TRP Health Policy Report
September 8, 2014
The Week Ahead
Members of the House and Senate return to Washington today following a 5-week recess. Lawmakers will have just a few weeks to handle a series of ‘must-pass’ legislative items before adjourning again until the November elections. Key issues expected to be considered include a short-term continuing resolution (CR) to avoid a government shutdown, reauthorization of the Export-Import bank, extending the Internet Tax Freedom Act and consideration of a fiscal 2015 Defense Authorization bill. House leadership also plans to revisit several energy and “jobs” measures in late September, including bills to approve the Keystone XL pipeline. The Senate may consider a constitutional amendment regarding campaign financing, legislation on the minimum wage, student loans and a bill to address the Supreme Court’s Hobby Lobby ruling. Senate leaders say the chamber will be in session straight through September 23rd. The House is scheduled to be in session from September 8-19, and is likely to forgo a possible September 29-October 2 session if they are able to tackle imminent legislation without any hiccups.
CMS Actuaries: Healthcare Spending to Rise in 2014
According to a report issued by CMS economists and actuaries last Wednesday, U.S. health care spending is expected to rebound after years of slow growth. The study noted that the minimal, yet stable growth in health spending in recent years likely will end in 2014 for several reasons, such as coverage expansions under the ACA. Specifically, the report predicted that total health spending will increase by 5.6% in 2014. Spending would then increase by an average of about 6% annually until 2023, when healthcare costs will amount to 19.3% of the country's total spending. By 2023, the report estimated that the U.S. will spend $5.2 trillion on healthcare, up from $2.9 trillion in 2013. In addition, the report estimated that federal Medicaid spending will rise by 27%, from $254 billion in 2013 to $323 billion in 2015. During that same timeframe, state spending on Medicaid is expected to increase by 12% to $218 billion, up from $195 billion. The report predicted that businesses and households will pay a slightly smaller share.
The study also found that limited growth in Medicare reimbursements under the ACA and a trend toward higher deductible health plans could help curb the nation's health spending. Additionally, an excise tax on costly employer-sponsored health plans that is scheduled to take effect in 2018 is predicted to modestly restrict premium growth. The report's authors said that an increase in the use of generic prescription drugs, more scrutiny on providers' prices and trends toward health plans that require more out-of-pocket costs will help to reduce government spending. Other experts said that changes in care delivery – such as insurers awarding providers for delivering better quality care – will also help to control costs. Of note, the report assumes that Congress will approve another “doc fix” that will negate scheduled payment cuts under Medicare's sustainable growth rate (SGR) formula. In related news, an update to CBO budget forecasts showed that per capita Medicare spending is declining. According to the budget office update, the U.S. will spend $11,200 for each Medicare beneficiary this year, compared with $12,000 on average per beneficiary in 2011. Further, CBO projects that cost to fall below $11,000 by 2017 and stay below 2014 levels until 2020.
HealthCare.gov CEO Predicts Challenges Ahead
Last week, the new CEO of HealthCare.gov predicted challenges for the system's second enrollment period this November. In a media interview, Kevin Counihan, who previously led Connecticut's state exchange, cited concerns such as the shorter sign-up period for 2015 plans, which could create problems for both officials and consumers. The 2014 enrollment period was six months long, but with just three months to sign up more consumers, analysts say this year's process could prove a tough challenge as insurers and the government try to convince hard-to-reach populations to purchase health plans. In addition, current policyholders are likely to encounter changes in their premium prices that could also cause confusion. Counihan acknowledged that this year’s effort would be “more complicated,” highlighting the task facing federal health officials as they work to prevent a repeat of last year's first enrollment period. Counihan did not indicate that his concerns were related to technology, which has undergone extensive repairs since last October’s bumpy launch of the HealthCare.gov website.
Some ACA Premiums to Drop, KFF Study Finds
Last Friday, a new Kaiser Family Foundation (KFF) report estimated that premiums for certain plans sold through the Affordable Care Act's insurance exchanges will decline slightly in 16 U.S. cities in 2015. KFF researchers examined premium data in 15 states and the District of Columbia. According to the analysis, the premium for the second-lowest-cost silver plan, which is used to determine tax credits, will go down by an average of about 1 percent. The changes range from an 8.7 percent price increase in Tennessee to a 15.6 percent decrease in Denver. Each percentage represents the plan's change in cost before applying tax credits, which will help soften the impact of most price increases.
The study found that changes in price on the exchanges are “quite modest” for most low-cost insurers “where enrollment is concentrated.” The KFF authors encouraged consumers to comparison shop in order to get the best price starting in November, when the next open enrollment period begins. “While the marketplaces will auto-renew enrollees in their current plans and generally continue their estimated tax credits at the same level as in 2014, many enrollees may be able to lower their premiums substantially by switching plans,” they wrote. “Effective communication to enrollees and consumer assistance will be key to helping people understand their options.”
'Two-Midnights' Settlement Proposed
On August 30, CMS offered to pay hospitals 68% of what they have billed the government to settle pending appeals challenging Medicare's denials of reimbursement for short-term care. The final rule for the fiscal 2014 Inpatient Prospective Payment System established a time-based ‘two-midnights’ that based Medicare Part A payments on whether a doctor expects a patient's treatment to require a two-night hospital stay. In January, CMS instructed auditors to wait until Oct. 1 to begin scrutinizing such short inpatients stays. Hospitals often appeal short inpatient claim denials and disputes have been taking 18 months or longer to be resolved, according to industry analysts.
Under the CMS settlement offer, payments would apply only to patient admission dates prior to Oct. 1, 2013, and would exclude payments for beneficiaries enrolled in Medicare Part C. CMS said it would then pay hospitals within 60 days of agreeing to the settlement. CMS said its settlement offer could help hospitals “alleviate the administrative burden of current appeals on both the hospital and Medicare system.” Under the CMS proposal, hospitals have until Oct. 31, 2014, to participate in the settlement, although they can request an extension. The American Hospital Association, which has sued CMS over the two-midnight rule, said the agency's offer could “provide some temporary relief” but criticized the proposal as being overly narrow and “fail[ing] to address the underlying cause of the problem — overzealous RAC reviewers.” Other associations and stakeholders groups were mixed in their response, with some analysts predicting that some hospitals would take advantage of the voluntary settlement.
SAMHSA: Cost a Key Factor for Millions Seeking Mental-Health Treatment
Last Thursday, the Substance Abuse and Mental Health Services Administration (SAMHSA) issued a report finding that millions of American did not seek treatment for mental-health and substance-abuse issues in 2013 because they lacked insurance coverage or were unable to afford it. Last year, 20.2 million people ages 12 and older were in need of substance-abuse treatment, according to the report. Additionally, an estimated 43.8 million adults aged 18 and above were dealing with a mental illnesses not related to substance abuse. However, 9.2 million of them did not receive mental healthcare, with a lack of coverage or affordability believed to have played a part in these situations, according to the report.
SAMSA officials said the findings show that more work needs to be done to promote ACA plans offered on exchanges which cover substance-abuse treatment and mental-health visits as essential benefits. Officials said that the coverage expansion means that there will likely be an increase in demand for these services at a time when there's already a shortage of mental-health and service professionals. Staffing shortage concerns have led SAMSHA to support the use of peer providers. Many of these individuals are not certified, but instead use their life experiences of recovery from mental illness and/or addiction to aid another person's treatment. Despite the lack of professional certification, many patients reported that peer providers are crucial in helping individuals get the treatment they need.