Administration Implements Affordable Care Act Provision to Improve Care, Lower Costs

FOR IMMEDIATE RELEASE                                                             Contact:  HHS Press Office

Friday, April 29, 2011                                                                                                            (202) 690-6343

Administration Implements Affordable Care Act Provision to Improve Care, Lower Costs

Value-Based Purchasing Will Reward Hospitals Based on Quality of Care for Patients

The Department of Health and Human Services (HHS) today launched a new initiative which will reward hospitals for the quality of care they provide to people with Medicare and help reduce health care costs.  Authorized by the Affordable Care Act, the Hospital Value-Based Purchasing program marks the beginning of an historic change in how Medicare pays health care providers and facilities—for the first time, 3,500 hospitals across the country will be paid for inpatient acute care services based on care quality, not just the quantity of the services they provide.

This initiative helps support the goals of the Partnership for Patients, a new public-private partnership that will help improve the quality, safety and affordability of health care for all Americans. The Partnership for Patients has the potential over the next three years to save 60,000 lives and save up to $35 billion in U.S. health care costs, including up to $10 billion for Medicare.  Over the next ten years, the Partnership for Patients could reduce costs to Medicare by about $50 billion and result in billions more in Medicaid savings.

 “Changing the way we pay hospitals will improve the quality of care for seniors and save money for all of us,” said HHS Secretary Kathleen Sebelius. “Under this initiative, Medicare will reward hospitals that provide high-quality care and keep their patients healthy. It’s an important part of our work to improve the health of our nation and drive down costs.  As hospitals work to improve their performance on these measures, all patients – not just Medicare patients – will benefit.”

In FY 2013, an estimated $850 million will be allocated to hospitals based on their overall performance on a set of quality measures that have been shown to improve clinical processes of care and patient satisfaction.  This funding will be taken from what Medicare otherwise would have spent, and the size of the fund will gradually increase over time, resulting in a shift from payments based on volume to payments based on performance.    

“Medicare is in a unique position to reward hospitals for improving the quality of care they provide,” said Centers for Medicare & Medicaid (CMS) Administrator Donald Berwick, M.D.  “Under this new initiative, we will reward hospitals for delivering high-quality care, treating their patients with respect and compassion, and ensuring they have the opportunity to participate in decisions about their treatment.”

Some of these measures will assess whether hospitals:

·        Ensure that patients who may have had a heart attack receive care within 90 minutes;

·        Provide care within a 24-hour window to surgery patients to prevent blood clots;

·        Communicate discharge instructions to heart failure patients; and

·        Ensure hospital facilities are clean and well maintained.

The measures to determine quality in the Hospital Value-Based Purchasing Program focus on how closely hospitals follow best clinical practices and how well hospitals enhance patients’ experiences of care. When hospitals follow these types of proven best practices, patients receive higher quality care and see better outcomes.  And helping patients heal without complication can improve health and ultimately reduce health care costs.  For example, ensuring heart failure patients receive clear instructions when they are discharged on their medications and other follow-up activities reduces the likelihood that they will suffer a preventable complication that would require them to be readmitted to the hospital.  

The better a hospital does on its quality measures, the greater the reward it will receive from Medicare.  The measures selected for the Hospital Value-Based Purchasing program in FY 2013 have been endorsed by national bodies of experts, including the National Quality Forum.  Hospitals have been reporting on quality measures through the Hospital Inpatient Quality Reporting Program since 2004, and that information is posted on the Hospital Compare website. For a complete list of quality measures, visit www.HealthCare.gov/news/factsheets/valuebasedpurchasing04292011b.html.

In the future, CMS plans to add additional measures that focus on improved patient outcomes and prevention of hospital-acquired conditions.  Measures that have reached very high compliance scores would likely be replaced, continuing to raise the quality bar.

The Hospital Value-Based Purchasing initiative is just one part of a wide-ranging effort by the Obama Administration to improve the quality of health care for all Americans, using important new tools provided by the Affordable Care Act.  The Partnership for Patients is bringing together hospitals, doctors, nurses, pharmacists, employers, unions, and state and federal government committed to keeping patients from getting injured or sicker in the health care system and improving transitions between care settings.  CMS will invest up to $1 billion to help drive these changes.  In addition, proposed rules allowing Medicare to pay new Accountable Care Organizations (ACOs) to improve coordination of patient care are also expected to result in better care and lower costs.

For a fact sheet on the Hospital Value-Based Purchasing program, visit www.HealthCare.gov/news/factsheets/valuebasedpurchasing04292011a.html.  To learn more about Hospital Value-based Purchasing, please visit www.cms.gov/HospitalQualityInits.

The final rule establishing the program was placed on display at the Federal Register today, and can be found online at: http://www.cms.gov/HospitalQualityInits.  

More technical information about the final rule, including the measures CMS has included in the program, as well as CMS’ scoring methodology, is included in a Fact Sheet posted on our Web page at: http://www.cms.gov/apps/media/fact_sheets.asp.

From Medicare Watch, by medicarerights.org

The House Budget Proposal Means Changes for People with Medicare

According to a poll conducted by the Kaiser Family Foundation, 62 percent of people aged 65 and older oppose changing Medicare from its current form to a system in which the government contributes a capped amount to people with Medicare to purchase private insurance, as proposed under the House budget resolution passed on April 15. However, the poll also highlights confusion over the terms of the debate. Only 12 percent of those polled understood the term “premium support,” 28 percent stated that they had heard the term but were unsure of its meaning, and 58 percent responded that they had never heard the term before. The term “voucher” was slightly better understood by individuals polled: 30 percent understood the term when used in reference to Medicare, 36 percent had heard the term but did not know its meaning, and 32 percent had never heard the term “voucher” in the context of Medicare.  

The Medicare Rights Center has developed its own materials to help explain the terms of the debate and the implications of the House budget resolution. “Decoding the 2012 House Budget Resolution” explains some of the fundamental changes the House resolution would make to Medicare and Medicaid and highlights the impact that these proposals would have on people with Medicare, both now and in the future. For example, the Congressional Budget Office (CBO) estimates that the House budget resolution’s scheme to convert Medicare into a “premium support” program—also known as a “voucher” or “defined contribution” program—will double projected costs for people with Medicare. 

Some Post PPACA Deductibles Could Be High

By ALLISON BELL

Published 4/28/2011 

Consumers who buy the minimum required level of health coverage in an Affordable Care Act health care environment could be responsible for handling thousands of dollars of medical costs out of pocket.

Analaysts at the Henry J. Kaiser Family Foundation, Menlo Park, Calif., come to that conclusion in a report prepared using actuarial analyses from Actuarial Research Corp., Columbia, Md.; the Aon Hewitt of Aon Corp., Chicago (NYSE:AON); and Towers Watson & Company, New York (NYSE:TW).

The analysts looked at the deductibles and out-of-pocket spending limits consumers might see if they buy individual health coverage through the new health insurance exchanges that are supposed to come online in 2014.

Many Republicans and some Democrats are trying to block implementation of part or all of the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act of 2010 (PPACA).

If PPACA takes effect as written and works as supporters have hoped, consumers will be able to use subsidies to buy coverage through the exchanges, which are supposed to help match individual consumers and small employer groups with health insurers.

PPACA requires exchanges to offer coverage with 4 levels of actuarial value -- bronze, silver, gold, and platinum.

The bronze-level plans are supposed to cost the least and cover the smallest share o enrollees’ expenses, and the platinum-level plans are supposed to cost the most and offer the richest level of benefits.

When the Congressional Budget Office (CBO) was considering PPACA, it did not provide estimates of exchange plan deductibles or analyses of out-of-pocket cost totals, the Kaiser analysts say.

The analysts commissioned the 3 separate deductible and out-of-pocket cost forecasts to deal with variations in estimation techniques and assumptions.

The firms found, for example, that an individual who owned a bronze-level plan could end up facing a deductible of anywhere from $2,750 to $6,350 and a coinsurance rate for bills between the deductible amount and the out-of-pocket cost limit ranging from 0% to 30%.

The bronze-level plan would cover only 60% of expenses before the out-of-pocket cost limit kicked in.

“The variation – which exists in spite of agreement up front among the firms on a common set of major assumptions – is primarily due to differences in the assumed distribution of health expenses across the population, as well as how patients are believed to respond to varying levels of cost-sharing in their use of services,” the Kaiser analysts write.

The variation in the estimates suggests that exchange plans could vary widely, despite efforts of the PPACA drafters to promote standardization of coverage terms, the analysts say.

VA Flows Jump

 

By WARREN S. HERSCH

Published 4/28/2011 

The flow of new assets into U.S. variable annuities increased 10% in 2010, to about $137 billion, according to the Insured Retirement Institute.

IRI, Washington, published that finding in a summary of results from a survey of VA sellers. The results were compiled by a unit of Morningstar Inc., Chicago.

VA contracts held $1.5 trillion in assets at the end of 2010. The asset total was the highest IRI has recorded. The previous record high was posted in the third quarter of 2007, before the economic crisis began, IRI says.

IRI found that VA fee levels have remained steady over the past 5 years.

VA fees amounted to an average of 2.49% of VA assets, down slightly from 2.51% in 2009.

In related news, IRI says the VA issuers that participated in the survey filed only 49 product changes in the first quarter of 2011, down from 140 in the first quarter of 2010.

Lifetime guaranteed minimum withdrawal benefit features continue to be popular among product developrs and VA distributors. All 13 living benefits filed in the first quarter this year were designed as lifetime withdrawal riders, IRI says.

Court Requires Part D Plans to Cover Cost Of Medically Necessary Off-Label Drugs

Court Requires Part D Plans to Cover Cost Of Medically Necessary Off-Label Drugs

Reprinted from MEDICARE PART D NEWS, monthly business, compliance and management news and strategies to help Part D plans increase enrollment, boost revenues and minimize their risks of CMS fines, penalties and repayments.

By Barbra Golub, Editor

May 2011 Volume 6 Issue 5

The discussion surrounding off-label coverage of Part D drugs is back on the table with two recent developments — reintroduction of the Part D Off-Label Prescription Parity Act and a court ruling that Part D plans should cover medically necessary off-label prescription drug costs. Although the court case does not have the effect of law, one health care consultant says the decision will “have a huge impact on plans.”

Jennifer Levinson, vice president at Avalere Health LLC, tells PDN that the “primary reason beneficiaries appeal [drug coverage decisions] is off-label usage.” Part D plans have always had an easy time defending coverage decisions on appeal “based on compendia,” she adds. Now, though, they face a “tough situation.”

The U.S. District Court for the Southern District of New York ruled on March 7 that regulations barring Part D plans from covering medically necessary off-label prescription drugs are unreasonable and do not reflect Congress’ intent.

In Layzer v. Leavitt (07 Civ. 11339), the Part D independent review entity (IRE), Maximus Federal Services, determined that there was no evidence supporting the use of a particular drug for Layzer’s medical condition. However, after Congress amended Medicare regulations through the 2008 Medicare Improvements for Patients and Providers Act, expanding Part D coverage to off-label uses of anti-cancer drugs, Maximus reversed its decision. It decided that a search of relevant compendia was sufficient to find that using a certain drug to treat ovarian cancer was a medically accepted indication.

Eventually, the Medicare Rights Center added a plaintiff to the Layzer case, Ray Fischer, who suffers from muscular dystrophy.

On appeal, CMS argued that the Medicare drug benefit law limits coverage to drugs prescribed for on-label uses or off-label uses found in compendia. The district court ruled that the statutory language of the law indicated that Congress did not intend to impose the “compendia requirement.” Congress included compendia as an illustrative example of materials that may be used to determine coverage, said the court.

Evening Things Out

The Part D Off-Label Prescription Parity Act (H.R. 1055) would also aid beneficiaries in accessing off-label prescriptions by creating coverage parity across the Medicare program.

Originally introduced in July 2010 (PDN 8/10, p. 10) and reintroduced March 18, the bill would allow Medicare Part D carriers to cover the off-label use of drugs prescribed to people living with chronic diseases when its use is supported by peer-reviewed medical literature. This would put the Part D benefit in sync with Medicare Part B and give Part D plans the same flexibility as commercial plans have.

Now off-label indications supported by peer-reviewed literature are covered under Medicare Part B. CMS allows carriers to consider the major drug compendia, authoritative medical literature and/or accepted standards of medical practice in determining whether an off-label use is medically accepted.

According to co-sponsor Rep. Mac Thornberry (R-Texas), “right now, the requirements for coverage of the off-label use of a drug are burdensome and often result in Medicare patients not being able to get the drug coverage they need.”

H.R. 1055 “takes a balanced approach to keeping patients safe from improper prescribing while allowing access to the most up-to-date treatments available,“ said Joe Baker, president of the Medicare Rights Center. “Doctors routinely prescribe medications for uses other than those on the FDA label, according to their professional judgment and evidence in the medical literature,” he added in expressing support for the bill.

This bill and the court decision open up “access to Part D drugs for beneficiaries,” says Levinson. But they also present plans with some issues regarding what drugs to cover. She suggests that plans look at denials of coverage based on what district court the beneficiaries reside in and what constitutes “adequate peer-reviewed literature.”

In some situations, Levinson contends, it may make sense for plans to cover off-label usages instead of denying them and having to defend their position during the appeals process.

However, she maintains that the court decision does not have the effect of law for all plans. The decision only affects plans and beneficiaries in that district. Levinson adds that she expects CMS to issue some type of guidance on the issue, however.

Today's Datapoint

PPACA May Leave Gaps

PPACA May Leave Gaps 

By ALLISON BELL

Published 4/27/2011 

About 18% of moderately high-income families that live in high-cost areas and have big medical bills could still have trouble paying for health coverage even if the Affordable Care Act takes effect as written and works as supporters hope, researchers say.

Jonathan Gruber and Ian Perry, researchers at the Massachusetts Institute of Technology, have published an analysis of the affects of Affordable Care Act coverage ownership requirements on consumers in a paper distributed by the Commonwealth Fund, New York.

The Affordable Care Act – the legislative package that includes the Patient Protection and Affordable Care Act of 2010 (PPACA) – is supposed to start requiring many individuals and families with incomes over a minimum level to own health coverage or pay penalties.

The PPACA minimum coverage requirement would exempt people with religious objections health coverage and taxpayers who would have to spend more than 8% of their income on out-of-pocket health care costs and payments for basic, “bronze plan” health insurance premiums.

About 90% of U.S. families over the federal poverty level probably would be able to afford coverage, in part because the government would provide free coverage for low-income people and subsidies for moderate-income taxpayers with incomes under 400% of the federal poverty level, the researchers say.

But even families with incomes equal to 400% or 500% of the federal poverty level have relatively modest income levels by the standards of many financial professionals, and especially by the standards of financial professionals who live in expensive communities such as New York and Boston.

A family of 4 would have to earn just $112,000 per year to have an income over 500% of the federal poverty level.

The researchers prepared a chart that shows “no room for health insurance premiums” levels for families with expenditures on necessities such as food and housing in the top 10% for their income level and out-of-pocket health care costs in the top 10%.

At those living expense and health care expense levels, about 18% of the families with incomes equal to 400% to 450% of the federal poverty level might have trouble paying for health coverage, and even 3.2% of the families with incomes greater than 400% of the federal poverty level might have trouble paying for coverage, the researchers say.

Conditions for those families might be somewhat better for those families than they are today, forever, because the families would be able to buy coverage on a guaranteed-issue, mostly community-rated basis.

Lawmakers Seeking CLASS Details

Lawmakers Seeking CLASS Details 

By NU ONLINE NEWS SERVICE

Published 4/26/2011

Republicans in the House and Senate are trying to get more information about the Community Living Assistance Services and Supports Act, a consulting firm says.  

Analysts at the Deloitte Center for Health Solutions, Washington, report that the Republican leaders of the House Energy and Commerce Committee have asked groups such as America’s Health Insurance Plans, Washington, and AARP, Washington, for information about negotiations with the Obama administration on long term care program provisions and other provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA).

Republican senators have asked the U.S. Department of Health and Human Services for CLASS Act premium, participation and actuarial models that were created before PPACA was passed, the analysts say.

- Allison Bell

CMS proposes payment, policy changes for inpatient rehabilitation facilities

FOR IMMEDIATE RELEASE                                     Contact: CMS Office of Media Affairs

April 22, 2011                                                                                           (202) 690-6145

CMS proposes payment, policy changes for inpatient rehabilitation facilities

Proposals would create new Quality Reporting Program

The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule that would update Medicare payment policies and rates for inpatient rehabilitation facilities (IRFs) in Fiscal Year (FY) 2012.  The rule proposes to increase payment rates under the IRF Prospective Payment System (PPS) by a projected 1.5 percent —an estimated $120 million nationwide. The projected update reflects a rebased and revised market basket specific to IRFs, inpatient psychiatric facilities, and long-term care hospitals (the RPL market basket) — currently estimated at 2.8 percent for FY 2012 ‑ less a 1.3 percentage point reduction mandated by the Affordable Care Act.

The proposed rule, which would apply to more than 1,200 Medicare-participating IRFs, including approximately 200 freestanding IRFs and approximately 1,000 IRF units in acute care hospitals and critical access hospitals, seeks to establish a new quality reporting system authorized by the Affordable Care Act. 

“The proposed rule would extend Medicare’s ongoing efforts to use its payments to encourage better care for beneficiaries who are treated in inpatient rehabilitation facilities,” said CMS Administrator Donald Berwick, M.D.  “The measures IRFs would report under the proposed rule will pave the way for Medicare to work with IRFs to improve patient safety, prevent patients from picking up new illnesses during a hospitalization, and provide well-coordinated person-and-family-centered care.”

The proposed quality reporting system is aligned with the goals of the Partnership for Patients, a new public-private partnership that will help improve the quality, safety, and affordability of health care for all Americans.  Initially, IRFs would submit data on two quality measures, “urinary catheter-associated urinary tract infection” and “pressure ulcers that are new or have worsened.”  These proposed measures represent two of the nine conditions the Partnership has identified as important places to begin in efforts to reduce harms to patients.  A third measure that is currently under development is also discussed as a potential measure for future rulemaking cycles.  It would address readmissions within 30 days to another inpatient stay, whether in an acute care hospital, rehabilitation facility, or other setting. 

IRFs that do not submit quality data would see their payments reduced by two percentage points beginning in FY 2014.  CMS anticipates adding measures for reporting in the future through rulemaking.  CMS also plans to establish a process for making the measures data available to the public.  As with other data published on the CMS website, IRFs choosing to report quality data would have an opportunity to review the data for accuracy before it became public.

Other provisions in the proposed rule include proposals to:

·       Update the case-mix group (CMG) relative weights using FY 2010 IRF claims and FY 2009 IRF cost report data, and to set the high cost outlier threshold at $11,822 for FY 2012, compared with $11,410 for FY 2011.  The proposed threshold is projected to maintain outlier payments at three percent of total payments under the IRF PPS in FY 2012.

·       Continue using the pre-reclassified and pre-floor hospital wage data to determine the proposed FY 2012 rates.  For this proposed rule, CMS used the final FY 2011 hospital inpatient prospective payment system (IPPS) pre-reclassified and pre-floor wage data.  CMS is also proposing to update the rural, low-income patient (LIP), and teaching status adjustment factors using the most recent three years of data (FYs 2008 through 2010).

·       Allow IRFs to receive temporary adjustments to their full-time equivalent (FTE) intern and resident caps if they take on interns and residents who are unable to complete their training because the IRF that had been training them either closed or ended its resident training program.

“IRFs need to be at the forefront of the quality movement because they play such a critical role in patient care,” said Dr. Berwick.  “They’re called on to meet the needs of some of our most vulnerable patients, and they’re responsible for making sure each one of them meets their rehabilitation goals and makes real progress towards improved functional independence.”

            CMS will accept comments on the proposed rule until June 21, 2011, and will address all comments in a final rule to be issued by Aug. 1, 2011.

            The proposed rule went on display today at the Federal Register’s Public Inspection Desk and will be available under “Special Filings,” at: http://www.ofr.gov/inspection.aspx.

For more information, please see: http://www.cms.gov/InpatientRehabFacPPS/.

Medicaid Wastes $329 Million a Year on Brand Drugs

Medicaid Wastes $329 Million a Year on Brand Drugs

Medicaid squandered $329 million in a single year by paying for costly brand-name drugs when much cheaper generic versions were available.

That’s the troubling disclosure from Alex Brill of the American Enterprise Institute, who compiled an extensive study of Medicaid spending in 2009.

Given the huge federal and state budget deficits “and the added burden of recent healthcare reform legislation that will add 16 million new enrollees to Medicaid rolls by 2019, there is a clear and obvious need to identify potential savings opportunities to address budget pressures, particularly as they relate to healthcare spending,” Brill observes.

Brill looked at 20 medications that are available as both a brand-name product and a “therapeutically equivalent” generic one. Total Medicaid spending on these medications was about $1.5 billion in 2009.

“The analysis identifies $329 million of overspending as a result of underutilization of the less costly (generic) and overutilization of the more costly (brand) versions of these multi‐source products,” Brill discloses in his report, released on March 28.

“Because Medicaid is a joint federal‐state program, savings from addressing this problem would accrue to both states and the federal government.”

The average price for a generic-filled prescription among private payers that year was $39.73, while brand-name drugs averaged $155.45.

Brill estimates that the overspending for just one drug, the antipsychotic Risperdal, was more than $60 million that year, while the average waste per prescription for the antipsychotic Clorazil was $232.

On the state level, the greatest amount of unnecessary spending was in California, $102 million, followed by Texas at $31 million. Per enrollee, the most wasteful states were Vermont and Iowa, which unnecessarily spent $31.43 per enrollee.

In contrast, Hawaii overspent just 12 cents per enrollee.

Brill points out that reining in unnecessary spending is particularly important now because many widely used brand-name drugs will lose patent protection in 2011 and 2012 and face competition from cheaper generic products. “Future overspending in this program [will likely be] even greater if new policies are not promptly adopted,” he states.

His analysis looks at 10 such patented drugs, including the popular cholesterol drug Lipitor, and projects that overspending for the branded versions will range from $289 million to $433 million.

Brill’s conclusion: “Continued wasteful spending in the Medicaid drug program is a problem requiring policymakers’ prompt attention.”

P.S.: Factoring in Medicare as well, Brill cites a 2010 report by the Congressional Budget Office estimating that Medicare’s overspending on brand-name drugs was $900 million in 2007.

Industry Lauds Repeal of PPACA Provision for “Free-Choice” Vouchers

Industry Lauds Repeal of PPACA Provision for “Free-Choice” Vouchers 

By ARTHUR D. POSTAL

Published 4/22/2011 

Insurance agents and employers are breathing a sigh of relief that Congress has repealed a healthcare reform law provision that would have required employers to offer low-income employees so-called “free-choice” vouchers starting in 2014.

According to officials at the National Association of Insurance and Financial Advisors, this provision could have “potentially hurt” an employer’s insurance risk profile if too many young, healthy workers qualified for vouchers to buy insurance through newly created exchanges.

That’s because it would leave the employer plan “with too many older, sicker workers,” NAIFA officials say.

Included in the 2011 budget agreement passed by Congress on April 14, the provision would have affected low-income employees whose employer-provided health insurance premiums cost between 8% and 9.8% of household income. The employee could have then used the vouchers to purchase health insurance in the exchanges and keep excess amounts tax-free if the voucher exceeded the cost of health coverage.

The provision was included in the Senate bill at the request of Sen. Ron Wyden, D-Ore.

The American Benefits Council was a strong supporter of repeal, as was the ERISA Industry Committee.

In a recent letter to members of the Senate, ABC officials said a “much more appropriate way to address this situation, in addition to any possible modifications to eligibility for subsidies in the exchanges, would be to allow those individuals who are not able to afford coverage offered under an employer plan to purchase low-cost catastrophic coverage (which includes comprehensive coverage for preventive care and access to primary care services).

The ABC said Sen. Susan Collins, R-Maine, has proposed an amendment during the markup process for PPACA that would accomplish that.

ABC said in its letter that any other possible proposals to require employers to provide vouchers even more expansively to employees who decline coverage under their employer plan “should be summarily rejected.”

That’s because, the ABC letter said, under such approaches, “employees who remain in the employer’s plan would lose the value of the premium contributions from their co-workers who opt out and obtain coverage in the insurance exchanges.”

Insurance agents and employers are breathing a sigh of relief that Congress has repealed a healthcare reform law provision that would have required employers to offer low-income employees so-called “free-choice” vouchers starting in 2014.

According to officials at the National Association of Insurance and Financial Advisors, this provision could have “potentially hurt” an employer’s insurance risk profile if too many young, healthy workers qualified for vouchers to buy insurance through newly created exchanges.

That’s because it would leave the employer plan “with too many older, sicker workers,” NAIFA officials say.

Included in the 2011 budget agreement passed by Congress on April 14, the provision would have affected low-income employees whose employer-provided health insurance premiums cost between 8% and 9.8% of household income. The employee could have then used the vouchers to purchase health insurance in the exchanges and keep excess amounts tax-free if the voucher exceeded the cost of health coverage.

The provision was included in the Senate bill at the request of Sen. Ron Wyden, D-Ore.

The American Benefits Council was a strong supporter of repeal, as was the ERISA Industry Committee.

In a recent letter to members of the Senate, ABC officials said a “much more appropriate way to address this situation, in addition to any possible modifications to eligibility for subsidies in the exchanges, would be to allow those individuals who are not able to afford coverage offered under an employer plan to purchase low-cost catastrophic coverage (which includes comprehensive coverage for preventive care and access to primary care services).

The ABC said Sen. Susan Collins, R-Maine, has proposed an amendment during the markup process for PPACA that would accomplish that.

ABC said in its letter that any other possible proposals to require employers to provide vouchers even more expansively to employees who decline coverage under their employer plan “should be summarily rejected.”

That’s because, the ABC letter said, under such approaches, “employees who remain in the employer’s plan would lose the value of the premium contributions from their co-workers who opt out and obtain coverage in the insurance exchanges.”

Survey Finds that LTC Costs Continue to Climb

Survey Finds that LTC Costs Continue to Climb   

By NU ONLINE NEWS SERVICE

Published 4/22/2011 

 The cost of long-term care services continues to rise, according to a new report.

John Hancock Financial Services Inc., Boston, published this finding in a summary of results from a new study of 11,000 U.S. providers, including nursing homes, assisted living facilities and home health care agencies. The report was conducted by LifePlans Inc., Waltham, Mass.

To determine how long-term care costs are trending over time, John Hancock calculated a 9-year average based on a comparison of data gathered from providers across the country for surveys conducted in 2002, 2005, 2008, and 2011.  The 9-year average annual increases in the cost of care, the company says, closely track the long-term average annual rate of inflation, which is 4.1%.

Among the report’s findings:

--The 2011 average cost of a private nursing home room ($235 a day/ $85,775 annually) has risen an average 3.5% per year.

--The 2011 average cost of a semi-private nursing home room ($207 a day/ $75,555 annually) has risen an average 3.2% per year.

--The 2011 average cost for a month in an assisted living facility ($3,270 a month/ $39,240 annually) has risen an average 3.4% per year.

--The 2011 average cost for a home health aide ($20 hourly/$37,440 annually) has risen an average 1.3 percent per year.

The survey reveals that the national average annual cost of care in the U.S. to be $85,775 for a private room in a nursing home; $75,555 for a semi-private room in a nursing home; and $39,240 for an assisted living facility.

The average cost of care received at home was approximately $20 per hour, the report says.

--Warren S. Hersch

Earnings: UnitedHealth, Molina 

By NU ONLINE NEWS SERVICE

Published 4/22/2011 

UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH) 1Q 2011 Results
NET INCOME: $1.3 billion
HEALTH PLAN MEMBERS: 34 million
REVENUE: $25 billion
1Q 2010 Results
NET INCOME: $1.2 billion
HEALTH PLAN MEMBERS: 32 million
REVENUE: $23 billion
- During the depths of the recession, commercial plan enrollment was soft. During the first quarter, enrollment in self-insured, fee-based health plans increased about 5.6%, to about 16 million. Enrollment in insured commercial plans increased 3.5%, to 9.5 million.
- Medicare Advantage plan enrollment increased 8%, to 2.2 million. And Medicare supplement plan enrollment increased 5%, to 2.8 million.
- The ratio of medical costs to revenue for commercial customers fell to 78.6% during the first quarter, from about 82.6% during the first quarter of 2010.

Molina Healthcare Inc., Long Beach, Calif. (NYSE:MOH)
1Q 2011 Results
NET INCOME: $17 million
HEALTH PLAN MEMBERS: 1.6 million
REVENUE: $1.1 billion
1Q 2010 Results
NET INCOME: $11 million
HEALTH PLAN MEMBERS: 1.5 million
REVENUE: $967 million
- Molina helps states run Medicaid plans.
- The ratio of medical claims to revenue fell to 84.5% during the latest quarter, from 85.3% during the first quarter of 2010.
- The rate of hospital members per 1,000 enrollees per year was 7% lower in the latest quarter than it was during the comparable quarter in 2010.

UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH) 1Q 2011 Results
NET INCOME: $1.3 billion
HEALTH PLAN MEMBERS: 34 million
REVENUE: $25 billion
1Q 2010 Results
NET INCOME: $1.2 billion
HEALTH PLAN MEMBERS: 32 million
REVENUE: $23 billion
- During the depths of the recession, commercial plan enrollment was soft. During the first quarter, enrollment in self-insured, fee-based health plans increased about 5.6%, to about 16 million. Enrollment in insured commercial plans increased 3.5%, to 9.5 million.
- Medicare Advantage plan enrollment increased 8%, to 2.2 million. And Medicare supplement plan enrollment increased 5%, to 2.8 million.
- The ratio of medical costs to revenue for commercial customers fell to 78.6% during the first quarter, from about 82.6% during the first quarter of 2010.


Molina Healthcare Inc., Long Beach, Calif. (NYSE:MOH)
1Q 2011 Results
NET INCOME: $17 million
HEALTH PLAN MEMBERS: 1.6 million
REVENUE: $1.1 billion
1Q 2010 Results
NET INCOME: $11 million
HEALTH PLAN MEMBERS: 1.5 million
REVENUE: $967 million
- Molina helps states run Medicaid plans.
- The ratio of medical claims to revenue fell to 84.5% during the latest quarter, from 85.3% during the first quarter of 2010.
- The rate of hospital members per 1,000 enrollees per year was 7% lower in the latest quarter than it was during the comparable quarter in 2010.

MA Plans Gear Up for Shortened 2012 AEP With Ideas Designed to Shrink Sales Cycle

MA Plans Gear Up for Shortened 2012 AEP With Ideas Designed to Shrink Sales Cycle

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care.

By James Gutman, Managing Editor

April 7, 2011Volume 17Issue 7

Medicare Advantage plans already are gearing up for an Annual Election Period (AEP) this fall that is almost mind-boggling in its challenges. First and foremost, the total time for marketing and sales combined is shrinking to 10 weeks from the previous 13. Second, because of the compressed period and earlier start for sales (Oct. 15 instead of Nov. 15), marketing materials need to be into CMS for review by June 30. Third, MA plans’ Annual Notice of Changes (ANOCs) in benefits must arrive in beneficiaries’ homes by Sept. 30, making it important to reach members with marketing pieces shortly after that if the changes are negative.

Executives of two MA plans detailed what they are doing about those and other issues related to the shortened AEP in two sessions of the Medicare Marketing & Enrollment Strategies 2011 conference, sponsored by World Research Group, in Tysons Corner, Va., March 30. And their strategies include heavy doses of the non-product¬specific marketing that is allowed before the official start of marketing Oct. 1. The plans also intend to use several different kinds of both acquisition and retention marketing designed to ensure that hot prospects and current members are fully signed up for 2012 by the Dec. 7 end of the AEP.

Such a strategy is especially important because there will be only 10 days to market this year after Thanksgiving weekend, which traditionally has been a “black hole” for MA enrollment, said Craig Hayden, director of Medicare sales for CDPHP (formerly known as Capital District Physicians Health Plan) in upstate New York.

“Acquisition has [already] started in my mind,” Hayden told conference attendees. He is getting the sales force focused on “referral sources development,” as well as lining up sales agents themselves and preparing September marketing efforts to get the plan’s name and “branding message” in front of prospects. That follows a 2011 AEP in which he said CDPHP Medicare Choices plans got a lot of responses to their marketing efforts but not a lot of sales.

The toughest part of the new AEP schedule, he suggested, is for marketing, especially since there are only two weeks for product-benefits-specific marketing before enrollment starts Oct. 15, and since the end of the AEP now is Dec. 7 instead of Dec. 31 as before.

Among the ways CDPHP, a 4.5-star plan with about 27,000 MA members in a largely rural area, may try to deal with the compressed marketing time frame is continued use of “town hall”-type meetings for members, Hayden said. CDPHP gets about 20% of its members to attend them, which it treats “like sales events,” and the plan gains from having a “captive audience” and targeted message that can combine to reduce “shopping” by plan members during the AEP. There are problems with these sessions, however, he notes, including “heavy time investment” and expense, which can be about $1,500 for a typical 200-attendee meeting.

Direct mail (DM), of course, also is a part of CDPHP’s arsenal for the AEP, and the plan will look to “lead with an emotional appeal,” according to Hayden. The downside to DM is the “crowded mailbox problem” during AEP, with so many plans mailing to seniors. Moreover, he said, once late November comes in the new AEP time frame, the plan will have to use much-more-costly first-class mail to be sure beneficiaries receive the mailings before Dec. 7.

Hayden and several conference attendees reported experiencing mail delivery-time problems during the AEP for 2011.

Calendar Poses Obstacle for Newspaper Ads

Newspaper ads also are an important part of CDPHP’s AEP marketing, since Medicare beneficiaries usually have enough time to read them, he noted. But he added that the calendar poses a problem this year since both the Oct. 1 marketing and Oct. 15 enrollment start dates are on Saturdays, traditionally the lightest-read day for newspapers. CDPHP also has used freestanding newspaper inserts to stand out more and allow inclusion of a business reply card, Hayden said. But the inserts are expensive, require long lead times for scheduling and can get “lost” if the newspaper they’re in has a lot of other inserts.

He said “search-engine marketing” has worked very well for CDPHP, which has found that its seniors aged under 75 now are used to the Internet. The plan, he noted, typically responds to queries it gets online within an hour, but he warned attendees to be careful of what they say in such responses since it can cause compliance issues with CMS. And while CDPHP is “looking at social media,” it’s “highly labor-intensive,” and MA beneficiaries “may not be there yet.”

Other parts of CDPHP’s AEP marketing are television ads — “the key thing on it is to have call-center support when the ad is running” — plus billboards and “wraps” on buses, Hayden said.

For this year’s AEP, he added, CDPHP is going to handle leads during the 10 days that remain after Thanksgiving weekend in a different way than previously. He explained that it wouldn’t work to send new leads then to brokers because of the very limited time left to sell, so “we’re going to try to handle them with our captive sales force.”

This relates to what Paul Carbone, director of sales and marketing for UPMC Health Plan, saw as the key issue for the upcoming AEP — shortening the sales cycle. He told another session of the conference that one big problem with the change from a 13-week to a 10-week AEP is that the last three weeks generated 28% of AEP sales for Pittsburgh-based UPMC’s MA plan in the AEP for 2011.

The way to deal with the shortening, he suggested, is to move more quickly after a marketing lead is generated.

Since the UPMC plan’s “engine of lead generation” still seems to be DM, he noted, it is trying several approaches to shrink the time for acting on DM leads. Carbone said, for example, that UPMC gets a lot of business reply cards in response to DM, and it now quickly scans them into its electronic system, assigns them to sales representatives, tracks the progress online, and can “refocus” if they’re not acted on promptly.

Similarly, according to Carbone, knowing that referrals from friends and neighbors can produce quick sources of new members, it will put a priority on such already-existing efforts as giving flu shots to members that can “put a buzz in the market for you.” That “buzz” in the form of recommendations can shorten the “time to buy” decision. Another plus, he said, comes in the form of 8% of the MA plan’s sales now coming from tech-savvy customers who want to do everything regarding enrollment themselves online. UPMC is trying to make it easier for them to do so, he explained.

The flip side of this is de-emphasizing sales methods that are time consuming, such as seminars, Carbone added.

Like Hayden, Carbone is a fan — albeit with some qualifiers — of non-product-specific September mailings “to get a placeholder in the buyer’s mind.” He said the UPMC plan hit almost a 4% response rate on its September direct mail last year but closed only 5% of those because, it later determined, the responders were just “information seekers, not serious shoppers.” Nevertheless, noted Carbone, UPMC got about 7,000 leads from these September mailings and is planning another September mailing this year.