Monthly Archive: January 2016

One year after jettisoning single payer, Vermont now looks to control medical costs via expanded “all payer” ACO

One year after Vermont abandoned its plan to move to a single payer health finance framework amid concerns over the ability of tax revenues to cover rising medical utilization costs under that payment model, the state is rolling out an alternative aimed at reining in those costs. It would do so through a proposed “all payer model.” The model builds on the Patient Protection and Affordable Care Act’s Medicare Shared Savings Program Accountable Care Organizations (ACO) model in which providers share risk with reimbursements tied to the overall cost and quality of care provided rather than discrete medical procedures under the traditional fee for service model. Reflecting the pervasiveness of costly, chronic health conditions no longer largely confined to the Medicaid eligible population, the Vermont proposal would expand that model to all forms of reimbursement, including Medicaid and commercial plans:

The State would agree to coordinate with Medicaid and commercial insurers, and in return the federal government would allow Medicare to participate in the ACO value-based payment model. As is true today, health care providers’ participation in ACOs is voluntary; the ACO must be attractive to providers and offer an alternative health care delivery model that is appealing enough to join.

The goal of the proposed all payer model is to limit the annual growth of statewide medical spending to 3.5 percent with a maximum spending growth of 4.3 percent:

The goal of this financial target is to bring health care spending closer to economic growth. When health care costs grow faster than Vermont’s economy, Vermont families find their premiums rising faster than wages. This is also true in the state’s Medicaid budget, which grows faster than the revenue sources used to fund it.

The board’s authority to regulate reimbursement rates exists under current state law, according to a term sheet outlining the proposal. Vermont will seek any necessary waivers from the federal government to operate the all payer model, noting the state has jointly developed a policy framework and the needed waivers in consultation with the federal Health and Human Services Department’s Center for Medicare & Medicaid Services.

The fee for service reimbursement model is no longer suitable and is “antiquated” according to the Vermont proposal:

When the fee-for-service health care payment model was devised over 50 years ago, the average life expectancy of Americans was significantly shorter than it is today, and the burden of chronic disease was smaller. The Centers for Disease Control and Prevention (CDC) reports that treating people with chronic diseases accounts for 86 percent of our nation’s health care costs. Health care reimbursement was designed to pay for acute medical conditions that required a single visit to the doctor or a single hospitalization. By contrast, persons with chronic conditions require regular, ongoing care across the continuum of traditional medical services and community-based services and supports. Fee-for-service reimbursement makes it difficult for innovative health care providers to adapt to the changing needs of the population that they serve. The antiquated system provides clear financial incentives to order additional tests and procedures, yet it does not reward doctors and other health care professionals for providing individualized and coordinated care for complex chronic conditions. In the end, patients may receive care that is expensive, fragmented, and disorganized.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

San Francisco offers additional subsidization for exchange plans

Covered California premiums are relatively affordable. The cheapest one for single San Franciscans earning $58,850 — the cutoff for the new city subsidy — would cost roughly $202 a month. But the cheapest plans have the highest deductibles, out-of-pocket expenses for doctor visits, hospital stays and drug prescriptions, potentially totaling thousands of dollars per year. And the subsidies for these expenses that are available in states with market exchanges, like California, come only with plans on the costlier “silver” tier. As a result, many residents choose to remain uninsured, said Colleen Chawla, deputy director of health at the San Francisco Public Health Department. This means people eligible for Covered California are turning to clinics intended for people who can’t get insurance at all or who have Medi-Cal, the state’s version of free medical insurance for very low-income residents.

Source: San Francisco to Expand Health Insurance Support – New America Media

In high cost areas like the San Francisco Bay Area, the Affordable Care Act’s advance premium tax credits and subsidies for out of pocket costs for silver tier qualified health plans aren’t enough of a positive incentive to encourage people to sign up for coverage.

The implication is in these very expensive localities, the cost of housing and other necessities of life simply leave no room to pay for health care and insurance. Since going without coverage subjects medically uninsured San Franciscans to the ACA’s federal income tax penalties, the city’s Bridge To Coverage rolling out this year provides an additional local government subsidy to defray the cost of plans purchased on the Golden State’s health benefit exchange, Covered California, for households below 500 percent of federal poverty level — a multiple higher than the ACA’s 400 percent cutoff for advance premium tax credit subsidies.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Direct primary care finding potential market among employers, Medicaid managed care plans

Direct primary care is much less pricey. Patients pay $100 a month or less directly to the physician for comprehensive primary care, including basic medication, lab tests and follow-up visits in person, over email and by phone. The idea is that doctors can focus on treating patients, since they no longer have to wade through heaps of insurance paperwork. They spend less on overhead, driving costs down. And physicians say they can give care that’s more personal and convenient than in traditional practices.It’s legal under the Affordable Care Act, which identifies direct primary care as an acceptable option. But since it doesn’t cover specialists or emergencies, consumers still need a high-deductible health plan. Still, the combined cost of the monthly fee and that plan is often still cheaper than traditional insurance.

Source: Concierge Medical Care Comes To the Middle Class : Shots – Health News : NPR

This is an interesting trend that could at least in theory coincide with the shift back to the “major medical” model common in the 1950s and 1960s where people paid out of pocket for primary care, using health insurance for high cost, major medical care events.

But whether pre-paid primary care bundled with a high deductible plan ends up costing less than, say, a gold or platinum rated Obamacare individual plan designed for the frequent user of primary care (such as families with young children) looking to minimize out of pocket costs is an open question. Unless perhaps monthly cost of pre-paid medical care falls to $40 as discussed in this analysis, which sees that as unlikely to pencil out for direct primary care practices. And as a practical matter as suggested in the analysis, not many people visit primary care docs frequently enough to make the arrangement worthwhile.

Where direct primary care makes better sense financially and where it has gained traction is among employers who offer it as part of their health benefit package. These employer groups can bring more belly buttons to the table in negotiating rates with direct primary care providers. Even larger economies of scale can be had with Medicaid managed care plans, where direct primary care practices offer Medicaid beneficiaries who typically bounce among various providers and emergency rooms much needed medical homes. From the NPR article:

In Seattle, a company called Qliance, which operates a network of primary care doctors, has been testing how to blend direct primary care with the state’s Medicaid program. They started taking Medicaid patients in 2014. So far, about 15,000 have signed up. They get a Qliance doctor and the unlimited visits and virtual access that are hallmarks of the model.

“Medicaid patients are made to feel like they’re a burden on the system,” said Dr. Erika Bliss, Qliance’s CEO. “For them, it was a breath of fresh air to be able to get such personalized care – to be able to talk to doctors over phone and email.”

The article goes on to report that Qliance contracts with Medicaid managed care provider Centene. Other states including North Carolina, Idaho and Texas are keeping an eye on the Washington arrangement and considering similar programs, according to the article.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

States that opted not to set up exchanges have opportunity to go their own way in 2017

Nearly three dozen states opted not to operate their own health benefit exchanges serving the individual and small group markets starting in 2014. In these states, the federal government became the default exchange operator under a provision of the Patient Protection and Affordable Care Act that’s invoked if states decline to establish an exchange. Typically red states hostile to the health reform law, these states also aren’t keen on other provisions of the law such as the individual and employer mandates. An Affordable Care Act provision that takes effect next year allows them to apply to the federal government to dispense with these mandates and the individual and small business exchanges as well as other major ACA health insurance market reform elements.

Section 1332 of the law affords states broad latitude to create their own health insurance programs serving individuals and small employers for coverage beginning in 2017. Section 1332 waivers even provide states federal funding for them, paying states what they would otherwise receive in the form of advance tax credit premium assistance payments to state residents to subsidize premiums for coverage purchased through exchanges.

The freedom and the federal funding come with some important provisos. According to federal guidance issued in December 2015, states must provide coverage for a comparable number of their residents and on terms that are as comprehensive and affordable as would be the case without the waiver. Funding for the states also cannot increase the federal deficit. The waivers would be for renewable five year periods.

While health plan issuers would still be barred from medical underwriting, states could even do away with foundational insurance market reforms such as those defining small and large employer group markets and those that affect rating such as a single statewide risk pool, rating territories and limited annual enrollment periods.

For those states that defaulted to the federal government to operate their exchanges, the guidance makes clear that if they want a Section 1332 waiver to set up their own state programs, they will be making a clean break with any federal government involvement other than monitoring to ensure they comply with the major waiver provisos. They would not be permitted, for example, to continue using the federal eligibility and enrollment portal, healthcare.gov, or to receive some modified form of advance premium tax credits in support of their programs. Nor could they mix Section 1332 funding with any federal Medicaid funding received under a state Section 1115 Medicaid waiver, according to the guidance.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Concern arises over effectiveness of ACA’s individual risk pool integrity mechanisms

To restore the dysfunctional individual health insurance market, the Patient Protection and Affordable Care Act took risk pooling and medical underwriting away from health plan issuers and created single statewide individual risk pools. The law also put in place mechanisms to ensure the reforms work as intended.

Two of those mechanisms are designed to preserve the spread of risk in statewide individual risk pools and ward off adverse selection that crippled the pre-2014 market so the pools contain enough people who don’t use a lot of medical services to pay in premium dollars to cover the care of those who do. One such device is limiting enrollment in individual health plans to a set time of year to reduce churn and keep the pool population relatively stable. There are exceptions to these limited enrollment periods such as when people lose employer-sponsored coverage, change their place of residence or their family status such as getting married for having a child.

Health plan issuers are concerned these exceptions are being gamed in the majority of states where the federal government operates health benefit exchanges to effectively enable people to obtain short term coverage of less than a year to cover needed medical care – contrary to the Affordable Care Act’s policy intent to require continuous annual enrollment. That degrades spread of risk and increases the likelihood of adverse selection, which in turn will require higher premiums. That was the fundamental, fatal problem facing individual health plan issuers before the law overhauled the individual and small group health insurance market segments. In response to their concerns, Andy Slavitt, acting administrator of the Centers for Medicare and Medicaid Services, told a J.P. Morgan health-care conference in San Francisco this week that CMS will tighten up its rules on exceptions for enrollments outside of the annual open enrollment period, The Wall Street Journal reported.

Another device to ensure the integrity of the state risk pools is federal income tax penalties assessed on those who opt to go without health coverage, particularly if they believe they are unlikely to need medical care over the near term. They act as a stick to nudge people into the pools if they don’t have coverage through an employer or government program. As with the limited open enrollment periods, they are designed to ward off adverse selection and preserve the risk spreading function of the pools. Here too, there are concerns they may not be working as intended. Some individuals – especially those earning more than 400 percent of federal poverty and thus ineligible for tax credits to offset individual health plan premiums – are doing back of the envelope calculations and opting to go uninsured and pay the penalty if their annual premium exceeds the penalty amount, according to The New York Times.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Do You Speak Health Insurance? It’s Not Easy : Shots – Health News : NPR

“We’ve created a monster, and it’s not surprising to me that there’s literacy issues,” says Kathleen Call, a professor in the University of Minnesota School of Public Health. “I’ve studied this stuff, and sometimes I make mistakes.”Call has grown increasingly concerned that the complexity of insurance could compromise public health by keeping people away from the doctor.”People are treating it more like car insurance: You don’t use it until something happens,” she says. “You have an accident, then you use it. Otherwise you’re trying not to use it. And that’s not the way we want health insurance to be used.”

Source: Do You Speak Health Insurance? It’s Not Easy : Shots – Health News : NPR

Call’s comment concerning people not wanting to use their health insurance coverage touches upon a deep philosophical split over what it should be in the Affordable Care Act era. In the age of the health maintenance organization that came about in the 1970s and 1980s, HMOs were a hybrid product consisting pre-paid primary care and protection for high cost care such as major accidents and medical events. Before the HMO, there was major medical coverage that covered only the latter with the patient paying out of pocket for the former.

Today, the United States is shifting back to pre-HMO days. Instead of major medical coverage as it was called in the 1950s and 1960s, we now have high deductible or consumer driven plans. With rising health care costs, the all inclusive HMO plans with little in the way of out of pocket costs are no longer feasible. The problem is people still remember these rich HMO plans of the recent past and see high deductible plans as a poor value by comparison — or even valueless as they were described in a recent New York Times story.

The NPR item featured here makes the case for a simplified high deductible policy resembling the major medical coverage of the past, with a flat deductible of say $2,500 and a 20 percent coinsurance level. And automatically health savings account compatible.

That would be a true insurance product since it would cover large, unexpected medical expenses. Since patients would be responsible for care costs incurred below the deductible, these plans would reduce health plan issuer administrative costs involved in processing reimbursements for lower cost care events and the burden of keeping practitioner directories updated. It also dovetails with the consumer trend of convenience-oriented primary care delivered at retail and employer-sponsored clinics, online and through pre-paid arrangements.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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