Evidence Based Planning: How it Impacts Health Care
EBP: What it is
Evidence based planning is the catch phrase of the health care reform movement and this article explains what it means and how it is applied in health care processes. The Institute of Medicine or the IOM defines quality of care as “the degree to which health services for individuals and populations increase the likelihood of desired outcomes and are consistent with current professional knowledge”. Evidence based planning is harnessing the enlightenment gained from sharing scientific and medical practice information and using it to optimize clinical and operational procedures to improve results. The health care reform mandates in 2010 have provisions for increased transparency and optimization of service delivery, which can only be achieved by deploying the best practice protocols by diagnosis, whether it is heart disease or diabetes through the evidence based planning process. Certainly the words “best practice” are not offensive, but the beast rears its head when someone other than the local practitioner suggests a change in practice or patient protocols. However, this method of protocol review is an ongoing drama that has been and continues as the singular best method to reach out and impact treatment patterns. Large integrated health care organizations like Kaiser, Group Health Cooperative, or the Veterans Administration already have working committees who meet regularly to review data, test protocols, make recommendations for changes, and deploy the innovations throughout the organization. Hospitals also have multi-disciplinary committees who meet to figure out how to enhance patient outcomes by reviewing and adopting the best data driven practices and not all clinicians are happy about changing their patient practices as a result of the scrutiny.
Health System Impact
Evidence based planning is the practice of critical review of scientific literature (study data) to obtain advances in medical care protocols and then developing a method for localized testing and adoption within a health care facility or system. EBP is a process, not a single product driven task. The act of planning is a verb and applying best practice evidence in that process enhances institutional performance metrics. This means that patients who are the beneficiary of best practices live longer and with fewer complications than those who don’t, by a population standard.
Reducing the Patient’s Chance of Dying
As an example, when I was working on my MHA degree I took an evidence based planning course at the University of Washington School of Public Health and our EBP project reviewed data on Secondary Myocardial Infarctions (heart attacks) to develop a plan to reduce the likelihood of the second heart attack. We reviewed a significant body of information, including several dozen peer reviewed articles, and a European study which had measured time to treatment and long term prognosis for myocardial infarction patients . In our EBP project we learned that if patients registered in a follow-up program, especially a national database (like the Minnesota Heart Institute Registry), saw a cardiologist for medication management, and obtained appropriate medication, their chances of a second heart attack were 6% less than patients who did not follow these protocols. Our research included a comprehensive review of 40,684 admissions in Pennsylvania hospitals from a study in 1993 . The study cited an estimated cost savings to the Pennsylvania Medicaid program was $71,970 just by improving compliance for prescribing and administering beta-blockers. We also discovered that MI patients who obtained their three month follow-up visit were 57% less likely to die than patients who did not come in for their check-up. A retrospective cohort study (means they are reviewing historical patient data to draw conclusions) in Scotland, showed a significant difference in patient outcomes post discharge if they were treated by a cardiologist. Now it doesn’t take a rocket scientist to figure out this is a huge difference in performance, which has a significant impact on the cost of health care, when you consider that the Association of Health Research for Quality (AHRQ) estimates that 50% of Americans die from heart disease.
Implications for Medicare, which is the single largest cost driver in US Health Care
Heart disease is expected to remain the leading cause of death for the USA until 2020. By improving the outcome of cardiac patients we can save literally, millions of lives, and this is accomplished by evidence based planning. The beta-blocker protocol alone could save state Medicaid agencies 3.7 million dollars in a single year. This is an example of how government policy, drives reimbursements that impact which treatments patients receive, which can be life saving as well as monetarily more effective.
Another example of the application of evidence based planning was in 2005, when Medicare created incentive reimbursements ($6,000 per patient) for the administration of the drug tPA within three hours of a stroke, because patient recovery and mortality were significantly improved by this process. This was a way to get the attention of hospital administrators and improve surveillance and dispensing of this drug within the window of time to provide the biggest clinical impact.
Currently Medicare has demonstration projects reviewing how to improve chronic disease management for diabetics and other disease management programs, to improve patient management and Medicare health system management.
Why We Want Evidence Based Planning
The value we will get for our health care contributions, whether they are premiums, tax allocations, or fees for direct services are directly affected by the efficiency and cost of services in any health care system. It is in our best interest in terms of patient mortality (death) and morbidity (other complications) to seek care from institutions who are openly seeking to adopt the best practices world-wide for the management of your condition. The 2010 health care reforms under the Obama Administration specify and encourage the communication of performance metrics and the adoption of best practice clinical protocols to give you the best value for your money. Sounds great, so why isn’t everyone excited about this process to save money and improve our clinical outcomes when we have treatment? The conservative think tank Heritage Foundation, criticizes the Institute for Comparative Effectiveness, created by the Obama reforms to use population based research, as I previously explained in my cardiac example, as a bureaucratic intervention. This is not an accurate statement as evidence based planning is a science based discipline reviewing published studies under the Cochrane Central Registry of Controlled Trials and Medline Database among others to discern performance difference of significant impact on populations. The Institute for Comparative Effectiveness will review these science findings, make comparative information available to clinicians, insurance companies, and patients as a part of enhancing communication about patient procedural outcomes and system processes. The agency will coordinate with the National Institute of Health, NIH and Agency for Health Research and Quality, AHRQ as well as other expert sources to assimilate, measure, and distribute data on optimizing medical system performance. Why wouldn’t you want to have a resource to cull and present current international data about disease management and procedural outcomes? Sure it will cost a bit of your tax dollars, but a lot less than the ordnance in Iraq or Afghanistan.
The Institute for Comparative Effectiveness
The real value in the Institute for Comparative Effectiveness is the initiative in linking economic cost benefit analysis to health care delivery protocols in order to reveal the most efficacious methods. This means cutting waste, reducing unnecessary procedures, resourcing facilities appropriately (we don’t all need the DaVinci surgical robot), and improving surveillance of illness to slow disease progression. Yes, it will put the spotlight on health care suppliers, insurance companies, and other providers, but if we really intend to address the grossly high cost of the United States health care system(more than any other country and with poorer results in many areas), this is necessary. The folks who are using the scare tactics about evidence based medicine are trying to get a toe-hold in the “old each-practice-doing-what-it-wants” method of dispensing health care. That process is too expensive and the degree of variations in dispensing health care in this haphazard fashion do not create the same proportion of patient improvements as adopting optimal best practices for a society. Medicare did the right thing by rewarding hospitals who were administering tPA for stroke victims within the optimal window for efficacy and hopefully this new institute will help identify and spread other improvements to American health care as well. This is a first step in some analysis on effective cost cutting measures for United States health care.
What you can do
Use your fingers and do some research on the internet, go to reputable sites like AHRQ or NIH and educate yourself about your condition before your follow-up appointment after your initial diagnosis. When you meet with your clinician, ask about best practices and see what they say. If you are uncomfortable with the response, ask more questions, or consider getting a different clinician. You can have an impact on your health and your wallet if you do a little bit of research and ask the investigative questions. And to those who say evidence based planning is bad, I hope you visit a health care facility that isn’t using global best practice protocols. Good Luck!
This article was written by Roberta E. Winter, MHA, MPA, a health policy analyst in Seattle, Washington and may be reprinted with her permission. 7/13/2010
Tuesday, July 20, 2010
Thursday, June 17, 2010
Government Regulations for Employer Health Care Mandates by September 23,2010
Health Care Reform Mandates by September 23, 2010
The most recent federal guidelines on the administration of the Patient Protection and Affordable Care Act and the Public Health Service Act are actually requiring All existing health and welfare plans to offer the following benefit mandates:
Elimination of any lifetime limits on coverage for all medical plans
Inability to rescind medical coverage for insureds except in the event of fraud
Must include children of the insured through age 25
Immediate coverage for children with preexisting conditions(no waiting periods)
The rules state that restrictions on dollar limits for conditions, will be mandated as well, TBD. These will be revealed by the plan anniversaries one would hope.
One could start to feel a bit verklempt(forgive my poor Yiddish), but again, the laws of economics dictate that the government steps in where there is private market failure. Currently, the American public feels that the insurance sector, representative of the private market has failed in providing basic coverage for families. It is not just about the money, its about the health care continuum.
Grandfathered Plan Status
The regulations state that health plans which make significant changes will lose their grandfathered status as far as the exceptions to the other health plan mandates. This appears to be a sticky wicket, but prohibitive actions include:
• Cannot significantly cut or reduce benefits; so you can raise rates and mandate benefits but they can’t change their plans to keep afloat?
• Cannot raise co-payment charges, even a $30 to $50 change will trigger this intervention, so I think many employers will just bail on health insurance.
• Cannot significantly raise deductibles, apparently more than 20% is prohibitive. This does not make any sense as employers might fund health purchasing accounts with high deductibles, which are very cost effective.
• Cannot significantly lower the employer contribution to employee health plans; again mandates raise costs in a BAD economy and employers can’t pass on any of it? OK kids, I was in the insurance business when they still used carbon paper and my deductible was based on my income.
Required Transparency of Plan Changes
One of the provisions that does make sense, is the requirement of employer sponsored plans to distribute notices to plan participants if they are subject to a grandfathered plan status.
Apparently there are 133 million American’s with employer sponsored plans that would come under this regulation (100 or more FTE’s under 5500 reporting requirements). The Obama Administration predicts that 70% of businesses fall under the “grandfathered status” but this could drop to as little as 30% because of the compliance challenges.
Medical Inflation
Allowable Changes in Co-payments will be tied to medical inflation, so up to 19% in 2011, which is much higher than the rest of the world and is not sustainable.
The insurance exchanges still appear to be a long way off and it is questionable if they are being designed by anyone who actually understands risk management and the insurance business. If your hiring standards are prejudiced toward other government workers and political considerations, are you really hiring the best utility workers for such a major social policy change by excluding the private sector?
Well, that is all for now, this is the health policy maven signing off, and you know I always tell the truth.
Thanks for your attention.
Citations:
http://www.dol.gov/federalregister/HtmlDisplay.aspx?DocId=23967&AgencyId=8&DocumentType=2
This article was written by Roberta E. Winter,a Seattle health policy consultant and may be reprinted with her permission.
The most recent federal guidelines on the administration of the Patient Protection and Affordable Care Act and the Public Health Service Act are actually requiring All existing health and welfare plans to offer the following benefit mandates:
Elimination of any lifetime limits on coverage for all medical plans
Inability to rescind medical coverage for insureds except in the event of fraud
Must include children of the insured through age 25
Immediate coverage for children with preexisting conditions(no waiting periods)
The rules state that restrictions on dollar limits for conditions, will be mandated as well, TBD. These will be revealed by the plan anniversaries one would hope.
One could start to feel a bit verklempt(forgive my poor Yiddish), but again, the laws of economics dictate that the government steps in where there is private market failure. Currently, the American public feels that the insurance sector, representative of the private market has failed in providing basic coverage for families. It is not just about the money, its about the health care continuum.
Grandfathered Plan Status
The regulations state that health plans which make significant changes will lose their grandfathered status as far as the exceptions to the other health plan mandates. This appears to be a sticky wicket, but prohibitive actions include:
• Cannot significantly cut or reduce benefits; so you can raise rates and mandate benefits but they can’t change their plans to keep afloat?
• Cannot raise co-payment charges, even a $30 to $50 change will trigger this intervention, so I think many employers will just bail on health insurance.
• Cannot significantly raise deductibles, apparently more than 20% is prohibitive. This does not make any sense as employers might fund health purchasing accounts with high deductibles, which are very cost effective.
• Cannot significantly lower the employer contribution to employee health plans; again mandates raise costs in a BAD economy and employers can’t pass on any of it? OK kids, I was in the insurance business when they still used carbon paper and my deductible was based on my income.
Required Transparency of Plan Changes
One of the provisions that does make sense, is the requirement of employer sponsored plans to distribute notices to plan participants if they are subject to a grandfathered plan status.
Apparently there are 133 million American’s with employer sponsored plans that would come under this regulation (100 or more FTE’s under 5500 reporting requirements). The Obama Administration predicts that 70% of businesses fall under the “grandfathered status” but this could drop to as little as 30% because of the compliance challenges.
Medical Inflation
Allowable Changes in Co-payments will be tied to medical inflation, so up to 19% in 2011, which is much higher than the rest of the world and is not sustainable.
The insurance exchanges still appear to be a long way off and it is questionable if they are being designed by anyone who actually understands risk management and the insurance business. If your hiring standards are prejudiced toward other government workers and political considerations, are you really hiring the best utility workers for such a major social policy change by excluding the private sector?
Well, that is all for now, this is the health policy maven signing off, and you know I always tell the truth.
Thanks for your attention.
Citations:
http://www.dol.gov/federalregister/HtmlDisplay.aspx?DocId=23967&AgencyId=8&DocumentType=2
This article was written by Roberta E. Winter,a Seattle health policy consultant and may be reprinted with her permission.
Sunday, May 30, 2010
2010 Health Reform Implementation Guidelines
Health Care Reform Compliance Guidelines
This article addresses the implementation schedule for the health care reforms that apply to private health insurance plans under the Patient Protection and Affordable Care Act and the Public Health Service Act stipulations. It is important to note these new provisions impact both self-insured and fully insured group health insurance plans and are incorporated into ERISA and IRS rules.
Compliance Mandates for 2010
1. COBRA- this provision has been extended from nine months to fifteen months for eligible participants and their dependents. If you were unemployed before February 28, 2009, you may be eligible for a COBRA benefit extension for your group insurance benefits and a federal subsidy for the insurance premiums. The COBRA subsidy was enacted under the American Recovery and Reinvestment Act of 2009 and requires eligible employees to pay a minimum of 35% of the COBRA premium expense (as opposed to 100% previously). Employers are required to administer the extension for qualifying employees and their family members.
New Plans Adopted in 2010 must Conform
2. Most of the health care reform provisions are not effective until 2014, however for health plans that begin on or within six months of the enactment date of the law(s), October 1, 2010 is the compliance target.
Extending Medical Insurance for Adult Children
3. Medical coverage for adult children can be extended from age 23 to age 26 for children who are covered dependents, whether or not they are married or filing separate tax returns, and is effective in 2010. Plans which existed prior to March13, 2010 will have until January 1, 2011 to comply with the mandated plan change for covering adult children. The question is will those adult children be able to adversely select against the parent’s medical plan based on their health needs? For example, if the child has coverage through employment, can they refuse that coverage in favor of the parent’s plan? So parents, your married kids who are living in their own residence can now be covered on your medical plan. It seems like they will never leave the nest.
Uniform Benefit Explanations-2012 Target Date
Uniform Explanations of Coverage must be provided by either the health plan insurance provider or the plan administrator and an electronic summary must be available. Personally, I think this is a good thing. In 1999, when I was building web sites for paperless plan communication and documentation, most insurance companies were not embracing the paperless process. It makes sense when the health care delivery system is converting to electronic medical records that the insurance industry also converts to paperless plan benefit information. This requirement will simply be an enhancement of the Summary Plan Description materials employers have to provide now. Also, if corporations are offering employee benefits it is incumbent on the group to provide understandable plan benefit information and one would hope the participants are already getting this kind of information. The Uniform Benefit Explanation code requirements will be provided by Health and Human Services within 12 months of enactment of the law, which means by March 2011, for published guidelines. Employers will have 12 more months to comply, so at a minimum that would mean March 2012 or at the plan anniversary, which could mean as late as January 2013.
Compliance by 2014
Mandates for Health Insurance Plan Changes Effective in 2014
The Patient Protection and Affordable Care Act, section 1304(b) stipulates that the group insurance market is divided into two segments for administration of the law, groups with over 100 employees, and those with fewer than that. There is a provision that allows states to designate that firms with less than 50 employees will be considered their standard for the small group exemption definition. This exception means small employers will not have to pay the per-employee tax (roughly $166.67/FTE/month Re. the Reconciliation bill amendment) if they don’t offer insurance to full time employees. It is expected that most states will accept the more liberal 50 and under criteria. Other provisions that will impact group medical plans include:
1. Group Health Insurance Plans Cannot Impose Annual Limits on Medical Benefits.
2. Health Insurance Plans Cannot Rescind Coverage except in cases of fraud or misrepresentation.
3. Preventive care must be provided without any co-payment.
4. Pre-existing condition clauses are not permitted.
Insurance Company Reporting Compliance Dates
5. Effective in 2014, Transparency and disclosure of claims utilization rate setting, and other financial data for insurance companies and third party administrators will be standardized. Those identified as insurance administrators or companies will have to provide the same information to the public, in an electronic format, which the government run health insurance exchanges are also required to provide. This includes clear explanations of claims payment standards, financial data disclosure, plan enrollment statistics, rate development information, participant cost-sharing, out of network payment information, and participant rights under the act, as determined by Health and Human Services. Though this is a comprehensive health care transparency law, much of this information is already available to plan administrators and this just codifies it and makes understandability a program performance value. For health care consumers this is a good thing because they will be able to see how their premium contributions are spent.
Plan Reporting Changes by 2014
6. Nondiscrimination rules previously only required under Section 105-H Executive Health Care Plans will now apply to fully insured group health plans and will be phased in by 2014. We can expect to see some new reporting requirement, including a nondiscrimination test probably under a provision in the Department of Labor Form 5500 filings.
7. Codification and reporting of health plan quality will be required by 2014, but no standards are expected from Health and Human Services until 2012. The standards will most likely address disease management programs for high cost chronic diseases like diabetes, hypertension, and COPD. Also, health promotional activities will be required to develop reporting standards. Case management will also be reviewed, as health programs that perform better will be rewarded for quality. Medicare has stipulated an increase in Medicare payments for quality indicators, which will ultimately be adopted in the private insurance sector as well. Complex health care systems already have sophisticated quality measurement programs, so the purpose of this provision is to spread the process improvements throughout the United States. Quality measurement is an important criterion for efficacy of program value and performance. I expect quality reporting to be included in the DOL 5500 reporting standards by 2014.
8. Claims utilization ratios and expenditures from health plans will have to be reported, but this is already available for most firms who have 100 or more employees enrolled on their health and welfare plans, so this is a standardization process. What is new is the requirement that insurers post a minimum loss ratio if they want to work in the insurance exchange market. This will encourage insurers to leave the small group marketplace, which will mean small employers will be relegated to the government insurance exchange offerings. A local nonprofit insurance group in Washington has already decided to leave the small group market and lay off about 25% of its workforce.
9. Uniform External Review Model
Health plans must have an acceptable external audit process, such as the one recommended by the National Association of Insurance Commissioners, which is a consumer protection process.
Observations
The Patient Health Safety Act quality reporting provisions will benefit health care patients who will see more quality indicator reporting. It is valuable to have knowledge of surgical and recovery outcomes by facility before going under the knife. In a perfect world this information will only be a click away in two years, but expect that the implementation for non-alpha organizations will be several years away and 2014 is the target date for mandatory compliance.
Get used to the term “Portal” as the federal government is using this euphemism to describe the mega web site it is creating for the Health Insurance Exchanges, which will serve as a one-stop-shop for various public and private health insurance programs. Portal pricing and plan information as stipulated in Section 2718 of PSACA will apply to plans with inception dates of September 23, 2010 and later. A phase-in period will apply for existing health and welfare plans. Currently data collection is on-going from state insurance commissioners, insurance companies, and Medicaid officials and Health & Human Services is expected to have a preliminary program activated by June 14th, with a “live date” by the July 1, 2010 statutory deadline. High Risk State Insurance Pools (providing health insurance for people who were considered uninsurable in the private sector and ineligible for a public plan) were to have reported their data to state insurance commissioners by May 21, 2010. There must be a lot of overtime at HHS right now!
When I first started writing this article I thought it would be a breeze, but the density of the changes is significant, so if it is a challenge for this policy analyst, I can only imagine how private sector plan administrators will feel. Ideally the government will hire some insurance experts to implement the rules in an effective manner, but that may require private sector experience, and governments are loath to hire anyone from the “for profit” world. My fingers are crossed hoping that some efficiency will emerge from this tsunami of change.
This article was written by Roberta E. Winter, MHA, MPA, a health policy consultant in Seattle and may be reprinted with her permission.
Citations
http://www.hhs.gov/oic/regulations/webportal.html
This article addresses the implementation schedule for the health care reforms that apply to private health insurance plans under the Patient Protection and Affordable Care Act and the Public Health Service Act stipulations. It is important to note these new provisions impact both self-insured and fully insured group health insurance plans and are incorporated into ERISA and IRS rules.
Compliance Mandates for 2010
1. COBRA- this provision has been extended from nine months to fifteen months for eligible participants and their dependents. If you were unemployed before February 28, 2009, you may be eligible for a COBRA benefit extension for your group insurance benefits and a federal subsidy for the insurance premiums. The COBRA subsidy was enacted under the American Recovery and Reinvestment Act of 2009 and requires eligible employees to pay a minimum of 35% of the COBRA premium expense (as opposed to 100% previously). Employers are required to administer the extension for qualifying employees and their family members.
New Plans Adopted in 2010 must Conform
2. Most of the health care reform provisions are not effective until 2014, however for health plans that begin on or within six months of the enactment date of the law(s), October 1, 2010 is the compliance target.
Extending Medical Insurance for Adult Children
3. Medical coverage for adult children can be extended from age 23 to age 26 for children who are covered dependents, whether or not they are married or filing separate tax returns, and is effective in 2010. Plans which existed prior to March13, 2010 will have until January 1, 2011 to comply with the mandated plan change for covering adult children. The question is will those adult children be able to adversely select against the parent’s medical plan based on their health needs? For example, if the child has coverage through employment, can they refuse that coverage in favor of the parent’s plan? So parents, your married kids who are living in their own residence can now be covered on your medical plan. It seems like they will never leave the nest.
Uniform Benefit Explanations-2012 Target Date
Uniform Explanations of Coverage must be provided by either the health plan insurance provider or the plan administrator and an electronic summary must be available. Personally, I think this is a good thing. In 1999, when I was building web sites for paperless plan communication and documentation, most insurance companies were not embracing the paperless process. It makes sense when the health care delivery system is converting to electronic medical records that the insurance industry also converts to paperless plan benefit information. This requirement will simply be an enhancement of the Summary Plan Description materials employers have to provide now. Also, if corporations are offering employee benefits it is incumbent on the group to provide understandable plan benefit information and one would hope the participants are already getting this kind of information. The Uniform Benefit Explanation code requirements will be provided by Health and Human Services within 12 months of enactment of the law, which means by March 2011, for published guidelines. Employers will have 12 more months to comply, so at a minimum that would mean March 2012 or at the plan anniversary, which could mean as late as January 2013.
Compliance by 2014
Mandates for Health Insurance Plan Changes Effective in 2014
The Patient Protection and Affordable Care Act, section 1304(b) stipulates that the group insurance market is divided into two segments for administration of the law, groups with over 100 employees, and those with fewer than that. There is a provision that allows states to designate that firms with less than 50 employees will be considered their standard for the small group exemption definition. This exception means small employers will not have to pay the per-employee tax (roughly $166.67/FTE/month Re. the Reconciliation bill amendment) if they don’t offer insurance to full time employees. It is expected that most states will accept the more liberal 50 and under criteria. Other provisions that will impact group medical plans include:
1. Group Health Insurance Plans Cannot Impose Annual Limits on Medical Benefits.
2. Health Insurance Plans Cannot Rescind Coverage except in cases of fraud or misrepresentation.
3. Preventive care must be provided without any co-payment.
4. Pre-existing condition clauses are not permitted.
Insurance Company Reporting Compliance Dates
5. Effective in 2014, Transparency and disclosure of claims utilization rate setting, and other financial data for insurance companies and third party administrators will be standardized. Those identified as insurance administrators or companies will have to provide the same information to the public, in an electronic format, which the government run health insurance exchanges are also required to provide. This includes clear explanations of claims payment standards, financial data disclosure, plan enrollment statistics, rate development information, participant cost-sharing, out of network payment information, and participant rights under the act, as determined by Health and Human Services. Though this is a comprehensive health care transparency law, much of this information is already available to plan administrators and this just codifies it and makes understandability a program performance value. For health care consumers this is a good thing because they will be able to see how their premium contributions are spent.
Plan Reporting Changes by 2014
6. Nondiscrimination rules previously only required under Section 105-H Executive Health Care Plans will now apply to fully insured group health plans and will be phased in by 2014. We can expect to see some new reporting requirement, including a nondiscrimination test probably under a provision in the Department of Labor Form 5500 filings.
7. Codification and reporting of health plan quality will be required by 2014, but no standards are expected from Health and Human Services until 2012. The standards will most likely address disease management programs for high cost chronic diseases like diabetes, hypertension, and COPD. Also, health promotional activities will be required to develop reporting standards. Case management will also be reviewed, as health programs that perform better will be rewarded for quality. Medicare has stipulated an increase in Medicare payments for quality indicators, which will ultimately be adopted in the private insurance sector as well. Complex health care systems already have sophisticated quality measurement programs, so the purpose of this provision is to spread the process improvements throughout the United States. Quality measurement is an important criterion for efficacy of program value and performance. I expect quality reporting to be included in the DOL 5500 reporting standards by 2014.
8. Claims utilization ratios and expenditures from health plans will have to be reported, but this is already available for most firms who have 100 or more employees enrolled on their health and welfare plans, so this is a standardization process. What is new is the requirement that insurers post a minimum loss ratio if they want to work in the insurance exchange market. This will encourage insurers to leave the small group marketplace, which will mean small employers will be relegated to the government insurance exchange offerings. A local nonprofit insurance group in Washington has already decided to leave the small group market and lay off about 25% of its workforce.
9. Uniform External Review Model
Health plans must have an acceptable external audit process, such as the one recommended by the National Association of Insurance Commissioners, which is a consumer protection process.
Observations
The Patient Health Safety Act quality reporting provisions will benefit health care patients who will see more quality indicator reporting. It is valuable to have knowledge of surgical and recovery outcomes by facility before going under the knife. In a perfect world this information will only be a click away in two years, but expect that the implementation for non-alpha organizations will be several years away and 2014 is the target date for mandatory compliance.
Get used to the term “Portal” as the federal government is using this euphemism to describe the mega web site it is creating for the Health Insurance Exchanges, which will serve as a one-stop-shop for various public and private health insurance programs. Portal pricing and plan information as stipulated in Section 2718 of PSACA will apply to plans with inception dates of September 23, 2010 and later. A phase-in period will apply for existing health and welfare plans. Currently data collection is on-going from state insurance commissioners, insurance companies, and Medicaid officials and Health & Human Services is expected to have a preliminary program activated by June 14th, with a “live date” by the July 1, 2010 statutory deadline. High Risk State Insurance Pools (providing health insurance for people who were considered uninsurable in the private sector and ineligible for a public plan) were to have reported their data to state insurance commissioners by May 21, 2010. There must be a lot of overtime at HHS right now!
When I first started writing this article I thought it would be a breeze, but the density of the changes is significant, so if it is a challenge for this policy analyst, I can only imagine how private sector plan administrators will feel. Ideally the government will hire some insurance experts to implement the rules in an effective manner, but that may require private sector experience, and governments are loath to hire anyone from the “for profit” world. My fingers are crossed hoping that some efficiency will emerge from this tsunami of change.
This article was written by Roberta E. Winter, MHA, MPA, a health policy consultant in Seattle and may be reprinted with her permission.
Citations
http://www.hhs.gov/oic/regulations/webportal.html
Friday, March 26, 2010
Insurance Changes from the Patient Protection and Affordable Care Act
How Insurance Companies, Employers, and Insureds will fare under the PPAC Act
Some of the legislators think the healthcare reform bill, signed by President Obama is a catastrophe, but from this angle it looks like a big win for the insurance industry. Though lots of things are missing from the bill, such as cost containment, this is the single biggest health care reform since Medicare was enacted in 1965. This article reviews how the current Patient Protection and Affordable Care Act impacts the insurance industry and its offerings.
Top 10 changes to the Insurance Industry with the PPACA law
1. Creation of the Federal Supplementary Medical Insurance Trust, funded through a panoply of new taxes to provide subsidies and expansion of health insurance programs, both government and private sector for the uninsured.
2. Medical insurance is now required for most U.S.A. residents (AKA lots of new customers!!!)
3. Removal of excessive waiting periods prior to commencement of insurance coverage
4. Removal of lifetime limits on benefits for medical insurance contracts
5. Insurers Required to post a Minimum Loss Ratio if participating in federal health plans like Medicare Advantage plans.
6. Extension of healthcare benefits for children to age 26
7. Closure of the prescription drug "donut hole" exclusion for Medicare recipients
8. Drug Rebates are provided for oral medicines that are re-formulations of existing drugs in an attempt to lower the cost of certain prescription medications
9. Establishment of health insurance exchanges and drug purchasing cooperatives
10. No changes in Cafeteria Plans until December 31, 2013
Pay or Play Provisions for Taxing Employers Who Don’t Offer Health Insurance
The Patient Protection and Affordable Care Act amended section 4980H of the Internal Revenue Code to provide tax assessment penalties for employers with fifty or more employees, who do not offer health insurance for their employees. The penalty will be between $2,000 and $3,000 per eligible employee, depending on the size of the employer. For some employers, it will still be worth it to avoid the expense of a medical insurance plan, which would cost over $5000 per employee and over $12,000 per family. According to the Kaiser Foundation’s Statehealthfacts.org, the cost for a single employee’s health insurance was $4,386 and the cost for a family was $12,298 in Washington State in 2008. But no matter how you look at this provision, it mandates more people buy medical insurance, which is a HUGE win for the insurance sector.
Funding of Insurance Mandates
The healthcare reform bill uses health insurance as a means to improve access to health care services for individuals and as such, provides federal tax credits to taxpayers to assist with the cost of the health insurance premiums.
For hospital systems, if more patients have access to insurance, there will be less uninsured services provided, which is a stabilizing factor for the health care industry. What remains to be seen, is how many of the 48,000,000 uninsured will be able to afford insurance for their families and will actually enroll, although the Obama Administration forecasts an additional 32,000,000 will obtain some form of health insurance, either government or private sector with this bill. To encourage participation, the law stipulates a tax penalty for those residents who don’t enroll in an insurance plan.
Medicaid Changes
Medicaid changes are a bright spot for healthcare providers as more people will be eligible for Medicaid, versus having no healthcare coverage now, which should reduce the stress on the under-funded population pass-through costs to private sector insurance participants. Granted Medicaid reimbursement is marginal, it is still better than no reimbursement, so this will increase viability of some hospitals, especially in the cities. The healthcare reform bill increases the allowance for the Federal Medical Assistance Percentage or FMAP for Medicaid Managed Care Plans.
Under fee-for-service reimbursement plans, family medicine, general internal medicine, and pediatric practitioners will also have increased reimbursement for primary care services.
Healthcare Purchasing Subsidy for Low Income Residents
For individuals who are not eligible for Medicaid or Medicare, but qualify for subsidized insurance purchasing, here is the subsidy range under the Patient Protection and Affordability Act, section 1402:
Household Income/ Insured’s Responsibility/ Subsidy
133% of FPL/ 3%/ 97%
Up to 400% of FPL/ 9.5%/ 91.5%
Individual Penalties for Residents who do not Obtain Health Insurance
Section 4980H of the Internal Revenue Code also provides that individuals who do not elect health insurance will be subject to a tax penalty, which would run between $325 and $695, depending on modified adjusted gross income levels. Many people may choose to pay the penalty rather than buy insurance because it is less expensive to pay the tax.
The combination of insurance tax subsidies, coerced employer contributions, and required individual insurance plan participation should help reduce some of the uninsured expenses which health systems experience, although it is difficult to forecast the level at this time. According to Hewitt Associates, when the COBRA subsidy kicked-in, enrollment increased by 20% for those beneficiaries. Also, individual participation in regional purchasing cooperatives is going to depend on how well those plans are communicated and ultimately, the cost of the plans.
Insurance Company Tax
Insurers will be assessed a premium tax to help pay for the provisions of health care under the Patient Protection and Affordability Act. Basically there is a formula that excludes certain activities from tax, has an offset, and has provisions for insurers that derive 80% or more of their revenue from low-income (re. Molina Healthcare), elderly (Medicare supplements), and disabled populations.
Health Insurance Luxury Plan Tax
High cost or "luxury" health plans will have to pay an excise tax up to 40%(yikes), based on an expected premium, with risk adjustments for that area. If the cost of your health insurance exceeds that threshold a tax will be assessed on the residual. The formula for determining which plans are high cost will be based on a per employee factor derived from Blue Cross/Blue Shield industry standards, which are age/risk/sex adjusted. Currently this threshold is $10,200 for an individual and $27,500 for a family, which is indexed for medical inflation. It is difficult to understand how this will help lower health costs, it seems to me it will just encourage employers to pass more costs onto their work force, who are already financially strapped. What are we doing, punishing the good guys who have great healthcare? Why not just mandate design elements with co-payments as opposed to only addressing the spend factor? This tax may force some plans to reduce some benefit levels to comply.
Medicare Changes
Medicare enrollees benefit by the following changes in reimbursements:
1. Closure of the prescription drug "donut hole" exclusion under Medicare Part D
Medicare enrollees who have used all of their prescription drug allowance will be reimbursed up to $250 to close this loophole. This reimbursement will be allowed once per year per enrollee for Medicare Part D drugs.
2. Changes in Medicare Advantage (HMO) payments
Qualifying counties will receive increased allowances, based on enrollment.
3. Quality rankings will impact Medicare Payments
Healthcare facilities with a quality ranking of four or higher will receive increased reimbursement from Medicare. Reimbursements will also depend on Medicare Advantage plan enrollment by county.
4. Transparency about plan expenses and administration costs
Under the Public Health Services Act, Medicare Advantage plans are required to have a claims loss ratio of 85% of premiums or the plan will have to pay a penalty to the government.
5. Physician Ownership Referral (Medical Home Provision)
This provision requires provider agreements to be signed for patients, designating a medical home status. This is part of Medicare’s efforts to improve primary care for Medicare patients by strengthening the primary care relationship.
Medicare Tax Increase
It should come as no surprise that there is an increase in the Medicare payroll tax, from 2.9% of total payroll to 3.80%, split evenly between the employee and the employer. Given the state of the Medicare fund, a bigger tax increase is warranted, and is probably on its way.
Other New Taxes
Medical Device Excise Tax
Medical devices, meaning cardiac pacemakers and such, will now be taxed at 2.9% of the purchase price. Orthopedic devices presumably are included in this category. Exceptions to the tax include; hearing aids, glasses, contacts, and over-the-counter devices purchased at the drug store. This tax will simply make these devices more expensive and will be passed directly through to the ratepayers and healthcare consumers. Also, in a nod to medical tourism, since this is an excise tax, even if you obtain healthcare outside of the United States, the device, if manufactured in this country, you will pay the tax.
Estate and Trust Tax
A tax equal to 3.8% will be levied on estates and trusts
Administrative Changes
Durable Medical Equipment Oversight
Durable Medical Equipment suppliers will be subject to an additional 90-day period of claim review, due to a high degree of suspected fraudulent activity in this supply sector. So, I guess this means they will be getting paid later.
Fraud Detection
The Commission of Medical Services in HHS is going to compare notes with the Internal Revenue Service as an enhanced Medicare fraud detection procedure.
Any semblance of privacy we had was lost with the post-911 anti-terrorist provisions, so lets just add this to the list of big brother invasiveness.
On a closing note, the Public Health Services Act imposes a slew of new taxes on corporations, individuals with investment income, and trusts. I just hope there is transparency in the spending of those funds and that is does actually go towards health care for those who need it.
This article was written by Roberta E. Winter, MHA, MPA, an independent healthcare consultant in the Pacific Northwest region of the United States, and may be reprinted with her permission.
Some of the legislators think the healthcare reform bill, signed by President Obama is a catastrophe, but from this angle it looks like a big win for the insurance industry. Though lots of things are missing from the bill, such as cost containment, this is the single biggest health care reform since Medicare was enacted in 1965. This article reviews how the current Patient Protection and Affordable Care Act impacts the insurance industry and its offerings.
Top 10 changes to the Insurance Industry with the PPACA law
1. Creation of the Federal Supplementary Medical Insurance Trust, funded through a panoply of new taxes to provide subsidies and expansion of health insurance programs, both government and private sector for the uninsured.
2. Medical insurance is now required for most U.S.A. residents (AKA lots of new customers!!!)
3. Removal of excessive waiting periods prior to commencement of insurance coverage
4. Removal of lifetime limits on benefits for medical insurance contracts
5. Insurers Required to post a Minimum Loss Ratio if participating in federal health plans like Medicare Advantage plans.
6. Extension of healthcare benefits for children to age 26
7. Closure of the prescription drug "donut hole" exclusion for Medicare recipients
8. Drug Rebates are provided for oral medicines that are re-formulations of existing drugs in an attempt to lower the cost of certain prescription medications
9. Establishment of health insurance exchanges and drug purchasing cooperatives
10. No changes in Cafeteria Plans until December 31, 2013
Pay or Play Provisions for Taxing Employers Who Don’t Offer Health Insurance
The Patient Protection and Affordable Care Act amended section 4980H of the Internal Revenue Code to provide tax assessment penalties for employers with fifty or more employees, who do not offer health insurance for their employees. The penalty will be between $2,000 and $3,000 per eligible employee, depending on the size of the employer. For some employers, it will still be worth it to avoid the expense of a medical insurance plan, which would cost over $5000 per employee and over $12,000 per family. According to the Kaiser Foundation’s Statehealthfacts.org, the cost for a single employee’s health insurance was $4,386 and the cost for a family was $12,298 in Washington State in 2008. But no matter how you look at this provision, it mandates more people buy medical insurance, which is a HUGE win for the insurance sector.
Funding of Insurance Mandates
The healthcare reform bill uses health insurance as a means to improve access to health care services for individuals and as such, provides federal tax credits to taxpayers to assist with the cost of the health insurance premiums.
For hospital systems, if more patients have access to insurance, there will be less uninsured services provided, which is a stabilizing factor for the health care industry. What remains to be seen, is how many of the 48,000,000 uninsured will be able to afford insurance for their families and will actually enroll, although the Obama Administration forecasts an additional 32,000,000 will obtain some form of health insurance, either government or private sector with this bill. To encourage participation, the law stipulates a tax penalty for those residents who don’t enroll in an insurance plan.
Medicaid Changes
Medicaid changes are a bright spot for healthcare providers as more people will be eligible for Medicaid, versus having no healthcare coverage now, which should reduce the stress on the under-funded population pass-through costs to private sector insurance participants. Granted Medicaid reimbursement is marginal, it is still better than no reimbursement, so this will increase viability of some hospitals, especially in the cities. The healthcare reform bill increases the allowance for the Federal Medical Assistance Percentage or FMAP for Medicaid Managed Care Plans.
Under fee-for-service reimbursement plans, family medicine, general internal medicine, and pediatric practitioners will also have increased reimbursement for primary care services.
Healthcare Purchasing Subsidy for Low Income Residents
For individuals who are not eligible for Medicaid or Medicare, but qualify for subsidized insurance purchasing, here is the subsidy range under the Patient Protection and Affordability Act, section 1402:
Household Income/ Insured’s Responsibility/ Subsidy
133% of FPL/ 3%/ 97%
Up to 400% of FPL/ 9.5%/ 91.5%
Individual Penalties for Residents who do not Obtain Health Insurance
Section 4980H of the Internal Revenue Code also provides that individuals who do not elect health insurance will be subject to a tax penalty, which would run between $325 and $695, depending on modified adjusted gross income levels. Many people may choose to pay the penalty rather than buy insurance because it is less expensive to pay the tax.
The combination of insurance tax subsidies, coerced employer contributions, and required individual insurance plan participation should help reduce some of the uninsured expenses which health systems experience, although it is difficult to forecast the level at this time. According to Hewitt Associates, when the COBRA subsidy kicked-in, enrollment increased by 20% for those beneficiaries. Also, individual participation in regional purchasing cooperatives is going to depend on how well those plans are communicated and ultimately, the cost of the plans.
Insurance Company Tax
Insurers will be assessed a premium tax to help pay for the provisions of health care under the Patient Protection and Affordability Act. Basically there is a formula that excludes certain activities from tax, has an offset, and has provisions for insurers that derive 80% or more of their revenue from low-income (re. Molina Healthcare), elderly (Medicare supplements), and disabled populations.
Health Insurance Luxury Plan Tax
High cost or "luxury" health plans will have to pay an excise tax up to 40%(yikes), based on an expected premium, with risk adjustments for that area. If the cost of your health insurance exceeds that threshold a tax will be assessed on the residual. The formula for determining which plans are high cost will be based on a per employee factor derived from Blue Cross/Blue Shield industry standards, which are age/risk/sex adjusted. Currently this threshold is $10,200 for an individual and $27,500 for a family, which is indexed for medical inflation. It is difficult to understand how this will help lower health costs, it seems to me it will just encourage employers to pass more costs onto their work force, who are already financially strapped. What are we doing, punishing the good guys who have great healthcare? Why not just mandate design elements with co-payments as opposed to only addressing the spend factor? This tax may force some plans to reduce some benefit levels to comply.
Medicare Changes
Medicare enrollees benefit by the following changes in reimbursements:
1. Closure of the prescription drug "donut hole" exclusion under Medicare Part D
Medicare enrollees who have used all of their prescription drug allowance will be reimbursed up to $250 to close this loophole. This reimbursement will be allowed once per year per enrollee for Medicare Part D drugs.
2. Changes in Medicare Advantage (HMO) payments
Qualifying counties will receive increased allowances, based on enrollment.
3. Quality rankings will impact Medicare Payments
Healthcare facilities with a quality ranking of four or higher will receive increased reimbursement from Medicare. Reimbursements will also depend on Medicare Advantage plan enrollment by county.
4. Transparency about plan expenses and administration costs
Under the Public Health Services Act, Medicare Advantage plans are required to have a claims loss ratio of 85% of premiums or the plan will have to pay a penalty to the government.
5. Physician Ownership Referral (Medical Home Provision)
This provision requires provider agreements to be signed for patients, designating a medical home status. This is part of Medicare’s efforts to improve primary care for Medicare patients by strengthening the primary care relationship.
Medicare Tax Increase
It should come as no surprise that there is an increase in the Medicare payroll tax, from 2.9% of total payroll to 3.80%, split evenly between the employee and the employer. Given the state of the Medicare fund, a bigger tax increase is warranted, and is probably on its way.
Other New Taxes
Medical Device Excise Tax
Medical devices, meaning cardiac pacemakers and such, will now be taxed at 2.9% of the purchase price. Orthopedic devices presumably are included in this category. Exceptions to the tax include; hearing aids, glasses, contacts, and over-the-counter devices purchased at the drug store. This tax will simply make these devices more expensive and will be passed directly through to the ratepayers and healthcare consumers. Also, in a nod to medical tourism, since this is an excise tax, even if you obtain healthcare outside of the United States, the device, if manufactured in this country, you will pay the tax.
Estate and Trust Tax
A tax equal to 3.8% will be levied on estates and trusts
Administrative Changes
Durable Medical Equipment Oversight
Durable Medical Equipment suppliers will be subject to an additional 90-day period of claim review, due to a high degree of suspected fraudulent activity in this supply sector. So, I guess this means they will be getting paid later.
Fraud Detection
The Commission of Medical Services in HHS is going to compare notes with the Internal Revenue Service as an enhanced Medicare fraud detection procedure.
Any semblance of privacy we had was lost with the post-911 anti-terrorist provisions, so lets just add this to the list of big brother invasiveness.
On a closing note, the Public Health Services Act imposes a slew of new taxes on corporations, individuals with investment income, and trusts. I just hope there is transparency in the spending of those funds and that is does actually go towards health care for those who need it.
This article was written by Roberta E. Winter, MHA, MPA, an independent healthcare consultant in the Pacific Northwest region of the United States, and may be reprinted with her permission.
Tuesday, March 23, 2010
How Hospitals will fare under the 2010 Public Health Service Act
Listening to some of the law makers you would think the healthcare reform bill, signed by President Obama was an apocalypse now, rather than a process, albeit a messy one, of change in our democracy. Certainly lots of things are missing from the single biggest healthcare reform (cost containment) since the initiation of Medicare in the sixties, but this article reviews how the current Public Health Services Act impacts hospital systems. And you can thank-me-in-advance for compressing the 153-page bill into only 4 pages for you to digest.
Medicare Changes
Medicare changes will have an impact on hospitals, as the majority of their patients are typically Medicare eligible.
1. Closure of the prescription drug "donut hole" exclusion under Medicare Part D
Medicare enrollees who have used all of their prescription drug allowance will be reimbursed up to $250 to close this loophole. This reimbursement will be allowed once per year per enrollee for Medicare Part D drugs. Also, the difference in cost sharing between generic and name brand drugs will continue at 7% until 2020 when it will increase to 25% for Medicare participants.
2. Changes in Medicare Advantage (HMO) payments
There is a planned phase out of indirect costs associated with medical education for medical plans with capitated rates (HMO’s) and replaced by modified benchmarks. This is an extremely complicated calculation, which I won’t cover, except to say that qualifying counties will receive increased allowances, based on enrollment.
3. Quality rankings will impact Medicare Payments
Healthcare facilities with a quality ranking of four or higher will receive increased reimbursement from Medicare. Reimbursements will also depend on Medicare Advantage plan enrollment by county.
4. Changes in Medicare Administration
Under the Public Health Services Act, Medicare Advantage plans are required to have a claims loss ratio of 85% of premiums or the plan will have to pay a penalty to the government. This provision applies to insurance companies or health systems that include sponsored health plans.
5. Market Basket Update for reimbursements
The Medicare Market Basket is a reimbursement adjustment category and under this act, the percentage point adjustment will be as follows: .03 in 2014, .02 in 2015 &2016, and .75 in 2017-2019. Have fun with that you svengallis of finance & accounting.
6.Physician Ownership Referral (Medical Home Provision)
This provision requires provider agreements to be signed for patients, designating a medical home status, but for hospitals that have a high proportion of Medicaid patients, implementation has been delayed until December 31, 2010.
7. Changes in Imaging Payments
This is a modification to the current schedule of reimbursement for imaging services, beginning 2011, a 75% utilization rate will be assumed for this service for Medicare patients. Department managers in laboratory and X-ray units will want to review this to assess the impact on revenues and budget.
8. Repeal of Medicare prepayment medical review limitations.
Disproportionate Share Funding
For hospitals that serve indigent populations, making them eligible for Disproportionate Share Funding from the federal government, the current reduction is 1.5% and this will become 1% in 2014 and then increase to 2% in 2017. Though it appears that states with heavy indigent and Medicaid populations will feel this DPS reduction less than wealthier states, because of a complex modification formula. Hospitals with a low percentage of uninsured patients will experience a reduction in this reimbursement. Everybody has to share the pain I guess.
Medicaid Changes
Medicaid changes are a bright spot for hospitals as more people will be eligible for Medicaid, versus having no insurance now. Granted Medicaid reimbursement is marginal, it is still better than no reimbursement, so this will increase viability of some hospitals, especially in the cities. The healthcare reform bill increases the allowance for the Federal Medical Assistance Percentage or FMAP for Medicaid Managed Care Plans. This is for the calculation of reimbursement for primary care physician services, which will benefit clinics especially. The formula for the FMAP change is as follows:
2014-50%
2015-60%
2016-70%
2017-80%
2018-90%
2019-100%
Under fee-for-service reimbursement plans, family medicine, general internal medicine, and pediatric practitioners will also have increased reimbursement for primary care services.
Tax Subsidies and Funding of Insurance Mandates
The healthcare reform bill uses health insurance as one of the means to improve access to healthcare services for individuals and as such, provides federal tax credits to taxpayers to assist with the cost of the health insurance premiums. Here is the schedule for tax credits to finance health insurance purchasing:
Federal Poverty/ Level Premium Assistance/ Final Assistance %
Up to 133%/ 2%/ 2%
133% to150%/ 3%/ 4%
200% to 250%/ 6.3%/ 8.05%
250% to 300%/ 8.05%/ 9.5%
300% to 400%/ 9.5%/ 9.5%
For hospital systems, if more patients have access to insurance, there will be less uninsured services provided, which is a stabilizing factor for healthcare. What remains to be seen, is how many of the 48,000,000 uninsured will be able to afford insurance for their families and will actually enroll. To encourage participation, the law stipulates a tax penalty for those residents who don’t enroll in an insurance plan.
Healthcare Purchasing Subsidy for Low Income Residents
For individuals who are not eligible for Medicaid or Medicare, but qualify for subsidized insurance purchasing, here is the subsidy range under the Patient Protection and Affordability Act, section 1402:
Household Income/ Insured’s Responsibility/ Subsidy
133% of FPL/ 3%/ 97%
Up to 400% of FPL/ 9.5%/ 91.5%
Pay or Play Provisions for Taxing Employers Who Don’t Offer Health Insurance
The Patient Protection and Affordable Care Act amended section 4980H of the Internal Revenue Code to provide tax assessment penalties for employers with fifty or more employees, who do not offer health insurance for their employees. The penalty will be between $2,000 and $3,000 per eligible employee, depending on the size of the employer. For some employers, it will still be worth it to avoid the expense of a medical insurance plan, which would cost over $5000 per employee and over $12,000 per family. According to the Kaiser Foundation’s Statehealthfacts.org, the cost for a single employee’s health insurance was $4,386 and the cost for a family was $12,298 in Washington State in 2008.
Health Insurance Luxury Tax
High cost or "luxury" health plans will have to pay an excise tax up to 40%(yikes), based on an expected premium, with risk adjustments for that area. The formula for determining which plans are high cost will be based on a per employee factor derived from Blue Cross/Blue Shield industry standards, which are age/risk/sex adjusted. Currently this threshold is $10,200 for an individual and $27,500 for a family. It is difficult to understand how this will help lower health costs, it seems to me it will just encourage employers to pass more costs onto their work force, who are already financially strapped. What are we doing, punishing the good guys who have great healthcare? Why not just mandate design elements with co-payments as opposed to only addressing the spend factor?
Individual Penalties
Section 4980H of the Internal Revenue Code also provides that individuals who do not elect health insurance will be subject to a tax penalty, which would run between $325 and $695, depending on modified adjusted gross income levels.
The combination of tax subsidies, employer contributions, and required individual insurance plan participation should help reduce some of the uninsured expenses which health systems experience, although it is difficult to forecast at this time. Many people may choose to pay the penalty rather than buy insurance because it is less expensive to pay the tax. Also, individual participation in regional purchasing cooperatives is going to depend on how well those plans are communicated and ultimately, the cost of the plans.
Medical Device Excise Tax
Medical devices, meaning cardiac pacemakers and such, will now be taxed at 2.9% of the purchase price. Orthopedic devices presumably are included in this category. Exceptions to the tax include; hearing aids, glasses, contacts, and over-the-counter devices purchased at the drug store. This tax will simply make these devices more expensive.
Durable Medical Equipment Oversight
Durable Medical Equipment suppliers will be subject to an additional 90-day period of claim review, due to a high degree of suspected fraudulent activity in this supply sector. So, I guess this means they will be getting paid later.
Fraud Detection
The Commission of Medical Services in HHS is going to compare notes with the Internal Revenue Service as an enhanced Medicare fraud detection procedure.
Any semblance of privacy we had was lost with the post-911 anti-terrorist provisions, so lets just add this to the list of big brother invasiveness.
Medicare Tax Increase
It should come as no surprise that there is an increase in the Medicare payroll tax, from 2.9% of total payroll to 3.80%, split evenly between the employee and the employer. Given the state of the Medicare fund, a bigger tax increase is warranted, and is probably on its way.
On a closing note, the Public Health Services Act imposes a slew of new taxes on corporations, individuals with investment income, and trusts, lets just hope there is transparency in the spending of those funds and that is does actually go towards health care for those who need it.
This article was written by Roberta E. Winter, MHA, MPA, an independent healthcare consultant in the Pacific Northwest region of the United States, and may be reprinted with her permission.
Medicare Changes
Medicare changes will have an impact on hospitals, as the majority of their patients are typically Medicare eligible.
1. Closure of the prescription drug "donut hole" exclusion under Medicare Part D
Medicare enrollees who have used all of their prescription drug allowance will be reimbursed up to $250 to close this loophole. This reimbursement will be allowed once per year per enrollee for Medicare Part D drugs. Also, the difference in cost sharing between generic and name brand drugs will continue at 7% until 2020 when it will increase to 25% for Medicare participants.
2. Changes in Medicare Advantage (HMO) payments
There is a planned phase out of indirect costs associated with medical education for medical plans with capitated rates (HMO’s) and replaced by modified benchmarks. This is an extremely complicated calculation, which I won’t cover, except to say that qualifying counties will receive increased allowances, based on enrollment.
3. Quality rankings will impact Medicare Payments
Healthcare facilities with a quality ranking of four or higher will receive increased reimbursement from Medicare. Reimbursements will also depend on Medicare Advantage plan enrollment by county.
4. Changes in Medicare Administration
Under the Public Health Services Act, Medicare Advantage plans are required to have a claims loss ratio of 85% of premiums or the plan will have to pay a penalty to the government. This provision applies to insurance companies or health systems that include sponsored health plans.
5. Market Basket Update for reimbursements
The Medicare Market Basket is a reimbursement adjustment category and under this act, the percentage point adjustment will be as follows: .03 in 2014, .02 in 2015 &2016, and .75 in 2017-2019. Have fun with that you svengallis of finance & accounting.
6.Physician Ownership Referral (Medical Home Provision)
This provision requires provider agreements to be signed for patients, designating a medical home status, but for hospitals that have a high proportion of Medicaid patients, implementation has been delayed until December 31, 2010.
7. Changes in Imaging Payments
This is a modification to the current schedule of reimbursement for imaging services, beginning 2011, a 75% utilization rate will be assumed for this service for Medicare patients. Department managers in laboratory and X-ray units will want to review this to assess the impact on revenues and budget.
8. Repeal of Medicare prepayment medical review limitations.
Disproportionate Share Funding
For hospitals that serve indigent populations, making them eligible for Disproportionate Share Funding from the federal government, the current reduction is 1.5% and this will become 1% in 2014 and then increase to 2% in 2017. Though it appears that states with heavy indigent and Medicaid populations will feel this DPS reduction less than wealthier states, because of a complex modification formula. Hospitals with a low percentage of uninsured patients will experience a reduction in this reimbursement. Everybody has to share the pain I guess.
Medicaid Changes
Medicaid changes are a bright spot for hospitals as more people will be eligible for Medicaid, versus having no insurance now. Granted Medicaid reimbursement is marginal, it is still better than no reimbursement, so this will increase viability of some hospitals, especially in the cities. The healthcare reform bill increases the allowance for the Federal Medical Assistance Percentage or FMAP for Medicaid Managed Care Plans. This is for the calculation of reimbursement for primary care physician services, which will benefit clinics especially. The formula for the FMAP change is as follows:
2014-50%
2015-60%
2016-70%
2017-80%
2018-90%
2019-100%
Under fee-for-service reimbursement plans, family medicine, general internal medicine, and pediatric practitioners will also have increased reimbursement for primary care services.
Tax Subsidies and Funding of Insurance Mandates
The healthcare reform bill uses health insurance as one of the means to improve access to healthcare services for individuals and as such, provides federal tax credits to taxpayers to assist with the cost of the health insurance premiums. Here is the schedule for tax credits to finance health insurance purchasing:
Federal Poverty/ Level Premium Assistance/ Final Assistance %
Up to 133%/ 2%/ 2%
133% to150%/ 3%/ 4%
200% to 250%/ 6.3%/ 8.05%
250% to 300%/ 8.05%/ 9.5%
300% to 400%/ 9.5%/ 9.5%
For hospital systems, if more patients have access to insurance, there will be less uninsured services provided, which is a stabilizing factor for healthcare. What remains to be seen, is how many of the 48,000,000 uninsured will be able to afford insurance for their families and will actually enroll. To encourage participation, the law stipulates a tax penalty for those residents who don’t enroll in an insurance plan.
Healthcare Purchasing Subsidy for Low Income Residents
For individuals who are not eligible for Medicaid or Medicare, but qualify for subsidized insurance purchasing, here is the subsidy range under the Patient Protection and Affordability Act, section 1402:
Household Income/ Insured’s Responsibility/ Subsidy
133% of FPL/ 3%/ 97%
Up to 400% of FPL/ 9.5%/ 91.5%
Pay or Play Provisions for Taxing Employers Who Don’t Offer Health Insurance
The Patient Protection and Affordable Care Act amended section 4980H of the Internal Revenue Code to provide tax assessment penalties for employers with fifty or more employees, who do not offer health insurance for their employees. The penalty will be between $2,000 and $3,000 per eligible employee, depending on the size of the employer. For some employers, it will still be worth it to avoid the expense of a medical insurance plan, which would cost over $5000 per employee and over $12,000 per family. According to the Kaiser Foundation’s Statehealthfacts.org, the cost for a single employee’s health insurance was $4,386 and the cost for a family was $12,298 in Washington State in 2008.
Health Insurance Luxury Tax
High cost or "luxury" health plans will have to pay an excise tax up to 40%(yikes), based on an expected premium, with risk adjustments for that area. The formula for determining which plans are high cost will be based on a per employee factor derived from Blue Cross/Blue Shield industry standards, which are age/risk/sex adjusted. Currently this threshold is $10,200 for an individual and $27,500 for a family. It is difficult to understand how this will help lower health costs, it seems to me it will just encourage employers to pass more costs onto their work force, who are already financially strapped. What are we doing, punishing the good guys who have great healthcare? Why not just mandate design elements with co-payments as opposed to only addressing the spend factor?
Individual Penalties
Section 4980H of the Internal Revenue Code also provides that individuals who do not elect health insurance will be subject to a tax penalty, which would run between $325 and $695, depending on modified adjusted gross income levels.
The combination of tax subsidies, employer contributions, and required individual insurance plan participation should help reduce some of the uninsured expenses which health systems experience, although it is difficult to forecast at this time. Many people may choose to pay the penalty rather than buy insurance because it is less expensive to pay the tax. Also, individual participation in regional purchasing cooperatives is going to depend on how well those plans are communicated and ultimately, the cost of the plans.
Medical Device Excise Tax
Medical devices, meaning cardiac pacemakers and such, will now be taxed at 2.9% of the purchase price. Orthopedic devices presumably are included in this category. Exceptions to the tax include; hearing aids, glasses, contacts, and over-the-counter devices purchased at the drug store. This tax will simply make these devices more expensive.
Durable Medical Equipment Oversight
Durable Medical Equipment suppliers will be subject to an additional 90-day period of claim review, due to a high degree of suspected fraudulent activity in this supply sector. So, I guess this means they will be getting paid later.
Fraud Detection
The Commission of Medical Services in HHS is going to compare notes with the Internal Revenue Service as an enhanced Medicare fraud detection procedure.
Any semblance of privacy we had was lost with the post-911 anti-terrorist provisions, so lets just add this to the list of big brother invasiveness.
Medicare Tax Increase
It should come as no surprise that there is an increase in the Medicare payroll tax, from 2.9% of total payroll to 3.80%, split evenly between the employee and the employer. Given the state of the Medicare fund, a bigger tax increase is warranted, and is probably on its way.
On a closing note, the Public Health Services Act imposes a slew of new taxes on corporations, individuals with investment income, and trusts, lets just hope there is transparency in the spending of those funds and that is does actually go towards health care for those who need it.
This article was written by Roberta E. Winter, MHA, MPA, an independent healthcare consultant in the Pacific Northwest region of the United States, and may be reprinted with her permission.
Monday, March 22, 2010
Obama Signed the most significant Healthcare Reform Bill since the Creation of Medicare
Whew! I must say I am surprised that any agreement was reached on a healthcare bill, but President Obama was presented with a bill and he signed it. Having read all 153 pages of the bill, I am NOT going to write one review of the bill, but this week, I will break it down into three articles. The first article will feature healthcare changes for hospitals, the second article will address insurance changes, and the third article will showcase how these regulatory changes will impact consumers. The only way to digest this mammoth piece of legislation is in smaller bites. So watch for more from the healthpolicymaven this week.
Wednesday, February 3, 2010
Medical Tourism and Quality Measures
Medical Tourism or the exportation of health care services and procedures is in full swing in the United States consumer driven health care movement. Since deregulation of the airlines with the Reagan administration Americans have increasingly become global travelers and consumers, so why not health care services as well? This article explores the private sector health care population that is seeking health care outside of the United States and examines some quality issues.
Previously Americans seeking health care overseas were expatriates working offshore, residents with family ties in other countries with westernized medical services, or the wealthy. Since 2000, there has been a tremendous increase in middle class Americans seeking medical services abroad. Approximately twenty billion dollars annually are spent by U.S. residents who obtain medical care off shore. The primary medical services accessed outside of the U.S.A. purview are cosmetic surgery, orthopedic repairs, cardiac procedures, organ transplants, and fertility treatments. These are also high profit services for medical facilities in the United States. Insurance companies, largely at the behest of privately insured employers, are including coverage for medical procedures provided off shore at an increasing rate in their contracts. Even the nonprofit hospital group, Christus Health in the Southwest purchased a hospital in Mexico, in order to offer lower cost procedures within their network. This triad of insurance companies, employer groups, and USA health care providers has created a tsunami of change in the provision of health care.
In 2003, I conducted research on medical tourism for Seattle Cancer Care Alliance and Fred Hutchison Cancer Research Center, for a marketing project to encourage transplant patients to obtain care in Seattle. At that time, no thought was given to patients seeking transplant procedures outside the United States for the exportation of medical care. My survey included facilities on the east and west coasts. Though I was very enthusiastic about the potential for business development for world class transplant centers, this was not shared by my direct reports. I recall how a Miami Florida facility had a very advanced patient support system, including housing, interpretation, and other assimilation services. How things have changed in a mere seven years, now United States transplant facilities must compete with international facilities who are obtaining Joint Commission International accreditation, and can offer the same services as U.S. health centers for less than half of what the same services would cost in the states, inclusive of travel expenses!
The next step to assuring a safe process for adventurous or maybe even frugal patients, who seek medical care outside U.S. oversight, is to identify quality indicators on a global scale, and incorporate quality measures into certification, and contracting of services throughout the globe. India and Thailand both have international centers that cater to western patients and other countries are rapidly developing their ability to serve global patients.
For any medical procedure involving surgery, infection is one of the risks, and is a frequent complication post-op. Infection rates by procedure and facility should be tracked and reported in a transparent manner for a primary quality indicator. A second indicator would of course be mortality, incidence of death, again, by procedure and facility. A third quality indicator would be the re-admission rate for complications from a procedure, which could include complications from co morbidities and device or surgical failure rates. Another quality indicator would be certification of facilities and clinical staffers. A part of this certification should include the frequency with which they perform the contracted procedures and their patient success and failure rates. Meaning, surgeries that go as planned as well as those with unintended consequences, including death. Cost or value should also be included in the scorecard for determining an international medical center’s performance. Administrative functioning and efficiency should also be considered in contracting for quality with an international facility. Finally, the patient’s experience should also be included in a facility’s quality assessment. These seven criteria provide a good basis to create a quality benchmark from which to gauge an off shore healthcare facility’s excellence prior to contracting for services.
Though all of these criteria are important in attempting to pre-qualify an international medical facility’s ability to perform as contracted, the patient’s health status and mobility are also essential elements of any surgical intervention. Insurance companies, who incorporate medical tourism into their contracts, should require a U.S. physician to examine each patient’s ability to seek services at a non-local facility. If the patient may be certified as healthy enough to seek services off shore, then the insurer would approve the procedure. Also, U.S. physicians are reluctant to release patients to clinicians they do not know and facilities for which they are unfamiliar. Insurance companies and health care providers should find ways to build confidence between professionals as needed. I won’t address the legal implications of off shore medical services, but I am sure it is just a question of time before a malpractice or wrongful death suit is filed under medical tourism.
This article was written by Roberta Winter, MHA, MPA, President of Praevalere Inc., a Seattle based health care consulting firm, and may be reprinted with her permission.
Previously Americans seeking health care overseas were expatriates working offshore, residents with family ties in other countries with westernized medical services, or the wealthy. Since 2000, there has been a tremendous increase in middle class Americans seeking medical services abroad. Approximately twenty billion dollars annually are spent by U.S. residents who obtain medical care off shore. The primary medical services accessed outside of the U.S.A. purview are cosmetic surgery, orthopedic repairs, cardiac procedures, organ transplants, and fertility treatments. These are also high profit services for medical facilities in the United States. Insurance companies, largely at the behest of privately insured employers, are including coverage for medical procedures provided off shore at an increasing rate in their contracts. Even the nonprofit hospital group, Christus Health in the Southwest purchased a hospital in Mexico, in order to offer lower cost procedures within their network. This triad of insurance companies, employer groups, and USA health care providers has created a tsunami of change in the provision of health care.
In 2003, I conducted research on medical tourism for Seattle Cancer Care Alliance and Fred Hutchison Cancer Research Center, for a marketing project to encourage transplant patients to obtain care in Seattle. At that time, no thought was given to patients seeking transplant procedures outside the United States for the exportation of medical care. My survey included facilities on the east and west coasts. Though I was very enthusiastic about the potential for business development for world class transplant centers, this was not shared by my direct reports. I recall how a Miami Florida facility had a very advanced patient support system, including housing, interpretation, and other assimilation services. How things have changed in a mere seven years, now United States transplant facilities must compete with international facilities who are obtaining Joint Commission International accreditation, and can offer the same services as U.S. health centers for less than half of what the same services would cost in the states, inclusive of travel expenses!
The next step to assuring a safe process for adventurous or maybe even frugal patients, who seek medical care outside U.S. oversight, is to identify quality indicators on a global scale, and incorporate quality measures into certification, and contracting of services throughout the globe. India and Thailand both have international centers that cater to western patients and other countries are rapidly developing their ability to serve global patients.
For any medical procedure involving surgery, infection is one of the risks, and is a frequent complication post-op. Infection rates by procedure and facility should be tracked and reported in a transparent manner for a primary quality indicator. A second indicator would of course be mortality, incidence of death, again, by procedure and facility. A third quality indicator would be the re-admission rate for complications from a procedure, which could include complications from co morbidities and device or surgical failure rates. Another quality indicator would be certification of facilities and clinical staffers. A part of this certification should include the frequency with which they perform the contracted procedures and their patient success and failure rates. Meaning, surgeries that go as planned as well as those with unintended consequences, including death. Cost or value should also be included in the scorecard for determining an international medical center’s performance. Administrative functioning and efficiency should also be considered in contracting for quality with an international facility. Finally, the patient’s experience should also be included in a facility’s quality assessment. These seven criteria provide a good basis to create a quality benchmark from which to gauge an off shore healthcare facility’s excellence prior to contracting for services.
Though all of these criteria are important in attempting to pre-qualify an international medical facility’s ability to perform as contracted, the patient’s health status and mobility are also essential elements of any surgical intervention. Insurance companies, who incorporate medical tourism into their contracts, should require a U.S. physician to examine each patient’s ability to seek services at a non-local facility. If the patient may be certified as healthy enough to seek services off shore, then the insurer would approve the procedure. Also, U.S. physicians are reluctant to release patients to clinicians they do not know and facilities for which they are unfamiliar. Insurance companies and health care providers should find ways to build confidence between professionals as needed. I won’t address the legal implications of off shore medical services, but I am sure it is just a question of time before a malpractice or wrongful death suit is filed under medical tourism.
This article was written by Roberta Winter, MHA, MPA, President of Praevalere Inc., a Seattle based health care consulting firm, and may be reprinted with her permission.
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