Two Wins on Transparency and Payment Levels

Brian Klepper

Going forward on the NBCH blog, I will try to post often and in depth on issues related to health and benefits. We'll also consider non-promotional, thoughtful contributions from regional coalition staff and employer members.

Two important items are in today's news that merit your attention. First is Medicare's announcement of its intention to release its Physician Claims data set. Presumably, analysis of these records will permit a better understanding of physician performance and value, critical for patients and purchasers. Public information on performance should encourage more physicians to be more aware of their practice patterns, creating new market pressures for excellence that have been lacking in health care for decades. I have already asked our team to inquire about how to obtain that set.

Also, yesterday the US Senate approved a bill that calls for identifying overvalued procedures in the Medicare fee schedule. After 22 years of an opaque and corrosive relationship between Medicare and the AMA's Relative Value Scale Update Committee (RUC), this is a heartening and unexpected move. The question now will be whether the House affirms. Certainly, we can expect the entire health care industry, except for primary care, to lobby against House approval. Because this change has momentous economic ramifications that are squarely in the public interest (as well as those of purchasers), we should each consider contacting our Congressional representatives to advocate for them to do the right thing.

Here's an article I have first published on the Health Affairs Blog a little more than a year ago that explains why and how RUC came to be such a powerfully negative influence on health care.

The RUC, Health Care Finance’s Star Chamber, Remains Untouchable
Brian Klepper

Posted 2/1/13 on The Health Affairs Blog

On January 7, 2013, a federal appeals court rejected six Georgia primary care physicians’ (PCPs) challenge to the Centers for Medicare and Medicaid Services’ (CMS) 20-year, sole-source relationship with the secretive, specialist-dominated federal advisory committee that determines the relative value of medical services. The American Medical Association’s (AMA) Relative Value Scale Update Committee (RUC) is, in the court’s view, not subject to the public interest rules that govern other federal advisory groups. Like the district court ruling before it, the decision dismissed the plaintiffs’ claims out of hand and on procedural grounds, with almost no discussion of content or merit.

Thus ends the latest attempt to dislodge what is perhaps the most blatantly corrosive mechanism of US health care finance, a star-chamber of powerful interests that, complicit with federal regulators, spins Medicare reimbursement to the industry’s advantage and facilitates payment levels that are followed by much of health care’s commercial sector. Most important, this new legal opinion affirms that the health industry’s grip on US health care policy and practice is all but unshakable and unaccountable, and it appears to have co-opted the reach of law.

The RUC exerts its influence by rolling up the collective interests of the nation’s most powerful medical specialty societies and, indirectly, the drug and device firms that support and benefit from their activity. The RUC uses questionable “methodologies,” closed to public scrutiny, to value medical services. CMS has historically accepted nearly 90 percent of the RUC’s recommendations without further due diligence. In a damning October 2010 Wall Street Journal expose, former CMS Administrator Tom Scully described the RUC’s processes as “indefensible.”

The RUC’s distortion of America’s health care market, ramping up both care and cost, cannot be overstated. It has consistently over-valued specialty services and undervalued primary care services. Ophthalmologists performing cataract procedures are now paid 12.5 times the hourly rate of PCPs involved in a moderately complex office visit, arguably a more complicated activity.

At the same time, the erosion in primary care reimbursement has reduced office visit durations and undermined primary care’s moderating influence over specialty care. These dynamics are almost certainly responsible for the doubling of specialty referrals over the past decade.

The RUC’s excessive valuations of certain procedures — e.g., cardiac stenting, colonoscopies, back surgeries — have created lucrative incentives for over-utilization. 2008 OECD health data showed that, for every inpatient percutaneous transluminal coronary angioplasty (PTCA) performed on patients in the United Kingdom, New Zealand or Switzerland, we do more than four in the US. Then there are data showing a clinically inexplicable 15-fold increase in complex spinal fusions between 2002 and 2007, with adjusted mean hospital charges of $81,000.

All health care interests except primary care win under this arrangement. Everyone else loses. Unnecessary care puts patients at physical risk. Purchasers — taxpayers, employers and individuals — pay twice the cost of care in other developed countries, an economic burden that now threatens to pull the US economy off a cliff. And the role of PCPs gets short shrift.

The Legal Objection To The RUC
The core of the Augusta physicians’ legal challenge was that the RUC is a “de facto Federal Advisory Committee,” and therefore subject to the stringent accountability requirements of the Federal Advisory Committee Act (FACA). This law ensures that federal bodies have panel compositions that are numerically representative of their constituencies, that their proceedings are open, and that methodologies are scientifically credible. In other words, FACA ensures that advisory practices are aligned with the public interest.

The RUC adheres to none of these and is an object lesson in how special interests can be insinuated into and capture regulatory processes, displacing the public interest. For example, when the legal challenge was first filed, only 3 of 29 RUC panelists (10 percent) represented primary care, even though some 30 percent of US physicians practice primary care. RUC meetings are closed to the public, unless an invitation is extended by the Chair, and admission is tied to the guest signing a nondisclosure agreement. Determination of a procedure’s value has been based on as few as 30 survey responses by physicians who know that their reimbursement will be linked to how they have answered the questions.

The Effects Of The RUC’s Influence
There are also several cascade effects. One is our crisis-level shortage of PCPs. All but the most idealistic medical students are steered away from primary care and into the specialties by relative low reimbursement. A PCP can expect to earn $3.5 million less over a 30-year career than a typical specialist. When the comparison is against high-earning physicians, like orthopedic surgeons, the difference is $10 million. Just as our boomer population reaches its years of highest health care use and cost, we’ll have a devastating primary care shortage, which in turn will propel traditional primary care cases into far more expensive and often unnecessary specialty care.

And, as lead plaintiff Paul Fischer MD has noted, the policies promoted by the RUC have degraded many areas of specialty medicine, narrowing care patterns as specialists “practice to the codes” that are most lucrative, and straining the collegiality that, until recent years, characterized most medical care.

One difficulty in challenging the RUC is that, to lay observers, it can appear to be a technical issue, accessible only to people who get down in the weeds. But it is foundational, defining the relative value of care services, which in turn drives pricing, profitability and care patterns.

That said, there are true experts who grasp the gravity of the problem. Among the most compelling are four former Administrators of CMS — Gail Wilensky, Bruce Vladeck, Tom Scully and Mark McClellen — who came together in a remarkable round table discussion last March in front of the Senate Finance Committee, co-chaired by Orrin Hatch and Max Baucus, unanimously agreeing that the RUC has been a colossal error and must be replaced (See the video here.) As Dr. Vladeck commented:

I’m hopeful that some combination of the need to address overall deficit reduction strategies more generally and a different kind of political climate in the relatively near future will create the opportunity for people to say, “We made a mistake in 1997. We created a formula that produces irrational and counterintuitive results, and we’re just going to abolish it and start all over again in terms of some kind of cap on Part B payments. It’s the only way we’re going to get out of this morass.”

A Laudable Effort By Six Primary Care Physicians
America’s health care community should also acknowledge the tremendous effort mounted by the six Augusta, GA PCPs: Robert Clark, Becca Talley, Paul Fischer, Edwin Scott, Rob Suykerbuyk and Les Pollard. These physicians financed the legal challenge out of their own pockets and did so for no other reason than they were convinced of the huge wrong CMS’ relationship with the RUC perpetrates on the American people and on primary care. They are great American citizens who, unlike their primary care societies, took a stand on behalf of the public interest, literally putting their money where their mouths are and paying the price of admission to the legal system.

American health care has many problems that contribute to uneven quality and egregious cost, but CMS’ longstanding relationship with the highly conflicted and unaccountable RUC is among the most outrageous and damaging. Now, with legal remedies exhausted, the avenues of redress are limited.

As Dr. Vladeck noted, perhaps America’s looming fiscal crisis, driven primarily by its health care costs, can compel Executive or Congressional action on the RUC. Only if the CMS Administrator changes her agency’s reliance on the RUC in its current form, presumably with pressure from the White House, Congress and the HHS Secretary, can this problem be resolved. Doing so would be a huge step toward regaining our fiscal balance, not just in health care but for the nation as a whole.

Commonwealth Fund Policy Brief on CMS State Innovation Models (SIM) Program

Since July 2012, the Centers for Medicare and Medicaid Services has awarded 25 states nearly $300 million to help them plan, design, and test new ways to improve population health and increase the value of health care services they pay for.

Under the State Innovation Models (SIM) Initiative, Oregon, for example, is promoting community-based networks of providers that receive a set fee to deliver a range of chronic disease management and health promotion services for Medicaid enrollees. Maryland, meanwhile, is extending its all-payer hospital rate-setting approach to all health care in a bid to hold cost growth below the state economy’s overall inflation rate.

A new Commonwealth Fund issue brief examines the early experiences of the SIM states, and offers lessons for other states wishing to pursue broad health system reforms while contending with formidable political and budgetary constraints.

Early Results from the CMS Innovation Center's CPCi

The Comprehensive Primary Care Initiative, launched last fall by the Centers for Medicaid and Medicare Services (CMS) Innovation Center, offers an opportunity for health plans, providers and CMS to work together on a community-based and integrated approach to health management. Preliminary year-one results for the Comprehensive Primary Care initiative appear to be positive, Managed Care Executive reports.

It looked at several CPCi sites, including Colorado. Patrick Gordon, associate vice president of Rocky Mountain Health Plans, the technical assistance contractor for CPCi on the Western Slope, shared some insights. It's a tough program, he says, but "nobody has thrown their hands up and said 'this is too much. In Colorado, a “very high percentage” of providers are meeting milestones and none of the 74 primary care practices or 369 providers in Grand Junction have exited the program.

Participants report that while aligning payment incentives is important, the real value of the Comprehensive Primary Care Initiative might be getting providers, payers, and government agencies to collaborate on pathways for information exchange.  Payment reform cannot be accomplished, nor will it solve the problems of our health care system, unless greater data exchange capabilities can be achieved.

Towers Watson Signs Agreement With Federal Government to Facilitate Public Exchange Enrollments

Towers Watson has announced that it has signed a web broker entity agreement with the Centers for Medicare & Medicaid Services, which supervises the federally facilitated marketplace — the health insurance exchange operated by the federal government in 36 states.

With this agreement, Towers Watson can help employers provide health insurance education and enrollment services to part-time and seasonal employees, retirees and their dependents by supporting them as they evaluate and purchase individual health plans on the federally run exchange.

Towers Watson operates the nation's largest private Medicare exchange, which offers thousands of private Medicare plans from more than 85 health insurance carriers. Licensed benefit advisors and technology-based decision support tools provide personalized support and expert guidance to retirees as they shop for individual plans. Nearly 300 public and private sector employers and trade associations have used Towers Watson's private Medicare exchange to connect more than a half million customers with health coverage.

Brookings Institution Health Insurance Exchanges Implementation Webinar

The Brookings Institution is hosting a webinar on Tuesday, June 25 featuring a panel presentation on the status of implementation of the new health insurance exchanges.

Hosted by the Engelberg Center for Health Care Reform at Brookings, the panel presentation will run from 9:00 a.m. to 11:30 a.m. EDT and will be co-moderated by Dr. Mark McClellan, Director of the Engelberg Center for Health Care Reform and the Leonard D. Schaeffer Chair in Health Policy Studies at the Brookings Institution and Governor Michael Leavitt, Founder and Chairman of Leavitt Partners. Additionally, the event will feature senior officials from the Centers of Medicare and Medicaid (CMS)—Gary Cohen, Deputy Administrator and Director of the Center for Consumer Information and Insurance Oversight and Mandy Cohen, Senior Technical Advisor—who will provide an overview and update on the health insurance marketplace implementation including outreach, education, and system requirements for coordinating data flows, as CMS works to advance the diverse processes for successful implementation.

You can register for the webinar here.

University of Michigan's VBID Center Info on CMS' SIM Program

CMS' State Innovation Model program is an important opportunity for local areas to align payers with each other, and with consumers to encourage the use of appropriate incentives, such as those used in value-based insurance design.  The University of Michigan's VBID Center has produced an Issue Brief on the SIM program's potential for advancing the use of VBID.  The Issue Brief includes a video overview and links to important CMS documents on the SIM program.

CMS Announces $1 Billion Health Care Innovation Awards Initiative

The Centers for Medicare & Medicaid Services (CMS) has released a Funding Opportunity Announcement for round two of the Health Care Innovation Awards. Under this announcement, CMS will spend up to $1 billion for awards and evaluation of projects from across the country that test new payment and service delivery models that will deliver better care and lower costs for Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) enrollees.

The second round of the Health Care Innovation Awards will support public and private organizations in four defined areas that have a high likelihood of driving health care system transformation and delivering better outcomes. Specifically, in this second round, CMS is seeking proposals in the following categories:

• Models that are designed to rapidly reduce Medicare, Medicaid, and/or CHIP costs in outpatient and/or post-acute settings.
• Models that improve care for populations with specialized needs.
• Models that test approaches for specific types of providers to transform their financial and clinical models.
• Models that improve the health of populations – defined geographically (health of a community), clinically (health of those with specific diseases), or by socioeconomic class – through activities focused on engaging beneficiaries, prevention (for example, a diabetes prevention program or a hypertension prevention program), wellness, and comprehensive care that extend beyond the clinical service delivery setting.

In this round, CMS specifically seeks new payment models to support the service delivery models funded by this initiative. All applicants must submit, as part of their application, the design of a payment model that is consistent with the new service delivery model that they propose.

Interested parties of all types who have developed innovations that will drive significant improvement in population health, quality of care and total cost of care are welcome to apply. Eligible applicants include, but not limited to: provider groups, health systems, payers and other private sector organizations, faith-based organizations, states, local governments, public-private partnerships and for-profit organizations.

Key Dates and Deadlines
Letters of Intent to Apply: CMS will accept letters of intent beginning June 1 until June 28, 2013 3pm EDT.
Application: CMS will accept applications beginning June 14 until August 15, 2013 3pm EDT.

Visit the Innovation Center website for more details on how to apply for these awards! 

CMS Publishes Hospital-Specific Medicare Charge Data for 100 Common Procedures

CMS has released data showing that U.S. hospitals charge widely varying amounts for the same services, and also illustrating the significant variation in how much Medicare pays for those services. The database includes hospital charges for 100 most frequently billed discharges by the more than 3,000 hospitals reimbursed under the inpatient prospective payment system. The numbers reflect $66.7 billion in Medicare spending during fiscal 2011 and represent 7 million discharges.

Hospitals determine what they will charge for items and services provided to patients and these charges are the amount the hospital bills for an item or service. The Total Payment amount includes the MS-DRG amount, bill total per diem, beneficiary primary payer claim payment amount, beneficiary Part A coinsurance amount, beneficiary deductible amount, beneficiary blood deducible amount and DRG outlier amount.

One of the most concerning aspects of the data is the wide variation in what Medicare pays hospitals for treating the same conditions, which does not seem to be driven by the provider's status as a teaching hospital or higher capital costs of some facilities. CMS speculates that the reason for such disparity is the wide variations in the average morbidity of patients and local costs at different hospitals. Specifically, hospitals with sicker patients receive health status outlier payments and add-on payments based on the geographic location.

CMS Releases Guidance on Role of Brokers and Agents in Exchanges

The Center for Consumer Information and Insurance Oversight (CCIIO) within CMS has released a new guidance document describing the roles agents and brokers can play in the new ACA-created health insurance exchanges. The guidance acknowledges that agents and brokers have an important role to play in helping consumers - both individuals and small businesses - understand the new exchanges.

Section I of this document provides a high-level overview of the role of agents and brokers, including web-brokers, in federally-facilitated exchanges and state partnership model exchanges. In section II, CMS addresses common questions raised by states and other stakeholders on the role of agents and brokers in all exchanges, including state-based exchanges. In section III, CMS addresses questions specific to web-brokers. The guidance document also contains a process flowchart to illustrate how agents and brokers will assist consumers through both the issuer-based and exchange pathways.

Agents and brokers intending to work with consumers in federally-facilitated and state partnership exchanges will be able to assist consumers in two ways: (a) an issuer-based pathway, through which an agent or broker uses an issuer’s website to assist the consumer; or (b) an exchange pathway, through which an agent or broker assists the consumer using the exchange website. In states where a federally-facilitated or partnership is operating, all agents and brokers must register with CMS and complete a training course. This online registration process administered by CMS will begin in the summer of 2013, prior to open enrollment. Agents and brokers working in states with state-based exchanges will still need to register with the state exchange and follow any processes and requirements of that state exchange.

CMS Webinar: Learn How to Access and Use Medicare Data

In July 2012, the Centers for Medicare & Medicaid Services (CMS) announced that in July 2013, the platform for the downloadable data on the Medicare.gov Compare websites (Dialysis Facility Compare, Home Health Compare, Hospital Compare, and Nursing Home Compare) would be Data.Medicare.Gov.

The Centers for Medicare & Medicaid Services will be hosting a webinar, “Data.Medicare.Gov: Get Started!” to:

• Provide an introduction to Data.Medicare.Gov, 
• Demonstrate options for accessing the data, and 
• Describe how to make use of the site's tools for exploring and interacting with the data. 

The webinar is appropriate for both technical and non-technical users of Compare website data, for example, researchers, health care administrators, and quality improvement professionals.

WHEN: Thursday May 16, 2013 1:00 PM to 2:00 PM Eastern Daylight Time

WEBINAR REGISTRATION INFORMATION: In order to receive log-in information, you must register for the webinar though the following link: https://cc.readytalk.com/r/vutakpmjxr7j

Participants are strongly encouraged to register early because space is limited and to dial in 10 minutes early to ensure that you are able to connect and view the presentation.

If you are unable to join, you can:

• View the video recording in the Help section of http://www.data.medicare.gov following the event. 
• Visit http://www.data.medicare.gov before or after the event and click the Help button. There you can find a variety of useful videos and resources to help you use the site.

HHS Seeks Input on Exchange Design in Partnership and Federal Fallback States

HHS invites you and your colleagues to participate in state-specific conference calls about federally facilitated and partnership exchanges (marketplaces). Call in to hear updates about policies and operations of the exchanges in your state and for an opportunity to ask questions and provide input. HHS will use the information and feedback provided by participants to inform their decisions as they develop exchanges.

Please visit the CMS Open Door Forum (ODF) for call and registration details for your specific state.

Again, these calls are specifically for states participating in a federally facilitated or partnership exchange. If this applies to your state, we encourage you to participate in these important calls to ensure the employer voice is heard.

Health Care in President Obama's 2014 Budget Proposal

On April 10, President Obama released his proposed budget for Fiscal Year 2014. The release of the President's Budget (usually occurring in early February) is mostly a symbolic measure. Congress is not required to act on any of the proposals, and most observers agree that the partisan deadlock between the Republican-controlled House and Democratic-controlled Senate will continue, and little, if anything, is likely to be enacted out of the President's proposal.

However, the Budget does represent the Administration's policy priorities, and with major provisions of Affordable Care Act set to be implemented in 2014, there are a lot of health care-related proposals. Among the highlights are:

• An additional $800 million for CMS’s insurance exchange operations, along with an additional 280 employees to work on exchange implementation.
• Cuts to Medicare — more than $300 billion in provider payments and $50 billion from seniors, mostly in the form of increased cost sharing for higher-income beneficiaries.
• A proposal to close the Medicare prescription drug doughnut hole by 2015 — a full five years ahead of the ACA’s target date of 2020.
• Expanding and simplifying the tax credits provided to small businesses for their non-elective contributions to employee health insurance. The expansion would cost $720 million in 2014. 
• $18.4 million for CMS to ensure compliance with MLR and rate-review processes.
• Instead of the SGR formula or a specific SGR "fix," the budget calls for a “period of payment stability lasting several years” to allow the development of “accountable payment models.”
• A one-year delay of the ACA’s scheduled reductions in Disproportionate Share Hospital (DSH) payments to safety-net hospitals; the reductions are scheduled to go into effect in 2014, but the White House wants to wait a year to get a better sense of how much the law reduces the number of uninsured now that Medicaid expansion is optional for states.
• Inclusion of a MedPAC recommendation to cut Graduate Medical Education payments to hospitals by $11 billion over 10 years.
• Elimination of the Preventive Health and Health Services Block Grant program, administered by the CDC. The program funds a variety of state efforts, including emergency medical services, home health services, and fluoridation. It is not the same thing as the Prevention and Public Health Fund in the ACA.

Again, this is the President's proposed budget for Fiscal Year 2014; none of these changes or funding levels are in place, and likely may never happen. NBCH continues to monitor the federal budget process and proposals from Congress, and will keep members informed if any significant health-related budget changes are enacted.

Commonwealth Fund Tracking State Insurance Market Reforms

Last month, federal regulators at the Center for Consumer Information and Insurance Oversight released guidance on how the Affordable Care Act’s new private insurance market reforms—including guaranteed access to health care coverage and the ban on denying or limiting benefits for people with preexisting health conditions—will be enforced. While states are the primary regulators of insurance, the guidance recognizes that the Centers for Medicare and Medicaid Services is responsible for enforcing the reforms in states that lack the authority or ability to do so.

In a new blog post, Katie Keith, J.D., and Kevin W. Lucia, J.D., of the Georgetown University Center on Health Insurance Reforms describe what the new guidance means for enforcement of some of the law’s most significant reforms. An interactive map, meanwhile, highlights the legislative steps states have taken―or not taken―to enforce the insurance protections.

CMS Launches Chronic Condition Dashboard

CMS has launched its new Chronic Conditions Dashboard, an interactive tool that provides quick analyses and reports based on the data CMS houses in its Chronic Conditions Warehouse. The dashboard is housed on a CMS website created to help researchers access federal data on Medicare Fee-For-Service patients. The dashboard focuses on patients with diseases such as heart disease and diabetes.

It offers "new and critical data that can help us develop better patient-centered approaches to improve health outcomes, lower costs and maximize quality of life," says HHS Assistant Secretary Dr. Howard Koh.

Sequester's Effects on Health Care

At midnight on Friday, March 1, the first round of automatic budget cuts outlined in the Budget Control Act of 2011 (the "sequester") went into effect.  Policymakers and analysts are still working through the details, but many of the cuts are actually intended to be phased in over time, and significant questions remain as to exactly how federal agencies will be implementing the cuts.  For example, Medicare is set to take a 2% cut, but no one knows yet whether it will be an across-the-board 2% reduction in payments to all health care providers and suppliers that Medicare pays, or whether it will be more targeted.  The Budget Control Act itself does not contain this level of detail (presumably because no one thought the cuts would actually end up taking place), leaving these details to be worked out between the White House and the administrative agencies.

Other health care-related cuts that are included in the Act include decreases to the Public Health and Prevention Trust Fund in the ACA, and decreases in the grants to states for establishing health insurance exchanges.  Again, the details of these cuts have not yet been determined.  In addition, discretionary spending within HHS is set to decrease by as much as 8% in the case of the FDA.  Depending on how the cut is implemented, effects could range from employee layoffs and/or furloughs to delayed drug approvals and decreased capacity for safety inspections.  The NIH is also set to take a significant cut, which could also result in employee layoffs and/or furloughs, and decreased funding for medical research.  Medicaid and the Childrens' Health Insurance Program (CHIP) are exempt from cuts.

Advocacy groups such as the American Hospital Association and American Medical Association have published analyses indicating that the effects of the sequester could have far-reaching indirect impacts on the health care industry, mostly in terms of reduced hiring and layoffs of existing employees - as many as 300,000 jobs.  Since the cuts are scheduled to take place over time, it is difficult to determine whether this number is accurate.

NBCH continues to monitor these developments and will provide additional information as it becomes available.  However, the administrative agencies are operating under "business as usual" until further directed.

HHS Publishes Final Regulation on Reinsurance Program

On Friday, March 1, HHS published a final rule that includes the final regulations for the Temporary Reinsurance Program under the ACA.  Upon publication of the proposed rule, NBCH submitted a comment letter on behalf of our members commending HHS for proposing flexible standards and options for counting plan enrollees, but expressed concern about the unanswered questions still remaining such as treatment of disease management and wellness programs, and the interaction between the TRP and state high-risk pools.

The final rule reiterates that the reinsurance contribution applies to enrollees in "major medical coverage."  The following exclusions to major medical coverage are clarified by HHS:

• stand-alone vision and dental
• plans that cover prescription drugs only
• stand-alone HRAs and HSAs
• employee assistance, wellness, and disease management programs, to the extent they do not provide major medical coverage
• stop-loss and reinsurance policies

Several commenters requested that retiree-only coverage be excluded, but HHS maintains that it does not have the statutory authority to do so.

In the final rule, HHS clarifies that states cannot collect additional funds beyond those required to administer the ACA TRP from ERISA-covered self-insured health plans.  States are still allowed to operate their own high-risk pools outside of the ACA program, but these states cannot collect contributions from self-insured employers whose plans are covered under ERISA.

The final regulation indicates that future guidance on the mechanics of submitting the TRP payments is forthcoming.  NBCH will continue to monitor agency activity on this program.

CMS releases final rule on ACA

CMS has released the long awaited final rule on the ACA’s essential benefits, actuarial value and accreditation requirements which provides importance guidance to states and health plans for the implementation of public insurance exchanges starting in 2014.

NBCH staff will be reviewing the final regulations and will be reporting to its members on any surprises in the final rule and any important implications for the employer community.

Hospital Value-Based Purchasing Conundrum

Investors Business Daily reports on an interesting juxtaposition that is resulting from two separate provisions of the ACA. The Hospital Value-Based Purchasing (HVBP) program in the ACA has identified hospitals that provide patients with the most value. The program rewards hospitals that meet certain quality standards with a small percentage increase in their Medicare payments. Those that fall short face small Medicare payment percentage cuts. Nine of the top 10 hospitals in the first round of HVBP were physician-owned. In fact, doctor-owned hospitals accounted for 48 of the 100 top spots, according to data from the Centers for Medicare and Medicaid Services. More than 3,400 hospitals were included in the program. However, a separate provision in the ACA places limits on existing physician-owned hospitals, and establishes significant barriers to the establishment of new physician-owned hospitals. 

According to the physician-owned hospitals, the ACA has impeded the expansion of the hospitals that may provide patients with the most value, hindering beneficiaries' access to high-quality care. Critics say that the HVBP program measures are dominated by heart care and orthopedic care, which is where physician-owned hospitals are likely to excel; most physician-owned hospitals tend to specialize in one field, such as cardiac or orthopedic surgery. Additionally, hospitals that are newer and smaller do better on patient satisfaction measures, and those differences make it more challenging for general, acute-care hospitals to score as well as their physician-owned counterparts.

While CMS will certainly be monitoring this in future years of the HVBP program, one lesson that emerges is that value-based purchasing programs must be carefully designed to balance the competing interests of all of those involved.

New National Health Expenditures Analysis from CMS

A new report from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS), published in the January 2013 issue of Health Affairs, estimates that health care spending in the United States grew at a rate of 3.9 percent in 2011. That level of annual growth is identical to spending growth rates in 2009 and 2010, which means that growth in all three years has occurred at the slowest rates ever recorded in the 52-year history of the National Health Expenditure Accounts.

Total health care spending growth in 2010 and 2011 continued to track closely with the growth in nominal gross domestic product (GDP) in both years, and the health spending share of GDP stayed stable in 2011 at 17.9 percent. Yet despite the overall stability in health spending, "we observed faster growth in spending among some payers and services in 2011," said Micah Hartman, statistician in the Office of the Actuary at CMS and lead author of the Health Affairs article.

In 2011, for example, there was slower growth than in 2010 in the net cost of insurance and in noncommercial medical research. There was also a decline in spending in government public health activities. At the same time, there was faster growth in spending in 2011 than in 2010 for personal health care goods and services. Growth in this category was mainly due to an increase in non-price factors, such as the use and intensity or complexity of services.

Faster growth in personal health care spending in 2011 was also driven by increased growth in spending for retail prescription drugs and physician and clinical services, which was partly offset by slower growth in spending for hospital services. Furthermore, from a payer perspective, spending for Medicare, private health insurance, and consumer out-of-pocket payments increased faster in 2011 compared to 2010, although spending for the Medicaid program grew more slowly.

On the whole, the impact of provisions of the Affordable Care Act on aggregate health spending growth in 2010 and 2011 was minimal. However, there was some impact on certain subcomponents of national health expenditures; for example, private health insurance spending and enrollment were impacted by the provision that expanded private health insurance coverage to dependents of enrollees up to age 26.

CMS Announces First Qualified Entities to Receive Medicare Data

The Centers for Medicare & Medicaid Services (CMS) has announced the first three participants in the Medicare Data Sharing for Performance Measurement program. Authorized under the Affordable Care Act, the program makes Medicare claims data available, under strict privacy requirements, to groups that CMS certifies as qualified to handle this data and protect patient privacy. These groups will combine Medicare and private insurance data to create comprehensive, useful reports on provider performance.

The three organizations are:

• Health Improvement Collaborative of Greater Cincinnati
• Kansas City Quality Improvement Consortium (serving the Greater Kansas City area in Missouri and Kansas)
• Oregon Health Care Quality Corporation

To receive certain Medicare claims data, organizations participating in the program must show that they can manage and process consumer-focused data and can prevent breaches of protected health information. The organizations must also show that they are working with private insurers to access other payer data in order to produce comprehensive reports on provider performance.

The program takes important steps to protect the privacy of patients. Information that could identify specific patients will not be publicly released and strong penalties will be in place for misuse of the Medicare data.

With access to provider performance reports, employers and consumer organizations can identify and reward high quality health care providers in their local areas and develop online tools to help consumers and their families make health care choices informed by this useful data.

For more information on CMS’ Qualified Entity Program, visit:
http://www.cms.gov/QEMedicareData/