Week of 01/27/2014

HRI regulatory center weekly newsletter

This week’s regulatory and legislative news

States restrict exchange navigators as cost-sharing concerns mount 

Texas recently became the latest state to formalize regulations restricting navigators, workers who assist individuals in signing up for insurance exchange coverage. The Texas rules require navigators to complete 20 hours of training beyond the 20 to 30 hours already required under federal law, undergo background checks, and provide proof of identity. Seventeen states have passed laws with additional restrictions and requirementsfor navigators.

HRI impact analysis: Supporters argue that these additional state rules protect consumers’ privacy, but they come at a time of mounting concern about the lack of awareness of deductibles and other out-of-pocket costs—information that consumers may need the most help navigating. According to a 2013 HRI survey, more than nine out of 10 insurance executives believe consumers care most about premiums. Early HHS data shows that 60% of consumers signed up for silver plans and another 20% chose bronze plans, both of which typically have lower premiums but higher deductibles and co-insurance than gold or platinum coverage. Hospitals and physicians will be left with uncompensated care costs if individuals can’t afford their out-of-pocket expenses. Although enrollees making less than 250% of the federal poverty level ($29,175 for an individual in 2014) are eligible for cost-sharing assistance, those subsidies may not be sufficient. The navigator role was designed to help individuals understand the basics of plan design and enrollment. In states with restrictions on navigator activity, the responsibility of insurance education will fall more to health plans, brokers, providers, and consumers themselves.

MedPAC backs hospital, Medicare Advantage payment changes

MedPAC has approved a trio of potential Medicare payment changes, including one that would narrow reimbursement rates between hospital outpatient departments and physician offices, and another that reduces rates for certain long-term care patients. The panel also recommended a 3.25% increase in acute care hospital payments next year. Overall, the package of payment reforms would result in smaller near-term reductions for hospitals, and ultimately boost payments by 0.3% once fully implemented. Additionally, MedPAC approved a recommendation for Medicare to reduce payments to employer-group Medicare Advantage (MA) plans and require MA benefit packages to include hospice services.

HRI impact analysis: The proposed changes follow a similar path endorsed by MedPAC in previous reports, effectively allowing Medicare to align payments between high-cost providers and lower-cost ones. Routine services such as echocardiograms and cardiac imaging, once performed in a doctor’s office, increasingly have moved to higher-cost hospital outpatient departments. To discourage that shift, MedPAC wants to equalize those payments. The commission’s call for payment parity between outpatient clinics and physician offices would affect imaging procedures, bone density tests, and about 65 other services MedPAC believes can be done in a less expensive setting. Under the second part of its proposal, Medicare would lower its long-term care hospital payments to rates similar to acute care. The move would only be for non-chronically ill patients, however, and the savings would be returned to hospitals that treat sicker patients. MedPAC will submit its recommendations to Congress in March.

Calls for more comparative effectiveness research intensify

The Patient Centered Outcomes Research Institute (PCORI) is coming under pressure to ramp up the number of comparative effectiveness studies it pays for. PCORI was established under the ACA to support research that helps patients and caregivers make better, data-informed care decisions such as which drugs are more effective. At a recent briefing in Washington, the Center for American Progress released a report arguing that PCORI isn’t fulfilling its core mission by failing to spend at least 80% of its $465 million research budget on comparing medical interventions. Instead, money has been divided among other priority areas such as developing educational materials to communicate with patients and providers. PCORI’s executive director, Dr. Joe Selby, argued that it was necessary to build the institute’s infrastructure first, and that grants to compare treatments will begin to increase.

HRI impact analysis: While PCORI may be behind schedule, private insurers are already demanding CER studies before they agree to reimburse a product or procedure. For instance, 60% of insurers told HRI that drugmakers wanting to put a new drug in a benefit formulary must first demonstrate a significant clinical benefit compared to current branded and generic treatments. The push for CER will likely increase in the new health economy as consumers exert more control over their healthcare and become attuned to cost and quality issues. The challenge will be ensuring patients have access to information they can understand and act on.

Mexico’s tax on sodas: Is the US far behind?

The first of the year marked the implementation of Mexico’s tax on soda. The tax, one peso (roughly $0.08)/liter on sugary beverages, is projected to reduce soft drink consumption by 5%. The initiative, which is aimed at obesity prevention, is supported by a $10 million grant from Michael Bloomberg, who attempted to implement a ban on large-size sodas during his tenure as mayor of New York City. Mexico recently surpassed the United States as the country with the highest prevalence of obesity, with just over 32% of the nation’s population falling into that category.

HRI impact analysis: Mexico’s soda tax has the potential to spur a fresh round of calls for a similar tax in the United States. Lawmakers in California, Massachusetts, Washington D.C., and other locales are  considering comparable legislation, which may gain footing should Mexico’s tax succeed in significantly reducing soft-drink consumption. 2013 soda sales in the United States were approximately $28.7 billion.

Hospital groups eye legal action on “two-midnight” rule

Two New York hospital associations and a major health system joined a growing list of providers seeking legal action against CMS over its “two-midnight” payment rule, which defines an appropriate inpatient admission as one that spans at least two midnights. Mount Sinai Health System, along with the Healthcare Association of New York State and Greater New York Hospital Association, will join a lawsuit filed late last year by the American Hospital Association that claims the rule is unlawful on the grounds the agency did not provide an adequate explanation, notice, or comment period. CMS released the rule last year in hopes of clarifying when a patient should be admitted to the hospital—and it largely relies on physician judgment to do so.

HRI impact analysis: While the lawsuit may turn on the intricacies of federal rulemaking, the real issue centers squarely on reimbursement. Hospitals can now bill Medicare Part B for a broader array of medical services performed in a hospital but which were later denied by an auditor. But they can only do so within one year of when the patient was treated. The AHA said that nearly all denials by a recovery audit contractor happen more than a year after the treatment date, meaning hospitals cannot “rebill” for those services. Hospitals continue to struggle with implementing the rule. Even though physicians can determine when a patient may need to be admitted, practice patterns vary, and doctors may use different admission criteria.

Upcoming events & deadlines

  • February 3 – Comments due on FDA's draft guidance on compounded pharmaceuticals.
  • February 4 – Federal Trade Commission workshopon naming conventions for biologics.
  • March 3 - Start of CMS testing weekfor ICD-10, a new, more detailed set of diagnosis codes that CMS is requiring all providers and insurers to adopt.
  • March 31 -Extended deadlinefor those in the Pre-Existing Condition Insurance Plan to gain coverage through exchanges.
  • March 31 - Open enrollment in health insurance exchanges scheduled to end for 2014.

Quote of the week

“[T]onight I ask every American who knows someone without health insurance to help them get covered by March 31st,” said President Barack Obama in his State of the Union address.

In the news

A study reported by NY Times Magazine and conducted by the FDA found that antibiotics used in animal feed are contributing to treatment-resistant bacterial infections in humans. The study analyzed 30 additives in animal feed and determined that 18 out of 30 posed a risk of transmitting antibiotic-resistant bacteria to people through food. Though the FDA passed regulations in 1973 requiring companies to prove that drugs given to animals do not promote resistance in humans, there have been some reported challenges to its implementation. The CDC reports that two million Americans get sick and 23,000 die from antibiotic-resistant infections each year.

Factually correct 

61.8% - The percentage of Medicaid-eligible adults who do not believe they qualify for insurance, according to a study conducted by Urban Institute’s Health Policy Center.

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