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Unpacking The Burr-Hatch-Upton Plan


March 24th, 2015

Anticipating the upcoming Supreme Court decision on King v. Burwell, which could halt health insurance subsidies available through the federal exchange, Republican Senators Richard Burr and Orrin Hatch joined with Representative Fred Upton to propose a comprehensive replacement for the Affordable Care Act (ACA). The Patient Choice, Affordability, Responsibility, and Empowerment Act, or Patient CARE Act, is modeled on a proposal of the same name offered last year by Senators Burr, Hatch, and Tom Coburn, who has retired from the Senate. The Burr-Hatch-Upton plan, like its predecessor, adopts consumer-based reforms of the insurance market, modernizes the Medicaid program, and makes other changes intended to lower cost and increase choices.

In an earlier post, we described in detail the provisions of the Burr-Coburn-Hatch bill. In this post, we discuss how the Burr-Hatch-Upton plan differs from the earlier proposal. We also discuss the impact of the new proposal on health insurance coverage, premiums, and the federal budget based on a new analysis from the Center for Health and Economy (H&E), a non-partisan think tank focused on producing informative analyses of trends in U.S. health care policy and reform ideas. We conclude by commenting on the direction Republicans are likely to take in reforming the health system in the aftermath of a Supreme Court decision in the King v. Burwell case.

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What Kind Of Advance Care Planning Should CMS Pay For?


March 19th, 2015

Currently, Medicare does not offer a paid benefit for advance care planning (ACP). As a result, health care providers who want to assist Medicare enrollees with ACP do so voluntarily and neither they, nor their institutions, are compensated for their time and efforts. This is not only an unfair expectation on individual practitioners or health institutions, it is also medically and ethically unsound. Fortunately, two recent events have the potential to reshape the landscape of advance care planning in the U.S.

Cultural And Policy Evolution In Advance Care Planning

On September 17, 2014, the Institute of Medicine (IOM) published Dying in America: Improving Quality and Honoring Individual Preferences Near the End of Life. The report is built on two basic premises:

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Implementing Health Reform: Wraparound Benefits Final Rule; Coverage Report (Revised)


March 17th, 2015

With open enrollment closed for 2015 and the Departments having finalized the Benefit and Payment Parameters Rule and Letter to Issuers for 2016, we have entered the Spring Affordable Care Act regulatory doldrums.  Reports, minor regulations, guidances, and court decisions continue to appear, however.  Two appeared on March 16.  This post addresses the final wraparound coverage excepted benefits rule, and a report on health insurance coverage and the ACA (technical appendix here), both released on March 16, 2015.

The wraparound coverage rule creates a new category of excepted benefits.  The concept of excepted benefits was created by the Health Insurance Portability and Accountability Act of 1996 and is carried forward in the ACA.  Excepted benefits plans provide benefits that resemble in some way the health benefits that have been regulated by HIPAA and are now regulated by the ACA, but are more limited or are more tangential to medical care.  These include benefits that are not generally medical benefits but do afford some medical coverage (auto liability, workers’ compensation); health coverage that is not medical coverage (dental, vision, long-term care); benefits that are not coordinated with medical benefits (specific disease coverage, fixed dollar indemnity coverage); and coverage that is supplemental to medical coverage (such as Medicare supplement policies).  Additional specific conditions must be met for some of these benefits to qualify as excepted benefits.

Excepted benefits are generally not subject to Affordable Care Act requirements, such as the ban on dollar coverage limits or preexisting conditions clauses.  But excepted benefit coverage explicitly does not qualify as minimum essential coverage.  An individual who has only excepted benefit coverage and does not qualify for a shared responsibility requirement exception must still pay the individual mandate penalty.  Large employers that offer only excepted benefits may have to pay the employer responsibility penalty, but individuals offered only excepted benefits by their employers are not disqualified from receiving premium tax credits to purchase individual coverage through the marketplaces.

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Implementing Health Reform: March Enrollment Report Provides Income Data (Updated)


March 11th, 2015

On March 10, 2015, the HHS Assistant Secretary for Planning and Evaluation (ASPE) released the Health Insurance Marketplaces 2015 Open Enrollment Period March Enrollment Report.  The report covers open enrollment activity through February 22, 2015; it contains a wealth of data on 2015 marketplace enrollment, including for the first time enrollee income data that provides some useful insights (discussed in more detail below).

The headlines of the report are old news.  Nearly 11.7 million Americans selected or were automatically enrolled in health plans through the marketplaces during the 2015 open enrollment period, including 8.84 million through the exchanges that use healthcare.gov.  Of these, 4.6 million were new consumers, 2.2 million actively reenrolled , and nearly 2 million were automatically reenrolled.  Nearly 2.85 million people selected plans or were automatically enrolled through state exchanges that used their own marketplace platforms.

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Reconciling Prevention And Value In The Health Care System


March 11th, 2015

The term ‘value’ (commonly defined as health improvements attained per dollar spent) has become ubiquitous in discussions around improving the health care system. Increasingly, payers are adopting value-based purchasing programs (paying more for higher value care) and providing benefits that follow the principles of value-based insurance design (aligning patient cost-sharing with the value of the service). These programs typically focus on services widely regarded as relatively low-cost and clinically effective, such as beta-blockers prescribed for patients following a myocardial infarction (i.e. heart attack).

Simultaneously, there is widespread enthusiasm for the increased use of preventive services. The Patient Protection and Affordable Act (ACA) mandates the elimination of consumer cost sharing for selected preventive services in marketplace plans and many other individual health plans. A particular subset of plans, High-Deductible Health Plans with Health Savings Accounts (HSA-HDHPs) can cover certain preventive services—but not other services—before the deductible, a minimum of $1,250 for an individual and $2,500 for a family, is met.

Generally, policies supporting prevention and value are consistent. Many (not all) preventive services do provide considerable value. Yet as with value, there are nuances in the definition of prevention that can lead to suboptimal policy choices. Specifically, most policy related to prevention defines preventive services as those delivered to asymptomatic individuals.

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Implementing Health Reform: Supreme Court Remands Contraceptive Case; ACA Cost Estimates Go Lower


March 10th, 2015

On March 9, 2015, the Supreme Court waded once again into the waters of the Affordable Care Act, or at least got its toes wet.  The Supreme Court granted certiorari in Notre Dame v. Burwell, vacated the decision of the federal Court of Appeals for the Seventh Circuit, and remanded the case for reconsideration in light of Hobby Lobby v. Burwell.  Both Hobby Lobby and Notre Dame, of course, involve the regulations that require health plans and insurers to provide contraceptive services to female employees and students.

Also on March 9, 2015, the Congressional Budget Office issued its March, 2015 baseline report.  The CBO and the Joint Committee on Taxation (JCT) now project that the major insurance provisions of the ACA will cost $1.2 trillion over the period 2016-2025, $144 billion less than it projected in January, 2015.  Current projections for the years 2015-2019 are over $200 billion less than costs projected in 2010 when the law was adopted, while projected costs for 2019 are $56 billion, or 33 percent, lower.  The CBO also projects, however, that the ACA will reduce the number of uninsured by 25 million by 2025 rather than the 27 million it had projected in January.

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Go Slow On Reference Pricing: Why The Federal Agencies Have It Wrong On Regulations


March 9th, 2015

Despite concerns outlined in our previous post on reference pricing, federal oversight agencies essentially have taken a hands-off approach. First, they announced that for large group and self-insured plans, the Affordable Care Act’s (ACA) annual maximum limits on out-of-pocket costs do not apply to charges above the reference price.

These limits are already high: $6,600 for an individual and $13,200 for family coverage in 2015. Without any discussion the agencies asserted that non-designated providers are out-of-network, and therefore cost sharing falls within the ACA’s exclusion of out-of-network cost from the maximum limits.

This ruling is inconsistent with the ACA and harmful to patients, effectively allowing plans to circumvent the Act’s crucial out-of-pocket cost limits. The ACA’s annual out-of-pocket maximums are meant to apply to in-network care. If plan members receive care inside this provider network, the Act mandates that they are to be protected by these maximums.

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Go Slow On Reference Pricing: Not Ready For Prime Time


March 9th, 2015

Editor’s note: This post is part one of two on reference pricing. 

The use of reference pricing by health insurers and employee health benefit plans stands high on the policy and regulatory agenda because it is gaining popularity, particularly now that federal agencies have blessed its use by large group insurers and self-insured plans, while imposing only relatively lax requirements. The purpose of reference pricing is to enable patients to “shop” for care and to spur provider competition by creating a group of “designated” in-network providers that agree to abide by the reference price while others do not (“non-designated providers”).

Patients who select more expensive non-designated providers must pay extra, letting them decide whether the extra out-of-pocket cost is worth it. Providers compete, either by agreeing to the reference price or by lowering their prices to approach it. Prices are driven downward.

Reference pricing is superficially appealing because it invokes powers that consumers exercise every day, as they weigh cost and value for items ranging from cold cereal to new cars. But it also raises significant issues regarding quality and access to care and has the potential to discriminate against sick and vulnerable patients. The strategy may also prove costly in relation to the benefits it confers. We urge a go-slow approach and more careful regulation.

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The Payment Reform Landscape: Everyone Has A Goal


March 6th, 2015

It seems these days everyone is setting ambitious goals for making changes to how we pay for health care, including my organization Catalyst for Payment Reform (CPR).

Initially, our goal at CPR was to ensure that 20 percent of health care payments be value-oriented (seeking to improve quality and reduce costs) by the year 2020. But to reflect our desire for greater assurance that good would come of it, we recently refined that goal.

It’s great that commercial health plans report a significant increase in value-oriented payments. But, to avoid wasting valuable time and resources, there needs to be quantifiable evidence that new payment methods actually lead to improved health care while containing costs. as we’ve emphasized in our posts here. The “proof is in the pudding” as they say.

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Four Words Or 17 Syllables: Predicting King v. Burwell In Haiku


March 5th, 2015

Editor’s note: Watch Health Affairs Blog for more posts on King v. Burwell and the Supreme Court oral arguments in the case by Tim Jost, Grace-Marie Turner, Sara Rosenbaum, and others.

The resolution of King v. Burwell boils down to a simple point. A majority of the Supreme Court is willing to interpret the language of the Affordable Care Act. It is unwilling to rewrite that language.

It is all about four words: Whether “established by the state” in one section of the ponderously long, hastily passed health reform law renders low-income residents of states that have not created their own insurance exchanges but participate in federal exchanges ineligible for federal tax credits. If this is indeed the law, many middle-class families will be unable to afford coverage, residents of states that rely on federal exchanges will pay billions to the IRS for the benefit of those living elsewhere, premiums in those exchanges will rise as enrollment of healthy individuals drops, and the ACA will be unable to achieve its undisputed core purpose of health insurance for all Americans.

In contrast to the media cacophony leading up to yesterday’s hearing in the Supreme Court, the oral arguments themselves were clear and lawyerly. They were also undramatic. Most of the Justices knew where they stood, forcing plaintiff’s counsel Michael Carvin – who spoke first – to hear answers from the bench more often than he was asked actual questions. The Court’s willingness to listen had increased by the time Solicitor General Donald Verrilli took the podium on behalf of the government, and he proved himself an organized and articulate presenter. The only jurists not revealing their positions were Justice Kennedy, who challenged both lawyers on several points, and Chief Justice Roberts, who said little except to maintain order and decorum. (Justice Thomas famously refrains from participating in oral argument, but usually votes with Justice Scalia.)

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King v Burwell: The NFIB Medicaid Coercion Argument Returns


March 5th, 2015

Editor’s note: Watch Health Affairs Blog for more posts on King v. Burwell and the Supreme Court oral arguments in the case by Tim Jost, Grace-Marie Turner, and others.

The March 4, 2015 oral argument in King v Burwell, which will determine whether millions of low- and moderate-income Americans will continue to have access to affordable health insurance coverage, revealed a United States Supreme Court very much in play.  In this climate, observers inevitably are paying heightened attention to each of the many parries and thrusts that unfolded over more than an hour of rapid give-and-take between the Justices and the lawyers, as they battled over the meaning of 4 words in a 1000-page statute.

Perhaps no exchange will receive more attention than the one between Justice Anthony Kennedy and Michael Carvin (representing the challengers) that took place approximately 5 minutes into his argument.  It was Justice Sotomayor who actually kicked things off with the following observation:

The choice the state had was to establish [an] Exchange or let the Federal government establish it. . . .That was the choice.  If we read [the statute] the way you’re saying, then we’re going to read a statute as intruding on the Federal-State relationship, because then the States are going to be coerced into establishing their own Exchanges. . . Tell me how that is not coercive in an unconstitutional way?  And if it is coercive in an unconstitutional way [isn’t there] a primary statutory command that we read a statute in a way where we don’t impinge on the basic Federal-State relationship?

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King v. Burwell: Finding A Path Forward After An Executive Overreach


March 5th, 2015

Editor’s note: Watch Health Affairs Blog for more posts on King v. Burwell and the Supreme Court oral arguments in the case by Tim Jost and others.

The Supreme Court justices had a lively discussion today during arguments in King v. Burwell about who Congress intended to get health insurance subsidies and under what conditions.

The central question is whether the Internal Revenue Service had the authority to write a rule authorizing subsidies to go to millions of people in the 37 states now operating under federal exchanges.

The plaintiffs say the language of the law is clear:  Subsidies are allowed in “an Exchange established by the State under [section] 1311of the Patient Protection and Affordable Care Act.” It doesn’t just say this once, but nine times in various linguistic forms.

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King v. Burwell: Unpacking The Supreme Court Oral Arguments


March 5th, 2015

Editor’s note: Watch Health Affairs Blog for more posts by Grace-Marie Turner and others on King v. Burwell and the Supreme Court oral arguments in the case.

One March 4, 2015, the United States Supreme Court heard oral arguments in King v. Burwell.  As every reader of this Blog knows, the issue in the case is whether the Internal Revenue Service rule that allows the federally facilitated marketplaces to grant premium tax credits is valid.

If it is not, millions of individuals in the 34 states served by the FFMs will lose their tax credits.  Without the credits, they will no longer be able to afford health insurance.  The cost of insurance to those remaining in the nongroup market will rise precipitously, causing even more Americans to lose coverage.  As the number of uninsured increases, providers will bear an increased burden of uncompensated care.  A decision for the plaintiffs, that is, will be disaster for the American health care system.

The challengers argue that this is a result Congress intended.  They contend that the subsection of the Affordable Care Act dealing with the calculation of premium tax credits limits the credits to individuals enrolled in an “Exchange established by the State.”  The government argues that this is a term of art — that Congress intended this phrase to include the federally facilitated exchanges that the ACA requires the Department of Health and Human Services to create as a fallback where the states elect not to operate their own exchange.  Dozens of other provisions of the ACA support the government’s position.

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The Latest Health Wonk Review


March 4th, 2015

David Williams has the tenth anniversary edition of the Health Wonk Review up at Health Business Blog. David’s interesting review includes Tim Jost’s series of Health Affairs Blog posts unpacking the final 2016 Notice of Benefit and Payment Parameters rule and final 2016 Letter to Issuers in the federal exchange.

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Health Affairs’ March Issue: The Benefits And Limitations Of Information


March 2nd, 2015

The March issue of Health Affairs contains papers focusing on the benefits—and the limitations—of information-gathering processes as a way to solve health system problems. Studies in this variety issue examine US hospital rating systems, disclaimers on dietary supplements, state prescription drug monitoring programs, the value of US versus Western European cancer care and other topics.

National hospital rating systems show little agreement — what’s a consumer to do?

Matt Austin of Johns Hopkins Medicine and coauthors compared four well-known national hospital rating systems designed for use by US consumers: U.S. News & World Report’s Best Hospitals; HealthGrades’ America’s 100 Best Hospitals; Leapfrog’s Hospital Safety Score; and Consumer Reports’ Health Safety Score. They analyzed ratings covering the time period from July 2012 to July 2013.

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How Many Americans Will Lose Coverage If The Supreme Court Kills The ACA Tax Credits?


March 2nd, 2015

In March, the U.S. Supreme Court is slated to hear King v. Burwell, a case that challenges the authority of the federal government to provide tax credits and other financial assistance to people who buy Affordable Care Act (ACA) coverage through the federal health insurance marketplace. The federal government runs the health insurance marketplace in 34 states where states chose not to set up a state-based exchange.

Estimates on how many people could lose tax credits in these 34 states vary widely from 4.5 million to 13 million. After talking to executives and lobbyists for health care related entities in 20 of the 34 states affected, I believe that about 6.5 million people who have tax credits in 2015 will lose them. The difference in these numbers will be important to policymakers, since politicians are likely to make decisions on how to respond to a Court ruling based on the actual number of their constituents who are receiving tax credits or other support.

In addition, the impact of a Court ruling will be affected by state action. Some observers have questioned whether states will set up exchanges if the Court eliminates tax credits from the federal exchange. These observers have said that establishing a state exchange is costly and time consuming and that most federal exchange states will not take this step. I argue in the following post that setting up a state exchange could be easy and inexpensive if the federal exchange operations are used.

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New Health Policy Brief: Risk Corridors (Updated)


February 26th, 2015

The latest Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation (RWJF) provides an update to an earlier brief on the Affordable Care Act (ACA)’s risk corridor program, which allows the Department of Health and Human Services (HHS) to collect and make payments to qualified health plans. As the brief explains, a recent amendment to federal appropriations raises questions as to whether insurers will receive their full risk corridor payments for 2014.

While the Consolidated and Further Continuing Appropriations Act of 2015, which funded the government for the 2015 fiscal year, did give HHS the authority to collect user fees, an amendment was included that specifically prohibited HHS from transferring money from either trust fund.

The amendment did not eliminate the risk corridor program, nor did it prevent HHS from using payments received from insurers to pay out claims under the program (that is, user fees), but it effectively made the risk corridor program budget neutral unless HHS can find another source of funding. As a result, insurers expecting payments from HHS may not receive the full amount due.

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State Expectations: Setting The Record Straight In King v. Burwell


February 25th, 2015

On Wednesday, March 4th, the Supreme Court will hear the latest attack on the Affordable Care Act (ACA): the case King v. Burwell. The King petitioners allege that the Internal Revenue Service overstepped its authority by issuing regulations authorizing residents of states with federally run exchanges to access premium tax credits. The petitioners claim that Congress intentionally limited access to premium tax credits to residents of state-based exchanges as a way to encourage states to run their own exchanges.

In support, some state officials claim that they interpreted the law in this manner and that it impacted their state’s decision not to operate a state-run exchange. These assertions, like their analysis of the statutory language, fall flat under any serious scrutiny, however.

Between October 2012 and March 2013, with the support of the Commonwealth Fund, the Center on Health Insurance Reforms (CHIR) conducted a comprehensive review of publicly available information in 50 states pertaining to their decisions to operate either a state or federally run exchange.

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Implementing Health Reform: Beginning The Cadillac Tax Regulatory Conversation And Other ACA News (Updated)


February 24th, 2015

The Cadillac high-cost health plan excise tax, which goes into effect in 2018, is one of the last-to-be-implemented provisions of the Affordable Care Act (ACA). It was one of the most controversial provisions of the ACA, which contributed to its delayed effective date. But 2018 is now getting closer, and the Internal Revenue Services (IRS) is beginning a discussion about implementation of the Cadillac plan tax.

The Cadillac plan provision of the ACA will impose a 40 percent excise tax on the cost of employer-sponsored health plans when that cost exceeds certain thresholds. It is projected to be one of the biggest sources of revenue under the ACA; the Congressional Budget Office (CBO) in its 2015 Budget and Economic Outlook Report estimated that it would account for $149 billion in revenue between 2018 and 2225. Of this, however, only one quarter will come from the tax itself, while three quarters will come from increases in taxes on income as employers shift compensation from health benefits to taxable wages.

While the tax will affect few plans initially, it is likely to affect many more plans over time as the cost of health care continues to grow faster than inflation generally. The tax is expected to reduce health care expenditures by individuals, as it will drive employers to increase employee cost sharing as they cut the cost of coverage, and employees are likely to spend less on health care if they have to purchase it out-of-pocket rather than drawing on insurance coverage.

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Implementing Health Reform: Final 2016 Letter To Federal Exchange Issuers


February 22nd, 2015

Each year the Centers for Medicare and Medicaid Services (CMS) releases a letter to issuers (insurers) in the federally facilitated marketplace (FFM) setting out the ground rules for coverage through the FFM for the coming year.  A draft letter is published for comments, followed by the final letter.  The letter addresses insurers that issue qualified health plans (QHPs) in the FFM, including stand-alone dental plans (SADPs), and covers the small business (FF-SHOP) marketplace as well as the individual marketplace.

On December 19, 2014, CMS  published the draft 2016 letter which I covered here.  On February 20, 2015, CMS published the final letter to issuers in the federally facilitated marketplace.  Not surprisingly, since it  covers the third year of operation of the marketplace, the 2016 letter is quite similar to those of preceding years.   The letter is based on previously published rules governing QHPs and the marketplaces, as well as on the final 2016 Benefit and Payment Parameters Rule, covered here (CITE) and here (CITE), from which it incorporates many provisions.

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