The Washington Extension

August 26, 2011

Medicare News

CMS announced the initiation of the bundled care payment incentive program created by the Affordable Care Act (ACA). This program is designed to incentive greater cost efficiency by sharing savings that accrue to Medicare with providers. The agency is seeking requests to join the program, allowing applicants to define the “bundle” and name their own target price. Providers can bundle acute hospital stays, hospital and post-acute care, or just post-acute care. The idea of designing their own bundle appeals to hospitals but it’s too early to know whether the incentives are strong enough.

ACA Updates

On August 17, HHS proposed new rules requiring health insurers to present clear, consistent and comparable information about benefits and coverage to consumers. In tandem with the departments of Labor and Treasury, this requirement for a standardized summary of coverage will apply to health plans in the individual and group markets. Representatives from associations representing health insurers and businesses caution that this new burden could add costs to the health care system.

The ACA did not appropriate funding for the Federal government to set up a fallback exchange, if that becomes necessary. HHS can impose fees or design other methods to fund the exchange on an ongoing basis—similar to states’ authority—but the lack of an explicit allowance for funds to establish the exchange may complicate the Federal government’s initial efforts.

Although the legislature failed to establish an exchange, Mississippi’s state Insurance Commissioner authorized a nonprofit group operating in the state already to run its exchange. Mississippi recently received over $20 million in funding to help establish its exchange. Governor Haley Barbour supports establishment of a health insurance exchange, although Mississippi is part of the lawsuit suing the Federal government over the constitutionality of health reform.

On the Hill

While Congress is recessed, the so-called “Super Committee” is beginning discussions about how to trim the nation’s deficit, though it may be off to a bumpy start. This 12-member panel—half Republicans, half Democrats, split evenly between the Senate and House of Representatives—is responsible for recommending $1.2 trillion in spending cuts and/or revenue increases. If it fails, across-the-board spending cuts to Medicare and defense are automatically triggered.

Reports/Other News

Preliminary results from a Towers Watson survey of almost 400 midsize to large companies indicate although employer health care costs are expected to rise more slowly in 2012 compared to 2011, almost 90% of employers are planning steps to control their costs. This may be due to the belief of 56% of employers that they will be liable for the excise tax beginning in 2018 for “high-cost” health insurance. Just over half of employers that offer retiree health insurance plan to discontinue benefits for pre- and post-65 retirees, though Towers does not report whether employers are considering alternate ways to help retirees afford health insurance (e.g. an HRA).

Thomson Reuters released an analysis of geographic variation in health care spending, finding that high Medicare spending is not necessarily correlated with high spending by employer-sponsored private insurance in the same area. The study did not adjust for demographic characteristics, pricing or health status.

Visit Extend Health — the nation’s largest private Medicare exchange.

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