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The New York Times: Hospitals Question Medicare Rules on Readmissions

March 29, 2013


It is no longer enough for hospitals to make patients healthy enough to leave. Now, as part of the Obama administration’s health care overhaul, they are spending millions of dollars to keep those patients from coming back, often acting like personal assistants to help them manage their post-hospital lives.

While federal statistics show the effort is beginning to reduce costly and unnecessary readmissions, a growing chorus of critics is asking whether the government policy, which penalizes hospitals that have high readmission rates, is unfair. They are also questioning whether hospitals should be responsible for managing the personal lives of patients once they are released — or whether they should focus on other ways to improve care.

“It’s consumed a lot of resources,” said Dr. J. Michael Henderson, who focuses on quality and patient safety for the Cleveland Clinic, which attributes its relatively high readmission rate to the fact that it successfully treats a high number of severely ill patients.

Under the new federal regulations, hospitals face hefty penalties for readmitting patients they have already treated, on the theory that many readmissions result from poor follow-up care.

It makes for cheaper and better care in the long run, the thinking goes, to help patients stay healthy than to be forced to readmit them for another costly hospital stay.

So hospitals call patients within 48 hours of discharge to find out how they are feeling. They arrange patients’ follow-up appointments with doctors even before a patient leaves. And they have redoubled their efforts to make sure patients understand what medicines to take at home.

But hospitals have also taken on responsibilities far outside the medical realm: they are helping patients arrange transportation for follow-up doctor visits, get safe housing or even find a hot meal, all in an effort to keep them healthy.

“There’s a huge opportunity to reduce the cost of medical care by addressing these other things, the social aspects,” said Dr. Samuel Skootsky, chief medical officer of the U.C.L.A. Faculty Practice Group and Medical Group.

Medicare, which monitors hospitals’ compliance with the new rules, says nearly two-thirds of hospitals receiving traditional Medicare payments are expected to pay penalties totaling about $300 million in 2013 because too many of their patients were readmitted within 30 days of discharge. Last month, the agency reported that readmissions had dropped to 17.8 percent by late last year from about 19 percent in 2011.

But increasingly, health policy experts and hospital executives say the penalties, which went into effect in October, unfairly target hospitals that treat the sickest patients or the patients facing the greatest socioeconomic challenges. They say a hospital’s readmission rate is not a clear measure of the quality of care it provides, noting that hospitals with higher mortality rates may also have fewer returning patients.

“Dead patients can’t be readmitted,” Dr. Henderson said.

“We’re using a proxy because it’s a convenient proxy — it’s just not a very accurate proxy,” said Dr. Karen E. Joynt, a health policy expert and co-author of an article critical of the penalties in The New England Journal of Medicine this month. Large academic medical centers and so-called safety-net hospitals are bearing the brunt of the new policy, and the authors warn that the penalties could make it even harder for hospitals struggling to care for those patients with the highest needs. The current policy, the article says, “has the potential to exacerbate disparities in care and create disincentives to providing care for patients who are particularly ill or who have complex health needs.”

The penalties, which apply to rates of readmission after hospitalization for heart attacks, pneumonia and heart failure, are now calculated at 1 percent of hospital payments but will increase to 3 percent by 2015. Medicare also expects to expand the targeted readmissions to include more kinds of hospitalizations, like those for chronic lung disease.

Some hospitals say they have little choice but to incur the penalties, simply because they have other demands. At Boston Medical Center, which serves a high number of low-income patients, efforts to reduce readmissions, including making follow-up appointments and writing out a simple plan of what to do after leaving the hospital, have been successful for Medicaid patients.

But the medical center chose not to immediately expand the program to all patients, including the Medicare patients who would count toward future penalties.

“We make those trade-offs,” said Dr. Stanley Hochberg, the center’s chief quality officer. Medicare’s focus on readmissions “doesn’t necessarily align with our social priorities and medical priorities,” he said. Medicare officials say they have listened to hospitals’ concerns but defend the policy as heading in the right direction. “It’s a very traumatic event to go back to the hospital,” said Jonathan Blum, a senior Medicare official. “I’m personally comfortable with some imprecision to our measures.”

“The ultimate goal is to have these numbers come down,” he said.

Because so many hospital readmissions are tied to social or economic factors, hospitals have a hard time predicting which patients are likely to return, said Dr. Jan Berger, the chief medical officer for Silverlink Communications, a consulting firm. When Marjorie Crear, 66, left Ronald Reagan U.C.L.A. Medical Center after a stroke, she struggled to keep track of her medications and to remember her doctor appointments. Tiffany Phan, a newly hired care manager, helped with those tasks and has also been trying to find public housing with a shower instead of a hard-to-navigate bathtub.

Making it even harder for hospitals is the number of consultants and companies springing up to offer solutions with little hard evidence about which steps are the most effective. “We don’t really know very clearly how to prevent more readmissions,” said Austin Frakt, a health economist at Boston University.

In some cases, such prevention may take a combination of efforts that differ from hospital to hospital, said Dr. Risa Lavizzo-Mourey, chief executive of the Robert Wood Johnson Foundation, which has been financing pilot programs aimed at reducing readmissions. “One of the key factors we keep emphasizing is that there isn’t a single magic bullet to fix everything,” she said.

And complicating the issue even further is the possibility of doing harm. In 2011, for example, the Department of Veterans Affairs halted a program in which patients with chronic lung disease were supposed to learn to take better care of themselves when 28 patients in the program died, in contrast to 10 deaths in the group receiving typical care.

“It was just an incredible thing,” said Dr. Dennis E. Niewoehner, a researcher from the University of Minnesota who said the findings were “a warning signal” for others thinking about embarking on similar programs. The higher death rate may have been purely chance, he said, but the researchers, who published their findings last year, do not know.

Link to “Hospitals Question Medicare Rules on Readmissions” article

The New York Times: Health Care Law Will Raise Some Premiums, Study Says

March 28, 2013

WASHINGTON — A study commissioned by the State of California says that the new federal health care law will drive up individual insurance premiums, but that subsidies will offset most of the increase for low-income people.

The study, issued Thursday in the midst of a growing national debate over the impact of the law, is significant because California is far ahead of most states in setting up a competitive marketplace, or exchange, where people can buy insurance this fall.

Premiums could increase by an average of 30 percent for higher-income people in California who are now insured and do not qualify for federal insurance subsidies, the study said.

However, it said, people in this group will benefit from new limits on their out-of-pocket medical expenses, so their total cost of care will increase by 20 percent, on average.

The report for the state insurance exchange, known as Covered California, cited several factors contributing to higher premiums: an influx of less healthy people into the individual insurance market, and a requirement for health insurance plans to offer richer benefits and to cover more of the cost of care than is now typical for individual insurance policies.

Another factor, it said, is that federal and state government agencies are imposing new taxes and fees on insurers, which are likely to pass on some of the costs to consumers.

“Health insurance will become relatively less expensive for people with chronic conditions and relatively more expensive for healthier people,” said Robert G. Cosway, an actuary at Milliman, a large consulting firm that prepared the report.

Some people, especially those in good health, may drop their insurance because of the premium increases, Mr. Cosway said.

However, the study said that low-income people would see significant reductions in their premiums and out-of-pocket costs, in part because of income tax credits and other subsidies. The total cost of care, it said, will fall by an average of 76 percent for people who are currently insured and have incomes less than 250 percent of the poverty level (meaning less than $28,725 a year for an individual).

The report was prepared to help state officials evaluate proposals from insurers and develop marketing messages to reach consumers.

“There are 5.3 million Californians who will qualify to purchase insurance through the exchange,” said Peter V. Lee, the executive director of the California exchange. “Insights gained from this research confirm that most people will experience a positive impact.”

The California report follows a study by the Society of Actuaries, a professional organization, suggesting that the new law would contribute to higher insurance costs in the next three years.

Asked about such estimates, Kathleen Sebelius, the secretary of health and human services, acknowledged that costs could rise in the individual insurance market, particularly for men and for younger people. She noted that the law prohibits insurers from charging women more than men and limits their ability to charge higher premiums based on age. “Women are going to see some lower costs, some men are going to see some higher costs,” she said Tuesday at a White House briefing. “So it’s sort of a one-to-one shift.”

Republicans said the Society of Actuaries report validated their concerns. Senator Lamar Alexander, Republican of Tennessee, said, “This nonpartisan report offers more evidence that what I told the president in 2010 is true: individual insurance premiums will rise under his plan.”

Under the law, insurers cannot deny coverage or charge higher premiums to people because of pre-existing medical conditions.

As a result, Milliman said in the California study, “we expect the average currently insured to experience premium increases because they will be part of a new risk pool” including sicker people who have been excluded from the market in the past.

The White House says the fears of “rate shock” are overblown. Consumers can move from expensive health plans to more efficient, lower-cost plans, the administration says. Officials also predict that people gaining insurance will, on average, be younger and healthier than those who already have it.

San Francisco Chronicle: Medi-Cal Expansion Will Test Capacity

A million more people on rolls may tighten access to providers

Emily Bazar, CHCF Center for Health Reporting
March 2, 2013

In less than one year, the Affordable Care Act’s promise to bring health care to perhaps 1 million more California residents will be tested. On Jan. 1, 2014, Medi-Cal, the publicly funded health program for low-income and disabled residents, launches a huge statewide expansion.
But making a promise is one thing, and delivering is another.
In some places, it’s already difficult for many poor California residents to find a doctor who is able – or willing – to see them. Many medical providers who see these patients say they are overwhelmed, a situation that could worsen when those newly covered by Medi-Cal arrive for care.
“We’re not even talking about 2014. Good luck finding a doctor who takes Medi-Cal now,” said Carmen Burgos of the nonprofit Greater Bakersfield Legal Assistance program. Burgos helps low-income Kern County residents find health care and dental services.
More than 7 million Californians are covered under Medi-Cal, and expanding the program is a major piece of President Obama’s signature health law.
Between 2014 and 2019, another 1 million to 1.4 million Californians will enroll in Medi-Cal, according to UCLA and UC Berkeley estimates.
The Medi-Cal expansion will allow applicants with higher incomes and those who were previously ineligible, such as childless adults, to get coverage. State officials say there’s sufficient access to Medi-Cal services and they are constantly monitoring to ensure recipients can get care.
“We do believe that the Medi-Cal provider network provides adequate access in California now,” said Norman Williams, spokesman for the state Department of Health Care Services, which administers Medi-Cal. The state also is “adequately preparing for 2014 and the expansion.”
But doctors and health care experts disagree.
“We’re experiencing provider shortages right now,” said Alex Briscoe, director of the Health Care Services Agency in Alameda County. “Patients often wait months to get access to care,” he said.
Participation lags
Medi-Cal is California’s version of the federal Medicaid program, and the Golden State ranks poorly in doctor participation compared with other states.
Two studies, including one published in the journal Health Affairs in August, show that 57 percent of California doctors accept new Medi-Cal patients. That’s the second-lowest rate in the nation after New Jersey.
California’s neighbors, Nevada and Oregon, accept 75 percent and 80 percent, respectively. The primary reason doctors don’t participate is financial, doctors themselves say.
Here, too, California scores badly, with one of the nation’s lowest reimbursement rates, ranking 47th of 50.
Eye surgeon and ophthalmologist Andrew Calman is an associate clinical professor at UCSF. He also has a practice in San Francisco’s Mission District, and about 10 percent of his patients are on Medi-Cal, he said.
Calman said he wants to help as many patients as possible, but because he loses money on Medi-Cal patients, he must limit the number he accepts. Calman said Medi-Cal pays him $22 for a regular visit; Medicare and private insurance reimburses between $60 and $100.
“We’re performing an important service, but there is a limit to how much of that we can do and still have a viable practice. We have to pay our rent, we have to pay our salaries to our staff. We have to pay insurance. If it costs me on average $60 to see a patient, there are only so many I can see at $20 before I close my doors.”
In theory, Calman said, the Affordable Care Act is supposed to improve access by covering those who have been previously uninsured. In practice, however, he said it will be hard for many of the newly insured to find doctors willing to see them.
Reimbursements rise
Low Medi-Cal payments are being addressed – temporarily at least – by the Affordable Care Act.
Starting this past January and lasting through 2014, reimbursement rates for many primary care services in Medi-Cal are rising to Medicare levels, funded by the federal government.
In California, the change is dramatic. On average, payments will increase by 136 percent, according to the Kaiser Commission on Medicaid and the Uninsured.
“The payment increase is a significant incentive that we anticipate will help attract new primary care physicians to the Medi-Cal provider network,” said Williams of the Department of Health Care Services.
But improving access to care will involve more than convincing more doctors to participate, said Linette Scott, the department’s chief medical information officer.
It will be about changing the way care is delivered, she said. As the state moves more Medi-Cal recipients into managed care, she said, models of treatment will rely more on teams of health professionals to care for patients, not just individual doctors.
Plus, health plans must ensure there are enough doctors and other medical providers in their networks to provide that care, Williams said.
Clinic capacity stretched
In some communities, many Medi-Cal patients have no other choice than clinics, said Debbie Wood, coordinator of school health for the Bakersfield City School District, where nearly 90 percent of students live at or below the poverty level.
“They go to the clinics and they sit there for six, seven, eight hours. They may have an appointment at 8 a.m. and not be seen until 4 in the afternoon,” she said. While patients ultimately receive care at the clinics, they pay for the crowded conditions in other ways, Wood said. “Many of our families are in agricultural work,” she said. “If they miss a day they don’t get paid. So they go to the emergency room.”
Louise McCarthy, president of the Community Clinic Association of Los Angeles County, said clinics are working double-time to hire more doctors and increase capacity, but no one is sure whether their efforts will be enough.
“At a certain point, the clinics are going to need to say, ‘I need to cap enrollment or cap my patient load,’ ” she said. “It’s critical we take on new patients in a sustainable manner.”

Los Angeles Times: More states cleared to operate health insurance exchanges,0,4957751.story

The Obama administration has given conditional approval to D.C. and 17 states, including California, to run exchanges where consumers can shop for coverage.

By Noam N. Levey, Washington Bureau
January 4, 2013

WASHINGTON — The Obama administration has cleared what could be the final group of states to open their own health insurance exchanges this fall, advancing a key goal of the 2010 healthcare law to provide Americans with new options to shop for coverage.

The conditional approvals announced for California, Hawaii, Idaho, Nevada, New Mexico, Vermont and Utah mean 17 states and the District of Columbia are on track to operate their own insurance exchanges this year.

Exchanges in the remaining states will be run by the federal government or by state-federal partnerships.

“It’s encouraging to see so many states moving forward,” Secretary of Health and Human Services Kathleen Sebelius said. “Finding the right health plan is going to be less costly and less complicated than ever before.”

Administration officials and many healthcare experts hoped each state would operate an exchange, a cornerstone of the Affordable Care Act designed to allow consumers who don’t get health benefits at work to comparison shop for health plans, much as they now buy airplane tickets.

Health plans in these exchanges will have to meet new minimum standards and guarantee coverage, even to those with preexisting medical conditions. Consumers who make less than four times the federal poverty level will be eligible for new government subsidies to offset their premiums.

Most states led by Democratic governors chose to set up an exchange. Colorado, Connecticut, Kentucky, Massachusetts, Maryland, Minnesota, New York, Oregon, Rhode Island, Washington, and the District of Columbia had already received preliminary clearance from the administration.

Delaware and Arkansas, which have Democratic governors, have received conditional approval to run a partnership exchange. Several other states, including Illinois, Iowa and North Carolina, have expressed interest in such an arrangement.

But most Republican state leaders, many of whom have vigorously fought implementation of the 2010 law, balked at setting up an insurance marketplace, with many complaining that it would saddle states with additional costs. States that defer to the federal government can reconsider in the future.

For now, only four GOP-led states — Idaho, Nevada, New Mexico and Utah — are moving ahead with their own exchanges.

Many healthcare experts have been closely watching Utah, which has been operating a limited exchange for small businesses for years.

Obama administration officials indicated that the state would have to considerably expand services to comply with the law, including adding resources to help consumers shop for health plans and developing a system to fund the exchange. If Utah does not meet these conditions, the administration could step in and run the state’s exchange.

The administration also is in discussions with state officials in Mississippi, who earlier indicated they wanted to run their own exchange.

Gary Cohen, who oversees the Obama administration’s exchange effort, said it was now unclear whether the state would move forward because of a dispute between the state’s Republican governor, who does not want to run an exchange, and the state’s Republican insurance commissioner, who does.

Cohen did not say when a final decision would be made on whether Mississippi would run its own marketplace.

The New York Times: Hospitals Fear They’ll Bear Brunt of Medicare Cuts

December 18, 2012

WASHINGTON — As President Obama and Congress try to thrash out a budget deal, the question is not whether they will squeeze money out of Medicare, but how much and who will bear the brunt of the cuts.
Republicans say that some of the savings should come from beneficiaries, and they are pushing proposals like raising the eligibility age or increasing premiums for people with high incomes, who already pay more than the standard premium. Even President Obama has proposed higher premiums, increasing the likelihood that the idea could be adopted. But any significant tinkering with the benefits for older Americans comes with significant political risks, and most Democrats in Congress strenuously oppose raising the age when Medicare coverage begins.

With growing pressure to reach an agreement on deficit reduction by the end of the year, some consensus is building around the idea that the largest Medicare savings should come from hospitals and other institutional providers of care.

“Hospitals will be in the cross hairs for more cuts,” said Lisa Goldstein, an analyst with Moody’s Investors Service, which follows nonprofit hospitals that issue bonds. While hospital executives fiercely defend the payments their own institutions receive, many acknowledge that Medicare is spending too much and growing too fast.

Those executives point out, however, that they have already agreed to $155 billion in cuts over a decade as part of the Affordable Care Act and they face billions more in additional cuts as part of the current negotiations. They argue that such large cuts to hospitals will ultimately affect beneficiaries.

“There is no such thing as a cut to a provider that isn’t a cut to a beneficiary,” said Dr. Steven M. Safyer, the chief executive of Montefiore Medical Center, a large nonprofit hospital system in the Bronx.

Mr. Obama and Speaker John A. Boehner continued trying on Tuesday to reach an overall budget agreement, which would call for significant savings in Medicare and would avert a deep cut in Medicare payments to doctors, scheduled to occur next month.

Mr. Boehner said that an increase in the eligibility age for Medicare, favored by many Republicans, could wait until next year.

“I don’t believe it’s an issue that has to be dealt with between now and the end of the year,” Mr. Boehner said Tuesday when asked about a possible change in the eligibility age. “It is an issue, I think, if Congress were to do entitlement reform next year and tax reform, as we envision, if there is an agreement, that issue will certainly be open to debate in that context.”

The starting point for the current negotiations is President Obama’s most recent budget request, which proposed legislation that would save $300 billion, or 4 percent of projected Medicare spending, over 10 years.

By contrast, Republicans in Congress are seeking savings of $400 billion to $600 billion, at least some of which should come from beneficiaries, they say.

Members of the Medicare Payment Advisory Commission, an influential panel that advises Congress, see many opportunities to rein in costs, and they say that financial pressure on providers could make them more efficient without harming the quality of care. At a meeting of the panel earlier this month, one commission member, Scott Armstrong, president of Group Health Cooperative, a nonprofit health system in Seattle, said Medicare spent “too much” on inpatient hospital care — $117 billion last year. “In an efficient system,” he said, “we wouldn’t be spending that kind of money on hospital services.”

Although Congress may leave the details of Medicare savings to be worked out next year, there is already discussion of cutting special payments to teaching hospitals and small rural hospitals. Lawmakers are also considering reducing payments to hospitals for certain outpatient services that can be performed at lower cost in doctors’ offices. Medicare pays substantially higher rates for the same services when they are provided in a hospital outpatient department rather than a doctor’s office. The differential added $1.5 billion to Medicare costs last year, and as hospitals buy physician practices around the country, the costs are likely to grow, the Medicare commission says.

The savings contemplated by Mr. Obama and Mr. Boehner are substantially larger than the Medicare savings that would be produced by automatic across-the-board cutbacks scheduled to start next month if Congress does not intervene. Those Medicare savings have been estimated at $123 billion from 2013 to 2021. Some hospital executives favor the automatic cuts as more equitable — and less painful — than some of the specific reductions being contemplated.

Hospital administrators and others warn of potential hospital closings, shutting down of unprofitable services like hospitalization for psychiatric care and less access to medical care for the most vulnerable if the cuts are too deep. Nancy M. Schlichting, the chief executive of the Henry Ford Health System in Detroit, says severe cuts might make it harder for hospitals like hers to treat patients without insurance. “It’s a big question whether we can continue to do that,” she said. “We would have to make tough decisions.”

Many rural hospitals are worried about a reduction in certain special payments they received because they treat relatively few people and depend heavily on Medicare as a source of revenue. The payments were put in place after Medicare changed the way it paid hospitals in the 1980s and hundreds of rural hospitals disappeared, said Alan Morgan, the chief executive of the National Rural Health Association in Washington.

“We have really struggled in the last couple of years to improve our financial condition,” said Jodi Schmidt, the chief executive of Labette Health, a small hospital in Parsons, Kan. The hospital was able to provide trauma services to people in nearby Joplin, Mo., after a tornado devastated the hospital there. “With more cuts, the reality is we’re going to have to really cut services,” she said.

Urban teaching hospitals, which are already receiving some reduced payments for treating poor people under the federal health care law, say they, too, will have difficulty managing if there are significant cuts to medical education programs to train physicians and to the higher payments they get for outpatient care. Some of the hospitals say they have created integrated systems of doctors and hospitals, already delivering care at lower costs, that will suffer.

And any significant reduction in payments is likely to increase the pace of mergers among hospitals as they combine to become more efficient — and try to negotiate better rates with insurers, industry analysts say.

Other providers that could see cutbacks include home health agencies. Glenn M. Hackbarth, the chairman of the Medicare payment commission, said they provided invaluable services but were receiving “high levels of payment, way above costs” in many cases.

Complicating the negotiations is also a fundamental disagreement over where the savings should go. Republicans want to use Medicare savings to reduce federal budget deficits. By contrast, many Democrats and health policy experts would prefer to use the money to pay doctors.
Under current law, doctors face a 26.5 percent cut in their Medicare fees on Jan. 1. Just to block that cut and freeze payments to doctors would cost $11 billion next year and more than $240 billion over 10 years, the Congressional Budget Office estimates.

Lawmakers are considering other alternatives, including raising the Medicare eligibility age, a top Republican priority. Republicans say an increase in the Medicare eligibility age is justified because life expectancy has increased significantly since the program was created in 1965. Congressional Democrats say the change would shift costs to older Americans and increase the number of uninsured.

Mr. Obama considered such a proposal in budget negotiations last year and again in the last month. On Thursday, the No. 2 Senate Democrat, Richard J. Durbin of Illinois, said he understood that the idea of increasing the Medicare eligibility age was “no longer one of the items being considered by the White House.”

The Congressional Budget Office analyzed a proposal to increase the eligibility age by two months a year until it reached 67, up from the current 65. Under this proposal, the budget office said, the federal government could save $113 billion over 10 years.

Besides hospital cuts, negotiators are considering a proposal that would require drug manufacturers to provide deeper discounts on prescription drugs dispensed to low-income Medicare beneficiaries. Mr. Obama and many Democrats say this could save more than $150 billion over 10 years. But many Republicans and drug companies oppose it as a form of price controls.

Another proposal being debated would impose a surcharge on Medicare premiums for older Americans who buy the most generous private insurance to cover their deductibles, co-payments and other out-of-pocket costs. The White House and some economists say such Medigap insurance encourages the overuse of medical care. But many beneficiaries are willing to pay for the extra protection.

A White House proposal to impose the surcharge on new beneficiaries would save $2.5 billion over 10 years. The Congressional Budget Office says that another option, setting more stringent limits on Medigap policies, could save more than $50 billion.

But hospitals say they are worried that, in the end, Congress will turn to them for a large share of the savings. Montefiore’s chief executive, Dr. Safyer, said hospitals like his had already made significant changes, focusing much more on keeping patients healthy and out of the hospital. “We’ve become much more efficient,” he said. “We’ve had price compression. We’re innovating and changing.” Those changes take time, he said, but he said he was convinced that they would result in lower spending in the long run.

Dr. Safyer refused to speculate on what Montefiore might do if it faced additional cuts, which could easily total 6 percent of Montefiore’s revenue. “This is not crying wolf,” he said. He added, “I don’t have a Plan B.”

Los Angeles Times: Obama’s reelection cements his healthcare law

Republican state leaders must decide quickly whether to implement it or have the federal government do so. Obama also faces imminent challenges to carry out the legislation.,0,6639904.story

By Noam N. Levey, Washington Bureau
5:49 PM PST, November 8, 2012

WASHINGTON — President Obama’s victory all but assures that his landmark healthcare law and its guarantee of insurance coverage for nearly all Americans will be implemented, effectively putting an end to the Republican campaign to derail the law.

That outcome — which seemed almost unimaginable this spring when the Supreme Court considered whether the Affordable Care Act was constitutional — puts immediate pressure on many Republican state leaders who fought it. They must decide in days whether to implement it or have the federal government do it for them.

Tuesday’s results also present Obama with a new set of challenges as he tries to fulfill the promise of his signature legislative achievement, the biggest expansion of the social safety net since Medicare and Medicaid were created in 1965.

Federal and state officials nationwide must create systems to handle millions of new insurance customers. Key will be setting up insurance marketplaces, known as exchanges, in every state by next October. (California has established one, but most states have not.)

Under the law, millions of Americans should be able to get health insurance for the first time starting in 2014. Millions more who don’t get coverage through work should be able to buy a health plan that meets new basic standards.

“It’s all over but the shouting,” said Families USA Executive Director Ron Pollack, a consumer advocate and leading champion of the law. “What was very questionable at the start of the year has been settled. … The Affordable Care Act will be a permanent fixture of the American healthcare system.”

But Obama will face renewed pressure to scale back the law as Congress tries to rein in federal budget deficits.

The act authorizes more than $1 trillion in new federal spending over the next decade. Although that is offset with new taxes and other spending cuts, critics say the law’s program to provide insurance subsidies to households making up to four times the federal poverty level — or about $90,000 for a family of four — is overly generous.

At the same time, health insurance companies, hospitals, employers and other interest groups are gearing up lobbying campaigns to modify the law, parts of which threaten to push up healthcare costs.

Also unclear is how the administration will contend with GOP governors who continue to resist the law and may spurn hundreds of billions of federal dollars to provide insurance coverage.

Several states, including Texas, Florida and Louisiana, have indicated they will not open their Medicaid programs in 2014 to cover all low-income citizens. Most states — including those with Republican statehouses — are expected to expand Medicaid because of the federal money the law provides.

The president could face even more resistance to the law if insurance premiums and other medical costs continue to rise in coming years, undermining a pledge he made in pushing for reform.

“It will be full-speed ahead with implementation. But there could still be some rocky going,” said Dean Rosen, a Republican healthcare lobbyist and onetime aide to former Senate Majority Leader Bill Frist.

James Capretta, associate director of the White House Office of Management and Budget under President George W. Bush, said many conservatives would not stop contesting the law. “The fight over the size and scope of government will continue,” he said. “Giving up is not an option.”

Polls show the public is evenly divided over the legislation. Republicans remain strongly in favor of repeal. And with control of the House, GOP lawmakers could continue to push proposals to eliminate or roll back parts of the law.

Obama in the past has signaled willingness to modify the law. But he has flatly rejected any major retrenchments. As the presidential campaign drew to a close, Obama increasingly defended the law. The president was introduced at one of his final rallies by a father whose 8-year-old daughter got treatment for leukemia thanks to the law, an anecdote he repeated in his victory speech Tuesday night.

Administration officials also insist they will not delay the law, which will allow Americans who don’t get coverage through work to buy insurance on Internet-based marketplaces called exchanges. “Consumers in all 50 states will absolutely have access to an exchange come January of 2014,” said Department of Health and Human Services spokeswoman Erin Shields Britt.

Under the law, states have until Nov. 16 to tell the department whether they will set up an exchange, a complicated project requiring new data systems, regulations and bureaucracy.

Just 15 states, including California, Maryland and Connecticut, as well as the District of Columbia, have established an exchange, according to the nonpartisan Kaiser Family Foundation. More than a third of the states are expected to reject that option, forcing the federal government to step in.

There has been much hand-wringing among state officials and others over the slow process of writing regulations outlining how these federal exchanges will work. But several experts said it was highly likely the Obama administration would be ready to open exchanges next fall.

Heather Howard, who directs the State Health Reform Assistance Network at Princeton University, cited Washington’s recent experience creating the popular Medicare Part D prescription drug program.

More uncertain is what smaller modifications the Obama administration may agree to make.

Insurance companies have been warning that a new tax on insurers — scheduled for 2014 — will be passed on to consumers, further inflating healthcare costs. Many insurers also warn that regulations limiting how much more insurers can charge older consumers could mean much higher rates for young people.

Many hospitals, meanwhile, are worried they could be saddled with more uninsured patients as states with conservative leaders decline to extend Medicaid coverage.

And employers are stepping up warnings that the law’s mandate requiring them to provide health benefits to full-time employees may prompt some to shift more workers to part-time, depressing employment.

Adjusting the law has been all but impossible over the last 2 1/2 years as Republicans pledged to destroy the legislation, fueling Democratic resistance to acknowledging emerging problems.

Those political dynamics may shift in Obama’s second term as implementation becomes an accepted reality, said Neil Trautwein, vice president of the National Retail Federation, many of whose members have been ardent opponents of the law.

“What gives me hope now is that so long as the Affordable Care Act remains the law of the land, I think Republicans and Democrats alike will have an interest in preventing any harmful effects on the economy,” he said.

Los Angeles Times: California speeds revamp of health insurance market

With Obama victory, state officials move ahead with implementing healthcare changes under the Affordable Care Act and expand insurance coverage.,0,6188013.story

By Chad Terhune
November 7, 2012

With President Obama’s reelection lifting a potential roadblock, California officials are rushing to implement the federal healthcare law and revamp the insurance market for millions of Californians starting next fall.

Republican challenger Mitt Romney had vowed to overturn the Affordable Care Act, casting uncertainty over efforts in California to use billions of federal dollars to extend coverage to many of the state’s 7 million uninsured.

Wednesday, California officials disclosed plans to spend nearly $90 million next year on marketing and outreach to millions of consumers who may become eligible for premium subsidies and other assistance under the federal law starting in 2014.

“The election removes what was really the last distraction from focusing on the job, which is to get millions of Californians enrolled in health coverage,” said Peter Lee, executive director of the California Health Benefit Exchange, which was renamed Covered California last week.

California was the first state to establish an insurance exchange after Congress passed the Affordable Care Act in 2010, and more than 30 other states have sought federal help in enacting their own. But some Republican-led states resisted the healthcare expansion as the presidential campaign wore on, and now the federal government may step in to open exchanges in those states.

The California exchange aims to enroll about 2 million new people in Medi-Cal, the state’s Medicaid program for the poor and disabled, and help an additional 2 million Californians buy private coverage with federal subsidies.

State leaders and consumer advocates remain concerned about whether the exchange will attract enough initial enrollment, particularly among healthier consumers, to keep premiums affordable. “I think the exchange will be a tougher sell than originally thought,” said Steve Valentine, president of Camden Group, an El Segundo healthcare consulting firm.

Meanwhile, health insurers are scrambling to assemble networks of medical providers, negotiate rates and design various health plans that comply with new levels of standardized benefits in the exchange.

“There are lots of details to sort out, and we don’t have all that much time,” said Paul Markovich, president of Blue Shield of California.

State lawmakers also must resolve several insurance issues in a special session expected to convene in January. Open enrollment in this new state-run insurance market will start in October 2013.

Those policies take effect in January 2014, when most Americans face the requirement to buy health insurance or pay a penalty.

To woo consumers, Lee said, the exchange plans to use a wide range of marketing methods, from grass-roots efforts through churches and schools to advertising on TV and radio, to educate California’s large and diverse population about the new healthcare options. Next week, the exchange’s board is expected to finalize its marketing and enrollment plans ahead of a Nov. 16 federal deadline.

With the election over, federal officials are also expected to issue more guidance to states on implementing the healthcare law.

Some industry experts have lobbied federal officials to phase in new rules that limit the difference in consumer premiums by age.

By some estimates, that change may raise rates for some younger consumers as much as 45% under the federal law. Older consumers could pay about 13% less.

Critics said this change may attract too many sicker policyholders and too few of the young, healthier customers, threatening the viability of the exchange if healthcare costs rise too fast.

Patrick Johnston, president of the California Assn. of Health Plans, warned that “the risk of rate shock is real.”

The exchange hasn’t taken a formal position on the age-rating issue, but Lee said he’s open to federal officials gradually implementing those requirements beyond 2014.

“We need to look at a whole range of options to moderate price increases,” he said.

The Sacramento Bee: VSP to add 400 jobs after favorable state ruling

By Dale Kasler
Published Wednesday, Oct. 31, 2012

Vision Service Plan isn’t going anywhere. In fact, a favorable decision by a state agency Tuesday prompted the Rancho Cordova insurer to green-light a plan to add 400 jobs in the area.
The state agreed to rewrite the rules governing California’s fledgling online insurance market, a crucial piece of President Barack Obama’s overhaul of the health care system.
The revision gives companies like VSP – which insure eye care only – much greater access to sell coverage in the online market. VSP and other eye-care insurers can now take aim at the full range of Californians who will buy coverage through the market, which begins operations in January 2014.
The agency overseeing the new market, the California Health Benefit Exchange, said in August that stand-alone vision insurers could sell coverage to small businesses but not individuals – the biggest slice of the market. As many as 2.4 million uninsured Californians are expected to buy coverage through the exchange, which will be called California Covered.
VSP, which employs 2,100 Sacramentans, hinted it might leave the state. A slew of government and business leaders, led by Senate President Pro Tem Darrell Steinberg, D-Sacramento, urged the agency to change its mind.
The agency’s governing board reversed course Tuesday, voting 5-0 to let VSP and its peers become full participants in the market.
Within minutes, VSP Chief Executive Rob Lynch told The Bee the company will hire 400 workers in the region. The hirings had been deferred until the controversy was settled.
“We’ll take the hold off the jobs,” Lynch said. The hiring includes 250 new workers at VSP’s optical lens-grinding facility near Highway 50.
Lynch added that the company wasn’t actually contemplating leaving the state. But if the exchange hadn’t changed its mind, he said VSP would have taken “a serious look” at directing all future expansions to other states.
Ohio, Texas and New York, where VSP has operations, have been courting the company, he said.
Several of VSP’s supporters argued that the exchange’s original decision made little business sense because many Californians buy vision coverage from stand-alone companies like VSP.
“We think this is good for consumers,” the exchange’s executive director, Peter Lee, said in urging the board to reverse course.
The board’s original decision was tied to the federal tax subsidies being offered to individuals who buy through the exchange.
Letting individuals buy vision insurance from one company – and the rest of their insurance from another company – would require splitting the subsidies between the policies. The exchange board originally said that was too complicated.

Kaiser Health News: Hospitals Treating The Poor Hardest Hit By Readmissions Penalties

By Jordan Rau

KHN Staff Writer

Aug 13, 2012

Medicare’s new crackdown on readmissions will hit hospitals that treat large numbers of low-income patients especially hard, a Kaiser Health News analysis shows.

The debate over whether readmissions penalties would fall most heavily on safety-net hospitals has been a flash point since penalties were included in the 2010 health law.

The hospital industry has emphasized that poor patients are more likely to be readmitted, as they have a tougher time affording medications, often don’t have access to doctors for check-ups and can have difficulty securing transportation to get follow-up care. Hospitals also have complained that many safety-net hospitals operate on tight margins.

“You’re probably going to end up penalizing those very places that need to put resources into patients when they leave the hospital,” said Atul Grover, chief public policy officer of the Association of American Medical Colleges.

The federal Centers for Medicare & Medicaid Services has noted that some of the hospitals with the most impoverished patients, such as Denver Health in Colorado, are able to avoid excessive readmissions, proving the challenges are surmountable. “We do not want to hold hospitals to different standards for the outcomes of their patients of low socioeconomic status,” CMS wrote in a regulation issued earlier this month. The agency added: “We do not want to mask potential disparities or minimize incentives to improve the outcomes of disadvantaged populations.”

The KHN analysis separated hospitals into four groups based on an index that the Centers for Medicare & Medicaid Services uses to decide whether a hospital deserves extra payments for treating large numbers of low-income patients. The index looks at the number of patients who qualify for Medicaid, the joint federal-state health program for the poor, and Medicare’s Supplemental Security Income benefit for the poor and disabled.

For each group, KHN examined what penalties the hospitals in each group were assessed by Medicare. Those penalties are based on the rates of readmission within 30 days of discharge for heart failure, heart attack and pneumonia patients between July 2008 and June 2010.

One hundred hospitals in the group with the most poor patients –12 percent — will receive the maximum penalty from CMS: a 1 percent decrease in their reimbursements starting in October. By contrast, only 47 hospitals, or 6 percent, in the group with the fewest poor patients will receive the maximum penalty, the data show.

Hospitals with lots of low-income patients were generally more likely to receive a penalty of any size.

The data show that 204 safety net hospitals overcame their patients’ challenges to minimize readmissions to a level that Medicare determined did not warrant any penalty. Among the hospitals with the fewest low-income patients, 379 avoided any penalty.

San Francisco Chronicle: Overcrowded ER points to larger problems


By Victoria Colliver
Updated 9:47 a.m., Tuesday, August 7, 2012

California hospitals in areas with large minority populations are disproportionately affected by emergency room overcrowding, making them more likely to ease the congestion by diverting ambulances to other hospitals, according to a UCSF-led study.
The study, which looked at 2007 data from 202 hospitals around the state, found hospitals that served the greatest percentage of minority patients turned away ambulances because of overcrowding as much as four times as often as those that served the smallest number of minorities.
Health experts say ambulance diversion, the practice of turning ambulances away temporarily when a hospital’s emergency department becomes overcrowded, can lead to delayed care and poorer health outcomes.
What this study points to is that overcrowding is a symptom of larger problems within the health care system, the study’s author said. These include patients who lack primary-care services that could keep them out of the hospital, and hospitals that are overwhelmed by poorer patients or could use better emergency management. These issues can be particularly acute in areas with higher minority populations.
“Diversion originally was created for patient safety; it was created as a safety valve,” said Dr. Renee Hsia, lead author of the study and assistant professor of emergency medicine at UCSF.
“What diversion shows is that the system is not prepared to provide the care it was designed to provide,” said Hsia, who is also an attending physician in San Francisco General Hospital’s emergency department. She said the study is the first to use hospital-level data to show how diversion affects minorities.
Emergency departments become overcrowded for several reasons. Patients – often those who are uninsured or lack adequate access to primary-care services – end up there for nonurgent care or for serious conditions that could have been treated earlier or even prevented.
Sometimes the emergency department becomes overcrowded because hospitals lack the proper staffing to admit patients into the hospital so they get stuck waiting in a room or on a gurney in the emergency department for hours. Other times the hospital may lack the equipment or services it needs to treat a specific medical problem.
Overcrowding, whatever the cause, can lead to ambulance diversions and impact the quality of care. In a separate study, which was published last year in the Journal of the American Medical Association, Hsia found that patients seeking care for heart attacks at busy hospitals undergoing ambulance diversion had a significantly higher chance of dying within 30 days.
Hospital officials weren’t surprised by the results of the new study, which were published online Monday in the journal Health Affairs.
Jan Emerson-Shea, spokeswoman for the California Hospital Association, said communities with high numbers of minorities tend to have more people who are uninsured, are on Medi-Cal or otherwise lack access to care.
“If they had access to primary-care services either through a clinic or an urgent-care center to treat that earache … it would help mitigate the ER overcrowding issue,” she said.
Hsia said a number of issues must be addressed to fix the problem, including better management of hospital flow as well as possible statewide policies to regulate diversion.
Overcrowding can affect all patients, even those who live in areas that are not diverting ambulances. “If another hospital is crowded,” she said, “they may be going to go to your ER.”

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