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Fitch: Trump could hurt hospitals’ credit ratings

November 10, 2016by Robert Whitcomb in Uncategorized tagged , , , , , , ,

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Medieval butcher shop in Europe.

A Fitch Ratings report says that President-elect Donald Trump’s stated intention to  dismantle the Affordable Care Act will hurt the credit ratings of hospitals and health systems.

Fitch  says that the ACA has helped  hospitals by sending them higher volumes of insured patients, which  would drop if the ACA is repealed or  dramatically changed.

Fitch also noted  that repeal could  slow the transition to value-based payment models and cause fewer people to keep prescription coverage, which would, of course, hurt  the pharmaceutical industry.

To read the Fitch report, please hit this link.

How congressional Republicans, Trump could move swiftly to change health laws

November 9, 2016by Robert Whitcomb in Uncategorized tagged , , , , , , , , , , ,

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By JULIE ROVNER

For Kaiser Health News

Throughout the campaign, President-Elect Donald Trump’s entire health message consisted of promising to repeal the Affordable Care Act.

That remains difficult with Democrats still commanding enough power in the Senate to block the 60 votes needed for a full repeal. Republicans could use fast-track budget authority to make some major changes to the law, although that could take some time. In the short term, however, Trump could use executive power to make some major changes on his own.

Beyond the health law, Trump also could push for some Republican perennials, such as giving states block grants to handle Medicaid, allowing insurers to sell across state lines and establishing a federal high-risk insurance pool for people who are ill and unable to get private insurance.

But those options, too, would likely meet Democratic resistance, and it’s unclear where health will land on what could be a jam-packed White House agenda.

Still, there are several health issues that the next Congress and the new administration will be required to address in 2017, if only because some key laws are set to expire.

And those could provide a vehicle for other sorts of health changes that might not be able to clear political or procedural hurdles on their own.

Here are some of the major health issues that are certain to come up in 2017: 

The Affordable Care Act

If the GOP could not repeal the law and Trump were to turn to Congress to address some of the issues associated with it, it’s not clear if the executive and legislative branches could work together to respond to rising insurance premiums, declining insurance company participation or other unintended impacts of the health law. Nonetheless, some aspects of the law are unavoidable next year. For example, Congress in 2015 temporarily suspended or delayed three controversial taxes that were created to help pay for the law.

One of those taxes, a fee levied on health insurers, is suspended for 2017, while a 2.3 percent tax on medical devices was suspended for 2016 and 2017. Both industries lobbied heavily for the changes — arguing that the taxes boosted the prices of their products — and would like to permanently kill the taxes.

Also on hold is the most controversial health law tax of all, the so-called “Cadillac Tax” that levies a 40 percent penalty on very generous health insurance plans. The idea is to prevent consumers who pay little out of pocket because of their coverage from overusing health care services and driving up overall health costs.

The tax was technically put off from 2018 to 2020, but experts say pressure will begin to mount next year for reconsideration because employers will need a long lead time if they are to change benefits to avoid paying it. While economists are virtually unanimous in their support for the tax on high-end health plans, business and labor both strongly oppose it.

Children’s Health Insurance Program

The Children’s Health Insurance Program, a federal-state partnership that Hillary Clinton helped set up in negotiations with Congress during her husband’s administration, is up again for renewal in 2017. CHIP covers more than 8 million children from low- and moderate-income households and has made a huge dent in the number of uninsured children. According to the Census Bureau, nearly 95 percent of children had insurance coverage in 2015.

When the federal health law passed in 2010, many policymakers thought that CHIP would quietly go away because most of the families whose children are eligible for the program became eligible for tax credits to help them purchase plans for the entire family in the health law’s marketplaces. But it turned out that CHIP in most states remained more popular because it provided better benefits at lower costs than did plans through the ACA.

In 2015, Congress compromised between those arguing to extend CHIP and those who wanted to end it, by renewing it for only two years. That ends Oct. 1, 2017. In practice, if Congress wants to extend CHIP, it needs to act early in 2017 because many states have fiscal years that begin in July and need lead time to plan their budgets.

Prescription Drug And Medical Device User Fees

Also expiring in 2017 is the authority for the Food and Drug Administration to collect “user fees” from makers of prescription drugs and medical devices.

The Prescription Drug User Fee Act, known as PDUFA (pronounced pah-doof-uh), was originally passed in 1990 in an effort to speed the review of new drug applications by enabling the agency to use the extra money to hire more personnel. The user fees were later expanded to speed the review of medical devices (2002), generic copies of brand-name drugs (2012) and generic biologic medicines (2012).

PDUFA gets reviewed and renewed every five years, and its “must-pass” status makes it a magnet for other changes to drug policy. For example, in 2012 the renewal also created a program aimed at addressing critical shortages of some prescription drugs. Earlier renewals also included separate programs that gave pharmaceutical firms incentives to study the effect of drugs in children.

Some policy-watchers think this year the bill could serve as a vehicle for provisions to help bring down drug prices, although it is not clear how well many of the ideas currently being floated would work.

“I think [Congress] will talk a lot about it and do very little,” said Robert Reischauer of the Urban Institute, who called the drug price issue “incredibly complex.”

Medicare’s Independent Payment Advisory Board

One more issue that might come up is a controversial cost-saving provision of the federal health law called the Independent Payment Advisory Board, or IPAB. The board is supposed to make recommendations for reducing Medicare spending if the program’s costs rise significantly faster than overall inflation. Congress can override those recommendations, but only with a two-thirds vote in each of the House and Senate.

So far the trigger hasn’t been reached. That’s lucky because the board has turned out to be so unpopular with both Democratic and Republican lawmakers, who say it will lead to rationing, that no one has even been appointed to serve.

The lack of an actual board, however, does not mean that nothing will happen if the requirement for Medicare savings is triggered. In that case, the responsibility for recommending savings will fall to the secretary of Health and Human Services. Medicare’s trustees predicted in their 2016 report that the targets will be exceeded for the first time in 2017.

That would likely touch off a furious round of legislating that could, in turn, lead to other Medicare changes.

What a ‘public option’ would look like

November 8, 2016by Robert Whitcomb in Uncategorized tagged , , , , , , ,

 

By PAULINE BARTOLONE

For Kaiser Health News

SACRAMENTO

The “public option,” which stoked fierce debate in the run-up to the Affordable Care Act, is making a comeback — at least among Democratic politicians.

The proposal to create a government-funded health plan, one that might look like Medicare or Medicaid but would be open to everyone, is being advocated by some  federal officials, and gaining traction here in California too.

Amid news that two major insurers were pulling out of Affordable Care Act exchanges, 33 senators recently renewed the call for a public option. The idea was first floated, then rejected, during the drafting of the federal health law, which took effect in 2010.
Dave Jones, the elected regulator of California’s private insurance industry, endorsed the idea of a state-specific public option in an interview last month with California Healthline, though he did not specify how it might work. Democratic presidential candidate Hillary Clinton includes a public option in her campaign platform, and President  Obama urged Congress to revisit the idea in a JAMA article published in August.

A public option “would look just like an insurance plan,” except that the state or federal government would pay for medical care, potentially set up the network of doctors and hospitals, and make rules about paying providers, according to Gerald Kominski, director of the UCLA Center for Health Policy Research. Private industry could be involved in these or other aspects of running the health plan, much as they do in Medicare Advantage and managed Medicaid plans.

California Healthline interviewed Kominski to better understand how a public option could work. The interview was edited for length and clarity.

Q: When we talk about a public option, do we mean a health plan for which the government takes the risk, sets the coverage rules and pays out the claims — and enrollees pay premiums just as they would to an insurance company?

That is what the public option would be. But that still leaves out the answer to a lot of questions about how actually that would occur. How would a government agency essentially become the insurer? So we have two examples. We have the Medicare program and we have the Medicaid program.

Medicare establishes the rules. It contracts with insurance companies to pay the bills. And that’s the way that Medicare has operated for over 50 years.

Now we have Medicare Advantage plans, where the contracting is not to pay bills but is basically contracting with insurers to bundle the services. And rather than pay the doctors and hospitals, the government pays the insurer and puts the insurer at risk.

Q: Insurers have opposed this idea in the past, and they’re opposing it again now that it’s being raised by members of Congress.

Private insurers could participate as administrators or providers on behalf of the state. But here’s one concern that I have with that model: California has four large insurance companies in the exchange that account for about 90 percent of the market.

Let’s say that California wanted to create a public option and hire an insurance company to administer that product for it. What would be the reason or the incentive for any of those companies to agree to be the plan administrator for the public option when the public option would be competing with the product that they’re already offering? They would be competing with themselves.

Q: Some provider groups may be opposed to a public option because they say that government programs like Medi-Cal pay very little and they believe a public option plan would also pay little. Is this necessarily the case that a government program would pay low rates?

It’s not necessarily the case, but it is in fact what we observe in the Medicare and the Medicaid/Medi-Cal programs.

Q: Do you think a public plan would help bring down costs in the healthcare system by negotiating for lower payments to hospitals and doctors?

I think that is possible in other areas of the country, where there are markets with one or two health insurance plans in the exchange. I think California has one of the most competitive ACA marketplaces. And so would the public option in California dramatically reduce premiums? I think the answer is no. It would have little or no effect.

For some people, the advantage is that we think that the public option’s going to be around because the state’s not going to back out of its commitment, whereas private insurers come and go in the marketplace.

Q: Is there something about California’s healthcare system that uniquely primes the state for a public option?

I think so. One of the things that’s unique about California is the high percentage of managed-care enrollment. The public option in California would probably include or be based on a managed-care model and Californians are pretty receptive to that model.

Q: So if the public option could include private insurance, why are the insurers so opposed?

Well, the simple answer is they don’t want more competition. And again it goes back to, why was this battle so intense during the development and enactment of the ACA back in 2009 and 2010? The insurance industry said we cannot compete with a plan, a government plan, that pays doctors and hospitals using Medicare fees or fee schedules.

You remember the fundamental rule of business is you don’t want more competition. You want the market to yourself.
Well, that’s where you can’t ignore the political environment. And so the short answer is in the current political environment, doing something at the national level is extremely difficult. Even though there might be arguments to develop a public option at the national level, it’s very challenging in the current political environment to get the agreement.

Q: Do you think it would be more effective or easier to implement a public option at a state or national level?

Q: Is there something that’s more efficient about a national public option?

Potentially. It’s economies of scale. You know, the larger your potential market nationally, the lower the potential costs per person. You just get administrative savings and efficiency. But it’s not easy to create a national program. One issue that’s challenging is how to put together a national network of doctors and hospitals that would participate. That’s a lot of work.

Q: Do you think the idea of a public option is more viable now than it was when it was debated before and ultimately stripped from the Affordable Care Act?

A: Well, I think that what makes it more attractive right now is the fact that we’ve got large insurance companies pulling out of the exchange marketplaces. And because of that … the idea of a public option to provide stability and protection for people in the exchanges has resurfaced. And I think with good reason.

A way to raise wages and curb healthcare costs

November 7, 2016by Robert Whitcomb in Uncategorized tagged , ,

The price of American healthcare continues to surge, including for those who get their insurance via their employers.

The main elements are  a “system” whose politically powerful constituencies benefit from economic incentives to maximize the number of procedures; for-profit insurers seeking to maximize profit and senior executives’ salaries; by far the world’s highest paid physicians, and hospital executives and astronomical drug prices

Thus healthcare premiums for employer-sponsored  coverage have risen three times faster than wages even as deductibles and co-payments have soared.

These costs have wiped out most of the (small) wage gains that American workers have gotten since the turn of the last century.

Regina E. Herzlinger, a professor of business administration at Harvard University; Barak D. Richman, a professor of law and business administration at Duke University, and Richard J. Boxer, M.D., a professor at the David Geffen School of Medicine at UCLA, have proposed in The New York Times a way to address this and in so doing give American workers real raises.

They write:

“What if employers transferred to their employees the amount they now spend on coverage and the law allowed employees to deduct that spending from their taxes?

“And what if those laws allowed employees to opt not to spend that entire sum on health insurance, but instead take some home as wages? If an employee in a marginal tax bracket of 25 percent were given an $18,000 budget to purchase insurance, but opted for a plan that costs only $14,000, she could take an additional $3,000, post-tax, home to her family….

“Abundant research has shown that low- and middle-income workers have a strong preference for low-cost plans, much more than what their employers currently offer. If workers know they can increase take-home wages by purchasing less expensive insurance, they will demand more insurance options, and insurers are likely to respond. To avoid the chance that cash-strapped families purchase inadequate plans, insurance plans would have to meet the Affordable Care Act’s minimum standards. The law’s requirement to purchase insurance, with penalties for non-purchase, would lessen the possibility that workers would keep all the money rather than buy insurance.

“Freeing workers’ choices for insurance would also bring pressures on insurers to create new products that control costs, such as bundling of homeowners, auto and health insurances, or enabling people between 55 and 64 years old to access Medicare. State legislatures would feel similar pressures to adjust regulations to support competitive insurance marketplaces.”

“Stiffer competition and cost pressures on insurers, in turn, would force providers to offer more efficient care, such as by replacing outpatient and emergency room visits with telemedicine technology.”

To read all of this prescriptive piece, please hit this link.

 

 

Anti-ACA states keep asking for Medicaid waivers

November 3, 2016by Robert Whitcomb in Uncategorized tagged , , , , ,

 

In September,  the federal government denied Arizona and Ohio’s requests to adopt strict eligibility requirements for their Medicaid programs.

Surprising many observers is that in the third year into Medicaid expansion under the Affordable Care Act,  some Republican-led anti-ACA states have kept asking the Centers for Medicare & Medicaid Services   for waivers that the Feds have repeatedly refused.

“It’s clear there’s an ideological component,”  Jesse Cross-Call, a health policy analyst for the left-leaning Center on Budget and Policy Priorities told Governing magazine. CMS has made it clear that certain requests won’t be approved, “and state legislators know that, but they feel they should ask anyway.”

Governing reported:

“To encourage the  {Medicaid-expansion} holdout states, the federal government let them tailor their Medicaid programs using a Section 1115 Waiver. Six states (Arkansas, Indiana, Iowa, Michigan, Montana and New Hampshire) have used the waiver to expand Medicaid while adding tweaks to appease their more conservative legislators. Those commonly include charging premiums, enrolling beneficiaries on the private marketplace and eliminating non-emergency medical transportation.

“But states can’t make just any changes they want. They have to be approved by the Feds — and they often aren’t.”

To read the Governing story, please hit this link.

Expanding health systems’ pricing power tied to surging premiums and insurer withdrawals

November 1, 2016by Robert Whitcomb in Uncategorized tagged , , , , , ,

 

Ashish K. Jha, M.D., of the Harvard T.H. Chan School of Public Health and an internist at the Veterans Affairs Boston Healthcare System, argues in a JAMA piece that the insurer withdrawals and big insurance premium increases this year are to no small degree attributable to the market power being wielded by ever larger hospital chains.

He thinks that the future of the Affordable Care Act may rest on the federal government’s ability to monitor and regulate healthcare-industry consolidation among practices, hospitals and hospital systems.

“If the ACA is to thrive under the next president, he or she must ensure that we have a dynamic healthcare marketplace,”  Dr. Jha wrote. “For that reason alone, the ability of the ACA to fulfill its promise of greater access at an affordable price will depend as much on the effectiveness of the FTC  {Federal Trade Commission} as it will on the effectiveness of the CMS.”

His remarks come as a federal appeals court decided to support the FTC’s challenge of  the proposed merger between Advocate Health Care and NorthShore University HealthSystem, both in Illinois.

The 7th Circuit Court  of Appeals called a lower court’s decision to allow the proposed merger between the two health systems “erroneously flawed.”

FTC has argued that the deal could hurt both patients and insurers and result in higher medical costs because of the new behemoth’s pricing power. The health systems have been battling with the FTC over  how their market share should be defined.

To read Dr. Jha’s JAMA piece, please hit this link.

N.C. BCBS denounces Feds over risk-corridor payments

November 1, 2016by Robert Whitcomb in Uncategorized tagged ,

 

Blue Cross and Blue Shield of North Carolina has denounced the federal government  for trying to avoid paying it  many millions of dollars in overdue risk-corridor payments.

Modern Healthcare reported: “Although the U.S. Justice Department recently said the insurer’s lawsuit and several others over the controversial three-year program are premature, since payments allegedly won’t be due until next year at the earliest, the North Carolina Blues said that argument runs afoul of the Affordable Care Act and history of the risk-corridor program.”

The insurer attacked the Feds’ recent  moves in a series of lawsuits over risk-corridor payments for 2014 and 2015. North Carolina BCBS alone is owed $147.5 million in overdue payments for its losses  on the Affordable Care Act exchange but so far, the Feds have only paid the insurer $18 million.

The Blues say the risk-corridor program was a major element in the insurer joining the insurance exchange in the state, as it hedged the impact of insuring new customers without necessary medical or actuarial data to help set premium rates. The Feds have touted the program over the years as a way to protect health plans.

Modern Healthcare reported that the Justice Department has asserted that the risk-corridor plan was meant to be budget-neutral, which BCBS disputes, pointing out that  the final rulemaking establishing the risk-corridor program stated  that the program was not going to be budget-neutral.

To read the Modern Healthcare article on this, please hit this link.

Penn. to review definition of hospital charity care

November 1, 2016by Robert Whitcomb in Uncategorized tagged , , ,

 

Responding to a series of articles called “Counting Charity Care,” by the Pittsburgh Post-Gazette, Pennsylvania Gov. Tom Wolf has agreed to review the state’s definition of charity care, the newspaper reports.

The newspaper raised the question of how hospitals make decisions for patients who don’t fill out  charity-care forms. Many hospitals use algorithms to determine if the patient qualified for charity care based on publicly available data.

However, the paper reported, many hospitals don’t tell these patients that they qualified for charity care and that they can  come back for more free care as they would with patients who complete the form.

This practice means that charity care is not necessarily applied evenly among patients, the paper reported.

The Post-Gazette reported:

“Hospitals have given various reasons why they don’t tell the patients — from claiming that the law simply does not require them to, to saying that it would just be too expensive and a ‘burden’ to track down the patients and tell them they qualified.

“Patient advocates say not telling the patient does not appear to follow the law or spirit of the Affordable Care Act, which seeks to get people into a system of regular health care, rather than just receiving care in an emergency room when they are sicker.”

To read the Post-Gazette’s story, please hit this link.

The major cost issues in employer-based insurance: Bigger deductibles and slow income growth

October 28, 2016by Robert Whitcomb in Uncategorized tagged

 

The Commonwealth Fund has compared  cost growth in employer health-insurance coverage during the five years before and the five years after 2010, when the Affordable Care Act was enacted, and looked at changes in workers’ incomes over that time.

The employer-based insurance-cost growth report found premium rises for single health-insurance policies slowed post-ACA enactment overall nationally, and specifically in 33 states and Washington, D.C.

The big problems, the researchers found, was the big rise in deductibles and very slow income growth that failed to keep up with insurance-cost growth.

For a HealthcareDive analysis of the report, please hit this link.

Obama throws support to a public option

October 21, 2016by Robert Whitcomb in Uncategorized tagged , ,

 

President Obama has thrown his support to a  “public option” as part of fixing the Affordable Care Act  as well increasing the number of states with Medicaid expansion and  expanding enrollee tax credits. He called it all addressing the ACA’S “growing pains.”

To address uncompetitive ACA marketplaces, the president proposed creating a “public fallback plan”  — i.e., a “public option” — that would be offered with commercial insurance in  markets with too-limited competition.

He said that it is not “the time to move backwards on healthcare reform” and that “problems that may have arisen from the Affordable Care Act [are] not because government is too involved in the process. The problem is we have not reached everybody and pulled them in.”

To read a Becker’s Hospital Review story on this, please hit this link.

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