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Category Archives: Health Insurance Exchanges

Heeeer’s Brad!

Thanks to our Dear Leader for the link to the Republican’s health reform proposal, cutely called PCARE. Professor Wright is the expert and will look through it carefully and give you the real scoop.  I’ll be the opening act.  I’ve read through it, and there are some good things in it, although you have to skip the rhetoric spouted in the first few paragraphs of every section. To wit: “Despite promises that Obamacare would lover health care costs, costs continue to skyrocket for patients, families, taxpayers, and businesses.”  Actually, the Kaiser Family Foundation says that Medicare spent $1000 less per person last year, and is projected to remain steady at 14.5% of the federal budget and 3% of GDP.  Non-partisan this treatise is not.

The good:

1. There is a proposed provision for extending health insurance policies across state lines.  This would certainly help equalize coverage quality and could promote competition.  It is worker-friendly and makes sense.  Medicare is already nationwide, although the private insurance companies that actually provide a lot of the policies are not.  So, OK.  I wonder, though, since as I point out below the plan lays an awful lot of the responsibility for all of this stuff on the states.

2. The republicans like health care savings accounts, or HSAs (personal responsibility and all that) and would like to expand this option.  Great as long as you have two coins to rub together at the end of the month.

3. They want to keep the coverage for kids under their parent’s plan ’til age 26.  I guess that one polls well.

4. Tort reform.  Amen.  Caps on non-economic damages and limitations on attorney’s fees.

5. Transparency.  “…health insurance plans would be required to disclose covered items, drugs, and services, any plan limitations or restrictions, potential cost sharing, the actual cost of services (my boldface), the claims appeal process, as well as the providers participating in the plan.”  Some of this is already required, but some real information about cost would be welcome.

The not-so-good:

1. The plan throws out the rule that insurance companies cannot charge elderly patients more than 3 times what it charges a young person.  This is considered “too restrictive” and the new proposal ups the number to 5 times. This is supposedly better because premiums would go down for millions of Americans.  That it will also go up for millions of Americans is not mentioned.

2. The proposal seems to throw the ball back into the state’s courts.  States can opt out of the coverage for kids under age 26, they can adjust the amount the elderly pay in comparison to the elderly, re-using the high-risk pool idea within states, and making the states negotiate the terms of cross-border agreements.  Perhaps most oddly, it asks the states to designate health plans that would be the default coverage for people who don’t choose a plan.  Wait, weren’t most states perfectly happy to let the federal government set up the health insurance exchanges?

3. The republicans also really like using tax credits, which I think have already been tried. Many times.

4. Here’s the part that makes me nervous.  I quote:

“Under our plan, no one can be denied coverage based on a pre-existing condition.  To help consumers with pre-existing conditions our proposal would create a new ‘continuous coverage protection’.  Under this new protection, individuals moving from one health pan to another could not be medically unwritten and denied a plan based on a pre-existing condition if they were continuously enrolled in a health plan. This new consumer protection helps incentivize responsible behaviors by encouraging consumers to keep their health coverage.”

Those italics are not mine.  People with pre-existing conditions who have been uninsured would supposedly get a grace period in the form of a one-time enrollment period in which they could not be denied for a pre-existing condition.  So people who are not “responsible” (here read “poor”) aren’t entitled to this so-called consumer protection.  I could be wrong about this, but I need a much better explanation about why the ACA’s rule that you can’t turn anyone down for a pre-existing condition at any time is so bad.

So there you go!  The real health policy expert will now take the podium…

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Posted by on February 9, 2015 in Congress, Health Insurance Exchanges

 

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8 Things CFOs Must Know About Health Reform

Whether a Chief Financial Officer is running the fiscal operations of a hospital system, an insurance company or a company that simply employs individuals with health coverage, the decision-making process for sustainability is changing at a rapid pace. However, after years of hearing about reformation in the health system, broad, sweeping and revolutionary changes are finally happening. Major shifts are also occurring in the population, as well as technological advances that will disrupt the entire premise of a four-walled institution for care and the very model we use for health delivery.

Health care in the US is a business – a multi-billion dollar business – and understanding the financial implications of health reform will make or break every CFO. Knowing that health access, demand, quality and payment changes are inevitable there is an immediate need for CFOs across the ecosystems to embrace and plan for transformation.

  1. You have too many beds.
    While many hospital leaders won’t accept this at face value due to lengthy wait times, surgical demands and desire to shift beds, the truth is there are too many beds in a lot of hospitals. Between transferals to the outpatient setting and telemedicine, the need for expensive inpatient beds is declining. Additionally, hospital leadership are increasingly finding that they face problems with state authorities when they apply to move beds. Most recently at the University of Chicago, where 338 beds were being used for a 304-person utilization pattern, the state rejected a University application to move surgical beds.
  2. Food, housing and transportation of patients is your problem.
    As Americans begin to define and attempt to tackle community and population-based care, the access individuals have to quality food, affordable housing and efficient transit matter.  No one living in a food desert will have the same health outcomes as someone living next door to a Whole Foods, just as an individual with a new car will always be more consistent in making appointments and picking up prescriptions than someone who has to access three public transit buses for the same activities. Real patient engagement and activation begins with understanding the environment of each patient.
  3. Your patient demographics are shifting, and so too should your leaderships. As the US continues to brown, hospital leadership must be representative of the population to understand and meet need. At a recent Modern Healthcare Top 25 Minority Executives session, an awardee remarked that the United States is now a country of minorities, and “our leadership as minorities is our future for health outcomes.” With this in mind, it is inevitable and paramount to success that the leadership of any organization resembles and represents those it serves, so it makes the financial investments and decisions that influence the community.
  4. More bodies in beds will never work again.
    Value-based purchasing means that a warm body in a bed not only drives costs higher for the payer, but that the longer a patient remains in the hospital – or the more often they return – the more penalties that accrue. Therefore, the goal should not be for more bodies, but for cost-effective bodies. Depending on the community serviced, this can mean desire for more Masters Athletesspecialized services or elective services. Additionally, as we shift to a world where technology enables more clinical procedures and recovery to be done in the outpatient setting, or at home, and expensive inpatient procedures decrease in volume and reimbursements, hoping to fill beds is futile.
  5. Alignment with physicians is nonnegotiable.
    No leader can effectively attain a goal without buy in from those who carry out the work.  However, it is important to be aware that “physician alignment” is a term that causes almost all physicians to turn and walk the other direction out of fear that this indicates buying their autonomy and dictating their day-to-day, moment-to-moment ability to practice. According to Healthcare Financial News the implications of physician behavior are so important in 2014 that more revenue than ever will be spent recruiting physicians who see the world the same way you do, which is not very different from how corporation CFOs think about their employee hires.
  6. As consumers take on more and more pay responsibility, unexpected payment shifts will keep occurring.
    Many experts estimate that defined contributionhealth insurance exchanges and the growing individual health insurance market means that patients will become more informed about spending their health care dollars, and therefore, more unwilling to spend. The future of reimbursements and pricing strategies is presently a puzzle wrapped in an enigma because of extreme uncertainty. However, it is general knowledge that Medicare and Medicaid reimbursements are going to continue decreasing, with the American Hospital Association and Moody’s already estimating an, “unequivocally negative” outlook for hospitals on the reimbursement fronts.
  7. Technology and data utilization can save you money.
    While the learning curve with new technology can be excruciating and the meaningful utilization of collected information seems daunting, everything from workflow to health activities and employee/patient engagement can be monitored – and altered in real time – using new technology. Moreover, the more information that is known today, the better predictive analytics and behavioral change that can be made tomorrow. However, as the amount of technology available to leadership continues to grow exponentially, the purchasing of new tech will be a balancing act between what is a passing fad versus what is sustainable and transferable.
  8. Your EHR is going to cost you. Big time.
    Now this seems obvious to most hospital CFOs, as they have already seen the initial price tags that come with implementing a “holistic” electronic system. However, the most costly elements may not yet be realized. As mergers and acquisitions continue, technology advances and EHR capabilities increase, the need to refresh systems will continue.  At present there is not one system that meets end-to-end patient or provider needs, leaving the ecosystem open for further disruption, which inherently includes more interoperability, more upgrades, more plugins and more costs.
 
 

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Health Insurance Benefits – Can You Have It Your Way?

As the percentage of large employers that consider a shift to defined contribution and/or private exchange increases, the number of options – and flexibility in those options – must also increase. Consideration for those options rose last year from 14% to 18% among large employers (500+ employees). Further, those who are considering the move to a private exchange want to because of their desire to offer more and better plan options, as well as realize cost-savings. Shifting to the defined contribution framework allows employers to moderate their subsidies to employees, and employees to make better trade-offs among plan options. Additionally, by increasing choices, defined contribution makes it easier for employers to integrate their health incentive and wellness programs by layering them “on top” of the defined contribution.

With this economic opportunity in the market, it is imperative that health plans and enrollment become more tailored to individual and company needs, in addition to the one-size-fits-all solutions of the past and present.

Private health exchanges, according to bswift, like their new Springboard Marketplace, could be the platform to give consumers that greater choice and increase individual decision-making. Given that most large employers who are considering a defined contribution will remain self-insured, bswift is taking a calculated gamble that employers will continue to invest in cost management solutions such as incentives, wellness programs, consumerism as opposed to simply shifting costs to employees under the “fix it and forget it” cost sharing approach suggested by some competitors.

Customize Your Cart

The Springboard Marketplace that bswift has created has the online functionality healthcare.gov could only have dreamed of, and the choice construction of a grocery store.  In fact, the terminology the company uses alludes to “Stocking the Shelves” with your benefit choices and “Shopping” for your ideal group of benefits. This is all done through the interactive benefits advisor, Emma, who walks employees through an online step-by-step process to fill their cart with health care options.

For those aware of bswift’s background as a tech company it may not be a surprise that the software and services offered are aimed at streamlining a very sophisticated system, and making the user experience easy. And for those that know the company’s Executive Director of Exchange Solutions Brad Wolfsen, the shopping experience and ease of transition into a new set of consumer options will easily resonate. Mr. Wolfsen, before joining the team, built and led Safeway’s wellness and retail strategy programs, and was the President of Safeway Health.

According to Mr. Wolfsen, the real benefit he sees to bswift’s products are that they, “allow employers to focus on equity for employees and shift to a retail view on providing health benefits.”  Or, as the Society for Human Resource Management labels it, From Parenting To Partnering.

New Plans Equal New Decisions

With a growing demand for health benefit options that resemble a choose your own adventure book, but with a set amount of money to spend, the development of software must also be functional for employers and employees. The Springboard Marketplace has been constructed so that functionality can simply be turned on and off, so that choices are simplified. Additionally, since there is not a standard approach to benefit choices and many legacy systems that have to be revamped due to mergers, acquisitions and partnerships, greater automation for employers means less paperwork for HR departments. By making workflow, reporting and administrative work more efficient through automation, cost-savings increase even further.

“The best and brightest clients are currently driving what is in the bswift system now,” says Mr. Wolfsen. “As we move towards expanding the suite of benefit options and meeting compliance standards, we are also investing in the shoppers experience.”

He, along with his colleagues at bswift, believe that their tech company is nimble in ways that others are not, and that with the help of their platform and Emma, more and more employers will begin the migration to defined contribution and private exchanges. If true, that growing shift could redefine how health benefit decision-making is done by employees in the future.

 

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Uninsured Rate Has Fallen, But May Soon Increase

While there are plenty of valid reasons to be skeptical about the Affordable Care Act, regardless of where you fall on the political spectrum, it’s hard to argue that imposing an individual mandate to purchase insurance won’t result in more people obtaining coverage. According to the results of a recent survey conducted by the Centers for Disease Control and Prevention (CDC), that’s precisely what’s happened. Based on results of the National Health Interview Survey, researchers at the CDC estimate that nearly 4 million people gained insurance coverage from January to March of 2014. Of course, we also know that people tend to procrastinate, and that consequently, there was a surge of last-minute sign-ups occurring in March. Those newly insured individuals aren’t accounted for in the CDC’s findings, and other estimates that include those individuals put the number of newly insured at between 8 and 10 million. Even then, as Jonathan Gruber is quoted saying in the New York Times, “This is really a three-year process of implementation….Trying to draw strong conclusions from one quarter of one year is impossible.” The bottom line is: The early indications are that more people have coverage, and things seem to be moving in the right direction. But let’s not get ahead of ourselves.

According to another report, though, the end of the third quarter may bring a slight uptick to the number of uninsured. Apparently, Uncle Sam has actually been checking on the information people submitted through Healthcare.gov when they signed up for coverage. As it turns out, the Centers for Medicare and Medicaid Services (CMS) found that nearly 1 million people had issues documenting their status as U.S. citizens. Most of these people were citizens, complied with requests to submit proper documentation, and have kept their coverage. But there are still 115,000 people who have failed to submit documentation by the government’s September 5th deadline. As I’m writing this, these people have two weeks to get their documentation in order. If they do not do so by September 30th, they will lose their coverage. On top of this, more than 350,000 other people–who are unquestionably U.S. citizens–may lose their federal subsidies that lowered the cost of their insurance, because they didn’t submit verifiable proof of income to the government. Together, this represents nearly one-half million people that could be at risk of going without insurance once again after only part of a year.

The issue is whether the discrepancies in documentation are accurate reflections of reality. If someone is an undocumented immigrant, the law is clear that they are not entitled to purchase health insurance through the exchange. Likewise, if someone makes more money than they claim, the law is clear that they are only entitled to the amount of subsidy that corresponds to their actual income. So, if the failure to provide verifiable documentation is legitimate, then by denying these individuals coverage, or eliminating their subsidy, the government is simply correcting a mistake it should not have made to begin with. That is, these people should never have qualified for coverage or a subsidy. However, we know all too well the technical issues that Healthcare.gov has experienced, and many people are claiming that they have tried to upload their documentation electronically without success. If the fault lies with a federal website that continues to experience glitches, it isn’t appropriate to deny people who are lawful residents of the U.S. and/or who have accurately reported their income to be denied coverage. Which is the case? I can only speculate, but I’d be willing to bet it’s a mixture of both. What I do know is that this is one more wrinkle in a complicated implementation process. But, to paraphrase Dr. Gruber, we’ve got at least two more years to iron things out.

 
 

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Yeah. What He Said.

Remember when everyone was talking about how awful healthcare.gov is?  Well, guess what?  At least 4 states are recommending that their citizens use the federal site because theirs are so bad.  That’s a nice about-face huh?  Here’s what the governor of one of those states, Oregon, says:

“I think their recommendation to use the federal website technology is the right call,” he said. “It is the most reliable and least costly way to ensure that we have a working website for the next enrollment period.”

Wait, what?  Healthcare.gov is the “most reliable”?  I love it.  I really do.  That is damning with faint praise if I ever heard it.  So, fine.  Those state’s residents can just go over to the federal site.  No harm, no foul.  Here’s the catch.  The government, the federal one, gave a whole bunch of money to those states to start their own exchanges.  Do we get our money back?

Now, whatever we may think about past and future hospital CEOs, sometimes they get it right.  Dear leader Brad Wright might think this is cheating, but I’m going to re-post a blog entry by a CEO who’s probably doing more for health policy now than he was when he was a CEO.  Here it is: (http://runningahospital.blogspot.com/2014/04/i-want-my-money-back.html)

“Like many people, I have been following the saga of the failed state health care exchanges, Massachusetts being one.  But a sentence in today’s New York Times Article about the Oregon exchange took my breath away:

Oregon has received $305 million in federal grants to build its exchange, according to the Congressional Research Service. 

The Census Bureau reports the number of households in Oregon as 1.5 million. So we (yes, we) have spent about $300 per family to produce nothing.

As we look at that CRS report we see that Massachusetts got $170 million for the same purpose and couldn’t get its act together.  Hawaii, $205 million.  Maryland, $171 million.  And, in addition, according to the Pioneer Institute report“Failure at the Connector will cost Massachusetts taxpayers over $100 million dollars this year” because 160,000 Massachusetts residents are on temporary public Medicaid coverage even though they don’t qualify for MassHealth.

On Oregon, the Times reports:

[I]n February, the federal government delivered a devastating critique of the Oregon exchange, saying it had “no integrated project schedule” and no “overarching dedicated project manager” to keep work on track. Moreover, it said, the state did far too little to supervise its main information technology contractor, Oracle. 

I strongly support the goals and purposes of the Accountable Care Act, but this level of managerial incompetence is breathtaking.  Shouldn’t we as federal taxpayers ask for the failed states to return the US grants they received?  Perhaps, then, the states will have an incentive to recover the spent funds from the contractors they hired.”

Well said, Paul Levy.

 
 

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The meaning of success

How should we define the success of the Affordable Care Act (ACA)? In recent months, news reports focused on the number of new enrollees as a key test of the law. Although the troubled performance of the healthcare.gov website during October and November delayed enrollment for hundreds of thousands of potential subscribers, Obama administration officials and Congressional Democrats hailed a surge in enrollment at the end of the year as proof that the law would fulfill its promise of providing affordable coverage to millions of uninsured Americans.

To date, enrollment numbers paint a decidedly mixed portrait of the ACA’s impact. Speaking on September 30, 2013, HHS Secretary Kathleen Sebelius declared that “success looks like at least 7 million people having signed up by the end of March 2014.” By late December, however, Sebelius hailed the fact that 2.1 million people had signed up for coverage through the new exchanges as evidence that the law was now working well. Earlier in the month, President Obama cited the increased pace of enrollment as proof that “the demand is there, and the product is good.” Even the most optimistic estimates, however, suggest that signups continue to lag far behind the administration’s own goals.

Obama administration officials responded to criticism about the widespread cancellation of individual insurance market policies in late 2013 by exempting millions of Americans who faced “unexpected natural or human-caused events” that prevented them from obtaining coverage from the individual mandate. Ironically, this decision, which sought to mollify Congressional critics and their outraged constituents, further undermines the prospects for meeting its enrollment targets and exacerbates an already serious credibility gap for Democratic candidates in the upcoming Congressional elections. Democrats continue to emphasize a “moving average” approach to measuring the success of the health insurance exchanges, pointing out that the pace of enrollments increased steadily once the website’s “glitches” were ironed out in late November. However, a failure to meet the administration’s own goal of 7 million new enrollees by the end of March 2014 will provide Republicans with a new policy story just in time for the 2014 campaign season.

Unfortunately for Congressional Democrats, increased enrollments did little to rehabilitate the image of the ACA in the eyes of the public. In a CNN poll released in on December 23, support for the law fell to 35% – a new low – despite significant improvements to healthcare.gov as a result of the “tech surge” in late November. The new polls highlight a troublesome trend for Democratic candidates who heed President Obama’s call to close ranks behind the ACA. Core Democratic constituencies now oppose the law, including 60% of women. Furthermore, in an ironic twist, 63% of those polled expected to pay more for health care after the implementation of the Affordable Care Act. In its current form, the ACA promises to be a millstone around the necks of vulnerable Congressional Democrats in 2014. Unless the Obama administration and other supporters of reform can reassure a doubtful public about the problem-solving capacity of American political institutions, the ACA may prove to be a classic Pyrrhic victory. In short, administration officials may win small battles over improving the performance of website, but lose the larger war over public support for government-led health care reforms.

The continued unpopularity of ObamaCare more than three and a half years after its enactment reflects a much deeper concern than simply website snafus or insurance cancellations. As I’ve argued elsewhere, ObamaCare has done little to restore public faith in the ability of government to solve social problems. Unless and until the administration begins to meet its own targets, the political fallout of the ACA will cast a long shadow over the 2014 elections … and beyond.

 

Sometimes, Even If You Like Your Insurance, You Can’t Keep It

Perhaps one of the most frustrating parts of being President is that your every waking moment is documented. Consequently, when you say something, and it subsequently turns out not to be quite true, you can expect that your opposition will take advantage of the opportunity to make you look like the American people can’t trust you. That’s precisely what has happened in the last week or two as some 3.5 million individuals report receiving cancellation notices from their insurance company, despite President Obama’s assurance early in the health reform debate that if you like your coverage, you can keep it.

There’s no disputing that the President overstated things and that his words are being used against him, but the issue is a bit more complex than that, and that’s what I’m going to address here. In particular, I want to move past the idea of broken Presidential promises and focus instead on the details of why insurance companies have been cancelling policies and what it means for the individuals affected.

The simple explanation is that the plans that were cancelled did not meet federal requirements under the ACA. This could happen for a number of reasons, but the primary one is that the plans did not meet the minimum actuarial value of 60% and/or did not cover all of the essential health benefits outlined in the law. That means, to put it even more simply, that individuals covered by these plans would be underinsured. But to people who were fortunate enough not to have to test the limits of their coverage, the inadequacy of their benefits isn’t apparent. In fact, one might argue that the coverage was perfectly adequate in practice, if not in theory.

So what’s happening now? The ACA is making these less than adequate plans illegal, and requiring individuals to obtain more robust coverage. Of course, the big concern among consumers is that this may be more expensive. Whether or not that’s the case will depend on numerous factors like where the individuals live, how much money they earn, and whether affordable coverage is available to them through an employer. Depending on the answers to those questions, individuals may find that they are eligible for Medicaid at no cost to them, eligible to purchase heavily subsidized private coverage through the health insurance exchange, or able to obtain affordable coverage through their employer. For many individuals, the price they’ll pay for insurance will go down. Of course, for others it will increase. But in all cases, the individuals will have substantially better coverage that will be there for them in the event that they ever need it, and that’s the true purpose of having insurance.

For those who want a more detailed understanding of the issue, I highly recommend two pieces by Jonathan Cohn. The first will provide you an overview. The second will give you some anecdotal insight into the complexities of the issue.

 

 

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