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Pick the right provider and get money back



For Kaiser Health News

Laurie Cook went shopping recently for a mammogram near her home in New Hampshire. Using an online tool provided through her insurer, she plugged in her ZIP code. Up popped facilities in her network, each with an incentive amount she would be paid if she chose it.

Paid? To get a test? It’s part of a strategy to rein in health care spending by steering patients to the most cost-effective providers for non-emergency care.

State public employee insurance programs were among the early adopters of this approach. It is now finding a foothold among policymakers and in the private sector.

Scrolling through her options, Cook, a school nurse who is covered through New Hampshire’s state employee health plan, found that choosing a certain facility scored her a $50 check in the mail.

She then used the website again to shop for a series of lab tests. “For a while there, I was getting a $25 check every few weeks,” said Cook. The checks represented a share of the cost savings that resulted from her selections.

Lawmakers in nearby Maine took the idea further, recently enacting legislation that requires some private insurers to offer pay-to-shop incentives, part of a movement backed by a conservative foundation to get similar measures passed nationally.

Similar proposals are pending in a handful of other statehouses, including Virginia, West Virginia and Ohio.

“If insurance plans were serious about saving money, they would have been doing this stuff years ago,” said Josh Archambault, a senior fellow at the Foundation for Government Accountability, a limited-government advocacy group based in Naples, Fla., that promotes such “right-to-shop” laws. “This starts to peel back the black box in health care and make the conversation about value.”

Still, some economists caution that shop-around initiatives alone cannot force the level of market-based change needed. While such shopping may make a difference for individual employers, they note it represents a tiny drop of the $3.3 trillion spent on health care in the U.S. each year.

“These are not crazy ideas,” said David Asch, professor of medicine, medical ethics and health policy at the Penn Medicine Center for Health Care Innovation in Philadelphia. But it’s hard to get consumers to change behavior — and curbing health care spending is an even bigger task. Shopping incentives, he warned, “might be less effective than you think.”

If they achieve nothing else, though, such efforts could help remove barriers to price transparency, said Francois de Brantes, vice president and director of the Center for Value in Health Care at Altarum, a nonprofit that studies the health economy.

“I think this could be quite the breakthrough,” he said.

Yet de Brantes predicts only modest savings if shopping simply results in narrowing the price variation between high- and low-cost providers: “Ideally, transparency is about stopping folks from continuously charging more.”

Among the programs in use, only a few show consumers the price differences among facilities. Many, like the one Cook used, merely display the financial incentives attached to each facility based on the underlying price.

Advocates say both approaches can work.

“When your plan members have ‘skin in the game,’ they have an incentive to consider the overall cost to the plan,” said Catherine Keane, deputy commissioner of administrative services in New Hampshire. She credits the incentives with leading to millions of dollars in savings each year.

Several states require insurers or medical providers to provide cost estimates upon patients’ requests, although studies have found that information can still be hard to access.

Now, private firms are marketing ways to make this information more available by incorporating it into incentive programs.

For example, Vitals, the New Hampshire-based company that runs the program Cook uses, and Healthcare Bluebook in Nashville offer employers — for a fee — comparative shopping gizmos that harness medical cost information from claims data. This information becomes the basis by which consumers shop around.

Crossing Network Lines

Maine’s law, adopted last year, requires insurers that sell coverage to small businesses to offer financial incentives — such as gift cards, discounts on deductibles or direct payments — to encourage patients, starting in 2019, to shop around.

A second and possibly more controversial provision also kicks in next year, requiring insurers, except HMOs, to allow patients to go out-of-network for care if they can find comparable services for less than the average price insurers pay in network.

Similar provisions are included in a West Virginia bill now under debate.

Touted by proponents as a way to promote health care choice, it nonetheless raises questions about how the out-of-network price would be calculated, what information would be publicly disclosed about how much insurers actually pay different hospitals, doctors or clinics for care and whether patients can find charges lower than in-network negotiated rates.

“Mathematically, that just doesn’t work” because out-of-network charges are likely to be far higher than negotiated in-network rates, said Joe Letnaunchyn, president and CEO of the West Virginia Hospital Association.

Not necessarily, counters the bill’s sponsor, Del. Eric Householder, who said he introduced the measure after speaking with the Foundation for Government Accountability. The Republican from the Martinsburg area said “the biggest thing lacking right now is health care choice because we’re limited to our in-network providers.”

Shopping for health care faces other challenges. For one thing, much of medical care is not “shoppable,” meaning it falls in the category of emergency services. But things such as blood tests, imaging exams, cancer screening tests and some drugs that are administered in doctor’s offices are fair game.

Less than half of the more than $500 billion spent on health care by people with job-based insurance falls into this category, according to a 2016 study by the Health Care Cost Institute, a nonprofit organization that analyzes payment data from four large national insurers. The report also noted there must be variation in price between providers in a region for these programs to make sense.

Increasingly, though, evidence is mounting that large price differences for medical care exist — even among rates negotiated by the same insurer.

The price differences are so substantial it’s actually scary,” said Heyward Donigan, CEO of Vitals.

At the request of Kaiser Health News, Healthcare Bluebook ran some sample numbers for a Northern Virginia ZIP code, finding the cost of a colonoscopy ranged from $670 to $6,240, while a knee arthroscopy ranged from $1,959 to $20,241.

Another challenge is the belief by some consumers that higher prices mean higher quality, which studies don’t bear out.

Even with incentives, the programs face what may be their biggest challenge: simply getting people to use a shopping tool.

Kentucky state spokeswoman Jenny Goins said only 52 percent of eligible employees looked at the shopping site last year — and, of those, slightly more than half chose a less expensive option.

“That’s not as high as we would like,” she said.

Still, state workers in Kentucky have pocketed more than $1.6 million in incentives — and the state said it has saved $11 million — since the program began in mid-2013.

Deductibles, the annual amounts consumers must pay before their insurance kicks in and are usually $1,000 or more, are more effective than smaller shopping incentives, say some policy experts.

In New Hampshire, it took a combination of the two.

The state rolled out the payments for shopping around — and a website to look for best prices — in 2010. But participation didn’t really start to take off until 2014, when state employees began facing an annual deductible, said Deputy Commissioner Keane.

Still, the biggest question is whether these programs ultimately cause providers to lower prices.

Anecdotally, administrators think so.

Kentucky officials report they already are witnessing a market response because providers want patients to have an incentive to choose them.

“We do know providers are calling and asking, ‘How do I get my name on that list’ [of cost-effective providers]?” said Kentucky spokeswoman Goins. “The only way they can do that is to negotiate.”


Many parents with job-based insurance turn to Medicaid, CHIP to cover kids




For Kaiser Health News

Lower-income parents who have health insurance through their employers are increasingly likely to forgo family coverage and enroll their kids in Medicaid or the Children’s Health Insurance Program (CHIP) instead, a new study found. Working families’ growing reliance on these programs is something that lawmakers should keep in mind when they consider whether to renew financing for the CHIP program in 2017, the study’s lead author said.

“These aren’t just safety net programs for uninsured families,” said Douglas Strane, a clinical research associate at PolicyLab at the Children’s Hospital of Philadelphia and the lead author of the study, which appeared in the December issue of Health Affairs. “If CHIP isn’t renewed, we could place substantial pressure on working families.”

Medicaid is the state-federal program that provides health coverage for low-income adults and children. CHIP provides health insurance for children in families whose incomes are modest but too high to qualify for Medicaid. In 2016, only three states — Arizona, Idaho and North Dakota — limited Medicaid/CHIP coverage to children whose families have incomes less than 200 percent of the federal poverty level ($40,320 for a family of three). In contrast, 19 states offered coverage to children with family incomes greater than 300 percent of the federal poverty level ($60,480 for a three-person family), according to the Kaiser Family Foundation.

Medicaid/CHIP out-of-pocket costs vary by state, but coverage is generally significantly less expensive than employer coverage.

The Health Affairs study analyzed data from the Medical Expenditure Panel Survey between 2008 and 2013 for families with incomes between 100 and 400 percent of the federal poverty level in which at least one parent had employer-sponsored coverage. The study predated the opening of the health law’s marketplaces, but the researchers said that because these families had employer-based coverage options, they would likely not qualify for less expensive coverage on the exchanges.

Over the course of the study, nearly all the families in which a parent was offered coverage accepted it for the parent, and about three-quarters of children in the sample were covered by their parents’ employer-sponsored plan, on average.

But the proportion of kids who lacked employer-sponsored coverage even though at least one parent had it grew from 22.5 percent in 2008 to 25 percent in 2013, the study found. Likewise, the percentage of children who were on Medicaid or CHIP even though at least one parent had coverage through an employer increased 3.1 percentage points, to 15.2 percent, over the course of the study.

Premium increases for employer-sponsored coverage may put a family plan out of reach for low- and moderate-income families, said Strane. Between 2006 and 2016 premiums rose 58 percent for family coverage, according to the Kaiser Family Foundation’s 2016 annual survey of employer-sponsored coverage. This year, families pay $5,277 for coverage on average, 29 percent of the total cost of the plan. Workers’ share of the premium grew 78 percent over the past decade, outpacing the growth in premiums, according to the KFF study.

“They did the math and likely figured CHIP was going to save them money,” said Strane.


Majority in poll support single-payer health insurance


A new Gallup Poll found that a 58 percent majority of American adults support replacing the Affordable Care Act with a federally funded system of universal coverage. Such a policy is similar to the single-payer, “Medicare for all” plan 0f Democratic presidential candidate Sen. Bernie Sanders, whose campaign has increased the popularity of a single-payer system.

A move to universal coverage to replace the current very, very complicated and expensive private-sector-state-federal health-insurance “system” is starting to look increasingly possible in the next few years.


Replacing ACA tax credits seen hurting poor


The Commonwealth Fund has been looking at some Republican suggestions to replace the Affordable Care Act. For instance, the fund notes, tax credits for  buying health insurance in the ACA marketplaces are designed to limit enrollees’ premium contributions to a percentage of their income.  Critics have pushed the idea of replacing those contributions with  “premium support” to give enrollees a fixed subsidy amount—regardless of their premium costs.

In a new analysis for The Commonwealth Fund Blog, Evan Saltzman, of the University of Pennsylvania’s Wharton School, and Christine Eibner, of RAND,  say that premium-support models could place financial burdens on low-income and older individuals.



UnitedHealth warning a call for Obama action?



For Kaiser Health News

UnitedHealthGroup laid out a litany of reasons Thursday why it might stop selling individual health insurance through federal and state markets in 2017 — a move some see as an effort to compel the Obama administration to ease regulations and make good on promised payments.

Those problems, including low participation by healthy people, have led to financial losses, according to UnitedHealth. If not addressed, similar issues could affect other insurers, causing more to exit the market in the coming years, some Wall Street analysts and policy experts said.

Many said they anticipate the federal government will act to forestall widespread departures, particularly because continued withdrawals could be politically explosive during an election year.

A key piece of the Affordable Care Act, the online marketplaces, also called exchanges, opened in 2014 for people who buy their own insurance because they don’t get it through their jobs. Enrollment, while growing, has fallen short of capturing the share of the eligible uninsured that was anticipated. This year, the marketplaces saw enrollment of more than 9 million customers, although the law’s expansion of Medicaid enrollment in many states has also played a large role in reducing the overall number of uninsured.

Only a month ago, United sounded more optimistic about business on the exchanges. But in its unexpected disclosure Thursday, the insurer said it would cut its earnings forecast and projected hundreds of millions in losses stemming from the policies it sells through the health law’s marketplaces.

The turnaround led some analysts to ask the insurer what had changed.

Stephen Hemsley, UnitedHealth chief executive officer, said too many healthy people dropped coverage and noted slower than expected enrollment. A major factor, he added, was far higher costs for those who signed up  for 2015 coverage under special exemptions after the general open enrollment period ended.

Those exemptions included, for example, people who lost their insurance, moved or suffered a hardship, such as an eviction or had their utilities turned off. United said it did not see a similar increase in costs for people who bought policies from private brokers or Web sites instead of the government marketplaces after open enrollment, suggesting  that the reason was partly that the company’s eligibility assessments were more thorough.

The firm did not say that it would halt sales in 2017 but warned that it would strongly consider doing so based on what happens in the next few months.

“We cannot sustain these losses,” he told Wall Street analysts. “We can’t subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”

Although it’s the nation’s largest insurer, United captured only a small percentage of consumers who currently have coverage through the Affordable Care Act marketplace, in part because it sat out the first year of enrollment and really ramped up only for this year’s coverage.

While seen as a serious challenge to the ACA, United’s decision alone doesn’t mark the death knell for the exchanges. In remarks to analysts and press reports on Thursday, Aetna and insurer Kaiser Permanente re-affirmed their commitment to selling through the marketplaces.

HHS Spokesman Ben Wakana defended the government marketplaces, noting that 9 of 10 of policyholders re-enrolling have a choice of three or more insurers for next year. “The reality is we continue to see more people signing up for health insurance and more issuers entering the Marketplaces, and at the end of January, we believe we’ll be looking at another successful open enrollment– just like the last two,” he said. “[Thursday’s] statement by one issuer is not indicative of the Marketplace’s strength and viability.”

But insurers, including Humana, Aetna and some of the large Blue Cross Blue Shield plans, were losing money or barely breaking even on their marketplace business, according to earnings reports.

“If there are no changes, all the large publicly traded companies will end up leaving,” said Ana Gupte, analyst with Leerink Partners. “But I would be very surprised if [the Department of Health and Human Services] doesn’t do something to accommodate their issues.”

Those options would be limited to what the agency could do without congressional action, many analysts said. Still, that could include relaxing some regulations or reconsidering some of the exemptions that allow people to sign up after the open enrollment period.

Consultant and former insurance executive Robert Laszewski said  that the administration needs to relax the rules to give insurers more flexibility to design plans that would attract healthier people. He said the costs – including deductibles and premiums – were too high for many people, particularly those with few medical needs.

“Disproportionately, the sick are signing up and the healthy are dropping out,” said Laszewski, adding that alternative plans with fewer benefits but lower costs should be made available.

Economist Len Nichols cautioned, however, that most of the law’s benefit requirements – taken individually – add little to the cost of a plan. Removing the bigger-ticket requirements, such as coverage for maternity care, would leave consumers without adequate coverage, said Nichols, who directs the George Mason University Center for Health Research and Ethics.

Nichols, Gupte and other analysts agree with the industry’s trade lobby, which says one thing that he administration could do is make good on a promise to pay insurers under a temporary program designed to redistribute profits from some insurers that did especially well to offset losses others experienced in the marketplace plans. That program, however, has paid only about 13 cents on the dollar of what was promised, mainly because fewer insurers than expected made money.

Earlier this month, HHS Secretary Sylvia Burwell said the administration is exploring ways it might be able to help make those payments, although such a move comes too late to save many of the dozen insurance cooperatives that have announced they will pull out of the market in January. The less-than-anticipated payments are often cited as a main factor in the co-ops demise.

Many millions more could be insured


Hackers’ new focus is health insurance



Video: Why and how are hackers focusing on health-insurance companies.



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