state) Medicaid spending grew by more than seven percent in FY2009, state Medicaid spending actually dropped for the first time in the history of the program.

Unfortunately, that enhanced funding has now expired, while the economic slump has not. That leaves states in the very difficult position this year of having to fill in the gap left from the lost federal funds. Kaiser’s report found that states project an increase in state Medicaid spending of nearly 30 percent in FY2012 (even though overall Medicaid spending is projected to increase by only 2.2 percent).

Chapter 3: States control Medicaid spending by shifting costs onto vulnerable families and restricting care.
Kaiser’s report shows an overwhelming majority of states – 46 in FY2012 – contain Medicaid costs by freezing or lowering provider payment rates. Since Medicaid already reimburses well below private rates, further cuts can worsen provider shortages in Medicaid and have a devastating effect on access to care for beneficiaries.

Another common approach is to restrict or eliminate coverage of services. Eighteen states eliminated benefits such as dental care and medical supplies, or restricted key services like physician visits, mental health care and inpatient hospital stays in FY2012. This strategy not only deprives impoverished and very sick patients of needed health services, it may also lead to higher use of expensive emergency services as chronic illnesses can worsen without access to these benefits.

This Story Needs a New Ending
Kaiser’s results also hint at a more hopeful, emerging story: states are starting to look beyond those traditional harmful cost-containment strategies. For example, 33 states expanded Long Term Care services in FY2012, frequently by encouraging the types of Home and Community Based Services that enable seniors and people with disabilities to stay at home in their communities – a cost-effective alternative to expensive institutions.

Kaiser’s survey also shows overwhelming interest in developing systems of integrated, coordinated care for the those served by both Medicaid and Medicare (the “dually-eligible”). It’s critical to ensure that these reforms improve quality of care rather than just cutting back on services, but since the dually-eligibles’ care is fractured and plagued by expensive preventable hospital readmissions and duplicated tests, investing in improved care-coordination for this population can drive up their quality of life and drive down costs.

While this is an encouraging start, there is far more states can do to lower Medicaid costs without harming – and often by improving – care. Recently, Community Catalyst released a Medicaid Report Card designed to help states do just that. It features three budget-saving policies that remarkably few states have yet enacted:

  • • Improving Payment Incentives: states could save hundreds of millions of dollars by providing a stronger incentive for hospitals to reduce their rates of potentially preventable complications (such as infections) and readmissions.
  • • Setting Fair Prices for Prescription Drugs: too many states reimburse pharmacies for the costs of prescription drugs using a pricing benchmark created – and inflated – by the drug manufacturer industry.
  • • Expanding the Use of Nurse Practitioners: states could save millions and improve access to primary care by expanding scope of practice laws to allow nurse practitioners to practice to the fullest extent of their training.

Instead of cutting dental benefits for low-income parents or slashing already low Medicaid provider rates, states should pass these – and other – policies that improve care while lowering costs. Let’s give Kaiser something new to write about in next year’s Medicaid budget survey.

– Katherine Howitt, Senior Policy Analyst

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Posted in Affordable Care Act implementation, Medicaid | 3 Comments »

NAIC Commissioner’s Fall Back on Medical Loss Ratio

Wednesday, November 9th, 2011

You know that expression, “Fool me once, shame on you. Fool me twice, shame on me”? Well, it came to mind this past week at the National Association of Insurance Commissioner’s (NAIC) fall meeting in Washington, DC. Just as in March, during the NAIC’s spring meeting in Austin, the NAIC consumer representatives were lulled into a false sense of complacency. “This will be a quiet meeting,” everyone said. “No votes on health care issues.” And that Task Force that had taken up the cause of insurance agents and brokers last summer to push for removing agent compensation from the medical loss ratio (MLR)? “They’re not even meeting,” we were told. “NAIC is done with that issue,” they said.

Imagine our disappointment and surprise when rumors started to swirl Thursday afternoon—the first day of the conference—that the commissioner from Florida planned to introduce a resolution at the NAIC’s final plenary meeting, urging Congress to consider and adopt legislation to “preserve consumer access to agents and brokers.”

When we finally saw a draft, the resolution was alarming. It ignored the considerable data collected by the NAIC’s actuarial task force over the summer, as well as the thoughtful recommendations they had developed. If it passed, it could have given momentum to H.R. 1206, which renders the medical loss ratio (MLR) requirements in the Affordable Care Act (ACA) effectively useless as a tool to help consumers get greater value for their health care dollar.

Once again, the consumer representatives swung into action, alerting the media and networks of advocates in the states. Alerts went out, urging consumer groups to contact their state insurance commissioners and let them know they opposed the resolution. The good news: the advocacy worked. NAIC’s membership agreed to delay a vote on the resolution. The bad news? The issue could come back up on a call scheduled for November 22, which consumer representatives will closely monitor. However, a number of commissioners raised sufficient concerns about the lack of notice that NAIC is likely to revisit their rules for bringing up last-minute resolutions.

MLR wasn’t the only thing on the Commissioners’ minds last week. The subgroup on Exchanges, chaired by Commissioner Sandy Praeger (of Kansas), also met. They heard testimony from one of our own consumer representatives, Sarah Lueck from the Center on Budget and Policy Priorities. She did a great job outlining the importance of a seamless experience for consumers as they seek eligibility determinations and make decisions about enrolling in health plans. The subgroup appears poised to take up model regulations for Exchanges, based on the rulemaking coming out of the United States Department of Health and Human Services (HHS).

In another important development, the regulatory framework task force has begun work on a model state law to implement some of the Affordable Care Act’s 2014 insurance reforms (i.e., guaranteed issue, modified community rating, and elimination of pre-existing condition exclusions). The draft currently applies only to the group insurance market, but members discussed adding individual market reforms as well. Getting this right is really important, because this model law is likely to be the framework many states use to adopt the central reforms of the ACA. The NAIC is taking comments on the first draft, and we would encourage consumer groups to submit comments, particularly those of you from states with protections that are stronger than the minimum standards set by the ACA.

In addition, the NAIC’s health actuarial task force is taking up some challenging topics that will have direct bearing on the success of the ACA:

  • – They will be working with HHS to develop “state-specific” thresholds for reasonable health insurance rate increases. Under the rate review rule, HHS is currently using a national standard of 10 percent (if a rate increase is 10 percent or greater, it triggers an automatic review). Starting in 2012 they will transition to state-based thresholds to better reflect local market conditions.
  • – They will work on recommendations to HHS and states for the ACA’s “3 Rs”—risk adjustment, reinsurance, and risk corridors. Their most immediate task is to finalize comments on a white paper HHS released in September.
  • – They will review data on the use of self-insurance by employers, particularly smaller employers and assess whether it is increasing as a result of the ACA’s insurance reforms. This will be an important study. A number of insurance companies are becoming more aggressive in marketing self-insurance to small businesses, because it allows them to escape key insurance reforms (such as the essential health benefits package and the modified community rating).

Last but not least, I was surprised to hear a couple of broker groups take time out of their Industry Liaison meeting agenda to complain about the NAIC’s consumer representative program. They argued that the consumer reps weren’t “diverse” enough in terms of our perspective on the ACA, complained the media mistakenly report that we speak on behalf of the NAIC, and even suggested many of us have a conflict of interest because some day we might – gasp – take grants to serve as Navigators. For myself, I take their whining as a badge of honor. The fact that they would take the time to complain about our small band of consumer reps suggests that we’re actually having an impact at NAIC.

—Sabrina Corlette, Research Professor
Georgetown Health Policy Institute

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Posted in Affordable Care Act implementation, private insurance | 1 Comment »

The Insider: News Round Up

Wednesday, November 2nd, 2011

File Under: “…and don’t let the door hit you on the way out”

Recently, two Florida insurers announced their intention to quit the non-group health insurance market in that state. The state of Florida is trying to use the exit to bolster its case for a waiver from the Affordable Care Act’s Medical Loss Ratio requirement. If the waiver is granted, it will cost Florida rate-payers millions of dollars. Given that the carriers in question cover well under one percent of the non-group market, their exit hardly makes for a compelling case in Florida. But setting the specifics of Florida aside for a moment, should we be worried about carriers leaving the market? In general, the answer is no.

When it comes to health insurance, the notion of “the more the merrier” is deeply flawed. Why? Because every insurer has to pay fixed costs for sales and marketing, claims processing, and underwriting. At the same time, unless you are talking about old-school HMOs where the insurer is essentially synonymous with the provider network, small insurers don’t have the ability to negotiate effectively with providers on price or to innovate with respect to quality. Basically, the insurers most likely to call it quits have a business model based on making sure that they don’t cover sick people. That business model is now obsolete thanks to the ACA. The only thing such insurers add to our health care system is cost, not value. (Click here for an economic model illustrating why too many insurers can be a problem.)

File under: “I’ve got some good news and some bad news”

The recent CMS decision to partially allow proposed cuts in California Medicaid rates is a mixed bag. First the good news: The state agreed to withdraw proposals to reduce reimbursements to pediatricians and for home health services. The state has also agreed to a first-of-its-kind Medicaid access monitoring plan to evaluate the impact of the cuts.

Now the bad news: CMS approved rate cuts to a broad cross-section of other providers. Although a few types of providers (family practitioners, internists and pediatricians) will see rate increases starting in 2013 courtesy of the ACA, most others will continue to be reimbursed at the lowest rates in the country. (Decisions on proposed benefit limits and increased cost-sharing are still pending.)

The decision elicited concern from consumer advocates and outrage from some providers. One worry is that cuts will undermine access and provider support in the run-up to the ACA’s Medicaid expansion. Another concern is that, notwithstanding the access monitoring plan agreed to by the state, the recent decision underscores the limits of CMS’s ability to block state cuts that could be harmful to patients. At the same time, the administration has taken a position on the wrong side of the question of whether individuals should have the right to pursue legal action to enforce access to care for Medicaid beneficiaries.

Unfortunately, what is most unusual about the California developments is the state access monitoring plan, not the cuts. Across the country states are cutting Medicaid benefits and rates. This is a dead end strategy. The bottom line is that states cannot solve their budget problems via Medicaid rate cuts. There is an urgent need for states to reform the delivery of care to maximize quality while reducing cost. At the same time, even the best crafted strategies will not be sufficient. Whether we are looking at the federal budget or the states, new revenue has to be part of the solution to balancing budgets without eviscerating services.

And speaking of revenue and budget balancing…

File this one under “What are they thinking (or smoking)?”

The $3 trillion debt reduction proposal by the majority of the “Super Committee’s” Democratic members has, apparently, crashed and burned (though elements of it could still rise from the dead). The proposal had a lifespan even shorter than a Kardashian marriage, and was immediately panned by Republican members and criticized by many Democrats off the committee, as well.

Although details are hard to come by, the $475 billion in proposed Medicare and Medicaid cuts would certainly have included both significant cuts to beneficiaries and cost shifts onto state Medicaid programs, violating the key demands of consumer advocates.

Committee Democrats may have been hoping to get political credit for “being the adults in the room” willing to make tough choices. But it is more likely that the only thing they accomplished was to further arouse the fears of older voters—an important voting bloc that largely turned against the Democrats in 2010—that the Democratic Party was unwilling to defend their health care benefits.

In earlier blog posts, we’ve shown how to achieve substantial federal health savings without harming Medicare and Medicaid beneficiaries, which means supporting proposals that harm seniors is not only politically unwise, but also unnecessary. So in the future, please folks, no more negotiating with yourselves. There is simply no upside to making symbolic gestures toward debt reduction as long as there is “no partner for peace” in the room. As one Democratic Hill staffer put it recently, “Because the GOP is not engaged at all on revenues … this could go on forever and they would still stand there offering a giant middle finger.”

– Michael Miller, Policy Director

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Accountable Care Organizations: Who’s Coming to the Party?

Wednesday, November 2nd, 2011

Recently, the U.S. Department of Health and Human Services (HHS) released its long-awaited final rules for Accountable Care Organizations (ACOs) in the Medicare Shared Savings Program (MSSP).

Generally speaking, an ACO is a network of health care providers (typically primary care physicians, specialists and hospitals) that work together to provide and coordinate care for a specified population. The providers collectively take responsiblity for providing and coordinating care for their patients across the full range of medical services. The overarching idea is that ACOs would lower costs while improving care through coordination of services, which reduces things like unnecessary hospitalizations and duplicate tests. The MSSP – considered by some to be one of the ACA’s key cost containment measures – allows ACOs to share savings with Medicare if they improve patient health, shown through meeting specified quality measures, and lower the cost of providing care.

The final MSSP rules lower the bar set by the draft released by HHS last spring, largely to sweeten the pot for doctors and hospitals and get them to participate in the program. (Providers complained vociferously that the draft rules were unworkable and overly restrictive.) Key concessions in the final rules include:

  • – More opportunities and less risk for providers
    The draft rules allowed ACOs to share savings but they were also at financial risk if their costs exceeded what Medicare would have spent without the ACO. In addition, under the draft rules there was a minimum savings requirement before the ACO could get a portion of the savings. Under the final rules an ACO can share in any savings, starting with the first dollar saved. If costs run higher than expected, Medicare will pay the higher costs without collecting anything back from the ACO. The draft rules also held back a portion of any savings to cover possible cost increases in future years but the final rules make the savings available right away.
  • – Expanding the eligible pool of potential providers
    Under the final rules, community health centers and rural health clinics will be allowed to form ACOs. Also, physician-owned practices and rural health providers will be given access to some of the expected savings – $170 million – so that they can use the money to start ACOs.
  • – Clarifying which patients are in an ACO
    The draft rules called for patients to be assigned to an ACO “after the fact,” that is HHS would look at patients who had been treated by a group of providers and determine if there had been any savings. Both providers and patient-advocacy groups stressed the need for up-front clarity on who was actually in an ACO and the final rules reflect that concern.
  • – Simpler and less rigorous requirements for start-up and operation, including:
    • – A reduction in the number of quality control measures, from 65 to 33
    • – The elimination of a mandatory review for a new ACO by the Justice Department and the Federal Trade Commission for antitrust issues – any ACO that stays below 30 percent of the market share is unlikely to encounter antitrust scrutiny
    • – The elimination of the requirement that ACOs include consumers in their governing bodies

For a chart outlining additional changes, click here.

Hospitals and doctors generally responded positively to the changes, but paint us “concerned.” On the one hand, we recognize that to have an ACO program, we need providers willing to take part in the program (“what if you threw a party and no one came?”). On the other, lowering the bar in the final rules may result in a program that’s unable to meet its twin goals of better care and lower costs and could affect the cost of care outside the Medicare program. For instance, the current shared-savings arrangement makes cost overruns more likely since ACOs will not be held accountable if spending is higher than expected. Weakening the antitrust provision increases the likelihood that groups of hospitals and physicians could form an ACO with enough clout to allow them to drive up prices to private insurers.

Still, there is room for cautious optimism among consumers. Even with the final rules’ changes, ACOs have the potential to improve health outcomes while bending the cost curve. As The Campaign for Better Care pointed out in its analysis, the final rules retained some critical patient-centered features, including:

  • – Patient-Centered Criteria: Care coordination across all settings, a foundation of primary care, new systems to identify high risk patients, and ways to measure the quality of care beneficiaries receive.
  • – Patient Experience: ACOs must report on patient experience of care including in areas like shared decision making and how well doctors communicate.
  • – Patient Engagement: ACOs must do things like communicate with beneficiaries in ways they understand, promote shared decision making that takes into account beneficiaries’ unique needs and preferences, and allow beneficiaries to easily access their own medical records.
  • – Beneficiary Choice of Provider: Beneficiaries are not “locked in” and can see physicians outside the ACO.

These are all important ingredients to a strong program. However, for the program to achieve its full cost-saving, quality-improving potential it will also require ongoing and meaningful consumer involvement in ACO design and governance and strong oversight from the feds. This is especially true for ACOs serving the most vulnerable Medicare beneficiaries: people with multiple chronic conditions and those with disabilities.

Community Catalyst and the advocates we work with across the country will continue to monitor the MSSP as the first ACOs roll out next spring. Only time will tell whether ACOs will live up to their current promise.

– Jo Klemczak, Legal Intern and
Renée Markus Hodin, Director, Integrated Care Advocacy Project

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