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Vorys Health Care Advisors

For health care reformers, the challenge is to improve care quality and expand access to providers and services while controlling costs. It is not a job for the timid. Instead, it requires creativity, experience and leadership. Vorys Health Care Advisors’ strategic solutions and guidance exemplify each of these imperatives. Our health care and Medicaid consultants help providers, business decision makers, state and federal government agencies and professional associations respond to the complex needs of health care consumers by discovering, developing and implementing innovative policies and programs.

Payment Reform and Maryland’s All Payer Agreement with CMS

Posted in Articles, Health Care, Health Care Reform

Payment reform is considered essential to the transformation underway across the United States. Catalyst for Payment Reform (CPR) indicates that almost 90% of all private sector payments are still provided on the basis of fee-for-service. CPR defines payment reform as “payment methods that reflect or support provider performance, especially the quality and safety of care that providers deliver, and are designed to spur provider efficiency and reduce unnecessary spending.”

One example of the exception to CFR’s statistics is Maryland. As announced earlier this year, the Centers for Medicare & Medicaid Services (CMS) has approved Maryland’s plan to reform hospital rate setting. The stated goal is the triple aim of better health, better care and lower costs for Maryland residents. With this plan, Maryland guarantees a savings to Medicare of $330 million in total hospital costs.

The model is key…and has never been done on such a large scale. Maryland will transform its hospital reimbursement system from a per admission reimbursement system to one based on population based reimbursement for hospital services. The plan will limit the state’s per capita hospital cost growth to 3.58% per year, which is the state’s 10-year average gross state product. In short, the state will set hospital rates and budgets to meet its financial targets, while over five years shifting virtually all of their hospital payments into global payment models.

The model’s per capita cap design approach will put great pressure on the health care system to improve outcomes and quality, focus on care coordination and overall population health, as well as reducing avoidable costs. Quality targets are built in, to reduce hospital acquired infections and readmissions. The plan includes stakeholders and medical schools in the planning to sustain the transformation.

Maryland has the unique ability to take on this challenge given its current all-payer hospital reimbursement system. This system is based on a federal waiver approved nearly forty years ago. Under the waiver, every payer in the state — private insurers, self-insured employers, Medicare, Medicaid or someone who simply shows up on a hospital’s doorstep — pays the same for a hospital stay, an emergency room visit or an inpatient test or procedure. Although the program initially reduced costs, over time, Maryland’s per capita Medicare hospital costs became among the highest in the country. (Considered in terms of cost shifting, the higher rates for Medicare and Medicaid to cover the uninsured was part of the arrangement to lessen the cost shifting and rate negotiations of commercial payers.)

We can only speculate on the various effects that this change will have on the hospital providers and residents of Maryland. With the targets set, a strong incentive exists to find efficiencies.  However, perverse incentives that can affect quality of care also may be present. The state’s Health Services Cost Review Commission has significant opportunity to influence these issues.

Still, what is clear is that this Maryland initiative has the potential to take over our collective attention.  Maryland’s jump into the great foray of  payment reform is just one teaser for the unknown – the outer limits of what health care payments, service and quality is and should be.  Marylanders are all in it together!

Is One Brand of Medicaid Expansion Waiver Better than Another?

Posted in Affordable Care Act, Health Care, Health Care Reform, Medicaid

Different strokes for different folks as the old adage goes.  This saying, however, is particularly true when you look at the states that have chosen to expand their Medicaid programs under the Affordable Care Act (ACA) through waivers.

States do not have to seek a waiver from the federal government in order to expand their Medicaid programs under the ACA.  However, if a state wants to implement the expansion in a way that does not comport with federal law, it must seek a waiver from the federal Centers for Medicare & Medicaid Services (CMS).  Three states – Arkansas, Iowa and Michigan – have received approval from CMS to provide access to health care coverage through specifically-tailored, Medicaid expansion programs.

Review of these waivers provides insight into the availability of coverage for the mostly uninsured, poor and childless adult population. These waivers also provide an opportunity to observe and analyze additional issues for states, including utilization of health services, possible health outcomes, health care spending priorities and states’ values related to these issues.  Insight on these issues will affect future policy, not only in the waiver states but across all states that are considering the needs of this population.

Before looking into the different waivers, it is worth noting that the expansion of Medicaid was intended to cover mostly low-income adults without dependent children who earn up to 138% of the federal poverty level ($15,856 for an individual).  Since the U.S. Supreme Court’s ruling made the expansion of Medicaid optional for states, 25 states have chosen not to expand coverage.  The vast majority of the states that have expanded, chose to provide to this population Medicaid benefits that look like the state’s traditional Medicaid program or a similar Medicaid benefit.  In these states, you can predict service utilization because the benefit packages are the same.

The Arkansas, Iowa and Michigan waivers present fresh opportunities to consider how states provide services, effect positive outcomes and attempt to keep health care costs down.  Notable similarities exist among the waivers.  For example, cost-sharing, or requiring individuals to pay for a portion of the cost of service, is required in all three plans.  The cost-sharing component is structured in accord with Medicaid laws that limit the percentage of income that can be required of an individual to pay out-of-pocket costs.  The inclusion of cost-sharing requirements may be reflective of a desire for Medicaid expansion consumers to use mechanisms that are very common in commercial health insurance plans.

On the other hand, the waivers differ significantly where each state has perceived that individual choice may have some impact on health outcomes and the sustainability of Medicaid expansion.  For example, Arkansas and Iowa will provide premium assistance for adults to enter the ACA-created, health insurance marketplace to purchase a qualified health plan instead of enrolling these individuals in the state’s Medicaid program.  Arkansas will not require these individuals to pay any premiums in the health care marketplace, but in Iowa, individuals may have a premium obligation.  Michigan will not offer premium assistance.  Rather, the state will cover this population through its existing Medicaid managed care delivery system.  Arkansas’ legislature recently approved the private option plan.

These innovations emerged out of a robust debate regarding state values and attitudes toward Medicaid expansion under the ACA.  As we approach future milestones, it will be interesting to see which innovations will have the greatest impact on cost and quality.

New York State’s Budget Relies on Federal Medicaid Money –Expecting an Answer from CMS Soon

Posted in Affordable Care Act, Health Care, Health Care Reform, Medicaid

In 2012, New York Governor Andrew Cuomo submitted to the federal Centers for Medicare & Medicaid Services (CMS) an amendment to New York’s existing Partnership Plan 1115 waiver that sought to “redesign” the state’s Medicaid program.  The amendment proposed to reinvest $10 billion of the $17 billion in savings the state anticipated it would achieve by implementing Medicaid Redesign Team (MRT) recommendations.  CMS has been carefully reviewing the waiver amendment in combination with several other pieces of New York’s Medicaid program that are also before CMS for consideration.

Earlier this week, Governor Cuomo released the New York State budget, which calls for the state to, among other things, spend $1.2 billion to restructure hospitals, long-term care, and other health care services, and to invest an additional $75 million in health information technology.  These projects would be financed, in part, by the $10 billion wrapped up in the waiver amendment.  In his budget presentation, the Governor called on CMS to approve the waiver amendment in order to free up this funding that, along with a 2% cap on state spending growth, will help balance the budget.

Some of the health care related provisions in the budget include the following:

  • Continues the downsizing of institutional programs for individuals with intellectual and developmental disabilities (IDD) by 300 individuals.
  • Encourages more integrated employment opportunities to reduce costs through reforming day service programs for individuals with IDD by transitioning them from full day-day service to Pathways to Employment opportunities.
  • Supports the integration of physical health and behavioral health services within a managed care environment through Behavioral Health Organizations and Health and Recovery Plans.
  • Makes additional funding available for affordable housing.
  • Facilitates the transition of foster care children into managed care.
  • Provides $54.3 million in 2014-15, growing to $148.3 million in state funding between the Department of Health and Department of Financial Service budgets, to sustain the continued operations of the New York Health Benefit Exchange, which will end January 1, 2015.
  • Requires counties to make good faith efforts to link uninsured women with health insurance coverage for prenatal care reimbursement through the General Public Health Works Program.

The Governor’s budget relies on funding still not approved by the federal government in addition to the modest increase in state spending. The health care initiatives are ambitious.  Yesterday’s Democrat and Chronicle from Rochester NY reports a conversation that Senator Schumer had with Secretary Sebelius on the floor of the House of Representatives following the President’s State of the Union Address, in which the Secretary indicated that a decision about the waiver, and the associated $10 billion dollars in funding,  would be made within 30 days. This budget will be one to watch.

Informative and Entertaining Look at Health Reform Issues for 2014

Posted in Affordable Care Act, Health Care Reform

In a move previously thought nearly impossible to pull off, Kaiser Health News recently published a list of “8 Things To Know About Obamacare in 2014″ that is both informative and entertaining.

This quick read highlights issues about which readers should be informed as they move into the new year, while injecting some levity into the often intense conversation about health care reform.  Check out the article to read up on important health insurance-related issues sure to remain on our radar screen this coming year.

Ringing in the New Year With Health Insurance

Posted in Affordable Care Act, Health Care Reform

So January 1, 2014, has come and gone.  While many people were busily ringing in the new year, others were celebrating a different kind of fresh start: one marked by the reassurance of having health insurance.

Although the rollout of healthcare.gov and even some state health insurance marketplaces was less than ideal, Americans who need and want health insurance are persisting – and getting results.  Results that amount to more than just receiving a health insurance card in the mail.  As a recent Washington Post article highlighted, results that mean Americans who have put off scheduling routine gynecological procedures and dermatological check-ups can now afford to do so; people who have not had a physical in years can schedule one to put their minds at ease – even if they do not appear to be currently suffering from any ailments; and individuals who previously feared experiencing an injury for which they could not afford treatment are able to go for a jog.

For these individuals, getting insurance may not have been not easy.  But their persistence in seeking coverage through the health insurance marketplace and Medicaid programs newly expanded in some states has paid off in the form of peace of mind and the ability to take better care of themselves.  Putting aside political differences, while the mere presence of health insurance does not in and of itself guarantee better health, having affordable health insurance at least gives Americans a fighting chance to improve their physical, mental, and emotional health.  As the Washington Post article (aptly titled “Beneath health law’s botched rollout is basic benefit for millions of uninsured Americans”) points out:

Various studies have found that children without insurance are less likely to get immunized or treated for a sore throat or even a ruptured appendix.  Adults without coverage are less likely to get mammograms or prostate exams.  If they have high blood pressure or diabetes, it is more likely to be out of control.  If they have a stroke, it is more likely to leave lasting damage.  The Institute of Medicine has said there’s “a chasm”between the health needs of uninsured people and their access to effective care — a gap that “esults in needless illness, suffering and even death.”

Moreover, having health insurance should also have at least a tangential positive impact on the financial “health” of many Americans.  Consider the following statistics reported by the American Journal of Medicine:

  • 62.1% of all bankruptcies have a medical cause
  • Most medical debtors are well educated and middle class – and three quarters have health insurance!
  • The share of bankruptcies attributable to medical problems rose by 50% between 2001 and 2007
  • Of the families who started out with insurance but lost it during the course of their illness, medical bills averaged $22,658.

So how many people have actually signed up for coverage so far under the Affordable Care Act?  According to the Obama Administration, as of December 31, 2013, 2.1 million people have signed up for health insurance through the health insurance marketplaces and another 3.9 million people have been determined eligible for Medicaid.

While the architects of the law hypothesized that newly insured individuals would be about split between those who accessed coverage through the marketplaces and those who got coverage under Medicaid, it is likely that the slow rollout of the marketplaces is initially impacting the numbers.

Whether these 6 million Americans are now getting their health insurance through a qualified health plan sold in the marketplace or through Medicaid, one thing is clear.  Despite the difficulty they may have had obtaining coverage, it will provide them new opportunities to improve their health.

Federal Budget Agreement Delays Medicaid DSH Cuts

Posted in Affordable Care Act, Medicaid

Section 1204 of the federal budget agreement, HJ.Res.59, delays the Medicaid Disproportionate Share Hospital (DSH) payment reductions included in the Affordable Care Act (ACA) for two years.  As originally contemplated in the ACA, the DSH reductions were to have become effective in October 2013.  Instead, the budget agreement delays the reductions until October 1, 2015, but doubles the reduction that would otherwise have applied in that year.  In light of the delay, the Centers for Medicare & Medicaid Services has indicated that it will publish updated fiscal year 2014 DSH allotments in the Federal Register early next year.

The budget agreement was recently passed by Congress and signed by the President on December 26th.

Ohio Supreme Court Upholds Medicaid Expansion

Posted in Behavioral Health, Medicaid

The Ohio Supreme Court issued a decision today confirming the constitutionality of the state’s decision to expand the Medicaid program through an action of the Controlling Board.  The Court rejected a constitutional challenge made by six legislators.

In November, our colleagues at Vorys, Sater, Seymour and Pease filed an amicus brief on behalf of Advocates for Ohio’s Future, the Coalition for Healthy Communities, the National Alliance on Mental Health, the Ohio Association of County Behavioral Health Authorities, the Ohio Council of Behavioral Health and Family Services Providers and the Ohio Provider Resource Association urging the Court to uphold the Controlling Board’s decision as constitutional.

Today’s decision ensures that an estimated 275,000 of Ohio’s most vulnerable citizens will have access to health care.

To read the decision, click here.

CMS Announces Extension of Stage 2 Meaningful Use

Posted in Uncategorized

The federal Centers for Medicare & Medicaid Services (CMS) announced on Friday that Stage 2 meaningful use for the Medicare and Medicaid EHR (electronic health record) Incentive Programs will be extended through 2016, and Stage 3 will not begin until at least fiscal year 2017 for hospitals and calendar year 2017 for physicians and other eligible professionals that have by then completed at least two years at Stage 2.

As reported by the U. S. Department of Health & Human Services’ Health IT Buzz, a statement by Robert Tagalicod, director, Office of E-Health Standards and Services, CMS, and Jacob Reider, M.D., acting national coordinator for health information technology for the Office of the National Coordinator for Health Information Technology (ONC), said that there are two goals of this change: (1) to allow CMS and ONC to focus on the successful implementation of the enhanced patient engagement, interoperability, and health information exchange requirements in Stage 2; and (2) to utilize data from Stage 2 participation to inform policy decisions for Stage 3.

Meaningful use is the set of standards defined by the CMS Incentive Programs that governs the use of electronic health records and allows eligible providers and hospitals to earn incentive payments by meeting specific criteria.  The goal of meaningful use is to promote the spread of electronic health records to improve health care in the United States.

Meaningful use is spread out over three stages.  The phased approach helps providers move from creating information in Stage 1, to exchanging health information in Stage 2, to focusing on improved outcomes in Stage 3.  The requirements for meeting each stage of meaningful use is available on CMS’ website.

The proposed rules for the requirements providers must meet for Stage 3 are expected to be released in the fall of 2014.  A separate rule extending Stage 2 by a year is expected sooner.

Vorys Attorney Discusses Confusion About Whether the Anti-Kickback Statute Applies to Qualified Health Plans

Posted in Affordable Care Act

Vorys attorney Robin L. Canowitz recently published an alert discussing potential confusion between a letter released by the U. S. Department of Health and Human Services (HHS) and a memo published a week later by the Centers for Medicare & Medicaid Services (CMS).  In the letter, HHS clarifies that qualified health plans sold in health insurance marketplaces are not “federal health care programs”.  As such, the federal Anti-Kickback Statute (AKS) does not apply.  As Robin explains, providers were concerned that the AKS would prohibit them from paying for the premiums of individuals enrolled in qualified health plans through the marketplace.  The letter clarifies that providers can legally pay premiums for patients enrolled in a qualified health plan without violating the federal AKS.  The memo issued by CMS just a week later, however, indicates that HHS has concerns with this practice.

Read Robin’s alert for a thorough discussion of these issues.

The Impact of the ACA on the Health Insurance Market – By the Numbers

Posted in Affordable Care Act, Health Care Reform

On a recent MSNBC segment, Steve Rattner shared the following slides that illustrate ways in which the health insurance market will be impacted as a result of the Affordable Care Act (ACA).

The first reflects how various populations will be affected by the individual mandate to have insurance.
Who will pay more under Obamacare?

The second indicates that most Americans who purchase individual plans — including those plans that the President recently announced may be continued depsite noncompliance with ACA requirements — only stay on those plans for a relatively short period of time before moving on.
Short Stays on Individual Plans

The third shows how coverage is projected to shift as a result of the ACA.
Shift in Coverage Under Obamacare