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Four Years Into A Commercial ACO For CalPERS: Substantial Savings And Lessons Learned

April 17th, 2014
by Glenn Melnick and Lois Green

Editor’s note: In addition to Glenn Melnick, this post is coauthored by Lois Green.

Background: In a very short period of time, Accountable Care Organizations (ACOs) have become an important and widespread part of the US health care landscape. A recent Health Affairs Blog post estimates the total number of public (Medicare) and private ACOs at more than 600 nationally, covering more than 18 million insured population. Despite their rapid and widespread adoption, relatively little is known about how ACOs actually work and how successful they have been. This is due in part to their relative “newness,” as many reported ACOs are just getting up and running. Others have been operational for short periods of time and have yet to produce meaningful or long-term sustainable results.

This Health Affairs Blog post helps fill some of this void by reporting on the operational experiences of one of the oldest (4+ years) and largest commercial ACOs in the nation. A previous Health Affairs Blog post reported on its initial planning and start-up phase, and a subsequent Health Affairs article reported on its early financial results.

In 2007, Blue Shield of California, along with provider and employer partner organizations, began exploring development of one of the first ACO-like programs in the country to serve Commercial patients. It launched in 2010 and, as reported below, has been generating savings to consumers throughout the period. Located in the competitive Sacramento market of northern California, the ACO is an example of an innovative shared savings model involving a large insurer—Blue Shield of California; a purchaser—the California Public Employees Retirement System (CalPERS); a physician group—Hill Physicians Medical Group (HPMG); and a hospital system—Dignity Health. The population served approximately 42,000 CalPERS employees and their families covered by Blue Shield.

In this Health Affairs Blog interview, senior executives from each of the partnership organizations, all of whom have operational responsibilities and oversight of this ground-breaking Commercial ACO, discuss key operational aspects of the ACO and its implementation. They discuss evolution of the culture, governance and essential “partnership” relationships an ACO requires to survive and thrive. In addition, they detail specific operational initiatives designed to coordinate and manage care, and report on how these initiatives have fared over the four-year period since the ACO’s launch. Empirical results show success in many areas, with challenges in some others. Of particular note has been overall cost of health care (COHC) savings reported at gross savings of more than $105 million, with net savings of $95 million to CalPERS members, since 2010. Finally, the partners illuminate the ACO’s future directions and offer lessons for other organizations considering development of an ACO delivery system for the Commercial market.

The interview was supported by funding from the California HealthCare Foundation.

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Implementing Health Reform: CBO Projects Lower ACA Costs, Greater Coverage

April 15th, 2014
by Timothy Jost

On April 14, 2014, the non-partisan Congressional Budget Office, together with the staff of the Joint Committee on Taxation, released an updated estimate on the Effects of the Insurance Coverage Provisions of the Affordable Care Act. The CBO report brings good news for the ACA. The CBO projects now that the ACA’s coverage provisions will cost $5 billion less for this year than it projected just two months ago. Over the 2015 to 2024 period, CBO projects that the ACA will cost $104 billion less than it projected in February. At the same time, the CBO projects that the number of uninsured Americans will in fact decrease by an additional one million over the next decade, by 26 rather than 25 million, as it estimated in February.

The CBO report estimates that the net cost of the ACA’s coverage provisions will be $36 billion in 2014, $1,383 billion over the 2015 to 2024 period. This estimate consists of $1,839 billion for premium tax credits and cost-sharing reduction payments, Medicaid, CHIP, and small employer tax credits, offset by $456 billion in receipts from penalty payments, the excise tax on high-premium insurance plans, and the effects on tax revenues of projected changes in employer coverage. The CBO report does not include an estimate of the total reduction in the federal deficit attributable to the ACA, as the CBO has concluded that it is no longer possible to estimate the net effect of ACA changes on existing federal programs, but the most recent CBO estimate from 2012 projected that the ACA would reduce the federal deficit over the 2013 to 2022 period by $109 billion. Given projected further reductions in Medicare spending projected in a CBO budget report also released on April 14, it is reasonable to believe that the ACA’s impact on the budget may be even greater than earlier estimated.

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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: 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: Waiting Periods For Employer-Sponsored Health Insurance

February 22nd, 2014
by Timothy Jost

On February 20, 2014, the Departments of Labor, Treasury, and Health and Human Services released a joint final rule to implement an Affordable Care Act provision prohibiting self-insured and insured group health plans from requiring employees to wait more than 90 days before health insurance becomes effective. The final regulation also contains amendments to pre-existing Health Insurance Affordability and Accountability Act regulations to bring them into ACA compliance.

The three agencies also released on February 20 a proposed rule addressing the relationship between orientation programs and the 90-day waiting period.

The Joint Final Rule On Waiting Periods

Waiting periods before health insurance becomes effective are quite common in employer-sponsored insurance. The agencies estimate based on information from the Kaiser Family Foundation/Health Research and Education Trust 2013 employee benefits report that nine percent of new employees, or about 459,000 in 2013, were subject to waiting periods of 4 months or more and may thus be affected by this rule; however, as discussed below, the rule does not necessarily mean that all employees hired will get coverage within 90 days.

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Health Affairs Web First: Positive Results For Value-Based Insurance Design Plans

February 12th, 2014
by Tracy Gnadinger

One of the provisions of the Affordable Care Act calls for the creation of guidelines to facilitate the broader use of Value-Based Insurance Design (VBID) plans. Existing VBID plans have been structured in a variety of ways, and these variations could influence their effectiveness. A new study, “Five Features Of Value-Based Insurance Design Plans Were Associated With Higher Rates Of Medication Adherence,” being released today as a Web First by Health Affairs, evaluated seventy-six VBID plans introduced by a large pharmacy benefit manager (CVS Caremark) during 2007-2010.

Authors Niteesh Choudhry, Michael Fisher, Benjamin Smith, Gregory Brill, Charmaine Girdish, Olga Matlin, Troyen Brennan, Jerry Avorn, and William Shrank found that after adjusting for the other features and baseline trends, VBID plans that were more generous, targeted high-risk patients, offered wellness programs, did not offer disease management programs, and made the benefit available only for the medication ordered by mail had a significantly greater impact on adherence than plans without these features.

The study sample consisted of 274,554 patients provided by thirty-three unique plan sponsors. The majority of VBID plans did not have generous benefits, used copay tiers, and had a disease management program for the condition that the plan targeted. The authors noted that the positive association between wellness programs, patient targeting, and mail-order prescriptions was significant, considering that all these interventions are very low cost and easily implemented.

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Implementing Health Reform: The Employer Responsiblity Final Rule (Part 2)

February 12th, 2014
by Timothy Jost

Editor’s note: This post continues analysis of the employer responsibility rule released by the Internal Revenue Service on February 10, 2014. Part one of this analysis is available here.

Safe harbors. An employer is subject to the 4980H(b) penalty of $3,000 for each full-time employee who receives premium tax credits because the employer failed to offer affordable and adequate coverage. Coverage is affordable if the employee’s share of the premium for employee coverage does not exceed 9.5 percent of the employee’s modified adjusted gross household income. An employer has no way, however, of knowing what an employee’s household income is. The final rule, therefore, provides three safe-harbors for employers to satisfy the affordability requirement.

First, employer-sponsored coverage is affordable if the employee’s share of the premium for the lowest-cost minimum value coverage is not more than 9.5 percent of the employee’s W-2 wages. Second, coverage is affordable if the employee does not have to pay more than 9.5 percent of the employee’s monthly salary or 130 times the lowest hourly rate paid the employee during the month. This safe harbor cannot be used for employees paid through tips or commissions. Third, the employer is protected if the employee is charged no more than 9.5 percent of the federal poverty rates, since an employee is ineligible for premium tax credits if the employee earns less than the poverty rate.

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A Senate GOP Health Reform Proposal: The Burr-Coburn-Hatch Plan

February 12th, 2014
by James Capretta and Joseph Antos

Republican Senators Richard Burr, Tom Coburn, and Orrin Hatch recently released a blueprint for repealing and replacing Obamacare, called the Patient Choice, Affordability, Responsibility, and Empowerment Act, or the Patient CARE Act (PCA). The plan is getting significant attention from supporters and critics alike (including the editorial page of the New York Times) because both sides recognize that it is a serious effort to address the problems in U.S. health care in a manner that is strikingly different from Obamacare. The debate over the merits (or perceived drawbacks) of the PCA proposal was given further impetus by an assessment of its coverage and cost implications from the Center for Health and Economy (H&E), a new think tank headed by former Congressional Budget Office Director Doug Holtz-Eakin (and with a board including several other academics, including Uwe Reinhardt of Princeton University) and devoted to providing independent analytical assessments of major public policy initiatives.

In this short post, we describe the major provisions of the PCA, as we understand them from the descriptive material and conversations with the authors’ staffs. We also offer our views on how to think about the budgetary and coverage implications of the PCA proposal in the context of the estimates produced by H&E.

Major Provisions of the Patient CARE Act (PCA)

Repeal of Obamacare. The starting point for the PCA is repeal of Obamacare in its entirety, with the exception of the law’s Medicare provisions. We do not take the retention of the Medicare provisions from Obamacare as an endorsement of them by the authors. That would be inconsistent with the public record. For instance, Senator Coburn has proposed sweeping reforms of Medicare that differ substantially from the Obamacare Medicare provisions. The retention of the Obamacare Medicare provisions would seem instead to be an acknowledgement that it will be difficult enough politically to enact a sensible reform of the insurance market for the under age-65 population without also having to pass in the same legislation a comprehensive reform of Medicare. A reworking of Medicare is badly needed, of course, but it can be addressed on a separate legislative track from an Obamacare replacement plan.

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Implementing Health Reform: The Employer Responsibility Final Rule (Part 1)

February 11th, 2014
by Timothy Jost

Editor’s note: This is part 1 of a two-part post by Timothy Jost describing the Internal Revenue Service’s final rule implementing the Affordable Care Act’s employer responsbility requirement. Part 2 will appear later today or tomorrow.

It is arguable that as of early February 2014, the most important missing piece of the 2014 Affordable Care Act implementation puzzle was the final employer responsibility rule. The ACA’s market reform, premium tax credit, qualified health plan, and exchange provisions have been in effect, more or less, since the beginning of January, and, although new guidance continues to emerge, the basic rules for these programs have been in place for months. The individual responsibility rule is also in effect, although individuals covered by the rule still have until March 31 to get coverage and those who fail to comply will not pay the penalty until 2015. But the employer responsibility requirement, which was delayed until 2015 in July, has remained in limbo.

On February 10, 2014, the Internal Revenue Service released the final employer responsibility rule, together with a fact sheet and a series of questions and answers about the rule. The rule finalizes rules proposed late in December 2012 and analyzed at that time.

The employer mandate plays a vital but secondary rule in the Affordable Care Act scheme. Our current health care financing system is overwhelmingly employment based. 171 million Americans are currently covered by employment-based coverage, compared to only 11 to 13 million in the individual market. Virtually all (99 percent) of large firms (200 plus workers) offer health insurance to their employees.

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The Changing Health Care World: Trends To Watch In 2014

February 10th, 2014
by Susan DeVore

While today’s news is bombarding us with headlines about, the Affordable Care Act isn’t just about insurance coverage. The legislation is also about transforming the way health care is provided. Consequently, it has ushered in new competitors, services and business practices, which are in turn generating substantial industry shifts that affect all players along healthcare’s value chain. Following are some of the top trends that our alliance is preparing for in 2014:

Chronic Care, Everywhere. It’s no secret that providers are moving quickly to implement accountable care organizations (ACOs). Recently, the Premier healthcare alliance released a survey of hospital executives projecting that ACO participation will nearly double in 2014. As providers work to improve their way to shared savings payments, look for a more intensive focus on the biggest health care consumers: those with multiple chronic conditions.

Since each chronic condition increases costs by a factor of three, managing this population is the sweet spot for the ACO, and the deepest pool from which to pull savings. To do it, an increasing number of providers will deploy Ambulatory Intensive Care Units (A-ICUs) or patient centered medical homes as part of their ACO, which will be charged with better managing chronic conditions exclusively within a clinically integrated, financially accountable primary care practice. As part of the approach, providers will develop care pathways for better managing chronic conditions and behavioral health needs, with an eye toward lowering hospital utilization, including inpatient bed days, length of stay, admissions, readmissions, and ED visits.

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The Payment Reform Landscape: Overview

February 6th, 2014
by Suzanne Delbanco

Editor’s note: This is the first post in a Health Affairs Blog series by Catalyst for Payment Reform Executive Director Suzanne Delbanco. Over the coming months, Delbanco will examine how different methods of payment reform are being employed and how well they’re working. This post provides an overview of payment reform; the next post will examine pay for performance.

Fed up with the status quo, large employers, other purchasers, and health plans have been on a steady march to change how we pay for health care, moving away from paying for care based on volume to paying for value. Some of our health plan colleagues have noted that this march has become an “arms race” to see who can achieve the greatest payment reforms most rapidly. In releasing the first-ever National Scorecard on Payment Reform last March, Catalyst for Payment Reform (CPR) started to measure this progress in the private sector, including the prevalence of specific payment methods. The Scorecard revealed what many of us already know—the vast majority of payment (89 percent) is still tied up in fee-for-service and other methods that are agnostic about the quality of care.

Within the 11 percent of payment meeting CPR’s definition of “value-oriented,” the Scorecard found that 43 percent of those payments give providers financial incentives by offering a potential bonus or added payment to support higher quality and more affordable care, such as fee-for-service with shared savings. The other 57 percent of payments put providers at financial risk for their performance if they do not meet certain quality and cost goals, such as bundled payment. A complete breakdown appears in the table below.

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Workplace Wellness Programs: Continuing The Discussion

January 27th, 2014
by Ron Goetzel

Editor’s note: One of the most-read Health Affairs articles last year was “Wellness Incentives In The Workplace: Cost Savings Through Cost Shifting To Unhealthy Workers,” by Jill R. Horwitz,.Brenna D. Kelly, and John E. DiNardo. The article engendered a Health Affairs Blog discussion between the authors and Ron Goetzel. (See here, here, here, and here.) Below is another installment of that discussion, from Ron Goetzel.

I have had several back and forth conversations with Professors DiNardo and Horwitz. I won’t bore the readers with a re-hash of old arguments. We don’t need to re-litigate the basic premises of our debate, from either point of view. Those interested in following that discussion can review our previous posts.

I would, however, like to respond to a central point made by DiNardo and Horwitz that employers should not interfere with the private lives of employees. I agree with this assertion to a certain point. It should be noted that many employers do “interfere” with employees’ private lives by not allowing them to smoke on premises, requiring them to wear seat belts when driving company vehicles, mandating that they wear protective gear (hard hats, work boots, gloves) at construction sites, and so forth.

Certainly, an employer cannot and should not tell workers what to eat or how much to exercise. However, an employer can provide guidance, education, skill building, and support programs to workers who wish to eat healthy foods and become more physically active. That, in my mind, is not interfering in workers’ lives but rather supporting their efforts at leading a healthy lifestyle.

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Implementing Health Reform: Filling In Details About The Shared Responsibility Requirement (Updated)

January 26th, 2014
by Timothy Jost

Although the Department of Health and Human Services has more or less finished its Affordable Care Act private insurance reform rulemaking agenda for the time being, the Internal Revenue Service still has important regulations outstanding. On January 23, 2014, the Internal Revenue Service proposed a set of less important regulations that further elaborate on the details of the shared responsibility or minimum essential coverage requirement, often called the individual mandate. These proposed rules will supplement and fill a few gaps in the final regulations published in August of 2013, described in an earlier Health Affairs Blog post.

The shared responsibility requirement obligates individuals who are not subject to an exemption to maintain minimum essential coverage (MEC) or pay a tax penalty. This requirement was upheld as a legitimate exercise of the power of Congress to tax in National Federation of Independent Business v. Sebelius.

MEC includes individual coverage, employer coverage, grandfathered coverage, and coverage under a number of government programs, such as Medicaid and Medicare. MEC, however, neither includes all forms of individual insurance coverage nor coverage under all government programs. Under previous rules, for example, MEC does not include Medicaid coverage that does not provide comprehensive medical coverage but rather only covers specific services such as family planning services, tuberculosis-related coverage, pregnancy-related services, or emergency medical care.

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Implementing Health Reform: An October Through December Exchange Enrollment Report

January 13th, 2014
by Timothy Jost

On January 13, 2014, the Department of Health and Human Services released a report on the Health Insurance Marketplace covering the first three months of open enrollment, October 1 through December 28, 2013. The data are reported cumulatively over the three month period rather than only for December, recognizing the fact that enrollment is a process that happens over a period of time and thus data reported separately on a monthly basis could be duplicative. Nevertheless the trends are very clear: the federal and many of the state exchanges are now in business, and enrollment is increasing at a rapid pace.

As of the end of December 2,153,421 Americans had enrolled in a qualified health plan: 956,991 had selected a plan through the state exchanges; 1,196,430 through the federal exchange. Three times as many enrollees selected a plan through the state exchanges in December (729,000) than had done so in October and November (227,000); five times as many selected a plan through the federal exchange in December (1,059,000) than had done so in October and November (137,000).

As of December 28, 2013, the exchanges had received a total of 4,348,224 applications, covering 7,716,824 individuals. Of these individuals, 5,130,798 were determined eligible for enrollment in an exchange-qualified health plan; 1,584,509 were determined or assessed eligible for Medicaid or CHIP. These numbers were dramatically increased from the 2.3 million determined eligible for exchange coverage and 803,077 eligible for Medicaid as of the end of November. A recent survey by the Commonwealth Fund found that 59 percent of adults who are potentially eligible for exchange coverage, but who had visited the exchange and not enrolled or had not yet visited the exchange, planned to enroll by March 31, 2014, the end of the open enrollment period. It is likely that many of the three million who have been determined eligible but not yet enrolled will yet do so.

The December report reveals new information on enrollees who qualified for premium tax credits. In October only 30 percent of enrollees who were determined eligible for exchange enrollment were determined eligible for financial assistance; by November the percentage had climbed to 50 percent. In the December report that number climbed only marginally, to 53 percent. The December report for the first time, however, tells us the proportion of individuals who actually enrolled in a plan who received financial assistance: 78 percent in the state-based exchanges, 80 percent in the federal exchange. This is close to the level of subsidy-eligible exchange enrollees projected by the Congressional Budget Office and suggests that the exchanges are actually reaching the uninsured — those who could not have previously afforded health insurance — as well as individuals who had individual coverage previously but really could not afford it.

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Implementing Health Reform: Affordable Care Act Round-Up

December 23rd, 2013
by Timothy Jost

As we reach the end of what has been a very long, exhausting, year for health care reform, one would have hoped that the pace of implementation might slow a little for the holidays. No such luck. December 20 ended the week before Christmas with a number of Affordable Care Act developments.

First, President Obama held a press conference that focused in part on health reform issues. The President announced that:

more than half a million Americans have enrolled through in the first three weeks of December alone. In California, for example, a state operating its own marketplace, more than 15,000 Americans are enrolling every single day. And in the federal website, tens of thousands are enrolling every single day. Since October 1st, more than 1 million Americans have selected new health insurance plans through the federal and state marketplaces.

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Implementing Health Reform: CMS Affordable Care Act Guidance

December 18th, 2013
by Timothy Jost

The Center for Medicare and Medicaid Services appears to have cleared its Affordable Care Act regulatory agenda for 2013—at least no proposed or final rules implementing Title I remain pending at the Office of Management and Budget. Nonetheless, guidance continues to steadily drip out of CMS and partner agencies as they prepare for the next steps of ACA implementation on January 1, 2014.  This information, however, is not always that easy to find.

Medicare and exchange coverage. First, CMS posted in December, 2013, at the website a set of questions and answers on Medicare and the Health Insurance Marketplace. The website is a useful site for consumer information on the exchange implementation, but CMS seems to be now using it to post policy guidance as well.

Basically, if individuals have Medicare, the exchanges are completely irrelevant to them. The two programs proceed on largely separate paths.  The exchanges do not sell Medicare Advantage, Medicare supplement, or Part D drug plans. Medicare coverage satisfies the individual responsibility minimum essential coverage requirement. Indeed, it is illegal for anyone to sell an exchange plan to someone who is covered by Medicare.

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Implementing Health Reform: The Delay Of SHOP Exchange Online Enrollment

November 28th, 2013
by Timothy Jost

On November 27, 2013, just as the nation headed out for the holiday, the Department of Health and Human Services announced that online enrollment in the federal SHOP exchange for small businesses would not be available until the 2015 open enrollment period in November of 2014. It also released a set of questions and answers as to how the federal SHOP would function in the interim. It is important to understand that this is not a delay of the federal SHOP exchange itself, but rather of one SHOP exchange functionality, albeit an important one.

States that operate their own exchanges (including Utah which only operates a SHOP exchange) will be able to offer online enrollment, but in some of them the SHOP exchange is not yet functional or does not offer coverage through the entire state.

The idea of the SHOP exchange actually predates the ACA, originating in bipartisan legislation proposed by moderate Republicans and Democrats at least as early as 2008. As the idea was finalized in the Affordable Care Act, the SHOP exchange was intended to allow “qualified employers,” that is small employers with between 1 and 100 employees (or, at a state’s option, 1 to 50 employees), to purchase qualified health plans for their employees.

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Implementing Health Reform: The 2015 Notice Of Benefit And Payment Parameters Proposed Rule; ACA Supreme Court Litigation

November 26th, 2013
by Timothy Jost

On November 24, 2013, the Department of Health and Human Services published its 2015 Notice of Benefit and Payment Parameters Proposed Rule. The benefit and payment parameters rule is a regulation that HHS must publish each fall describing the payment parameters of the premium stabilization (risk adjustment, reinsurance, and risk corridor) and cost-sharing reduction programs, as well as the federal exchange user fees for the following year. The notice is also an opportunity to tweak other aspects of the ACA health insurance programs, and this Notice proposes changes in rating methods in the small business health options program (SHOP); privacy and security rules for personally identifiable information; the annual open enrollment period for 2015; the actuarial value (AV) calculator; the annual limitation on cost sharing for stand-alone dental plans; the meaningful difference standard for qualified health plans offered through the federal exchange; and patient safety standards for issuers of qualified health plans. Finally, the Notice makes a few changes in the 2014 premium stabilization program.

This is in all likelihood the last major proposed rule to come out of HHS before the launch of the qualified health plan and the premium tax credit and cost-sharing reduction programs on January 1, 2014. We are likely to see more rulemaking activity from the Internal Revenue Service in 2013, but HHS has finished its regulatory work. Indeed, although the Proposed Notice does make some adjustments in the program for 2014, it is primarily oriented toward the second year of the program, 2015.

The benefit and payment parameters proposed notice is supposed to appear in October each year to provide time for the states and health plans to make adjustments for the next following year. This Proposed Notice was sent by HHS to the Office of Management and Budget for review on September 24, 2013 and released by OMB on November 8. It is emblematic of troubled launch of the HHS programs that the Proposed Notice is only now appearing now in late November. It does, however, propose a host of practical adjustments for 2015, and a few for 2014, that should smooth the way going forward.

Modifying premium stabilization programs. Notably, the Proposed Rule proposes a couple of adjustments in the premium stabilization programs for 2014, recognizing the changes in the 2014 risk pool that are likely to result from the exchange website troubles and the administrative fix undertaken to accommodate the nonrenewal of 2013 health insurance policies and plans.

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