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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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Top 5 Health Care Trends to Watch in 2015


February 25th, 2015

With a new Congress, health care is once again an issue of tremendous scrutiny and debate. Many of the federal policy debates in 2015 will be largely symbolic, resulting in little more than tweaks to existing law.

However, health care policy is not just a matter for Congress to consider. A range of issues will play out in the states and the private sector, effectively shaping the future. Below are the top trends we’re watching this year.

The Year of Living Interoperably

From electronic health records (EHRs) to clinical measures and decision support tools, providers are inundated with new technologies that automate processes and capture new types of data. However, these systems are limited in their potential because they don’t all “talk” to one another. They’re locked away within proprietary technologies that render them the equivalent of an email account that only sends messages to people in your company, or a phone that only makes calls in your house.

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Implementing Health Reform: New Enrollment Opportunity For Those Subject To 2014 Penalty


February 20th, 2015

In our Health Affairs Blog post of November 7, 2014, Brian Haile and I recommended that the Department of Health and Human Services (HHS) create a special enrollment period to allow individuals who had to pay the individual responsibility penalty for being uninsured for 2014 to enroll in coverage for 2015 so that they would not have to pay a higher penalty for being uninsured for 2015. Other advocates subsequently joined in this call. On February 20, 2015, HHS announced that it is creating such a special enrollment period.

The special enrollment period will run from March 15 to April 30, 2015 and will allow individuals who live in states served by the federally facilitated marketplace website, Healthcare.gov, to enroll in coverage for 2015 if they:

  • Are not currently enrolled in coverage through the Federally Facilitated Marketplace (FFM) for 2015;
  • Attest that when they filed their 2014 tax return they paid the fee for not having coverage in 2014; and
  • Attest that “they first became aware of, or understood the implications of, the Shared Responsibility Payment after the end of open enrollment (February 15, 2014) in connection with preparing their 2014 taxes.”

Coverage will be effective on the first day of May for those who enroll by April 15 and the first day of June for those who enroll thereafter. Individuals who apply will have to pay the penalty for months they were uninsured in 2015 unless they otherwise qualify for an exemption. Centers for Medicare and Medicaid Services (CMS) has also launched a new online tool to help consumers determine who might otherwise be subject to the penalty to see if they are covered by another exemption.

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How Open Data Can Reveal—And Correct—The Faults In Our Health System


February 18th, 2015

In April 2014, the Centers for Medicare and Medicaid (CMS) released millions of lines of Medicare Part B physician payment data, that led many researchers, analysts, journalists, and the general public to use the data to answer a number of pressing health care questions. And while the dataset does not include patient-level information, it does offer provider identifiers, which can facilitate data aggregation, highlight practice patterns, and cost trends (i.e. specialties with disproportionately higher payments and individual providers as “outliers”).

Our goal here, like many before us, is to highlight striking disparities in this dataset (despite its limitations); attempt to understand why they occur; and provide opportunities to address them.We examine three major issues: geographic variation; individual provider variation; and variation across care settings. Finally, we outline recommendations for future data releases to encourage more practical analyses.

Geographic Variation in Practice Patterns

A popular example highlighted by the CMS data was the rate of use of Lucentis — a drug prescribed for patients with age-related macular degeneration (AMD). Although a clinical study demonstrated similar outcomes for Lucentis ($2,000 per dose) versus Avastin ($50 per dose), the CMS data revealed total Lucentis spending of $1 billion.

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Health Affairs Web First: Recent US Hospital Productivity Growth


February 11th, 2015

Between 2002 and 2011, US hospitals increased their productivity in treating Medicare patients for several serious illnesses, refuting fears about a “cost disease” in health care and potentially mitigating concerns about provider payment under the Affordable Care Act.

The study, released today by Health Affairs as a Web First, addresses the quality of care and the severity of patient illness (considerations not fully taken into account by previous studies on this topic) found that during those years, the annual rates of productivity growth were 0.78 percent for heart attacks, 0.62 percent for heart failure, and 1.90 percent for pneumonia.

When the authors John Romley, Dana Goldman, and Neeraj Sood calculated productivity growth rates without factoring in trends in the severity of patient conditions or outcomes achieved after hospitalization, the annual productivity rates were different: -0.64 percent for heart attacks, -0.91 percent for heart failure, and -0.39 percent for pneumonia.

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How To Restore The Innovation Ecosystem For Medical Technology


February 10th, 2015

The recent February issue of Health Affairswhich features a series of articles on innovation, provides us with an opportunity to examine the state of America’s innovation ecosystem for medical technology. This ecosystem has produced a myriad of medical advances, ranging from advanced imaging to molecular diagnostics, minimally invasive surgical tools, and incredibly sophisticated implants. These technologies have shortened hospital stays, reduced the economic burden of disease, and saved and improved millions of lives.

But the system is severely stressed. Policy improvements are essential if America is to remain a world leader in medical devices and diagnostics and fulfill its potential for medical progress in this century of the life sciences. In the following blog post, we will look at the current state of the medical technology industry and make some policy recommendations covering regulatory approval processes, payment and coverage policies, and tax policy.

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The Payment Reform Landscape: Price Transparency Tools Better But Not Good Enough


February 6th, 2015

Catalyst for Payment Reform (CPR) will spend significant time in 2015 looking at the features payment reform programs must have to be workable for purchasers and sustainable for providers. We look forward to sharing in this space what we learn, as we have done each month for over a year. But this month, we’ll take a slight detour to devote some “ink” to an issue near and dear to our heart—price transparency, a critical building block for payment reform.

Across the board, price transparency tools from vendors and plans are improving, but are the price estimates tools give consumers accurate? Unfortunately, the answer is often no. In general, as we discovered in work with our colleagues from HCI3, many price transparency tools suffer from one or more common methodological flaws. Below, we examine these flaws and their remedies.

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How Hepatitis C Is Shining A Light On Critical Gaps In Payment Reform


February 3rd, 2015

Since December 2013, regulatory approval of new treatments for hepatitis C have brought long simmering debates on drug pricing and value to full boil. The drugs—Gilead’s Sovaldi and successor combination treatment Harvoni, AbbVie’s Viekira Pak—represent significant steps forward for treatment in hepatitis C, demonstrating cure rates well above 90 percent in the clinical trial setting as well as greater tolerability for patients.

This unprecedented effectiveness, however, has come at a high cost, with treatment ranging from $63,000 for an eight-week course of Harvoni on the low end to above $150,000 for Sovaldi in combination with other products on the high end. This is likely to be representative of a wave of similar products coming through the drug development pipeline: highly targeted, highly effective, and highly priced.

Also indicative of things to come are the steps some groups are taking to blunt the impact of increased spending on hepatitis C treatments, such as formulary adjustments or prioritized coverage for particular subsets of the hepatitis C patient community. Days after the U.S. Food and Drug Administration (FDA) approved AbbVie’s Viekira Pak in December 2014, for example, the largest pharmacy benefit management company in the United States, Express Scripts, announced that the drug regimen would be the only hepatitis C treatment on its preferred list of covered drugs.

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Exhibit Of The Month: California’s Hospital Fair Pricing Act Reduces Amount Paid By Uninsured


January 29th, 2015

Editor’s note: This post is part of an ongoing “Exhibit of the Monthseries. Readers who’d like to highlight other noteworthy exhibits from the same issue are encouraged to make their pitch in the comments section below.

This month’s exhibit, published in the January issue of Health Affairs, looks at the proportion of hospital charges to and collections from uninsured patients in California from 2003 to 2012.

In the article, “California’s Hospital Fair Pricing Act Reduced The Prices Actually Paid By Uninsured Patients,” author Ge Bai of the Williams School of Commerce, Economics, and Politics at Washington and Lee University, examines how the Hospital Fair Pricing Act affects the net price paid by uninsured patients.

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New Health Policy Brief: The Two-Midnight Rule


January 23rd, 2015

A new policy brief from Health Affairs and the Robert Wood Johnson Foundation (RWJF) examines the so-called “two-midnight rule,” which takes effect on April 1 of this year for new Medicare hospital claims. The rule, announced in 2013, is an effort by the Centers for Medicare and Medicaid Services (CMS) to clarify when a patient will be considered by Medicare as an inpatient for hospital billing purposes. Under this rule, only patients that a doctor expects to need two nights in the hospital would be considered inpatients for the purpose of Medicare claims.

In the past, CMS provided little guidance to hospitals on this matter. This is important because the Medicare payment structures are very different for inpatients versus outpatients: Hospitals are reimbursed with a single comprehensive payment for all care provided to an inpatient during his or her time at the hospital, but they are paid standard fees for each unique service they provide to outpatients. This brief describes the perceived need by CMS for the two-midnight rule, how it would work, the implications for Medicare payment, and the heated response to the rule by the hospital industry.

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Early Evidence On Medicare ACOs And Next Steps For The Medicare ACO Program (Updated)


January 22nd, 2015

Note: Pratyusha Katikaneni and Carmen Diaz also contributed to this post. They are both research assistants at the Engelberg Center for Health Care Reform, The Brookings Institution.

On December 1, CMS released a Notice of Proposed Rulemaking (NPRM) for the Medicare Shared Savings Program (MSSP), which requests feedback for changes CMS is considering for the Medicare accountable care organization (ACO) programs in 2016 and beyond. The proposal suggests significant potential alterations to the program, many of which we recently reviewed, that would address major issues that ACOs and others have raised: uncertainty and inexperience at transitioning to increasing levels of risk, lack of timely and accurate data, changes in attributed patient populations from year-to-year, and financial benchmarks that fail to account for regional variations and continue to reward high ACO performance over time.

The proposed rule raises more issues than it settles, but it clearly indicates that CMS is open to meaningful public comments and will make important revisions in the MSSP. However, the proposal also illustrates the challenges of resolving these issues in a way that both assures substantial ACO participation and improvement, as well as Medicare savings.

Ideally, big changes in key features in a major program like the MSSP would be based on extensive empirical evidence on what determines success in the program. Unfortunately, only limited evidence, including case studies and some comparative data, is available on the determinants of success for Medicare ACOs, and thus on the MSSP. Data released by CMS in September, which we previously reviewed, showed that the MSSP has generated over $700 million in savings to date relative to the spending benchmarks in the program. This is around 1 percent of the costs of care for beneficiaries affected by Medicare ACO initiatives.

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Unpacking The Medicare Shared Savings Proposed Rule: Geography And Policy


January 22nd, 2015

The Centers for Medicare and Medicaid Services (CMS) recently announced a Notice of Proposed Rulemaking (NPRM) for Medicare Shared Savings Program (MSSP) Accountable Care Organizations (ACOs). The rulemaking contains several proposals that if enacted, would fundamentally change the underlying incentives for providers to participate in the program. These proposed reforms address issues such as data sharing, renewals of participation agreements, beneficiary attribution, incentives to move to two-sided risk, and lastly, reforms to the benchmark calculations against which ACOs compete to earn savings.

The NPRM comes on the heels of a September 16, 2014 release of performance results for MSSP ACOs that began their performance years by 2013. Under the current program rules, ACOs that successfully reported quality performance data and whose savings exceeded their “minimum savings rate” were eligible to share in savings with Medicare. The MSSP program allows ACOs to choose either one-sided risk (Track 1, only upside potential to earn savings) or two-sided risk (Track 2, both upside and downside potential to earn savings/incur losses) with the final sharing amount based on achieving quality targets (up to 50 percent for Track 1 and 60 percent for Track 2). A vast majority of ACOs enrolled in Track 1, the one-sided risk option. Of the 220 ACOs in the program that participated in the first performance year, 53 earned shared savings, 52 saved money but not enough to meet the required “minimum savings rates,” and the other 115 did not accrue savings (spending on patients assigned to the ACO was greater than projected).

In February 2014, the CMS asked stakeholders for input as to how to improve its ACO programs, feedback which they used to generate the NPRM. Many ACOs and other stakeholders argued that failures to achieve savings over and above minimum savings rates were a partial result of residing in low spending areas. In this post, we examine the merits of this contention and consider the policy implications of our results and their bearing on some of the modifications of the MSSP program that CMS has proposed. We also discuss other strategies for improving the program CMS did not mention in the NPRM.

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Academic Medical Centers Should Lead The Charge On Price Transparency


January 21st, 2015

A bipartisan campaign to increase price transparency in the medical world has been reverberating through the press, government, and hospitals. Recent examples include CMS’ release of datasets for inpatient and outpatient charges and North Carolina’s House Bill 834, which was signed into law on August 21, 2013 and mandates that the state’s Department of Health and Human Services publish hospital charges. In Time Magazine, Steven Brill’s article, “Bitter Pill,” provided stunning real world examples of how the lack of price transparency can create enormous uncertainty and confusion among both patients and providers.

The momentum will only continue as Section 2718(e) of the Affordable Care Act is implemented. The provision, which took effect on October 1, 2014, mandates that each hospital establish, update, and publicize a list of standard charges for items and services provided. At this critical moment, there is one set of institutions that are uniquely positioned to ensure that price transparency is implemented deliberately and successfully: Academic Medical Centers.

For good reason, there is excitement about the potential of the price transparency movement. A recent Health Affairs study by Wu et al. suggests that when patients have access to health care prices for an intervention such as an MRI, a significant number select the lower-price option. This proof of concept shows that price transparency has the potential to lead to competition between hospitals, thus reducing costs to the patient and health care system.

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The Payment Reform Landscape: Drilling Down


January 15th, 2015

Catalyst for Payment Reform’s 2014 National Scorecard on Payment Reform revealed a dramatic jump in the percent of commercial health care payments that is value-oriented, meaning the payments are tied to the quality of care in some way. In last year’s Scorecard, commercial health plans reported 40 percent of payments were value-oriented, up from just 11 percent in 2013. So on the face of it, as the “health care payment reform arms race” continues among commercial health plans, we’re well on our way to a reformed approach to payment.

But we can’t jump for joy or shout from the rooftops just yet. As I shared in my December blog, we’ve learned not all payment reform models are created equal, and a lot of the jump can be explained by an increase in pay-for-performance — not the most ambitious model when it comes to reining in costs. Meanwhile, there was a very sluggish uptick in the use of models that place providers at financial risk (such as shared risk payment arrangements for ACOs). Moreover, while the National Scorecard tells us how plans are paying for care, it cannot answer other lingering questions: Which models should purchasers adopt if they want the best savings and improvements in care? Which models are spreadable and scalable so a broader swath of the population can reap their benefits?

Since Catalyst for Payment Reform (CPR) works on behalf of large employers and other big health care purchasers, we field these kinds of questions frequently. Unfortunately, there are no easy answers. And we often find ourselves stuck at a crossroads. Purchasers say they want payment reform, and they attempt to spell out what they want and need. Health plans work to build it, but often the purchasers don’t come, saying it’s not what they asked for, or citing concerns about return on investment and scalability. Plan leaders, who think they understood the “specs” and tried to deliver, become frustrated. Over time they can become reluctant to get creative. Purchasers can become jaded and start to wonder if the plans just don’t understand their needs.

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Arkansas Payment Improvement Initiative: Self-Insured Participation


January 7th, 2015

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 Arkansas model.

Designed and launched by the state’s Medicaid program and some of its largest private insurers, including Arkansas Blue Cross Blue Shield (BCBS) and QualChoice, the Arkansas Payment Improvement Initiative (APII) has been a multi-payer effort since its inception in 2011. As the APII has developed, participation from some of the state’s largest self-insured employers has increased its scope and impact.

While we’ve referenced self-insured participation in our previous blog posts, we provide more detail in the following blog post on its ongoing development and explore what it takes for self-insured plans to adapt to the Arkansas Payment Improvement Initiative’s payment model. What has been the response from Arkansas employers and plans? What is the effect on existing contractual relationships? What are the hurdles?

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Sovaldi, Harvoni Payment Issues Lead Health Affairs Blog November Most-Read List


December 24th, 2014

A piece by Laura Fegraus and Murray Ross on the challenges of paying for lifesaving but high-priced drugs like Sovaldi and Harvoni from was the most-read Health Affairs Blog post for November. This was followed by a critical analysis of workplace wellness programs from Al Lewis, Vik Khanna, and Shana Montrose.

Next came a post on the 2016 Notice of Benefit and Payment Parameters Proposed Rule from Tim Jost, and then a look at health care policy after the mid-term elections from James Capretta.

The full top-ten list for November is below.

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The Latest Health Wonk Review


December 23rd, 2014

Last Thursday, Julie Ferguson at Workers’ Comp Insider published the “holiday edition” of the Health Wonk Review. Her merry band of posts include a two-part Health Affairs Blog essay on payment reform by our very own editor-in-chief Alan Weil.

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The Medicare Shared Savings Program: CMS Turns To Stakeholders On Incentivizing ACO Risk


December 19th, 2014

On December 1, 2014, the Centers for Medicare & Medicaid Services (“CMS”) released its long awaited Proposed Rule to update regulation and operation of the Medicare Shared Savings Program (“MSSP”). In response to concerns raised by participating accountable care organizations, CMS proposes to revise the MSSP program in several ways to provide greater flexibility for ACOs.

However, in important areas CMS may not have gone far enough. This post describes the framework CMS has set forth and then suggests several ways in which the proposal could, in our view, be improved to achieve the CMS objective of encouraging ACOs to bear more risk. In particular, CMS should consider using its waiver authority more robustly; allowing Medicare beneficiaries to designate their primary care providers, and by extension their ACO; and revising the MSSP risk-adjustment methodology to better reflect the changing risk profiles of ACOs.

CMS is actively seeking stakeholder input, which may indicate agency recognition that further changes beyond those in the propose rule are needed. By all indications, stakeholder input will be seriously considered; more than any time in recent memory, stakeholder comments will make a difference in the shape of the Final Rule. This presents a unique opportunity for stakeholders and we urge concerned parties to share their perspectives through comments – the deadline for submitting comments is February 6, 2015.

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How To Succeed At Payment Reform (By Really Trying)


December 18th, 2014

Editor’s note: This is part 2 of a blog post adapted by the author from his recent keynote address at the New York State Health Foundation Conference, “Payment Reform: Expanding the Playing Field.” You can watch his half-hour speech, beginning around the eight-minute mark.

In my previous post, I explained “Why I Oppose Payment Reform.” Despite the reservations I laid out in that post, I do not actually oppose payment reform.

To summarize the case for payment reform, fee-for-service payment has supported a fragmented delivery system with little accountability for cost or quality.  As there is growing consensus that we want to move from our current system toward one that maximizes the health outcomes we achieve relative to the resources we expend, alternative payment models may provide us with a path. We should remember, however, that payment reform is a tool, not an end in itself; and we should be clear about our goals and then deploy the tool where it can help us achieve those goals.

Achieving payment reform is a process.  Here are five elements that are necessary for a successful process.

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Implementing Health Reform: Enrollment And Reenrollment For 2015 (Updated)


December 16th, 2014

The December 15, 2014 deadline for reenrolling in qualified health plan (QHP) coverage to assure continuous coverage as of January 1, 2015 has come and gone.  Individuals who were enrolled through the federally facilitated marketplace (FFM) for 2014 but did not return to the marketplace to shop for 2015 plans will be passively reenrolled in their 2014 plan or in a plan similar to it.  The 2015 open enrollment period lasts through February 2015, and individuals can return to the FFM at any time before then to change plans.  But the change will not be effective for January 1.

A number of state-operated exchanges—including New York, Massachusetts, Idaho, Rhode Island, Washington, Minnesota, and California—have reportedly either extended the date by which individuals can enroll or reenroll and still have coverage effective January 1 or given individuals who had begun the enrollment process as of December 15 extra time to complete the process for January 1 coverage.  The FFM has not extended the deadline.

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