Obama and Boehner Have Forever Changed the Medicare Debate
President Obama and House Speaker Boehner may have failed to strike a "grand bargain" on the nation's deficit, but they have accomplished one thing in our world: they have forever changed the terms of the Medicare debate. There is an air of inevitability about some of the proposals they have put forth brewing here in DC.
Obama says he could accept "means testing" the program, which would require affluent seniors to pay more for services. Obama used himself as an example of someone who would pay a higher rate. Obama has also been open to other proposals, including charging co-pays for home health services and for lab work.
Obama also floated on several occasions a provision that would raise Medicare's eligibility age from 65 to 67 -- one that Boehner agrees with him on. In doing so, they gave a controversial idea legitimacy and high political cover. The concept is now likely going to be a fixture in the Medicare debate.
The idea has drawn some support from the GOP in the past. Senators Tom Coburn (R-OK) and Joe Lieberman (I-CT) introduced a bill last month moving the eligibility age up by two years, and Democrats ran from it like scalded dogs. Senate GOP Leader Mitch McConnell didn't endorse the proposal but applauded the effort. Grover Norquist -- the guy behind the GOP's stalwart refusal to move one inch on taxes in this debate -- backed it too.
Under the ACA, in 2014 insurers are banned from turning down any patient — and that could make increasing the eligibility age an easier pill to swallow because 65-66 year-olds would ostensibly have access to coverage in the exchanges. It also means that any increase in eligibility age is unlikely to pass until the exchanges and subsidies are in place in 2014.
The "agreement" between Obama and Boehner -- before talks collapsed last week -- bumped up the eligibility age from 65 to 67 over about two decades. One approach called for increasing the age by one month per year beginning in 2017 until it reached 66 in 2029. In 2030, it would increase two months each year until it hit 67.
The Congressional Budget Office said raising the eligibility age to 67 would save $125 billion over 10 years, adding that the savings would be somewhat reduced by new spending on Medicaid and insurance subsidies to cover the uninsured 65- and 66-year-olds. It's still too big a number to ignore when the bills come due next month.
Expect to see a lot more discussion about these ideas in the coming weeks as we hopefully find our way out of this looming mess. I'm turning 43 next week -- and my retirement plan assumes no Medicare or Social Security for me or my wife by the time we're ready for it. Our generation should be prepared for a very different look to Medicare now that the once unthinkable has become a fixture of the debate.
Medicare Advantage and PDP Plans Continue Robust Growth
The August enrollment numbers are in from CMS. 61,000 new MA members in August and 544,000 year-to-date. MA and PDP plans continued their robust growth on pace to exceed 2010's enrollment gains. Year to date it appears Boomer "age-ins" are continuing to choose MA at a higher rate than their forebears -- more than 40% for the last two years. With major MA/PDP sponsors like Aetna and HealthNet now relieved of marketing and sales sanctions from CMS, MA enrollment growth may exceed 7% for the year.
The story behind the numbers is clear: MA plans are adjusting just fine to the "new normal" post-ACA. Benefit designs have held relatively steady, and plans are making big investments in better revenue management, like mastering risk adjustment and the new Star Ratings bonuses, to offset the ACA's cuts. Many are revisiting their entire service model in response to Stars, recognizing that keeping members is the new selling.
At the pace we are on, MA will hit 15 million beneficiaries sometime in 2016. But that of course assumes Congress and the debt reduction "supercommittee":
- don't require another pound of flesh from the plans in whatever deal they hatch up in November
- get the Medicare physician pay fix enacted permanently. There's an enormous price tag of over $300 billion over 10 years for this, but without it, MA rates could be cut another 7% in 2013 and beyond. This is the single largest threat facing the program in the next several years.
Let's hope the noble experiments in creating insurance markets that are MA and Part D are allowed to continue when Congress reconvenes in September.
What If the Individual Mandate is Overturned?
If the individual mandate is overturned, what will happen next will largely depend on the outcome of the 2012 elections. At the moment, it is hard to imagine that the Congress could compromise on any legislation related to health care reform. But that could change.
The biggest problem will be the issue of adverse selection in the individual market with the result that premiums will skyrocket. Even with federal subsidies, the premiums in the individual exchange may not be affordable. Congress might consider delaying the insurance market reforms to see if competition and transparency in the exchanges impacts affordability. Or Congress could consider allowing insurers to return to the practice of waiting periods.
Congress might also consider enacting tax policies that would be more effective than penalties in the ACA to encourage healthy individuals to buy insurance, e.g. allowing full tax credit when individuals purchase qualifying policies or imposing higher taxes on everyone that will go away when purchasing qualifying policies. Or the Congress could do nothing and allow states to consider enacting an individual mandate. And of course insurers will undertake marketing campaigns to remind individuals of limited open enrollment periods and the consequences of failure to buy coverage or lobby for smaller essential benefit policies.
Without an individual mandate, incremental reform will still continue with the addition of 16 million new Medicaid beneficiaries. States will operate exchanges for small groups that will offer more affordable choices for employers and employees. In the meantime states that are moving forward with implementing the individual exchange like Maryland will continue to proceed without regard to the fate of the individual mandate. The federal government will continue to urge states on, fill in the gaps where states need help, and proceed to develop the federal fallback plan for states that are opposed to health care reform or who run out of time while they wait on the fence for the Supreme Court decision.
President Ryan?
Washington is abuzz this week that Paul Ryan is considering a run for President. Remember him? He reportedly is in Colorado with his family at this time discussing their position on turning their life into a 24/7 freakshow. Say what you will about the Roadmap--- a Ryan candidacy would put Medicare solvency and Government-sponsored health care in the middle of what has been shaping up to be a jobs election. Can you mount and sustain a campaign based on deficit reduction?
Stephen Hayes of the Weekly Standard gets credit for the scoop... Or rather, his editors get the credit for putting virtual ink to what has simply been cocktail party chatter since last Friday. Not that I go to those sorts of parties.
Timing is Everything
We chatted with several health plans during the GHG August 11, 2011 webinar.
The purpose was to highlight that the earlier you begin your risk adjustment the better because you have more chances to:
• Get the data
• Interact with the member
• Impact the member's satisfaction
• Link the findings to care
• Impact the premium sooner
We found that most of the health plans listening:
• Start their retrospective program in April
• Start their prospective program in March
• Have 50% of the prospective evaluations completed by June
• Evaluate 51-75% of their membership each year via member evaluation
Really? These answers bring a tear to our eyes. Be proud if this is your program.
Our tip: Shoot a little higher in your evaluation program next year; a better target is 85%.
Again, shifting your start dates to earlier in the year will help you get to know your member and increase the closure rates or acceptance rates of your evaluations. Plus getting that premium bump in January of the 2012 will answer questions about expansion plans, bid application, and benefit design.
P.S. Join us for the next flash webinar in our series: Your Vendor Security Checklist, August 18 at 3:00 pm EST
The Medicare "Doc Fix" Will Get Pegged to Quality Measures
We're hearing from friends on the Hill that Republican staff on the Energy and Commerce Committee are thinking about attaching a pay-for-performance system to any fix of the Medicare Sustainable Growth Rate. The new approach would cost less than a straight fix of the SGR, which will slash Medicare payments to doctors by 29 percent at the end of the year if Congress doesn't intervene.
It's still early in its development, but we heard that after a year or two freeze in payment rates, a new, tiered system would be implemented. Physicians in ACOs would get the highest pay rate, followed by doctors in fee-for-service Medicare who meet performance standards, followed last by docs who don't.
There's huge issues all over the concept -- but I like it. And it has an air of inevitability all over it. It will cost close to $300 billion to permanently fix the SGR. There's no way Congress is going to lay down that kind of money without some stiff expectations on quality in return. And it could finally have the effect of breaking the curse that is fee-for-service reimbursement in Medicare -- the root of all evil in the program's cost explosion.
And remember: if Congress doesn't intervene on the SGR, that 29% hit on docs' rates will translate into a 7% whack on Medicare Advantage payments in 2013. It's imperative for both sides of the program that Congress get this done. Stay tuned.
Exchange Eligibility Regs: Massive and Visionary
Just as we were speculating Friday on timing for the Exchange eligibility and enrollment regs, out it came. The NPRM is a massive and visionary document that starts a discussion about how to revolutionize the way Americans select, enroll and pay for insurance.
States and the Federal government face a daunting task of preparing for a flood of millions of new consumers into Medicaid and subsidy programs in 2014. The ACA mandated a consumer-friendly, one-stop enrollment process with simpler eligibility rules and advanced technologies — referred to by one state official as "radical simplification". Most states couldn't be farther from the ACA's goals, having onerous cultures, manual paper-driven processes, and antiquated and disconnected systems. The Administration has released extensive guidance and unprecedented funding for states to revamp these processes and systems, and the timetable for planning and implementation is brutally tight.
Fact sheets from HHS are here. Tim Jost offered a nice overview at Health Affairs here. The GHG Public Policy team is reviewing the NPRMs and will have more perspectives this week on this page.
The Individual Mandate Will Get Settled by the Supremes
On Friday the 11th Circuit Court of Appeals in Atlanta found the ACA's individual mandate unconstitutional, ensuring the matter will be decided by the US Supreme Court in 2012. The only question among the DC chattering class is if the ruling will come in time to have an impact on the election, not whether the Court will uphold the law. Case law around the Federal government's right to tax interstate commerce -- and even inactivity like not buying health insurance -- is well-established, giving an edge to the Obama Administration that it will be upheld. Stay tuned.
Exchange Operations Regs Due Next
Recently at a Bipartisan Policy Center forum, CMS said the health insurance exchange regulations from HHS will cover enrollment and eligibility requirements. As we saw firsthand with the messy launch of Medicare Part D in 2006 -- one plagued by enrollment and eligibility SNAFUs for the first 6 months of the program, which kept thousands of beneficiaries from their needed medications -- the guidance can't come soon enough to ensure states and health plans have sufficient time and resources to get ready.
CMS said the forthcoming rule has a number of guiding principles:
- While it will be difficult given the intricacies of coordinating dozens of databases of healthcare consumer eligibility information, HHS is committed to flexibility for the states in figuring it out. The ACA requires the exchange to be a one-stop shop for determining eligibility in either the exchange, Medicaid, the Children's Health Insurance Program, or employer subsidies.
- There are wildly different eligibility rules for Medicaid, CHIP and the exchange subsidies, so streamlining those rules and procedures — such as for income verification — is key.
- ACA put emphasis on a simple enrollment process, for a simple reason: the vast majority of US citizens have never actually bought health insurance on their own. Most is provided through your employer, with the help of a friendly local broker. Exchanges need to be able to take a relatively small amount information from a consumer and be able to determine their eligibility for a range of healthcare subsidies, in near-real time. Simple for the consumer -- a monster for states and health plans to figure out. This is building the healthcare equivalent of Orbitz or Travelocity from a green field, to be presented to consumers who for the most part will have no idea what they're doing.
CMS said the eligibility and enrollment guidance will be coming "soon" but as is customary, wouldn't specify, though the draft reg has been submitted to OMB for approval, which means we can expect it in the next 60-90 days. And once that happens, the sluggish exchange planning process occurring in the states will get shot out of a cannon.
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