Week of 10/21/2013

HRI regulatory center weekly newsletter

This week’s regulatory and legislative news

Ohio to expand Medicaid, but challenges persist

Ohio Gov. John Kasich, a Republican, bucked stiff opposition from his own party this week to become one of only eight GOP governors to support the ACA’s Medicaid expansion. Kasich, in a prepared statement, touted the move that would improve “both the quality of care from Medicaid and its value for taxpayers.” The governor, a critic of much of the ACA who has declined to set up a state-based exchange, tied his decision to economics and the belief that a healthy workforce will aid in business development. About 15% of Ohioans are on Medicaid, and another 14% are uninsured, according to a recent report. Ohio could see about $1.9 billion in net state budget gains over the next nine years based largely on the extended federal payments. The 5-2 vote by the state’s little-known “Controlling Board,” which Kasich charged with the Medicaid decision, allows Ohio to extend coverage to individuals who earn up to 138% of the federal poverty level. For the first three years of the program, the federal government will pay the full cost of Medicaid expansion as more than 270,000 low-income Ohioans gain coverage, and in subsequent years, the federal government will cover 90%.

HRI impact analysis: The decision, which still faces legal challenges, earned praise from the Ohio Hospital Association, which lobbied for the expansion. Hospitals and physician groups widely see the expansion of Medicaid as a way to better control the health of a large population while also reducing their burden of uncompensated care. Some states, however, have taken a different tack. In Arkansas, those who are newly-eligible for Medicaid will be allowed to shop for coverage on the state’s new insurance exchange, where health plans typically offer more access to Medicaid networks.

Rift over narrow networks could reach state legislatures

Growing discontent between some health plans and hospitals over placement in narrow or tiered networks could land on the docket of several state legislatures next year. Paul Macielak, president and chief executive of the New York Health Plan Association, said he expects “backlash” from hospitals and physician specialists to reach the statehouse as insurers continue to develop more restrictive networks for policies offered on state exchanges. Already large academic medical centers and public hospitals have raised concerns over being excluded from some exchange plans. Washington’s Seattle Children’s Hospital filed suit against the state’s insurance commissioner after several insurers left it out of their benefits plans. Macielak made the comments last week during a panel presentation at AHIP’s State Issues Conference in Washington, D.C.

HRI impact analysis: Health plans see the use of tiered provider options as a way to bring down premium costs by nudging consumers toward lower-cost hospitals and health systems. Hospitals contend that the use of narrow networks exposes them to a higher share of bad debt—especially if patients do not fully understand their coverage options. Officials from both the Greater New York Hospital Association and the American Hospital Association told HRI that they do not intend to lobby state lawmakers on the issue. Still, consumer groups may get more involved, especially if individuals or families face higher out-of-pocket costs.

White House taps high tech cavalry as exchange glitches mount

The Obama administration, under intense scrutiny for the troubled October launch of its online insurance marketplace, tapped White House economic adviser Jeffrey Zients and U.S. Chief Technology Officer Todd Park to lead an overhaul of the government’s HealthCare.gov website. HHS Secretary Kathleen Sebelius said that a team of “additional experts and specialists has been recruited to fix the website,” adding that “this new infusion of talent will bring a powerful array of subject matter expertise and skills, including extensive experience scaling major IT systems.” The secretary will spend much of next week on Capitol Hill testifying about the troubled rollout.

HRI impact analysis: The bad press, political fight and loss of consumer confidence are all hallmarks of what can happen when a highly publicized program launch goes awry. Contractors who worked on the government’s website said it had not fully been vetted prior to its launch earlier this month, and tech experts from the business sector chided the administration for its high profile technology miscue. Consumers want the convenience of an online shopping experience, yet they show little patience for technical glitches. Politically, critics of the ACA will use the administration’s troubled launch to again call for a delay to the individual mandate and other key provisions of the law. Insurers, meanwhile, remain concerned about potential back-end technology problems that may still come.

IOM report explores health reform’s impact on population health

In a new report, The Institute of Medicine examines a range of approaches at the hospital, community, and state level to achieve better population health management. Many community and state population health initiatives were kick started by the CMS Innovation Center, which has up to $10 billion in funding through 2019. For example, Live Well San Diego is a population health program that brings San Diego county health programs, school districts, and hospital systems together to address the root causes of illness and associated care costs. Many of these programs focus on lowering childhood obesity, fighting chronic disease, and healthy eating.

HRI impact analysis: Population health management programs may take many years to demonstrate impact and return on investment. Organizations involved in such programs should devise long-term plans to measure outcomes. If CMS funding winds down, programs will need to transition from grants to a more sustainable source of funding.

Maine reignites drug importation debate

Maine enacted a new law on October 9 giving consumers and retail pharmacists the power to purchase prescription drugs outside the US from a “licensed retail pharmacy.” The industry trade group PhRMA and others have filed a complaint in US district court against the state. Many of Maine’s citizens are within a few hours’ drive of the Canadian border, and obtaining cross-border prescriptions is common. Canadian border towns like Saint-Stephen, New Brunswick, a town of 4,800, have five pharmacies to choose from. Congress has previously debated the issue as a proposed amendment to the ACA. The FDA will periodically import medications that are in short supply in the US.

HRI impact analysis: Maine’s new law brings the issue of drug costs back to the forefront. While this is not the first time states have attempted to curtail drug costs, Maine’s approach is consumer-focused by placing responsibility on individuals to locate licensed pharmacies and order their medications. The program will likely see increased opposition and legal action from branded drug manufacturers and retail and health system pharmacists who cite safety concerns. HRI is projecting that expensive specialty drugs may be a driver of higher medical costs in 2014.

Upcoming events & deadlines

  • October 30 – US Senate Committee on Health, Education, Labor, and Pensions Executive Session hearing on Children’s Hospitals graduate medical education support, in Washington D.C.
  • November 7 – PwC webinar on new plans, progress, and pain points associated with the new state insurance exchanges.
  • November 12 – Webinar on the effects of health insurance exchanges on hospitals, including strategy for new exchange customers and research by the Health Research Institute
  • November 18 – Comments due on proposed rule for new prospective payment system for Federally Qualified Health Centers
  • November 25 – Comments due on the proposed rule on the Basic Health Program. The program gives states the option to establish a health benefits coverage program for low-income individuals who would otherwise be eligible to purchase coverage through health insurance exchanges.

Quote of the week

"The essence of the law, the health insurance that's available to people, is working just fine," said President Obama in a recent press conference in response to increased attention on the technical glitches of the new healthcare.gov health insurance exchange website.

In the news

A recent collaboration article between NPR and Kaiser Health News outlines how the placement of psychologists within primary care practices can provide better outcomes to patients coming in with routine problems, such as migraines and stomachaches that can actually stem from mental issues rather than physical ones.

Factually correct

$600 million – the amount of money that could be saved in year 2014 if decreases in hospital readmissions of Medicare patients stays on track with guidance provided by the Affordable Care Act.

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