Open Enrollment 2015 Re-Enrollment Snapshot

Department of Health and Human Services, February 25, 2015

Millions of consumers with coverage in 2014 actively selected a Marketplace plan or were automatically re-enrolled through the HealthCare.gov platform for coverage in 2015.

“These numbers tell a powerful story of a strong open enrollment and of engaged and satisfied consumers,” HHS Secretary Sylvia Burwell said. “More new consumers joined the HealthCare.gov Marketplace for 2015 than were covered through re-enrollment. More consumers actively selected a plan on HealthCare.gov than were automatically re-enrolled.  These are signs of a vibrant Marketplace where customers are actively engaged in choosing their health coverage – and of a product that families want, need and appreciate.”

“More than half of the 4.17 million people who re-enrolled in coverage during Open Enrollment came back and actively selected a plan and more than half of those consumers selected a new plan,” said Andy Slavitt, Principal Deputy Administrator of CMS. “Based on my experience looking at enrollment trends with employer-sponsored coverage and Medicare, it is clear that Marketplace consumers are more active, engaged, and eager to shop for the coverage that’s right for them.”

Of the approximately 2.21 million 2014 consumers who actively returned to select a plan for 2015, about 1.20 million or 54 percent chose a new plan for their 2015 coverage.

These numbers will fluctuate over the course of the year based on consumers changing or canceling plans or having a change in status such as new job or marriage.

http://www.hhs.gov/healthcare/facts/blog/2015/02/open-enrollment-2015-re-enrollment.html

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Comment:

By Don McCanne, MD

So HHS Secretary Sylvia Burwell is celebrating the “powerful story” of “engaged and satisfied consumers” in the “vibrant Marketplace” of federally facilitated ACA exchange plans. Really? Does this unheard of rate of switching plans during an open enrollment period really represent the enthusiasm of of health plan shoppers in finding even better plans than they have, or does it represent dissatisfaction with the plans they have been stuck with during the past year?

What it most likely represents is relatively healthy people – the majority – who are shopping for the lower premiums available for the benchmark silver plans. Because of the clumsy administrative nature of pricing exchange plan premiums, there is a high turnover in the plans classified as benchmark plans. So these are healthier individuals who are more concerned about a better deal on the insurance premiums than they are about the specifics of their plans, since they hope that they won’t need to use them much.

This process of annually switching benchmark plans ensures instability of coverage which is especially problematic when considering that the narrow networks that are essentially universal in the exchange plans will often result in disruption of care whenever there is a change in the plan selected.

Thus the ACA Marketplace perpetuates instability of premiums, instability of plans selected, instability of provider networks, instability of out-of-pocket cost sharing, and instability of the innumerable devious insurer practices such as outrageous coinsurance for expensive drugs – a practice designed to chase chronically ill individuals away, dumping them on the insurer’s competitors.

This is how markets are supposed to work? The deceptive rhetoric of “a vibrant Marketplace where customers are actively engaged” is shameful. It is particularly disgusting when it is our own government that is perpetrating the dishonest and disproved dynamic that markets work well in health care. Nobel laureate Kenneth Arrow disproved that decades ago.

We need the government to take charge by enacting and then implementing a single payer national health program. But it appears that first we will have to replace our legislators and government administrators with more responsible stewards who are dedicated to the health of the people rather than to the medical-industrial complex. Are we up to that task?

Medicaid Acceptance by Healthcare Providers Drops to 1-out-of-3

By Kev Coleman
HealthPocket, February 26, 2015

When HealthPocket first investigated Medicaid acceptance in 2013, it found that only 43% of the healthcare providers examined were formally listed as accepting Medicaid. Since the original 2013 study, Medicaid enrollment has continued to rise as the Affordable Care Act has led many states to increase the income eligibility range for the program. Medicaid, along with the Child Health Insurance Program (CHIP), currently covers approximately 1-in-5 people in the United States. This year, the temporary increase in Medicaid payments to primary care physicians discontinues with only 15 states indicating that they intend to maintain the payment increase (fully or partially). The reduction in Medicaid reimbursement to primary care physicians has brought with it a concern that Medicaid acceptance, already low among healthcare providers, will drop further.

HealthPocket found that in 2015 only 34% of the healthcare providers examined were listed as accepting Medicaid insurance. This represents a 21% decrease from the listings of Medicaid acceptance found in the 2013 data for the same categories of healthcare providers.

Since both the 2013 analysis and 2015 analysis relied upon the same government data source and provider record parameters, the marked decline in Medicaid acceptance is significant. In particular, the data calls into question whether the temporary increase in Medicaid payments to primary care physicians effected any lasting improvements to Medicaid acceptance.

Why Do Some Healthcare Providers Avoid Medicaid?

A common explanation given for Medicaid lower acceptance is the program’s reimbursement rate to healthcare providers. Medicaid typically pays 61% of what Medicare pays for the same outpatient physician services. To make matters worse, the Medicare payment benchmark is already lower than payments for the same services from private insurers. It is estimated that Medicare typically pays 80% of what commercial health insurers pay. Consequently, in comparison to commercial health insurance from private insurance companies, Medicaid payments represent a reduction on a reduction.

One of state governments’ responses to the problem is the use of managed care organizations to serve some portion of a state’s Medicaid population. However, as a 2014 Health & Human Services study noted, state standards regarding the ratio of primary care physicians to Medicaid managed care enrollees can vary widely (1-to-100 to 1-to-2,500) as do their methods for determining compliance with these standards. Consequently, Medicaid enrollees can face the prospect of long distances and/or long waits to access care under the program.

From the Conclusion

HealthPocket’s comparison of Medicaid acceptance listings from 2013 to 2015 illuminates an alarming trend for those dependent on Medicaid for their healthcare: a reduction in Medicaid acceptance occurring during a period of Medicaid enrollee expansion. How federal and state governments will reverse this trend remains to be seen. The temporary increase in Medicaid payments to primary care physicians from 2013 to 2014 does not appear to have produced a lasting increase in Medicaid acceptance and the expiration of this increase may contribute to further healthcare provider attrition from the Medicaid program.

http://www.healthpocket.com/healthcare-research/infostat/medicaid-acceptance-doctors-health-care-providers-2015

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Guest Comment:

By Richard Gottfried, Chair, Committee on Health, New York State Assembly, and sponsor of A05062 (S03525), “The New York Health Act”

If the Medicaid recipient’s doctor were paid the same as my doctor, this wouldn’t be a problem.  And if we were all in the same health plan, the wealthy and well-connected would see to it that their doctors were paid fairly, and the rest of us (and our doctors) would share the benefit.  If we’re all in the same boat, we’ll all do better.

Market Guide for Healthcare Payers’ Core Administrative Processing Systems

By Constance Sjoquist
Gartner, January 28, 2015

Payer CIOs need to enhance, append or replace their existing core administrative systems to more effectively compete in an increasingly complex healthcare environment. Vendors are developing newer or re-engineering existing solutions to meet this demand.

Market Direction

Historically, the vendor options for core claims administrative systems have been somewhat limited. A handful of legacy solutions have dominated the payer space for years. Often highly customized to a payer’s unique business environment or utilized only for a specific line of business (LOB), core administration systems have been expensive and difficult to replace, upgrade, enhance or consolidate without incurring significant risk or downtime.

In the last several years, an enormous amount of change has occurred in the healthcare market and is impacting payers’ requirements of their core administrative solutions. New demands include the need to comply with an increased number of regulatory requirements, manage a growing number of contractual arrangements and support new distribution channels. Payers are finding it necessary to make the shift from a historical group to a largely individual membership base and are seeking new and differentiated capabilities that will help ensure they can remain relevant and competitive.

In response, vendors in the healthcare core administrative space have begun to significantly shift their product strategy or market focus to address new payer challenges. While this has brought about innovation and choice, it has also led to a disparate market, causing confusion over what exactly the essential elements of a core administrative system are. Vendors that once dominated the market have recently merged or have been acquired, causing uncertainty around their future product road maps. Some vendors have completely dropped their product offerings for a particular LOB or have shifted their technology strategy to offer only nonlicensed software solutions.

Gartner receives a steady volume of inquiries and requests for information on core administrative vendors, as these run the business applications that necessitate an enormous amount of a payer’s IT resources and budget. Healthcare payers are looking to modernize their application portfolios, comply with government regulations and lower their cost of doing business. Payers are also seeking functionality that will allow them to support new health models, such as accountable care organizations (ACOs), pay for performance (PFP) and value-based networks (VBNs). Inquiries focus on who can provide new technology approaches to the development, deployment and management of existing core administrative applications, as well as which vendors offer solutions to support future payer needs.

Core administrative vendors are challenged to adapt and develop their solutions to address these disruptive changes in the healthcare industry, as well as to adapt to rapid advancements in technology.

Industry disruptions include:

• * The shift from a wholesale (group) to a retail (consumer) decision maker requiring greater support for user-specific preferences
• * Demand for transparency tools to support member enrollment, care and payment decisions
• * Providers becoming risk-bearing entities requiring real-time information on payment and reconciliation in their provider applications that parallels payers’ application status
• * Establishment of payer/provider contractual arrangements requiring increased coordination of information and workflows and greater accountability of services and payments
• * Ongoing regulation and compliance changes requiring timely updates, audits and reports
• * The expanding number of distribution channels requiring increased support for enrollment and related services

The healthcare market is expected to continue along a path of rapid change and innovation. There is great uncertainty as to where the market is headed and what technologies will be necessary to adapt and succeed. Core administrative vendors are aggressively vying for position and are competing to manage current expectations and address future client demands.

http://www.gartner.com/technology/reprints.do?id=1-28X3CQW&ct=150129&st=sb

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Comment:

By Don McCanne, MD

This report from Gartner is instructive in that it demonstrates the profound increase in administrative complexity in health care, much of which is directly attributable to a dependency on markets as opposed what we would have under a publicly administered single payer system. Administrative functions in health care are essential, but it is the private sector that has created a bureaucratic quagmire. Gartner is just trying to help the private sector make sense of it.

This does not let the government off the hook. By supporting the current fragmented, dysfunctional model of health care financing, the government is placing a greater burden on the private sector. We are all paying the price in higher costs and in bearing the the burden of systemic inefficiencies. By design, a single payer system would reduce this administrative complexity.

Taxpayers Following ACA Rules, Refunds Take a Hit

H&R Block, February 24, 2015

So far in the 2015 tax season, H&R Block (NYSE: HRB), the world’s largest consumer tax services provider, is seeing a majority (52 percent) who enrolled in insurance via the state or federal Marketplaces paying back a portion of the Advance Premium Tax Credit (APTC). The average amount paid back is $530, decreasing the tax refund on average by 17 percent, according to analysis almost six weeks into the 2015 tax season.

The average tax penalty for not having insurance was $172, an indication that most taxpayers are paying more than the flat-fee of $95 per uncovered adult penalty many consumers anticipated.

“The level of payback of the Advance Premium Tax Credit is significant in that it’s costing taxpayers a large percentage of their refund – a refund many of them count on to pay household expenses,” said Mark Ciaramitaro, vice president of H&R Block health care and tax services.

For next tax filing season, it is important to note that the base penalty will increase to the greater of $325 or 2 percent of household income for 2015.

http://newsroom.hrblock.com/hr-block-taxpayers-following-aca-rules-refunds-take-hit/

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Comment:

By Don McCanne, MD

So far, 52 percent of those receiving a tax credit last year to help pay their premiums for the ACA exchange plans are having to pay back an average of $530 – certainly an unpleasant surprise for individuals subsisting on modest budgets.

Fortunately, for most individuals that repayment will be through a reduction in their tax refunds rather than an additional payment to be made from funds on hand. Nevertheless, many people look forward to receiving their tax refunds in order to be able to meet other important expenses.

Under a single payer system, there is no premium to be paid and thus no need for subsidies based on income. It is much simpler and even more equitable to fund the entire system through progressive taxes.

Research says hospital consolidation isn’t a cure-all for health care

By Tim Vogus, Associate Professor of Management at Vanderbilt University
The Conversation, February 23, 2015

In his new book, America’s Bitter Pill, Steven Brill dives deep into the history of the Affordable Care Act (ACA) and how it was passed. He concludes that, although providing more Americans with health insurance is worthy of praise, the ACA does far too little to address the costs of health care.

And he makes his own proposal for bringing costs down: consolidation. As hospital systems expand and eye ways to grow even more, Brill proposes that these systems start to insure patients as well as treating them. If the hospital system is the insurer, he reasons, it has an incentive to keep costs down. And these new integrated systems would treat all their patients’ needs from primary care, to surgery and more. In short – treating the whole patient.

Economists and other researchers have been looking at what consolidation, big integrated systems and dwindling competition mean for health care. And so far, it looks like consolidation isn’t a cure for high costs or a way to improve care. In fact, it might make it harder for hospitals to deliver care well.

Consolidation is already happening

Hospital consolidation is either “horizontal,” like buying a hospital and reducing the number in the market, for instance, or “vertical,” like buying clinics and physician practices.

The truth is that hospitals are already a long way down this road. Both kinds of consolidation are happening and in recent years there has been unprecedented consolidation, with more planned for 2015.

And the ACA creates an incentive for organization to consolidate and offer insurance by encouraging the development of Accountable Care Organizations (ACOs). These are networks of doctors, hospitals and other care providers that coordinate care for patients. The idea is that they save money by increasing efficiency because they care for all of the patients health needs. That means everything from primary care to specialists, hospital services and more. ACOs are especially prominent in Medicare, but the Department of Health and Human Services (HHS) is pushing for more of this quality- and value-based contracting over traditional fee-for-service.

Some critics say that consolidation in general means that hospital systems have a tremendous amount of market power – something that isn’t known for keeping costs down. But Brill argues that any concerns about the market power these systems would hold can be overcome by simple regulations to ensure minimum competition.

So in other words, both Brill and the ACA would push health care delivery toward large integrated entities that would manage the entire spectrum of patient needs from insurance to primary care checkups to cancer treatment to managing chronic disease. But research shows that consolidation has a poor track record of keeping costs down and that very large organizations have trouble delivering care and working efficiently.

Consolidation doesn’t have a track record of keeping costs down

Earlier attempts to control costs through consolidation did not succeed. In the 1990s integrated delivery networks attempted to lower costs, but failed due to financial losses from purchasing physicians practice, difficulties with integration and managing risk. Researchers argue that new attempts to control costs through consolidation are likely to experience similar disappointing results.

Martin Gaynor of Carnegie Mellon and Robert Town of the University of Pennsylvania’s Wharton School summarize recent research indicating that increases in consolidation – and the resulting lack of competition – lead to higher health care costs. And these increases are especially high in consolidated markets with few hospitals.

Beyond higher costs, consolidation can also reduce the quality of care provided. Research from outside the US suggests that increases in consolidation can have a negative impact on survival from heart attack. Concentrated markets also mean less choice for patients when it comes to choosing hospitals or doctors, and research indicates that more choice can lead to better health outcomes for procedures like coronary artery bypass graft surgery.

Bigger systems don’t always make for better care

Brill also ignores another major problem: integrating and operating a very large or consolidated health system is hard.

In research at a large, academic medical center, Brian Hilligoss and I found even simple, everyday care transactions and decisions are fraught with problems. Different units, like general medicine and emergency, have different workplace cultures and different ways of operating, which can make integration difficult. Units might be interdependent, but their administration is separated. And the physical size of these organizations matters too. The hospital we studied occupied over 6 million square feet putting a lot of physical distance between units and between doctors and patients. In our study we found that these factors led to a heavy reliance on technology to coordinate care rather than direct communication.

In another study Hilligoss found that this poor integration between different units in the hospital means that doctors rely on an elaborate process of “selling patients” to other departments in order to transfer them. One department has to make a case for the patient to be transferred to another department, even if that is where they objectively need to be. And inpatient services have the right to refuse transfers.

We found that physicians have to consistently engage in elaborate workarounds to carry out their work. And nurses face similar challenges in complex organizations. Anita Tucker of Brandeis University documents how, like doctors, they frequently encounter operational failures like missing materials and information that require workarounds.

Mergers don’t always mean coordinated care

The consolidation encouraged by Brill exacerbates all the challenges identified in this research. For example, in her book Code Green, Dana Beth Weinberg documents how the merger of Beth Israel and Deaconess hospitals in Boston had profound effects on the way care was delivered at the bedside. The merger prioritized cost reductions through higher patient loads for each nurse which undermined Beth Israel’s comprehensive and influential primary nursing model. In practice that meant shifting critical patient care tasks away from highly skilled registered nurses to less skilled aides which compromised care quality.

And early evidence from Accountable Care Organizations suggest that is difficult for different organizations to integrate their cultures. Sara Kreindler of the University of Manitoba and colleagues examined early Accountable Care Organizations and found that in no case did these organizations see themselves as integrating different groups into one whole. In fact, the organizations studied painstakingly avoided the idea of integration.

While Brill’s work offers a compelling personal narrative and a provocative and thorough recounting of the development and passage of the ACA, it has substantially less to offer as guidebook for change. He fails to sufficiently grapple with existing economic research, earlier attempts to achieve similar aims, and the real difficulties posed by consolidation for those doing the hard work at the point of care delivery.

(The article includes links to resources cited plus a response by Steven Brill and a reply by the author.)

http://theconversation.com/research-says-hospital-consolidation-isnt-a-cure-all-for-health-care-36282

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Comment:

By Don McCanne, MD

Considerable attention has been directed to the phenomenon of provider consolidation. It is celebrated by some as a means of providing greater efficiency and quality by means of integration of services, advancing the model of accountable care organizations. Others have criticized consolidation because of its anti-competitive influence on markets, driving prices ever higher.

This article by Professor Tim Vogus is presented in its entirety since it explains why we need to look elsewhere than provider consolidation if we truly want to improve value delivered by our health care system.

If we had publicly-administered health care financing through a single payer system, then consolidation would not be a tool of gaining greater market leverage and thus higher prices. Rather, consolidation would occur only if it improved the delivery of care. Single payer is a much more effective way of achieving our goals of improving quality while controlling costs.

CMS pitches 1.1% boost to Medicare Advantage payments

By Bob Herman
Modern Healthcare, February 20, 2015

The CMS has proposed increasing health insurers’ Medicare Advantage payment rates by 1.05% for 2016, a move that kicks off a 45-day dogfight in Washington before the rates are cemented.

The base rate was an 0.95% average decrease, but “when combined with expected growth in plan risk scores due to coding,” Advantage plans will actually receive the 1.05% hike in revenue next year, according to a release from the CMS posted late Friday afternoon. Risk scores relate to how Medicare pays for the health status of beneficiaries. CMS pays more for patients who have more health conditions and less for those who are healthier. 

Like last year, Advantage plans that earn at least four stars out of five will receive a 5% bonus payment in 2016, the CMS said. Any plans with 3.5 stars or fewer will continue to get no additional payments.

Breaking from proposals in the previous two years, the CMS said it will not propose any adjustments to the use of home visits for patient risk assessments. Many Advantage plans diagnose the severity of patients’ illnesses at home instead of in a physician’s office. But this has raised concerns that many plans are falsely inflating the diagnoses in a bid to warrant higher payments for sicker members, a process called upcoding.

Medicare Advantage’s risk-assessment process has been under fire from policymakers and consumer advocates who argue private insurers are purposefully bilking money from the program, which covers 17.3 million people as of this month. The Medicare Payment Advisory Commission has said the risk scores of Advantage patients have grown more rapidly than those of regular fee-for-service beneficiaries, and the current risk-score payment reductions mandated by the Affordable Care Act may not be enough.

Humana, one of the largest Advantage insurers in the country, disclosed this week that it is facing increased scrutiny from the U.S. Justice Department for its risk-adjustment practices.

Health insurers have already begun their Medicare Advantage lobbying campaign in the hope of extracting higher rates come April. The Coalition for Medicare Choices, part of America’s Health Insurance Plans, has aired several ads featuring seniors advocating for the private plans.

Many members of Congress have also weighed in on the process. A bipartisan group of 53 senators, led by Chuck Schumer (D-N.Y.) and Mike Crapo (R-Idaho), sent their own letter to Tavenner this week urging the agency to “minimize disruptions for beneficiaries enrolled in the MA program by maintaining payment levels and providing a stable policy environment for 2016.”

The health insurance industry also happens to be one of the top financial backers of Schumer and Crapo. Since 2009, health insurers have given more than $493,000 to Schumer’s campaigns and more than $234,000 to Crapo’s, according to OpenSecrets.org.

http://www.modernhealthcare.com/article/20150220/NEWS/150229988

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CMS proposes 2016 payment and policy updates for Medicare Health and Drug Plans

CMS Press Release, February 20, 2015

The Centers for Medicare and Medicaid Services (CMS) today released proposed changes for the coming year for the Medicare Advantage (MA) and Part D Prescription Drug Programs that will advance Health and Human Services Secretary Sylvia M. Burwell’s vision of building a better, smarter health care system and moving the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they give patients.

The proposed changes reflect the commitment to a Medicare program that delivers better care, spends health care dollars more wisely and results in healthier people.

http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2015-Press-releases-items/2015-02-20-3.html

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NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan Sponsors, and Other Interested Parties
SUBJECT: Advance Notice of Methodological Changes for Calendar Year (CY) 2016 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2016 Call Letter

CMS, February 20, 2015

Section H. Medicare Advantage Coding Pattern Adjustment

Below we offer three analyses that strongly suggest that the health status of MA enrollees is no worse, and more likely is better, than the health status of FFS beneficiaries of similar age, gender, Medicaid, and institutional status. These include analyses of self-reported health status and mortality rates, as well as Part D drug information.

Self-Reported Health Status. Analysis of self-reported data on health status and on whether the respondent has ever been diagnosed with one of a variety of conditions from the 2006-2011 Medicare Current Beneficiary Survey (MCBS) suggests that the average risk for MA enrollees is approximately 96% of the average risk for FFS beneficiaries.

Mortality Rates. Mortality rates for MA beneficiaries are significantly lower than mortality rates for FFS enrollees. For example, in 2012, the mortality rate in MA was 81% of the mortality rate in FFS. (It is possible that lower mortality rates result from better quality of care in MA, but it seems more likely, given the size of the difference, that this reflects, at least in part, relative health status.)

Part D Drug Information. MA enrollees are significantly less likely than FFS beneficiaries to be prescribed drugs that are predictive of high expenditures. HHS has used information from Part D data to construct risk scores for MA and FFS enrollees, and has found that MA enrollees are at significantly lower risk than demographically similar FFS beneficiaries.

Of the three sources of information that are independent of the diagnoses reported by MA plans, each suggests that MA enrollees are at similar or lower risk than demographically similar FFS beneficiaries.

CMS Advance Notice (172 pages): http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2016.pdf

Letter from U.S. Senate members to Marilyn Tavenner, CMS Administrator: http://www.usatoday.com/story/news/nation/2015/02/20/medicare-advantage-prescription-drug-part-d-cms/23744123/

Comment:

By Don McCanne, MD

The 2016 base rate for private Medicare Advantage (MA) plan payments was to have decreased by 0.95%, phasing in a correction of the overpayments that have been made to the MA plans. Instead, CMS will increase the payment rates by 1.05%, a full 2.0% increase over the projected base rate. This is the fourth year in a row that CMS has violated the intent of ACA and other legislation to bring MA rates down to the equivalent of payments made in the traditional fee-for-service Medicare program.

CMS’s Advance Notice provides three sources of evidence demonstrating that the MA patients are a healthier subset of patients than those in the traditional Medicare program. Since this results in adverse selection in the traditional Medicare program, the rates paid to MA plans should be even lower than payments made in the traditional program, not higher.

The record is now clear that the MA plans have been using various methods of upcoding the severity of illness of their customers (known to us as patients) thus qualifying for higher risk adjustment payments. One of the latest schemes is to make home visits, not to provide more care but merely to try to find more diagnoses to be used in inflating risk adjustments – diagnoses that do not appear in the billing documents from physicians and hospitals! Although this abuse is widely recognized, CMS said “it will not propose any adjustments to the use of home visits for patient risk assessments.” This is at a time that the Justice Department has increased its scrutiny of these likely criminal acts.

As if we didn’t have enough reason to be disgusted with our government, over 50 Senators have sent a letter to CMS Administrator Marilyn Tavenner requesting preservation of the overpayments made to the MA plans. The rhetoric of the letter is clearly that of America’s Health Insurance Plans (AHIP) – the lobby organization for the health insurance industry. To no surprise the lead signers of the letter, Senators Mike Crapo and Charles Schumer, between them have received from the insurance industry close to three-quarters of a million dollars.

The Coalition for Medicare Choices has already begun its intense campaign to drum up public support for MA overpayments, of course disguised as protecting Medicare. It surely surprises no one that this organization is headquartered not only in the same building as AHIP, but it even shares the same suite.

Perhaps even more ominous is the statement in the CMS press release that states that the proposed changes “will advance Health and Human Services Secretary Sylvia M. Burwell’s vision of building a better, smarter health care system and moving the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they give patients.” And the the Senators’ letter that states, “At the time of broad agreement on the need to shift U.S. health care to focus on care coordination, quality, and value-based payments, it would be counterproductive to jeopardize a program that is already driven by and aligned toward those goals.” This political support of MA plans clearly advances the agenda of privatizing Medicare – only one step away from converting to a defined contribution premium support (voucher) program – the dream of the private insurance industry.

So who is paying the higher costs of these private MA plans? We, the taxpayers, and the beneficiaries in the traditional Medicare program who are paying higher Part B premiums to help fund this gift to the private insurers.

If there were even a thread of moral fiber left in D.C., instead of shamelessly supporting overpayments to the private insurance industry, our representatives would be advocating for using those funds to improve benefits for all Medicare beneficiaries. Under that scenario, the private insurers who are keeping three-fourths of the overpayments, would be dismissed. But then Crapo and Schumer would likely decide that three-quarters of a million dollars is too dear of a price to pay for a strand of moral fiber.

Why High Risk Pools (Still) Won’t Work

By Jean P. Hall
The Commonwealth Fund, February 13, 2015

As the new Congress convenes and the Supreme Court prepares to hear arguments in the King v. Burwell case challenging tax subsidies for insurance purchased through the federally facilitated marketplaces, proposals to repeal and replace the Affordable Care Act (ACA) are resurfacing. Many of these rely on high-risk health insurance pools to cover people with preexisting health conditions.

In fact, the risk pools are suggested as a viable alternative to the ACA’s ban on preexisting condition exclusions in the individual market and the marketplaces. My recent analysis of high-risk pools, however, explains why these entities simply are not a realistic alternative to coverage requirements under the ACA. In a nutshell, high-risk pools:

1. are prohibitively expensive to administer,
2. are prohibitively expensive for consumers to purchase, and
3. offer much less than optimal coverage, often with annual and lifetime limits, coverage gaps, and very high premiums and deductibles.

Recent proposals to replace ACA reforms with high-risk pools focus on using state-based programs, but historical experience with 35 state-based high-risk pools and more recent experience with the national Pre-Existing Condition Insurance Plan (PCIP) illustrate the problems with this approach. Even though state-based high-risk pools charged premiums of up to 250 percent of those charged to healthy beneficiaries in the individual insurance market, premium revenues paid just 53 percent, on average, of program costs. In addition to these high premiums, enrollees in state-based high-risk pools faced annual deductibles as high as $25,000 and annual coverage limits as low as $75,000. Past research indicated that high costs and limited benefits associated with high-risk pool coverage resulted in delayed or forgone care and adverse outcomes for enrollees. Many also accrued medical debt despite having insurance.

For these reasons, use of high-risk pools in lieu of marketplace and Medicaid expansion coverage would result in greater state and federal costs, fewer people with preexisting conditions able to obtain coverage, and coverage that fails to meet the often greater needs of people with chronic conditions.

http://www.commonwealthfund.org/publications/blog/2015/feb/why-high-risk-pools-still-will-not-work

Brief: Why a National High-Risk Insurance Pool Is Not a Workable Alternative to the Marketplace

http://www.commonwealthfund.org/~/media/files/publications/issue-brief/2014/dec/1792_hall_highrisk_pools.pdf

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Comment:

By Don McCanne, MD

Those who wish to repeal or at least drastically reduce the provisions of the Affordable Care Act realize that they must come up with a replacement.

Most of the proposals would grant much greater flexibility to insurance products while reducing regulatory oversight. The problem that creates is that individuals with high medical expenses tend to be shut out of the insurance market. To ensure coverage for these individuals, high-risk insurance pools have been proposed.

This article and the brief that it is based on explain why high-risk pools are not a satisfactory solution. The premiums are unaffordable, and the pared-down benefits are unsatisfactory. These over-priced plans do not provide the financial protection that patients with chronic disorders need.

Even with the Affordable Care Act, enrollment in the temporary high-risk pools had to be closed early because they proved to be too expensive, threatening depletion of the allotted funds. They provide poor coverage at a very high cost.

With a single payer system this problem disappears. Funding is based on ability to pay, through the tax system, and not on the basis of anticipated medical expenses. Everyone receives the care they need, regardless of their health status. The fragmented plans supported by the repeal and replace people cannot do that.