Back to school: The reading, writing, and ‘rithmetic of health care

Health Care Current | September 12, 2017

This weekly series explores breaking news and developments in the US health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory, and legislative changes.

My Take

Back to school: The reading, writing, and ‘rithmetic of health care

By Sarah Thomas, Managing Director, Deloitte Center for Health Solutions, Deloitte Services LLP

Well, it is that time of year again, when dry leaves start skittering around and the days get shorter. School supplies have been purchased and tucked into backpacks, and first-day-of-school photos have been filling up my Facebook page. Summer recess is also over for Congress, which returned to work after Labor Day. What can we expect from the Senate and the House during what remains of 2017? With back to school as a theme, I thought it would be interesting to look at how Congress might deal with the three Rs of health care – reading, writing, and ‘rithmetic.

I think this year, the numbers tell the story:

Less than a dozen: The number of working days left in the Congressional session for federal fiscal year 2017
The Senate’s parliamentarian recently confirmed that September 30, the end of the fiscal year, is the deadline for passing legislation aimed at repealing and replacing the Affordable Care Act (ACA) through budget reconciliation. Less than a dozen days doesn’t give Congress much time to address the many items on its to-do list. Funding the government for 2018, raising the debt ceiling, and flood-relief funding related to recent hurricanes have been high priorities, which were temporarily solved last week with a package signed into law after quick deliberation in Congress. But on the health care front, major issues still on the table are reauthorization of funding for the Children’s Health Insurance Program (CHIP) and the extension of a handful of programs in Medicare.

The Senate Committee on Health, Education, Labor, and Pensions (HELP) held hearings on September 6 and 7 to explore ideas to shore up the public health insurance exchanges and the individual market.1 Witnesses at the September 6 meeting included state insurance commissioners, while the next day’s hearing featured Republican and Democratic governors from five states (see first story below). While this is an important topic, action in September is unlikely. HELP Committee Chairman Lamar Alexander (R-TN) emphasized that Congress must act before September 27 – the deadline for insurance companies to sign contracts with the federal government to sell insurance through this fall for the 2018 plan year. Moreover, anything tied to the ACA remains politically volatile.

Tax reform is another issue to keep an eye on this quarter. In addition to being of great interest to many health care stakeholders as taxpayers, it might also be a vehicle to address health care policy.

63: The total number of US counties that don’t have at least one health plan offering coverage through an insurance exchange during the upcoming open-enrollment period.2
Last week, one health plan announced it would no longer offer products in 63 counties and cities in Virginia, leaving those areas without any options on the exchange. This happened in several other states over the summer, but in the end, insurance commissioners and health plans worked hard to ensure that eligible people will be able to purchase health coverage through an exchange regardless of where they live. It is unclear how the counties in Virginia will fare for now. And, despite the availability of coverage in most of the country, premiums around the country are expected to rise to reflect the health care cost trend as well as the uncertainty surrounding the exchanges.

$194 billion: According to the Congressional Budget Office (CBO), annual federal spending will increase by $194 billion if the administration stops cost-sharing reduction (CSRs) payments.3
One question as we head into fall is whether the administration will continue to pay health plans to reduce cost sharing for low-income beneficiaries. This question continues to add uncertainty to health plans, insurance commissioners, and consumers who buy coverage through the exchanges. If the government opts to end CSR payments, many carriers have said they will have to increase premiums. Higher rates would translate to larger federal premium subsidies, which are based on the cost of coverage. The administration has paid the CSR payments every month to date.

I am looking forward to reading a potential Request for Information from the US Centers for Medicare and Medicaid Services (CMS) on the overall direction the Center for Medicare and Medicaid Innovation (CMMI) will take. I will also be interested in reading the responses. CMMI has been the hub for much of the agency’s work on alternative payment models, and is closely tied to the implementation of the Medicare Access and CHIP Reauthorization Act (MACRA). Some industry observers have urged the agency to keep pressure on value-based payment models in Medicare, even as some provider organizations support a gradual transition to many of the MACRA provisions.

As part of larger efforts to support the president’s priority, CMS is working actively with all stakeholders – including state officials – on innovative payment arrangements. These arrangements could, for example, include outcome-based pricing for medicines in relation to clinical outcomes. CMS plans to issue future guidance to explain how pharmaceutical manufacturers can engage in innovative payment arrangements, and plans to continue to work with states on other options, as well as help them manage the cost of new therapies and cures.

I am also keeping an eye out for information outlining the administration’s ideas for reducing drug prices or making information about pricing more transparent. This includes watching US Food and Drug Administration (FDA) Commissioner Scott Gottlieb’s next steps around creating a more competitive market for drugs, accelerating the approval process, and implementing 21st Century Cures – including its provisions around real-world evidence and consumer input into the drug approval process.

A good bit of writing took place over the summer, and we expect it could continue. States have been writing and submitting waivers that, if approved, will allow them to tinker with Medicaid and ACA requirements. Section 1332 of the ACA allows a state to apply for a State Innovation Waiver “to pursue innovative strategies for providing their residents with access to high-quality, affordable health insurance while retaining the basic protections of the ACA.”2 CMS approved Hawaii’s waiver late last year. Iowa’s recently submitted waiver request seeks to offer just one plan in the individual market and set a flat premium subsidy payment based on income and age. It also would eliminate CSR payments to insurers and would instead establish a reinsurance program (see the August 29, 2017 Health Care Current). If that waiver is approved, other states are likely to follow.

Many states also have been busy developing policies to address high-risk individuals who buy coverage through an exchange. Some states contend that pulling these members out of the risk pool will bring premium costs down and add a measure of stability to this market. Some states also have been exploring innovation waivers to reshape the structure of subsidies and enrollees.

Even though the Congress did not act to make major changes to Medicaid, some states want to experiment with their programs (see the August 29, 2017 Health Care Current). Section 1115 of the Social Security Act gives the US Department of Health and Human Services (HHS) authority to approve experimental projects and demonstrations that promote the objectives of Medicaid and CHIP. Some states want to test whether it is acceptable to scale back (but not altogether eliminate) Medicaid expansion. Other states want to add employment and other requirements as a condition of Medicaid eligibility. Stay tuned this fall to see if the federal government approves them.

Watch this space as this new school year unfolds. We will keep you up to speed with the latest developments on the Hill, in the administration, and the courts, and – as states take a stronger role – around the country.

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2 2018 projected health insurance exchange coverage map, the Center for Consumer Information & Insurance Oversight,

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In the news

At Senate hearings, governors, regulators discuss ways to stabilize individual market

State insurance commissioners and governors testified before the Senate HELP Committee last week, and offered ideas to help stabilize the individual health insurance market in the short term.

The witnesses, who represented nine states and both political parties, brought up many of the same issues. They stressed that different states have different needs, and that they must be able to tailor their insurance markets accordingly. The insurance commissioners and governors appeared to have consensus on the following key issues:

  • Funding the CSR payments: Most of the witnesses agreed that CSRs should be funded at least through 2018, if not 2019. They said that this would help lower premiums, as it would give health plans more certainty when they price products for those years. 
  • Adding more flexibility into the ACA’s Section 1332 waivers: The witnesses lauded the waiver program as a way for states to tailor insurance markets to their unique populations. But they said the application and approval process is onerous and excessively long. They suggested shortening the application process, allowing states to use “copycat” waivers from other states, and allowing governors or insurance commissioners to agree on the final terms, instead of requiring state lawmakers to pass legislation to implement a waiver.
  • Establishing a temporary federal reinsurance program: The governors and commissioners agreed that a federal reinsurance program or high-risk pool would help stabilize the market initially. Several governors said a temporary funding mechanism from the federal government would give states time to set up their own program.

Other ideas that were discussed, but not necessarily prioritized or agreed on by all witnesses, include reinstating funding for the navigator and outreach programs (which the administration recently cut), allowing states to come up with their own solutions or alternatives to the individual mandate (e.g., continuous coverage provision), and allowing individuals in “bare” counties – those without any health plan offering coverage – to buy into the Federal Employees Health Benefits Program.

Although the hearings focused on short-term fixes, both the witnesses and senators acknowledged the need for long-term solutions. The committee will hear from insurance industry representatives and other stakeholders on September 12 and 14. After the hearings, Committee Chairman Lamar Alexander (R-TN) said he wants to have a draft bipartisan bill that addresses short-term solutions by the end of this week.

Related: In an August 29 letter to Senators Alexander and Patty Murray (D-WA), leaders from 12 state-run health insurance exchanges outlined solutions they say would stabilize the individual market. The authors are members of the State Health Exchange Leadership Network, a program that advises policymakers on issues regarding state-based marketplaces.

In the letter, the exchange leaders presented solutions consistent with those in recent testimonies from insurance commissioners and the governors: Fund the CSRs, create a federal reinsurance program, and loosen restrictions on Section 1332 waivers. They added that long-term certainty and predictability are key for keeping the individual markets stable.

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More employers offered health insurance to workers in 2016

More small and mid-sized businesses offered health insurance to their employees in 2016 than in previous years, according to research from the Employee Benefit Research Institute (EBRI). Between 2015 and 2016, the number of business with 10-999 employees offering health insurance increased by 1.5 percent, according to the report. This is despite many predictions that fewer businesses would offer insurance after the enactment of the ACA.

EBRI found:

  • The share of large employers offering coverage has not changed: From 2008-2016, the proportion of large employers (1,000 or more employees) offering insurance stayed in the 99 percent range. 
  • The share of employers with fewer than 10 employees offering health insurance decreased: Offer rates fell from 22.7 percent to 21.7 percent from 2015 to 2016.

The authors cite the improving economy and a stronger labor market as potential reasons why more employers are offering health insurance.

Background: EBRI analyzed data from the Medical Expenditure Panel Survey–Insurance Component (MEPS-IC) survey on health insurance coverage.

(Source: Paul Fronstin, “After years of erosion, mid-size and some small employers added health coverage in 2016,” Employee Benefit Research Institute, August 2017)

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The Joint Commission releases new pain-management standards for hospitals

The Joint Commission has announced new pain-management standards for hospitals, along with an accompanying report, in response to the nation’s opioid crisis. The standards will go into effect on January 1, 2018. The Commission says hospitals should:

  • Make pain assessment and management, including safe opioid prescribing, a priority across the organization and the leadership
  • Involve medical staff in improvement activities, including helping establish new protocols and quality metrics
  • Assess and manage patient pain early and often, identify treatment risks, and discuss ways to involve patients in treatment plans
  • Collect data on the effectiveness of programs to monitor performance 
  • Compile and analyze data, including on the use of opioids, to ensure they are being used safely

The report also identifies additional standards around leadership, medical staff, the provision of care, and performance improvement. The Joint Commission worked with technical experts, visited hospitals, and consulted with professional organizations to develop the standards. To maintain Joint Commission accreditation, hospitals must be surveyed every five years.

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FDA studies of drug advertising provide insight into consumer responsiveness

The FDA Office of Prescription Drug Promotion (OPDP) has been studying how prescription drugs have been advertised since the first television advertisement for a drug ran in 1984. The office has supported 43 research projects on drug promotion to date, 14 of which are in progress.

The studies analyze how people interpret and respond to drug advertisements, as well as the ads’ content and format. According to the OPDP, research on drug promotion has helped the agency and manufacturers understand how to effectively reach consumers through targeted messaging. For example, the research revealed that consumers need information in both audio and visual formats to digest it more easily. Technological developments, including smartphones and social media, have presented more opportunities for drug companies to advertise, and with it, additional issues for OPDP to study.

The OPDP has requirements that drug manufacturers must follow for advertisements. One of the most important is to disclose risks. Broadcasted ads must state the drug’s most serious risks, as well as direct consumers to find more information from another source, such as a doctor or website.

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CMS says it will pay risk corridor payments from 2015 toward 2014 deficits

In late August, CMS announced it will pay health plans in the individual market risk corridor payments from 2015. CMS has not yet disclosed the amount of the payments, but it said the payments are going toward the amounts that CMS still owes health plans from the year exchanges began – 2014.

The risk corridors program was a temporary program established by the ACA to protect health plans on the exchanges from potential losses and to discourage them from raising premiums. More profitable plans – those making more than a three percent margin – paid into the program, and less profitable plans – those with negative three percent margins or larger – were to receive funds through CMS. Congressional action in 2014 required these payments to be budget-neutral, and plans have requested more funds than were available.

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HHS OIG: MSSP ACOs saved Medicare nearly $1 billion from 2013 to 2015

The HHS Office of Inspector General (OIG) recently announced that Medicare accountable care organizations (ACOs) saved the federal government close to $1 billion from 2013-2015. It also found that ACOs both improved their scores on most (82 percent) of the 33 quality measures, and outperformed fee-for-service providers.

The report looked at the 428 ACOs, which serve 9.7 million Medicare beneficiaries, established through the Medicare Shared Savings Program (MSSP). Under the MSSP, providers form ACOs and work to reduce overall costs and improve quality compared with benchmarks. If an ACO reduces costs and improves quality, it can qualify to receive a portion (the Medicare program keeps the rest). One-third of the ACOs reduced their spending enough to qualify for shared savings.

To improve the MSSP program, the OIG suggests future research focus on the ACOs that substantially reduced their payments and improved quality.

(Source: HHS OIG, “Medicare Shared Savings Program Accountable Care Organizations Have Shown Potential for Reducing Spending and Improving Quality,” August 2017)

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20.5 million Americans have gained health insurance since the ACA became law

More than 20 million Americans gained health insurance between the first quarter of 2010 (prior to the enactment of the ACA) and the first quarter of 2017, according to the National Health Interview Survey. During the first three months of 2017, 70.5 percent of adults (138.8 million) were covered by private health insurance, which includes 4.8 percent (9.4 million) who purchased coverage through a public insurance exchange.

The survey also revealed that:

  • 18.9 percent of adults between the ages of 18 and 64 had public coverage during the first quarter of 2017, which is down from 20 percent in 2016, but is the same rate reported in 2015. 
  • 12.1 percent of adults were uninsured, which continues a declining trend in the uninsured rate. 
  • The greatest decreases in uninsured adults since 2013 were among the poor (individuals with incomes below the federal poverty level [FPL]) or the near poor (100 to 200 percent of the FPL).
  • Adults between the ages of 25 and 34 are nearly twice as likely as adults ages 45 to 64 to be uninsured.

This report from the National Center for Health Statistics presents selected estimates of health insurance coverage for the civilian noninstitutionalized US population based on data from the January-March 2017 National Health Interview Survey, along with comparable estimates from previous calendar years.

(Source: Robin A. Cohen, Michael E. Martinez, et al., “Health insurance coverage: Early release of estimates from the National Health Interview Survey, January-March 2017,” Division of Health Interview Statistics, National Center for Health Statistics, August 2017)

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Breaking Boundaries

Lessons from past emergencies help in the response to recent hurricanes

In the wake of Hurricane Harvey, which set a record for the most rainfall from a single storm in the continental US, and Hurricane Irma, which has set new flood records in northeast Florida, many journalists and commentators have looked back to the emergency response to Hurricane Katrina for comparison. It’s interesting to reflect on the progress we have made in emergency response and health care connectivity over the past 12 years.

Mobile services and social media. During Katrina, almost all cell phone communication was wiped out – more than 1,000 cell sites failed. During Harvey, just four percent of the almost 8,000 cell sites in the storm’s path were wiped out – a notable improvement. Major telecommunications companies were prepared with additional fuel delivery for back-up generators, and were ready to deploy emergency repair units. Social media was in its infancy; now, hundreds of millions of people use a wide range of platforms. When they were unable to reach emergency services via traditional methods, many people alerted rescue teams and emergency responders by posting their addresses on social media. In 2014, Facebook launched its Safety Check tool, which allows users in an emergency to mark themselves as safe. Social media platforms also provided a way to recruit and organize volunteers. Airbnb, which people typically use to find vacation rentals, served as a resource to shelter people who were forced from their homes and had nowhere else to go.

Electronic health records. The rising prevalence of electronic health records (EHRs) since Katrina means that tens of thousands more patients may be spared from having their paper records washed away. When Katrina hit, only about a quarter of the nation’s physicians were using EHRs. Seventy-one percent of Texas physicians were using EHRs as of 2016, the same as the national average. EHRs help providers get immediate access to patient information for those evacuated to other parts of the state. The Health Information Technology for Economic and Clinical Health (HITECH) Act passed in 2009 and provided funding for EHR adoption, partially in response to Hurricane Katrina. Several Texas hospitals, including MD Anderson, Houston Methodist, and Texas Children’s Hospital, reported that their EHRs and related technology operated effectively through the storm, a positive sign that HITECH is meeting its goals.

Inside Houston’s convention center, which served as a shelter, “virtual clinics” were set up, which allowed physicians to order medications and input patient information. Seventy percent of US hospitals now have cloud-based backups for their data, according to the American Hospital Association. Houston Methodist, for example, began preparing for a natural disaster years before Harvey hit, taking care to make sure its data centers could withstand hurricane-force winds, and erecting a steel lattice roof to protect generators.

However, across the country, interoperability – or the ability for different providers in different networks to exchange and share information – is still limited for many patients. If patients need to go outside of their provider network, they might need to have their records faxed. Health care stakeholders have long recognized this challenge and are working to address this lack of interoperability in an emergency. In the years since Katrina, federal officials have been working on a national solution to EHR gaps in an emergency, called the Patient Unified Lookup System for Emergencies (PULSE). The system, which is still being tested, allows disaster workers to look up patient records, such as prescriptions or recent test results, for anyone who came to an emergency room, pop-up field hospital, or evacuation shelter. In June of this year, officials had completed the first big test of the system, and the drill was successful.

Other recent innovations may have saved lives. These innovations include the sled stretchers that many hospitals now use to transport very large patients, or patients who are tied to a lot of equipment, when elevators are out. These special stretchers are much easier to glide down stairs. Texas Medical Center installed submarine doors to keep out water. Of course, hospitals are only one part of the preparedness equation in health care. Many vulnerable patients are at home or in nursing centers. Federal health officials were able to analyze Medicare claims to help hospitals identify and locate patients at home who rely on ventilators, oxygen concentrators, or electric wheelchairs. For example, CMS identified 130 patients on dialysis on St. Thomas Island that needed to be moved.

The importance of preparation is well-recognized in health care. Quantum computing - which takes advantage of the ability of subatomic particles to exist in more than one state at any time and allows operations to be done much more quickly using less energy than classical computing – could make prevention more of a reality in weather as well. In the coming years, quantum computing may help better predict exactly what areas will be most impacted, so that the most vulnerable areas can better prepare, and health care and other resources can be better targeted and distributed.

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