Friday, November 30, 2012

CMS Fact Sheet: Draft HHS Notice of Benefit and Payment Parameters for 2014

Earlier this year, CMS published the Patient Protection and Affordable Care Act: Standards Related to Reinsurance, Risk Corridors and Risk Adjustment Final Rule (Premium Stabilization Rule) (77 FR 17220) and the Establishment of Exchanges and Qualified Health Plans; Exchange Standards for Employers Final Rule (77 FR 18310). These rules implement standards for Affordable Insurance Exchanges (Exchanges), States, and health insurance issuers related to the reinsurance, risk adjustment, and risk corridors programs established by the Affordable Care Act and the establishment of Exchanges and qualified health plans. These programs are designed to provide consumers with affordable health insurance coverage, to reduce incentives for health insurance issuers to avoid enrolling sicker people, and to stabilize premiums in the individual and small group health insurance markets inside and outside Exchanges.

The draft HHS Notice of Benefit and Payment Parameters is a proposed rule released today that expands upon the standards set forth in these earlier rules, and provides further information related to policies such as the risk adjustment, reinsurance and risk corridors programs, advance payments of the premium tax credit, and cost-sharing reductions. Key proposals include:
• Reducing the incentives for health insurance issuers to avoid enrolling people with pre-existing conditions: The permanent risk adjustment program will assist health plans that cover individuals with higher health care costs and will help ensure that those who are sick have access to the coverage that they need. CMS proposes a risk adjustment methodology to use when operating risk adjustment on behalf of a State. CMS also outlines the agency’s proposed approach to validating risk adjustment data to instill confidence in the program. States that are running an Exchange and their own risk adjustment program can propose a different methodology.
• Stabilizing premiums in the individual market for health insurance: The transitional reinsurance program is a three-year program designed to reduce medical risk for issuers and thereby reduce premiums for enrollees in the individual market to ensure market stability with the implementation of new consumer protections in 2014. The statute sets a fixed, national amount for the reinsurance program. To improve efficiency and reduce administrative burden, CMS proposes uniform reinsurance payment parameters for this program. CMS proposes that a State may supplement the HHS reinsurance payment parameters, but must pay for those supplementary parameters with additional State reinsurance collections or State funds (instead of funds collected by HHS under the national contribution rate). CMS also proposes: a per capita rate under which contributions would be collected annually by HHS from all applicable health insurance issuers and group health plans; exclusion of certain types of plans from the reinsurance contribution requirement; and standards governing the calculation of contributions.
• Protecting health insurance issuers against uncertainty in setting premium rates:  The temporary risk corridors program protects qualified health plans from uncertainty in rate setting from 2014 to 2016 by having the Federal government share risk in losses and gains. CMS proposes to account for profits and taxes in the calculations and to align this program with the MLR program.
• Assisting low and moderate-income Americans in affording health insurance on Exchanges: CMS proposes further clarification regarding the administration of advance payments of the premium tax credit and cost-sharing reductions. To help eligible individuals pay their premiums and make coverage purchased through an Exchange affordable for low- and middle-income consumers, CMS is proposing to make advance payments of the premium tax credit to issuers on behalf of certain individuals. The cost-sharing reduction program will further reduce the out-of-pocket spending for health services for low- and middle-income individuals, and Indians. CMS is proposing that issuers provide cost sharing reductions at the point of service for eligible individuals and that CMS directly reimburse issuers for these payments.
• Exchange User Fees: Under the Affordable Care Act, Exchanges are self-sustaining entities. CMS proposes a user fee for health insurance issuers participating in a Federally-facilitated Exchange that would be commensurate with fees charged by State-based Exchanges.

You can access the draft Notice of Benefit and Payment Parameters for 2014

Comments on draft Notice of Benefit and Payment Parameters are invited from the general public, consumers, States, industry, and other stakeholders, and must be submitted by December 31, 2012. 

Thursday, November 29, 2012

The Hidden Costs Of Raising The Medicare Age

November 29, 2012 4:00 AM
Whenever the discussion turns to saving money in Medicare, the idea of raising the eligibility age often comes up.
"I don't think you can look at entitlement reform without adjusting the age for retirement," Sen. Lindsey Graham, R-S.C., said on ABC's This Week last Sunday. "Let it float up another year or so over the next 30 years, adjust Medicare from 65 to 67."
It's hardly surprising that the idea keeps finding its way into the conversation. That same increase is already being phased in for Social Security. Even President Obama reportedly had the idea on the table during his informal negotiations with House Speaker John Boehner during the summer of 2011.
And why not? "It's clear that it would reduce federal spending and it can do so in a very immediate sense, depending on how it's phased in," says Tricia Neuman, senior vice president of the nonpartisan Kaiser Family Foundation and director of its Medicare Policy Project. "However, while federal spending will go down, costs to others will go up. In fact, total spending will rise."
How's that? Like everything in health care, it's a little bit complicated. But the bottom line is that if you lower costs for one group, you almost always raise them for another.

Let's focus on those 65- and 66-year-olds. In Medicare, they're currently the youngest and healthiest people. So by delaying their entry into the program, says Neuman, you raise costs for everyone else already there.

The result would be that "people on Medicare pay higher premiums," she said. "That's because you're taking the healthiest people out of the Medicare risk pool, leaving sicker people to pay higher premiums."

At the same time, those same 65- and 66-year-olds would be the oldest and, likely, among the sickest people remaining in the insurance pools of the working-age population, particularly in the new health insurance exchanges.
"That means that they are raising the average risk of people in the exchanges, so that younger people in the exchanges, everybody in the exchanges, will see premiums rise, but especially so for those who are younger," Neuman says.

That's because under the federal health law for the first time, insurance companies won't be able to charge older people many times more than  younger people for the same insurance coverage. Topher Spiro, head of health policy at the liberal think tank Center for American Progress, says it's one more reason not to change Medicare's eligibility age, at least not right now.

"We think it's the absolute wrong approach when you're first implementing health care reform," Spiro said.

To be clear, raising Medicare's eligibility age would save money for the half-trillion-dollar-a-year Medicare program — and for the federal government as a whole. The Congressional Budget Office estimates that Medicare spending would drop by about 5 percent a year. And at the same time, federal tax revenues would increase slightly because some of those 65- and 66-year-olds would remain in the workforce and continue to pay taxes.

But overall, according to a separate study done by the Kaiser Family Foundation, the savings to the federal government would be more than offset by additional costs to states, individuals and employers — about $1 billion more in 2014 alone.

"This is a very good example of how something that seems very straightforward in terms of reducing federal spending actually is a very direct way of shifting costs to other payers," Neuman says.

And how nothing in health care is ever as straightforward as it might seem.

Liberals Start to See Entitlement Trims as Inevitable

·         By Paul Krawzak
·         Nov. 28, 2012, 9:15 p.m.
Last weekend, Durbin called on Democrats to address entitlement spending as part of the fiscal cliff negotiations, although he ruled out increasing Medicare’s eligibility age.
When the Center for American Progress recently pointed to some potential savings from entitlement programs, the political implications were more important than the numbers.
The left-of-center group’s entry into the battle over entitlement spending provided some political cover that could allow more Democratic lawmakers to support a deficit reduction compromise including savings from programs they have long defended with their political lives — Medicare, Medicaid and perhaps Social Security.
The report said Congress could reduce the cost of health care for seniors by $385 billion over 10 years by picking up some proposals that were either discussed during the 2011 debt limit standoff or included in President Barack Obama’s fiscal 2013 budget proposal — things such as higher premiums for upper-income Medicare beneficiaries and cuts in Medicare payments to hospitals and nursing facilities.
Many Democrats have sought to put the major entitlements off limits during deficit negotiations. But with automatic, across-the-board spending cuts scheduled to begin next year unless Congress and Obama change the law, liberals are starting to accept the inevitability of trimming the cost of entitlements as part of the “balanced” deficit agreement the president is demanding.
And just as Republicans may be looking for a nod from their key political supporters before they accept the tax component of such a compromise, Democrats are looking to the backers of entitlement programs for spending reductions that might be viewed as the least objectionable.
Although the partisan split over tax policy has dominated the public debate over how to avoid the fiscal cliff of tax increases and spending cuts due to begin Jan. 1, an agreement on entitlements may be more difficult to achieve.
In the wake of Obama’s re-election, Republican leaders have opened the door to accepting additional tax revenue as part of a grand bargain, but only if Democrats agree to reduce the projected growth of spending on Medicare and Medicaid.
Paul Van de Water, senior fellow at the liberal Center on Budget and Policy Priorities, said most Democrats will accept some changes in entitlement programs, provided Republicans go along with substantial revenue increases. “But it’s going to be a tricky balancing act,” he said.
While Obama has said he recognizes a need to do more to slow the growth of the cost of federal health care programs, House and Senate Democrats remain divided over changes to Medicare, Medicaid and Social Security.
Some Democrats remain opposed to any changes that would affect beneficiaries. During a rally at the Capitol earlier this month, a group of Democratic lawmakers vowed to oppose any cuts in benefits. “We are here today to send a very loud and very clear message to the leadership” in Congress and the White House, said Sen. Bernard Sanders, I-Vt. “Do not cut Social Security, do not cut Medicare, do not cut Medicaid and do not provide more tax breaks to the top 2 percent, who are doing phenomenally well and, in many cases, have never had it so good.”
Former Federal Reserve Chairman Alan Greenspan predicted at a recent fiscal issues forum sponsored by the Peter G. Peterson Foundation that it will be difficult to find agreement on entitlement spending cuts but that such a deal is well worth the effort. “It is extremely difficult to rescind entitlements to which people think they are legally entitled,” Greenspan said. “As far as I’m concerned, if we have to pay a large price in increasing taxes in order to get [at] this extraordinary, unstoppable rise in spending ... I think we have to do that, and then recognize that it’s politically far easier to lower taxes than it is to lower spending.”

There have been recent signs that bipartisan agreement on at least a few changes in Medicare and Medicaid is possible as part of a larger deal on taxes and spending.

Last weekend, Senate Majority Whip Richard J. Durbin, D-Ill., called on Democrats to address entitlement spending as part of the fiscal cliff negotiations, although he ruled out increasing Medicare’s eligibility age. And speaking to the Center for American Progress this week, Durbin said entitlement programs including Medicare and Medicaid are likely to face greater scrutiny. “Put everything on the table,” he said.

Some centrist brokers are also trying to pull Democrats toward a deal on entitlements.

Alice M. Rivlin, a former director of the Congressional Budget Office and a former Office of Management and Budget director in the Clinton administration, said Republicans and Democrats are “missing how close they are” to an agreement. “The campaign was focused on each side saying that the other side would destroy Medicare, for example,” she said. “But if you look at what they were actually proposing, neither side wants to destroy Medicare. And I think now that the campaigns are over, there may be some potential for actually working out some compromises.”

Today's Datapoint

55% … was the increase in Medicare spending on MRI and CT services between 2004 and 2010 that were ordered by physicians who have a financial stake in them, according to a new report from the Government Accountability Office. When these services were not self-referred, Medicare claims dropped about 8.5% for the same period, the GAO found.

Monday, November 26, 2012

Today's Datapoint

$ the copay on non-preferred brand drugs under the AARP Saver Plus plan when they are obtained at a preferred pharmacy, as opposed to $70 for non-preferred pharmacies.

Accountable Care Organizations and Post-Acute Care: Shaping the Future of Health Care

by Carrie Nixon on November 13, 2012 in ACO News, Affordable Care Act
by Carrie Nixon, Carson Porter, and Caroline Klocko *
An aging population with increased longevity and chronic health problems, coupled with a fee-for-service model of care that rewards volume of services over outcomes, has created a perfect storm of rising healthcare costs in America that, if left unchecked, spells disaster for our economy.  This dire scenario led to passage of the Affordable Care Act, and with it, a fundamental shift in our healthcare system from a fee-for-service model to a patient-centered model of care.
The so-called “Triple Aim” – improved care experience for individual patients, better health of patient populations, and reduced cost of care per capita – provides the underpinnings of this new healthcare model and with it, the advent of Accountable Care Organizations (ACOs) as vehicles for reform.  Post-acute and long-term care providers in particular have a significant role to play in the evolution of ACOs.
What is an ACO?
An ACO is an alliance of physicians, hospitals, treatment facilities and other healthcare providers that coordinate treatment to improve the quality of care and reduce costs across a patient population. It is essentially a patient’s one-stop-shop for basic medical needs, achieving the three goals of the Triple Aim through increased care coordination. The Affordable Care Act approved the formation and use of ACOs in the Medicare system, and as of August 2012, the Center for Medicare & Medicaid Services has already approved well over 100 ACOs nationwide.
The ACO model is based on pooling the resources of primary care providers, specialists, therapy centers, long-term care facilities, hospitals, and other healthcare providers to concentrate, coordinate, and streamline patient care. In the current healthcare model, a patient’s care is often cobbled together through different care providers who are not effectively coordinating their treatment plans, leading to redundant and ineffective care that drives up costs with little benefit to the patient.  In contrast, the ACO model creates incentives for outcome-driven quality care to Medicare beneficiaries at overall cost savings.
The Role of Post-Acute Care
The time is ripe for post-acute care providers to seize the opportunity to shape the ACO model as it develops and expands.  CMS is targeting savings through reducing the number of expensive hospital readmissions and incentivizing care in lower cost, non-hospital settings. Post-acute care centers are uniquely positioned to meet this need, particularly through concerted management of cardiac care and pneumonia patients who account for a large portion of preventable hospital readmissions.
In October 2012, CMS began enforcing a new policy under the inpatient prospective payment system (IPPS) that penalizes hospitals if a patient who was discharged to a post-acute care setting is readmitted to the hospital. This policy creates a strong incentive for hospitals to coordinate treatment with post-acute care providers, and ACOs are an obvious mechanism for doing so.
CMS’ Shared Savings Program (“SSP”) allows post-acute providers who are part of an ACO to share up to 50% of estimated savings with CMS if they participate in a “one-sided model,” or up to 60% of savings in a “two-sided model,” where participants must also share in any losses. Under the SSP, CMS establishes a benchmark for each ACO, estimating what Medicare Fee-For-Service expenditures would have been for the given population in the absence of an ACO; savings or losses are calculated against this benchmark.  Under both the one-sided and two-sided models, providers are still paid for specific items and services, as they would be under a fee-for-service model.  Then the percentage of savings is calculated, with the exact percentage that an ACO receives based upon 33 individual quality performance measures grouped into four key areas: patient experience, care coordination/patient safety, preventive health, and the overall health improvement of the at-risk population.  The goal is to incentivize quality, outcome-based care as the unifying objective of all ACO participant members.
Weighing the Options
What does all of this really mean for today’s post-acute care providers?  In a healthcare system that is rapidly evolving, there are three main options:
1)  Maintain the status quo.  In doing so, post-acute providers avoid the risk of shared losses associated with CMS’ two-sided ACO model; but they also lose out on the potential of shared savings available to them as the provider best positioned to reduce hospital readmissions. In addition, stand-alone post-acute providers are likely to become less attractive as referrals for hospitals who need to avoid penalties for unnecessary readmissions.
2)  Establish a Post-Acute Care Network (PACN).  Such a network could consist of skilled nursing facilities, rehabilitation services and therapy providers, home care providers, and/or hospice.  A PACN that highlights its ability to provide quality, coordinated care is an attractive partner to contract as a unit with ACOs, other provider networks, or private health plans to share in savings.
3)  Join an ACO.  Many newly forming Medicare and private ACOs are recognizing the advantages of adding quality post-acute providers to their organizational structure as a means of increasing overall savings.  In deciding whether to join or form an ACO, there are numerous business and legal issues to consider, including legal structure, governance, financing, health IT, and quality measures. For details on these and other considerations, see our article titled “Should you join an ACO?”
America’s health care system is experiencing a sea change, and the tides are favorable for post-acute and long-term care providers who embrace a patient-centered model of care.  New Medicare and private ACOs are forming every day with the goal of providing high quality, cost-effective care for optimal patient outcomes.  Forward-looking post-acute providers are well positioned to share in the savings generated by the new models, and to shape the future of healthcare in the process.
Carrie Nixon is President of Accountable Care Law & Policy ( and CEO of Nixon Law Group.  Carson Porter is Chairman of Accountable Care Law & Policy and Partner at Rimon Law.  Caroline Klocko is an affiliate attorney at Nixon Law Group.

Friday, November 23, 2012

Obama administration moves forward to implement health care law, ban discrimination against people with pre-existing conditions

U.S. Department of Health & Human Services
News Division                               

Tuesday, November 20, 2012

Obama administration moves forward to implement health care law, ban discrimination against people with pre-existing conditions
 The Obama administration moved forward today to implement provisions in the health care law that would make it illegal for insurance companies to discriminate against people with pre-existing conditions. The provisions of the Affordable Care Act also would make it easier for consumers to compare health plans and employers to promote and encourage employee wellness.
 “The Affordable Care Act is building a health insurance market that works for consumers,” said Health and Human Services Secretary Kathleen Sebelius. “Thanks to the health care law, no one will be discriminated against because of a pre-existing condition.”
 “The Affordable Care Act recognizes that well-run, equitable workplace wellness programs allow workers to access services that can help them and their families lead healthier lives,” said Secretary of Labor Hilda L. Solis. “Employers, too, can benefit from reduced costs associated with a healthier workforce.”
 The Obama administration issued:

A proposed rule that, beginning in 2014, prohibits health insurance companies from discriminating against individuals because of a pre-existing or chronic condition.  Under the rule, insurance companies would be allowed to vary premiums within limits, only based on age, tobacco use, family size, and geography. Health insurance companies would be prohibited from denying coverage to any American because of a pre-existing condition or from charging higher premiums to certain enrollees because of their current or past health problems, gender, occupation, and small employer size or industry. The rule would ensure that people for whom coverage would otherwise be unaffordable, and young adults, have access to a catastrophic coverage plan in the individual market. For more information regarding this rule, visit:

A proposed rule outlining policies and standards for coverage of essential health benefits, while giving states more flexibility to implement the Affordable Care Act. Essential health benefits are a core set of benefits that would give consumers a consistent way to compare health plans in the individual and small group markets. A companion letter on the flexibility in implementing the essential health benefits in Medicaid was also sent to states. For more information regarding this rule, visit

A proposed rule implementing and expanding employment-based wellness programs to promote health and help control health care spending, while ensuring that individuals are protected from unfair underwriting practices that could otherwise reduce benefits based on health status. For more information regarding this rule, visit: 

Deficit Reduction and Medicare:

Deficit Reduction and Medicare:
Save Money Without Harming Beneficiaries

Although passage of the Affordable Care Act (ACA) has achieved considerable savings for the Medicare program, Medicare is still being targeted by policymakers looking to negotiate a large "grand bargain" deficit-reduction package. Many of the proposals to achieve Medicare savings would shift costs from the federal government to Medicare beneficiaries.
As the debt and deficit debate heats up, the Center for Medicare Advocacy urges policymakers to protect Medicare and Medicaid.  These critical programs are health and economic lifelines for Americans and their families.  Half of all Medicare beneficiaries have incomes of $22,000 a year, and women with Medicare have an average income of only $15,000 a year.[1]

While most Medicare beneficiaries have very limited incomes, they are paying more out-of-pocket than ever for their care.  In 1970, premiums and cost-sharing accounted for 6% of beneficiaries' Social Security benefits; by 2010, that figure had risen to 27% of Social Security benefits – nearly a third of their income.[2] In short, people with Medicare cannot afford to shoulder the burden of deficit-reduction through higher out-of-pocket costs. If policymakers are serious about saving money from Medicare and health costs without harming beneficiaries, they must consider proposals that would achieve significant savings without shifting costs to people who rely on Medicare and Medicaid.

Below are proposals that would save the Medicare program money, without harming beneficiaries, by addressing the cost of prescription drugs:

1. Negotiate Drug Prices with Pharmaceutical Companies
The Medicare Modernization Act (MMA) of 2003 prohibits the Secretary of Health and Human Services from negotiating prices with pharmaceutical companies. These companies gained 50 million new customers when Medicare began covering prescription drugs, but they did not have to adjust their prices in return. Requiring the Secretary to negotiate drug prices and rebates for Medicare would save taxpayers billions of dollars – potentially over $200 billion over ten years.[3] Taxpayers currently pay nearly 70% more for drugs in the Medicare program than through the Veteran's Administration, which has direct negotiating power.[4] Savings realized from reducing Medicare drug cuts could be used to both improve benefits for beneficiaries and reduce the deficit.
2. Reinstate Drug Rebates for Low-Income People with Medicare
Until Congress created the prescription drug program as part of the MMA, drug manufacturers paid rebates for drugs provided to individuals eligible for both Medicare and Medicaid (known as "dual eligibles") who are typically the poorest and most vulnerable population in the health care system.[5] As a result of the MMA, drug manufacturers received a windfall when the drug coverage for dual eligibles shifted from Medicaid to Medicare and the rebates were ended. Reinstating these rebates could save over $130 billion over ten years while curbing costs for beneficiaries.[6]
3. End Harmful "Pay-for-Delay" Settlements to Expand Access to Generic Drugs
"Pay-for-delay" settlements by brand-name drug manufacturers that pay off generic drug manufacturers to keep generic drugs off the market are increasingly common. In 2010, the Federal Trade Commission reported a 60% increase in reported pay-for-delay settlements in one year alone. [7] These unfair settlements cost taxpayers and beneficiaries billions of dollars every year and contribute to rising drug costs.[8] Prohibiting these settlements would ensure greater access to lower-cost generic drugs and help lower premiums for consumers and beneficiaries.
4. Add a Drug Benefit in Traditional Medicare
Offering a drug benefit in traditional Medicare would give beneficiaries a choice they do not now have, encourage people to stay in the cost-effective traditional Medicare program, and save money for taxpayers.  A Medicare-administered drug plan would have lower administrative costs than private plans.  Such a plan would be easier to understand than sorting through multiple private plan options, would result in lower drug prices for beneficiaries, and could save taxpayers over $20 billion a year.[9]

The solution to addressing rising Medicare costs is not to shift those costs onto consumers, but instead to focus on proposals that would bring down health costs overall.  Addressing the cost of prescription drugs would benefit not only the Medicare program, but also taxpayers and the health care system as a whole.

For more information, contact attorney David Lipschutz ( in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760.

[1]Kaiser Family Foundation, Medicare at a Glance, available at[2]2012 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, available at[3] National Committee to Preserve Social Security and Medicare, available at (2009).[4] Center for Economic and Policy Research, "Negotiating Prices with Drug Companies Could Save Medicare $30 Billion", March 2007, available at[5] Center for Medicare Advocacy, Debunking Medicare Myths: Drug Rebates for Dual Eligibles, available at[6]  See, e.g., President Obama's "Plan for Economic Growth and Deficit Reduction" (September 2011) which includes a proposal to require rebates for drugs provided to beneficiaries who receive the Low-Income Subsidy (LIS), with a projected savings of $135 billion over 10 years.[7] Federal Trade Commission Report, available at[8] Federal Trade Commission, "Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions", available at[9] Senator Dick Durbin, Press Release: "Medicare Prescription Drug Savings Act of 2011" (March 11, 2011), available at

A Jimmo (Improvement Standard) Settlement FAQ

Q:  Can the Jimmo Settlement Agreement help now?

A:  Yes.  The Settlement Agreement standards for Medicare coverage of skilled maintenance services apply now.  We have been hearing from many sources that they are still being denied coverage based on the Improvement Standard.  We continue to think that coverage should be available now for skilled nursing or therapy necessary to maintain an individual’s condition.  This is particularly true since the government itself states that the Settlement Agreement clarifies rather than changes the law.  We encourage people to appeal denials even if they think the appeal will be futile because, once finalized,  the Settlement Agreement will provide a review under the proper standard for all claims that are denied on the basis of the Improvement Standard  after January 18, 2011 (the date the Jimmo case was filed).
Use the Center’s Self-Help Packets to help understand proper coverage rules and contest a Medicare denial for outpatient, home health, or skilled nursing facility care. Include a copy of the Settlement Agreement. Key pages and sections of the Agreement are highlighted in yellow in the version on the Center’s website.

Explain that the Settlement confirms, and the government agreed, that skilled services are covered when they are required to maintain a patient’s condition, or prevent or slow further deterioration. Providers and Medicare decision-makers should be pushed to change their approach based on the Settlement – now.

When it is fully implemented, the Settlement Agreement will result in new manual provisions explicitly covering maintenance nursing and therapy, and formal education of adjudicators and providers. But there is no reason not to make the argument now. Perhaps some decision-makers can be educated before the Settlement’s education campaign begins. And if denials persist, people will be entitled either to re-review later on in the Settlement process or at a higher level of review in the regular Medicare appeals process.

For more information, see

NAIC says NO to Medigap cost-sharing, but frets on how to tell Sebelius

November 5, 2012

The NAIC is preparing a process to tell Department of Health and Human Services (HHS) Secretary Kathleen Sebelius that no changes should be made to certain Medicare plans to add beneficiary cost sharing, but it is struggling with how much to add to that conclusion. 
The process is a bit confusing for members of the subgroup organized to address Medigap both in terms of process and the draft letter’s wording, should it become a policy vehicle. 

An NAIC-sponsored Medigap Subgroup conference call November 5 about the proposed draft letter became steeped in questions about process, politics and message.
The data the NAIC reviewed does not support a recommendation for cost-sharing in Medigap plans. Alternatives are only being suggested because of Section 3210 of the health care reform law, according to regulators.
However, some worry that the way the draft letter, subject to changes, is written would make it seem that the  NAIC and its Medigap  Subgroup of industry representatives, consumer advocates, aging/policy folk organized by state insurance regulators indeed does support cost-sharing. The Medigap PPACA Subgroup is also  composed of representatives from the Centers for Medicare and Medicaid Services (CMS) and other experts in the areas of Medicare and Medigap.

HHS had asked the NAIC to review and revise the NAIC Medicare Supplement insurance (Medigap) model regulation to include nominal cost sharing in Medigap Plans C and F to encourage the use of appropriate physicians’ services. The Obama administration wants the NAIC and the states to change the rules governing Medigap plans C and F, which hold purchasers' out-of-pocket costs to especially low levels. Officials say Medicare enrollees who buy Medigap plans C and F now have no incentive to be good health consumers. The NAIC finds otherwise.
The preliminary draft letter to Sebelius stresses concern about the impact of any additional cost sharing on Medicare beneficiaries. If the Secretary does not agree and says changes must still be made, the NAIC will adopt possible revisions to the NAIC Medigap Model.
The Patient Protection and Affordable Care Act (PPACA) requires the NAIC to consider “peer-reviewed journals or current examples of integrated delivery systems.”
If the Secretary determines that the addition of nominal cost sharing is necessary to implement Section 3210 of the PPACA, then the group must suggest possible revisions to the current NAIC Medigap model law, but the question is when to do that.
The NAIC, after its review of the standards under Section 3210, concluded that “it is very unclear that increased cost sharing will cause beneficiaries to limit their use of physicians’ services to those that are ‘appropriate.’ Therefore, our primary recommendation is that no cost sharing be introduced to Plans C and F. We hope that you will agree with this determination,” the very preliminary letter, dated October 31, stated.
The draft letter’s language will certainly be tweaked in the coming weeks to reflect the concerns of consumer representatives and the health insurance industry. The letter will not be sent until after it had been vetted by the various committees--Senior Issues Task Force  Health Insurance on Friday, and the Health and Managed Care Committee at the Winter National Meeting November 29-Dec. 2  --and then to the NAIC’s government relations office in Washington, before being signed by NAIC officers.
The NAIC Medicare Supplement insurance (Medigap) model regulation would only go through the adoption if the law says some changes should be made despite peer reviewed recommendations by the NAIC, according to the NAIC.
The Medigap (PPACA) Subgroup had discovered that there is a limited amount of relevant peer-reviewed material on this topic. Several of the studies caution that added cost sharing would result in delayed treatments that could increase Medicare program costs later. Many of the studies do not consider the same population of health insurance beneficiaries as those that purchase Medigap products, the Subgroup found.
If--and only if--there are to be revisions the proposed revisions would add “nominal” copays for advanced diagnostic imaging services and power operated vehicles (scooters) and include, the Subgroup suggested:
$25 copay for Plan C for each primary covered advanced imaging service. $25 copay for Plan F for each primary covered advanced imaging service.
$50 copay for Plan C for the purchase of each power operated vehicle. 
$50 copay for Plan F for the purchase of each power operated vehicle for Medicare assigned claims.
$500 copay for Plan F for the purchase of each power operated vehicle for unassigned claims.

A representative of Wellpoint on the call wondered if these co-pay attachments should be attached or listed in the Sebelius cover letter, depending on who the audience for the letter is and how it would be handled by the press.

Another Subgroup member said that Medigap cost-sharing is going to be on the table and will become a subject for the press and for Congress and that the NAIC group should make a very strong stance against cost-sharing.

Medigap is a political football. Medigap’s protections “are now inappropriately being held responsible for encouraging the overuse of covered services and increasing costs in the Medicare program,” the draft NAIC letter states.

The NAIC draft letter refuted the assertion being made by some parties that Medigap is the driver of unnecessary medical care by Medicare beneficiaries. Medigap pays benefits only after Medicare has determined that the services are medically necessary and has paid benefits.

“ ...the assertion that Medigap coverage causes overuse of Medicare services fails to recognize that Medigap coverage is secondary and that only Medicare determines the necessity and appropriateness of medical care utilization and services,” the draft letter stated.

Consumer advocates worried that the NAIC should not detail a "fallback position" to copays or it would undercut  the message that no cost sharing should be the stance.

Most, if not all, health insurance consumer advocates have raised concerns, reflecting a lack of consensus about any changes to the model regulation.

“I don’t want the Secretary to think for two years we haven’t been doing anything,” said one member of the Subgroup.

America's Health Insurance Plans (AHIP) has suggested adding language reporting that NAIC officials have reviewed the data they could get and found no studies showing whether Medicare enrollees with Medigap coverage are really overusing medical services.

“It has been a challenge and I think everybody has worked together with good will and with a good attitude and I very much appreciate that,” said Michelle Robleto a Florida regulator who chairs the Subgroup. 

Medicare beneficiaries who do not have access to Medicare Advantage plans may also be disproportionately impacted, particularly in rural areas, the letter, developed by the  NAIC Medigap PPACA Subgroup, told Sebelius.

“In summary, based on our thorough review and deliberation on this topic, we believe, and hope that you will agree, that no changes should be made to Plans C and F to add beneficiary cost sharing at this time. If, however, it is determined that changes are required, then we have developed proposed revisions to the NAIC model regulation,” the draft letter from the NAIC stated.

Medicare continues effort to give consumers more information on health care quality


FOR IMMEDIATE RELEASE                                    Contact: CMS Media Relations
November 21, 2012                                                                       (202) 690-6145

Medicare continues effort to give consumers more information on health care quality

Today, the Centers for Medicare & Medicaid Services (CMS) announced the first three participants in a program designed to help consumers get more information regarding their local doctors, hospitals, and other health care providers. The Medicare Data Sharing for Performance Measurement program, made possible by the health care law, makes Medicare claims data available, under strict privacy requirements, to groups that HHS certifies as qualified to handle this data and protect patient privacy. These groups will combine Medicare and private insurance data to create comprehensive, useful reports on provider performance.

The three organizations announced today, are:

  •        Health Improvement Collaborative of Greater Cincinnati
  •        Kansas City Quality Improvement Consortium (serving the Greater Kansas City area in Missouri and Kansas)
  •        Oregon Health Care Quality Corporation

“These organizations will make quality and cost information more available and easier to understand for the health care systems in their areas,” said Acting CMS Administrator Marilyn Tavenner. “By allowing these organizations to combine Medicare data with other insurers’ data in public reports, consumers and businesses will have better information on provider performance and providers will have a greater incentive to improve the quality of care.”

To receive certain Medicare claims data, organizations participating in the program must show that they can manage and process consumer-focused data and can prevent breaches of protected health information. The organizations must also show that they are working with private insurers to access other payer data in order to produce comprehensive reports on provider performance.

The program takes important steps to protect the privacy of patients. Information that could identify specific patients will not be publicly released and strong penalties will be in place for misuse of the Medicare data.

With access to provider performance reports, employers and consumer organizations can identify and reward high quality health care providers in their local areas and develop online tools to help consumers and their families make health care choices informed by this useful data.

For more information on CMS’ Qualified Entity Program, visit:

Wednesday, November 21, 2012

Quote of the Day

“Large swaths” of the health reform law will be unfunded since the Republican-controlled House “holds the purse strings. There is just no money to pay for what is already in the act. No matter how much [the administration] may be intent on the law taking effect, they are going to be coming away disappointed.”
— Robert Conroy, senior partner with the law firm of Kern, Augustine, Conroy & Schoppmann, P.C., told AIS’s Health Reform Week.

Is the Future of MA in Integrated Care Delivery?

By James Gutman - November 16, 2012
Humana Inc. says it has seen the future of Medicare Advantage, and it looks quite a bit different from what MA looks like today. When the company on Nov. 5 unveiled the planned acquisition of Metropolitan Health Networks, Inc., a Florida-based medical services organization, and purchase of a noncontrolling interest in another MSO and of a health IT firm that links physicians, it made a point of saying they are parts of a new integrated care delivery strategy in Medicare.
In some ways, this kind of a strategy has been tried before with decidedly mixed results. Hospital system-owned plans either in MA or its Medicare+Choice predecessor often stumbled over the opposite incentives of the two entities — hospitals wanting more patients, and health plans wanting to avoid the high costs of hospital care. But the kind of integration Humana now is looking at is different — and so are the times. The company is focusing on primary care physicians (PCPs), as was WellPoint, Inc. in its CareMore acquisition last year, seeing that as the key piece in improving patient outcomes — and boosting its CMS star quality ratings (and thus bonus payments) in the process.
Is Humana’s approach, which the company said it expects to extend to acquiring more MSO “assets” and 300 to 400 more PCPs next year in a total of “six targeted markets,” a right one? Are we going to see a new wave of MA plans buying PCP practices? And will PCPs and MA plans be able to co-exist beneficially in this modified “back to the future” approach?