Health Care Current: October 28, 2014

Prioritizing state health care agendas

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.

Decision time: Prioritizing state health care agendas

In November U.S. voters across the country will face decision time as they head to the polls. Between the 36 gubernatorial races, 36 Senate races and all 435 seats of the House that are up for election, it’s hard to miss the campaign commercials and fliers that have come our way and will continue to do so right up to election day. But voters aren’t the only ones who face decision time. Many governors and state legislatures are weighing their options for where to spend precious resources with respect to their health care priorities.

Since the Affordable Care Act (ACA) passed in 2010, there have been many revisions, delays and even permanent removals of certain provisions of the law. These changes in legislation and regulation have brought significant decisions to states’ front doorsteps. Many of these have been covered extensively in the news, and in some states, are as hotly debated as (or sometimes even inserted into) the elections themselves. To date, 28 states and the District of Columbia have made the decision to expand their Medicaid programs.1 Similarly, states have faced decisions around their health insurance marketplace operations—more than half have defaulted to the federally-facilitated model, while the remaining states are either implementing state-based marketplaces or working in conjunction with the federal government in a partnership model.2

Other health care issues states have faced are not as well known or widely publicized—these are the issues that have yet to make the headlines. But as we quickly head toward the end of 2014, many states are grappling with some big decisions in health care:

  • State-based health insurance marketplaces: In the future, where will funds to sustain operations come from? Given the dual aim of re-enrolling last year’s enrollees and signing up new enrollees, how should spending on outreach and in-person assistance for the second round of open enrollment be focused?
  • Small Business Health Options Program (SHOP) marketplace: What is the status of the SHOP marketplace in the state and how does that map against the federal government’s efforts? Where should resources be spent to increase employer awareness and understanding?
  • ICD-10 delay: How are individual states and their Medicaid programs mapping to the updated plans? Are mid-course adjustments needed?
  • Provider network standards: Should provider network standards be stricter or more lax? How should the state work with health plans and providers to refine network standards?

These decisions and others are difficult for states to make, especially as budget constraints continue to increase, legislative mandates loom and consumer demand grows. Meanwhile, populations are aging, fewer are entering into the physician workforce and outdated technology infrastructures are lagging in interoperability, security standards and analytics capabilities.

There is not a “one size fits all” solution for states as they contemplate these tough health care decisions. As decision makers determine how they want to position their states for the future, the following three paradigms, in my opinion, will be critical considerations:

Adapt the role of the state to promote innovation: As providers, payers, regulators and collaborators, states should seek to use their influence and authority to innovate and drive population health management. States can encourage public and private players across the health care system to work together to achieve better outcomes and value. This involvement will be critical, and state decision makers should consider their state-wide population as a whole as well as the individual needs of specific communities based on socioeconomic factors and social determinants.

State-based health insurance marketplaces can be structured so that, as a regulator, the state can help providers and plans react and adjust to increased consumer demand for quality and affordable health insurance and health care. Outreach can also be tailored at the state level to specific groups and hard-to-reach populations. In Washington, D.C., for example, workers from the state-based marketplace, DC Health Link, canvassed local laundromats to help residents enroll in health insurance while their clothes were drying.3

Build a 21st century connected infrastructure to enable transformation: Reliance on technology will continue to grow, further necessitating interoperability between electronic health records (EHR) systems, Medicaid Management Information Systems, all-payer claims databases, health in formation exchanges (HIE), integrated eligibility systems and state health insurance marketplaces. With the explosion of mHealth, building an infrastructure that connects all the dots between technology and people becomes even more important. States occupy an important position at the epicenter of the infrastructure to help drive transparency and transformation through integration.

For example, established in 2003 as an independent state agency, Maine’s all-payer claims database allows stakeholders across the health care system to access critical information on medical, pharmacy, and dental claims and information from commercial health plans, third party administrators, Medicaid and Medicare.4 The state’s Maine HealthCost website also provides health care consumers transparency around health care prices such as the average cost of certain medical procedures.5 States can enhance their role in making information available to individuals as stakeholders in the system aim to help individuals move from passive patients to informed health care consumers.

Unleash the power of data to drive outcomes: Population health can be within reach if states help influence data sharing behavior and support integration efforts among all stakeholders. Once this is achieved, states will be in a unique position to educate and empower health care consumers.

The Centers for Medicare & Medicaid Services (CMS) and others are focused on finding ways to reduce costs and improve quality. For example, earlier this month CMS released its latest figures on hospital readmissions, announcing that more than 2,000 hospitals across the country would be penalized with reduced Medicare reimbursement for high readmissions in their patient populations. States are working to help reduce high readmission rates by implementing certain population health strategies. Data from Kentucky’s state Medicaid program were integrated with data in the state’s HIE to identify “super-utilizers” of the emergency departments statewide. Now, when a super-utilizer patient returns to the emergency department, their medical record is flagged and the provider is sent an alert.6

As voters educate themselves on candidates’ platforms for the election, they are likely to take a keen eye to how the state is performing on important issues. Some issues come up in every election—economic and social factors can make or break a candidate. As state decision makers and legislators begin to take on greater responsibility for the health and care of their populations, voters are likely to increase their focus on health care, especially state health policy decisions that affect them, their families and their wallets.

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1 See Deloitte’s State Medicaid programs: Map of expansion by state
2 See Deloitte’s Health insurance exchanges: Map of enrollment by state
3 DC Health Link, “DC Health Link Says: As You Spring Clean, Start With a Clean Bill of Health and Get Affordable Health Insurance,” March 20, 2014
4 Main All-Payer Claims Database,
5 Maine Health Data Organization, “Maine HealthCost,”
6 North Carolina Health Information Exchange, “Leveraging HIE for Medicaid Reform: Quality Improvements and Reduced Spending,”

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My Take 

By Jessica Blume, Vice Chairman, U.S. Public Sector Leader, Deloitte LLP



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KFF poll: nine in 10 uninsured adults are unaware of HIX open enrollment, but 59 percent plan to buy coverage

Last Monday the Kaiser Family Foundation released its Kaiser Health Tracking Poll results for October. The poll tracks respondents’ views on the ACA, health insurance and health insurance marketplace open enrollment. The second round of open enrollment starts on November 15, but the poll found that nine in 10 uninsured adults ages 18-64 (89 percent) are unaware of this fact—including those who do not know the time period at all and those who guessed the wrong time period. The results show other gaps in knowledge about the ACA. Approximately 66 percent do not know or know little about the marketplaces, and 53 percent are unaware of the availability of health subsidies. Still, 59 percent of the uninsured said they intended to purchase health insurance coverage in the next several months:

Notably, of the 38 percent who intend to remain uninsured, 18 percent reported affordability as a key barrier, while 12 percent said they did not want to be forced into buying it.

Related: Morning Consult surveyed likely voters last week to understand how well they know and understand basic health insurance terms: 77 percent of voters correctly identified what the term insurance deductible means, and 58 percent understand what a co-pay is and how it works. This could be a positive sign as health care consumers head into open enrollment. In addition, 15 percent of voters indicated they are “almost certain” or “very likely” to purchase health insurance on the marketplace. Last week America’s Health Insurance Plans published a 22-page guide to help consumers navigate information around provider networks in their health plans and understand the connection to their health care costs. It discusses why and how networks are used by health plans, how provider networks can affect premiums and out-of-pocket spending, how consumers can identify providers that are in their networks and what consumers should know about out-of-network care.

(Source: Hamel, Liz, Firth, Jamie, DiJulio, Bianca, and Brodie, Mollyann. Kaiser Family Foundation, “Kaiser Health Tracking Poll: October 2014,” October 21, 2014; Morning Consult, “Voter Knowledge On Insurance Terms, Narrow Networks Crosstabulation Results,” October 21, 2014)

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Implementation and Adoption


Study: inpatient and ambulatory care reference pricing yields modest savings of 4.8 percent

A recent study found that reference-based pricing strategies can result in modest savings. Health plans use reference-based pricing strategies to steer patients to therapies using differential cost sharing. The best value therapy anchors the “reference price” to which alternative therapies are compared; patients pay the difference between the reference price and the higher price of the therapies with lower value.

The National Institute for Health Care Reform analyzed 528,000 claims data from 2011 for active and retired nonelderly auto workers and their dependents and simulated what the savings might be if reference-based pricing was applied. The results suggest that applying narrow reference pricing to “shoppable” inpatient and ambulatory services could produce modest savings (4.8 percent) as a share of total spending. For the study, the researchers defined shoppable services as those that are typically scheduled in advance, are offered through more than one provider in the market and have provider price data available on them. Services meeting this definition included inpatient facility knee and hip replacements and imaging and lab tests and account for approximately one-third of total spending.

The researchers found that while uncomplicated knee and hip replacements accounted for a high share of inpatient stays, they only accounted for 1.6 percent of auto workers’ total spending; using reference-based pricing would have produced a small amount (0.2 percent) of savings in the simulation. Expanding the definition to all shoppable inpatient stays (accounting for 27.2 percent of inpatient spending and 6.4 percent of total spending) would likely increase savings from inpatient procedures to 0.6 percent. Additional findings from the reference-based pricing simulation include:


The researchers also noted that health plans using reference-based pricing could face challenges with gaining access to reliable provider price data, sharing provider quality metrics with beneficiaries to assure them that they are seeing high-quality providers and adding customer-service tools that allow consumers to shop and voice complaints if necessary.

(Source: White, Chapin and Eguchi, Megan. National Institute for Health Care Reform, “Reference Pricing: A Small Piece of the Health Care Price and Quality Puzzle,” October, 2014)

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Medicare Rights Center: CMS should take steps to improve MA appeals process

The Medicare Rights Center (MRC) released an issue brief overviewing challenges that Medicare beneficiaries face with Medicare Advantage (MA) coverage denials and appeals. Approximately 16 million (30 percent) of Medicare beneficiaries are enrolled in MA plans. The MRC reviewed the coverage and appeals process for MA enrollees by analyzing the issues raised in 15,000 calls received by its national helpline in 2013. The MRC emphasized that most beneficiaries have a positive experience with their plan, but also found that more than one-in-three callers cited difficulty managing denials and appeals. In 2013 CMS audited MA and Part D plan sponsors to find that 89 percent of them had issued denial-of-coverage letters with limited information on the rationale for the denial. Moreover, 70 percent of appeal reviews that beneficiaries requested were dismissed or withdrawn. MRC said that many of the helpline callers seemed to have had their coverage denied because of narrow technicalities or delays outside of their control. To improve and enhance the MA appeals process, MRC recommends CMS consider:

  • Making appeals and grievances data public and continuing to strengthen data reported on MA and Part D plans
  • Requiring MA plans to provide documentation that explains the reasoning behind appeal denials
  • Educating beneficiaries on available resources that could help with the appeals process
  • Increasing consumer education on how plans work
  • Improving appeals and grievances monitoring and enforcement processes 
  • Requiring the appeals process to include more outreach to reduce the legal burden of beneficiaries

(Source: Medicare Rights Center, “Medicare Snapshot: Managing Medicare Advantage Denials of Coverage and Appeals,” October 2014)

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PCORI holds stakeholder workshop on Hepatitis C diagnosis and treatment

An estimated 185 million people worldwide are living with Hepatitis C, a disease that is particularly prevalent in the Baby Boomer population, and it often leads to cirrhosis and affects the quality of life and productivity levels of many infected individuals. In 2013 Hepatitis C is estimated to have cost $6.5 billion.

The Patient-Centered Outcomes Research Institute (PCORI) held a workshop earlier this month to explore the current state of Hepatitis C diagnosis and treatment. The workshop, which convened researchers, patients and other stakeholders from the health care industry and the public health and policy communities, identified several key uncertainties facing clinical decision makers in the provision of diagnosis and treatment options for Hepatitis C patients:

  • How do newer treatments impact racially and economically diverse populations?
  • What is the cost-effectiveness of newer regimens for treating Hepatitis C and how does the cost-effectiveness of each compare to one another?
  • Can length of treatment be shortened for certain patients?

During the workshop, the stakeholders and PCORI representatives tackled issues related to care delivery, head-to-head trials, patient populations and timing of treatment and screening and diagnostic tests.

PCORI was created through the ACA as a non-profit entity to compare the effectiveness of therapies for particular conditions. PCORI’s findings cannot be used for mandatory practice guidelines or coverage decisions. By law, the group is prohibited from setting caps in the cost per quality-adjusted life year measures (which help quantify the effectiveness of therapies for the comparisons the organizations makes) to measure cost effectiveness. For example, PCORI may not say that if the cost of a treatment exceeds $50,000 per quality-adjusted life year then the treatment is considered cost-ineffective. Congress included this provision in PCORI’s statutory language to allay concerns that PCORI’s studies might lead to health care rationing. PCORI is funded through a trust fund that collects fees on certain health plans and from the general fund of the Department of Treasury. For fiscal years (FY) 2010 through 2012, PCORI received $210 million to operate, and the entity is expected to receive $150 million from FY2014-2019.

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CMS releases certification agreement for QHPs; Includes clause on premium tax credits

On October 16 CMS released the 2015 certification agreement for qualified health plan insurers (QHPIs) in the federally-facilitated marketplace (FFM). QHPIs had to sign the agreement by last Wednesday in order to participate in 2015. Notably, the contract includes language emphasizing that CMS understands the agreement between QHPIs and the agency reflects an expectation that premium tax credits (subsidies) will be available to individuals in all of the marketplaces—whether they are FFM or state-based marketplaces (SBM). CMS clarifies that the QHPIs could have cause to terminate the contract if subsidies are no longer available. Some have interpreted this to mean that the Administration is allowing health plans an out clause if the U.S. Supreme Court rules that the subsidies through the FFM are illegal. The case, Halbig v. Burwell, represents the ongoing debate as to whether the ACA intended for subsidies to be offered to individuals in the FFM. This case and others similar to it are pending in the courts (see the September 9, 2014 Health Care Current for more information).

The agreement also outlines rules of conduct that QHPIs are bound by in order to access the FFM and the site that contains information about applicants, including eligibility information and other affordability programs. Insurers and their contractors must have ways to protect personally identifiable information and communicate through secure channels with CMS. The contract also contains standards around data breaches, including a requirement that health plans must report incidents or breaches within 72 to 96 hours of their occurrence. QHPIs that have repeated issues with data breaches could face termination.

Related: In a recent blog post Timothy Jost wrote for Health Affairs, he notes that the agreement does not reference the funding of the risk corridors program, meant to help stabilize health plan participation in the marketplaces. Some Congressional lawmakers have attempted to derail funding for this program, and some expect that this means CMS is confident that funding for that program will continue.

(Source: Timothy Jost, Health Affairs, " Implementing Health Reform: The Qualified Health Plan Federal Exchange Participation Agreement And More,” October 21, 2014)

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On the Hill and In the Courts 


CMS issues proposed notice for 2016 Basic Health Program

Last week CMS released a proposed notice that established how it will pay for the Basic Health Program (BHP) in 2016. The ACA created the BHP as a way for states to provide health insurance coverage to individuals whose income falls between 133 and 200 percent of the federal poverty level (FPL) and who are not eligible for Medicaid; essentially the lowest income group eligible for subsidies in public marketplaces. If states choose to offer the BHP, they will receive funding from the federal government for 95 percent of what individuals would have received through subsidies and cost-sharing reductions if they enrolled in a qualified health plan (QHP) on the marketplace. Individuals in the BHP cannot be required to pay more for coverage or have higher cost sharing than if they were in a marketplace plan. BHP plans must cover the 10 essential health benefits that the QHPs are required to cover. In the proposed notice, CMS indicated that it will use the same methodology for payments that it did in the 2015 plan year, allowing states to base their payment rates on either premiums for the marketplace for 2016 or by projecting the 2015 premiums forward.

Background: The BHP was modeled after a program established in Washington state in 1987 through the Health Care Access Act. The program aimed to provide health care coverage to childless adults whose incomes were below 200 percent of the federal poverty level, but were not eligible for Medicaid. The ACA established 2014 as the first year of the program, but CMS delayed its implementation until 2015. As of April, only two states, New York and Minnesota, were on the path to start a BHP.

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CMS announces funding to support clinical practice transformation

Last Thursday the U.S. Department of Health & Human Services (HHS) announced it would award $840 million for the Transforming Clinical Practice Initiative, which is focused on creating a more collaborative learning and training culture among physicians. The initiative will fund group practices, health systems and associations to help physicians redesign their practices and develop new strategies for improving health outcomes and coordination of care. The CMS Innovation Center will oversee the new initiative and will award two cooperative agreements: 

  • Practice Transformation Networks: CMS will give awards to group practices, health systems and others to collaborate with clinician practices to coach them and share best practices with the goal of achieving measurable quality metrics. The award seeks to reach provider practices in rural and medically underserved areas.
  • Support and Aligning Networks: CMS will fund medical professional associations and others to help identify and disseminate evidence-based practices.

The initiative aims to provide 150,000 clinicians incentives, tools, and information over the next four years. CMS aims to focus efforts on moving the health care system from one based on volume to one based on outcomes and value by giving providers greater access to information, expanding use of new communication channels between patients and providers, enhancing care coordination and increasing the use of electronic health records.

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Study: Essential Health Benefits packages vary across states

The Essential Health Benefits (EHB) package, established by the ACA, requires health plans to cover 10 categories of benefits in the individual and small group markets. At a high level, these 10 categories are consistent, however, states can require specific benefits in their EHB that reflect the types of plans typically offered in those states.

Researchers at the Leonard Davis Institute of Health Economics at the University of Pennsylvania, with funding from the Robert Wood Johnson Foundation, found interesting variations in states EHB coverage requirements. Data are from the May 2014 CMS Revised Benchmark Benefits Worksheet. The EHB benefits most likely to be included in state definitions are:

(Source: Weiner, Janet and Colameco, Christopher. Robert Wood Johnson Foundation and the Leonard David Institute of Health, “Essential Health Benefits: 50-State Variations on a Theme,” October 2014)

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Around the Country


NIH awards $31 million to invest in a more geographically diverse biomedical research workforce

Last Wednesday the National Institutes of Health (NIH) announced $31 million in grants meant to help build a more diverse biomedical research workforce across the U.S. According to the NIH, research shows that socio-economic and cultural factors may have a powerful impact on an individual’s choice to pursue biomedical research; the funding is intended to change the way scientists are trained and mentored with a more diverse workforce as the desired result. The new grants will help create the Diversity Program Consortium through the “Enhancing the Diversity of the NIH-Funded Workspace” program’s three initiatives:

  • Building Infrastructure Leading to Diversity: 10 experimental training awards will aim to attract diverse students and enable them to become future NIH-funded researchers. Awardees will work with partnering institutions to offer a more robust research experience to students and faculty in less-intensive institutions.
  • National Research Monitoring Network: The national network will train mentors on best practices and offer mentees training and professional opportunities.
  • Coordination and Evaluation Center: This body will assess consortium-wide activities nationally and evaluate the training and mentoring efficacy developed by grantees both in the short- and long-term.

The 12 awards are supported by the NIH Common Fund and its 27 institutes and centers. The program seeks to encourage transformation and identify new models that best foster career learning and growth that can then be adopted nationally.

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What is holding us back in the quest to cure cancer?

The Aspen Institute recently hosted a conversation to ask, “Why haven’t we cured cancer?” featuring Dr. Francis Collins, director of the National Institutes of Health, and Dr. Ronald DePinho, president of the University of Texas MD Anderson Cancer Center. The session highlighted the issue that billions of dollars have been spent in research and development to combat cancer in a time where science and technology are rapidly evolving in every part of our lives, and yet, cancer is still claiming too many lives.

Dr. Collins and Dr. DePinho reflected on the history of cancer research and how far the science has come since they were each entering the field of medicine decades ago. The human genome project of the 1990s was cited as a critical breakthrough for cancer. In recent years, game-changing technological advances, such as the ability to sequence genomes more cheaply and rapidly, advances in imaging and cognitive computing and the ability to aggregate large volumes of data to inform clinical decision making, have contributed to progress in cancer treatment and have allowed for a more personalized approach to treatment.

As for barriers and opportunities in the quest for a cure for cancer, both speakers acknowledged there is not a good track record in medicine for integrating results of proven research broadly into the standard of care. Dr. Collins referred to today’s “era of empowered patients” as getting physicians around the country motivated to be up to speed on the latest research. He also mentioned the advent of the electronic health record as a tool to provide patients with better access to clinical trials. When asked about the biggest hurdles to curing cancer, both speakers pointed to limited resources, but not limited ideas or talent. Dr. Collins acknowledged what a remarkable time it is for scientific discovery, where the landscape changes almost daily. However, he noted that the U.S. is not doing enough to nurture that discovery, and cited the sequestration and other funding challenges. He concluded with making the case that the economic benefits of investing in research warrant stable, predictable funding for the NIH.


Personalized medicine offers the promise of more targeted therapies – targeting treatment to positively responding patients – and reducing adverse events. The challenge is that targeted treatments still have to go through the rigorous and costly research and development process, but may only be used for a small subset of patients, reducing the return on investment.

Empowered patients are becoming more actively engaged in their treatment and keeping their providers “on their toes” – making it necessary for them to stay abreast of emerging technologies. Deloitte’s forthcoming 2014 Survey of U.S. Physicians results show that physicians report that more active health care consumers could have an impact on practicing medicine: 75 percent of physicians think they will need to be prepared to defend their treatment decisions, and 72 percent believe patients will demand more communication from their physician outside of office visits.

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Breaking Boundaries


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