November 20th, 2013
With health care costs continuing to rise and employees taking on an ever-growing share of costs, it’s no wonder the market for price transparency and consumer-oriented tools and solutions continued to grow in 2013. Well over a dozen independent vendors and all the major health plans now offer some type of price transparency tool or “solution” for employers and purchasers, and more join their ranks each year, aided by venture capitalists’ investments.
Policymakers are jumping on the price transparency bandwagon too; on the heels of the release of the HCI3/CPR 2013 Report Card on State Price Transparency Laws, many state legislatures took up the issue of price transparency in 2013 and attempted to pass better laws to empower consumers. But do today’s products help consumers find comprehensive and comprehensible information on health care costs and quality? Are employers finding them they useful—and usable—when trying to educate and empower consumers with the hope of reining in health care spending?
Last November, Catalyst for Payment Reform—a nationwide nonprofit coalition of large employers and other health care purchasers–issued a call to action to health plans, providers, and policymakers. The ask? Help support greater price transparency! Our Statement outlined steps plans and providers could take, including sharing claims data and removing gag clauses. In addition, we issued Comprehensive Specifications for the Evaluation of Transparency Tools, thereby offering employers and purchasers general guidance on features tools should have if they’re to be useful for consumers.
This fall, CPR took a closer look at the more established products in an attempt to answer the question: Are these tools and solutions evolving to become more useful for consumers and employers? We examined fee-based online tools and telephonic solutions available from independent vendors for purchasers and employers, as well as the tools the major national health plans offer freely to their members. We summarize our findings in a new report. Read the rest of this entry »
November 20th, 2013
There has been a great deal of confusion in the media in recent days about “direct enrollment,” the process through which insurers can enroll applicants directly in a qualified health plan through the exchange. Media reports characterize this process as a new, possibly illegal, development that the administration has suddenly come up with to address healthcare.gov problems. Some reports also seem to be based on a misunderstanding of the process, suggesting that insurers will be able to directly enroll applicants for premium tax credits without going through the exchanges.
It is, of course, and always has been, possible for insurers to directly enroll consumers in their own products, including qualified health plans, in the individual market outside of the exchange. Insurers cannot, however, legally or in reality, enroll consumers for advance premium tax credits or cost-sharing reduction payments without going through the exchange. A moment’s reflection will reveal the absurdity of allowing private businesses to make binding determinations of eligibility for federal income tax credits. It is also not possible for insurers to enroll individuals in qualified health plans outside of the exchange for which individuals can retroactively receive premium tax credits when they file their taxes. Tax credits, advance or retroactive, are only available for individuals who enroll in a qualified health plan through the exchange.
The Affordable Care Act does, however, explicitly provide that agents and brokers can, if permitted by a state, “enroll individuals and employers in any qualified health plans in the individual or small group market’ through an exchange and “assist individuals in applying for premium tax credits and cost-sharing reductions for plans sold through an Exchange.” This provision first appeared in the 2009 manager’s amendment in the Senate bill, apparently the result of lobbying by agents and brokers to ensure that they would have a piece of the action as the exchanges expanded the nongroup and small group market. In retrospect, it seems like a good idea, given that the exchanges will need any help they can get to expand enrollment and there are far more brokers and agents than there are navigators or assisters. Read the rest of this entry »
November 15th, 2013
In the midst of all of the storm and fury that attended the announcement of the Administration’s administrative fix for policy cancellations, HHS also quietly released on November 14, 2013, a Notice with comment regarding the Quality Rating System (QRS), Framework Measures and Methodology for the health insurance exchanges and qualified health plans. One of the requirements of the ACA is that HHS develop a system that rates qualified health plans (QHPs) on the basis of relative quality and price, and an enrollee satisfaction survey system to assess enrollee experience with QHPs. Exchanges must make quality rating and enrollee satisfaction information available to consumers who shop on the exchange. The Notice solicits comments on a list of proposed quality measures that QHP issuers would be required to collect and report, the hierarchical structure of the measure sets, and the elements of the QRS methodology.
Development of the QRS has not been the highest priority for HHS and implementation and has lagged behind other exchange functions and QHP requirements. The foundation for QRS implementation was laid in the 2012 exchange and QHP rules, however, and QRS implementation takes another step forward with this notice. Rulemaking and guidance to implement the QRS will follow. Read the rest of this entry »
November 15th, 2013
Editor’s note: In addition to Shubham Singhal (photo and linked bio above), this post is authored by Rohit Kumar and Jeris Stueland. Rohit Kumar is a consultant in McKinsey’s Chicago office. Jeris Stueland, an expert in McKinsey’s Healthcare Systems and Services Practice, is also in the Chicago office. The authors would like to thank Ellen Rosen, Jim Oatman, and Michael K. Park for their contributions to this article.
This is the second in a periodic series of posts by McKinsey analysts on the landscape facing payors in the post-reform world. You can read the first post in the series here.
Whether scale brings competitive advantage to payors is a topic of hot debate. Many believe that consolidation is likely as the industry goes through the disruptive changes set in motion by reform. Some contend that anticipated margin compression and medical-loss-ratio floors will make scale efficiencies critical for achieving sustainable economics in the future. Others, however, note that managing the total cost of care is becoming central to a payor’s success, and question what advantages scale provides in such a world. If most health care is locally delivered, they argue, how much of the value created by cost-of-care management can scale drive?
Our research and experience suggest that for payors, the minimum threshold for efficient and effective scale is low. The primary rationale for scale emerges from the large fixed investments payors must make to develop the new capabilities needed to compete effectively in a rapidly changing regulatory and market environment (and to comply with evolving regulations). This rationale holds particularly true for payors that choose to build these capabilities themselves rather than through partnerships with external vendors, noncompeting plans, or other stakeholders in the value chain.
Yet, once the minimum level of scale is achieved, performance variability on administrative costs continues to be quite high. This suggests that for many payors the bigger opportunity to achieve administrative efficiencies is through operating model and organizational redesign, productivity enhancements, and application of design-to-value principles to core processes. Read the rest of this entry »
November 14th, 2013
Earlier today, President Obama announced an “administrative fix” to the problem of health insurance policy terminations that has provoked a major uproar in the media and in Congress in recent days. His announcement was followed up by a letter from Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, to state insurance commissioners implementing the fix. A set of questions and answers on the policy followed later in the day.
The problem, discussed in an earlier post, is that millions of Americans who are insured in the individual and small group markets have been getting notices from their insurers that the policies under which they were covered for 2013 will not be available in 2014. In most instances these notices were accompanied by offers of alternative coverage, but the alternatives offered often cost more, and in some instances included higher cost-sharing obligations. In some instances the coverage that was terminated was problematic — with skimpy benefits and very high cost-sharing. But in other situations, the coverage was adequate — it simply did not meet the full 2014 essential health benefit requirements and cost-sharing standards.
In some cases, the higher premiums required for 2014 policies were attributable to improved coverage. In many situations, however, higher premiums were also attributable to the fact that individuals or groups whose coverage was being terminated had been charged favorable premiums in the past because they were healthy and presented insurers with little risk, but beginning in 2014 would have to pay more because they were going to be part of a risk pool that could no longer be underwritten based on health status. Some of the increased cost was also no doubt simply due to increased claims costs.
Whatever the reason for premium increases, however, individuals and small employers who received notices that coverage would only be available at higher cost were unhappy, and they let Congress and the media know about it. Read the rest of this entry »
November 13th, 2013
On November 13, 2013, the Department of Health and Human Services released its first monthly enrollment report for the Affordable Care Act health insurance exchanges. The report is full of numbers, but two are certain to make the headlines: Only 106,185 persons selected a plan through the exchanges during the period covered by the report (October 1 through November 2, 2013), and only 26,794 of them did so through the federal exchange. Indeed, some in the media seem to believe that the most important number is one that is not in the report — the number of enrollees that actually paid for a plan. That number that is certainly even smaller.
Of course, the number of enrollees is the smallest number in the report (other than the number of enrollees from individual states — 42 enrollees from North Dakota). Most of the numbers in the report are much larger. These include:
- 26,876,527 unique visitors (apparently visitors from unique computers) to the federal and state exchange websites and 3,158,436 calls to the call centers.
- 846,184 paper and electronic applications submitted to the state and federal exchanges (326,623 state and 519,561 federal) with sufficient information to begin determining eligibility for enrollment or financial assistance. These applications covered 1,509,883 individuals. Seventy-four percent were submitted electronically, 26 percent were submitted by phone or mail.
- 1,477,853 applications processed to the point of an eligibility determination.
- 1,081,592 individuals (378,973 state and 702,619 federal) determined to be eligible to enroll in marketplace plans.
- 396,261 individuals determined to be eligible for Medicaid or CHIP. This number only includes individuals who applied for Medicaid or CHIP through the exchanges, and not individuals who applied independently to state agencies.
Read the rest of this entry »
November 12th, 2013
Note: In addition to Mark McClellan (photo and linked bio above), this post is coauthored by John O’Shea, a Visiting Scholar at the Engelberg Center for Health Reform at the Brookings Institution, and Erica Socker, a Research Analyst there. The post is part of the Richard Merkin Initiative on Payment Reform and Clinician Leadership and the Bending the Curve Project at Brookings. In particular, the post reflects the contributions to the projects by Sara Bencic, Christine Dang-Vu, Keith Fontenot, Larry Kocot, Farzad Mostashari, Kavita Patel, Alice Rivlin, and Darshak Sanghavi. We also thank the Irene Diamond Fund for financial support.
Bipartisan health care reform recently reappeared in Congress, when the Senate Finance and House Ways & Means committees released a framework to reform the Sustainable Growth Rate (SGR) formula for physician payment in Medicare. The proposal builds on an earlier bipartisan bill passed by the House Energy & Commerce committee this summer.
Permanent reform of Medicare’s physician payment system is urgently needed. No provider is more important than physicians in determining how patients are treated, yet Medicare’s physician payment system is based on a SGR formula that is not focused on quality of care and has not worked to reduce overall health care costs. The formula was enacted as part of the Balanced Budget Act of 1997 to constrain Medicare spending growth on physician-related services in line with growth of the overall economy, through across-the-board, proportional reductions in physician payments when projected spending exceeds the growth target. Read the rest of this entry »
November 9th, 2013
The first week of November, 2013, was a very bad week for the health care reform project. Healthcare.gov continues to stumble. Although the Department of Health and Human Services continues to insist in daily briefings that the performance of the website is improving, and that it will be fully operational by the end of November, improvement is frankly not yet visible. Full functionality in time for millions of Americans to enroll in coverage in time for the premium tax credits becoming available on January 1, 2104, looks increasingly unrealistic.
The news of the week, however, focused not only on the website woes, but also on millions of Americans in the individual and small group markets who have received notices that their current coverage is not going to be available in 2014 and that the policies that are available are going to cost them more, and in some instances impose higher cost-sharing obligations. The media have characterized these notices as “cancellation” notices, but in fact in most instances they are not terminating coverage as such, but rather changing the form of coverage that is available. In any event, enrollees receiving these notices are understandably upset and are complaining loudly to the media and to their congressional representatives.
Both HHS Secretary Sebelius and Center for Medicare and Medicaid Services Administrator Tavenner testified before Congressional committees, facing hostile questions (indeed demands for resignation in the case of Sebelius) from Republicans, who have long fought against the legislation, and anxious pleas from Democrats, who have long stood by it. At the end of the week, President Obama, apologized to those whose premiums were increasing, saying, “I’ve assigned my team to see what we can do to close some of the holes and gaps in the law,” and suggesting that there might be some sort of “administrative fix” that could help those whose costs were increasing but who would not be eligible for the premium tax credits. Read the rest of this entry »
November 8th, 2013
On October 31, 2013 the House Ways & Means and Senate Finance Committees unveiled a bicameral and bipartisan press release and Discussion Draft of a proposal to repeal the SGR (sustainable growth rate) update to professional fees and replace it with: (1) reforms for future fee-for-service (FFS); (2) incentives for alternative payment models (APMs); and (3) provisions regarding care coordination, relative valuation, service use, and data availability. After a decade of simply kicking the SGR down the road with last-minute and temporary authorizations, a “permanent fix” to this “fundamentally broken” program will be universally welcome. The task at hand: analyzing the elements of what is proposed to replace it.
We all know that the future of Medicare is at a critical state, and it is therefore imperative that we use this rare opportunity of Congressional harmony to do it right. I am delighted to contribute to this discussion, especially as feedback was solicited by the Committees and due to them by November 12. My overall conclusion: the objectives should be applauded, the legislation should be supported, but some changes to the details need to be encouraged before the final legislative text is reported. Read the rest of this entry »
November 6th, 2013
In the month since the Health Insurance Exchange enrollment websites were launched — by the federal government and by 14 states and D.C. — we’ve all heard a lot about the technical problems plaguing the systems. The websites were overwhelmed and often inaccessible; some data systems were not linked properly to ensure accurate information; you had to share every bit of your personal history but the name of your first-grade teacher to create an account and shop around.
Many of these problems have been resolved or are on track to be resolved. I appreciate that many federal and state officials and IT contractors are working around the clock to get the sites right; the stakes could hardly be higher. A functional enrollment system is an essential part of expanding health care coverage to tens of millions of Americans, including more than 1 million New Yorkers.
As the basic kinks are worked out, though, one of the most important priorities should be getting “Shop and Compare” functionality up and running on every Exchange website. A Shop and Compare feature — like the one on the Washington State Exchange — clearly presents information about insurance plan options, features of each plan, the premium associated with each plan, the federal contribution to the plan given a person’s income, and the network of providers offered by the plan. Read the rest of this entry »