Insurers Profit From Health Law They Spent Millions to Fight

Insurance companies spent millions of dollars trying to defeat the U.S. health-care overhaul, saying it would raise costs and disrupt coverage. Instead, profit margins at the companies widened to levels not seen since before the recession, a Bloomberg Government study shows.

Insurers Profit From Health Law They Spent Millions to Fight
Sarah Frier
Jan 05, 2012 4:26 pm ET

(Updates with closing share price in 10th paragraph.)

Jan. 5 (Bloomberg) — Insurance companies spent millions of dollars trying to defeat the U.S. health-care overhaul, saying it would raise costs and disrupt coverage. Instead, profit margins at the companies widened to levels not seen since before the recession, a Bloomberg Government study shows.

Insurers led by WellPoint Inc., the biggest by membership, recorded their highest combined quarterly net income of the past decade after the law was signed in 2010, said Peter Gosselin, the study author and senior health-care analyst for Bloomberg Government. The Standard & Poor’s 500 Managed Health-Care Index rose 36 percent in the period, four times more than the S&P 500.

“The industry that was the loudest, most persistent critic of this law, the industry whose analysts and executives predicted it would suffer immensely because of the law, has thrived,” Gosselin said. “There is a shift to government work under way that is going to represent a fundamental change in their business model.”

Health insurers contributed $86.2 million to the U.S. Chamber of Commerce to oppose the law after Obama administration officials criticized the plans for enriching themselves by raising customer premiums.

“We remain very concerned that major health-care reform provisions that go into effect on Jan. 1, 2014 will raise costs and disrupt coverage for individuals, families, seniors and small businesses,” Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s Washington lobbyist, said after reading the study.

Profit Margins

Still, the companies saw their average operating profit margins expand to 8.24 percent in the six quarters since the overhaul became law, compared with 6.88 percent for the 18 months before it was passed.

Quarterly earnings per share from continuing operations between the third quarters of 2008 and 2011 jumped 29 percent, and the results have on average beaten analyst estimates since the first quarter of 2009. WellPoint, based in Indianapolis, raised its 2011 earnings forecast in October after third-quarter earnings of $1.77 a share beat by 10 cents, the average estimate of 20 analysts surveyed by Bloomberg.

At the same time, companies are changing their business focus to gain from provisions in the law that will expand the size of Medicaid, the $401 billion government health plan for the poor. “Only by substantially reshaping their businesses can they profit,” the study says.

Health-Care Overhaul

The report compares the 18 months before and after the overhaul became law, Gosselin said. The companies studied are WellPoint; UnitedHealth Group Inc., of Minnetonka, Minnesota; Aetna Inc., of Hartford, Connecticut; Humana Inc., in Louisville, Kentucky; and Philadelphia-based Cigna Corp.

The managed care index, which includes all of the companies studied plus Coventry Health Care, rose less than 1 percent at the close in New York. WellPoint also increased less than 1 percent to $68.51.

Cynthia Michener of Aetna wouldn’t comment before reading the complete study. Declining to comment were Tyler Mason, a UnitedHealth spokesman and Phil Mann from Cigna, while WellPoint’s Jill Becher referred questions to AHIP. Humana’s Jim Turner said he wouldn’t speculate on the law’s effects ahead of a Feb. 6 earnings call.

Commercial business now accounts for less than half of the companies‚ combined revenue for the first time in at least two decades, according to the study. That‚s partly a result of the companies‚ growing investments in plans that provide services to Medicare and Medicaid patients, the report said.

Medicare Revenue

At the same time, quarterly revenue from Medicare, the $525 billion federal health program for the elderly and disabled, increased by one third, to $16.39 billion, for the four insurers that reported figures, the study shows. Medicaid revenue more than doubled to $4.11 billion.

The companies run managed-care plans for Medicare that may see revenue rise by $10 billion by 2015 as more baby boomers retire, industry analysts have said. The insurers also administer benefits for Medicaid, which is being expanded under the health-care law starting in 2014 to cover more uninsured people. States have turned to private plans to manage Medicaid caseloads and help control health spending.

Health plans will be able to bid on an estimated $40 billion in state Medicaid contracts from now to 2014, the study found.

The top five insurers have completed at least 10 deals to add Medicare HMO‚s or programs dealing with the chronically ill, which usually involve Medicare or Medicaid enrollees. The deals include UnitedHealth’s $2 billion purchase of XL Health Corp. and Cigna’s $3.8 billion for HealthSpring Inc.

The push toward government programs may prove to be a risky wager, Gosselin said in an interview.

The Supreme Court will rule on the law’s constitutionality this year and opponents of the law in Congress may target individual provisions in the overhaul for budget cuts, he said. Additionally, states may devise onerous rules for the way coverage is sold to uninsured Americans, he said.

—Editors: Adriel Bettelheim, Chris Staiti

SOURCE:
To view this article by Sarah Frier for Health Leaders Media and Bloomberg News in its original context, please visit HealthLeadersMedia.com

State's decision to halt health exchanges worries insurers

A recent decision by Gov. Scott Walker could give the federal government greater influence over the state’s health insurance market – and that worries some in the industry.

State’s decision to halt health exchanges worries insurers

By Guy Boulton of the Journal Sentinel

Jan. 1, 2012

A recent decision by Gov. Scott Walker could give the federal government greater influence over the state’s health insurance market – and that worries some in the industry.

Walker announced late last month that the state would halt work on the online marketplaces, or exchanges, required under federal health care reform until the U.S. Supreme Court rules on the constitutionality of the law.

The exchanges could help consumers and small businesses compare competing health plans.

They also could increase price competition by requiring health insurers to offer more standardized plans and by providing consumers with better information about what they are buying.

But how well they work will depend on dozens of decisions, such as how much flexibility to give health insurers in determining what to cover, and the roles of insurance agents and brokers.

Under the health care reform law, the state must have a plan in place to set up an effective exchange by January 2013. If it doesn’t, the federal government will set up the exchange.

There’s a risk in halting the work on the exchanges until the Supreme Court rules: If the law is upheld, the state would have only about six months to put together a plan.

Whether that can be done in that time frame is a question. It also is a concern for health insurance companies.“We do not want decisions about Wisconsin’s insurance market to be made in Washington,” said Phil Dougherty, senior executive officer of the Wisconsin Association of Health Plans.

One worry is that health insurers would face stricter regulations from the federal government than from the state Office of Free Market Health Care.“No question,” said Jon Rauser, president of the Rauser Agency, an insurance broker in Milwaukee.

The Office of Free Market Health Care has said it backs a “free-market, consumer-driven approach” for the state’s exchange. Consumer advocates have already criticized the working groups set up to advise the state, saying they are dominated by representatives of insurance companies and brokers.

Walker betting against it
Walker, who opposes federal health care reform, said that moving forward with the exchanges could be a waste of time and effort if the law is declared unconstitutional.

He denied that he was bowing to pressure from conservatives who have encouraged states not to plan for the exchanges.

His decision could be seen as a bet that the revamping of the health insurance market under federal health care reform won’t happen.

Under this scenario, the Supreme Court would declare the entire law unconstitutional – not just the provision that requires nearly everyone to have health insurance – or a Republican candidate would win the presidency in 2012 and be able to stop the law from being implemented.

Walker contends the state still can put together an exchange by the end of next year if the law is upheld.

But that would require the state to make a slew of quick decisions, ranging from arcane details on how to determine the actuarial value of the health plans to what information to provide consumers.“There are a lot of things that have to be worked out and thought through to make it work effectively,” said Barbara Zabawa, a Madison lawyer who is on the main working group to advise the state.

The state could meet the deadline, she said, but it would be a challenge.

Spokesmen for the state Office of Free Market Health Care have not responded to interview requests.

Legislation needed
Another potential obstacle is that the state may need to pass legislation to set up an exchange. That would require a special session of the Legislature if the law is upheld.

A lengthy debate on that legislation could further delay work on the exchange. Whether the Walker administration could get lawmakers to pass legislation is also a question.

Sen. Frank Lasee (R-De Pere), chairman of the Senate Committee on Insurance and Housing, has pledged to block legislation needed to set up an exchange.“We can come up with a lot of questions,” said Dougherty of the Wisconsin Association of Health Plans. “But we don’t have a lot of answers just now.“The state also may have to give back at least part of a $37 million federal grant to offset the initial cost of the exchanges.“I don’t know why the feds don’t pull that money, because they are not accomplishing anything with it,” said Bobby Peterson, a lawyer with ABC for Health, a public-interest law firm in Madison. “It’s a shame, because Wisconsin was in a position to be a leader.“At the same time, consumers might fare better if the federal government sets up the exchange rather than the Walker administration, Peterson said.

If nothing else, the governor’s decision adds to the uncertainty surrounding federal health care reform for health insurers.“The uncertainty is the worst part, because it’s hard to plan, it’s hard to budget, without knowing what’s on the horizon,” said Zabawa, the Madison lawyer on the working group.

She was disappointed by the state’s decision to stop work on the exchanges.“Wisconsin would be best served to have its own exchange tailored to the needs of the people of the state,” Zabawa said.

Rauser of the Rauser Agency said even people who oppose the federal law agree with that.“It’s a pragmatic alternative to doing nothing,” he said.

© 2012 jsonline , Journal Sentinel Inc. All rights reserved.

SOURCE:
To view this article by Guy Boulton for The Journal Sentinel in its original context, please visit JournalSentinel.com

Why Medicaid Is No Longer a Voluntary Program

It is widely believed that Medicaid is a voluntary program. While this may have once been true, it is no longer the case. Today, states confront the dilemma of having to choose between joining Medicaid or being forced to sacrifice any health care “safety net” for their indigent populations. This is all because of a law enacted by Congress in 1986 called the Emergency Treatment and Labor Act (EMTALA).

Why Medicaid Is No Longer a Voluntary Program

BY Jeffrey A. Singer

It is widely believed that Medicaid is a voluntary program. While this may have once been true, it is no longer the case. Today, states confront the dilemma of having to choose between joining Medicaid or being forced to sacrifice any health care “safety net” for their indigent populations. This is all because of a law enacted by Congress in 1986 called the Emergency Treatment and Labor Act (EMTALA).

In 1986, Congress passed EMTALA, making it a federal crime to transfer a patient from one hospital/emergency room to another for financial reasons. It compels hospitals to render care, even without any compensation.

EMTALA led to an explosion in uncompensated care. It became common knowledge that, if a person presents to a hospital emergency department, the hospital must provide care and may not transfer the patient elsewhere without the patient’s permission. This became a major cause of “cost-shifting,” as hospitals and doctors tried to recoup their losses from uncompensated care by raising their fees on insured patients.

Many doctors resigned from emergency room coverage, tired of rendering uncompensated care to people who might turn around and sue them for malpractice. EMTALA forced many hospitals to close their emergency rooms.

But EMTALA did more. It killed the voluntary nature of the Medicaid system.

Four years before the passage of EMTALA, Arizona still had its own state-run indigent care program.

Arizona law required each county to establish a comprehensive indigent care system. Maricopa County, home to metropolitan Phoenix, maintained a system of health clinics staffed with full-time physicians. At its heart was the Maricopa County Medical Center, a full-service teaching medical center, including a trauma center and the largest burn unit in the southwest. Patients who were seen in private hospitals and needed hospitalization were transferred over to “County.”

The system provided preventative care, prenatal care, mental health, and long-term care. Eligibility was tied to income and assets. Patients presenting for the first time as an emergency would be treated and retroactively enrolled in the system.

I was a surgical resident at “County” (1976-81). It was commonplace for a doctor at some other hospital to phone me and say, “I have an indigent patient in my emergency room who has an ‘acute gallbladder’ and who doesn’t have insurance. Can I send her over to you?” Like all of my fellow residents, I would enthusiastically accept the patient (we were a teaching hospital and wanted the experience). They would get prompt treatment, supervised by full-time faculty, cared for in a ward setting.

This system worked well and was popular. But in 1982, after pressure from various factions, Arizona became the last state to join Medicaid.

Today, if Arizona decided to leave Medicaid and resume its pre-Medicaid system, it couldn’t do so. EMTALA would prevent it from functioning. EMTALA specifically bans any hospital from transferring patients for financial reasons. Arizona’s pre-Medicaid system depended upon the transfer of indigent patients from private centers into its indigent health system, thus relieving private hospitals and providers from the burden of constantly providing uncompensated care.

Last year, when 26 states and the National Federation of Independent Business challenged, in federal court, the Patient Protection and Affordable Care Act (“Obamacare”), they argued there was no constitutional authority for the so-called “individual mandate.” But they also challenged the authority of the PPACA to require states to expand their Medicaid rolls, and thus their Medicaid budgets.

The plaintiffs claimed that compelling the states to increase the amount they spend on Medicaid was a federal “commandeering” of the states’ treasuries.

Medicaid is a voluntary program, said the Feds. If the states opt in they receive matching funds of 50% or more from the federal government to fuel the system. But nothing prevents the states from opting out of Medicaid, so state sovereignty is not being usurped.

The states responded that the loss of federal matching funds resulting from an opt-out would be so severe as to amount to coercing the states to stay in the program.

The District Court, and later the Appeals Court, didn’t buy this part of the states’ case. While they agreed that the “individual mandate” is unconstitutional, they didn’t see the state Medicaid mandates as usurping state sovereignty.

The U.S. Supreme Court recently agreed to hear the case in the spring of 2012. And it will revisit the Medicaid issue. Hopefully, at that time, the EMTALA factor will finally get the attention it deserves.

If a state opts out of Medicaid, it forfeits federal matching funds amounting to anywhere from 40% to 60% of the state’s Medicaid budget. It is fiscally impossible for the state to create anything remotely resembling Medicaid using solely state funds without imposing massive tax increases on its residents, as well as draconian cuts in other services.

But if a state chose to leave Medicaid and adopt a less extravagant, more cost-effective, county-based indigent care system, like Arizona enjoyed until 1982, it couldn’t do that either. How, for instance, can an indigent patient be transferred to the County Medical Center or any of the satellite County treatment centers for financial reasons? It would be a violation of EMTALA.

By banning the transfer of indigent patients to indigent care facilities, this 1986 federal law unintentionally denies states the freedom to exercise their traditional sovereign powers to design their own cost-effective forms of indigent care.

EMTALA leaves states no real choice. Any choice to opt out of Medicaid effectively forces them to abandon indigent health care delivery.

EMTALA is the heretofore-unnoticed 800-pound gorilla in the room that just might secure the argument that “Obamacare” violates state sovereignty.

Jeffrey A. Singer, MD practices general surgery in metropolitan Phoenix, writes and lectures on regional and national public policy, and writes for Arizona Medicine (the journal of the Arizona Medical Association).

SOURCE:
To view this article by Jeffrey A. Singer for The Hawaii Reporter in its original context, please visit HawaiiReporter.com

Analysis: Deficit may be biggest threat to healthcare reforms

A mounting U.S. deficit could pose a much greater threat to the survival of President Barack Obama’s healthcare reforms than either the Supreme Court or 2012 elections.

Analysis: Deficit may be biggest threat to healthcare reforms

Sun, Dec 18 2011
By David Morgan

WASHINGTON (Reuters) – A mounting U.S. deficit could pose a much greater threat to the survival of President Barack Obama’s healthcare reforms than either the Supreme Court or 2012 elections.

Many health experts say innovations in delivering medical care and the creation of state health insurance exchanges for extending coverage to the uninsured are likely to continue in some form even if Obama’s 2010 Patient Protection and Affordable Care Act is struck down or repealed.

But former top healthcare policymakers from Democratic and Republican administrations warn that some of the most promising measures for controlling costs, while improving quality and access to care, could run aground as early as 2013 if a new Congress and administration respond to the fiscal pressures with arbitrary spending cuts.

“If the plan is what’s on the table now, which is cut, cut, cut – shift the burden to poor people and taxpayers, take away benefits, take away Medicaid coverage – things will get worse,” said Dr. Don Berwick, who left his temporary post as Obama’s head of Medicare and Medicaid this month after Republicans blocked his Senate confirmation.

The Affordable Care Act is designed mainly to extend healthcare coverage to more than 30 million uninsured Americans by expanding Medicaid for the poor and establishing state exchanges where people with low incomes who do not qualify for Medicaid can buy subsidized private insurance.

It also calls for innovations that could guide America’s $2.6 trillion healthcare system, the world’s most expensive, toward incentives to contain costs.

The law faces fierce Republican opposition and is heading into a period of unprecedented turmoil.

Next spring the Supreme Court is expected to rule on the constitutionality of the individual mandate, the law’s lynchpin provision that requires all Americans to buy insurance. Months later, voters will deliver another verdict by deciding whether Republicans or Democrats control the White House and Congress.

Current and former healthcare officials have great hopes for changes that reward doctors and other providers for how well patients progress rather than compensating them according to the number of tests and procedures they perform.

For a panel discussion on the subject moderated by Reuters at Harvard School of Public Health, go to ForumHSPH.com

“These reforms really have the potential for a longer term impact on healthcare costs,” said Dr. Mark McClellan, who oversaw Medicare, Medicaid and the Food and Drug Administration under President George W. Bush.

GAINING MOMENTUM

Some innovations, like “bundled payments,” set cost targets for specific conditions that teams of doctors must meet. Others reward healthcare providers for keeping patients healthy or for delivering successful outcomes while saving money.

The innovations were already taking hold in the private market before Obama signed the healthcare bill into law in March 2010.

Their momentum has gained pace sharply across the United States as a result of the law’s efforts to apply them to Medicare and Medicaid, which combined spend about $900 billion annually to provide care to 100 million beneficiaries.

The year-old Center for Medicare and Medicaid Innovation has about two dozen innovation models that it intends to develop with private partners over the next few years.

Experts say innovations in delivering care are durable because they offer providers a way to cope with growing cost pressure from employers who sponsor health insurance and from government agencies forced to cut spending.

“This is a response to market realities, not just reformist interests,” said Don Moran, a Washington-based healthcare consultant who served in President Ronald Reagan’s Office of Management and Budget.

The climate for innovation could change dramatically after Election Day in November if Washington responds to deficits with across-the-board cuts to Medicare and Medicaid that reinforce the traditional fee-for-service approach to healthcare.

Innovations are vulnerable because they have yet to established a cost-cutting track record to which the bipartisan Congressional Budget Office can assign tangible dollar values for deficit reduction.

Gail Wilensky, who headed Medicare and Medicaid under President George H.W. Bush, worries that Congress will opt for the standard practice of cutting payments to doctors and other healthcare providers, who may react by dropping Medicare patients.

“That’s the only thing Congress will get credit for and so that’s what they’ll do. We know this is not our future if we want to do well by our seniors,” she said at the Harvard School of Public Health forum on Friday.

Some analysts say deficit pressures could encourage the Obama administration to delay segments of the healthcare law, including state health insurance exchanges and the requirement for each individual citizen to have health insurance.

Such a move could save tens of billions of dollars in government spending, while giving state and federal officials more time to set up exchanges that have taken shape slowly amid uncertainties posed by the Supreme Court case and the election.

An administration official said there are no plans to delay the law’s implementation. “That idea has never been discussed and is not under consideration,” the official said.

The election also is unlikely to decide the law’s fate unless Obama loses re-election, according to analysts who say Congress is unlikely to overcome partisan gridlock even if Republicans eke out a slim majority in the Senate.

McClellan said sections of the law including state insurance exchanges could go forward even if the individual mandate were overturned in court, repealed after the election or weakened by political and budgetary pressures.

Instead of a legal requirement for purchasing insurance, McClellan said the government could design effective voluntary rules that encourage people to participate in exchanges

He said an obvious model would be Medicare Part D, the prescription drug benefit that offers rewards for people who enroll early and penalties for those who show up late.

McClellan acknowledged that state exchanges would not be as robust without the individual mandate but said that fact could result in deficit savings.

The administration official said there are currently no plans or conversations taking place about using Part D enrollment restrictions in place of the individual mandate.

SOURCE:
To view the article by David Morgan for Reuters in its original context, please visit Reuters.com

States, Not Feds, to Determine Essential Benefits

States, Not Feds, to Determine Essential Benefits

Cheryl Clark, for HealthLeaders Media , December 19, 2011

In a surprise decision, Obama Administration officials on Friday announced they do not intend to prescribe specific features for essential health benefits beyond 10 general categories, but instead will let each state decide what’s appropriate for exchanges that start in 2014.

“The proposal we’re putting forward today reflects our commitment to giving states the flexibility they need to set up their state-based exchanges,” Health and Human Services Secretary Kathleen Sebelius said in a news briefing. “We’ve acknowledged many times that coverage that works in Florida may not work in Nebraska.”

Steven Larsen, Centers for Medicare & Medicaid Services deputy administrator, added that “the point is that states, through say, creation of their small group benefit… have made decisions about what benefits are appropriate in that particular state. So you do end up with differences, and that’s based on judgments that typically the state legislatures have made…”

The Patient Protection and Affordable Care Act directed Sebelius’ office to “define essential health benefits” saying that it should include “at least the following general categories and the items and services within the categories:”

• Ambulatory patient services.
• Emergency services.
• Hospitalization.
• Maternity and newborn care.
• Mental health and substance use disorder services, including behavioral health treatment.
• Prescription drugs.
• Rehabilitative and habilitative services and devices.
• Laboratory services.
• Preventive and wellness services and chronic disease management.
• Pediatric services, including oral and vision care.

Many Americans now do not have coverage for many services within these categories, such as maternity or drug coverage, said Sherry Glied, HHS , assistant secretary for planning and evaluation.

Patient advocates criticized the announcement, saying the result could be a patchwork of coverage that varies in comprehensiveness from state to state for 30 million newly covered residents.

Political observers and news reports, however, said the administration may be trying to void criticism and fear that it would foist a Beltway-designed version of quality care on states that have a very different idea what that should be. Such concerns may be the foundation for state challenges to the Affordable Care Act, now under review by the U.S. Supreme Court.

But Sebelius touted the expanded coverage that will be available with inclusions from these 10 general categories. She said that the law will prevent plans from having “gaping holes in coverage, missing preventive benefits to annual limits that could mean your insurer stopped paying for care just when you needed it the most.”

Under the proposal, which was issued in the form of a “bulletin” to describe how HHS and CMS intend to issue the proposed and final rule next year, states would select existing health plan coverage within these 10 categories as “benchmarks.” The idea would be similar to the way states set up their Children’s Health Insurance Programs.

They could choose one of the following:

• One of the three largest small group plans in the state
• One of the three largest state employee health plans
• One of the three largest federal employee health plan options
• The largest HMO plan offered in the state’s commercial market

If the chosen plan does not include services or items in all 10 categories, the state could fill those gaps from another plan. If the state chooses not to go forward with an exchange, the federal government will run the exchange but the decisions about what those options include will still be made by that state’s Legislature, administration officials said.

The Obama administration also postponed critical decisions on cost-sharing, such as the amounts of deductibles, co-payments or co-insurance, and whether each state will have the authority to choose its own minimums or maximums. Those will be addressed in a future bulletin, HHS officials said.

The White House was encouraging stakeholders to make comments on its bulletin here by Jan. 31.

In a statement, Neil Trautwein, chairman of the Essential Health Benefits Coalition and vice president at the National Retail Federation, said in a statement that “the devil will be in the details.”

“The bulletin leaves unanswered the question of affordability in the states, he said.   “Employers, health plans, and state governments should have as much flexibility as possible in order to design and choose plans that are affordable and meet the needs of American families.”

SOURCE:
To view this article by Cheryl Clark for HealthLeaders Media in its original context, please visit HealthLeadersMedia.com

CMS Rule Would Make Drug, Device Makers’ Payments to Docs Transparent

The Centers for Medicare & Medicaid Services late Wednesday released its 121-page proposed rule designed to reveal potential conflicts of interest between drug, biological and medical device companies and the physicians and teaching hospitals that prescribe and use them.

CMS Rule Would Make Drug, Device Makers’ Payments to Docs Transparent

Cheryl Clark, for HealthLeaders Media , December 15, 2011

The Centers for Medicare & Medicaid Services late Wednesday released its 121-page proposed rule designed to reveal potential conflicts of interest between drug, biological and medical device companies and the physicians and teaching hospitals that prescribe and use them.

The proposed rule, also called the Physician Payment Sunshine Act, which was required by Section 6002 in the Affordable Care Act, would mean about 150 manufacturers of drugs, or biologics, 1,000 makers of medical devices or medical supplies, and 420 group purchasing organizations will be required to report payments, to physicians and teaching hospitals. Such payments are defined to include gifts, fees, meals and travel expenses.

“When people are faced with the difficult task of choosing the right doctor, they need all the information they can gather,” CMS deputy administrator for Program Integrity Peter Budetti, MD, said in a statement.  “If your doctor is taking money from manufacturers of prescription drugs, suppliers of wheelchairs or other devices, you deserve to know about it.

“Disclosure of these relationships will discourage the inappropriate influence on clinical decision-making that sometimes occurs while still allowing legitimate partnerships,” Budetti said.

The ACA specified that details of these transactions should be made publicly available and searchable on a federal website.

CMS missed its deadline by about 10 weeks. The proposed rule delays the start time from Jan. 1, as set forth in the Affordable Care Act, to after the final rule is published next year.

It defines eligible transfers of value as amounts of $10 or more. Covered teaching hospitals are defined as those that receive graduate medical education payments.

The proposed rule would also require the disclosure of physician’s, or immediate family members of a physician, ownership or investment interests in applicable manufacturers and group purchasing organizations.

Drugs and biologicals are defined as those which require prescriptions and which are covered by Medicare, Medicaid or the Children’s Health Insurance Program, but not over-the-counter products.

“Collaboration among physicians, teaching hospitals, and industry manufacturers may contribute to the design and delivery of life-saving drugs and devices,” the proposed rule begins.

“However, while some collaboration is beneficial to the continued innovation and improvement of our health care system, payments from manufacturers to physicians and teaching hospitals can also introduce conflicts of interests that may influence research education, and clinical decision-making in ways that compromise clinical integrity and patient care, and may lead to increased health care costs.”

The Affordable Care Act provides that violators of the reporting requirements will be subject to civil monetary penalties (CMPs), capped at $150,000 annually for failing to report, and $1,000,000 for knowingly failing to report.

The proposed rule goes into detail about how a manufacturing company of a medical product determines whether it will have to report a financial interaction with a particular doctor.

“For example, if once during the calendar year, a sales representative from an applicable manufacturer brings $25 worth of bagels and coffee to a solo physician’s office for a morning meeting, regardless of the number of individuals who partake (such as non-covered recipient staff members), the per covered recipient cost is $25. Since this falls above the $10 minimum threshold for reporting a payment or other transfer of value … this meal must be reported.

“However, if the practice group includes five physicians, then the per-covered recipient cost is $5 (regardless of whether all five physicians actually consumed any of the food provided), so the payment would not need to be reported.”

Group purchasing organizations covered by the proposed rule are broadly defined as any entity that purchases and arranges for, or negotiates the purchase of covered drugs, devices, biologicals or medical supplies in the U.S. whether they purchase them directly or for resale or distribution.

The reporting requirements also are proposed to exclude:

• Transfers of value less than $10, unless the aggregate amount transferred to, requested by, or designated on behalf of the covered recipient exceeds $100 in a calendar year.

• Product samples that are not intended to be sold and are intended for patient use.

• Educational materials that directly benefit patients or are intended for patient use.

• The loan of a covered device for a short-term trial period, not to exceed 90 days, to permit evaluation of the covered device by the covered recipient.

• Items or services provided under a contractual warranty, including the replacement of a covered device, where the terms of the warranty are set forth in the purchase or lease agreement for the covered device.

• A transfer of anything of value to a covered recipient when the covered recipient is a patient and not acting in the professional capacity of a covered recipient.

• Discounts, including rebates.

CMS says it will accept comments on the proposed rule until Feb. 17.

SOURCE:
To view this article by Cheryl Clark for HealthLeaders Media in its original context, please visit HealthLeadersMedia.com

Feds Face Challenges In Launching U.S. Health Exchange

With many states unwilling or unable to get insurance exchanges operational by the health law deadline of Jan. 1, 2014, pressure is growing on the federal government to do the job for them.

Feds Face Challenges In Launching U.S. Health Exchange

By Julie Appleby
KHN Staff Writer

Dec 19, 2011

This story was produced in collaboration with the Washington Post

With many states unwilling or unable to get insurance exchanges operational by the health law deadline of Jan. 1, 2014, pressure is growing on the federal government to do the job for them.

But health care experts are starting to ask whether the fallback federal exchange called for in the 2010 health law will be operational by the deadline in states that will not have their own exchanges ready.

“It will be an enormous uphill battle to get this thing launched on time,” says Robert Laszewski, a consultant and former insurance executive who is watching the effort closely.  “They have a Herculean task, even if everyone was cooperating.”

The federal exchange – like the state models – would be a one-stop website where individuals and small businesses could compare insurance policy offerings on price, coverage and quality.

The exchanges also will help applicants determine whether they are eligible for Medicaid or for federal subsidies or tax credits to help offset premium costs.  Thus, the exchanges will need to incorporate a host of state and federal data on income, employment and residency. Enrollment through the state and federal exchanges is scheduled to begin in the fall of 2013 .

So how far along are the feds? 

It’s hard to assess, because the Obama administration has “been very reluctant to provide any updates on progress,” says Daniel Schuyler, a director at consulting firm Leavitt Partners in Salt Lake City, which is advising states on the establishment of exchanges.

HHS did not respond to requests for comment.

All but a few states accepted initial federal planning money for exchanges, and 28 of them plus the District of Columbia have received additional grants.

About a dozen have authorized establishment of exchanges, but even those may not be able to meet the deadlines for enrollment. Alaska, Florida and Louisiana have said flat out that they won’t establish exchanges of their own. 

That guarantees that a federal exchange will be needed. But those crafting it face enormous technical, political and financial challenges.

Technically, federal data from a host of agencies needs to be collected in one system, which then must be linked with differing computer systems in 50 states plus the District of Columbia.

Matt Salo, executive director of the National Association of State Medicaid Directors, notes that computer systems in some states are quite old and may need substantial upgrading. While the federal government is putting up 90 percent of the money for the upgrades, Salo says there is some question about whether there is enough “physical capacity in the IT systems world” to get it all done in time.

 “Our members have been having conversations with the vendors since the law was passed, and they are coming to the gradual conclusions that no, they don’t have the capacity to do this everywhere in the time frame,” says Salo.

Political threats also abound. No one knows whether the Supreme Court will invalidate part or all of the law next year. It is also not clear how much funding will be available to launch and operate the federal exchange, and the 2012 presidential and congressional elections could delay or derail the entire process if Republicans are victorious.

Still, at this point Schuyler says he is confident that the Obama administration “will be able to provide a federally facilitated exchange” in time to meet the law’s requirements.

Although federal officials are saying very little about their progress, they have signed contracts worth more than $150 million with several private contractors who are working on creating the federal exchange. Late last month, Oregon’s top insurance regulator, Teresa Miller, was hired by the Department of Health and Human Services to oversee development of health insurance exchanges.

The administration is taking a three-pronged approach, says Schuyler, who formerly was director of technology at the Utah Health Exchange.

First, a Federal Data Services Hub is being built to pull together needed information across agencies, such as the IRS and Social Security. States will be able to “plug in” to that data hub if they run their own exchanges.  The Department of Health and Human Services has signed a five-year contract worth roughly $69 million with Columbia, Md.-based Quality Software Services to set up the hub.

The second prong is to beef up the healthcare.gov site to include more information on health insurers and the health law.  While the site already has some information on private insurers by zip code, more is coming.

And finally, the federal government has signed a $94 million contract with Fairfax, Va.-based  CGI Federal Inc. to build the federal exchange. The firm is also helping with the healthcare.gov site. A company spokeswoman referred questions to the government.

Despite the contracts, some state officials, Medicaid directors and health-care experts are nervous. 

Many significant questions remain unsettled about the operation of exchanges, they say, whether the marketplaces are managed by the states or by the federal government. 

They still don’t know, for example, the final rules on “essential benefits” the federal government will require insurers to offer in all policies sold on the exchanges. Details on what the federal exchange will look like are still lacking.  Also not clear are the standards – and the work required – for the states to upgrade their computer systems so they will link with the federal data hub. States will be assessed in January 2013 as to whether they will be ready by the fall of that year.

“There’s an enormous amount to be decided and put together and built before these key milestones can happen,” says Laura Minzer, executive director of the Illinois Chamber of Commerce’s Healthcare Council. “The fact that so little has happened [at the state and federal level] is good cause for alarm.”

What’s happening in Illinois shows that even when a state has authorized an exchange, political disagreements can stymie efforts to move forward. 

“A study group met over the summer, but didn’t come up with any clear recommendations,” says Minzer.  A big part is politics, she adds.  Some lawmakers – both Democrats and Republicans — fear that any movement to implement the law threatens their re-election chances. Others want to wait to see how the Supreme Court rules.

“Even though we are a blue state – the Democrats have a majority in the House and Senate – there’s a nervousness going into the [2012] elections,” she says. “There’s speculation that nothing will happen on the exchange until after the elections.”

It is possible to set up exchanges fairly fast, says John McDonough, one of the principal authors of the Massachusetts law that created a similar site, called the Connector.  In that state, the exchange was up and running within about six months of the law’s enactment, he says.

“Massachusetts had a head start because it had already done a modernization of its data system, so it’s not completely analogous, “ says McDonough, now director of the Center for Public Health Leadership at Harvard School of Public Health, “but it doesn’t take as much time to get an exchange up as a lot imagine.”
McDonough says in his conversations with Obama administration officials, he has found them “hell-bent on meeting the Jan. 1, 2014, deadline by hook or crook.”

SOURCE:
To view this article by Julie Appleby for Kaiser Health News in its original context, please visit KaiserHealthNews.com

Medicaid suffers from toothache

The number of patients who sought emergency-room care for dental problems was about 115,700 last year, up by about 10,000 patients since 2008, said the report from Florida Public Health Institute.

Medicaid suffers from toothache
By Brittany Davis
12/15/11 © Health News Florida

Serious tooth problems that could have been prevented are increasingly showing up in Florida hospital emergency rooms, according to a report released today.

The number of patients who sought emergency-room care for dental problems was about 115,700 last year, up by about 10,000 patients since 2008, said the report from Florida Public Health Institute.

Total charges exceeded $88 million, up about $22 million over the same period, the report said. “When you think about it, we shouldn’t have any ER admissions for dental care unless there’s an accident,” said Dr. Claude Earl Fox, president of the institute. “To me, what it says is that these are people who have nowhere else to go.”

Though spending went up across all types of insurance, the most dramatic increases were from patients enrolled in Medicaid, the state-run health program for the poor and disabled.

The state will not pay for preventive or restorative dental care for adults. While it pays for children, parents have a hard time finding dentists who will accept what Medicaid pays, about one-fourth of the private-pay rate.

While private dentists can choose whether to accept Medicaid patients, hospital emergency rooms cannot turn them away.

The numbers are considered a conservative estimate, the report said. The increases vary between counties, but the trend was statewide.

The analysis was commissioned by the institute and was carried out by the Health Council of Southeast Florida.

The health council reviewed the emergency department database for 2008 through 2010 kept by the Agency for Health Care Administration.

The 2011 Legislature changed licensure requirements so that dental hygienists can offer preventive services, such as teeth-cleaning, without direct supervision by a dentist in certain settings. 

Cox, chair of the Oral Health Florida Leadership Council, said the hygienists’ services need to be expanded through health departments and other community settings where Medicaid patients can find them.

The trend is disturbing, but not surprising for the Florida Dental Association, which also helped work on the project.

The organization lobbies the Florida Legislature for higher payment rates and student loan forgiveness programs that encourage dentists to care for the under-served population, the release states.

“Much more still needs to be done to ensure that Florida citizens have access to routine dental care,” said Dr. Cesar R. Sabates, FDA president.

AHCA spokeswoman Shelisha Coleman said she could not comment until the agency has time to review the data.

SOURCE:
To view this article by Brittany Davis for Health News Florida in its original context, please visit HealthNewsFlorida.com

State efforts put more children on health insurance rolls, despite economic downturn

Publicly funded programs have enabled 1.2 million more children to gain health insurance since 2008 — at least in part due to extra work by many states to ensure that more of the children who are eligible for the programs are actually signed up, Obama administration officials plan to announce Wednesday.

State efforts put more children on health insurance rolls, despite economic downturn
By N.C. Aizenman, Published: December 27

The Washington Post

Publicly funded programs have enabled 1.2 million more children to gain health insurance since 2008 — at least in part due to extra work by many states to ensure that more of the children who are eligible for the programs are actually signed up, Obama administration officials plan to announce Wednesday.

Twenty-three states are to be awarded federal performance bonuses totaling nearly $300 million for these efforts.

Maryland and Virginia have qualified for the two largest amounts — $28.3 million and $26.7 million, respectively — under an incentive plan aimed at improving child enrollment rates in Medicaid and the Children’s Health Insurance Program, or CHIP.

Jointly funded by states and the federal government, CHIP supplements Medicaid, the health insurance program for the poor, by offering insurance to children in low-income families.

Together, the two programs are responsible for reducing the number of uninsured children from 6.6 million in 2008, just before CHIP was reauthorized, to 5.4 million in 2011, according to an analysis of survey data from the Centers for Disease Control and Prevention to be released Wednesday.

In addition to the 1.2 million newly insured children, 3 million children who formerly had private insurance were picked up by CHIP or Medicaid over the same period, said Sherry Glied, assistant secretary for planning and evaluation at the Department of Health and Human Services.

As a result, children have been largely shielded from the decade-long erosion of health insurance among Americans that resulted as employers dropped coverage, workers with insurance lost their jobs to the recession, and individuals whose only option was to buy insurance on their own faced increasingly prohibitive costs.

Since 1997, when CHIP was first established, the share of adults ages 26 to 64 with a health plan dipped from 83 percent to 80 percent. By contrast, in the same period, the share of children with insurance grew from 86 percent to 93 percent.

“It’s very encouraging, because it shows that even in an economic downturn, CHIP really made a difference,” Glied said.

At least some of the increase was attributable to state initiatives to solve a persistent challenge for Medicaid and CHIP: many children who qualify are never signed up.

Some parents are not aware that their children are eligible. Others have difficulty gathering cumbersome documentation required for state application or renewal forms.

To combat the problem, Congress offered states performance bonuses for each year through 2013 as part of the 2009 law reauthorizing CHIP. To qualify in 2011, states had to take specific steps to streamline procedures and had to increase enrollment by more than 3.5 percent from 2010.

The bonuses offset at least 15 percent of the added cost to states of covering the additional children. States that increase enrollment more than 10 percent above the baseline get a “Tier 2” bonus covering 62.5 percent of the extra cost.

The 23 states that will be awarded bonuses for this year achieved increases ranging from 4 percent to 27 percent, with 16 states, including Maryland and Virginia, topping 10 percent.

All of the 16 states that were awarded bonuses in 2010 also qualified this year. Cindy Mann, deputy administrator of the Centers for Medicaid and Medicare Services, said this was evidence of both a continued commitment by state leaders to cover more children and the lasting impact of steps taken to improve the process in prior years.

Measures taken by states include adopting one form for both Medicaid and CHIP applications and using an “express lane” system in which a state official considering a Medicaid or CHIP application is permitted to accept prior income determinations made by officials who approved enrollment in programs such as food stamps.

“Once you simplify a program, what we’ve seen is the benefits can be provided continuously, without interruption,” Mann said. “So it makes sense that enrollment continues to grow because states have a continued ability to bring in more children who are eligible but not enrolled.”

Other strategies that count toward the performance bonus include automatically renewing children for whom no new information is needed and allowing children on Medicaid or CHIP to remain enrolled for a full year even if their parents’ income fluctuates. This ensures that a child’s access to health care is not disrupted if a parent cycles through jobs that temporarily increase the household income above the limit.

Studies suggest that such measures can have an impact within a short time.

According to an August report by the Urban Institute, looking at 2008 and 2009, the most recent year for which data were available, the participation rate in Medicaid and CHIP — meaning the share of eligible children who were enrolled — increased from 82.1 percent to 84.8 percent.

SOURCE:
To view this article by N.C. Aizenman for The Washington Post in its original context, please visit WashingtonPost.com

Physicians Pessimistic on Benefits of Health Care Reform

A new Deloitte study reveals physicians are skeptical about core promises associated with the Patient Protection and Affordable Care Act. Only 27 percent of physicians surveyed believe the PPACA is likely to reduce costs by increasing efficiency, and only 33 percent feel it is likely to decrease disparities. Moreover, half say access to health care will decrease because of hospital closures that result from the law.

Physicians Pessimistic on Benefits of Health Care Reform: Deloitte
Overwhelmed emergency rooms, hospital closures cited by doctors

WASHINGTON, Dec. 13, 2011 /PRNewswire/ — A new Deloitte study reveals physicians are skeptical about core promises associated with the Patient Protection and Affordable Care Act.  Only 27 percent of physicians surveyed believe the PPACA is likely to reduce costs by increasing efficiency, and only 33 percent feel it is likely to decrease disparities.  Moreover, half say access to health care will decrease because of hospital closures that result from the law. 

The report, “Physician Perspectives about Health Care Reform and the Future of the Medical Profession,” also shows that the majority of doctors (73 percent) are not excited about the future of medicine and believe (69 percent) the “best and brightest” who might consider a career in medicine will think otherwise.

“The data confirms that physicians are resistant to reform and are frustrated with the direction of the profession,” says Paul Keckley, Ph.D., executive director of the Deloitte Center for Health Solutions and lead author of the report.  “Understanding the view of the physician is fundamental to any attempt to change the health care model – this is the person prescribing the medicine, ordering the test and performing the surgery.”

The negativity is driven in part by concern over the pressure primary doctors will face from millions of newly-insured consumers seeking care and the reverberations this sudden impact could create on the larger system.

Another stumbling block for physicians is the view that reform will mean a loss of autonomy and more costs and administrative burdens in adopting processes and technologies.  For decades this sense of autonomy has been sacrosanct to the profession, and it’s difficult to uproot that overnight, continues Keckley.

“Effective reform has to consider the physician’s view as a starting point,” says Keckley.  “We not only have to design the right model, but we have to create the right incentives and processes for implementing that model.  The concept of change management is just as important for doctors in the health care system as it is for employees in a corporation.”

Additional key findings from the study include:

Nearly three-quarters of respondents think that emergency rooms could get overwhelmed if primary care physician appointments are full as a result of the Patient Protection and Affordable Care Act. 

More than 80 percent believe it is likely that wait times for primary care appointments will increase because of a lack of providers.  More than half indicate that other medical professionals (physician assistants, nurse practitioners) will deliver primary care both independently and as an adjunct to physician services.

Surgical specialists (57 percent) are much more likely to support the law’s repeal compared to primary-care providers (38 percent) and non-surgical specialists (34 percent).  They are also more likely to say the legislation is a step in the wrong direction and believe their net income will decrease as a result of reform.

There is a disparity among generations, as 59 percent of physicians 50 to 59 years old feel PPACA is a step in the wrong direction while only 36 percent of those ages 25 to 39 share this sentiment. Younger physicians (ages 25 to 39) are also more likely than older doctors (ages 40 to 59) to think the transition to evidence-based medicine will improve care.  

For more information about Physician Perspectives about Health Care Reform and the Future of the Medical Profession, visit www.deloitte.com/us/physiciansurvey .

About the Survey

The survey was commissioned by Deloitte and polled 501 physicians obtained as a random sample from the American Medical Association’s master file of physicians. The responses were weighted by years in practice according to gender, region and practice specialty to reflect the national distribution of physicians in the AMA master file.

As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

SOURCE:
To view this release its original context, please visit prnewswire.com