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Last Build Date: Tue, 27 Jun 2017 03:37:41 +0000

 



CBO Projects That 22 Million Would Lose Coverage Under Senate Bill

Tue, 27 Jun 2017 03:37:41 +0000

On June 26, 2017, the Congressional Budget Office and Joint Committee on Taxation (referred here collectively as CBO) released a cost estimate on the Senate’s Better Care Reconciliation Act (BCRA) of 2017. The JCT separately released an analysis of the revenue effects of the legislation. The headlines are that the BCRA would reduce spending over the period of 2017-2026 by $321 billion, $202 billion more than the reduction that would result from House American Health Care Act (AHCA). It would also, however, reduce coverage by about 22 million people by 2026, an only slightly smaller coverage loss than under the AHCA, leaving about 49 million people uninsured in that year. The CBO projects that the BCRA would reduce premiums in the individual market as compared to current law but would dramatically increase out-of-pocket spending for cost-sharing. Indeed, the CBO believes that many lower-income people would not consider the BCRA insurance worth buying despite the bill’s continuation of income-based tax credits. The BCRA would raise the cost of coverage significantly for older people as it reduced it for younger people. The CBO believes that the six-month waiting period for coverage in the individual market for individuals with gaps in coverage would only slightly increase the number of people covered. The waiting period would have far less effect on coverage than the individual mandate would have if not repealed. Unpacking The BCRA’s Spending And Revenue Effects The CBO projects that the BCRA would reduce direct spending by $1.022 trillion over the 2017-2026 period while reducing revenues by $701 billion. (These reductions, and the reduction in coverage, are measured relative to the CBO’s March 2016 baseline, as the CBO has not had time yet to conduct analysis of the BCRA under its January 2017 baseline. The CBO believes that the effects of the BCRA on cost and coverage would be similar using a 2017 baseline). Medicaid spending would be cut by $772 billion over ten years, and would be $160 billion—26 percent—less in 2026 than under current law. The BCRA would cut spending on tax credits and related coverage provisions by $408 billion. The CBO estimates that the short-term and long-term state stability funds in the BCRA would cost $107 billion. The federal government would lose $210 billion in individual and employer mandate penalties, while the bill’s tax cuts and changes in tax preferences would cost $541 billion. The JCT estimates that elimination of the additional Medicare payroll tax that the ACA imposed on people with income exceeding $200,000 per year ($250,000 for joint filers) would cost $59 billion; eliminating the Medicare tax the ACA imposed on unearned income for the same wealthy taxpayers would cost $172 billion; and repealing the health insurance provider tax would cost $145 billion. The CBO predicts that the BCRA would not cause federal budget deficits to increase in any four consecutive 10-year periods beginning in 2027. This is primarily because federal Medicaid expenditures would continue to grow more slowly as tighter growth in per-capita caps was imposed after 2025. Unpacking The BCRA’s Coverage Effects The CBO estimates that in 2018, 15 million more people would be uninsured under the BCRA than under current law, with the number reaching 19 million in 2020 and 22 million in 2026. The decline in enrollment would be disproportionately among people between 50 and 64 years of age and with income less than 200 percent of the federal poverty level. The CBO estimates that enrollment in Medicaid would decrease by 15 million in 2026, about 4 million of whom would be new enrollees who would have been enrolled by states that would have expanded Medicaid had the current law remained in effect. The CBO believes that the repeal of the individual mandate would reduce Medicaid enrollment because people would be less likely to seek out coverage or recertify eligibility (not because they would drop coverage). The CBO estimates that 7 million fewer people would enroll in individual coverage in 2018, 9[...]



Amended Senate Bill Includes Waiting Period for Those Who Let Coverage Lapse

Mon, 26 Jun 2017 19:22:56 +0000

On June 26, 2017, the Republican Leadership released an amended version of the Senate Better Care Reconciliation Act.  It is very similar to the version they released on June 22, but includes two changes. First, it amends a couple of provisions of the stability and innovation funds section to allow both short and long-term funds to be used to purchase health insurance benefits.  This was apparently done to align the program more closely with the CHIP program.  The stability and innovation fund is being created through the CHIP program, reportedly so as to incorporate CHIP’s abortion funding restrictions. Second, it makes a significant change with respect to individual market requirements. The original Senate bill repealed the individual mandate but left nothing in its place to encourage healthy people to enroll in the individual market.  The House bill had included provisions that imposed a premium surcharge for a year on people with a gap in coverage during the preceding year, while the MacArthur amendment would have allowed states to permit insurers to health status underwrite individuals who had a gap in coverage.  The Congressional budget office predicted that the enrollment penalty would discourage healthy people from enrolling and that the health status underwriting option could allow healthy people to opt out of community rating and destabilize insurance markets. The new Senate amendment would allow an insurer in the individual market to impose a waiting period of six months on an enrollee who had had a gap in coverage of 63 days or more during the preceding 12 months.  An individual who applied for coverage during the annual open enrollment period or during a special enrollment period would have to wait six months from the date of application to enroll in coverage. Under this provision, an individual who applied on November 1, the first day of the open enrollment period, could not begin coverage until May1 of the following year.  An individual who lost employer coverage on March 31—who would under the ACA be able to get coverage effective April 1 under a special enrollment period for loss of employer-sponsored coverage—would have to wait until October if he or she had experienced a 63- day gap in coverage during the preceding year prior to getting employer coverage. Individuals who do not qualify for a special enrollment period would be able to apply and be eligible for coverage on either the first day of the next plan year or the date six months after they apply for coverage, whichever is later.  Thus an individual who is ineligible for a special enrollment period but applies on July 1 would be able to get coverage on January 1 of the following year, but a person who applies on October 1 would have to wait until April. The waiting period does not apply to newborns or to children adopted or placed for adoption before reaching the age of 18 if an application is submitted within 30 days of the date of birth or adoption.  It also does not apply to individuals with coverage in the individual market the day before the effective date of the coverage in which the individual is enrolling.  Thus individuals could transition from one individual market plan to another or reenroll in the same plan, even if they had experienced an earlier gap in coverage. The waiting period would impose an additional barrier on individuals who want to enroll in coverage and reduce the immediate benefits of getting coverage — and thus, would likely have the effect of discouraging enrollment in the individual market.  This could reduce the cost of the tax credit program, but might also decrease the stability of the market. But most importantly, it would mean that individuals who need health care will have to wait six months longer to get it. Under current rules they have to wait until open enrollment.  Now many will have to wait even longer. Six months may mean the difference between life and death for a person with cancer awaiting treatment.  It will also be a very long time for providers w[...]



The Downstream Consequences Of Per Capita Spending Caps In Medicaid

Mon, 26 Jun 2017 17:04:15 +0000

Medicaid, the government program that provides health insurance coverage to low-income and disabled Americans, is the largest payer for health care in the United States in terms of enrollees and the second-largest payer (behind only Medicare) in terms of spending. Escalating health care costs, a growing federal budget deficit, and fiscal challenges in many states have led to calls to reform the program to decrease spending growth. Recent federal reform proposals from House and Senate republicans would change the current financing system in which the federal government guarantees a share of total program spending to states to one limiting federal cost exposure by setting a per capita cap on federal payments to a state. A change in the Medicaid program to a per capita cap financing system is included in the House-passed American Health Care Act (AHCA) and in the Senate-proposed Better Care Reconciliation Act of 2017 currently under consideration. With the Congressional Budget Office estimating that the Medicaid proposals in the AHCA will cut federal Medicaid spending by 25 percent by 2026, much attention has been given to the effects of such cuts on decreasing the number of individuals enrolled in Medicaid and increasing state budgets. Much less attention, however, has been given to a related but critical question: How do the reforms affect who enrolls in and gets care under Medicaid? From the lens of economics, we draw an analogy to per capita payments in health insurance markets and explain how the currently proposed reforms threaten the core programmatic purpose of Medicaid by incentivizing states to limit care and coverage to the states’ most vulnerable residents. Federal funding for Medicaid creates a national safety-net health insurance program. Without federal funding, one might expect a classic “race to the bottom” among states to reduce state spending (and the accompanying taxes) by weakening their Medicaid programs. Federal policy for Medicaid prevents the race to the bottom by conditioning funding on both state spending and on the fulfilment of certain safety-net requirements, such as eligibility for statutory categories of individuals and benefit and access requirements. But while the need for federal funding is clear, what form should it take? Is it better to share costs at the margin or limit federal exposure with a per-person cap? Currently, the federal government pays a percentage of every program dollar, the Federal Medical Assistance Percentage (FMAP). FMAPs are determined by a formula incorporating the ratio of the state’s per capita income to national per capita income, to ensure low-income states get higher FMAPs. For example, the FMAP for Connecticut is 50.0 percent (the FMAP floor), and the FMAP for Mississippi is 75.7 percent. This effectively results in the federal government giving states at least a $1 for every $1 of state Medicaid program spending. The federal government pays the FMAP regardless of the previous year’s spending or budget projections, paying less when the program spends less than projected and paying more when the program spends more. Under the House-passed AHCA, the mechanism by which the federal government would share in program costs would change dramatically to a per capita spending cap. Under such a system, the federal government would pay a maximum preset amount for each Medicaid enrollee, regardless of actual spending in a given year (Note 1). These payments would vary across five broad Medicaid eligibility groups, with five different per capita payments (Note 2) based on historical within-group-spending averages. If a state spends more than the total cap, the federal government provides no additional funding and thereby shifts all spending growth risk to states. With a new set of financial incentives and with less federal reimbursement at stake, states would need to determine how to make up for the risk of future funding losses. To do so, policy experts consistently cite that states could either increase thei[...]



What’s CHIP Got To Do With It?

Mon, 26 Jun 2017 14:52:03 +0000

Children in US receive their health insurance from multiple sources: the Children’s Health Insurance Program (CHIP), Medicaid, employer-sponsored insurance (ESI), or a qualified health plan on the Marketplace. Each offering has different cost sharing and premium requirements, provider networks, coverage packages, and eligibility criteria. This creates a fragmented system of coverage for children and families, particularly for low- and moderate-income families, who often have children and parents enrolled in across separate coverage sources. Furthermore, this fragmentation leads to disparities in children’s coverage by coverage source. Shouldn’t all children benefit from cohesive and comprehensive coverage? CHIP was traditionally seen as a bipartisan program. However, over time, particularly with the passage of the Affordable Care Act (ACA), the politics of CHIP have changed. The uncertain political footing for the program will play a role this summer with the future of children’s coverage up for debate again. CHIP funding is scheduled to expire on September 30, 2017. Additionally, the Medicaid and CHIP Payment and Access Commission (MACPAC) reports that Arizona, California, DC, Minnesota, and North Carolina will run out of CHIP funding by December 2017 if Congress does not reauthorize the money for the program. More than half of states are projected to exhaust federal CHIP funds by March 2018 without reauthorization. That said, we can expect CHIP to be a key driver in the upcoming the health care minibus discussions. The “minibus” refers to a handful of policy provisions tied together in one piece of legislation. The health care minibus includes all the health care extenders left behind from the Medicare Access and CHIP Reauthorization Act (MACRA), including but not limited to CHIP, the Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program, community health centers funding, and therapy caps. However, it is time for us to stop talking about CHIP, and instead start talking about integrating the myriad of children’s coverage sources. Comparing CHIP with Employer Sponsored Plans and the Marketplace With the creation of the Marketplace and subsidized coverage through the Affordable Care Act (ACA), there is a significant coverage overlap for children in families between 133 percent and 250 percent of the federal poverty level (FPL). These children can receive coverage through CHIP, the Marketplace, or ESI. Families that fall into this income range find themselves examining these options and determining which coverage is best for their children. CHIP, generally, requires low premiums and cost sharing; includes a robust provider network that is specific to children; and offers expansive services, including Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) coverage, in certain states. Studies have shown that while major medical benefits are comparable across CHIP, ESI, and the Marketplace, certain benefits, such as dental, vision, and autism services, are more available in CHIP. Additionally, Marketplace coverage, even with subsidies, requires more out-of-pocket costs compared to CHIP. Although there are limited data available to compare CHIP, marketplace, and ESI provider networks, flexibility in network regulations creates significant variation in provider networks across states and plans. These factors often result in families opting for CHIP coverage for their children, while parents remain in the Marketplace or on employer sponsored plans. Looking Beyond CHIP There are many proposals and recommendations that call for an extension of CHIP funding. Recently, for example, MACPAC recommended extending CHIP coverage for five years, extending a “maintenance of effort” requirement on states that operate Medicaid-expansion CHIP programs, and continuing a 23 percentage point increase in the CHIP matching rate for states expenditures. Advocacy groups have called for long-term extension of CHIP funding. Howeve[...]



Sounding The Alarms On Children’s Health Coverage

Mon, 26 Jun 2017 14:49:00 +0000

Buried beneath a very intense discussion on the future of adult coverage in this country has been a far more serious issue in children’s coverage many years in the making. The American Health Care Act (AHCA) and the president’s recent budget proposal certainly have those who care for children concerned about the future of children’s insurance. The AHCA’s proposed changes to Medicaid would undo a half century of health care standards that were designed to maximize child development and well-being outcomes, such as guaranteed comprehensive health care coverage that includes access to mental health services, dental care, and school-based assistance for children with special health care needs. For special needs children, they have also insured that children with autism have aides to assist them in school, or that a child with cerebral palsy has access to appropriate transportation for themselves and their durable medical equipment to and from school, as well as the assisted nursing to support them while they are there. But it’s not just the direct impact to children that is concerning. To the extent the AHCA rolls back the Affordable Care Act’s (ACA) Medicaid expansion, it would strip health insurance coverage from many low-income parents, whose own health is critical to that of their children. There have also been proposed cuts to Medicaid that are at a magnitude never seen before: the president’s budget recommends reducing Medicaid funding by more than $600 billion dollars over 10 years, above and beyond the more than $800 billion in Medicaid cuts written into the AHCA. These changes to Medicaid would not be trivial: more than 36 million children and adolescents in this country are insured through Medicaid, a number that grows every day. These are not simply children living in poverty; most hail from working families. Many of these children have complex medical or behavioral health concerns, intellectual disabilities, or are in foster care. Medicaid’s reach among children is huge. The risk to families is a perfect storm that’s been brewing for some time Although the dramatic changes proposed by the AHCA and the president’s budget are more immediate, the truth is that their impact would negate the gains made in reducing the uninsured rate in children and leave families with fewer options for their children’s health care. When the ACA became law in 2010, children’s uninsurance rates in this country were much lower among children than adults (and continued to decline to only 5 percent by 2015). Lawmakers, therefore, designed the ACA principally to address uninsurance among adults, but nonetheless, added regulations that guaranteed a set of essential benefits to families who purchased coverage through the exchanges, including maternity, pediatric, mental health, and substance abuse benefits. Optimism abounded and many hoped that the exchanges’ success might one day eliminate the need for the Children’s Health Insurance Program (CHIP). CHIP is a federally subsidized state program, which, at its peak, has insured an additional 8 million children in low- and moderate-income families who were not offered affordable coverage through their employers and could not qualify for Medicaid because their families were just above the federal poverty line. From that high point, there has been a steady erosion of children’s coverage under their parents’ employer-sponsored plans that has gone largely unseen. Even as we’ve climbed out of recession and more low-income individuals are gaining employment, they’re not being provided affordable family coverage by their employers. Facing soaring benefits costs, many employers are dropping dependent coverage for their employees, or offering ever-more-expensive coverage. Escalating family deductibles and premiums have far outpaced those for single-adult enrollees, making such coverage unaffordable for many families. Lacking affordable options to cover their c[...]



ACA Round-Up: QHP Application Deadline Passes, House v. Price, Special Enrollment Periods

Sun, 25 Jun 2017 01:11:42 +0000

June 21, 2017, was the last day for insurers to file qualified health plan applications in the 39 states that use HealthCare.gov, including federally facilitated marketplace (FFM), plan management, and state-based marketplace-federal platform states. There were reportedly a few additional defections, including Anthem from Wisconsin and Indiana, but most insurers are back from last year, and a there are a few new entrants, notably Centene in several states. According to slides posted at the CMS REGTAP.info website, insurers may make any changes they wish to their plan filings until August 16, 2017, except for adding plans, changing plan type or child-only value, or changing service areas without permission from CMS, as long as they get state regulator approval. Insurers that wish to change the service area served by a plan must petition CMS by August 4, 2017. From August 17, 2017, CMS will not allow further changes except data corrections needed to correct data display errors and align QHP plan displays with products and plans approved by the states. Insurers will have a final opportunity to withdraw plans during the plan confirmation process, which takes place between September 12 and 15, 2017. These deadlines are not statutory but are rather established by guidance. It is hard to believe, therefore, that if an insurer steps forward to cover a bare county (or which 44 currently are believed to exist in Missouri, Ohio, and Washington, CMS would not accept a late filing. The QHP filings are not public information. Some of the data contained in the applications will be made available in public use or landscape files in the fall. QHP filings contain some information on proposed rates, but uniform rate review templates for individual and small group market rate filings are not due at CMS until July 17, 2017 (although states have earlier deadlines, many of which have passed). Proposed rates will be published on the CMS website and by states on August 1, 2017. Final rates must be published by November 1, 2017. Court Orders House And Administration To Respond To States’ Request To Intervene In House v. Price On June 22nd, the District of Columbia Court of Appeals today ordered the government and the House to respond to the motion to intervene in House v. Price filed by attorneys general from 17 states and the District of Columbia. The House and administration must respond in 10 days, and the states have 7 days to reply. The states asked to intervene in the appeal of the litigation, arguing that uncertainty caused by the litigation was threatening their health insurance markets and that their interests were not adequately represented in the litigation. The House and the administration then asked the court not to lift the stay that has been imposed on the litigation to hear the states’ request, but the court ruled in favor of lifting the stay to let the states present their case for intervention. Pre-Enrollment Verification For Special Enrollment Periods On June 23, 2017, HealthCare.gov began requiring pre-enrollment verification for eligibility for loss of minimum essential coverage and permanent move special enrollment periods (SEPs).  CMS has posted at the Center for Consumer Information and Insurance Oversight website examples of the forms that it intends to use to: remind people who qualify for a SEP to pick a plan and confirm their eligibility, inform applicants who have already applied and picked a plan that they have 30 days to document eligibility, warn applicants ten days before the application of the 30-day period who have picked a plan but have not yet submitted eligibility verification documentation to do so, notify applicants when the documentation they have submitted is insufficient and to inform them of what more is needed to verify eligibility (apparently within the original 30-day period), notify applicants that their SEP eligibility has been verified and that the[...]



Medicaid Round Two: The Senate’s Draft “Better Care Reconciliation Act Of 2017”

Sat, 24 Jun 2017 21:25:21 +0000

Although it differs in important details, the draft Medicaid provisions of the Better Care Reconciliation Act — the Senate’s version of Affordable Care Act “repeal and replace” —  share the vision of its House-passed counterpart, the American Health Care Act: to, as much as possible, shield the federal government from the cost of Medicaid. Like the House, the Senate would accomplish this goal by fundamentally altering the terms of Medicaid itself rather than by ending it and replacing its entitlement structure with a new, successor program as Congress did in 1996 when it replaced the Aid to Families with Dependent Children (AFDC) program with Temporary Assistance to Needy Families (TANF). Medicaid is far too complex, and the rules of reconciliation far too constrained, to permit the creation of a new program. Instead, both the House and Senate revise the terms of a law that states have relied on for over a half century to fund health care for the indigent, a basic function of all state governments. The Senate bill, like the House measure, will have massive financial consequences for states, regardless of whether a state has opted for the ACA Medicaid expansion or eschewed this choice. States that want to continue to qualify for federal Medicaid contributions – so vital not only to health care but to their overall economies as measured in employment and local economic activities — will have little choice but to make up the deficits created by legislation that grafts unprecedented payment constraints onto the statutory federal funding formula. Inevitably, the caps mean that states with costlier programs will face larger funding deficits. But the cost of Medicaid is not simply a function of design choices states make in terms of whom and what to cover. Even states with constrained programs will face a funding gap driven by essentially uncontrollable factors such as the decline of good paying jobs that carry health insurance, an aging population, and public health catastrophes such as Zika or the opioid crisis. Indeed, it is fundamentally wrong to think of states’ Medicaid design choices as optional, even though they are as a matter of law. States choose to cover optional groups and services in response to underlying economic, demographic, and health forces such as infant mortality, elevated disability rates among children and adults, or high numbers of very old residents. Thus, while the Medicaid and CHIP Payment and Access Commission recently reported to Congress, only slightly more than 47 percent of all Medicaid spending is for mandatory services to mandatory populations, the report also reminds us that in a statute in which prescription drugs and inpatient psychiatric rehabilitation services for adults are technically optional, virtually nothing that Medicaid covers is truly a state option. State programs reflect their effort to deal with population health. The potential federal funding losses to states stemming from the pending legislation are immense. The Urban Institute pegs the dollar loss flowing from the House version of the legislation at $373.6 billion over ten years; over $50 billion of that amount would be tied to the decline in federal payments for traditional populations and the rest would be linked to the combined effect of the loss of the enhanced federal payment rate for the ACA expansion population coupled and the per capita cap. Urban also points out that the losses would grow far higher if states respond to the loss of enhanced federal funding for the expansion population by eliminating coverage entirely. Urban also reports that under a scenario that applies the capping formula used in the Senate draft (the same formula used by Speaker Paul Ryan in A Better Way) 10-year losses would climb to $841 billion — $467.4 billion less in federal funding than provided by the House. Other reports add key dimensions to[...]



The Senate Health Care Bill

Fri, 23 Jun 2017 17:41:41 +0000

Yesterday, Senate Republican leaders released a discussion draft of their version of health-care legislation, the Better Care Reconciliation Act (BCRA). Senate Majority Leader Mitch McConnell plans to put this legislation to a vote next week with the expectation of passing it. The Senate Republican plan is best understood as a GOP amendment to the existing Affordable Care Act (ACA). Indeed, one could imagine that, back in 2009, if the Republicans had attempted to modify rather than defeat the ACA, this is the kind of amendment they would have offered. The BCRA repeals most of the tax hikes of the ACA, cuts back substantially on the spending in the ACA, eliminates enforcement of the ACA’s individual and employer mandates, and provides more space for state decision-making and initiative. Even with these changes, much of the ACA’s structure is left in place. The following is a condensed summary of the main features of the Senate proposal with some thoughts about the bill’s likely effects. Building on the ACA’s Tax Credits The House-passed American Health Care Act (AHCA) would repeal the ACA’s premium credits, which are adjusted based on household income, and replace them with age-adjusted tax credits that are not scaled to income except for households with incomes above $75,000 per year. Senate Republicans have chosen to use the ACA’s premium credit structure as their starting point rather than the AHCA’s age-adjusted credits. The Senate legislation would make three important changes to the ACA’s premium credit structure. First, it would add an age-adjustment to them, beginning in 2020. Second, it ties the calculation of these credits to higher-deductible insurance plans, which means the value of the credits would be lower. Third, it would allow taxpayers below 100 percent of the federal poverty line (FPL) who are ineligible for Medicaid to get the credits, too. Providing tax credits for insurance enrollment for persons below 100 percent of the FPL is an especially consequential proposal. Nineteen states have not expanded their Medicaid programs under the terms of the ACA, leaving millions of people with incomes below the poverty line without a realistic option of getting health insurance. As federal support for Medicaid is lowered in future years, more people are likely to become eligible for this tax credit, which, unlike Medicaid, is financed entirely by the federal government. Very low-income households receiving this credit could enroll in health insurance while paying minimal premiums themselves. A person with income at the 2017 federal poverty level would pay a maximum of 2 percent of their income, or $23.10 a month for coverage; they could also pay less if they use their federal credit to purchase a plan with a premium below the median price of a plan in the market. The credit is also tied to age, with older persons expected to pay higher premiums. People in their 20s with incomes at 350 percent of the FPL would pay a maximum of 6.4 percent of their income in premiums, which equals $260 a month; a person in his 60’s with an income at the same level would pay a maximum of 16.2 percent of his income, or $655 per month. Far-Reaching Medicaid Reforms Like the House bill, the Senate legislation includes far-reaching reforms to the Medicaid program. First, the bill would roll back the enhanced federal matching funds for Medicaid over the period 2020 to 2024. States would be allowed to maintain enrollment for the population covered by the ACA, but at the regular, rather than enhanced, federal match rates. The Senate bill also places a new per-person limit on the amount of federal matching funds for five different categories of Medicaid enrollees. The per-person limits are based on state-specific pattern of spending for these populations in recent years. These limits would be indexed to grow with inflation in the medi[...]



The Payment Reform Landscape: Is The Debate Over Retrospective Versus Prospective Bundled Payments A Distraction?

Fri, 23 Jun 2017 13:25:47 +0000

Based on surveys of health plans by Catalyst for Payment Reform, less than 3 percent of payments in the commercial market are “bundled.” One can argue that there have been more conferences and webinars about bundled payment than actual bundled payments. In the public sector, however, there is much more experimentation with and usage of bundled payment through Medicare and Medicaid. There is good reason to pursue bundled payment. At least in theory, a bundle represents the best thinking on how much it costs to treat the course of an identifiable illness, disease, or injury. It also addresses the tendency to inflate costs with excessive, and often unnecessary, medical intervention. But progress has been slow, in part, because of a wide array of variables that go into calculating a bundled payment, including: Which costs does the bundle include? Which providers get which portion of the bundle? What timeframe does a bundle cover? What happens with outlier cases that come in below cost or, more likely, above? These and other questions have stunted the growth of what could be a breakout idea. Is The Focus On Prospective Payment A Barrier? Some believe that the holy grail of bundled payments is prospective bundles—setting a price for a course of care that has not yet occurred and paying only that amount at the start of the episode of care. The thinking behind prospective payment is that the incentives for cost containment will be stronger because providers will be loath to overspend when they know there’s no chance of additional payment. They also sound administratively simpler for the payer—just cut one check, and don’t worry about figuring out who did what. (It’s strange, however, that there doesn’t seem to be an equal push for prospective global payments. Total cost of care contracts with accountable care organizations or other health systems are almost always settled retrospectively against a target decided in advance.) However, prospective bundled payments can be difficult to implement because they require deciding which provider receives the funds and can be trusted to distribute them properly among all providers involved in an episode. Legal and turf issues can stymie the effort. The difference between retrospective and prospective payments is not significant enough to delay implementation of bundled payment in the hopes of perfecting prospective bundling. Payers shouldn’t go into a retrospective bundled payment arrangement without having agreed upon a budget for a procedure or other episode of care in advance, even though they may settle debts and credits on the back end. In addition, providers, like most people, have an aversion to loss, and if the payment arrangement includes downside risk, they will work hard to avoid any losses. This means that waiting for the means to implement prospective bundles on a broad scale is not sufficient cause for delaying the use of bundled payment. Focus On The Real Problems There are real challenges that need to be addressed in many of the alternative payment models being discussed today, including bundled payments, whether paid prospectively or retrospectively. These include: Prospectively Setting The Price And Budget Coming to agreement on a reasonable budget (and therefore payment amount) takes analysis and negotiation on the part of the providers and payers. Ideally, the arrangement includes a separate payment for evaluation, so providers are paid partially for helping to determine when patients do not need the care the bundle covers. And bundles won’t save payers money if the price for the bundle is too high. Risk Adjustment In setting a bundled payment amount, providers will want payers to consider that some patients are sicker and more complicated than others. Identifying these patients and deciding how much to adjust the bundled pay[...]



Unpacking The Senate’s Take On ACA Repeal And Replace

Fri, 23 Jun 2017 02:05:41 +0000

On June 22, 2017, Senate Majority Leader Mitch McConnell (R-KY) released the Senate GOP’s version of Affordable Care Act repeal, the Better Care Reconciliation Act of 2017. The Senate bill is in many respects quite different from the House’s American Health Care Act (AHCA), which was introduced on March 6, 2017; AHCA passed on May 6 by a narrow, mostly party line 217 to 213 vote after lengthy negotiations and a series of amendments. Although the Senate bill has the same bill number at the House, it entirely strikes the House bill and adopts a new bill with a new title. All of its amendments are amendments to the ACA itself or of other existing laws, not to the House bill. The majority of the Senate bill is focused on changes to the Medicaid program. This post includes a brief summary of the Medicaid provisions by Sara Rosenbaum, who will examine these in greater detail in a post in the near future. The remainder of this post by Timothy Jost focuses on the non-Medicaid sections of the legislation. A Quick Review Of The House Bill As adopted, the House, the AHCA: Eliminated the taxes and tax increases imposed by the ACA (most, but not all of them for 2017); Phased out enhanced funding for the Medicaid expansions beginning in 2020 and imposed either a block grant or per capita caps on Medicaid; Permitted work requirements for Medicaid recipients and repealed various ACA Medicaid provisions; Removed the ACA’s individual and employer mandate penalties retroactively to 2016: Increased age rating ratios from 1 to 3 to 1 to 5 in the individual and small group market and allowed states to go higher by waiver; Repealed the ACA’s actuarial value requirements; Repealed funding for the Prevention and Public Health Fund; Withdrew funding for Planned Parenthood for one year; Permitted states to waive the ACA’s essential health benefit requirements; Imposed a penalty on individuals who failed to maintain continuous coverage; Alternatively allowed states to obtain a waiver to allow insurers to health status underwrite individuals who do not maintain continuous coverage; Created funds amounting to $138 billion to assist states in dealing with high-cost consumers and for other purposes; Liberalized requirements for Health Savings Accounts; and Ended the ACA’s means tested subsidies as of 2020 and substituted for them age-adjusted fixed-dollar tax credits. The House version of the AHCA left six of the ACA’s ten titles, and virtually all of its insurance reforms, in place. The AHCA did not repeal or amend the ACA’s prohibition against preexisting condition exclusion clauses; its guaranteed issue and renewal requirements (except insofar as it allowed penalties for individuals with a gap in coverage); its requirement that health plans cover preventive services without cost sharing, its requirement that health plans and insurers cover adult children to age 26; or many other popular provisions. The Senate Better Care bill leaves these provisions in place as well. Indeed, the House bill likely left many of them alone because most involved issues that could not be addressed by the Senate under budget reconciliation procedures being employed by Republicans. Reconciliation allows Senate passage with 51 votes (or 50 votes plus Vice President Pence’s tiebreaker) rather than the 60 votes normally needed to end a filibuster. However, the Senate’s Byrd Rule  restricts these procedures to provisions that affect the revenues or expenditures of the federal government and do not do so simply incidental to some other purpose. It is likely that parts of the Senate draft will be challenged under the Byrd rule. If the Senate Parliamentarian rules that challenged provisions are “extraneous,” it will take a three-fifths vote of the Senate for them to move forward, which is very unlikely to happen[...]