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Chasing Medicaid dollars, hospitals rent or buy up nursing homes

By PHIL GALEWITZ

For Kaiser Health News

Westminster Village North, a nursing-home and retirement community in Indianapolis, recently added 25 beds and two kitchens to speed food delivery to residents. It also redesigned patient rooms to ease wheelchair use and added Wi-Fi and flat-screen televisions. This fall, it’s opening a new assisted-living unit.

“We have seen amazing changes and created a more home-like environment for our residents,” said Shelley Rauch, executive director of the home.

The nursing home can afford these multimillion-dollar improvements partly because it has, for the past five years, been collecting significantly higher reimbursement rates from Medicaid, the state-federal health insurance program for the poor. About half of its residents are covered by the program.

In 2012, the nursing facility was leased to Hancock Regional Hospital, a county-owned hospital 15 miles away. The lease lets it take advantage of a wrinkle in Medicaid’s complex funding formula that gives Indiana nursing homes owned or leased by city or county governments a funding boost. For Indiana, that translates to 30 percent more federal dollars per Medicaid resident. But that money is sent to the hospitals, which negotiate with the nursing homes on how to divide the funding.

Nearly 90 percent of the state’s 554 nursing homes have been leased or sold to county hospitals, state records show, bringing in hundreds of millions in extra federal payments to the state.

Even though Indiana’s nursing home population has remained steady at about 39,000 people over the past five years, Medicaid spending for the homes has increased by $900 million, in large part because of the extra federal dollars, according to state data. Total spending on Indiana nursing homes was $2.2 billion in 2016.

The funding enhancements were pioneered in Indiana, but hospitals in several other states, including Pennsylvania and Michigan, have also used the process. Advocates say it has been a key factor in helping to keep Indiana’s city and county hospitals economically vital at a time when many rural hospitals nationwide are facing serious financial difficulties.

Westminster Village North, a nursing home and retirement community in Indianapolis, recently redesigned patient rooms in the nursing home to ease wheelchair use. (Courtesy of Westminster Village North)

But critics argue that the money flow has not significantly improved nursing home quality and has slowed adoption of community and home health services.

More than two-thirds of Indiana’s Medicaid long-term-care dollars go to nursing homes, compared with the U.S. average of 47 percent.

Joe Moser, who until May was Indiana’s Medicaid director, said while in office that the hospital-nursing home marriages were partly responsible for keeping more people in nursing homes. “It is a factor that has contributed to our imbalance,” he said.

Daniel Hatcher, a law professor at the University of Baltimore and author of  the book The Poverty Industry, said this funding arrangement is a bad deal for the poor and undercuts the purpose of the Medicaid program. “The state is using an illusory practice and taking away money from low-income elderly individuals who are living in poor-performing nursing homes,” he said. He noted Indiana is ranked near the bottom of states for nursing home quality by several government and private reports.

But proponents of the practice say that even when hospitals get most of the money, it is well spent.

Marion County Hospital and Health Corp., the large safety-net hospital system in Indianapolis, owns or leases 78 nursing homes across the state, more than any other county hospital.

Sheila Guenin, vice president for long-term care there, said the hospital keeps 75 percent of the additional Medicaid dollars and the nursing homes get the rest. Still, the additional money has improved care. The transfer of the license to the hospital has kept several nursing homes from closing and increased staffing rates at many others, she said.

About 40 percent of the county hospital’s nursing homes have five-star ratings from the federal government, up substantially from 10 years ago, she said. Among the improvements at the nursing homes were the addition of electronic health records as well as high-capacity emergency generators to provide power in case of a natural disaster.

Still, some patient advocates said the extra funding is flowing to hospitals and nursing homes with little public accounting. Ron Flickinger, a regional long-term-care ombudsman in Indiana, said, “A lot of extra money is being spent here, but I’m not sure patients have seen it benefit them.”

A couple reads the paper in one of the common rooms at the Westminster Village North nursing home. (Courtesy of Westminster Village North)

Practice Dates To 2003

Medicaid, which typically covers about two-thirds of nursing-home residents, is jointly financed by the federal and state governments. States pay no more than half of the costs, although the federal match varies based on a state’s wealth. In Indiana the federal government covers about two-thirds of Medicaid costs.

The enhanced nursing-home payments began in 2003 when a financially strapped Indianapolis hospital owned by the county took advantage of the Medicaid funding provision to bolster its bottom line. In this case, the hospital purchased a nursing home, then provided the money for the state to increase what it spent on the home to the federally allowed maximum.

That increase, in turn, drew down more federal matching funds. Since the federal remittance is larger than the hospital contribution, the hospital got back its initial investment and divided the extra money with the nursing home.

Other county-owned hospitals in Indiana slowly followed suit.

Hatcher said Indiana government leaders embraced the funding arrangement because it let them avoid the politically difficult step of raising taxes to increase state funding to improve care at nursing homes. “It’s a revenue generator for the state and counties,” he said.

All the Medicaid funding for nursing homes should be going to those homes to care for the poor, not shared with hospitals to use as they choose, he added.

The strategy, promoted by consultants advising hospitals and nursing homes in Indiana, is used heavily there because of the plethora of county-owned hospitals. But the federal government is tightening the rules about such payments.

Texas has secured Medicaid approval for a similar strategy starting this month, but federal officials have made the extra funding dependent on nursing homes meeting quality measures, such as reducing falls. Oklahoma is seeking to get federal approval as well.

And in a rule released last year, the federal Centers for Medicare & Medicaid Services announced that it would gradually force states to shift to payment systems that tie such reimbursements to quality of care. Michael Grubbs, an Indiana health consultant, said that rule does not stop the Indiana hospital funding program, but it’s unclear that it will last.

Nursing-home operators in Indiana say the financing arrangement has helped them keep up with rising costs and improve care for residents.

Zach Cattell, president of the Indiana Health Care Association, a nursing-home trade group, noted the number of nursing homes in the state earning Medicare’s top, five-star rating has increased 9 percentage points since 2011. He said the percentage of high-risk residents with pressure ulcers and those physically restrained also dropped significantly.

An Opportunity Or A Loophole?

In Indiana, the small, county-run rural hospitals generally are not facing the financial threat that has become common elsewhere, in part because of the extra Medicaid funding gained from buying nursing homes, hospital officials say.

“The money has meant a great deal to us,” said Gregg Malot, director of business development at Pulaski Memorial Hospital in northern Indiana. “I don’t see this as a loophole but see it as an opportunity for small rural community hospitals to improve our quality and access to care.”

His hospital is the only one in Pulaski County. The extra Medicaid revenue from acquiring 10 nursing homes statewide — about $2 million a year — has helped finance the hospital’s obstetrics care and the purchase of the hospital’s first MRI, so doctors don’t have to rely on a mobile unit that used to come twice a week, he said. The hospital also spent some of the funding to add a centralized telemetry unit to monitor patients.

Steve Long, CEO of Hancock Regional Hospital, in Greenfield, Ind., said his hospital recently built two fitness centers in the county with help from its extra Medicaid dollars. “This would not be possible without the additional funding.”

He rejects the notion that additional Medicaid money reduces the hospital’s incentive to add home- and community-based care in the community. He said new Medicare financing arrangements, such as accountable care organizations, give the hospital motivation to find the most efficient ways to care for patients after they leave the hospital.

But he acknowledged the hospital benefits from seeing more patients go to nursing homes licensed under its name.

“Welcome to health care — it’s a complex and confusing environment where we have all different competing incentives,” Long said.


The future of CHIP

By PHIL GALEWITZ

For Kaiser Health News

Congress finally seems ready to take action on the Children’s Health Insurance Program after funding lapsed Sept. 30.

Before the deadline, lawmakers were busy grappling with the failed repeal of the Affordable Care Act.

CHIP covers 9 million children nationwide. But until Congress renews CHIP, states are cut off from additional federal funding that helps lower- and middle-income families.

CHIP, which has enjoyed broad bipartisan support, helps lower- and middle-income families that otherwise earn too much to be eligible for Medicaid. Besides children, it covers 370,000 pregnant women a year. Like Medicaid, CHIP is traditionally paid for with state and federal funds, but the federal government covers most of the cost.).

Though current authorization for spending has expired, states can use some of their unspent federal CHIP money. Still, several states are expected to run out of money before the end of 2017, and most of the rest will run out by next summer. CHIP has been in this fix only one other time since it was established in 1997. In 2007, CHIP went weeks without funding authorization from Congress.

Here’s a quick look at what may lie ahead for the program.

1. Will children lose coverage because Congress missed the deadline?

They could eventually, but not immediately. A few states facing the most immediate threat — including California and Arizona — have enough funding to last only until the end of the year.

No states have yet announced plans to freeze enrollment or alert families about any potential end in coverage. But if Congress fails to renew funding quickly, some states may begin taking steps to unwind the program in the next few weeks.

2. What are states doing in reaction to Congress missing the deadline?

Most states are doing little except reaching into their unspent federal funds.

However, Minnesota was among those most imperiled because it had spent all its funds. State officials said Tuesday that the federal Centers for Medicare & Medicaid Services (CMS) was giving Minnesota $3.6 million from unspent national funds to cover CHIP this month.

Emily Piper, commissioner of the Minnesota Department of Human Services, reported in a newspaper commentary last month that her state’s funds would be exhausted last Sunday.

Even without the last-minute infusion of funding from CMS, most of the children covered by CHIP would have continued to receive care under the state’s Medicaid program, but Minnesota would get fewer federal dollars for each child, according to Piper’s commentary. However, she added, those most at risk are the 1,700 pregnant women covered by CHIP, because they wouldn’t be eligible for Medicaid.

Utah has notified CMS that it plans to discontinue its CHIP program by the end of the year unless it receives more federal money. About 19,000 children are in the state’s CHIP program, state officials say. So far, though, the state said it is not moving to suspend service or enrollment or alert enrollees about any possible changes.

Nevada officials said if funding is not extended it might have to freeze enrollment on Nov. 1 and end coverage by Nov. 30.

California, which has 1.3 million children covered by CHIP, has the highest enrollment of any state running out of funding this year. But, so far, it’s continuing business as usual.

“We estimate that we have available CHIP funding at least through December 2017,” said Tony Cava, spokesman for California Department of Health Services. “Our CHIP program is open for enrollment and continues to operate normally.”

Oregon said it has enough CHIP funding to last through October for its program that covers 98,000 children.

3. When is Congress likely to act?

Senate Finance Committee Chairman Orrin Hatch (R-Utah) and the committee’s ranking Democrat, Sen. Ron Wyden of Oregon, announced an agreement in mid-September to renew CHIP funding. Under the proposed dealfederal CHIP funding would drop by 23 percentage points starting in by 2020, returning to its pre-Affordable Care Act levels. The agreement would extend the life of the CHIP program through 2022.

Hatch and Wyden did not provide any details on how they would pay for the CHIP extension.

The House Energy and Commerce Committee posted its bill just before midnight Monday. It mirrors the Senate Finance plan by extending funding for CHIP for five years and gradually phasing down the 23-percentage-point funding increase provided under Affordable Care Act over the next two years.

4. If CHIP is so popular among Republicans and Democrats, why hasn’t Congress renewed the program yet?

The funding renewal was not a priority among Republican leaders, who have spent most of this year trying to replace the Affordable Care Act and dramatically overhaul the Medicaid program. Some in Congress also thought the Sept. 30 deadline was squishy since states could extend their existing funds beyond that.

5. Who benefits from CHIP?

While CHIP income eligibility levels vary by state, about 90 percent of children covered are in families earning 200 percent of poverty or less ($40,840 for a family of three). CHIP covers children up to age 19. States have the option to cover pregnant women, and 18 plus the District of Columbia do so.

The program is known by different names in different states such as Hoosier Healthwise in Indiana and PeachCare for Kids in Georgia.

For families that move out of Medicaid as their incomes rise, CHIP is an affordable option that ensures continued coverage for their children. Many states operate their CHIP programs as part of Medicaid.

 


GAO: Hospitals with low quality scores still got federal bonuses

 

The Government Accountability Office reports that while the Feds’ value-based purchasing program was created to financially reward hospitals that provide high-quality care at a lower cost, some hospitals with low quality scores still received bonuses because they had high efficiency scores.

Thus the GAO questions the methodology that the Centers for Medicare & Medicaid Services uses to determine bonuses and penalties.

The report’s writers found, perhaps not unexpectedly, that “safety-net hospitals,” which have a high-proportion of low-income patients, generally scored lower in quality compared to participating hospitals in general.  However, small and/or rural urban hospitals with 100 or fewer acute-care beds scored higher on efficiency compared to hospitals in general.

Small hospitals were more likely to get a bonus compared to participating hospitals in general but safety-net hospitals were more likely to be financially penalized.

To ensure that lower-quality hospitals don’t receive bonuses in the future, the GAO recommended that, among other things, CMS revise its methodology for calculating  total performance scores.

To read the GAO report, please hit this link.

To read a FierceHealthcare story on this, please hit this link.

 


Medicare Advantage doesn’t look all that good to some sicker seniors

By FRED SCHULTE

For Kaiser Health News

When Sol Shipotow enrolled in a new Medicare Advantage health plan earlier this year, he expected to keep the doctor who treats his serious eye condition.

“That turned out not to be so,” said Shipotow, 83, who lives in Bensalem, Pa.

Shipotow said he had to scramble to get back on a health plan he could afford and that his longtime eye specialist would accept. “You have to really understand your policy,” he said. “I thought it was the same coverage.”

Boosters say that privately run Medicare Advantage plans, which enroll about one-third of all people eligible for Medicare, offer good value. They strive to keep patients healthy by coordinating their medical care through cost-conscious networks of doctors and hospitals.

But some critics argue the plans can prove risky for seniors in poor or declining health, or those like Shipotow who need to see specialists, because they often face hurdles getting access.ils).

A recent report by the Government Accountability Office, the auditing arm of Congress, adds new weight to criticisms that some health plans may leave sicker patients worse off.

The GAO report, released this spring, reviewed 126 Medicare Advantage plans and found that 35 of them had disproportionately high numbers of sicker people dropping out. Patients cited difficulty with access to “preferred doctors and hospitals” or other medical care, as the leading reasons for leaving.

“People who are sicker are much more likely to leave (Medicare Advantage plans) than people who are healthier,” James Cosgrove, director of the GAO’s health care analysis, said in explaining the research.

David Lipschutz, an attorney at the Center for Medicare Advocacy, says the GAO findings were alarming and should prompt tighter government oversight.

“A Medicare Advantage plan sponsor does not have an evergreen right to participate in and profit from the Medicare program, particularly if it is providing poor care,” Lipschutz says.

The GAO did not name the 35 health plans, though it urged federal health officials to consider a large exodus from a plan as a possible sign of substandard care. Most of the 35 health plans were relatively small, with 15,000 members or fewer, and had received poor scores on other government quality measures, the report said. Two dozen plans saw 1 in 5 patients leave in 2014, much higher turnover than normal, the GAO found.

Medicare Advantage plans now treat more than 19 million patients, and are expected to grow as record numbers of baby boomers reach retirement age.

Kristine Grow, a spokeswoman for America’s Health Insurance Plans, an industry trade group, says Medicare Advantage keeps expanding because most people who sign up are satisfied with the care they receive.

She says that patients in the GAO study mostly switched from one health plan to another because they got a better deal, either through cheaper or more inclusive coverage.

Grow says many Medicare Advantage plans offer members extra benefits not covered by standard Medicare, such as fitness club memberships or vision or dental care, and do a better job of coordinating medical care to keep people active and out of hospitals.

“We have to remember these are plans working hard to deliver the best care they can,” Grow says. Insurers compete vigorously for business and “want to keep members for the long term,” she adds.

Some seniors, wary of problems ahead, are choosing to go with traditional Medicare coverage. Pittsburgh resident Marcy Grupp says she mulled over proposals from Medicare Advantage plans but worried she might need orthopedic or other specialized health care and wanted the freedom to go to any doctor or hospital. She’s decided on standard Medicare coverage and paid for a “Medigap” policy to pick up any uncovered charges.

“Everything is already in place,” says Grupp, a former administrative assistant who turns 65 this month.

The GAO report on Medicare Advantage comes as federal officials are ramping up fines and other penalties against errant health plans.

In the first two months of this year, for instance, the federal Centers for Medicare & Medicaid Services fined 10 Medicare Advantage health plans a total of more than $4.1 million for alleged misconduct that “delayed or denied access” to covered benefits, mostly prescription drugs.

In some of these cases, health plans charged patients too much for drugs or failed to advise them of their right to appeal denials of medical services, according to government records. Industry watchers predict more penalties are to come.

Last month, CMS officials ended a 16-month ban on enrollment in Cigna Corp.’s Medicare Advantage plans. CMS took the action after citing Cigna for “widespread and systematic failures” to provide necessary medical care and prescription drugs, policies officials called a “serious threat to enrollee health and safety.”

A flurry of whistleblower lawsuits have surfaced, too. In late May, Freedom Health, a Florida Medicare Advantage insurer, agreed to pay nearly $32 million to settle allegations that it exaggerated how sick some patients were to boost profits, while getting rid of others who cost a lot to treat.


What’s needed for future bundled-payment success

 

A piece in JAMA looks at what would be needed in future expansion of bundled-payments programs.

The authors consider such things as extending bundle durations to a year; the role of bundled-payments programs outside the hospital, especially as efforts intensify to reduce readmissions, and ensuring that Accountable Care Organizations and bundles are adequately integrated and coordinated by aligning incentives and sharing information on shared patients.

The authors conclude

“Expansion of bundled payment for episodes of care is under way. The 3 key innovations in the next generation of bundled payment models (extending the duration of the bundles, expanding the accountable entities beyond hospitals, and integrating bundled payments with global budget models within ACOs) could better align episode-based payment with population health and offer a smoother path to global budgets. Testing bundles nested within overarching collective accountability through bundle-ACO integration is particularly promising. There will be ample opportunity to inform bundle design based on findings from voluntary and mandatory Centers for Medicare & Medicaid Services programs and private insurer initiatives. Innovations in bundled payment design could increase their attractiveness to commercial and public payers alike in the pursuit of higher-value care.”

To read the whole article, please hit this link.


Health-coverage issues particularly acute in Alaska

anchorage

Anchorage

By JoNEL ALICCIA

For Kaiser Health News

ANCHORAGE

When Andy Hawk needed hernia surgery last year, his biggest worry wasn’t the operation’s cost — it was whether he’d heal in time to lead a spring bear-hunting expedition on Kodiak Island, Alaska.

For the first time, the self-employed gunsmith in the state with the nation’s highest medical costs and most volatile insurance market had some protection. He had coverage for all but $10,000 of the $45,000 tab.

“Before that, I was just damn lucky,” said Hawk, 52, who joined the Affordable Care Act marketplace in 2013.

But neither Hawk nor his girlfriend, Jennifer Jolliffe, 55, a self-employed acupuncturist also covered under the ACA, is resting easy.

The couple was relieved last month when Republican congressional leaders hastily withdrew the American Health Care Act, a GOP bill described by Sen. Lisa Murkowski (R.-Alaska) as “a flawed replacement” for Obamacare, the most common name for the ACA.

The bill’s failure left Obamacare intact while Republicans regroup on how to address rising insurance costs and other weaknesses with healthcare delivery. The issues are particularly acute in Alaska, the fourth most expensive state in the U.S. for medical care, where a standard knee replacement might cost five times what it does in Seattle and pricey air-ambulance rides are common in emergencies.

Individual health insurance premiums here climbed almost 40 percent annually after the ACA went into effect, and high healthcare costs drove all but one provider, Premera Blue Cross Blue Shield, out of the market in 2017.

Now, Hawk and Jolliffe are watching closely as state leaders grapple with preventing the online marketplace from collapsing in Alaska. Officials are seeking a $51.6 million federal waiver to shore up the individual insurance market.

“I just want everyone to have health insurance,” said Jolliffe, who suffered a life-threatening bacterial infection in 2009 that for her underscored the need for coverage.

Jennifer Jolliffe, 55, an acupuncturist, works from home with Hawk. Both receive health care coverage through the ACA and are concerned about what a GOP plan for health coverage would mean for them.

Most of Alaska’s more than 738,000 residents receive health insurance through employers or government programs. About 30,000 obtained insurance under the Medicaid expansion in 2015 enacted under the ACA — the health law that was largely opposed by the 51 percent of Alaska voters who voted for President Donald Trump.

Even fewer residents buy insurance on the ACA’s marketplace. In that small private insurance pool, rates have soared because health insurers in the vast but sparsely populated state couldn’t sign up enough healthy people to offset costs for high-risk patients with expensive conditions such as end-stage renal disease and cancer.

Premera reported that last year it paid about $67 million in claims for individual members on the Alaska exchange, but about a quarter — more than $16 million — came from just 20 patients.

“Alaska has been quite a story over the last few years,” said Premera spokeswoman Melanie Coon. “It’s not like other states.”

With the market approaching collapse, Alaska lawmakers tackled the problem last year in a novel way, said Eric Earling, a senior vice president with State of Reform, a nonpartisan health policy communication group with a focus in the West.

State officials voted to levy a 2.7 percent tax on all insurers to create a $55 million reinsurance fund that covers bills for high-cost patients, stabilizing the individual market for the rest of the customers.

“The reinsurance program could be a model for others across the U.S.,” he said.

In the short run, it worked. Instead of an expected premium increase of more than 40 percent for 2017, Premera’s rates rose just 7.3 percent, Coon said.

The insurer reported March 29 that it made $20 million in the individual market in Alaska in 2016. That figure included $4 million in direct profits, $8 million in adjusted income carried over from 2015 and $8 million in federal risk adjustment funds, which help compensate insurers for enrolling high-risk patients, according to Jim Grazko, president of Premera’s Alaska operations. The new report cuts Premera’s losses in the state’s individual market through the ACA from more than $25 million to about $7 million over three years, he said.

Still, premiums remained the nation’s highest, $904 a month for a 40-year-old nonsmoker in Anchorage on Premera’s second-lowest silver plan, which sets the benchmark for subsidy levels. Enrollment on the Alaska individual exchange fell from about 23,000 people in 2016 to about 19,145 this year, according to the Centers for Medicare & Medicaid Services.

“I think we lost about 3,800,” said Lori Wing-Heier, director of the state Division of Insurance. “Some of them just could not afford it.”

The reinsurance fund — approved by a Republican-dominated Legislature and signed by an independent governor — was a one-year deal designed to prevent the state’s insurance market from imploding.

For a longer-term solution, state officials in December submitted a proposal to federal health officials known as a Section 1332 waiver, which allows states to seek “innovative strategies” for providing insurance. Alaska is asking that the federal government funnel $51.6 million that would have been paid for premium subsidies in 2018 into the reinsurance program. It would be authorized for five years, with a renewal option.

Such waivers have been encouraged by new Health and Human Services Secretary Tom Price, M.D., and Wing-Heier said  that she expects it to be approved “quite quickly” after state legislators tweak final language.

“It is a way of stabilizing the ACA in Alaska,” said Wing-Heier, who emphasizes that cutting health care costs is also crucial.

Alaska’s all-Republican congressional contingent — including Murkowski, Sen. Dan Sullivan and Rep. Don Young — have remained steadfastly opposed to Obamacare but did not support the Republican House bill.

“Healthcare is broken as it is today,” Young said in a March 21 press release that detailed his reservations. “We’ve seen the numbers — skyrocketing premiums, soaring deductibles and the loss of all but one insurer. Ultimately, I support efforts to repeal and replace the Affordable Care Act, but I also recognize that it’s very difficult to put the toothpaste back in the tube.”

Murkowski called the push for the AHCA “a reckless repeal process” and vowed that she wouldn’t support plans to cap federal funds for Medicaid that could endanger the newly insured.

“I don’t support pulling the rug out from people who have received coverage,” she said in a Facebook Live town hall on March 23. Murkowski has also opposed efforts to strip federal funding for Planned Parenthood.

That was welcome news to people like Cindy Stark, 61, who runs a small sewing and embroidery business outside Anchorage and gained health insurance through the state’s Medicaid expansion. She was badly injured in horse-riding accidents in 2003 and 2008 and had previously struggled to pay a $950 monthly premium and $5,000 deductible with private insurance. She hopes that recent efforts to cap Medicaid funding, possibly cutting enrollment, are over.

“I have asthma and the chronic pain,” said Stark, who voted for Hillary Clinton in the 2016 presidential election. “My medicine now keeps me on track.”

But constituents such as Sam Trotzke, 48, a partner in an accounting firm in North Pole, Alaska, criticized Murkowski, whom he called “a Democrat in Republican’s clothes,” for not working harder to repeal Obamacare.

Trotzke turned down his firm’s insurance in favor of a Christian healthcare sharing ministry called Medi-Share. It’s one of several growing programs across the U.S. in which medical care is paid for through monthly payments — called “shares” — of faith-based followers.

Wing-Heier estimates that such programs have become popular with some Alaskans on the wrong side of the ACA’s “subsidy cliff,” a reference to the cutoff for federal premium subsidies at 400 percent of the poverty level.

Instead of more than $2,600 a month in health-insurance premiums, Trotzke said he pays $634 for coverage for himself and his wife, Shauna, 44, and their daughters, Tessa, 12, and Anna, 8. Preventive care, dental visits and eye appointments come out of his pocket.

“It’s the way health insurance should be. They’re paying the big costs. I’m paying the doctors’ visits. Health insurance shouldn’t be covering every little thing,” said Trotzke, who voted for Trump.

With the cost-sharing plan, Trotzke said he feels as if he has more control over his health care spending. He’d like to see the ACA repealed and replaced with a plan with fewer regulations.

“It’s our overlords in Washington, D.C., dictating to us how we have to run our business,” he said. “That just rubs me the wrong way.”
The ACA isn’t perfect, he said, but the insurance plan means that he and Jolliffe can lead active Alaskan lives — hunting, fishing, skiing — without worrying about costs of a medical catastrophe.Back at the Anchorage gunsmith shop, where custom rifles and rebuilt shotguns line the walls beneath moose antlers and a wolverine pelt, Hawk has a different take.

Hawk, a Clinton voter, worries about Trump’s vows to “let Obamacare explode” and said he fears the administration will go out of its way to undermine the health care law — even without a full repeal.

“We don’t smoke, don’t drink, we’re doing our part,” said Hawk, who added: “I don’t understand why they couldn’t just fix it.”


2 studies look at savings from ACOs

 

While provider participation in Medicare and Medicaid Accountable Care Organizations may lead to only modest savings at first, the savings grow substantially over time, say two studies.

The first study, led J. Michael McWilliams, M.D., Ph.D., of Harvard Medical School and published in JAMA Internal Medicine,  found that such organizations notably cut post-acute care costs. Between 2012 and 2014,  the 114 ACOs in the research reduced post-acute spending by 9 percent, or just over $100 per beneficiary, compared with a non-ACO control group.

To read the study, please hit this link.

The second study, also published in JAMA Internal Medicine, compared  two Medicaid ACOs, one each  in Colorado and in Oregon.

To read that study, please hit this link.

An editorial accompanying the two articles concluded:

“Accountable care organizations have been established across diverse market settings, using a multitude of organizational structures and approaches to governance and operations, and this heterogeneity is reflected in the heterogeneity of their performance. The 2 articles published in this issue add to a growing body of evidence on overall performance, several dimensions of quality, and spending. Nevertheless, we know little about the effects of ACOs on patients’ health and quality of life. Perhaps most important for ACO leaders and the long-term success of these programs, we know little about the key ACO capabilities that are important to ensuring their success in different organizational or market contexts. Although the Centers for Medicare & Medicaid Services has conducted rigorous evaluations of the Pioneer program, generalizable findings tailored to organizational contexts are few. A long-term commitment to alternative payment model evaluation is necessary to ensure effective, sustainable payment and delivery system reform.”


CMS nominee wants to overhaul Medicaid

 

Seema Verma, nominated by President Trump to lead the Centers for Medicare & Medicaid Services, told her confirmation hearing at the Senate Finance Committee that she’d consider clawing back parts of a rule set during the Obama administration that overhauled Medicaid managed-care programs.
She also  said he doesn’t want to turn Medicare into a voucher program, an idea backed by Health and Human Services Secretary Tom Price, M.D., and thinks  that rural healthcare providers shouldn’t face risk in alternative-payment models.

Ms. Verma said  that one of her priorities would be re-assessing a rule issued under the Obama administration that ordered states to more vigorously oversee the adequacy of Medicaid plans’ provider networks and encouraged states to establish quality rating systems for health plans. She raised the question of whether these mandates have  overly burdened the states financially.

On Medicaid,  she said that  “the status quo is not acceptable.”

“I’m endorsing the Medicaid system being changed to make it better for the people relying on it … and whether that’s a block grant or per capita cap, there are many ways we can get there.”

On Medicare, Modern Healthcare reported that Sen. Ron Wyden (D.-Ore.), the ranking Democrat on the Finance Committee, “said that she sounded like she wanted to keep Medicare a fee-for-service system.” The CMS under the Obama administration set goals to move Medicare away from fee-for-service, which was viewed as prone to abuse and fraud even as it has been very lucrative for physicians and hospitals and encourages much medically unneeded ordering of tests and procedures to maximize providers’ income.

But Ms. Verma denied Senator Wyden’s assertion and said that she supports Medicare focusing more on quality of care instead of volume.

To read more, please hit this link.

 

 

 


Minn. reforms could presage ACA repeal and replacement

By MARK ZDECHIK

Via Kaiser Health News

What’s going to happen to the federal health law? The quick answer is no one knows. But in the midst of the uncertainty about the Affordable Care Act, states still must govern their insurance markets. Most have been muddling through with the 2017 status quo, but Minnesota is a special case, taking three unusual actions that are worth a closer look.

Last month, Minnesota:

  • Passed a one-time bailout for some consumers in the individual insurance market dealing with skyrocketing premiums.
  • Rejected an attempt to let insurers offer cheaper, bare-bones coverage.
  • Laid the groundwork for a sort of homegrown “public option” insurance plan.

Here’s more on each item.

The Bailout

Faced with some of the country’s highest hikes on premiums in the individual market — 50 to 67 percent, on average — Minnesota lawmakers passed a bailout for people who earn too much to qualify for the Affordable Care Act’s federal tax credit. The $300 million law will cut monthly 2017 premiums by 25 percent for about 125,000 Minnesotans.

Democratic Gov. Mark Dayton backed the measure since October when he called the ACA “no longer affordable to increasing numbers of people.” But passage wasn’t assured as both houses of Minnesota’s legislature are controlled by Republicans.

It is thought to be the second time a state has offered up state tax dollars to stabilize an insurance marketplace created by the ACA. (Alaska came up with a $55 million bailout for insurers in 2016.)

Bare-Bones Coverage

A failed amendment to the Minnesota legislation sought to strip dozens of so-called “essential benefits” from health plans with the expectation that slimmed-down coverage would cost less.

Republican State Rep. Steve Drazkowski, who offered the amendment, said he was trying to eliminate the current, “government-controlled, one-size-fits-all, dictating set of mandates.

“What we’re doing is trying to create an environment that, if and when the ACA goes away, that Minnesotans will have the freedoms they need in order to start to bring some free-market competition, some free-market ingenuity and innovation into the health insurance market,” he said.

The laundry list of benefits that consumers could choose to have covered or not under Drazkowski’s amendment included maternity care, diabetes treatment and mental health care among many others. Some items on the list are very specific: Lyme disease, prostate cancer screenings, outpatient surgery.

Dayton and other Democrats opposed the amendment and it dropped out of the final legislation.

Still, it caught the eye of Minnesota native Andy Slavitt, who is the former administrator of the Centers for Medicare & Medicaid Services, which oversee the health law marketplaces. Slavitt, who tweeted about the amendment, said it is a cautionary tale about high-deductible catastrophic

 

Still, it caught the eye of Minnesota native Andy Slavitt, who is the former administrator of the Centers for Medicare & Medicaid Services, which oversee the health law marketplaces. Slavitt, who tweeted about the amendment, said it is a cautionary tale about high-deductible catastrophic plans that cover little or no basic care.

Democratic Gov. Mark Dayton backed the measure since October when he called the ACA “no longer affordable to increasing numbers of people.” But passage wasn’t assured as both houses of Minnesota’s legislature are controlled by Republicans.

It is thought to be the second time a state has offered up state tax dollars to stabilize an insurance marketplace created by the ACA. (Alaska came up with a $55 million bailout for insurers in 2016.)

Bare-Bones Coverage

A failed amendment to the Minnesota legislation sought to strip dozens of so-called “essential benefits” from health plans with the expectation that slimmed-down coverage would cost less.

Republican State Rep. Steve Drazkowski, who offered the amendment, said he was trying to eliminate the current, “government-controlled, one-size-fits-all, dictating set of mandates.

“What we’re doing is trying to create an environment that, if and when the ACA goes away, that Minnesotans will have the freedoms they need in order to start to bring some free-market competition, some free-market ingenuity and innovation into the health insurance market,” he said.

The laundry list of benefits that consumers could choose to have covered or not under Drazkowski’s amendment included maternity care, diabetes treatment and mental health care among many others. Some items on the list are very specific: Lyme disease, prostate cancer screenings, outpatient surgery.

Dayton and other Democrats opposed the amendment and it dropped out of the final legislation.

Still, it caught the eye of Minnesota native Andy Slavitt, who is the former administrator of the Centers for Medicare & Medicaid Services, which oversee the health law marketplaces. Slavitt, who tweeted about the amendment, said it is a cautionary tale about high-deductible catastrophic plans that cover little or no basic care.


Trump’s HHS pick dislikes Medicare bundles program

hip

By RACHEL BLUTH

Kaiser Health News

A recent change in how Medicare pays for joint replacements is saving millions of dollars annually — and could save billions — without impacting patient care, a new study has found. But the man whom Donald Trump has picked to be the secretary of  the Department of Health and Human Services has vocally opposed the new mandatory payment program and is likely to revoke it.

Under the new program, Medicare effectively agrees to pay hospitals a set fee — a bundled payment — for all care related to hip- or knee-replacement surgery, from the time of the surgery until 90 days after. Traditionally hospitals collect payments for many components of care and rehabilitation individually.

Tom Price, M.D., the president elect’s HHS nominee, a congressman from Georgia and a very affluent orthopedic surgeon, has actively opposed the idea of mandating bundled payments for these orthopedic operations, calling it “experimenting with Americans’ health,” in a letter to the Medicare agency just last September. In addition, the agency which designed and implemented the experiment, the Center for Medicare and Medicaid Innovation, was created by the Affordable Care Act to devise new methods for encouraging cost-effective care. It will disappear if the act is repealed, as President-elect Trump has promised to do.

The study appeared Jan. 3 in the Journal of the American Medical Association. Though one of its authors is Ezekiel Emanuel, M.D., a professor at the University of Pennsylvania who helped design the ACA, the research relies on Medicare claims data from 2008 through mid-2015, long before the presidential election.

Starting in April 2016, CMS required around 800 hospitals in 67 cities to use the bundled payment model for joint replacements and 90 days of care after the surgery as part of the Comprehensive Care for Joint Replacement program. The program had previously been road-tested on a smaller number of hospitals on a voluntary basis, which formed the focus of the research.

The study found that hospitals saved an average of 8 percent under the program, and some saved much more. Price has been skeptical that bundled payments did save money, but the researchers estimate that if every hospital used this model, it would save Medicare $2 billion annually.

The bundled payment program works like this: For some specific kinds of medical procedures, including joint replacements or some heart surgeries, the Centers for Medicare & Medicaid Services will add up the costs for the entire episode, from the hospital stay and medical supplies to the rehabilitation afterwards. If the total costs are below a target set by CMS, the hospital gets to keep the savings. If not, the hospital has to pay Medicare the difference. It’s supposed to incentivize more efficient spending and better care coordination between providers, so they can lower costs.

In practice, it seems to be working. Baptist Health System, a network of five hospitals in San Antonio, saved an average of $5,577 on each joint replacement without sacrificing the quality of care, according to the study. Baptist was an early adopter of bundled payments; it began experimenting with them in 2008. Over seven years, the hospital system has cut Medicare’s costs on knee replacements by almost 21 percent.

The savings came without impacting quality. Patients at Baptist Health System were just as likely to be readmitted to the hospital or end up in the emergency room as patients nationally. There was some indication that quality of care may be better, fewer patients under bundled payments had long, extended hospital stays.

In Price’s letter from September, he said that Medicare had exceeded its powers in imposing such bundled payments, which he said took decisions out of the hands of doctors and patients.

That doesn’t seem to be the case, according to Amol Navathe, M.D., an assistant professor of medicine and health policy at the University of Pennsylvania, and one of the authors of the JAMA study. Instead, Navathe and his colleagues suggest that the bundled payments actually fostered greater collaboration between surgeons, administrators and patients because programs could only succeed in saving money if physicians were engaged in creating standardized pathways for care.

For example, the Baptist Health System saved about 30 percent on implant costs, around $2,000 on each artificial joint, by using the least expensive medically equivalent implants as determined by the hospitals’ surgeons.

Usually, physicians are prevented from benefitting when hospitals save money because of anti-kickback laws. Waivers under bundled-payment models mean that surgeons can put in the time to find the best, most cost-effective implants, and share in some of that savings.

“It takes that extra level of effort and coordination, and proactively communicate with [patients],” Navathe said. “Preplanning, setting of expectations and communicating up-front is resource intensive, when they have the incentive to do that they were willing to expend the extra resources to make that happen.”

When bundles included care after a patient’s hospital stay, spending on rehabilitation went down 54 percent. That’s because hospitals took the time to match patients to the right level of care, Navathe said.

Patients who didn’t need to stay in a nursing home or rehab center were set up with home health care or physical therapy.

Price has objected to CMS making bundled payments mandatory, calling it an instance of federal overreach. But bundled payments only work if everyone has to participate, according to Darshak Sanghavi, M.D., the former director of prevention and population health at the Center for Medicare and Medicaid Innovation.

If hospitals can choose whether or not to participate, only the ones that are already delivering care efficiently –and coming in under CMS’s cost target — will use bundles and Medicare will constantly be paying out bonuses. The system needs to be mandatory, Sanghavi said, to pull in less efficient hospitals and give them incentive to change.

“Stopping the programs for ideological reasons I think impedes innovation in a way that is going to consign us to having really, really high costs of care that’s going to continue in the future,” Sanghavi said.

Bundled payments aren’t just for hip and knee replacements. On Dec. 20, CMS announced it would expand mandatory bundled payments to treatments for heart attacks, bypass surgery and cardiac rehab beginning in July 2017. In its waning days, the Obama administration is effectively throwing down the gauntlet to the incoming administration on bundled payments, one of its signature reforms.


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