Draft 2015 Letter to Issuers in the Federally-facilitated Marketplaces

Centers for Medicare & Medicaid Services, February 4, 2014

This Letter provides issuers seeking to offer Qualified Health Plans (QHPs), including stand-alone dental plans (SADPs), in a Federally- facilitated Marketplace (FFM) and/or Federally-facilitated Small Business Health Options Program (FF-SHOP), with operational and technical guidance to help them successfully participate in the Marketplaces.

Chapter 2

Section 3. Network Adequacy

Pursuant to 45 C.F.R. 156.230(a)(2), an issuer of a QHP that has a provider network must maintain a network that is sufficient in number and types of providers, including providers that specialize in mental health and substance use disorder services, to assure that all services will be accessible to enrollees without unreasonable delay.

For the 2015 benefit year, issuers will be required to submit a provider list that includes all in-network providers and facilities for all plans for which a QHP certification application is submitted. CMS will review the collected provider list to evaluate provider networks using a “reasonable access” review standard, and will identify networks that fail to provide access without unreasonable delay. In order to determine whether an issuer meets the “reasonable access” standard, CMS will focus most closely on those areas which have historically raised network adequacy concerns. These areas may include the following:

• Hospital systems,

• Mental health providers,

• Oncology providers, and

• Primary care providers.

If CMS determines that an issuer’s network is inadequate under the reasonable access review standard, CMS will notify the issuer of the identified problem area(s) and will consider the issuer’s response in assessing whether the issuer has met the regulatory requirement and prior to making the certification or recertification determination.

Section 4. Essential Community Providers

Essential community providers (ECPs) include providers that serve predominantly low-income and medically underserved individuals (includes federally qualified health centers, Ryan White HIV/AIDS Providers, Title X Family Planning Clinics, Tribal and Urban Indian Organization Providers, Disproportionate Share Hospital (DSH) and DSH-eligible Hospitals, Children’s Hospitals, Rural Referral Centers, Sole Community Hospitals, Free-standing Cancer Centers, Critical Access Hospitals, STD Clinics, TB Clinics, Hemophilia Treatment Centers, Black Lung Clinics, and other entities that serve predominantly low-income, medically underserved individuals).

i. Evaluation of Network Adequacy with respect to ECP

Because the number and types of ECPs available vary significantly by location, CMS intends to propose in rulemaking an approach to evaluating QHP Applications for sufficient inclusion of ECPs for the 2015 benefit year.

If finalized, we intend for certification year 2015 to utilize a general ECP standard whereby the application would first have to demonstrate that at least 30 percent of available ECPs in each plan’s service area participate in the provider network.

http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/dr…

In an effort to improve the function of health plans being offered through the Federally-facilitated Marketplaces (insurance exchanges), CMS has issued a Draft Letter providing guidance to Qualified Health Plans (QHPs) as they apply for certification or recertification of their plans. From CMS’s 51 page letter, two of the issues presented warrant our special attention: 1) network adequacy for the QHPs, and 2) network inclusion of Essential Community Providers (ECPs).

The Affordable Care Act (ACA) very intentionally included limited provider networks as a tool to reduce health care spending. QHPs could negotiate lower payment rates by offering physicians and hospitals exclusivity – exchanging lower fees for higher volume, while excluding the other physicians and hospitals in the community. The insurers seemed to think that they were given carte blanche and trimmed these back to narrow networks or even ultra-narrow networks. The insurers’ bargaining leverage with the few providers that sign on is even greater, plus these narrow networks further reduce spending since patients have greater difficulties accessing care because of transportation problems and difficulties obtaining appointments with overbooked providers. Patients losing their established health care providers not only have the right to be angry, but that can also be disruptive to the care of those in ongoing treatment programs for more serious problems. Disruption of care, impairing access, and depriving patients of choice of their care are opposite of the policies that reform should bring us.

The CMS Letter states that “a provider network must maintain a network that is sufficient in number and types of providers,” and that “issuers will be required to submit a provider list that includes all in-network providers and facilities” so that CMS can “evaluate provider networks using a ‘reasonable access’ review standard.”

Well, that’s a nice process. Sufficient providers? Reasonable access standard? Every community is different. How many hospitals and physicians would be needed in each network, and, furthermore, how do you choose which ones are to be anointed? Is this another one of those public-private partnerships burying corruption under the banner of market efficiency? Further, what about the next year when it turns out that the selected providers were not so hot after all? Do you then turn to the providers who were rejected? Not if they closed shop and left town. Disrupting the community health care infrastructure is the opposite of the policies that reform should bring us.

Since tens of millions will remain uninsured it is essential that ECPs be supported. The uninsured will have to rely largely on federally qualified health centers, disproportionate share hospitals, critical access hospitals, rural referral centers and other institutions that have traditionally provided care to the poor and uninsured. In many communities, these institutions also provide services to insured individuals, including especially those with Medicaid. Sometimes these sites are chosen by patients because of impaired access to mainstream providers, sometimes for convenience, and sometimes because of patient preference, especially when these sites have always been the individual’s source of care.

So what is the new proposed CMS rule on ECPs? For 2015, CMS would require that “at least 30 percent of available ECPs in each plan’s service area participate in the provider network.” The reciprocal? The health plans can exclude up to 70 percent of essential community providers from its networks! ACA reduced the funding for safety-net institutions since “everybody would be insured” so their care could be paid for through the plans. Yet when the beneficiaries use these essential community providers, the insurers do not have to pay for care provided by 70 percent of these ESSENTIAL institutions. Defunding essential community providers is the opposite of the policies that reform should bring us.

The few good polices contained in ACA do not begin to offset all of the terrible policies that already characterize our dysfunctional health care system – policies that were left in place because of the highly flawed design of ACA.

There is something we can do about it. First, it is essential that everyone has a solid foundation in knowledge about social insurance. Once we have that, it will be so obvious that we need a universal, publicly financed and publicly administered program of social insurance for health care, something like an improved Medicare that covers everyone. For those who missed yesterday’s Quote of the Day on “Social Insurance” by Marmor et al, click on the link below, read the message, and then buy the book.

https://pnhp.org/news/2014/february/social-insurance-what-you-need-to…

Social Insurance: America’s Neglected Heritage and Contested Future

By Theodore R. Marmor, Jerry L. Mashaw and John Pakutka
(Published by CQ Press, October 15, 2013))

The United States has a relatively comprehensive system of social insurance. Our programs of social provision begin with a bedrock assumption: family income will generally come from work wages or salaries, deferred compensation in the form of pensions, or investments in financial markets (roughly speaking, invested savings, although inheritance plays a small part for many families). We live and work in a vibrant market economy.

We recognize, however, that over the life cycle of any individual there are risks to adequate income from temporary or long-term inability to work and inadequate reserves to withstand major shocks, such as catastrophic medical expenses.

****

The overall lesson is clear: America’s social welfare programs directed at family economic security are complex compromises. They represent balances among visions of social welfare goals and understandings of the proper location of public responsibility. They also reflect compromises among conceptions of governmental and individual and private responsibilities and governmental and market allocation of goods and services. The complex nature of American social programs is hardly an accident. It is the outcome of the forces – political, economic, social, and philosophical – that shaped policy judgements at critical junctures in American history, that is, the point at which these programs were enacted, amended, or reformed.

****

Heterogeneity and complexity are not necessarily bad things in themselves. They may be the results of differing political preferences, differing local conditions, or the differing needs of various populations. Heterogeneous arrangements may also provide opportunities for experimentation and learning that are beneficial in the long run. But looking at the now so-called universal access to health insurance in the United States, it is difficult to perceive whether any of these values are being served. Moreover, the heterogeneity and complexity in these arrangements provide quite different levels of access to health insurance for different populations, a situation that is almost certain to lead to serious administrative difficulties and public misunderstandings. Whereas the relatively simple structure of Medicare, both in its coverage and financing, has led to immense popularity and very substantial improvements in the economic security of American seniors, both Medicare’s “modernization” in the Medicare Modernization Act of 2003 and the complex and administratively challenging provisions of the Affordable Care Act of 2010 raise all-too-obvious possibilities for health system cost inflation, citizen and provider dissatisfaction, and continued political struggle. “Universal coverage” is to be applauded from the perspective of increasing Americans’ economic security, but program design matters.

****

Social insurance programs engage most of the electorate precisely because they cover common risks and insure most of the population. And because practically everyone is both a contributor and a potential beneficiary, the politics of social insurance tends to be of the “us-us” rather than the “us-them” form. Each individual’s sense of earned entitlement or deservingness makes reneging on promises in social insurance programs politically costly. Each individual’s responsibility to contribute to the common pool makes extravagant promises of “something-for-nothing” future benefits less politically attractive.

****

The common pool feature of Medicare cannot plausibly be a cause for fiscal concern. The experience of other industrial democracies has repeatedly demonstrated the superior capacity of more universal social insurance programs to restrain growth in overall medical expenditures. Any comparison of growth in health expenditures of the United States and social insurance nations such as Germany, the Netherlands, and France would show American expenditures to have grown more rapidly in recent decades. And these are countries with both older populations and more widespread and intensive use of health care than in the United States. (The simple facts in the previous sentence are so little appreciated that we suggest you read the sentence again.) Countries with older populations, greater use of medical care, and, in addition, equal or better health results do a better job of restraining medical inflation than the United States. None of them rely on competition of individual responsibility as a major cost-control device.

****

It is hard to argue, and we will not, with the motivation of the ACA’s sponsors and supporters. Broadening health insurance coverage to include more than 50 million uninsured Americans is a worthy goal – as is any attempt to get a handle on cost inflation in health care expenses in the United States. But we believe that the idea that these goals are best pursued through market-mimicking and means-tested social provision is profoundly misguided. Fragmented risk pools will not promote either perceptions of fairness or us-us politics in the provision of health insurance. And patient choice and competition among insurers has no demonstrated record of cost control in medical care either in the United States or elsewhere in the developed world. The MMA and the ACA modernize health insurance in the United States by moving further toward the health insurance models that have long been available in private markets. Both statutes seem to imagine that health care economics works like the market for breakfast cereals and that individual choice in risk bearing is the solution to concerns about both quality and efficiency. We know of no evidence that could sustain these beliefs.

****

We should not leave this discussion without underscoring the profoundly traditional, indeed conservative, and work-oriented vision that American universalism embraces. It says not that you are entitled because you are part of the nation, although that is surely a plausible vision of universality, but that you are entitled because of your contribution to the nation. Funding is linked to earnings, and entitlement is defined largely by years of work. Hence for Americans, universalistic entitlement has always been a concept tied to, supported by and supporting, a market economy. That the protection of social insurance – and the demand for its expansion – should be thought to be the distinctive position of “liberals” is, to say the least, ironic. That the reform of social insurance should be thought to be best accomplished by moving in the direction of market-like devices that shift risks onto individuals and families already buffeted by the staggering economic uncertainties of a rapidly globalizing economy is, in our view, a serious mistake. “Modernization” in this form misunderstands what social insurance is about.

http://www.cqpress.com/product/Social-Insurance-America-s-Neglected.html

Comment:

By Don McCanne, M.D.

Social insurance defines a nation. Do we join together to protect each other from the many threats of financial disruption, or do we let each individual or family fend for themselves against odds of success? Compared to other nations, the record in the United States has been spotty. What are we doing right, what are we doing wrong, and how can we improve? “Social Insurance,” by Theodore Marmor, Jerry Mashaw and John Pakutka provides the answers.

Americans are very familiar with Medicare and Social Security, and, of course, are quite protective of them. But they are just two programs of social insurance, and they mesh with many other policies designed to protect us against the threat of being born poor, the threat of the early death of the family breadwinner, the threat of ill health, the threat of involuntary unemployment, the threat of disability, and the threat of outliving one’s savings. It is these threats and our current policies toward them that the authors describe, while providing us with an understanding of how we can improve security for all of us.

Everyone should have this book. For individuals already well versed in social insurance, it provides an oversight that organizes thoughts while providing us with clear explanations of the problems and solutions that we can share with others. For the business community, it explains social insurance in terms that astute businesspersons would recognize as smart business decisions on how to address these threats – for themselves and for their employees. For advocates of free markets who are uncomfortable with “government solutions,” it explains how social insurance is an essential component in maintaining a vibrant market economy. For politicians, once the public has a better understanding of social insurance, it shows them that they must abandon deceptive rhetoric and move forward with beneficial reform. For libertarians, well… they should read this to try to understand why people want to be in this together, then, if they still can’t get it, they should dig moats around their castles.

Social Insurance: America’s Neglected Heritage and Contested Future

By Theodore R. Marmor, Jerry L. Mashaw and John Pakutka
(Published by CQ Press, October 15, 2013))

The United States has a relatively comprehensive system of social insurance. Our programs of social provision begin with a bedrock assumption: family income will generally come from work wages or salaries, deferred compensation in the form of pensions, or investments in financial markets (roughly speaking, invested savings, although inheritance plays a small part for many families). We live and work in a vibrant market economy.

We recognize, however, that over the life cycle of any individual there are risks to adequate income from temporary or long-term inability to work and inadequate reserves to withstand major shocks, such as catastrophic medical expenses.

****

The overall lesson is clear: America’s social welfare programs directed at family economic security are complex compromises. They represent balances among visions of social welfare goals and understandings of the proper location of public responsibility. They also reflect compromises among conceptions of governmental and individual and private responsibilities and governmental and market allocation of goods and services. The complex nature of American social programs is hardly an accident. It is the outcome of the forces – political, economic, social, and philosophical – that shaped policy judgements at critical junctures in American history, that is, the point at which these programs were enacted, amended, or reformed.

****

Heterogeneity and complexity are not necessarily bad things in themselves. They may be the results of differing political preferences, differing local conditions, or the differing needs of various populations. Heterogeneous arrangements may also provide opportunities for experimentation and learning that are beneficial in the long run. But looking at the now so-called universal access to health insurance in the United States, it is difficult to perceive whether any of these values are being served. Moreover, the heterogeneity and complexity in these arrangements provide quite different levels of access to health insurance for different populations, a situation that is almost certain to lead to serious administrative difficulties and public misunderstandings. Whereas the relatively simple structure of Medicare, both in its coverage and financing, has led to immense popularity and very substantial improvements in the economic security of American seniors, both Medicare’s “modernization” in the Medicare Modernization Act of 2003 and the complex and administratively challenging provisions of the Affordable Care Act of 2010 raise all-too-obvious possibilities for health system cost inflation, citizen and provider dissatisfaction, and continued political struggle. “Universal coverage” is to be applauded from the perspective of increasing Americans’ economic security, but program design matters.

****

Social insurance programs engage most of the electorate precisely because they cover common risks and insure most of the population. And because practically everyone is both a contributor and a potential beneficiary, the politics of social insurance tends to be of the “us-us” rather than the “us-them” form. Each individual’s sense of earned entitlement or deservingness makes reneging on promises in social insurance programs politically costly. Each individual’s responsibility to contribute to the common pool makes extravagant promises of “something-for-nothing” future benefits less politically attractive.

****

The common pool feature of Medicare cannot plausibly be a cause for fiscal concern. The experience of other industrial democracies has repeatedly demonstrated the superior capacity of more universal social insurance programs to restrain growth in overall medical expenditures. Any comparison of growth in health expenditures of the United States and social insurance nations such as Germany, the Netherlands, and France would show American expenditures to have grown more rapidly in recent decades. And these are countries with both older populations and more widespread and intensive use of health care than in the United States. (The simple facts in the previous sentence are so little appreciated that we suggest you read the sentence again.) Countries with older populations, greater use of medical care, and, in addition, equal or better health results do a better job of restraining medical inflation than the United States. None of them rely on competition of individual responsibility as a major cost-control device.

****

It is hard to argue, and we will not, with the motivation of the ACA’s sponsors and supporters. Broadening health insurance coverage to include more than 50 million uninsured Americans is a worthy goal – as is any attempt to get a handle on cost inflation in health care expenses in the United States. But we believe that the idea that these goals are best pursued through market-mimicking and means-tested social provision is profoundly misguided. Fragmented risk pools will not promote either perceptions of fairness or us-us politics in the provision of health insurance. And patient choice and competition among insurers has no demonstrated record of cost control in medical care either in the United States or elsewhere in the developed world. The MMA and the ACA modernize health insurance in the United States by moving further toward the health insurance models that have long been available in private markets. Both statutes seem to imagine that health care economics works like the market for breakfast cereals and that individual choice in risk bearing is the solution to concerns about both quality and efficiency. We know of no evidence that could sustain these beliefs.

****

We should not leave this discussion without underscoring the profoundly traditional, indeed conservative, and work-oriented vision that American universalism embraces. It says not that you are entitled because you are part of the nation, although that is surely a plausible vision of universality, but that you are entitled because of your contribution to the nation. Funding is linked to earnings, and entitlement is defined largely by years of work. Hence for Americans, universalistic entitlement has always been a concept tied to, supported by and supporting, a market economy. That the protection of social insurance – and the demand for its expansion – should be thought to be the distinctive position of “liberals” is, to say the least, ironic. That the reform of social insurance should be thought to be best accomplished by moving in the direction of market-like devices that shift risks onto individuals and families already buffeted by the staggering economic uncertainties of a rapidly globalizing economy is, in our view, a serious mistake. “Modernization” in this form misunderstands what social insurance is about.

http://www.cqpress.com/product/Social-Insurance-America-s-Neglected.html

Social insurance defines a nation. Do we join together to protect each other from the many threats of financial disruption, or do we let each individual or family fend for themselves against odds of success? Compared to other nations, the record in the United States has been spotty. What are we doing right, what are we doing wrong, and how can we improve? “Social Insurance,” by Theodore Marmor, Jerry Mashaw and John Pakutka provides the answers.

Americans are very familiar with Medicare and Social Security, and, of course, are quite protective of them. But they are just two programs of social insurance, and they mesh with many other policies designed to protect us against the threat of being born poor, the threat of the early death of the family breadwinner, the threat of ill health, the threat of involuntary unemployment, the threat of disability, and the threat of outliving one’s savings. It is these threats and our current policies toward them that the authors describe, while providing us with an understanding of how we can improve security for all of us.

Everyone should have this book. For individuals already well versed in social insurance, it provides an oversight that organizes thoughts while providing us with clear explanations of the problems and solutions that we can share with others. For the business community, it explains social insurance in terms that astute businesspersons would recognize as smart business decisions on how to address these threats – for themselves and for their employees. For advocates of free markets who are uncomfortable with “government solutions,” it explains how social insurance is an essential component in maintaining a vibrant market economy. For politicians, once the public has a better understanding of social insurance, it shows them that they must abandon deceptive rhetoric and move forward with beneficial reform. For libertarians, well… they should read this to try to understand why people want to be in this together, then, if they still can’t get it, they should dig moats around their castles.

New Medicaid Enrollees In Oregon Report Health Care Successes And Challenges

By Heidi Allen, Bill J. Wright and Katherine Baicker
Health Affairs, February 2014

In 2008 Oregon used a lottery to expand its Medicaid program for low-income adults, Oregon Health Plan Standard (OHP).

For this study we conducted 120 qualitative interviews among Oregon residents who had recently gained Medicaid coverage. Our purpose was to better understand how newly insured patients did—and did not—interact with the health care system

Group 1: Minimal Interactions With Health Care

Forty percent of the newly insured enrollees whom we interviewed did not use their coverage much, if at all.  Low users gave one of the following four main reasons for not using their Medicaid benefits very often.

* Perception Of Good Health

* Confusion About Coverage

* Dissatisfaction With Care

* Access Barriers

Group 2: Regular Or Frequent Interactions With Health Care

The remaining 60 percent of respondents (called regular users) used their insurance more than a time or two but reported varying degrees of success.

* Regular Preventive Care And Minor Needs:

About one-tenth of the regular users took advantage of access to preventive care and also received treatment for occasional illnesses or injuries

* Immediate Health Improvement:

Another tenth of the regular users described an immediate transformation in their health after they received insurance. These people all had serious health problems that could be improved quickly, such as by getting back on a previously effective medication or having an operation that had been postponed because of lack of coverage. The members of this group saw their new insurance coverage as directly related to an improvement in their quality of life.

* Mixed Success:

Forty-four percent of regular users continued to experience challenges. Some interviewees were able to get partial treatment—such as prescriptions for chronic conditions—but had serious needs remaining. Some reported feeling misunderstood by physicians or being unable to build a relationship with a primary care provider. Others struggled with very poor health that continued to deteriorate even with regular treatment.

* Success Over Time:

Finally, 39 percent of regular users reported that their health had improved with insurance, but that it had taken time. They experienced incremental benefits once they found and built a relationship with the right doctor.

Often these users’ problems were addressed in order of severity or impairment. Lifestyle changes, such as modifications to diet and exercise, were not discussed until their acute symptoms had improved. Many of the positive changes that they reported were relatively recent.

http://content.healthaffairs.org/content/33/2/292.abstract

Comment:

By Don McCanne, M.D.

The “Oregon Health Insurance Experiment” made possible the comparison of uninsured patients with Medicaid patients by the natural experiment in which Medicaid patients were selected by lottery from a single population. The initial study reported was not powered to detect changes in health outcomes, but opponents of reform used the lack of demonstrable outcome differences to claim that Medicaid provides no health benefits for the patients enrolled. This new study of these Oregon Medicaid beneficiaries confirms that the claim of no health benefit was an outrageous extrapolation on the part of the opponents of ACA and Medicaid.

The majority of the 60 percent of the Medicaid beneficiaries who were regular users of care significantly benefited from the program. One-tenth experienced immediate health improvement, one-tenth benefited from preventive care and occasional acute care, 39 percent experienced incremental benefits over time, and 44 percent continued to experience challenges though many  of them were able to receive partial treatment.

Some of the reasons given by the 40 percent of the Medicaid beneficiaries who did not use much health care are of concern. Some reasons relate to well-known problems with Medicaid being considered a second-rate welfare program, that is chronically underfunded, and that has access problems due to an insufficient participation by health care professionals.

We can conclude that Medicaid has some definite problems, but we also can refute the opponents of Medicaid and state that it is far better to be insured, even with Medicaid, than not to be insured at all. At the same time, we can also state that mixed results for a portion of the study group should be motive enough for us to advocate emphatically for a higher quality program for everyone – an improved Medicare for all.

New Medicaid Enrollees In Oregon Report Health Care Successes And Challenges

By Heidi Allen, Bill J. Wright and Katherine Baicker
Health Affairs, February 2014

In 2008 Oregon used a lottery to expand its Medicaid program for low-income adults, Oregon Health Plan Standard (OHP).

For this study we conducted 120 qualitative interviews among Oregon residents who had recently gained Medicaid coverage. Our purpose was to better understand how newly insured patients did—and did not—interact with the health care system

Group 1: Minimal Interactions With Health Care

Forty percent of the newly insured enrollees whom we interviewed did not use their coverage much, if at all.  Low users gave one of the following four main reasons for not using their Medicaid benefits very often.

* Perception Of Good Health

* Confusion About Coverage

* Dissatisfaction With Care

* Access Barriers

Group 2: Regular Or Frequent Interactions With Health Care

The remaining 60 percent of respondents (called regular users) used their insurance more than a time or two but reported varying degrees of success.

* Regular Preventive Care And Minor Needs:

About one-tenth of the regular users took advantage of access to preventive care and also received treatment for occasional illnesses or injuries

* Immediate Health Improvement:

Another tenth of the regular users described an immediate transformation in their health after they received insurance. These people all had serious health problems that could be improved quickly, such as by getting back on a previously effective medication or having an operation that had been postponed because of lack of coverage. The members of this group saw their new insurance coverage as directly related to an improvement in their quality of life.

* Mixed Success:

Forty-four percent of regular users continued to experience challenges. Some interviewees were able to get partial treatment—such as prescriptions for chronic conditions—but had serious needs remaining. Some reported feeling misunderstood by physicians or being unable to build a relationship with a primary care provider. Others struggled with very poor health that continued to deteriorate even with regular treatment.

* Success Over Time:

Finally, 39 percent of regular users reported that their health had improved with insurance, but that it had taken time. They experienced incremental benefits once they found and built a relationship with the right doctor.

Often these users’ problems were addressed in order of severity or impairment. Lifestyle changes, such as modifications to diet and exercise, were not discussed until their acute symptoms had improved. Many of the positive changes that they reported were relatively recent.

http://content.healthaffairs.org/content/33/2/292.abstract

The “Oregon Health Insurance Experiment” made possible the comparison of uninsured patients with Medicaid patients by the natural experiment in which Medicaid patients were selected by lottery from a single population. The initial study reported was not powered to detect changes in health outcomes, but opponents of reform used the lack of demonstrable outcome differences to claim that Medicaid provides no health benefits for the patients enrolled. This new study of these Oregon Medicaid beneficiaries confirms that the claim of no health benefit was an outrageous extrapolation on the part of the opponents of ACA and Medicaid.

The majority of the 60 percent of the Medicaid beneficiaries who were regular users of care significantly benefited from the program. One-tenth experienced immediate health improvement, one-tenth benefited from preventive care and occasional acute care, 39 percent experienced incremental benefits over time, and 44 percent continued to experience challenges though many  of them were able to receive partial treatment.

Some of the reasons given by the 40 percent of the Medicaid beneficiaries who did not use much health care are of concern. Some reasons relate to well-known problems with Medicaid being considered a second-rate welfare program, that is chronically underfunded, and that has access problems due to an insufficient participation by health care professionals.

We can conclude that Medicaid has some definite problems, but we also can refute the opponents of Medicaid and state that it is far better to be insured, even with Medicaid, than not to be insured at all. At the same time, we can also state that mixed results for a portion of the study group should be motive enough for us to advocate emphatically for a higher quality program for everyone – an improved Medicare for all.

ACOs saving some money, but Medicare is short on details

By Jenny Gold

Kaiser Health News, January 31, 2014

The Centers for Medicare and Medicaid Services [CMS] announced Thursday that, overall, provider groups involved in Medicare ACO programs saved a total of $380 million in the first year. Sounds like a lot of money, but CMS declined to explain which hospitals were winners and which were losers, how it compared to expectations and how much the participants invested in coordinating care. Also missing is the scale of the savings; CMS did not provide the context of total spending by the ACOs…. It’s also unclear whether the savings figures factored in any losses from some of the ACOs that did not do well. And the agency did not release information about which ACOs saved money and which did not….

http://capsules.kaiserhealthnews.org/index.php/2014/01/acos-saving-some-money-but-medicare-is-short-on-details/

Comment:

By Kip Sullivan, JD

Congress has instructed CMS to conduct several experiments with Medicare ACOs. The first began in 2005, the year before the “accountable care organization” label was invented, and ran through 2010. The participating hospital-clinic chains were called “physician group practices” (PGPs), but within a few years ACO advocates and skeptics alike were asserting that these PGPs were indeed the equivalent of ACOs. The second and third ACO experiments began in 2012. CMS called one program the Pioneer ACO program and the other the Medicare Shared Savings program. 

CMS’s reports on all three ACO experiments have been extremely misleading. Here are the headlines and dates of CMS’s last three reports on its ACO experiments:

July 2011:  Physicians Groups Continue to Improve Quality and Generate Savings 

Under Medicare Physician Pay-for-Performance Demonstration http://www.cms.gov/Medicare/Demonstration-Projects/DemoProjectsEvalRpts/downloads/PGP_Fact_Sheet.pdf,

July 2013: Pioneer Accountable Care Organizations succeed in improving care, lowering costs http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-Releases/2013-Press-Releases-Items/2013-07-16.html,

January 2014: Medicare’s delivery system reform initiatives achieve significant savings and quality improvements – off to a strong start. http://www.hhs.gov/news/press/2014pres/01/20140130a.html.

Note the pattern: “Costs” are always going down, “quality” is always going up. 

These reports suffer from numerous defects. The worst defects are:

•  CMS fails to report how much it costs the ACOs to participate ;

•  CMS usually fails to give us enough information to determine the relative size of the savings or increased costs; and

•  CMS offers only the vaguest descriptions of what the ACOs are doing and yet, on the basis of a few quality measures, reports that quality is improving for all patients assigned to the ACOs.

Reports in both the general media and the professional literature rarely note these defects (for a typical example, see this article in Businessweek http://www.businessweek.com/articles/2014-01-30/obamacares-medicare-experiment-is-working). The article from Kaiser Health News quoted above (it appeared simultaneously in the Washington Post) is an exception to the rule. KHN reporter Jenny Gold criticizes CMS’s latest report – a press release issued last Thursday on the first-year (2012) results for both the Pioneer and the Shared Savings programs – for the first two defects. She notes CMS reports only on whether Medicare saved money and says not a word about whether the hospital-clinic chains that CMS certified as ACOs saved money after taking their ACO-related costs into account. And she comments on CMS’s failure to put the alleged $380-million first-year savings in context, that is, to help the reader understand whether $380 is a relatively large or small savings.

Gold goes on to quote an expert who did his own back-of-the-envelope calculation and concluded that, if CMS’s reported savings are accurate, CMS’s ACOs are cutting costs for Medicare (not Medicare plus the ACOs) by just $80 per beneficiary per year. (Gold offers a confusing explanation of his methodology, so I can’t vouch for it.) In 2012, Medicare spent $11,325 per beneficiary. Eighty dollars comes to seven-tenths of one percent of $11,325. (You can calculate 2012 per capita Medicare spending for yourself by going to page 6 of the 2013 Medicare trustees report. There you’ll find total spending in 2012 was $574.2 billion and total enrollment was 50.7 million. http://downloads.cms.gov/files/TR2013.pdf)

That estimate of seven-tenths of a percent is close to the half-percent savings (for Medicare only) that CMS reported in its July press release on Pioneer ACOs.

But if you want to know what effect CMS’s ACOs are having on the entire health care system (Medicare plus the ACOs), the only information we have that is remotely useful is the testimony to the Medicare Payment Advisory Commission I quoted here last December 9. https://pnhp.org/blog/2013/12/09/medpac-conflicted-between-fiscal-neutrality-and-paying-private-programs-more/ Katelyn Smalley stated at Medpac’s November 2013 meeting: “CMS reported [ACO Pioneer] program savings of about 0.5 percent…. The ACOs we spoke with confirmed that the cost of running the ACO was about one to two percent….” In other words, ACOs are driving costs up by a percent or two. Until CMS is more forthcoming, Ms. Smalley’s testimony must remain our most reliable estimate of whether ACOs are saving money.

My main quarrel with Gold’s article is that she or, more likely, one of her editors, inserted a misleading phrase in the headline of her article – “Medicare saving some money….” When the Washington Post published Gold’s article on their Wong Blog on January 31, their editor changed the headline to read, “Medicare won’t give a straight answer on Obamacare cost savings” http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/31/medicare-wont-give-a-straight-answer-on-obamacare-cost-savings/?tid=up_next. Now that’s more like it.

I have a modest request for the entire media: Please don’t insert the word “savings” in any future articles or broadcasts about Medicare ACOs until CMS reports on the cost incurred by the ACOs. There would still be other reasons to suspect there were no savings (the games ACOs play with risk-adjustment being one of them). But if my wish were granted, the media would no longer be an accomplice to the promulgation of CMS’s strange theory that ACO costs are non-existent or so trivial they don’t deserve mention, much less study.