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For High-Risk Medicare Beneficiaries: Targeting CMMI Demonstrations On Promising Delivery Models

April 22nd, 2014

Medicare beneficiaries with multiple chronic conditions, certain types of serious conditions (e.g. heart disease, pulmonary disorders, mental disorders, cancer), and functional limitations have higher health and long-term care costs and more adverse outcomes than other beneficiaries.

One of the biggest opportunities for savings for Medicare, Medicaid, and beneficiaries themselves, is through reducing hospitalizations, readmissions, and institutional care, especially for these high-risk beneficiaries. Achieving these savings and serving this population will require innovative delivery models and a clear business case to convince organizations to implement those new models.

The Affordable Care Act set aside $10 billion for experiments in innovative care delivery and payment systems.  With these funds, the Centers for Medicare and Medicaid Innovation (CMMI) is launching and evaluating several initiatives, primarily Accountable Care Organizations (ACOs), bundled payment for care innovation, and primary care transformation.  These initiatives change financial incentives for health care providers so that while they bear some financial risk for the costs of providing care, they also stand to benefit from any savings produced.

Historically, it has taken additional legislative action to apply successful delivery models more broadly across the Medicare program. Now, the health care law has removed this barrier, giving the Secretary of Health and Human Services the ability to expand successful innovations that improve quality or lower costs.  While early results show improvements in quality and modest savings, most CMMI pilots and demonstrations to date are not specifically targeted on high-risk beneficiaries, where the biggest gains can be expected.

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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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Financial Orphan Therapies Looking For Adoption

March 6th, 2014

There exist scientifically promising treatments not being tested further because of insufficient financial incentives. Many of these therapies involve off-label uses of drugs approved by the Food and Drug Administration that are readily available and often inexpensive. Pharmaceutical companies—largely responsible for clinical drug development—cannot justify investing in such clinical trials because they cannot recoup the costs of these studies.  However, without prospective data demonstrating efficacy, such treatments will never be adopted as standard of care.

In an era of increasing health care costs and the need for effective therapies in many diseases, it is essential that society finds ways to adopt these “financial orphans.” We propose several potential solutions for the non-profit sector, pharmaceutical companies, health insurers, patient driven research and others to accomplish this goal.

Drug Development Today

Under today’s drug development model, the vast majority of clinical trials are sponsored by pharmaceutical companies, and the process is lengthy, expensive, and, some have argued, inefficient. The cost of developing a new FDA approved drug is estimated to exceed $1.2 billion, the average time from lead to market is typically over 10 years, and only 1 in 10 drugs entering a phase I study is finally approved. Thus pharmaceutical companies, seeking to recoup this investment, conduct a return on investment (ROI) calculation with attention to both scientific and financial considerations such as the chances of success and whether the therapy will be sufficiently profitable to justify the high cost of clinical development.

These considerations sometimes lead to inefficient outcomes from society’s perspective in which promising and potentially transformative therapies are not pursued because of improperly designed financial incentives. We call such therapies “financial orphans.”

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Patients’ Views On Reforming The Physician Fee-For-Service Payment System

February 28th, 2014
by David Schleifer

Virtually all serious proposals for health care cost containment include reforming the fee-for-service payment system.  Last fall’s bipartisan proposal to fix Medicare’s sustainable growth rate included provisions to reward physicians for providing high-value rather than high-volume care.  Ostensibly, realigning physicians’ financial incentives would lead to higher quality, better coordinated, and more appropriate care.

But would patients necessarily be aware that their physicians are being paid differently? And would they even care? A new research report from Public Agenda and the Kettering Foundation suggests that consumers could play a role in advancing payment reform.  But in order to work through the trade-offs of changing the system, employers and payers must help members of the public understand that most reimbursement is currently fee-for-service.

Public Agenda asked a total of 44 insured and uninsured Americans, 40 to 64 years old, to deliberate together in focus groups over the pros and cons of several approaches to cost containment. Participants had some recent contact with the health care system as patients but none were seriously ill. They considered payment reform, price transparency, increased consumer cost-sharing, government price-setting, and expanded access to Medicare, among other approaches.  We held the deliberative focus groups in February and March 2013 in Secaucus, New Jersey; Montgomery, Alabama; and Cincinnati, Ohio, as well as a pilot in Stamford, Connecticut. After the groups, we followed up with participants for in-depth interviews. These focus groups do not provide information about how other types of consumers, particularly young people, view different approaches to addressing health care costs.

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Jeffrey Brenner On GrantWatch: The Future For Population Health

February 21st, 2014
by Tracy Gnadinger

In a recent GrantWatch Blog post, Jeffrey Brenner raises the question, “What if Thomas Edison had to write grant proposals to invent the light bulb?” Brenner is a MacArthur fellow, medical director of the Urban Health Institute, and executive director and founder of the Camden Coalition of Healthcare Providers.

Brenner uses the Edison analogy to look at current grant funding and population health.

Since 1945 the National Institutes of Health (NIH), a federal government agency that funds medical research, has spent $547 billion dollars to cure disease and push the frontiers of medical knowledge. This spending has been supplemented by funding from private foundations. Sadly, despite all of this spending we have little understanding of how to deliver better care at lower cost to every American. At best, in the field of population health, we have a few light bulbs that stay lit for an hour or two, but we lack even basic knowledge to drive this field forward.

With 85 million baby boomers in the midst of retiring and a health care system that consumes 18 percent of our economy, it is not a small problem. We do not understand the fundamental drivers of health care utilization; the basic rules for designing and implementing effective interventions; the best ways to use data to plan, implement, manage, and evaluate interventions; nor how to train staff to run and lead these interventions. Why the lack of progress?

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Care Delivery And Coordination In The Accountable Care Environment

February 19th, 2014

Editor’s Note: This post is the fourth in a periodic Health Affairs Blog series on palliative care, health policy, and health reform. The series features essays adapted from and drawing on an upcoming volume, Meeting the Needs of Older Adults with Serious Illness: Challenges and Opportunities in the Age of Health Care Reform, in which clinicians, researchers and policy leaders address 16 key areas where real-world policy options to improve access to quality palliative care could have a substantial role in improving value.

As we enter the world of accountable care, palliative care programs bring tremendous assets to our health care system. Accountable care organizations (ACOs) seek to improve quality and reduce costs for a defined population of patients, and palliative care offers value on both the quality and cost sides of the equation.

Palliative care improves quality

Patients facing a serious illness value survival, quality of life, and minimization of suffering for themselves and their families. For patients with far-advanced disease, hospice care is the “gold standard” of care in meeting these goals. Palliative care achieves these goals for patients who are living with a serious illness but may not be at the end of life. Many studies demonstrate a panoply of improved outcomes for patients receiving palliative care: improved quality of life, reduced symptoms, enhanced emotional support, improved communication with physicians, earlier and more frequent use of hospice, reductions in family distress, improved survival, and greater satisfaction with care.

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National Health Spending Growth Remains Low For Fourth Consecutive Year

January 6th, 2014
by Tracy Gnadinger

A new analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS), released today in the January 2014 issue of Health Affairs, estimates that health care spending in the United States grew at a rate of 3.7 percent in 2012 to $2.8 trillion. That level of annual growth is similar to spending growth rates since 2009, which increased between 3.6 percent and 3.8 percent annually. This means that growth during all four years has occurred at the slowest rates ever recorded in the fifty-three-year history of the National Health Expenditure Accounts.

Total health care spending in 2012 grew more slowly than did the gross domestic product (GDP), which means that the share of the economy devoted to health care fell slightly from its 2011 level of 17.3 percent to 17.2 percent in 2012 (these shares reflect a large upward revision to the GDP in July 2013 that caused a corresponding downward revision to the health spending proportion of GDP). Faster growth among some services was partially offset by slower growth in other areas, said Anne B. Martin, an economist in the Office of the Actuary at CMS and lead author of the Health Affairs article.

“The low rates of national health spending growth and relative stability since 2009 primarily reflect the lagged impacts of the recent severe economic recession,” Martin said. “Additionally, 2012 was impacted by the mostly one-time effects of a large number of blockbuster prescription drugs losing patent protection and a Medicare payment reduction to skilled nursing facilities.”

Personal health care spending (health care goods and services), which accounted for 85 percent of total national health spending, increased by 3.9 percent in 2012, 0.4 percentage points faster than in 2011. This uptick in growth was influenced primarily by faster growth in hospital and physician and clinical services. Partially offsetting this acceleration was slower growth in spending for prescription drugs and nursing home care. Spending growth trends among health care payers varied as well in 2012. Medicaid and out-of-pocket spending grew faster in 2012 than in 2011, but growth in private health insurance and Medicare spending was slightly slower.

Although the Affordable Care Act  had a minimal impact on aggregate health spending through 2012, several provisions continued to affect certain subcomponents of national health expenditures, such as increased Medicaid rebates for prescription drugs, the Medicare drug coverage gap (“donut hole”) discount program, coverage for dependents under age twenty-six, and the minimum medical loss ratio provision (which requires insurers to spend a minimum percentage of premium revenue on medical claims and health care quality improvements).

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Recent Health Policy Briefs: Specialty Pharmaceuticals And Medicare Hospital Readmissions

November 25th, 2013
by Tracy Gnadinger

The latest Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation explains many of the current debates surrounding the use of specialty pharmaceuticals. Specialty pharmaceuticals—drugs and biologics used to treat chronic, serious, or life-threatening diseases—are complex to manufacture and distribute, often difficult to administer, and may require special patient monitoring. They are a rapidly growing share of the costs borne by both public and private health plans. A patient could pay a few thousand dollars a month to use them, and the annual total cost for some products could exceed $100,000. This policy brief discusses the potential impact of specialty pharmaceuticals on consumers and the health care industry and some of the key challenges for policy makers.

The immediately preceding Health Policy Brief describes the Medicare Hospital Readmissions Reduction Program (HRRP), established as part of the Affordable Care Act. This program imposes financial penalties on hospitals with higher than expected readmissions. The program aims to create an incentive for hospitals to reduce the number of patients who return to the hospital within 30 days for treatment of three key conditions: acute myocardial infarction (that is, heart attack), heart failure, or pneumonia. The HRRP, in operation for only two years, already has shown results. Despite this success, some policy makers fear unintended consequences for safety-net hospitals, potentially putting vulnerable populations at risk.

Health Policy Briefs are aimed at policy makers, congressional staffers, and others needing short, jargon-free explanations of health policy basics. Sign up for an e-mail alert about upcoming briefs. The briefs are also available from the Robert Wood Johnson Foundation’s website. Please feel free to forward the briefs to any of your colleagues who are tracking health issues. And after you’ve taken a look, we welcome your feedback at:

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Premium Rate Variation In Exchanges Is An Eye Opener

August 7th, 2013

Like a burlesque strip tease for health policy wonks, the slow motion unveiling of premiums for state health insurance exchanges has generated a lot of attention, unease, and, yes, excitement. The 2014 premiums, the first for Obamacare’s centerpiece feature of health insurance marketplaces, represent nothing short of a referendum on the “affordable” in the Affordable Care Act.

In just the past few weeks, Maryland and New York have joined the show. Putting aside the “rates are too high” vs. “rates are well below expectation” arguments, one fact seems obvious from looking at the rates. With the very big exception of California, the variance among plan rates is startling.

We took a look at the rates for silver plans, the ones most closely watched as they form the basis for computing the premium subsidies. We also looked at the variation between the second-highest and second-lowest cost silver-level plans. This is a simple way to eliminate outliers at the high end and the low end of the premium range. It also allows us to include the cost of the second-lowest-cost silver plan, the premium from which the subsidies are determined.

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Unpacking The Meaning Of ‘Rationing’: A Response To Dowd And Allison

June 27th, 2013
by Uwe E. Reinhardt

Bryan Dowd and Kirk Allison are to be thanked for their lengthy treatise on the word “rationing.” It is a term whose interpretation economists have left to politicians — not invariably models of erudition. Check the subject index of introductory textbooks or even intermediary textbooks in economics and rarely will you see there the term “rationing.”

Part of the lack of clarity on the term can be laid at the doorsteps of the profession that claims to know all about resource allocation but rarely ever takes up the subject of rationing in its teaching. Sadly, modern textbooks in economics are, by and large, just copies of one another — worse than me too drugs in which at least one molecule is changed. At some point, someone forgot to cover the term, so all other texts followed.

But another reason for the lack of clarity on the term reflects the fact that even economists cannot seem to agree on its meaning.

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Competing Visions: A Response to John Goodman

April 4th, 2013
by Uwe E. Reinhardt

In his post “Why don’t Republicans Have a Vision for Health Reform” (April 2, 2013) John Goodman offers interesting comments on my earlier post “Reflections on The Federal Budget Resolutions” (March 21, 2013). I thank him for the comments.

My post was focused strictly on the vision for U.S. health care that Democrats and Republicans on Capitol Hill now project through the Senate budget resolution and the House budget resolution. Goodman, on the other hand, builds from my post a bridge to the vision some Republicans – including Goodman himself – have in the past projected for U.S. health care.

I can understand why Goodman used the well-known technique of the bridge, because he believes that Republicans currently do not have vision for health care. On this point, however, I beg to differ. There actually is a current Republican vision. It has been expressed through the House budget resolution.

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Health Affairs Briefing: The Triple Aim Goes Global

April 1st, 2013
by Rob Lott

You are invited to join us on Wednesday, April 11, when Health Affairs will hold a briefing to discuss its April 2013 issue, “Triple Aim Goes Global.”

The April issue examines how all high-income countries are struggling to pursue better health, better care, and lower cost – and to bring all of these goals into alignment. The issue received funding support from The Commonwealth Fund, the Nuffield Trust, and Imperial College London.

The briefing will take place at the Barbara Jordan Conference Center at the Kaiser Family Foundation, 1330 G Street, NW, in Washington, DC, on Thursday, April 11, 2013, 8:00 a.m. – 12:30 p.m.

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Health Policy Brief: The Multi-State Plan Program

March 29th, 2013
by Rob Lott

A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation discusses the Multi-State Plan Program created under the Affordable Care Act. Under the program, at least two health insurance plans choosing to participate will offer coverage through every state-run, federally facilitated, and partnership exchange created under the law. Insurance companies meeting the eligibility criteria have until March 29, 2013, to submit applications to participate in 2014.

The program was created to enhance competition among health plans within the new exchanges. It will be administered by the federal Office of Personnel Management, or OPM, which also administers the Federal Employees Health Benefits program offering coverage through a variety of health plans.

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CMS’s Innovation Center Evaluates New Care and Payment Models

March 27th, 2013
by Rob Lott

A Health Affairs Web First article released today describes the new rapid-cycle approach to program evaluation at the recently established Center for Medicare and Medicaid Innovation. The Affordable Care Act created the Innovation Center within the Centers for Medicare and Medicaid Services (CMS) to test payments and service delivery models, reduce costs in Medicare and Medicaid, and improve quality.

As the Innovation Center moves ahead with innovative payment and service delivery models, the Rapid Cycle Evaluation Group at the center delivers frequent feedback to providers while evaluating the outcomes of each model tested. When a model is considered for testing, staff from the Rapid Cycle Evaluation Group and CMS’ Office of the Actuary are immediately assigned to help create the model. The Office of the Actuary provides timely and impartial actuarial, economic, and statistical estimates–and monitors Innovation Center initiatives once testing has begun. This group’s rigorous and speedy assessment and evaluation is driven by performance metrics and robust new methodologies.

Researchers from the evaluation group have also been organized into “affinity groups” and use CMS data to answer critical policy questions that may shape future payment and service delivery models. The Innovation Center also plans to identify and promote population health metrics–measures of the functional status, healthy behavior, and health outcomes of a population–to promote disease prevention and achieve a more accountable, equitable, and coordinated health care system. All these efforts will contribute to the Innovation Center’s success in carrying out its mission of improving the quality of care combined with the slowing spending growth.

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Implementing Health Reform: The Premium Increase Review Final Rule

May 20th, 2011
by Timothy Jost

Editor’s Note: This is the latest in a series of posts by Timothy Jost on the implementation of the Affordable Care Act.  Earlier posts have analyzed some important guidances, as well as provisions governing state waiver requests, student health plans, premium review, medical loss ratios, insurance exchanges, coverage for pre-existing conditions, appeals of coverage denials, coverage for […]

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Free Access to Health Affairs Papers on Imaging Self-Referral Boom

December 27th, 2010
by Jane Hiebert-White

In the December issue, Health Affairs published a series of papers on the effects of self-referral by physicians for imaging services. Princeton economist Uwe Reinhardt spotlighted the set of papers in a Christmas Eve blog post in the New York Times’ Economix blog: A fascinating narrative on how private health insurers and Medicare have both […]

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Implementing Health Reform: The Premium Review Regulation

December 22nd, 2010
by Timothy Jost

Editor’s Note: This is the latest in a series of posts by Timothy Jost on the implementation of the Affordable Care Act.  Earlier posts analyze provisions governing the medical loss ratio, insurance exchanges, coverage for pre-existing conditions, appeals of coverage denials, coverage for preventive services, a patient bill of rights, grandfathered plans, tax-exempt hospitals, the small employer tax credit, the […]

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New Health Affairs: Acute But Nonemergency Patients Going To ERs

September 8th, 2010
by Chris Fleming

The busy daytime schedules of office-based primary care doctors, coupled with limited access to primary care services, have led a large number of Americans to seek care in hospital emergency departments, even when the problem may not be an emergency.  According to a new study in the September issue of Health Affairs, more than a quarter […]

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The Check’s (Almost) In The Mail

May 27th, 2010
by Chris Fleming

As Americans start to understand the concrete benefits contained in the Patient Protection and Affordable Care Act (PPACA), public attitudes about the new law will become more favorable. That at least is what the Obama administration is counting on. The administration has worked to quickly begin some of those benefits – such as a ban […]

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Sherry Glied On Mental Health And Mandates

May 26th, 2010
by Chris Fleming

The Senate Finance Committee is scheduled to vote today on the nomination of Sherry Glied to be the Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services. The President nominated Glied, a professor and chair of the department of Health Policy and Management at Columbia University’s Mailman School of Public […]

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