Healthcare Reform Blog > December 2012

Fresh U.S. healthcare insights from expert analysts on Healthcare Reform, ACOs, Exchanges, Medicaid, Medicare, regional and national trends…and much more
Ric GrossContributor: Ric Gross
Topic:  Payment reform, exchanges

Stop me if you’ve heard this one before—when it comes to healthcare innovations, Massachusetts continues to be a step ahead of everyone else. Whether implementing the nation’s first individual health insurance mandate or successfully launching a health benefits exchange, Massachusetts has beaten everyone else to the punch line. The latest wrinkle is a move away from fee-for-service and toward bundled or global payments, which was the subject of an extensive article in the Nov. 13, 2012, edition of The Los Angeles Times.

When it comes to healthcare innovations, Massachusetts may resemble Owen Wilson’s character from the first “Meet the Parents” movie. Wilson, who played the ex-boyfriend of Ben Stiller’s finance, was the perfect guy who could do no wrong, often touted his “strong portfolio” and noted that in his spare time he dabbled in carpentry because “if you're going to follow in someone's footsteps, who better than Christ?” Needless to say, Stiller’s character felt it hard to measure up—a feeling some states must have when Massachusetts’ reform efforts continue to be exalted by media outlets.

That’s not to say Massachusetts hasn’t had challenges and setbacks when it began moving down this path with its 2006 near-universal healthcare law. But as the nation prepares for full implementation of the Affordable Care Act, Massachusetts’ payment reform efforts are receiving justifiable attention. The state passed a payment reform law in August 2012 which—among other items—mandated that the state’s Medicaid program and employee healthcare program transition to new global payment methodologies.

Global payment has already been underway in the private market, as the state’s top insurers have been working to sign provider groups to such contracts. Quality metrics and significant rewards for providers able to improve patient health help guard against rationing of care. Blue Cross Blue Shield of Massachusetts, which has been pushing its global payment contracting method (the Alternative Quality Contract) since 2009, also measures providers on patient satisfaction scores. BCBS officials say AQC providers now significantly outperform providers in its FFS network on quality and outcome metrics. This is particularly true in managing chronic illnesses, doing preventive care screenings and treating depression.

One challenge, however, stems from the culture in Massachusetts, where HMO plans dominate but have open-access features, similar to what PPOs offer. That puts the onus on primary-care physicians to convince patients to stick with the medical team’s network, where their care can be coordinated, and limit the number of referrals made to more expensive systems. Signature Healthcare officials have said referrals to pricey teaching hospitals in Boston are down since its time operating under the AQC. In the LA Times article, primary-care physician Damian Folch, M.D., notes the global payment contracts have been positive for his practice and patients, despite some initial resistance to a community hospital referral versus a Boston teaching hospital, for instance.

As Massachusetts continues down this road, understanding the impact of global payment will be vital to whether these kinds of arrangements stay the new norm. The rest of the country should be paying attention.

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Posted on: 12/19/2012 10:37:31 AM | with 0 comments

Lyda PhillipsContributor: Sheri Sellmeyer
Topic: Primary care, emergency room, medical homes

Here is something that anyone with a child or an elderly parent could have told you: emergency room use is significantly less when patients can see their primary-care providers outside of regular office hours.

That was the conclusion of a study released this week by Health Affairs showing that patients were far less likely to use the ER when they had evening and weekend access to their physicians, and they had a significantly lower rate of unmet medical need than those who didn’t have such access.

All of this falls under the heading of “no brainer” – of course people who can get to their docs in the evenings and weekends are less like to go to the ER. But according to the journal article by Ann O’Malley, a senior fellow at the Center for Studying Health System Change, this was the first study to use a nationally representative sample to look at people’s access to after-hours care and whether that was associated with emergency-room use, hospitalization, and unmet medical need. Previous research had focused on the benefits of people having a primary-care provider, but not added the piece on after-hours care.

According to O’Malley’s research, only 29 percent of U.S. primary-care physicians offer after-hours care, compared to 95 percent in the United Kingdom and 94 percent in the Netherlands.
But abdominal pain, fevers, and scary, mysterious ailments occur at all hours, sending many Americans to the ER for care they could have gotten from their family doctor or internist. That, in turn, contributes to the high cost and fragmentation of healthcare in this country.

O’Malley’s article reported that 30.4 percent of patients with after-hours access to their primary care providers reported emergency room use, compared to 37.7 percent of those without after-hours access. In addition, those with after-hours access had just a 6.1 percent rate of unmet medical need, compared to 13.7 percent of people who had less ready access to after-hours care.

A central tenet of the Affordable Care Act is improving access to and coordination of primary care. Numerous medical home pilots are underway that pay PCPs extra for better coordinating patients’ care; having written standards for patient access and patient communication is one of six “must-pass” elements for medical practices to be recognized as patient-centered medical homes. One way to address accessibility is through urgent-care centers and retail clinics, both of which have grown dramatically in recent years. About 300 new urgent care centers open every year, according to the Urgent Care Association, with more than 9,000 now that provide walk-in service for acute illness or injury that is not life threatening. There are also more than 1,400 retail-based clinics in locations such as Wal-Marts and CVS stores, up from just 200 in 2006.

In an effort to stave off a shortage of PCPs, the federal government is providing $250 million in new funding to train doctors, nurses, practitioners, and physician’s assistants. More PCPs and nurse practitioners will help our fragmented healthcare system, but being able to access those providers outside of traditional office hours will also be important.

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Posted on: 12/14/2012 1:57:58 PM | with 0 comments

Chris SilvaContributor: Bill Melville
Topic: Medicaid, exchanges, hospitals

On the surface, Nevada should not be so far along in ACA implementation. The state joined the lawsuit against the Affordable Care Act, and it has a Republican governor. Yet now, Nevada could become Exhibit A in how a state with a high uninsured rate and a barebones Medicaid program adapts to the law’s changes.

Nevada approved the Silver State Health Exchange in 2011, when the healthcare reform law was still in limbo pending a Supreme Court ruling. Gov. Brian Sandoval opposed reform, but accepted it as the law of the land. In the end, federal funding for exchange preparation was too good a deal for the state.

The same rationale applied to Sandoval’s Medicaid decision. At 23 percent, Nevada trails only Texas in the percentage of uninsured residents. Nevada’s unemployment rate has been in the double digits since February 2009. Consequently, enrollment in the state’s Medicaid program has swollen since the housing market collapse and the recent recession clobbered the state’s economy.

But Nevada has a bigger problem looming – it has a high rate of Medicaid eligible residents who are not enrolled. If it had not expanded, Nevada would have been on the hook for those members without the enhanced federal match.

Now Nevada is in prime position to launch its exchange, along with other early adopters. The state should see heavy participation in the exchange. Participating plans will include the state’s Consumer Oriented and Operated Plans, such as Hospitality Health, which the Culinary Health Fund and Health Services Coalition will administer.

Expanding Medicaid will test the exchange’s uniform eligibility system, in which residents go to a single web portal to determine eligibility for Medicaid, the exchange and/or subsidies. Nevada will combat churn by requiring its Medicaid MCOs to participate in the exchange, reducing interruptions in care for people whose income pushes them in and out of Medicaid eligibility. With a green light for Medicaid expansion, the state will be more attractive to MCOs that haven’t participated in the program before.

Nevada illustrates the economic reality of healthcare reform. With federal indigent care dollars for hospitals likely to dry up, Medicaid funding will boost Las Vegas’ troubled safety-net hospital, University Medical Center of Southern Nevada. As Las Vegas’s primary source of indigent care, UMC of Southern Nevada typically runs $70 million annual deficits. Medicaid expansion will give it much-needed fiscal breathing room. Hiring among the state’s providers could rise as patient volume increases.

If the healthcare reform cards Nevada has played turn out right, those high uninsured and unemployment rates could head downward. In this case, success will ensure that what goes on in Las Vegas doesn’t stay in Las Vegas.

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Posted on: 12/13/2012 3:32:44 PM | with 0 comments

Lyda PhillipsContributor: Paula Wade
Topic: Medicaid, Exchanges

Now that most of the nation’s anti-Obamacare GOP governors have ceded control of their state health exchanges to the feds, it only makes sense that the Obama Administration can’t allow the states to piecemeal the ACA’s Medicaid Expansion.

With the clock ticking toward January 2014, HHS will have to move fast to construct a plug-and-play healthcare exchange mechanism for at least 18 states (most led by Republican governors who oppose Obamacare) who are ceding a huge portion of their state insurance markets to federal control. (These governors, having run down the clock in hope of a judicial or electoral reversal of the ACA, have ended up making the meme of a “federal takeover of healthcare” true in their own states.)

So should we be surprised that the Obama Administration has issued a polite “No” regarding whether states can expand Medicaid eligibility to a lower threshold than 133 percent of the federal poverty level and still be funded by the feds? Realistically, the administration had no choice but to say no.

Here’s why: The intent of the law was to provide access to health coverage to everyone (or nearly so). The first and most basic step was to simplify Medicaid eligibility, creating one simple income-based national standard rather than the existing 50-state hodgepodge. The threshold agreed on was that Medicaid should extend to all those earning below 133 percent of the federal poverty level, period. To ease the cost to states, the ACA funds those newly eligible Medicaid members 100 percent for the first three years, and 90 percent thereafter.

The exchanges are supposed to function as the clearinghouse for eligibility: both for Medicaid and for subsidized private coverage through the exchange. Any uninsured person will be able to answer a few basic questions and know whether he is covered by Medicaid, by a subsidized exchange plan, or can pick any qualified health plan and file for a tax break if they qualify. The idea was to provide a continuum: Medicaid coverage to the poorest, commercial coverage affordability to the working poor, and a transparent vehicle for finding coverage for everyone.

To make the exchanges work as intended, the Medicaid expansion has to offer a clear, easily determined definition of eligibility that does not shift depending on what state a person is in.

So now the states must decide to take it or leave it on the Medicaid expansion. In a non-political world, that decision would be a no-brainer: The ACA is the law of the land and isn’t going away. Your citizens will pay the same federal taxes regardless. Expansion means states get millions of new federal dollars flowing into their health systems, near-universal health coverage, less cost-shifting of indigent healthcare costs, a healthier population, and a much-simplified eligibility process for their Medicaid programs. Three years in, the states will pay 10 percent of the cost of the expansion population. They can decide to drop out of the expansion at any time if they want.

But alas, it’s a political world.

Indeed, some state governors have already rejected the Medicaid expansion outright, including Texas, South Carolina and Louisiana. Others are being pressured on both sides. Hospitals, insurers, pharma, employers and the uninsured have a huge stake in the outcome.

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Posted on: 12/11/2012 4:49:57 PM | with 0 comments

Lyda PhillipsContributor: Sheri Sellmeyer
Topic: Medicaid, states

As state legislative sessions begin to crank up in early 2013, look for some backtracking on the part of politicians who have vowed they won’t expand Medicaid.

Officially, there are now eight states that say they will not expand Medicaid.

But behind the scenes, hospitals that care for indigents and managed care organizations are lobbying heavily for all states to expand eligibility to 133 percent of the poverty level, which could add about 17 million to the Medicaid rolls.

Medicaid expansion is one of two ways the Accountable Care Act aims to cover the uninsured; the other is the state exchanges that will offer subsidized premiums for low-income people. The Supreme Court ruled last summer that Medicaid expansion was optional for states. Texas Gov. Rick Perry, whose state has the highest rate of uninsured in the country, has vowed that Texas will not expand Medicaid.

But hospitals such as Parkland in Dallas and Harris Health System in Houston, which care for indigents, find such talk foolhardy. The Accountable Care Act phases out federal Disproportionate Share Payments that help hospitals pay for indigent care. Both public and private hospitals that provide charity care were counting on expanded Medicaid programs and the state exchanges to provide coverage.

It’s not just hospitals arguing for Medicaid expansion in Texas. A business-friendly economic and financial analysis firm, The Perryman Group, issued a report saying Medicaid expansion is good for the Texas economy as a whole. The Perryman Group projects that every dollar spent by the state of Texas to expand Medicaid coverage will return $1.29 in state government revenue over the first 10 years of the expansion. According to the Perryman Group, Medicaid dollars will spur economic activity, reduce costs for uncompensated care, and boost productivity from a healthier population. “When these outcomes and the related multiplier effects are considered, the program actually far more than pays for itself and provides a notable economic stimulus,” the Perryman Group says.

Texas has an uninsured rate of 25 percent and one of the most restrictive Medicaid programs in the country. Adults with children can earn no more than 26 percent of the federal poverty level ($5,993) to qualify. (No coverage is provided for childless adults.) Expansion to 133 percent of the federal poverty level would extend eligibility to $30,656 for a family of four and cover an additional 1.2 million newly eligible enrollees in Texas in the first year.

The federal government pays all Medicaid expansion costs for the first three years and then 90 percent after that. A joint report from the Kaiser Family Foundation and the Urban Institute found that expanding Medicaid to over 20 million more people will cost $1 trillion from 2013 to 2022, with states paying just $76 billion of that and the federal government picking up the rest. Still, some governors say coming up with the 10 percent after the federal money dries up will be all but impossible given other demands on their state budgets.

In a letter to Health and Human Services Secretary Kathleen Sebelius last summer, Gov. Perry said, “Neither a ‘state’ exchange nor the expansion of Medicaid under the Orwellian-named P.P.A.C.A. would result in better ‘patient protection’ or in more ‘affordable care. What they would do is make Texas a mere appendage of the federal government when it comes to health care.”

He may still be proclaiming the same rhetoric when the legislature meets in January, but he will likely face a growing chorus of legislators who are hearing a very different view from their district’s hospitals, business interests and advocacy groups.

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Posted on: 12/7/2012 1:22:10 PM | with 0 comments

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