Health Care Current Library
This weekly series explores breaking news and developments in the U.S. health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory and legislative changes.
Health Care Current: April 15, 2014
Quality rating scores in exchanges
This weekly series explores breaking news and developments in the U.S. health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory and legislative changes.
Quality rating scores in exchanges are important, even if consumers don’t use them
By Sarah Thomas, Research Director, Deloitte Center for Health Solutions, Deloitte Services LP
When Medicare started covering prescription drugs, I helped my mother work through the website to choose a plan. I entered all of her prescriptions into the tool, reviewed the total premium and cost-sharing amounts and talked with her about whether she could switch to mail order or ask her doctor for a generic prescription. I then helped her best friend (who had a lot more prescriptions) go through the same process. Even though the early version of the tool was criticized, I actually found it pretty helpful as long as I was sitting with the prospective enrollee.
Now, an estimated 7.5 million Americans have had the experience of enrolling in plans through the health insurance exchanges (HIX), whether they were run by the federal government or states. Holding the challenges of some of the websites aside for the moment, all of these websites have had information on premiums, benefit design and cost sharing. But this first year, very few have had calculator programs to figure out the premium/cost-sharing tradeoffs or a lot of information about quality—either at the plan level or about providers in the network.
The ACA requires the secretary of the U.S. Department of Health and Human Services (HHS) to develop a rating system, the Quality Rating System (QRS), which will measure the quality of plans offered through the exchanges. Since the ACA was passed, two draft regulations have been released that provide additional information:
- November 19, 2013, draft regulation:1 the Centers for Medicare and Medicaid Services (CMS) released a draft regulation on what quality measures will go into the QRS. Although states can propose alternatives to this system, the federal regulation will probably have a strong influence—not only in the federally-facilitated HIX, but also in states that are developing their own systems. The draft identifies 42 measures (25 for plans that only serve children) for which the results will be combined and displayed to consumers. All of these measures are already in use and defined for health plans; many are endorsed by the National Quality Forum, which is the national arbiter on what makes a good measure. The final rule has not yet been released.
- March 14, 2014, draft regulation:2 in this release, CMS gave more specific information on how and when it will implement the QRS for the federally-facilitated HIX. It calls for phased-in reporting based on when plans started in HIXs. For plans operating in exchanges this year (that were approved in 2013), they would submit the required validated data for a QRS beta testing period beginning in mid-2015 (the second coverage year) and for public reporting during the 2016 open enrollment period for the 2017 coverage year (the fourth coverage year). CMS is still accepting comments on this regulation.
CMS is giving health plans some warning so they can prepare. Many of these measures are ones that health plans have been aware of. Even if they have not actually been reporting on these to Medicare, Medicaid or employers, most of the measures can be reported from administrative data, following detailed and careful specifications that allow for “apples-to-apples” comparisons among plans.
Will consumers use the information? Many policy wonks like me have hoped that consumers would actively use quality information to help them choose a health plan, stimulating competition among plans on quality and value. But, researchers like Naomi Bardach, Judy Hibbard and R. Adams Dudley have found that many consumers just don’t use this type of information—even if it’s been available through many report-card projects over the years.3
What has been the problem then?
Part of the problem is that report card websites (before the design of today’s HIXs) containing the information have not been well-designed. They included complex technical information and were hard to navigate.
Maybe the problem is that the measures don’t resonate with consumers. That said, the measures include consumer experience, which is something familiar to those of us who use apps like Angie’s List, TripAdvisor or Urbanspoon and measures of preventive care, which many people think is good for them.
Or maybe the problem is that people don’t think health plans have anything to do with clinical quality (in contrast to the physicians). Often times, when people think about a high-quality health plan, they mean a plan that offers a lot of choices and as many services as possible without hassling them or their doctor over claims denials and cost sharing. Perhaps many people with employer coverage don’t have that much choice anyway—they might only have one carrier with a couple of benefit designs.
Even if quality information hasn’t been that important to consumers, it still matters. Health plans’ boards of directors see the information, as do reporters. And those that do well on quality can advertise to consumers in broad terms to create a competitive advantage. The Medicare program is using quality information much more actively than before—paying higher rates based on quality ratings and requiring plans to use bonus payments to offer enhanced benefits to enrollees. Medicare also flags plans that do poorly prominently for consumers and asks the worst performers to leave the program.
Exchanges could well follow this lead. Paying more for better performance is probably not in the scope of the law, but exchanges could exclude plans with low-quality scores.
By all means, the health care industry shouldn’t give up on getting consumers to choose based on quality in addition to cost. Consumers could benefit from more quality information on CMS and state websites. More information around ratings could nudge people toward higher quality plans and could make investment in quality a business case for plans in the exchanges in the same way it has for Medicare.
Implementation & Adoption
CMS releases reimbursement data on 880,000 Medicare physicians, invites “public scrutiny” of dataset
Last Wednesday, CMS released Medicare reimbursement data on more than 880,000 providers who received a total of $77 billion in pay during 2012. Now available for download on the agency’s website, the dataset contains information on Medicare Part B fee-for-service utilization, payments, charges that were submitted by providers using their National Provider Identifier and locations of where the services were provided. CMS included several caveats with the release of the information, indicating that the snapshot of information may not be completely representative of the entire patient population or the workload of a specific provider. In addition, the agency noted that the information is not meant to represent the quality of care provided by the physicians, and it has not been risk-adjusted to account for differences in beneficiary health and health conditions. Some highlights of the findings in the data include:
- One of the most common visits that was reimbursed for is an eye disorder that mainly affects older adults—143,000 of these visits cost the program a total of $1 billion in 2012.
- The top 1 percent of providers accounted for 14 percent of the total $77 billion, and 75 percent of providers were reimbursed for less than $85,000.
- The five types of providers who were reimbursed the highest on average (from highest to lowest) are hematologists/oncologists, radiation oncologists, ophthalmologists, medical oncologists, and portable x-ray providers (of which there are only seven).
The same day that CMS released the dataset, CMS Principal Deputy Administrator Jonathan Blum asked the public to help with efforts to identify fraud and abuse in the program. While high reimbursement may not be a result of any wrongdoing on behalf of all physicians, the agency asked the press and researchers to help identify the outliers that suggest reimbursement issues.
Reactions: The American Academy of Ophthalmologists (AAO) released a statement to urge caution among health care stakeholders. The group agrees that sharing data could help to improve patient outcomes and care, but conclusions drawn from this data might not give the whole picture. Both AAO and the American Medical Association said that, while this data does contain information about reimbursement pay for physicians, it does not include overhead costs, salaries of employees or materials and supplies—much of the reimbursement goes to cover these additional costs. The American Society of Clinical Oncology argued that the release of this data goes against the general trend toward value and quality in the health care industry. The group claimed that there are inaccuracies in the data and that it was released without providing context of the complexity of the system or the value of the care that patients received.
Analysis: The release of these figures can be seen as another step forward in the broader journey toward transparency, as discussed in the January 28, 2014 Health Care Current. However, given the complexity underlying the data and the magnitude of some of these numbers, the conclusions drawn from them may be both tenuous and overzealous. There are many cases in which there is additional context that may accompany this data. For example, radiation oncologists often include in their billing the cost of using linear accelerators, technology that delivers high-energy x-rays to treat a cancer in patients. Similarly, the costs of expensive pharmaceuticals may be passed through from Medicare to the drug suppliers. With health care now approaching one-fifth of the U.S. gross domestic product, government officials and regulators are targeting fraud and abuse in the system more than ever—but this information is not the only piece of the fraud puzzle. Fraud, both large and small, can be detected in other ways such as audits. Release of this data could improve our overall understanding of the ecosystem but could also be misunderstood.
Prescription claims from the first two months of HIX enrollment suggest higher specialty drug spending by enrollees
Last week, Express Scripts, a pharmacy benefit management company, released findings suggesting that based on the first several months coverage data, HIX enrollees used specialty medications more often than those covered through commercial insurance plans. Using claims data of HIX enrollees (approximately 423,000 covered lives) from January 1 through February 28, the analysis provides early insights of drug spending trends. More specifically, the findings suggest:
- The top 10 therapy class claims by both commercially insured and HIX-insured populations were similar, but the use of pain, anti-seizure and anti-depressant medications was higher in exchange enrollees, and contraception use claims were lower in exchange enrollees.
- Six of the top 10 costliest drugs prescribed for populations in HIXs were for specialty medications, while only four of the costliest drugs prescribed in commercial plans were for the same.
- Six out of every 1,000 prescriptions in HIX plans were for medications that treat HIV.
The report noted that the findings are only a reflection of the first two months of claims data; this does not capture HIX enrollees in March and April, which many experts are expecting to be younger and healthier. Furthermore, analysis does not account for the different types of drug coverage available to individuals in employer-sponsored plans.
(Source: The Express Scripts Lab, "The 2013 Drug Trend Report," April 2014)
Report: more health care providers participating in quality reporting and e-prescribing programs
According to a recent report by CMS, health care providers participating in data reporting and electronic prescribing increased significantly in 2012. The findings are based on two quality reporting programs. The Physician Quality Reporting System (PQRS) uses incentive payments to encourage eligible providers to report on quality measures and will begin using payment adjustments in 2015. The Electronic Prescribing (eRx) Incentive Program uses a combination of incentive payments and payment adjustments to encourage electronic prescribing by eligible professionals. PQRS program participation increased 36 percent over 2011, reaching 435,931 in 2012, and participation is highest among professionals who treat more Medicare beneficiaries. In addition, eRx program participation increased by 22 percent, increasing to 344,676 in 2012. CMS has relied on incentive payments to enlist health professionals in data reporting; by 2015 providers that do not participate will see payment reductions.
(Source: Centers for Medicare and Medicaid Services (CMS), “2012 Reporting Experience: Physician Quality Reporting System and Electronic Prescribing (eRx) Incentive Program.” March 14, 2014)
Study: hospitalization, ED visits more likely among community-dwelling patients with Alzheimer’s disease
According to findings published in this month’s Health Affairs, community-dwelling older adults with Alzheimer’s disease and related disorders are more likely than their peers living in nursing homes to have an avoidable hospitalization or emergency department (ED) visit. This is despite dementia being seven times more common in nursing home residents (84 percent) than among those who reside in the community (12 percent). Other key findings of the study include:
- Last year of life: during the last year of life, community-dwelling and nursing home residents with and without dementia had no significant statistical difference in hospitalization or ED rates.
- Avoidable hospitalization and ED visit: the odds of having any potential avoidable hospitalization or ED visit were 74 percent and 51 percent respectively for people with dementia than those without it.
The researchers note that there could be several causes behind these findings: few programs exist to curb hospitalizations and ED visits among community-dwelling individuals with Alzheimer’s, and due to their primary business focus, nursing homes may be better equipped with professionals trained to care for patients with dementia (versus professionals in the community).
(Source: Feng, Zhanlian, Coots, Laura A., Kaganova, Yevgeniya, and Wiener, Joshua M. Health Affairs, “Hospital and ED Use Among Medicare Beneficiaries with Dementia Varies by Setting and Proximity to Death.” April, 2014)
On the Hill & In the Courts
HHS Secretary Kathleen Sebelius resigns; Sylvia Mathews Burwell to be replacement
Last Thursday, the Administration announced that HHS Secretary Kathleen Sebelius would resign after five years of service, making her one of the Secretaries of Health with the longest terms. Her resignation was announced shortly after Secretary Sebelius testified at a U.S. Senate Finance Committee budget hearing, where she stated that HIX enrollment had reached 7.5 million. On Friday, President Barack Obama nominated Sylvia Mathews Burwell, the current Director for the Office of Management and Budget (OMB), as the new HHS Secretary. Burwell is a Harvard graduate and a former Rhodes Scholar at Oxford. Early in her career, she spent two years at McKinsey as a consultant before she served on the Clinton Administration from 1993 through 2001. There, she held various roles, including Staff Director for the National Economic Council, Treasury Chief of Staff, White House Deputy Director, and OMB Deputy. She worked for two major foundations, the Walmart Foundation and the Bill and Melinda Gates Foundation, before being confirmed as OMB Director last year.
CMS issues final call letter for Medicare Advantage, Part D
Last week, CMS released the final call letter for the Medicare Advantage (MA) and prescription drug (Part D) programs for the 2015 plan year. Major highlights include:
After initially proposing changes that would have amounted to a payment cut of 1.9 percent in February, CMS adjusted the changes in the final letter, which will amount to a net increase of 0.4 percent. This includes growth rate adjustments (-3.4 percent), benchmark updates (-4.4 percent), the Baby Boomer adjustment (+4.3 percent), and other risk adjustment updates (+3.9 percent).
Reaction: America’s Health Insurance Plans welcomed changes included in the final letter as they believe the changes will help reduce the impact on enrollees, but warned of additional payment cuts that are facing the Medicare Advantage program. Many lawmakers came out in support of the final letter, citing continued success in the program that has enrolled more than 15 million beneficiaries to date.
Analysis: The annual rate announcement and call letter is widely considered to be one of the most important CMS communications for the Medicare Advantage and Part D industry. Not only does this document provide policy guidance that will likely determine how existing plan sponsors may conduct operations and administer their business, it provides insights that drive strategic decisions such as product design, market expansion and new market entry. The 2015 rate announcement and call letter is no exception. The magnitude and volume of the provisions seem to underscore CMS’s continued trend toward greater oversight and accountability, plan consolidations, and emphasis on plan performance and quality. Industry executives should carefully consider all of the provisions of this years’ notice to help develop a complete picture of how both sides of the profit and loss statement will be impacted, and help develop strategies to preserve their margins, offer quality coverage and maintain their membership.
GAO: competitive bidding for durable medical equipment doesn’t adversely affect Medicare beneficiaries
The Government Accountability Office (GAO) recently released analysis from the CMS Durable Medical Equipment (DME) Competitive Bidding Program (CBP). The report, mandated by the 2008 Medicare Improvements for Patients and Providers Act, examined the program’s effect on Medicare beneficiaries, suppliers’ market share and the extent to which suppliers were affected. Highlights include:
- Utilization and access: The number of individuals that were furnished items through the program decreased in the competitive bidding areas more than comparative areas, but this did not affect beneficiary access or satisfaction.
- Market share of contract suppliers: Four contract suppliers accounted for a large proportion of the total allowed charges by Medicare in the product categories.
- All suppliers: Both the number of suppliers and their Medicare-allowed charges decreased more than those outside of the competitive bidding area. DME suppliers with $2,500 or more in allowed charges per quarter decreased by an average of 27 percent compared to 5 percent in other areas. The Miami area decreased by 227 suppliers (32 percent) while its comparator area, Tampa, decreased by 52 suppliers (11 percent).
Background: Beginning in 2003, CMS phased in a CBP for the purchase of DME in order to address fraud concerns in the Medicare program. CMS awarded contracts to suppliers in nine regions for nine categories of DME (e.g., complex power wheelchairs, hospital beds, mail-order diabetes supplies) after a competition. The 356 suppliers that were awarded contracts entered the round 1 rebid, which began in 2009. To analyze the second year (2012) of the round 1 rebid, CMS looked at changes in utilization and satisfaction among beneficiaries, market share held by contract suppliers, and other changes affecting contract suppliers (e.g., terminated contracts, withdrawal from the Medicare program, acquisition). The suppliers in the CBP bidding areas provide items to approximately 2 million out of the 45 million Medicare beneficiaries. During the first two years, CMS estimates that the round 1 rebid has produced $400 million in cost savings.
(Source: GAO, “Medicare: Second Year Update for CMS’s Durable Medical Equipment Competitive Bidding Program Round 1 Rebid,” March 2014)
Around the Country
Avalere: 10 states account for 80 percent of new Medicaid enrollees under ACA
Last Monday, Avalere published findings that suggest 10 states are key drivers (approximately 80 percent) behind the 3 million new Medicaid enrollees recently reported by CMS. The breakdown of enrollment for each of the 10 states includes the following:
Florida had the second highest number of new enrollees behind California, despite being the only state in the top 10 that opted out of Medicaid expansion. The state experienced an increase in Medicaid enrollment of 8.2 percent. The authors noted that, while variations in enrollment may be due to state decisions to expand Medicaid, non-expansion states also saw a large increase in enrollment. The report also accounts for new enrollees in states such as Arkansas and Michigan, which expanded Medicaid through use of a private option plan.
Note: These numbers do not account for the last two months of open enrollment in the HIXs. Avalere projected the increased enrollment numbers to the Medicaid population to estimate that 4.3 million additional individuals could have enrolled in the program by the end of March. While there is no open enrollment period for the Medicaid program, the increased attention paid to general marketing and outreach for health insurance could have translated to the Medicaid population in some states and regions, otherwise known as the woodwork effect. Lastly, these figures do not include individuals deemed Medicaid-eligible through the HIXs but awaiting state approval, which could drive up enrollment numbers further.
(Source: Avalere, “Avalere Analysis: 10 States Driving New Medicaid Enrollment,” April 7, 2014)
New York state allows certain nurse practitioners to practice without a physician-written practice agreement
New York state’s final budget for the 2014-15 year included the Nurse Practitioner Modernization Act. Starting January 1, 2015, nurse practitioners (NP) with more than 3,600 hours of experience will not need to have a written practice agreement with physicians as a condition of their practice. The law requires NPs who practice beyond 3,600 hours to maintain “collaborative relationships” with physicians or hospitals that dictate guidelines for consultation, care coordination and emergency referral plans. It also included a provision to survey physicians and NPs and provide a report to the state legislature by September 2018; the act sunsets after six years and will be subject to renewal by the legislature at that point.
Background: The Nurse Practitioner Association New York State advocated for the bill, arguing that if NPs are allowed to practice to the top of their license, health care services could be more effective and efficient. Physician associations, such as the Medical Society of the State of New York, opposed the bill, arguing that granting NPs more independence does not increase access to care nor does it lower cost. Deloitte’s 2012 Survey of Health Care Consumers found that more than half (54 percent) of consumers agree or strongly agree that a nurse practitioner or physician assistant can provide primary care that is comparable in quality to care provided by a primary care doctor. This differs by generation, however, in that seniors (born in years 1900-1945) are less likely to agree with this statement than are younger generations.
Study: one-in-five Americans had trouble paying medical bills; “near poor” faced more difficulties than poor
An analysis of the National Health Interview Survey released by the National Center for Health Statistics found that individuals who had problems paying medical bills dropped from 21.7 percent (57.6 million) to 19.8 percent (52.8 million). The survey covered the first six months of 2011 and 2013. Notably, 23.7 percent of families with children under the age of 18, 34.3 percent of the uninsured, 28.6 percent of individuals with incomes under 100 percent of the federal poverty level (FPL) and 33.3 percent of individuals between 100 and 200 percent of the FPL indicated they faced difficulties in paying their medical bills. The higher rate of “near poor” who faced difficulties paying medical bills is likely a result of the poor having greater access to public/government programs to help pay for medical services.
(Source: Cohen, Robin A. and Kirzinger, Whitney K.. National Center for Health Statistics, “Problems Paying Medical Bills: Early Release of Estimates from the National Health Interview Survey, January 2011-June 2013,” April, 2014)
Study: cardiac rehabilitation mobile app could reduce ED readmissions by 40 percent
Last month, the Mayo Clinic released results that suggest the use of a mobile app after a cardiac episode could help reduce hospital readmissions by 40 percent. The Mayo Clinic designed a mobile health (mHealth) app that allows patients to track vital signs and access educational content. The three-month study examined 44 patients; 25 used the app in addition to regular cardiac rehabilitation while 19 participated in rehabilitation. At the end of the intervention, 20 percent of the patients who used the app were readmitted within 90 days, as compared to the 60 percent who only had rehabilitation. According to researchers, the study suggests that mHealth could be leveraged as a tool to help prevent cardiovascular disease among high-risk patients, particularly those that live in underserved, rural areas who might lack access to traditional programs. The study also highlights the importance of cardiac rehabilitation in reducing the risk of another cardiac event and hospital readmissions.
(Source: Mayo Clinic, Mayo Clinic News Network, “Mayo Research Shows Cardiac Rehab Patients Who Use Smartphone App Recover Better,” March 29, 2014)
ONC app helps small- to medium-sized health care practices assess HIPAA compliance
HHS has released a new security risk assessment (SRA) mobile app, developed in collaboration with the Office of the National Coordinator for Health Information Technology (ONC), the HHS office for Civil Rights (OCR) and the HHS Office of the General Counsel (OGC). The app allows small- to medium-sized providers to conduct risk assessments under the Health Insurance Portability and Accountability Act (HIPAA) on their organizations and document their risk and security issues. The app produces a report that can be given to auditors. Under the HIPAA Security Rule, in order to receive Medicare and Medicaid Electronic Health Record Incentive Program payments, health care providers are required to conduct risk assessments through a regular review of administrative, physical and technical safeguards. The app turned the HIPAA Security Rule into 156 “yes” or “no” questions designed to uncover risks and trigger suggestions for action. The questions cover areas such as security practices and failures as well as risk management and issues with personnel.
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