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The Payment Reform Landscape: Price Transparency


April 2nd, 2014
by Suzanne Delbanco

Editor’s note: This is the third post in a Health Affairs Blog series on payment reform by Catalyst for Payment Reform Executive Director Suzanne Delbanco. The first two posts are available here and here.

Last week Catalyst for Payment Reform (CPR) and our partners at the Healthcare Incentives Improvement Institute (HCI3) released our second annual Report Card on State Price Transparency Laws. This year, we decided not to grade states on a curve and to place greater emphasis on the price information actually available to consumers—not just what is written in the law.

Forty-five states received an F in this year’s Report Card, but there were a couple of notable exceptions: Massachusetts and Maine. Each month in this blog, I’ve been sharing insights about payment reform and which models are proving to work, so this naturally raises the question: what is the relationship between payment reform and the success of state price transparency efforts?

At CPR, we like to say price transparency is one of the core building blocks of payment reform and a higher-value health care system. Purchasers and consumers need transparency for three primary reasons: (1) to help contain health care costs; (2) to inform consumers’ health care decisions as they assume greater financial responsibility; and, (3) to reduce unknown and unwarranted price variation in the system.

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A March Madness Health Wonk Review


March 27th, 2014
by Chris Fleming

Welcome to the “March Madness” edition of the Health Wonk Review. The NCAA college basketball tournament seemed like a natural theme for a health care policy blog post: huge amounts of money floating around in ways that only sometimes correlate with performance, and head-to-head match-ups that can yield results no one expected (though in the tournament those unexpected results produce quicker and more certain changes than is often the case in health care).

We considered illustrating each blog post with pictures of a college basketball team from the author’s home state celebrating a championship, but we thought better of that after seeing this cautionary tale. So let’s get to the great collection of posts from our Wonkers.

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Implementing Health Reform: Additional Enrollment Opportunities And ACA Litigation (Updated)


March 26th, 2014
by Timothy Jost

On March 26, 2014, the Centers for Medicare and Medicaid Services drew the 2014 open enrollment period toward a close with a flourish, releasing a series of guidance documents regarding opportunities that remain to enroll in coverage after the open enrollment period. The Department of the Treasury also released a guidance, a fact sheet, and letter addressing the situation of domestic violence victims who apply for premium tax credits but are unable to file taxes jointly, as generally required by the ACA.

Extended Enrollment Opportunities

The first CMS Guidance addresses the situation of people waiting “in line” for enrollment in the federally facilitated marketplace or exchange (FFM) on the final day of the 2014 open enrollment period, March 31. CMS anticipates that application traffic will be very high during the last week of open enrollment—over a million individuals visited healthcare.gov on Monday, March 24. Individuals who applied by March 31, but did not complete their application, will be allowed to complete it—effectively given a special enrollment period to finish enrolling. CMS does not specify how long consumers may continue to do so beyond saying that they will have a “limited amount of additional time.” If applicants pay their first month’s premium by the time required by their insurer, they will be able to being coverage on May 1.

Paper applications that are received by April 7, or that were filed by March 31 but uncompleted because they were pending submission or review of documents, can also be approved for coverage beginning May 1 for consumers who choose a plan by April 30. Consumers who take advantage of this special enrollment period may also apply for a hardship exemption to avoid paying the individual responsibility tax for the additional month they are uninsured. The guidance applies only to the FFM, but it clarifies that state based marketplaces can apply similar policies.

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Health Insurance Coverage Is Just The First Step: Findings From Massachusetts


March 26th, 2014

As the rollout of coverage expansions under the Affordable Care Act (ACA) continues across the country, more Americans are gaining insurance coverage, with all the benefits that that implies in terms of health care access and financial protections. However, if, as President Obama has argued, affordable health care is a cornerstone of economic security for American families, findings from a survey of Massachusetts residents suggest that insurance coverage alone will not be enough.

Since its 2006 health reform initiative, Massachusetts has had the nation’s highest level of insurance coverage. But though there have been improvements in access to health care and health care affordability, insurance coverage has not eliminated the burden of high health care costs for Massachusetts families.

Health care costs are a problem for many insured adults. In 2012, more than one-third (38.7 percent) of Massachusetts adults with health insurance coverage for all of the past year reported problems with health care costs, with the level much higher for low-income insured adults (41.6 percent for those with family income at or below 138 percent of the poverty line—the income eligibility standard for the Medicaid expansion under the ACA) and middle-income insured adults (49.5 percent for those with income from 139 to 399 percent of poverty—the income group targeted by the new health insurance Marketplaces). Insured adults in Massachusetts report going without needed health care, cutting back on other spending, reducing savings, and taking on debt to deal with health care costs.

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PCORI’s Research Will Answer Patients’ Real-World Questions


March 25th, 2014
by Joe Selby

As a physician, I know the challenge of helping patients determine which health care options might work best for them given their personal situation and preferences. Too often they — and their clinicians — must make choices about preventing, diagnosing and treating diseases and health conditions without adequate information. The Patient-Centered Outcomes Research Institute (PCORI) was created to help solve this problem — to help patients and those who care for them make better-informed health decisions.

Established by Congress through the Patient Protection and Affordable Care Act as an independent research institute, PCORI is designed to answer real-world questions about what works best for patients based on their particular circumstances and concerns. We do this primarily by funding comparative clinical effectiveness research (CER), studies that compare multiple care options. But more research by itself won’t improve clinical decision-making. Patients and those who care for them must be able to easily find relevant evidence they can trust. That’s why our mandate is not just to fund high-quality CER and evidence synthesis but to share the results in ways that are meaningful to patients, clinicians and others. We’re also charged with improving the methods used in conducting those studies and enhancing our nation’s capacity to do such research.

We will be evaluated ultimately on whether the research we fund can change clinical practice and help reduce the variations and disparities that stand between patients and better outcomes. We’re confident that the work we’re funding brings us and the audiences we serve closer to that goal.

Recently, some questions have been raised in health policy circles about our holistic approach to PCORI’s work. That view holds that direct comparisons of health care options — especially those involving high-priced interventions — should be the dominant if not sole focus of PCORI’s research funding approach as a path to limiting the use of expensive, less-effective options.

We agree that discovering new knowledge on how therapies compare with one another is a critical mandate of PCORI and is essential to improving the quality and effectiveness of care. However, ensuring that patients and those who care for them have timely access to and can use this knowledge, so that they can effectively apply it to improve their decisions, is also very important. That is the reasoning behind our integrated approach path that addresses the gaps in available evidence, and also studies how best to make the evidence available and usable.

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The New Nutrition Facts Panel: Public Health Improvement Or Distraction?


March 19th, 2014
by Brian Elbel

Last month, the United States Food and Drug Administration announced long awaited proposed changes to the Nutrition Facts Panel (NFP), the nutrition information found on the back of packaged foods and beverages. The NFP is required to be on all packaged foods, with significant regulations on what is presented and how the information can be presented. Initially mandated in the first Bush Administration, the NFP offers a clear and consistent manner of presenting nutrition information—at least for those with the time and nutrition knowledge to benefit from the information.

The key questions behind the proposed changes are: will they be successful in altering consumer behavior, how might they be improved, and what overall role might they play in obesity prevention?

The NFP is clearly a source from which those already motivated and knowledgeable can easily access information and a base on which to build future approaches to addressing obesity. Put differently, this information will only work if people actively, directly choose to turn the package over, engage in information, and push past the many impulses pulling them towards the less healthy foods. The compelling nature of unhealthy foods means that individuals have to be particularly motivated, or the nutrition information has to be particularly compelling.

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Why Are Hispanics Slow To Enroll In ACA Coverage? Insights From The Health Reform Monitoring Survey


March 18th, 2014

As the end of the ACA’s first open enrollment period approaches, there is a big push to get as many uninsured people signed up for coverage as possible. As of March 1, 2014, more than 4.2 million people had enrolled in a plan through a federal or state health insurance Marketplace, with 2.1 million having enrolled since January 1 alone. An additional 2.4 to 3.5 million people have enrolled in Medicaid through January 2014 as a result of the ACA.

However, recent media reports indicate that one group with historically high rates of uninsurance—Hispanics—have been slow to sign up for coverage so far, particularly in California. Low levels of Marketplace participation among this group and a delayed and poorly translated Spanish-language version of HealthCare.gov could explain, in part, why President Obama appeared at a town-hall-style event last week hosted by Univision and Telemundo, the nation’s two largest Spanish-language television networks.

Estimates from the Urban Institute’s Health Reform Monitoring Survey (HRMS) shed some light on why Hispanics might have low levels of Marketplace participation so far, and what policies may be needed to increase their enrollment in health plans or Medicaid.

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Nine Questions About My New Medical Home


March 17th, 2014
by Matthew Anderson

Sometime in the past five years — it’s hard for me to say exactly when — I suddenly found myself living in a new home. I must admit I am still a bit disoriented by how this happened. But it did. People keep telling me that everything will be ok but I am not entirely sure.

For example, in my old home we had occasional family meetings; things are different now. We now have weekly (and monthly) meetings. The many new administrators ask us to complete personality surveys. Once we had to figure out what items we should take from a sinking yacht in the South Pacific (hint: the $100 bill will be useful). Another time we had to decide if we were a “Wow” or a “Thinker.” We are asked to figure out how we can do a better job for them. I guess, like all forms of therapy you don’t get better unless you change.

Despite all these meetings there are a series of things I still don’t understand. I am afraid to raise my hand at the meetings and give the impression I’m a bad sport so I have written my questions down. Please, please don’t think I am a Luddite who wants to go back to the old home. In fact, what I dislike most about the new home is precisely the way — even in its differences — it resembles the old home.

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Implementing Health Reform: Exchange And Insurance Market Standards Proposed Rule


March 16th, 2014
by Timothy Jost

On March 14, 2014, the Department of Health and Human Services, Centers for Medicare and Medicaid Services, published a proposed rule titled “Patient Protection and Affordable Care Act: Exchange and Insurance Market Standards.” The rule was accompanied by a bulletin on product discontinuance, one of the issues addressed by the rule. The proposed rule was one of a number of March 14 ACA issuances, the rest of which were addressed in earlier posts.

The Exchange and Insurance Market Standards proposed rule addresses a grab bag of issues that all relate loosely to exchanges or to the ACA’s insurance market reforms. Some of these — like QHP quality reporting — are issues that HHS had failed to address earlier because these issues did not rise to the urgency of other issues that needed to be resolved immediately for health reform to proceed. Others — like regulation of navigators — are issues that had been addressed earlier, but where it has become apparent that mid-course corrections are necessary. Still others, like modifications in the premium stabilization programs, are issues that have arisen in the unfolding course of events as problems developed in implementation.

Most of the issues are largely unrelated to one another; thus this description of the rule will proceed like the rule itself, addressing seriatim a catalog of largely unrelated issues. (A list of topics addressed by the rule is included in a note at the end of this post.)

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Implementing Health Reform: Ryan White Third-Party Payments, 2015 Letter To Issuers, And Other ACA Developments


March 15th, 2014
by Timothy Jost

On March 14, 2014, the Department of Health and Human Services released a flood of regulations, proposed regulations, and guidance addressing a host of Affordable Care Act implementation issues. From all indications, HHS has cleared the decks of all the regulatory issuances it had under consideration– nothing involving ACA implementation remains pending at the Office of Management and Budget. Perhaps someone made a promise that all would be completed by the end of the winter (or by Saint Patrick’s Day). More likely the necessity of having the ground rules for 2015 in place so that insurers could proceed with their 2015 forms and rates, and states with approving them, drove the deluge. In any event, it will take several posts to cover it all.

Yesterday’s post covered a notice on extending the federal preexisting condition high risk pool and a frequently asked questions document on coverage of same-sex spouses. The Internal Revenue Service also released a set of general Tax Tips for Same-Sex Couples (which covers general tax information and will not be discussed here), while HHS issued a blog post summarizing its frequently asked questions document.

This post will cover several other issuances released late in the day on March 14, 2014. These include an interim final rule (with comment period) dealing with third party payments for qualified health plans (QHPs) and stand-alone dental plans (SADPs); the 2015 final annual letter to issuers in the federally facilitated marketplace; a set of frequently asked questions on retroactive coverage, and a set of frequently asked questions on the use of exchange grants and no-cost extensions.

A final post will examine a proposed rule on exchange and insurance standards for 2015 and beyond and an accompanying bulletin on product discontinuance.

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Implementing Health Reform: The 2015 Health Insurance Marketplace Blueprints And More ACA News


March 14th, 2014
by Timothy Jost

In its final 2015 Notice of Benefit and Payment Parameters, the Centers for Medicare and Medicaid Services (CMS) noted that state applications to operate exchanges for 2015 would be due on June 30, 2014. On March 7, 2014, CMS released at its Paperwork Reduction Act (PRA) website the blueprints that states are to use to apply to operate an exchange (called a marketplace in the blueprint). The PRA listing also includes a helpful crosswalk between the proposed and final blueprint.

This post discusses these blueprints as well as other news related to Affordable Care Act implementation, such as an additional one-month extension of coverage in the federal Preexisting Condition High Risk Pool.

The biggest change in the 2015 blueprint is that plan management state partnership exchanges are no longer available. States that decide to assist in plan management functions will do so on an ad hoc basis and are not required to file a blueprint. This change apparently recognizes the reality that many of the states assisting in plan management are not able politically to identify themselves as partners, and thus there is little point in requiring some to do so and not others. States do also not need to file a blueprint regarding their decision on whether to use the federal exchange to assess or determine Medicaid eligibility.

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A Lifetime Value-Based Proposal For Medicare Payment Reform


March 14th, 2014
by Zhou Yang

urrent Medicare reform policy proposals mainly focus on lowering annual cost or cost increase per capita, but they fail to recognize Medicare as a lifetime plan that covers each beneficiary from age 65 to death. I propose a Lifetime Value-Based Payment Plan (LVBPP) for Medicare reform. LVBPP aims to achieve efficient use of the government contribution to Medicare for each beneficiary from age 65 to death and features shared responsibility among beneficiaries, providers, and federal government.

LVBPP includes six major components to create incentives for chronic disease prevention and efficient use of medical care resources by promoting market-based competition on quality of care and innovations in medical technology and care delivery models. Preliminary results indicate that LVBPP could lead to better health in terms of longer longevity and lower disability rate, save up to $70 billion over 10 years, and save up to $164 billion for the federal government over the lifetime of the cohort of upcoming beneficiaries age 55 to 59, as of the 2010 census. (The bases for these savings estimates, as well as suggested values for the expenditure thresholds and copayment rates involved in LVBPP, are provided in the Simulation Appendix below.)

The challenge. There is wide consensus that chronic disease is the leading cause of mortality and rapidly increasing health care costs in the US. Lifestyle choices have been found to be a major factor behind the increasing prevalence of chronic disease. It is estimated that 60 percent of deaths and 70 percent of health care spending in the US are related to lifestyle choices. However, despite volumes of science-based clinical trial results demonstrating positive effects of behavioral change on patients’ long-term well-being, and continuous public media campaigns promoting lifestyle change, there is no sign of reduction in the prevalence rate of chronic disease in the US population.

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Implementing Health Reform: A February Exchange Enrollment Report


March 12th, 2014
by Timothy Jost

On March 11, 2014, the Department of Health and Human Services released its Health Insurance Marketplace March Enrollment Report covering the period of October 1, 2013 through March 1, 2014. The Report covers, that is to say, five of the six months of the 2014 open enrollment period, which ends on March 31, 2014.

As of March 1, 4,242,300 individuals had selected a health plan through the federal and state exchanges, including 1,621,239 who signed up through the state exchanges and 2,621,086 who signed up through the federal exchange. New plan selections were down somewhat in February, with 942,000 individuals selecting a plan as compared to 1,146,000 in January, but February was a short month and the January report included a few days from December, so this does not necessarily indicate a drop in momentum.

There is every reason to believe, moreover, that enrollment will climb sharply in March, the last month of open enrollment. Experience with programs with open enrollment periods, such as Medicare Part D, Massachusetts Commonwealth Care, the Children’s Health Insurance Program, and the Federal Employee Health Benefits Program indicates that people tend to put off signing up for coverage until the last moment. During the 2012 FEHBP open enrollment period, 22 percent of those who changed enrollment did so in the last two days. The administration and partner organizations are also continuing to ramp up enrollment efforts, while exchanges continue to expand capacity.

It is quite likely, therefore, that the exchanges will sign up 6 million individuals—the revised Congressional Budget Office estimate—by March 31, perhaps more. Moreover, even after March 31, millions of additional Americans will qualify for special enrollment periods, for example because they lose Medicaid or employer coverage; thus, the total number of enrollees could easily exceed CBO estimates by the end of 2014.

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Implementing Health Reform: Allowing Noncompliant Policies; Benefits And Payment Parameters Rule (Part 3, IRS Reporting Rules)


March 8th, 2014
by Timothy Jost

Editor’s note: Part 1 of this post discussed the Department of Health and Human Services March 5 bulletin extending until October 1, 2016 its transitional policy permitting the renewal of ACA non-compliant individual and small group health insurance policies. Part 1 also began examining the final 2015 Notice of Benefit and Payment Parameters rule, issued on the same date; that analysis was concluded in Part 2. Part 3 below discusses two final rules also issued March 5 by the Internal Revenue Service regarding reporting by insurers of minimum essential coverage and reporting by employers on coverage under employer-sponsored health plans.

On March 5, 2014, the Internal Revenue Service released two final rules governing two of the Affordable Care Act’s most important reporting rules. One rule implements section 6055 of the Internal Revenue Code, which requires health insurers, self-insured employers, and other entities that provide minimum essential insurance coverage to individuals to report to the IRS information about the type and period of coverage and to provide statements containing this information to covered individuals.

The other rule implements section 6056 of the IRC, which requires large employers (generally employers with at least 50 full-time or full-time equivalent employees) to report to the IRS information concerning the health care coverage that they provide their employees to demonstrate compliance with the employer responsibility provisions of the ACA, and to provide statements to their employees regarding available employer-sponsored coverage so that the employees may determine whether they may claim premium tax credits under the ACA.

These reporting requirements were supposed to be implemented for the 2014 reporting year, but the administration decided last summer to delay the reporting requirements, and with them the employer mandate, because of difficulties with implementing the reporting requirements. The rules are now final and are effective for reports to be filed in 2016 for reporting year 2015.

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Implementing Health Reform: Allowing Noncompliant Policies; Benefits And Payment Parameters Rule (Part 2)


March 7th, 2014
by Timothy Jost

Editor’s note: Part 1 of this post discussed the Department of Health and Human Services March 5 bulletin extending until October 1, 2016 its transitional policy permitting the renewal of ACA non-compliant individual and small group health insurance policies. Part 1 also began examining the final 2015 Notice of Benefit and Payment Parameters rule, issued on the same date. Subsequent installments will discuss two final rules also issued March 5 by the Internal Revenue Service regarding reporting by insurers of minimum essential coverage and reporting by employers on coverage under employer-sponsored health plans.

Reduced notice requirement for new state exchanges. The final 2015 Benefit and Payment Parameters rule requires states that would like to begin operating their own exchanges to notify HHS of this intention by June 15 of the preceding year. Earlier rules had required a year’s notice.

Consumer assistance and privacy. States may permit web brokers to assist individuals, employers, and employees with enrolling in qualified health plans (QHPs) through their exchanges. Agents and brokers must comply with privacy and security standards protecting personally identifiable information and may not use it for marketing. The SHOP exchange, and not the web broker, is responsible for aggregating premiums and forwarding them to insurers. Web brokers must display information on all available QHPs, although insurers may refuse to provide non-appointed brokers with certain information. Web brokers must also provide enrollees with a disclaimer noting that they are not the exchange and may not have full information on all plans.

State exchanges must comply with federal personally identifiable information requirements, but may seek the approval of HHS to use this information to ensure the efficient operation of the exchange if they secure the consent of the individual whose information is to be used. Exchanges that disclose personally identifiable information to non-exchange entities (such as certified application counselors, in-person assisters, brokers, QHP insurers or others) must enter into a contract with these entities ensuring protection of this information. Non-exchange entities that must independently comply with Health Insurance Portability and Accountability Act data privacy and security requirements (such as QHPs) may be deemed to be in compliance with exchange requirements by virtue of their compliance with HIPAA as long as the HIPAA requirements are at least as protective as the exchange requirement and if the entities also comply with additional ACA data protection requirements.

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Implementing Health Reform: Allowing Noncompliant Policies; Benefits And Payment Parameters Rule (Part 1)


March 7th, 2014
by Timothy Jost

March 5, 2014 was a banner day for Affordable Care Act implementation. The Department of Health and Human Services released its final 2015 Notice of Benefit and Payment Parameters rule (fact sheet here), as well as a bulletin extending until October 1, 2016 its transitional policy permitting the renewal of ACA non-compliant individual and small group health insurance policies. The Internal Revenue Service also issued two final rules regarding reporting by insurers of minimum essential coverage and reporting by employers on coverage under employer-sponsored health plans. (fact sheet here)

This post will discuss the HHS bulletin and begin consideration of the benefit and payment parameter rule. Subsequent posts will discuss the remainder of the benefit and payment parameters rule and the IRS rules.

HHS Bulletin On ACA Non-Compliant Policies

On November 14, 2013, the Center for Medicare and Medicaid Services issued a letter to state insurance commissioners informing them that CMS would permit state regulators to allow insurers to renew non-grandfathered health insurance policies in the individual and small group market that did not comply with the 2014 market reform rules for policy years beginning by October 1, 2014. Specifically, renewed 2013 plans did not need to comply with the guaranteed issue and guaranteed renewability requirements; limitations on health status underwriting and preexisting condition exclusions (for adults); the single risk-pool requirement; the prohibition against discrimination; the essential health benefit and clinical trial coverage requirements; and limitations on cost-sharing. (Group plans are not excluded from the preexisting condition and discrimination provisions.) Insurance departments in 27 states allowed insurers to renew 2013 policies, while 21 states and the District of Columbia prohibited renewals.

The March 5, 2014 bulletin permits states and insurers to extend this transitional relief for another two years, that is, for policies renewed prior to October 1, 2016. It also allows states to permit employers with 51 to 100 employees, which are currently considered large employers but will become small employers as of January 1, 2016, to renew their current policies through October 1, 2016. States that had not earlier decided to implement the transitional policy may still do so for 2013 policies renewing in 2014. States may also opt to implement the transitional policy for fewer than two years, or only in the individual or in the small-group market, or only for large employers that become small employers.

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Medicare Part D Proposed Rule: Where Did Things Go Wrong?


March 6th, 2014
by Ian Spatz

It’s worth sitting up and taking notice when everyone seems to hate what you are doing. Last week, 20 of the 24 members of the sometimes fractious Senate Finance Committee wrote Centers for Medicare and Medicaid Services Administrator Marilyn Tavenner about a Medicare Part D proposed rule CMS published on January 10. They told her that they were “perplexed as to why CMS would propose to fundamentally restructure Part D …” and urged her to scrap the plan.

The House Energy and Commerce Committee held a hearing, also last week, with the hardly neutral title of “Messing with Success: How CMS’ Attack on the Part D Program Will Increase Costs and Reduce Choices for Seniors.” At the hearing, Medicare Chief Jon Blum, one of the most well-liked federal health officials there is, was subjected to a bipartisan, first class, grilling.

These Congressional complaints followed on the heels of Feb. 28 letter slamming the proposed rule from 277 organizations (with more organizations continuing to sign on) including patient advocates, insurance companies, health plans, pharmacists, employers, and both brand and generic drug companies.

In fairness to CMS, this is only a proposed rule and comment is what they are seeking. Well, it is comment that they are getting. What has led to this firestorm of criticism?

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Assessing A CMS Proposal To Improve Competition Among Medicare Part D Drug Plans


March 4th, 2014
by Jack Hoadley

In one provision of its January Notice of Proposed Rulemaking (NPRM), for Medicare Part D and Medicare Advantage, CMS proposed that it will accept no more than two stand-alone prescription drug plan (PDP) bids from each Part D plan sponsor, starting in coverage year 2016. The agency stated two reasons for this proposal. First, it would reduce beneficiary confusion in the Part D market by both lowering the number of choices that they face and ensuring that differences between competing options are clear and meaningful to them. Second, it would address the impact of one source of favorable selection that leads to higher costs for the government and the taxpayer. This note looks at evidence from Part D to help understand the context for this proposal.

Reducing the Number of Plan Offerings

The competitive market design of Part D requires that plan enrollees regularly evaluate their options. Our recent study shows that most Part D enrollees have not changed their plan selection from one year to the next, and seven of ten enrollees in stand-alone PDPs did not switch plans over a five-year period. Both the current CMS guidance and the new CMS proposal stem from the principle that available PDPs offered by a given plan sponsor should have “meaningful differences” to help ensure that beneficiaries are presented with a clear and understandable array of choices. The Part D program in 2014 offers the average beneficiary a choice of about 35 PDPs and 20 Medicare Advantage drug plans.

Currently, a plan sponsor may offer up to one plan with the basic Part D benefit as described in statute (or actuarially equivalent to the basic benefit) and two enhanced plans. If two enhanced plans are offered, a sponsor may enhance the benefit through lowering the deductible, cost sharing, or both. The second plan must add substantial coverage in the coverage gap (“doughnut hole”). Current CMS guidance further encourages plan sponsors to eliminate plans attracting few enrollees. Nevertheless, 330 of the 1,169 PDPs in 2014 have fewer than 1,000 enrollees (239 of them with fewer than 500 enrollees) – the level at which CMS encourages sponsors to consolidate smaller plans with another of the sponsor’s plan options.

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How Many Nongroup Policies Were Canceled? Estimates From December 2013


March 3rd, 2014
 
by Lisa Clemans-Cope and Nathaniel Anderson

Editor’s note: This post is co-authored by Lisa Clemans-Cope and Nathaniel Anderson of the Urban Institute.

Last fall, news reports focused on consumer discontent over “cancellation” notices of health insurance policies that did not meet the new minimum standards under the Affordable Care Act (ACA), but it’s difficult to determine exactly how many consumers were affected.  Starting in 2014, most non-group health insurance plans and small employer group plans must offer a minimum set of benefits and consumer protections—for example, plans must not exclude coverage of pre-existing conditions and must offer minimal coverage of certain health benefits such as prescription drugs.

Prior to reform, the nongroup health insurance market suffered from a number of shortcomings, such as benefit exclusions, denials of coverage, premiums that varied greatly by health status, benefit limits, high cost-sharing, and lack of information on plan benefits and design prior to purchase. The new minimum benefit standards and consumer protections work together with additional insurance market provisions that took effect in 2010, expansions of Medicaid eligibility, and income-based subsidies in the new health insurance Marketplaces. Together, these new reforms expanded coverage options for millions of people, and raised minimum benefits and consumer protections for millions more.

Among nongroup plans offered in 2013 that were not compliant with ACA standards, some were amended, some were cancelled, and some were granted “grandfathered” status and are not required to comply with the new rules if enrollees were holding the policy continuously before and since the passage of the ACA and insurers did not substantially change benefits or costs. Some insurers, however, chose to cancel policies that would otherwise have been legally grandfathered for business reasons, such as low enrollment or an enrollee group with high average cost, leading to unsustainable premiums. In fact, the non-group market has historically been highly volatile, with just 17 percent retaining coverage for more than two years.

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Implementing Health Reform: Retroactive Premium Tax Credits And Cost-Sharing Reductions (Updated)


February 28th, 2014
by Timothy Jost

As we move into the last month of the 2014 open enrollment period, the Centers on Medicare and Medicaid Services continues to make mid-course corrections. On February 27, 2014, the CMS issued a “Bulletin to Marketplaces on the Availability of Retroactive Advance Payments of the PTCs and CSRs in 2014 Due to Exceptional Circumstances.” The Bulletin makes it possible for exchanges to allow individuals to obtain advance premium tax credits (PTCs) and cost-sharing reductions (CSRs) retroactively if they have been unable to obtain eligibility determinations and to enroll in qualified health plans (QHPs) through the exchange because the exchange experienced technical difficulties during the 2014 open enrollment period.

Presumably the Bulletin is intended to assist enrollees in states like Massachusetts, Oregon, Maryland, Nevada, and Hawaii, where technical problems have made it difficult or impossible for individuals to enroll in QHPs through the exchange on a timely basis. It could also, however, apply to the federal exchange. Each exchange must apparently decide whether or not to effectuate this policy.

Under the Affordable Care Act, PTCs and CSRs are only available to individuals who enroll in a QHP through an exchange. This Bulletin does not change that. CMS continues to require individuals to be determined eligible for PTC and CSR payments and to be enrolled in a QHP through an exchange. To qualify for assistance under the Bulletin, individuals must also have applied to the exchange using a federally approved application during the open enrollment period.

However the Bulletin allows exchanges to permit individuals who have experienced “exceptional circumstances” related to technical difficulties in enrollment, such that they have not been able to have their eligibility determined and to be enrolled in a QHP through the exchange, to qualify for retroactive PTC and CSR eligibility under two circumstances.

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