Washington Extension

January 20, 2012

Medicare News

Medicare Advantage plans that offer gym memberships to enrollees may have the same effect as cherry picking healthy beneficiaries, according to a new study in the New England Journal of Medicine. The authors found that enrollees in plans with gym memberships are healthier and have fewer mobility limitations than enrollees in plans without fitness benefits. The study did not address whether the plans were purposefully trying to attract and retain healthier enrollees, which is prohibited by law.

Gradually increasing the Medicare eligibility age to 67 would save the Federal government $148 billion over ten years, according to a new Congressional Budget Office report, or about a 5 percent annual reduction in Medicare spending. Although most seniors losing access to Medicare would have employer-based coverage, they would face higher premiums and pay more out-of-pocket for health care.

ACA Update

The White House released a report showing that 28 states have taken concrete steps toward establishing a health insurance exchange—half with clear authority to set up an exchange and half with executive orders or studies authorizing exchange work. Another 22 are still studying their options. The report highlights the actions of ten states and summarizes the authority and funding for exchange development in each state.

Wisconsin Governor Scott Walker will officially return a $37 million Early Innovator grant from the Federal government. He has also directed the state health agency to cease work on a state-run health insurance exchange and will rescind the creation of the state Office of Free Market Health Care. Kansas House Republicans are pressuring Governor Sam Brownback to cancel the state’s $135 million contract with Accenture to design a computer system to track social service applicants. Though Governor Brownback has put a moratorium on health insurance exchange work until after the Supreme Court decision, Republicans saw Accenture’s project as laying the groundwork for an exchange. New Hampshire’s Senate voted unanimously to establish a health insurance exchange, with backers citing the need to keep state control over if the ACA is implemented. New Hampshire’s House is opposed to ACA implementation.

The US Department of Health and Human Services faces pushback on its essential health benefits proposal. Patient advocates are asking for an additional 45 day comment period, after the initial deadline of January 31, 2012. Republicans are criticizing the use of sub-regulatory guidance rather than the traditional rulemaking process, accusing HHS of sidestepping regulatory requirements for cost-benefit and unfunded mandate analyses.

On the Hill

The House and Senate conference committee assigned to negotiate a longer-term solution to the payroll tax break and Medicare physician payments will convene on January 24th. The House returned to Washington, DC on January 17th and the Senate returns on the 23rd. Current law expires on February 29th, at which point Medicare’s payments to physicians would fall by nearly one-third.

Other News/Reports

The Congressional Budget Office found that Medicare demonstration programs—used to explore new ways to deliver and pay for Medicare—rarely reduce Medicare spending and in fact are often more costly. Value-based payment experiments struggled to overcome Medicare’s fee-for-service payment incentives while trying to increase the quality and efficiency of care delivered, and only successfully decreased spending by negotiating lower payment rates. CBO concludes that effective demonstration programs focus on transitions in care settings, gather timely data on care utilization, encourage close interaction between physicians and case managers, and target interventions to high-risk enrollees.

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

In keeping with its mandate to inform the public of the measures it’s considering for adoption, the Centers for Medicare & Medicaid Services (CMS) has compiled a list of 367 new ideas on how to accurately and fairly measure doctors, hospitals and other health care providers. The proposed measures came from a variety of sources, including the CMS, CDC, industry groups, companies, health care organizations, universities, research groups and others. After a thorough review, CMS is expected to adopt about 60 of the measures.

A key goal of the Patient Protection and Affordable Care Act (ACA) is to shift reimbursements from being based on the quantity of services delivered to being based on improved efficiency, lower costs and improved quality of care provided. These new measures will be assessed and selected based on their ability to help CMS in their efforts to achieve this goal.

In addition, the ACA requires a federal “pre-rulemaking process” for selecting quality and efficiency measures. In compliance with this requirement, CMS submitted the entire list of proposed measure to the NFQ organization Measures Application Partnership (MAP) for their review.  MAP has studied the proposed measures to determine which ones it believes will accurately and fairly measure health care provider performance.” Their pre-rulemaking report is posted online and indicates which measures it does and does not endorse.

The new measures under consideration for 2012 are spread across 12 out of 23 CMS programs. In the chart below (from the CMS list of measures) you’ll find the number of measures being considered listed by program. It’s interesting to note that most of the measures are concentrated into just a few of the programs.

  • 153 measures (more than 40%) fall under the CMS program Physician Quality Reporting System
  • Other programs with many new measures include Medicare and Medicaid Incentive Program for both eligible professionals and for Hospitals and CAHs, and Hospital Inpatient Quality Reporting
  • None of the measures are related to the Medicare Shared Savings Program, Health Insurance Exchange Quality Reporting, or Medicare Part C and Part D Plan Rating Programs.
CMS Program

No. of new measures

End Stage Renal Disease Quality Improvement


Hospice Quality Reporting


Hospital Inpatient Quality Reporting


Hospital Value-Based Purchasing


Inpatient Psychiatric Facility Quality Reporting


Inpatient Rehabilitation Facility Quality Reporting


Long-Term Care Hospital Quality Reporting


Medicare and Medicaid EHR Incentive Program for Eligible Professionals


Medicare and Medicaid EHR Incentive Program for Hospitals and CAHs


Physician Quality Reporting System


Prospective Payment System (PPS) Exempt Cancer Hospital Quality Reporting


Physician Feedback/Value-Based Modifier Program: Value-Based Payment Modifier






The Washington Extension

December 16, 2011

Medicare News

Senator Ron Wyden (D-OR) and House Budget Chairman Paul Ryan (R-WI) introduced a plan to reform Medicare beginning in 2022, including premium support, a Medicare Exchange, and a cap on annual Medicare spending. The members tout their plan as increasing choice for seniors, spurring innovation, and lowering health care costs through competition among private plans and traditional Medicare. The plan also expands health care options for small businesses by allowing employees to use employer contributions to purchase their own health care. The reforms draw from ideas that Mr. Ryan and Mr. Wyden have previously backed. Though key details are omitted from the plan, critics of premium support have questioned its ability to lower costs, provide adequate premium support amounts, and protect low-income beneficiaries. Political reactions are divided largely along party lines, with Democrats asserting that the plan will undermine Medicare and Republicans cautiously supporting it as worthy of consideration.

ACA Update

The early retiree health insurance fund—established by the ACA to help employers maintain coverage for non-Medicare eligible retirees until 2014 when exchanges are running—will accept its last claim on December 31, 2011. The $5 billion fund has already exhausted $4.5 billion. According to Democrats, the rapid exhaustion is due to the program’s popularity with employers, though Republicans assert the premature shut-down proves the inaccuracy of cost estimates when the ACA was passed.

Minnesota has posted multiple exchange prototypes for employers and individuals to test drive, including websites from Ceridian, Curam Software, MAXIMUM/Connecture, Getinsured.com, and Deloitte. The functionality of the websites range from Deloitte, with actual plan search capability, to MAXIMUM’s, which appears to have only demonstration videos posted. Minnesota is asking for public feedback on the modules to influence its vendor selection process and development of an online interface.

On the Hill

Congress must act before the end of the year to avert a nearly 30% Medicare pay cut to physicians, and may pair short-term relief from the cuts with extension of the payroll tax holiday and unemployment benefits, also set to expire at year-end. The extension could be as short as two months, but will still require Congress to come up with $40 billion to pay for the bill. A House-passed bill earlier in the week offset the extensions in part by reducing the Medicare subsidy that certain higher-income beneficiaries receive, thereby increasing premiums and reducing government spending.

Both Senate committees with jurisdiction over health care—Finance and Health, Education, Labor and Pensions—held hearings on widespread prescription drug shortages reported across the country. Witnesses at the hearings cited quality control issues, manufacturing delays, supply disruptions and price changes as problematic in ensuring a constant supply of drugs.

HHS is expected to release information about essential health benefits that plans offered through health insurance exchanges will be required to cover. Look for the release here or here. The Institute of Medicine, at the HHS Secretary’s request, released a report earlier in the year recommending criteria and methods for determining and updating essential benefit requirements.

Reports/Other News

Seniors age 50+ and near retirement are more concerned about their ability to afford health care expenses (24%) than current retirees (17%), according to an Allstate-National Journal Heartland Monitor poll. Three-quarters of near-retirees believe they will have to work after retirement and over half say they will retire later than their parents.

The Government Accountability Office released a report on “job lock” due to employer-sponsored health insurance, finding that workers with health insurance from their employer are less likely to change jobs, leave the labor market, become self-employed, or retire when eligible, compared to workers with alternative sources of coverage. Experts surveyed generally agreed that broader access to health insurance in the ACA may help mitigate job lock, but opinions differed about the extent.

The Washington Extension will return in 2012. Happy Holidays!

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

For the latest news on Medicare and health care reform visit our Breaking News page.

The Urban Institute released a report this month titled, Why Employers Will Continue to Provide Health Insurance: The Impact of the Affordable Care Act. The authors of the report utilized microsimulation models to analyze ways employers might react to health care reform. Based on the results of these complex simulations they predict that employer-sponsored insurance (ESI) will remain the preferred and primary source of coverage. The report states that ESI coverage won’t be significantly different under the ACA, and points out that ESI actually grew in Massachusetts after it enacted health care reform similar to the ACA.

For more information the report and summary are available in PDF format.

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

Washington Extension

October 21, 2011

Medicare News

HHS released quality rating scores for 2012 Medicare Advantage plans. Nine out of 569 plans received the top score (five stars) and approximately 20% of plans are not rated due to lack of data. Of the nine top-rated plans, four are operated by Kaiser Permanente and all are HMOs. Other insurers—notably United Healthcare—have significantly lower average star ratings but are aggressively pursuing higher rankings. The Affordable Care Act tied significant funding, estimated at $3-4 billion in 2012, to high-quality rankings. The average plan rating is 3.56 stars, up 0.11 stars over 2011.

Just prior to the release of Medicare Advantage quality rankings, Kaiser Permanente released a survey of Medicare beneficiaries showing lack of awareness of quality rankings. The survey revealed that less than 20% of beneficiaries are aware of the rating system. Of those, less than one-third used quality rankings to choose a plan. Beginning this year, HHS’ Medicare Plan Finder highlights top-rated Medicare Advantage plan with a gold star to help seniors find high-quality plans.

ACA Updates

The Obama Administration effectively shut down the CLASS Act—the long-term care insurance scheme championed by the late Senator Kennedy and enacted in the Affordable Care Act. HHS sent a lengthy and detailed report to Congress explaining the attempt to develop an actuarially sound plan that would provide benefits required by law and ensure solvency over 75-years. Republicans assert that the failure of the CLASS Act is representative of the devastating effects the ACA would have and the House Energy & Commerce Committee has scheduled a hearing to explore the cancellation. The White House counters that CLASS is a stand-alone program with no effect on the rest of the law.

Despite his opposition to the Affordable Care Act, Wyoming Governor Matt Mead supports recommendations from a health insurance exchange steering committee to establish a state-run exchange through an executive order. The committee was skeptical that an exchange office could be established through the state legislature and wants to decide whether to run an exchange by 2013.

Arkansas’ Insurance Commissioner is concerned that it is too late to pass exchange authorizing legislation, and is advocating for a Federally-run exchange with state regulatory and oversight responsibilities. This hybrid model has been suggested by HHS as an option for states. Controversy over whether Arkansas should apply for Federal grant funding for exchange work continues within state government, leading to reversal of plans to seek funding for exchange progress.

On the Hill

The deficit reduction “Super Committee” is flooded with suggestions and protests for achieving its $1.2 trillion goal, with about a month left before recommendations are due. Most submissions are recycled policy ideas from previous debates, but aim to avoid harmful impacts from across-the-board cuts. In addition to comments from interest groups, think tanks, individual Congressman and caucuses, and industry, the Super Committee received recommendations from congressional committees both bipartisan and along partisan lines. Despite the multitude of ideas, the Super Committee’s work appears to be progressing slowly and will be discussed in public next week.

Reports/Other News

Humana has exited Utah’s health insurance exchange, citing its desire to prioritize its own solutions for the small business market. The exchange opened to all small employers in the state one year ago, and Humana was one of the largest insurers to participate.

The Kaiser Family Foundation released an analysis of the competitiveness of state health insurance markets. Analyzing the composition of state insurance markets may help state policymakers decide how to implement new insurance market rules, decide whether to operate an exchange, and conduct more effective premium rate review. In 30 states, one insurance company had more than 50% of the individual plan market share in 2010, while in the small group market the median market share of the largest insurer is 51%.

The Healthcare Leadership Council—a coalition of healthcare executives—released a survey of Part D enrollee experiences with the drug benefit. The survey found that almost 90% of enrollees are satisfied with their drug plan, and 70% report being better off than before Part D. Eighty-five percent agree that they understand how to use their plan and that it works well, and slightly fewer agree that their out-of-pocket costs are reasonable.

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

On Wednesday (10/12), the federal government released its annual review of private Medicare Advantage health plans. In addition, 5-Star quality ratings are now posted along with the plans loaded in “Medicare Plan Finder available on Medicare.gov.

This year health plans are paying much closer attention to their ratings because they stand to make more money if they score higher on Medicare’s 5-star quality rating system. The bonuses could be substantial, even for insurers that only make small increases in their ratings. Carriers with well-rated plans hope that the droves of baby boomers becoming eligible for Medicare will pay attention to the star ratings and choose their plans.

The ratings are based on 36 measures in five categories, covering things like screenings, tests, complaints, service, and other relevant measures. There’s a helpful CMS document called, “Choose Higher Quality for Better Health Care,” that provides a very good overview of the program. We also recommend reading our previous blog post, “New MA star ratings released by CMS.”

For more, check out these very good articles written recently on the subject.
Private Medicare Plans Use Stars To Navigate For Profits” from NPR

Chasing The Stars, Insurers Improve Quality — And Revenue” from Kaiser Health News

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

To make it easy for you to find the latest news on Medicare and health care reform we will be posting important stories for you throughout the week. To find the news that’s important to you check out our new page, “Today’s Top Medicare and Health Care Reform News.” You’ll find the link in the side bar on the right.

We hope you enjoy this new feature of our blog and find it useful on a regular basis. As always, we welcome your thoughts and comments. Thank you!

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

The recently announced CMS Comprehensive Primary Care (CPC) Initiative will increase Medicare payments to primary care providers who adopt a coordinated care model. This model centers around teamwork between doctors, specialists and providers working together to prevent and manage chronic diseases. HHS officials expect this coordination to yield improved quality and cost savings.

The CPC demonstration project will take place in five to seven markets selected by the CMS. According to recent KHN article, “CMS is looking for areas with multiple interested insurers, both public and private. These insurers will then help target and select about 75 practices in each market.” The providers selected will receive $20 per month for each Medicare beneficiary during the first two years. They can use these funds at their own discretion to develop the infrastructure necessary to support coordinated care.

The CPC initiative will test two models at the same time: a service delivery model that will test comprehensive primary care, and a payment model where primary care practices will be paid a fee and could potentially share in Medicare savings generated. CMS will evaluate providers after a year and determine the amount of Medicare savings they will share.

This four-year CMS demonstration project will begin next year. Insurers who want to participate must submit a letter of intent by November 15, 2001. Applications are due January 17, 2012. After CMS selects the markets, solicitations for primary care providers in those markets will be issued. Funds should start going out in the summer of 2012. Over time, CMS expects to expand the coordinated care model to all patients.

For more information read these articles from CMS Innovations and Kaiser Health News.

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

Employer group insurance premiums for family coverage grew 9% this year (triple the rate from 2010) and 8% for single coverage, according the 13th annual Employer Health Benefits survey conducted by Kaiser Family Foundation. Despite the increases, employers held the percentages workers paid toward premiums to about the same as they paid in 2010 (18% for single coverage and 28% for family coverage).

So what caused the sharp increases in the cost of health premiums this year? Since many have voiced concerns about the impact health care reform would have on costs, fingers will naturally point there first, but the study points out that it was not the main contributor. The research shows that provisions of the new health care law that were in effect only had about a 1.5 to 2 percent impact on the 9% increase. According KHN, “Many factors drive premium growth, the main one being actual spending on medical care, including jumps in prices charged by hospitals and doctors and growing use of expensive new drugs and technologies.”

Learn more about the results of this study in this article on Kaiser Health News. Download a summary or the full report.

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