WellAware - Health Policy News Feb 18 2011

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WellAware

Health Policy News from M2

February 18, 2011

WellAware is a weekly update on actionable health policy news for the business and investing community.
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Federal

Opponents of Health Reform Cite CBO Estimates Regarding Impact on Jobs
Congressional Budget Office Director Doug Elmendorf testified during a House Budget Committee hearing this week that the health reform law could lead to 800,000 fewer people working. His statement came in response to questions from GOP committee members about the numbers, which were pulled from a report compiled by the CBO last summer.

"[I]f the reduction in the labor used was workers working the average number of hours in the economy and earning the average wage...there would be a reduction of 800,000 workers," he told Rep. John Campbell (R-Calif.).

The report predicts that because people will have better coverage options through expanded Medicaid and insurance exchanges run by the state, many will choose not to work.

Link to article
Link to CBO August 2010 Report


President’s Proposed FY 2012 Budget Includes Doc Fix
President Obama's proposed budget for fiscal year 2012 would delay a significant reduction in Medicare reimbursement for physicians from January 1, 2012, until January 1, 2014, and freeze rates in the meantime.

The proposed budget for fiscal year 2012, which begins October 1, would finance this Medicare "doc fix" by, among other things, reducing Medicaid outlays for durable medical equipment; speeding new, lower-cost generic drugs to market; and capping Medicaid taxes that states impose on hospitals, nursing homes, and other providers as a way to increase their federal Medicaid funding. These measures would raise $62.2 billion, which would offset the $54.4 billion cost of the 2-year doc fix and result in an additional $7.8 billion in savings.

Last December, Congress passed a nearly $15 billion doc fix that delayed a 25% cut in Medicare rates from January 1, 2011, to January 1, 2012. The legislation froze rates at 2010 levels. If Congress enacts Obama's new 2-year fix, physicians will not receive a Medicare raise for three years running.

The pay cut once scheduled for January 1, 2011, had been mandated by the sustainable growth rate (SGR) formula that Medicare uses to set physician pay. Organized medicine has lobbied Congress for years to replace the SGR formula with one it considers more equitable for physicians. Congress has been overriding SGR-required pay cuts since 2003, causing them to balloon in size.

Link to article


President’s Proposed FY 2012 Budget and Health Reform
Of particular note in President Obama’s 2012 budget is almost $1 billion for “program management” related to the implementation of the Affordable Care Act. The budget also anticipates the hiring of more than 1,000 full time employees in 2012.

Funding for a public health emergency preparedness program run by the Centers for Disease Control and Prevention (CDC), on the other hand, was cut by about $72 million below fiscal 2010 levels in the budget proposal. Those funds are used to help state and city public health departments monitor for potential outbreaks and threats, hire and train staff to respond and other activities.

The discretionary budget request for the CDC remains only about $19 million below that of fiscal 2010. But that’s because the cuts are compensated by $752 million for the CDC from the Prevention and Public Health Fund (see WellAware February 11) that wasn’t meant to fill budget holes and which some worry isn’t secure.

Overall, the President’s FY 2012 budget is a reflection of guidance which asked all agencies to submit a discretionary budget that was at least 5 percent lower than in 2011.

Link to Budget Guidance
Link to FY 2012 Budget Document
Link to article


FDA Loosens Rules on Certain Medical Device Data Systems
The FDA has loosened regulations on “medical device data systems,” – also called mHealth, for mobile health - making them exempt from premarket review by the agency. However, FDA is also carefully limiting the definition of what the systems are.

Under the rule, published February 15, medical data device systems (MDDS) are “off-the-shelf or custom hardware or software products used alone or in combination that display unaltered medical device data, or transfer, store or convert medical device data for future use, in accordance with a preset specification,” according to FDA. Examples include devices that collect and store data from a glucose meter for future use or that transfer lab results for future use at a nursing station.

FDA emphasizes that a system that does anything else not described in the rule is not an MDDS. Notably, an MDDS does not modify, interpret, or add value to the data or the display of the data, and it does not add to or modify the intended uses or clinical functions that are already contained within the medical devices and that provide data to or receive data through the MDDS.

Link to article



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State

HHS to Provide $241 Million to Health Exchange “Early Innovator” States
HHS awarded $241 million in “Early Innovator” grants to help six states plus a consortium of the five states design and implement the IT infrastructure needed to create state health insurance exchanges.

States receiving grants are Kansas, Maryland, New York, Oklahoma, Oregon, Wisconsin and a consortium of New England states. The New England consortium will be led by the University of Massachusetts Medical School – the only medical school in the country to win an award - and aims to include individuals and small businesses in Connecticut, Maine, Massachusetts, Rhode Island, and Vermont.

The grants range from $6 million to $54 million and present a variety of potential solutions to providing the IT infrastructure necessary to run a state health insurance exchange.

Most states will use the funds to expand existing frameworks already in place, including those used for the administration of state Medicaid programs. Most aim to integrate with health departments and agencies to lower administrative costs while also providing consumers with easy access to health insurance information.

Technology sharing should help other states establish their exchanges quickly using the models and building blocks created by the Early Innovator states.

Link to release


Arizona Does Not Need Waiver to Cut 250,000 Enrollees, HHS Secretary Says
Arizona officials who spent nearly a year criticizing the federal government for not allowing the state to cut its Medicaid rolls got some surprising news: permission from HHS isn’t necessary for the state to drop 250,000 people from the Arizona Health Care Cost Containment System.

In a letter to Gov. Jan Brewer (R), HHS Secretary Sebelius said Arizona could simply choose to not renew the agreement under which the federal government provides matching funds for 250,000 childless adults in AHCCCS. The end of the agreement would effectively allow Arizona to drop those patients from AHCCCS on September 30, when the agreement expires.

In her letter, Sebelius said the cuts would not violate the maintenance-of-effort provision in the Patient Protection and Affordable Care Act, the landmark health care law passed by Congress in 2010, which prohibits states from reducing Medicaid eligibility.

But because Arizona is operating under a waiver that began when voters approved Proposition 204 in 2000, the state does not need a waiver to drop most of those people from AHCCCS. The ballot measure expanded AHCCCS coverage to include all childless adults who make up to 100 percent of the federal poverty level.

Brewer called the letter “an encouraging development” for the state as it seeks flexibility from the Affordable Care Act. “Secretary Sebelius’ letter clearly indicates that Arizona may take the steps it requires to manage its Medicaid program and balance its budget without violating MOE requirements,” Brewer said. It was not clear why state officials did not realize earlier that a waiver was unnecessary, nor why HHS did not inform the state sooner that the waiver was unnecessary. Brewer submitted her waiver request to HHS on January 25, but she and lawmakers had sought to cut AHCCCS for nearly a year.

Link to article
Link to letter from Gov. Brewer to Sebelius
Link to letter from Sebelius to Gov. Brewer


Kentucky, New Hampshire, Nevada Request Adjustments of the MLR Standard
Kentucky is seeking a waiver from HHS of the medical loss ratio (MLR) standard because of a “failed” experiment in the early nineties that “completely destabilized” the state’s individual market and ended with 43 health insurance companies exiting the market. The state proposes maintaining the existing 65 percent MLR in 2011, then increasing it 5 percent per year to reach the required 80 percent floor by 2014.

New Hampshire has submitted an MLR waiver request in part because “the size of New Hampshire’s market makes the market relatively unattractive to insurance carriers,” and the state’s individual market is currently dominated by one player. The current MLR is approximately 60 percent.

In addition, Nevada has requested an adjustment to the MLR standard to 72%. In its request, the Nevada Division of Insurance says that “this one-year adjustment will allow our carriers, agents and brokers time to adjust their pricing and operations to comply with the new standard. Carriers licensed in NV have demonstrated their intent to comply with the MLR.”

The health reform law allows the HHS Secretary to adjust the MLR for a state; the state must demonstrate that requiring insurers in its individual market to meet the 80 percent MLR has a likelihood of destabilizing the individual market and could result in fewer choices for consumers. HHS invites public comment on the requests.

Link to KY request
Link to HHS notice on NH
Link to NH MLR Adjustment Request
Link to HHS notice on NV
Link to NV MLR Adjustment Request


Wisconsin Insurance Commissioner Ends Federal Grant Under Health Reform
Wisconsin's insurance commissioner has terminated a $637,114 grant issued through the federal health reform law, part of $86 million awarded to the state, some of which also could be in question.

Ted Nickel, the Commissioner of Insurance appointed by GOP Gov. Scott Walker, has ended a Consumer Assistance Grant announced in October to help people enroll in health coverage and file complaints under the new law. Nickel said the program is "largely duplicative and unnecessary….We believe that saving taxpayers, whether they are federal or state taxpayers, from unnecessary spending is in everyone's best interest."

Attorney General J.B. Van Hollen said that in Wisconsin, "the federal health care law is dead — unless and until it is revived by an appellate court."

Van Hollen was responding to a federal court judge's ruling in Florida that the law is unconstitutional because it requires most Americans to buy insurance or face penalties.

Link to article


Texas Medicaid Cuts
As Texas budget writers attempt to make cuts to Medicaid, state Health and Human Services Commission officials are warning that certain cuts could cost the state more in the long run. For example, if kidney dialysis treatment is cut, Medicaid patients with renal disease would show up at hospitals, said Charles Bell, deputy executive commissioner for health services at the Health and Human Services Commission. “Without the dialysis, that individual would actually go into an emergency situation,” Bell, a doctor, told a Senate Finance Committee panel studying Medicaid.

Texas GOP leaders have proposed cuts of 29 percent to Medicaid, a much larger reduction than most programs would see, as lawmakers try to write a balanced budget without raising taxes or exhausting their rainy-day money.

The program’s costs grew rapidly in the current two-year cycle because Congress temporarily enhanced federal matching money to help recession-ravaged states cope with swelling rolls. But now, GOP leaders say, cuts must be made. “It’s absolutely unsustainable,” said Sen. Jane Nelson (R) who heads the panel. “Medicaid costs are projected to double every 10 years.”

While the proposed Senate budget, like the House’s, would cut the program to just over $17.5 billion a year, from $25 billion, leaders have put placeholders into the budget to achieve much of the savings. While a huge share of the cuts will come out of care providers’ fees, there are figures pulled out of the air for new efficiencies, savings generated by new outcomes-based payment models and cuts to the adult recipients’ optional services. Details are to come later.

Nelson said her panel has three weeks to craft recommendations, including on how to reduce spending of state taxes on the optional services — or at least those not provided in long-term care settings — by 10 percent, or $45 million over the next two years.

Link to article
Link to article



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Not in the News...Yet

Study: Hospital Budgets Will Expand over Next Five Years, With Increases in Areas Such as IT, Facilities and Medical Devices
Hospital executives are planning for budget increases during the next five years and are prioritizing strategic initiatives that had previously been on hold due to economic constraints. In addition, health reform is causing hospital management to re-evaluate how they select and purchase medical devices and other services, according to a new survey.

Nearly 60 percent of 196 surveyed hospital executives expected budget increases in 2011, the survey from L.E.K. Consulting finds. During the next five years, 70 percent of respondents predicted larger budgets and are planning to increase purchasing in multiple areas, including IT (58 percent), facilities (38 percent), large medical devices (37 percent), small medical devices (21 percent) and disposables (28 percent), according to the Boston-based consulting firm’s survey.

Supplier negotiations will be central to controlling costs, which has hospitals increasingly turning to group purchasing organizations (GPOs) to help negotiate the best rates possible. More than half of respondents expect to use GPOs more by 2015.

Which product area is almost as hot as IT? Anything that cuts medical errors. “Most of the executives surveyed are willing to pay a 10 to 15 percent premium on average for disposables that demonstrate an ability to reduce medical errors and infection rates.”

Link to article



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Releases of Note

Voters Ready to “Make Tough Choices” on Budget Cuts
A poll this week finds “70% of likely U.S. voters think voters are more willing to make the hard choices needed to reduce federal spending than elected politicians are.” A separate Rasmussen poll also found 55 percent of voters think President Obama’s proposed budget doesn’t cut enough spending from the national pocketbook.

Despite the fact that Republicans have taken over the House in Congress, the poll found, “voters still expect government spending, taxes and the deficit to go up over the next two years.”

Link to hard choices poll
Link to Obama budget poll




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M2 Health Care Consulting | Denver | Washington, DC | www.m2hcc.com
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