Archives for August 2016

Chronic conditions plus functional limitations causing high health needs, spending

Adults with multiple chronic diseases that limit their ability to perform routine tasks, including self-care, have much higher health needs than other patients. These health care needs correlate with higher health spending for these patients, and a one-size-fits-all approach to improving health outcomes and lowering spending may not be effective. The Commonwealth Fund (CWF) studied this patient population and concluded that functional limitations are a large part of the reason that these patients are high-need, and that focusing on the unique needs of these patients may be the key to reducing spending.

High-need patients, costs, and income

About 12 million adults in the U.S. meet the definition of high-need, with 79 million having at least three chronic diseases without the functional limitations. The average cost of health care services and prescription medicines for high-need patients was about $21,000. This amount was about three times the average for those without functional limitations, and over four times the average for the total population. The CWF classified “high-cost” individuals as those with total annual medical expenditures landing them among the top 5 or 10 percent of costly patients. One of six high-need adults remained in the top 5 percent group for two years in a row. High-need patients were not well equipped to handle their out-of-pocket costs, as the annual median income these patients was less than half of the total population. Those without functional limitations had much lower out-of-pocket costs and almost the same average income as the total population.

Demographic

The CWF found that high-need patients shared many traits. Over half were at least age 65, two-thirds were women, and almost 75 percent were white non-Hispanic. Over half made less than 200 percent of the federal poverty level, and most were covered by Medicare, Medicaid, or both. Comparatively, two out of five with multiple chronic conditions but no functional limitations were publicly insured. High-need adults also used hospital emergency departments twice as much as those without functional limitations, and more than three times as much as the total population. They were also much more likely to be hospitalized. The CWF’s report noted that not all high-need adults were frequent hospital users, and that about 65 percent had no emergency visits in a year.

Conclusions

The CWF believes that the high-need patient group will continue to incur high health spending at a higher rate than those without functional limitations, and that the health care industry should focus on high-need patients as a subpopulation when considering patients for care management programs. It also believes that the subpopulation should be further split into subgroups due to variation in the health care services needed. By focusing on patients’ unique needs, payers and providers can find more efficient and cost-effective ways to provide better services that will result in improved health outcomes.

If enrolled in Medicaid, end marketplace coverage or lose subsidies, HHS warns

The government has run out of patience with individuals enrolled in both Medicaid and private coverage on the marketplaces paid for through federal subsidies established by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). HHS Secretary Burwell authorized the federal exchange to notify consumers with someone in their household receiving duplicate coverage to immediately end coverage with premium tax credits. The existence of impermissible duplicate coverage was uncovered by a Government Accountability Office (GAO) investigation.

GAO investigation

The GAO investigated of the possibility of obtaining duplicate coverage in states that use the federal marketplace, and found that CMS did not appropriately control the risk of coverage gaps and duplicate coverage for those transitioning between Medicaid and marketplace coverage. The GAO identified two specific issues that materially contributed to the problem. The federal exchange is operated by federal officials, but the Medicaid programs are operated by state. The GAO found a vulnerability involving communications between the two, as records for Medicaid enrollees switching to exchange coverage were not transferred as closely to real time as possible. CMS indicated its belief that states transferred records at least daily, but this was not the case for one of the four states investigated out of the 34 that use the federal exchange. Additionally, CMS did not strive to detect duplicate coverage. Although CMS intended to implement periodic checks by the end of July 2015, it had not established the frequency of the checks or a mechanism for monitoring how effective the checks were.

Duplicate coverage situations

The GAO found that three different scenarios involving duplicate coverage were occurring, and only one was authorized by federal law. When individuals transition from exchange coverage to Medicaid coverage, the effective dates of coverage may overlap. Exchange coverage can only be ended with at least 14 days of advance notice, while Medicaid coverage is effective no later than the date an eligibility change is reported. The term of duplicate coverage might be extended in cases where a Medicaid eligibility determination takes a longer period of time than anticipated. Because this type of duplicate coverage is caused by program design, it is allowable.

Two other instances of duplicate coverage were discovered. In one state, the GAO found that 3,500 individuals were covered by both Medicaid and marketplace insurance in a six month period, and that many individuals failed to end subsidized coverage through the exchange after becoming eligible for Medicaid.  The GAO also found that the reverse was true, as Medicaid enrollees also enrolled in subsidized exchange coverage. CMS received recommendations to strengthen its controls.

Notifications

The notification letters indicate that CMS followed the GAO’s recommendations to identify those with duplicate coverage. The New York Times reported that the letters boldly warned that someone in the recipient’s household may lose their exchange subsidy. Anyone in the household that is enrolled in either Medicaid or the Children’s Health Insurance Program (CHIP) is instructed to immediately end subsidized coverage. Failure to do so will result in immediate cessation of any financial assistance for premiums, deductibles, and other costs. By taking these actions, the government is attempting to avoid paying its portion of Medicaid coverage, as well as offering tax credits for marketplace coverage.

CMS finds savings, quality improvement in ACOs

Accountable care organizations (ACOs) save money and provide a higher quality of care for their patients, according to an announcement from CMS. The assessment was made based on the 2015 performance year results for the Medicare Shared Savings Program (MSSP) and the Pioneer ACO model, which along with all ACOs, had combined total Medicare program savings of $466 million that year.

ACOs

ACOs are groups of physicians, facilities, and other health care professionals that agree to provide coordinated care to their patients to receive savings. ACOs use financial incentives to change behavior, such as paying more to physicians who coordinate care and use health information technologies. ACOs are judged on the care they provide, measured by various metrics. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) authorized two distinct ACO models.

The Pioneer ACO model, created by section 3021 of the ACA, is designed to support organizations with more experience in offering coordinated, patient-centered care. The program aims to test the payment arrangement of shared savings and shared losses, offering “higher levels of reward and risk than in the Shared Savings Program.” For the Pioneer program, ACOs agree to share their savings and losses with CMS, to a certain amount. Each Pioneer ACO had a minimum savings rate/minimum loss rate—if the gross savings/loss percentage was within that rate, the ACO neither received shared savings nor paid shared losses. If the ACO gained or lost more than their minimum rate, they either received a shared savings payment from CMS or owed CMS a shared loss payment, splitting the remaining amount.

Section 3022 of the ACA authorized the MSSP, which requires ACOs to meet certain quality metrics specified in CMS implementing regulations.

2015 results

In 2015, there were 392 MSSP participants and 12 Pioneer ACOs. They showed significant improvements in the quality of care offered to Medicare beneficiaries, with all 12 Pioneer ACOs improving their quality scores by more than 21 percentage points from 2012 to 2015. MSSP ACOs that reported in both 2014 and 2015 showed improvements on 84 percent of the quality measures reported in both years, and average quality performance improved by more than 15 percent on key preventive care measures. Overall, 125 ACOs qualified for shared savings payments by meeting quality performance standards and their savings threshold.

CMS Acting Commissioner Andy Slavitt commended ACOs for their performance, saying, “The coordinated, physician-led care provided by Accountable Care Organizations resulted in better care for over 7.7 million Medicare beneficiaries while also reducing costs.”

AHA not buying into OMHA’s backlog reduction plan

The American Hospital Association (AHA) submitted comments on August 26, 2016, on the HHS Proposed rule (81 FR 44456, July 7, 2016) intended to reduce the Medicare appeals backlog in the Office of Medicare Hearings and Appeals (OMHA), arguing that the proposal barely scratches the surface of the issue and “that merely tweaking the appeals system will not adequately address the problem.” At best, the AHA stated, the proposals would take five years to eliminate the backlog. The association cautioned that attorneys should only be permitted to adjudicate cases after thorough training and expressed concern with the lack of detail in the OMHA’s suggestion that certain decisions be designated as precedential.  It also rejected the OMHA’s proposals to eliminate the requirement that administrative law judges (ALJs) issue a decision within 90 calendar days of receiving a request for hearing and limit adjudicators’ ability to issue decisions without hearings when CMS or its contractor becomes a party to an appeal.

Proposed rule

The Medicare appeals backlog is a source of great concern for providers.  As of April 30, 2016, over 750,000 appeals were pending, while the OMHA only had the capacity to adjudicate 77,000 per year (with an additional capacity of 15,000 by the end of fiscal (FY) year 2016). The AHA noted that the most recent data reflect an increase in average processing time of 140 days—to 935.4 days, or two and a half years—since the beginning of FY 2016. In an effort to address this backlog, CMS issued a Proposed rule that would allow attorneys, in lieu of ALJs, to adjudicate certain decisions that would not go to hearing, and permit the Chair of the Departmental Appeals Board (DAB) to designate certain final Medicare Administrative Council decisions as precedential. However, it would also limit adjudicators’ ability to issue decisions without hearings when CMS or one of  its contractors becomes a party to a case and would eliminate the mandatory 90-day time period that adjudicators have to issue decisions.

AHA comments

Although the AHA conceded that the use of attorney adjudicators could address matters that do not require ALJ attention, including those decisions that can be issued without a hearing, those cases in which an appellant withdraws a request for hearing, and those appeals which must be remanded for information that can only be provided by CMS or a contractor,  it cautioned that attorneys must be properly trained to ensure they have “significant knowledge of and experience in applying Medicare regulations.”

The association was not accepting, however, of CMS’s proposal to allow the DAB Chair to designate select decisions that address repetitive legal and policy questions as precedential, and to designate factual decisions as precedential where relevant facts are the same and the underlying factual circumstances have not changed since the decision was issued. The AHA expressed “strong concerns” regarding the lack of specifics included in the proposal, noting, “it is difficult to evaluate the merits of the proposal, but easy to speculate how it could harm appellants if the process favors decisions that are beneficial to CMS.” Instead, it suggested gathering stakeholder feedback and engaging in future notice-and-comment rulemaking.

The AHA specifically opposed the proposal to amend 42 C.F.R. sec. 405.1016, which states that, after a qualified independent contractor (QIO) has issued a reconsideration, “the ALJ must issue a decision, dismissal order, or remand . . . no later than the end of the 90 calendar day period beginning on the date the request for hearing is received,” (emphasis added) by removing the word “must.” According to the AHA, the OMHA indicated that the requirement is not absolute, since appellants are statutorily permitted to escalate claims when the timeframe is not met.  The AHA referred to the reasoning as “too clever by half,” noting that amending the regulation would do nothing to eliminate the statutory mandate.

The association also rejected proposed changes to 42 C.F.R. sec. 405.1038(a), which currently states that ALJs may issue a decision without notice or hearing where the evidence on record “supports a finding in favor of appellant(s) on every issue.” According to the AHA, the proposed changes, which would prevent an adjudicator from issuing such a decision where CMS or its contractor chooses to become a party to the appeal, could allow contractors to force a hearing to justify inappropriate denials.

Ongoing issues

The AHA argued that HHS has refused to acknowledge that the backlog results predominately from “excessive inappropriate denials of claims by Medicare contractors, and specifically the Recovery Audit Contractors (RACs),” which have financial incentives for denying claims. While recognizing that the OMHA cannot control the RAC process, the AHA encouraged the agency to provide information about the process to Congress.  It also continued to urge the OMHA to:

  • delay recoupment of payments until an appeal is decided and prevent interest from accruing prior to a decision;
  • eliminate the one-year filing limit to rebilled Part B claims and allow hospitals to submit Part B claims within 180 days of a final Part A claim denial determination;
  • create a defined time period during which RACs may audit providers on a particular issue, after which RACs must petition CMS to perform additional audits on the issue, but only after a defined time period has passed, during which providers have been educated; and
  • codify, in regulation, a statement made in the FY 2014 inpatient prospective payment system Final rule that Medicare contractors may only evaluate the medical necessity of an inpatient stay based on “the information available to the admitting practitioner at the time of the admission” (78 F.R. 50495, August 19, 2013).