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Health Affairs Web First: The Bottom Line On Different Management Models In State Health Exchanges


December 17th, 2014

The Affordable Care Act gives states discretion as to how they design their health insurance Marketplaces. Some states run their own Marketplace; others are part of the federally facilitated exchange; and a few chose a state-federal partnership. All states have plan management responsibilities, and if a state runs its own Marketplace, it has management choices. A “clearinghouse” model of management is when all health plans meeting published criteria are accepted into the exchange.

This model is used by some state-run exchanges and all the state-federal partnerships and federally facilitated exchanges. The alternative is the “active purchasing” model, allowing a state to directly negotiate premiums, provider networks, and other details. This model has been adopted by ten of the seventeen state-run exchanges.

A new study, released today as a Web First by Health Affairs, found that in the 2013–14 open enrollment period, state-based Marketplaces using a clearinghouse model had significantly lower adjusted average premiums for all plans within each metal tier (bronze, silver, and gold) compared to state-based Marketplaces having active purchasing models. This study offers the first attempt to assess the premium differences across Marketplace models.

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Why I Oppose Payment Reform


December 12th, 2014

I recently gave the keynote address at the New York State Health Foundation Conference “Payment Reform: Expanding the Playing Field.” This blog post is adapted from those remarks (you can watch the half-hour speech beginning around the eight-minute mark).

I had my epiphany shortly after I announced my departure from the National Academy for State Health Policy (NASHP) about nine months ago. In an effort to help find my successor, I contacted some executive search firms. One firm quoted what they referred to as the “market price.” When I pressed them to tell me how much effort this price represented, they declined to do so. Ultimately, I recommended that NASHP contract with a search firm that charged by the hour.

It was then that I realized that, given the choice between capitation (a fixed fee for the outcome I desired) and fee-for-service (an hourly rate with no accountability for the outcome), I, as a purchaser, chose fee-for-service. Only a hypocrite would go around talking about the importance of payment reform, while secretly conducting business the old way!

Having given the matter some further thought, I present my five reasons for opposing payment reform:

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Two Theologies Have Blocked Medicare-For-All


December 11th, 2014

Editor’s note: This post is part of a series of several posts stemming from presentations given at “The Law of Medicare and Medicaid at Fifty,” a conference held at Yale Law School on November 6 and 7.

In the 50 years since Medicare was enacted, Congress has never seriously considered extending Medicare to all Americans, nor even lowering Medicare’s eligibility age below 65. This pattern persisted even during those periods when national health insurance was at the top of the national agenda. This is not what the original advocates of Medicare anticipated when Medicare was enacted in 1965. They saw Medicare as the cornerstone of a national system of health insurance that would eventually cover all Americans.

Two Myths that Undercut Medicare-for-All: Managed Care and Competition

In the paper we presented at the Yale conference, we reviewed short- and long-term factors affecting the debate about Medicare over its lifetime, and then turned to a discussion of two long-term factors: the rise of what came to be called the managed care movement, and the resurgence of a longstanding campaign promoting the idea that competition can right the wrongs of American medicine.

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What To Watch For During This Year’s Open Enrollment Period: Lessons From The Health Reform Monitoring Survey


December 10th, 2014

The Obama Administration recently lowered its expectations on the number of individuals that are likely to enroll in health insurance plans through the Marketplace by the end of 2015—suggesting that it might be more difficult than expected to find and enroll remaining uninsured residents while retaining people who signed up during the first open enrollment period (New York Times; Wall Street Journal; Washington Post’s “Wonkblog”).

One potential barrier to enrollment is low levels of Marketplace awareness among the uninsured: September 2014 estimates from the Urban Institute’s Health Reform Monitoring Survey (HRMS) indicate that only 52 percent of uninsured adults reported hearing some or a lot about the health insurance Marketplace created by the Affordable Care Act (ACA). Despite this large knowledge gap, awareness of the Marketplace has improved since last September, when only 30 percent of the uninsured reported hearing some or a lot about the Marketplace prior to the first open enrollment period.

While increasing awareness of the Marketplace will continue to be important as the second open enrollment period unfolds, there are two additional issues that may determine how many more uninsured people actually gain coverage this year. First, will the remaining uninsured be reluctant to seek coverage and enroll during the current open enrollment period, and if so, why? Second, for people seeking information on health plans, what sources of information are they likely to turn to, and will those sources be adequate to meet the demand?

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California’s Proposition 46 And The Uncertain Future Of Medical Malpractice Liability Reform


December 10th, 2014

On November 4, 2014, Californians voted against Proposition 46, an unprecedented statewide ballot initiative that would have, among other things, raised the $250,000 cap on noneconomic damages to $1.1 million and indexed it to the rate of inflation in future years. The margin was significant — 67 percent voted against it.

For nearly 40 years, noneconomic damages, which entail payments to patients for pain and suffering resulting from medical malpractice (as opposed to economic damages such as lost wages and medical costs), have been at the forefront of debates over the U.S. medical liability system. Currently, 22 states have caps on noneconomic damages of varying sizes in place. If it had passed, the ballot initiative would have raised the cap on noneconomic damages in California from among the most restrictive to the least restrictive among all states with caps.

Opponents of Proposition 46, and supporters of malpractice reform more generally, argued that raising the noneconomic damages cap would have increased malpractice awards and subsequently malpractice premiums, which would be passed on to patients and insurers as higher costs.

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From The National Coordinator For Health IT: The Federal Strategy For Collecting, Sharing, And Using Electronic Health Information


December 8th, 2014

Making our nation’s health and wellness infrastructure interoperable is a top priority for the Administration, and government plays a vital role in advancing this effort. Federal agencies are purchasers, regulators, and users of health information technology (health IT), as they set policy and insure, pay for care, or provide direct patient care for millions of Americans. They also contribute toward protecting and promoting community health, fund health and human services, invest in infrastructure, as well as develop and implement policies and regulations to advance science and support research.

The Office of the National Coordinator for Health IT (ONC) has a responsibility to coordinate across the federal partners to achieve a shared set of priorities and approach to health IT.  To that end, today we released the draft Federal Health IT Strategic Plan 2015-2020, and we are seeking feedback on the federal health IT strategy.  This Strategic Plan represents the collective priorities of federal agencies for modernizing our health ecosystem; however, we need your input. We will accept public comment through February 6, 2015. Please offer your insights on how we can improve our strategy and ensure that it reflects our nation’s most important needs.

A collection of 35-plus federal departments and agencies collaborated to develop the draft Federal Health IT Strategic Plan: 2015-2020, identifying key federal health IT priorities for the next six years (Exhibit 1). The landscape has dramatically changed since the last federal health IT strategyWhen we released that Plan, the HITECH Act implementation was in its infancy. Since then, there has been remarkable growth in health IT adoption. Additionally, the Affordable Care Act implementation has begun to shift care delivery and reimbursement from fee-for-service to value-based care.

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Health Affairs Web First: National Health Spending In 2013 Continued Pattern Of Low Growth


December 3rd, 2014

A new analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) estimates that in 2013 health care spending in the United States grew at a rate of 3.6 percent in 2013 to $2.9 trillion, or $9,255 per person. The increase was slower than the 4.1 percent growth in 2012 and continued a pattern of low growth that has held relatively steady at between 3.6 percent and 4.1 percent annual growth for five consecutive years.

The continued low growth in health spending is consistent with the modest overall economic growth since the end of the recent severe recession and with the long-standing relationship between economic growth and health spending—particularly several years after the end of economic recessions, when health spending and overall economic growth tend to converge. As a result, health spending’s share of the nation’s gross domestic product (GDP) remained at 17.4 percent in 2013.

The study is being released today by Health Affairs as a Web First and will appear in the January issue of Health Affairs. It was discussed this morning at a reporters briefing in the National Press Club.

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The Payment Reform Landscape: Tying It All Together


December 2nd, 2014

Throughout 2014, Health Affairs Blog has been generous in allowing us to share our insights and opinions on a monthly basis as we examine the evidence for different payment reform models. Along this journey, we’ve taken an in-depth look at how well different payment models are proving to enhance the quality and affordability of care.

We’ve taken a few detours to explore some of the building blocks of a higher-value health care system, like price transparency. And we took some time to share findings from our 2014 National Scorecard on Payment Reform, which revealed the commercial sector is moving toward more value oriented payment.

So with 2015 almost upon us, what did we learn from all this exploration? And based on our learnings, what are the logical next steps for our work at Catalyst for Payment Reform (CPR), and for health care leaders’ efforts as they think about moving the needle on payment reform?

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How Do Alternative Payment Models Fit In With State And National Reform Efforts?


December 1st, 2014

Editor’s note: This post is part of a periodic Health Affairs Blog series, which will run over the next year, looking at payment and delivery reforms in Arkansas and Oregon. The posts will be based on evaluations of these reforms performed with the support of the Robert Wood Johnson Foundation. The authors of this post are part of the team evaluating the Oregon model.

The Affordable Care Act has affected health care at almost every level. Extensive experimentation within states continues to create changes. Given all these shifts, it is helpful to step back and consider how alternative payment models (APMs) fit in with these reforms, and why they are critically important.

Many describe the Affordable Care Act as a means to expand coverage, with relatively little emphasis on controlling costs. This is an oversimplification — accountable care organizations are designed to address costs. New “productivity adjustments” in the Medicare program are also intended to check spending growth. But these changes, while real, represent a patchwork approach to controlling costs that probably do not address the underlying problem.

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Sovaldi, Harvoni, And Why It’s Different This Time


November 21st, 2014

With the Food and Drug Administration (FDA)’s approval of Harvoni, the successor to Gilead Science’s Sovaldi, the alarm bells have officially rung on breakthrough hepatitis C treatments. One can’t open a newspaper or scan a Twitter feed without stumbling on at least one reference to either of the these two drugs for hepatitis C — an often debilitating viral infection impacting the liver that affects somewhere between 3 to 5 million Americans and several hundred million people worldwide. Hepatitis C infection is often asymptomatic and can have long latency periods. In up to 20 percent of people, chronic infection can lead to liver failure, liver cancer, and potentially liver transplantation.

Gilead Sciences paid $11 billion to acquire the rights to Sovaldi — a drug that offers significant improvement in viral clearance over existing therapies — and launched the drug in the U.S. market at a price ($1,000 per pill, or $84,000 per course of treatment) that is usually reserved for drugs targeting “orphan conditions” for much smaller populations. Not surprisingly, Congress has taken an interest, patient advocacy groups are organizing, the health care community is holding conferences, coalitions are channeling a growing national outrage about the price, and public and private payers are stymied by the challenge of responsibly managing utilization of the drug.

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Adverse Events In Older Adults: The Need For Better Long-Term Care Financing And Delivery Innovation


November 20th, 2014

Evidence mounts that a major disconnect exists between the services most frail older adults need and what they get. The vast majority of frail older adults (around 75 percent) who face challenges in taking care of themselves live at home. According to new research from Vicki Freedman and Brenda Stillman, published in the most recent issue of The Milbank Quarterly, almost a third of these older adults report having an adverse consequence as a result of not getting the help they need. These consequences are pretty grim – the most frequently reported event being wet clothes associated with an unmet need around toileting.

But the most shocking statistic from this research is that hiring a paid helper appears to do little to protect against these consequences. Among those who hired help, nearly 60 percent reported adverse consequences. No doubt this reflects a higher level of need: paid helpers are brought in when the risk is quite high. But, it also reflects an inadequacy in support — an analogous group living in supportive housing (i.e., residential care or assisted living facilities) reported these events at a much lower rate (36 percent).

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Medicare, Medicaid, And Pharmaceuticals: The Price Of Innovation


November 20th, 2014

Editor’s note: This post is part of a series of several posts stemming from presentations given at “The Law of Medicare and Medicaid at Fifty,” a conference held at Yale Law School on November 6 and 7.

Through much of the last half century, Medicare and Medicaid (MM) have not for the most part supported research intended to lead to new drugs. For their role in drug development, we need to look to infrastructure and incentives. The record of the National Institutes of Health (NIH) illustrates the potential of both for pharmaceutical innovation. The current budget of NIH, the big elephant in the zoo of the federal biomedical enterprise, is $30 billion, but apart from a dozen small programs devoted to targeted drug development, most of these billions are not aimed directly at pharmaceutical innovation (See page 234).

Yet the NIH investment in biomedicine has indirectly fueled drug development in the private sector to a huge degree. It has paid for the training of biomedical scientists and clinicians, many of whom went on to staff the drug industry, especially its laboratories. NIH-sponsored research has also generated basic knowledge and technologies and it has encouraged universities to spin out their potentially useful findings into the industry by allowing for the patenting and licensing of the findings.

Like NIH, MM has helped fuel drug development indirectly by supporting selected experimental cancer treatments, medical education, and some clinical research and training. But investment in these activities has been small and their impact on drug development apparently very limited. In contrast to NIH, the MM stimulus to drug innovation has resided not in the production of new scientists or the patented uses of new knowledge, but principally in markets and pricing.

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Challenges For People With Disabilities Within The Health Care Safety Net


November 18th, 2014

Medicare and Medicaid were passed to serve as safety nets for the country’s most vulnerable populations, a point that has been reemphasized by the expansion of the populations they serve, especially with regards to Medicaid. Yet, even after 50 years, the disabled population continues to be one whose health care needs are not being met. This community is all too frequently left to suffer health disparities due to cultural incompetency, stigma and misunderstanding, and an inability to create policy changes that cover the population as a whole and their acute and long-term needs.

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Analysis Of Medicare Spending Slowdown Leads Health Affairs Blog October Most-Read List


November 17th, 2014

Loren Adler and Adam Rosenberg’s examination of the causes of slower Medicare spending growth was the most-read Health Affairs Blog post in October. Their post was followed by Jeff Goldsmith’s interview with former Kaiser Permanente CEO George Halvorson.

Next on the top-ten list was J. Stephen Morrison’s look at the US response to Ebola and the role of Centers for Disease Control and Prevention Director Tom Frieden, followed by Tim Jost’s post on reference pricing and network adequacy.

The full list is below:

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The Short-Term And Long-Term Outlook Of Drug Coupons


November 12th, 2014

In the October 2014 Health Affairs article, “Specialty Drug Coupons Lower Out-Of-Pocket Costs And May Improve Adherence At The Risk Of Increasing Premiums,” Catherine Starner and coauthors explore the relationship between drug coupons and specialty drugs. Specialty drugs, primarily injectables and biologics, are costly drugs used to treat complicated, chronic conditions that typically require special handling, administration, and monitoring. Starner et al. report that specialty drugs have an average monthly cost to patients and payers of about $3,500.

In their innovative study, Starner et al. find that nearly half of the patients in their sample who were prescribed specialty drugs used personal drug coupons to reduce their personal financial responsibilities. Coupons come in the form of maximum copay and monthly savings cards, and can be accessed from the brand-name manufacturer’s website, printed out, and cashed in at the pharmacy.

Manufacturers promote drug coupons as supplementary patient assistance programs that can fill gaps in insurance coverage by reducing individual patients’ responsibilities for out-of-pocket health care costs related to high-cost specialty drugs or other pharmaceutical products. For example, patients taking etanercept (Enbrel), an expensive biologic specialty drug indicated for rheumatoid arthritis, can receive savings via the Enbrel Support plan, which reduces the monthly co-pay to $0 for the first six months and $10 per month thereafter.

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Tax Filing And The ACA: Helping Americans Meet The Challenge


November 7th, 2014

Tim Jost’s post of September 21, 2014 expressed concern about the problems that Americans who are uninsured or who have received or qualify for premium tax credits will face in filing their taxes for 2014.  Those who are not otherwise insured and who wish to claim an exemption from the shared responsibility penalty will have to file tax form 8965.  Those who received advance premium tax credits during 2014 will have to file a form 8962, as will those who did not receive advance premium tax credits but who wish to claim premium tax credits on their tax return.  Tax filers who fail to reconcile their tax credits for 2014 cannot claim tax credits for subsequent years.

Individuals who did not have coverage at the beginning of 2014, but purchased coverage at some point in the year through the marketplaces, may need to file both forms.  For example, victims of domestic violence or spousal abandonment were granted a special enrollment period part of the way through 2014 and will have to file an 8965 for the months they were uninsured before they enrolled and an 8962 for months after they enrolled.

This post offers suggestions as to how the Internal Revenue Service and Centers for Medicare and Medicaid Services, the two agencies that oversee the shared responsibility and premium tax credit programs, might mitigate the problems that tax filers may face in filing their taxes for 2014.

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Yes, We Can Transcend Obamacare


November 6th, 2014

In a recent  Health Affairs Blog post, Washington and Lee University law professor Timothy Jost described a new health-reform plan designed by one of us (Roy) and fiscally modeled by the other (Parente) as a “serious proposal [that] deserves to be taken seriously.” Jost praises parts of the plan. Most notably, he writes that its suggested reform of Medicaid “makes a lot of sense and is similar to proposals made earlier by progressive commentators,” and describes its aim of enacting a uniform annual deductible for Medicare as a “common sense proposal.”

But much of Jost’s review is filled with ideological pique—there are various harrumphs about “nostrums” and “talking points” and “hobby horses.” His article contains some factual and analytical inaccuracies, but also a few good points worth discussing.

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An Emerging Consensus: Medicare Advantage Is Working And Can Deliver Meaningful Reform


November 6th, 2014

Since enactment of the Affordable Care Act (ACA) in 2010, much of the attention in the policy community has been on modernizing Medicare’s traditional fee-for-service (FFS) program.  Through Accountable Care Organizations (ACOs), larger “bundles” of payments to fee-for-service providers for episodes of care, and tests of pay-for-performance models, the hope is that the traditional Medicare model can be remade through sheer force of bureaucratic will.  The stated intent is to find a way to pay for value, not volume.

These efforts may or may not bear much fruit, but, over the longer term, it’s not likely to matter much.  That’s because a more important transformation of Medicare is already well underway and is occurring despite more resistance than assistance from the program’s bureaucracy.  According to the 2014 Medicare Trustees’ report, enrollment in Medicare Advantage – the private plan option in Medicare — has been surging for a decade.  In 2005 there were 5.8 million Medicare beneficiaries enrolled in MA plans — 13.6 percent of total enrollment in the program.  Today, there are 16.2 million beneficiaries in MA plans, or 30 percent of program enrollment. (See Table IV.C1)  In addition, the Medicare drug benefit, which constitutes about 12 percent of total program spending, is delivered entirely through private plans. (See Table II.B1)

As MA enrollment has surged, so has recognition of its improved value.  A recent, comprehensive review of the evidence conducted by Joseph Newhouse and Thomas McGuire of Harvard University makes a compelling case that MA plans are providing higher value services at less societal cost than the traditional FFS program.  Based on their findings, Newhouse and McGuire argue for policies that would provide incentives for even more beneficiaries to enroll in MA plans in the future.

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The Payment Reform Landscape: Benefit And Network Design Strategies To Complement Payment Reform


November 4th, 2014

For the past ten months on Health Affairs Blog, we’ve been discussing the evidence for different models of payment reform, examining everything from pay for performance to nonpayment. But no discussion of payment reform is complete without addressing benefit and network designs and how they can help or hinder various payment reforms.  When the right payment method is paired with the right benefit and/or network design, they can work together to help reduce costs and improve care.  There are a number of payment approaches that pair well with specific benefit and network design strategies to yield higher-quality, lower-cost care. Below we discuss a few of these effective pairings.

But before we get into the specifics, why it is important to motivate providers to deliver and patients to seek higher-value care?  Health care providers may not only respond to direct financial incentives, but they are also likely to respond to knowing information about their performance is being put in front of prospective and current patients.  They also may be more willing to accept new forms of payment if acceptance means payers will encourage more patients to seek their care.

On the flip side, patients are unlikely to know how their providers are paid.  But if motivated (financially and otherwise), patients may act on meaningful distinctions in price and quality by choosing higher-value providers, saving money for themselves and whoever else is footing the bill for their care.

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Grand-Aides And Health Policy: Reducing Readmissions Cost-Effectively


October 29th, 2014

Hospital readmissions for the same condition within 30 days likely should not occur, and most often indicate system failure. Readmitted patients are either discharged too early, should be placed into palliative care or hospice, or most often are victims of a failure in transition of care from hospital to home. Most hospitals and physicians would like to eliminate such readmissions, particularly now that payers like Medicare are penalizing hospitals for high rates of readmission. Numerous approaches have been tried to reduce readmissions, with recent published improvements between a 2 percent and 26 percent reduction.

The Grand-Aides® program features rigorous training of nurse aides or community health workers to work as nurse extenders, 5 Grand-Aides to one RN or NP supervisor, with approximately 50 patients per Grand-Aide per year. The Grand-Aides visit at home daily for the first 5 days post-discharge and then as ordered by the supervisor (e.g. 3 days the next week) for at least 30 days, extending as long as desired.

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