Kusserow on Compliance: OIG reports most ACA CO-OPs not meeting goals

The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) established health insurance exchanges (commonly referred to as “marketplaces”) for individuals and small businesses to shop for health insurance in all 50 States and the District of Columbia. To expand the number of health insurance plans available in the marketplaces, the ACA established the Consumer Operated and Oriented Plan (CO-OP) program for consumer-governed, nonprofit health insurance issuers. HHS provided loans to help establish CO-OPs in every state that were expected to become profitable after the initial start-up period. CMS awarded loans totaling $2.4 billion and by January 1, 2014, there were 23 CO-OPs offering health coverage in 23 states. Four of the 23 CO-OPs are or will be offering coverage to neighboring states. Loans were to be awarded only to entities that demonstrated a high probability of becoming financially viable and must be repaid with interest. However, the Office of Inspector General (OIG) found that most of the 23 CO-OPs had not met their initial program enrollment and profitability projections as of December 31, 2014.

A prior OIG audit examined the selection process for CO-OP loans and identified factors that could adversely affect the CO-OP program, including some CO-OPs having limited private monetary support and having budgeted start-up expenditures that exceeded available funding. The agency reported on their progress during the start-up phase and the CMS strategy for overseeing them during the start-up phase and after the launch of the exchanges. The 2015 OIG Work Plan included additional audits at 19 of the 23 CO-OPs to verify their eligibility for federal funding and their use of start-up and solvency loans. During those audits, the OIG identified concerns related to low enrollment and financial losses and identified factors such as low enrollments and net losses, which were limiting the ability of some CO-OPs to repay start-up and solvency loans and to remain viable and sustainable. Specific findings included:

  • Member enrollment for 13 of 23 CO-OPs was considerably lower than initial annual projections.
  • 21 of the 23 CO-OPs had incurred net losses.
  • The Iowa/Nebraska CO-OP was liquidated in March 2015 due to financial problems.

The OIG performed a more limited review of enrollment and profitability for the four remaining CO-OPs.

CMS has authority under the law to place a CO-OP on an enhanced oversight plan and/or terminate the loan agreement if it failed to meet quality and performance standards, including implementation of milestones and enrollment targets. If a CO-OP’s loan agreement is terminated, the organization forfeits all unused loan funds received under the CO-OP program as well as the remaining loan funds, interest, and, if applicable, a penalty must be repaid in accordance with the terms of the loan agreement. A CO-OP must resolve any outstanding debts or other accommodation of outstanding claim obligations before repaying the loan funds to CMS.

The OIG noted CMS had recently placed four CO-OPs on enhanced oversight or corrective action plans and two CO-OPs on low-enrollment-warning notifications; however it also noted that CMS had not established guidance or criteria to assess whether a CO-OP was viable or sustainable. As such, the OIG recommended further CMS action, including:

  • continuing to place underperforming CO-OPs on enhanced oversight or corrective action plans, in accordance with federal requirements;
  • working with state insurance regulators to identify and correct underperforming CO-OPs;
  • providing guidance or establishing criteria to determine when a CO-OP is no longer viable or sustainable; and
  • pursuing available remedies for recovery of funds from terminated CO-OPs, in accordance with the loan agreements.

CMS concurred with the recommendations and stated it has taken a number of steps to further oversee CO-OP compliance by requiring external audits, site visits, and additional financial reporting. The OIG stated they will be continuing to review other aspects of the CO-OP operations.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.


Little Sisters gear up for round two before the Supreme Court

The Little Sisters of the Poor Home for the Aged (Little Sisters), a group of Catholic nuns, is going before the Supreme Court yet again in its challenge of the contraception mandate found in the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). This petition follows a lengthy Tenth Circuit decision upholding the district court’s denial of the preliminary injunction requested by Little Sisters after finding that the ACA and its regulations do not burden the free exercise of religion or violate First Amendment rights.

First challenge

The Little Sisters first challenged the government’s accommodation allowing religious organizations that were not exempt from the contraception mandate to file Employee Benefits Service Administration (EBSA) Form 700. This form notifies HHS of the organization’s religious objection, and submission to the insurer or third-party administrator puts the responsibility of providing the coverage on these parties. The Little Sisters were initially denied a request for preliminary injunction, but the Supreme Court granted relief pending appeal (see Supreme Court grants reprieve to nuns opposing contraceptive requirement, pending appeal, Health Reform WK-EDGE, January 29, 2014, and Little Sisters of the Poor file appeal in contraceptive challenge, Health Reform WK-EDGE, February 26, 2014).

The Little Sisters maintained that the government’s solution to the EBSA Form 700 was inadequate. The government created interim rules allowing an organization to simply write to HHS letting it know of a religious objection to contraception coverage, and HHS would do the rest to ensure that a third party provided the coverage. The Little Sisters stated that the rule further insists that they comply with the mandate and “facilitate the distribution of contraceptives in conjunction with their benefit plan, which is precisely what they have already said they cannot do.”

Mark Rienzi, lead attorney for the case, said that the Little Sisters consider involvement in the distribution of contraception to be immoral, and wish for an exemption. Instead, “the government insists that it can take over their ministry’s employee healthcare to distribute these drugs to their employees, while dismissing the Sisters’ moral objections as irrelevant.” The Beckett Fund for Religious Liberty theorizes that the court is likely to consider all of the petitions this fall, and, if granted the case would be decided prior to the end of the June 2016 term.

Population health is here to stay

As health care continues to trend towards provider-driven, value-based reimbursement instead of fee-for-service arrangements, insurers are pushing population health data management services. Although there is not a consensus about the proper definition of the term, large insurance companies such as UnitedHealth Group, Aetna, Anthem, and Blue Cross Blue Shield are dedicated to making it a mainstay. According to Forbes, population health is now a multi-billion dollar business.

So, what is it?

In 2003, an article published in the American Journal of Public Health noted that there was not a precise definition of the term. The concept, first more widely discussed in Canada before trickling to the U.S. and becoming ever more popular, seemed to be focused on the “determinants of health of populations.” The article’s authors proposed the definition of “the health outcomes of a group of individuals, including the distribution of such outcomes within the group.” They believed that the field included health outcomes and the patterns of determinants, such as medical care, interventions, genetics, and components of social and physical environments. Fast forward to 2015, and a George Washington University Master of Health Administration blog notes that there is still not an agreed-upon definition.

The blog’s authors received 37 definitions of “population health” from health care leaders. They referenced the 2003 journal article definition and found that some leaders complained that the definition failed to acknowledge the role of health care providers. Although there is still not a consensus, many viewed population health as an opportunity for parties involved in health care to collaborate to improve the health outcomes of entire communities.

The Robert Wood Johnson Foundation issued a five-part series in 2013 on the topic in an effort to further explore the definition of population health. The series featured quotes from health care leaders, and a clinical “population medicine” perspective emerged, which focused on creating categories to allow the cost-effective allocation of health care resources. One leader stated that they intentionally managed patients “in terms of clusters” for managing chronic illnesses. The series also noted that those with a public health focus tended to start with geographic populations and then consider interventions. Another leader pointed to community characteristics, such as food and physical environments, as a focus point beyond a populations aggregate health status.

Health Catalyst stresses that population health and public health are two different things. While population health is focused on finding the connection between health outcomes and determinants, public health is concerned about societal efforts to ensure healthy conditions.

A growing field

A study conducted by the RAND Corporation, a research organization committed to addressing public policy challenges, found that physicians need more assistance in gathering information on patient populations. For a practice to find success with alternative payment models, more resources should be directed to data management and analysis. That’s exactly the gap several large insurers are trying to fill.

Health Catalyst points out that health insurance companies were mostly concerned about population health prior to the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Payer care management involved analyzing claims data for populations, then targeting at-risk individuals’ doctors, suggesting that gaps in care be addressed. This approach had several issues, as it was based on claims data instead of actual clinical information. Now, providers are driving population health as the holders of useful clinical data.

The need for more population health services is reflected by UnitedHealth’s growing business, Optum. The health services platform seeks to improve the health care system with its Optum360™ revenue cycle management solutions. According to Forbes, UnitedHealth attributed Optum’s growing revenues partially due to “business expansion in population health management services for payers.”

Aetna has its own population heath provider engagement system, known as Healthagen. Aetna has invested over $1.5 billion in Healthagen, and expects the business to grow even more after the proposed Humana acquisition. Humana has its own Transcend and Transcend Insights businesses to simplify population health management. Humana hopes to have three quarters of Medicare Advantage (MA) beneficiaries covered under a value-based model by 2017, and hopes to use the Transcend organizations to achieve this goal.

Highlight on Minnesota: Funding and coverage for many in jeopardy

Minnesota has a large backlog of renewals for Medical Assistance and MinnesotaCare, and 60,000 people stand to lose subsidized coverage if they do not submit more information. According to the state Department of Human Services (DHS), those who have received notices need to respond in 30 days. Assistant Commissioner Chuck Johnson stated that although the department wants to preserve coverage for those who are eligible, it needs to ensure that only the eligible non-responders are receiving coverage. An additional 120,000 people are in various stages of the process for renewing coverage.

MNsure, or unsure?

This large backlog is attributed to problems with MNsure, the state’s health insurance exchange, which handles renewals for Medicaid and MinnesotaCare. The technical problems were first announced in May, and 55,000 renewals were reportedly delayed. Specifically, MNsure had issues exchanging income information with a federal data hub. The hub checks both financial and immigration data. Due to these issues, the state has had a hard time collecting MinnesotaCare premiums and ensuring that citizens are meeting the proper qualifications for coverage. The exchange was created using $189 million in federal dollars, and the state received about $50 million in both state and federal Medicaid funding to improve the system. According to DHS, there were problems with both MNsure and the federal hub, and the problems with the hub have been resolved. Although the state has failed to send bills for premiums for 2015 coverage to 55,000 Minnesotans, DHS encourages enrollees to continue paying premiums.  The state hopes to handle all renewals by August 31, 2015.

These issues have prompted state Republican legislators to call for the establishment of a legislative oversight committee. Some have even discussed dumping MNsure and using the federal exchange instead. State Senator Tony Lourey believes that this wouldn’t solve the Medicaid and MinnesotatCare issues. Lourey also said that it is time for a meeting of an oversight committee, but that suggestions for fundamental changes should come from a task force already established for the job.

Mental health funding

Also on the line is coverage for mental health services for children. CMS had previously questioned Minnesota’s regulatory compliance for psychiatric residential treatment facilities (PRTFs). This statement expressed the possibility of cutting off federal financial participation (FFP) immediately. The state responded and asked CMS to allow DHS to maintain its current practices regarding mental health care, retroactive to 2001. The letter to CMS, signed by several state legislators, pointed out that Minnesota’s “services have been developed over many years to effectively meet the individual and unique needs of children, adolescents and their families in the state.” The efforts to protect the nearly $5 million in federal funding are led by Senator Al Franken (D) and Representative Erik Paulsen (R).

Federal Medicaid funding was originally excluded for institutions for mental diseases, which are facilities with over 16 beds. A later exception was established for enrollees under 21 years in larger settings, including PRTFs. HHS determines what settings qualify for the exception to the exclusion. With CMS input, Minnesota developed its rehabilitation model in 2001, which “allows for any medical service that has been recommended by a physician or other licensed practitioner for maximum reduction of a disability to be provided in a residential treatment center.”

The program in question is known as the Children’s Residential Bed program, which has 830 beds across the state. For federal funding purposes, a facility that has more than 50 percent of residents admitted for mental health reasons is considered a mental health institution, which cannot accept federal funds. Last year, providers raised concerns about participating facilities’ qualifications for federal funds, which prompted evaluation and inspection of the Children’s Residential Beds facilities that is currently ongoing. The state is urging CMS to stick by the state plan it originally approved and continue providing funding.