Older Americans Oppose Approval Process for Home Care Services

Eighty-three percent of seniors oppose a Medicare policy that requires a government contractor to approve claims for physician-prescribed home health care, according to a poll sponsored by Bring The Vote Home. The Centers for Medicare & Medicaid Services (CMS) recently implemented a pre-claim review demonstration that imposes documentation requirements on home health agencies and referring physicians. Doctors have to provide a broad array of eligibility-related documentation and clinical support for review by government contractors. Home health leaders warn that the new requirements could delay care and increase healthcare costs. Seniors say that requiring a government contractor to approve home heath care will have the following results:

  • 80% say it will delay care.
  • 77% say it will increase Medicare costs.
  • 75% say that will increase out-of- pocket costs.
  • 45% say it will decrease fraudulent home health claims.

For more information, visit bringthevotehome.org.

HMOs Beat PPOs on Cost and Quality

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California’s commercial HMOs outperform commercial PPOs on most clinical quality measures. They also consistently provide less costly care. The average yearly cost is $4,245 per HMO enrollee versus $4,455 per PPO enrollee, according to the California Regional Health Care Cost & Quality Atlas. The report comes from the Integrated Healthcare Assn., the California Health Care Foundation, and the California Health and Human Services Agency. Differences in benefit designs don’t explain the cost variation since the total cost of care includes enrollee cost-sharing (deductibles and coinsurance) as well as insurance payments to providers.

HMOs may be performing better because they rely on integrated care networks, which generally accept capitation (fixed per-member, per-month payments). So they are accountable for the patients’ health and are generally rewarded for it, according to the report. So why is HMO enrollment declining? PPOs are often less costly for employers since they reduce premiums with higher enrollee cost-sharing, such as deductibles and coinsurance. But employers should look at the whole picture since HMOs produce superior results when you consider quality and the total cost of care, according to the report.

Quality of Care
California’s commercial HMOs perform better than their national counterparts on every clinical quality measure except asthma medication management. At the same time, California’s commercial PPOs perform worse than the national average on five of the six measures.

When Kaiser Permanente is removed from the analysis, the difference in clinical quality between HMOs and PPOs is cut by about half. Also, the performance difference on risk-adjusted total cost of care narrows substantially, but HMOs still outperform PPOs.

Quality is highest in Northern California, solid in Southern California, and weakest in Central California. The study reveals these regional differences is quality:

  • Northern California outperforms Central and Southern California on clinical quality.
  • Central California falls below the statewide average on key clinical measures for cancer, diabetes, and asthma.
  • The lowest performing region is the Eastern region 13, which includes Central California counties Mono, Inyo, and Imperial.
  • The highest performing region is Contra Costa County region in Northern California.
  • Clinical quality scores vary significantly on some measures. For example, 33% of commercial enrollees with diabetes in Alameda County region six have poorly controlled blood sugar, compared to 75% in the Eastern region 13.
  • In Southern California, San Diego County region 19 is the highest performing region, outperforming Northern California regions: San Mateo County region eight and San Francisco County region four.

If all commercially insured Californians got the same quality of care as top-performing regions, nearly 200,000 more people would have been screened for colorectal cancer and 50,000 more women would have been screened for breast cancer in 2013. If care is provided to all Californians at the same cost as in San Diego, the cost of care would decrease 10% for commercially enrolled people. Many factors contribute to regional performance, including socioeconomic characteristics and the availability of medical services.

Medicare Advantage
The quality and cost of care varies widely for seniors enrolled in Medicare Advantage. For example, in North Bay counties, 91% of women have gotten appropriate breast cancer screening compared to 70% in the Eastern region 13. The average annual per-enrollee total cost of care for Medicare Advantage enrollees ranges from $11,500 in San Diego County to $14,500 a year in Los Angeles region.

Cost of Care
Geographic variation in cost of care is dramatic—a difference of $1,800 in the average annual per-enrollee total cost of care between the most costly and least costly regions. With one exception, all Northern California regions have higher annual per-enrollee costs than the statewide commercial average of $4,300 while all Southern California regions fall below the statewide average. Central California regions show mixed results on cost. HMOs have a lower average total cost of care than do PPOs in 12 of the 18 regions. More tightly managed care in HMOs may contribute to a lower cost of care. Yet, inpatient bed days and readmission rates are similar for HMOs and PPOs. Emergency department visit rates are actually higher for HMOs. The statewide average annual per-enrollee cost of care for commercially insured Californians is $4,300. Kern County is the least costly HMO region. It’s $1,800 per enrollee, per year less than in Santa Clara County, which is the costliest HMO region. The least costly PPO region is Los Angeles at $2,400 less than San Francisco County, which is the costliest PPO region.

Doctors May Do a “Brexit” from Medicare

American physicians have already been declaring independence from Medicare, states the Association of American Physicians and Surgeons (AAPS), but the imposition of new payment methods may lead to a rush to imitate the British in exiting the regime of a remote, unelected, unaccountable bureaucracy. Almost four in 10 physicians in solo and small group practices predict an exodus from Medicare within their ranks because of the program’s new payment plan, according to a Medscape Medical News survey.

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) includes complex system of bonuses and penalties. The Centers for Medicare and Medicaid Services (CMS) predicted that 87% of solo practice physicians would be penalized. AAPS says that a physician’s compliance score is tied to resource use. Physicians will be increasingly pressured to make decisions that save resources for Medicare instead of decisions that are in the best interest of their patients. Compliance is also tied to mandatory use of government-certified electronic health records, which AAPS says are harmful to patient medical privacy and detract from face-to-face patient care. The government would gain even greater ability to access patient medical records. The rules allow all insurance-based care, not just Medicare, to be phased in to these “harmful payment models, according to AAPS.

AAPS executive director Jane M. Orient, M.D. said, “It is impossible to practice medicine under this rule, for ethical and practical reasons. The rule makes it impossible to protect confidentiality, and one is in a constant conflict of interest: What is best for the patient may be bad for the financial viability of the practice. It would take a dedicated team of legal specialists to even attempt compliance. Full compliance is probably impossible even with such a team, which is beyond the means of a small practice. Physicians need to withdraw from Medicare or any other program that subjects them to this rule.” AAPS offers detailed instructions on how to opt out of Medicare, and regular workshops on building a successful practice to serve patients without third-party shackles.

Moving Medi-Cal Forward

California is a national leader in extending Medicaid to low-income people. But the program has not kept pace with dramatic changes in the Medi-Cal population, according to a report by the California Health Care Foundation (CHCF). Medi-Cal is now the largest single source of health insurance in the state. But Medi-Cal has also become a complex patchwork due to the its relationship with the counties, how care is delivered and financed, marketplace developments, and multiple initiatives that have been adopted throughout the years. This patchwork has had mixed results in quality of care, access to care, care coordination, and patient satisfaction. California is looking to reforms to drive timely access to high quality, coordinated, and cost effective care. The Affordable Care Act (ACA) has triggered a shift toward value-based purchasing in the commercial marketplace as well as in Medicare and Medicaid. These reforms are challenging in any environment, but the structural underpinnings of California’s Medicaid program make such changes all the more difficult to address.

Medi-Cal has accomplished a great deal in a short time, including a significant expansion of coverage, and important delivery system innovations in communities throughout the state. With Medi-Cal’s expanded role and the new Medi-Cal 2020 waiver recently launched, there is an extraordinary opportunity to reform the delivery system. To do so, California needs a plan to deliver better care and promote better health. The California Health Care Foundation (CHCF) retained Manatt Health to consider the current state of the Medi-Cal program and delivery reform, focusing particularly on Medi-Cal managed care.

Many states are developing ways to reform their Medicaid care delivery systems. For example, Oregon established locally driven regional coordinated care organizations, which bear full risk and are considered managed care organizations under federal rules. They have flexibility in designing their systems of care and, to some degree, choosing the services they will provide while meeting statewide quality and cost metrics. Massachusetts and New York are moving to require health plans to contract with accountable-care organizations or adopt alternative payment methods with a large portion of their providers. Colorado does not rely on managed care plans, but contracts directly with accountable care organizations. To get the report, “Moving Medi-Cal Forward on the Path to Delivery System,” visit chcf.org.

Bill Would Eliminate Medicare Advocacy Services

The Senate Appropriations Committee recently approved the FY17 Labor, HHS, Education Appropriations bill, which would eliminate funding for the State Health Insurance Assistance Program (SHIP). It’s called the Health Insurance Counseling and Advocacy Program (HICAP) in California. It is the only program that provides free, unbiased, one-on-one Medicare coverage and benefit counseling for beneficiaries, family members, and caregivers. According to California Health Advocates, “This dangerous bill aims to eliminate this important, effective program that helps millions of beneficiaries nationwide better understand and navigate the increasingly complex Medicare program.”

Prescription Drug Costs Skewed by Hidden Fees

Most independent community pharmacists consistently encounter misleading and confusing fees imposed by prescription drug middlemen. These fees distort medication costs and reimbursement rates, according to a recent survey by the National Community Pharmacists Association (NCPA). The survey documents two relatively recent trends: direct and indirect remuneration (DIR) fees imposed on community pharmacies and increased copay claw-back fees that affect pharmacy patients. NCPA CEO B. Douglas Hoey, RPh, MBA said, “Pharmacy benefit management (PBM) corporations are inserting costs into the system on virtually everyone in order to fuel their profits and reward shareholders. Government officials and health plan sponsors must insist on greater transparency and oversight of these practices to ensure that plan costs and premiums go to their intended purpose: taking care of patients. NCPA will continue to work with Medicare officials, Congress and others toward that end.”

Community pharmacies are assessed DIR fees that can turn a modest profit into a financial loss. Sometimes it takes weeks or months after medication is dispensed until the patient and pharmacy is reimbursed. The survey reveals the following:

  • 67% of pharmacists say they get no information on how much and when DIR fees will be collected or assessed.
  • 53% say DIR fees are assessed quarterly. Many complain that this lag time makes it difficult to operate a small business and impossible to determine if net reimbursement will cover their costs at the time of dispensing.
  • DIR fees started in the Medicare Part D program, but 57% of pharmacists say they now appear in some commercial plans as well.

Eighty-seven percent of pharmacists said that DIR fees significantly affect their pharmacy’s ability to provide patient care and remain in business. Many pharmacists say that DIR fees can be thousands of dollars each month. According to the survey, members report that the Aetna and CVS Caremark drug plans are the most egregious in this area. The survey also disputes claims that DIR fees are actually pay-for-performance incentives. Pharmacists said that PBM corporations were not transparent about their DIR fee criteria and they assessed DIR fees on pharmacies with the highest quality ratings.

Recently, 16 U.S. senators and 30 representatives wrote to the Centers for Medicare & Medicaid Services (CMS) urging implementation of the agency’s proposed “negotiated drug price” guidance. Proponents say that requiring  Part D plans to report these fees consistently would improve transparency, increase accuracy of the Medicare Plan Finder tool that patients use to evaluate drug plans, and give pharmacists more clarity about their true reimbursement rate.

The survey also addresses copay claw backs on patients. PBMs instruct pharmacies to collect elevated copays and recoup the excess amount – and sometimes more – from the pharmacy. “Patients purchase insurance with the presumption that they will save money using the plan’s designated health care providers. Copay claw backs turn that logic on its head. A copay becomes a full pay – and then some,” Hoey added. The survey also reveals the following:

  • 83% of pharmacists have witnessed copay claw backs at least 10 times during the past month.
  • 67% say the practice is limited to certain PBMs.
  • 59% say the practice occurs in Medicare Part D plans and commercial plans.

PBM corporations sometimes impose gag clauses that prohibit community pharmacists from volunteering that a medication may be less expensive if purchased at the cash price rather than through the insurance plan. In other words, the patient has to ask about pricing. Fifty-nine percent of pharmacists say they encountered these restrictions at least 10 times during the past month. Pharmacists sat that United Healthcare/Optum Rx and Aetna appear to employ copay claw backs most often.

Expensive Drugs Are Becoming More Accessible Under Exchange Plans

ACA exchange plans are making some drugs more accessible to patients in 2016. Plans are less likely to place all drugs for conditions, such as HIV, cancer, and multiple sclerosis (MS) in a class on the highest cost-sharing tier, according to a report by Avalere. The study looked at Silver plans across 20 classes of medications. In five medication classes, some plans all drugs on the highest tier including drugs to treat HIV, cancer, and MS. However, fewer exchange plans are doing so in 2016 than in the prior two years.

As in prior years, the anti-angiogenics class, used to treat cancer, was most often subject to universal placement on the specialty tier. Half of all Silver plans placed all covered drugs in this class on the specialty tier in 2016. Nearly one-third of Silver plans place all covered MS drugs on the specialty tier as well, though this rate is down 14% from 2015. The sharpest decline is for molecular target inhibitors at 18%. For these three classes, 2016 reversed the sharp increase in this tiering structure.

Since the launch of exchanges in 2014, patient groups and policymakers have considered how formulary designs could affect patients’ ability to access medications. At the same time, plans strive to offer innovative benefit designs with low premiums. CMS has issued guidance discouraging plans from placing all drugs for a condition on the highest tier without regarding the cost of the medication. The federal government has not yet created a tool for regulators to evaluate benefit designs in this regard. California passed legislation preventing plans from placing all drugs for a condition on the highest formulary tier beginning in 2017

Medicare Advantage 2016 Spotlight

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The number of Medicare beneficiaries enrolled in Medicare Advantage has climbed steadily over the past decade; this trend in enrollment growth continues in 2016. The enrollment growth has occurred despite provisions under the ACA that reduce payments to plans. As of 2016, the payment reductions have been phased in fully in 78% of counties, accounting for 70% of beneficiaries and 68% of Medicare Advantage enrollees, according to a study by the Kaiser Family Foundation. The following are study highlights:

  • Medicare Advantage enrollment has increased in virtually all states over the past year. Almost one in three people on Medicare (31% or 17.6 million beneficiaries) is enrolled in a Medicare Advantage plan in 2016. The penetration rate exceeds 40% in five states.
  • 18% of enrollees are in a group plan. Employers and their retirees still favor local PPOs over HMOs.
  • Enrollment is still highly concentrated. If Aetna acquired Humana with no divestitures in 2016, the combined firm would account for 25% of Medicare Advantage enrollees nationwide. UnitedHealthcare and Humana account for 39% of enrollment in 2016.
  • Premiums were relatively constant from 2015 to 2016 ($37 a month in 2016 versus $38 a month in 2015), although premiums vary widely across states, counties, and plan types.
  • In 2016, the average enrollee had an out-of-pocket limit of $5,223, which is nearly $1,000 higher than in 2011.
  • 31% of the Medicare population is enrolled in a Medicare Advantage plan. Total Medicare Advantage enrollment grew 5%, from 2015 to 2016. This reflects the influence of seniors aging on to Medicare and beneficiaries shifting from traditional Medicare to Medicare Advantage.
  • 64% of Medicare Advantage enrollees are in HMOs; 23% are in local PPOs; 7% are in regional PPOs; 1% are in private fee-for-service plans; and 4% are in other types of plans including cost plans and Medicare medical savings accounts.
  • Enrollment in private fee-for-service plans has declined slowly since the Medicare Improvements for Patients & Providers Act (MIPPA) of 2008. Under the law, in most parts of the country, private fee-for-service plans must have a provider network. About 1% of Medicare Advantage enrollees are in these plans. 26% of enrollees in private fee-for-service plans are in counties in which private fee-for-service plans are exempt from network requirements.
  • Medicare Advantage enrollment in California grew 6% from 2015 to 2016.
  • 44% of beneficiaries in Los Angeles County, California are enrolled in Medicare Advantage plans compared to only 11% of beneficiaries in Santa Cruz County, California.
  • The average MA prescription drug enrollee pays a monthly premium of about $37, which is 1% less than in 2015. Actual premiums are $28 a month for HMOs, $63 a month for local PPOs, and $76 a month for private fee-for-service plans. Average Medicare Advantage premiums for HMOs and local PPOs have decreased since the ACA was enacted while average premiums have increased for regional PPOs and private fee-for-service plans.
  • In 2016, 81% of Medicare beneficiaries had a choice of at least one zero premium MA prescription drug plan. From 2015 to 2016, the share of enrollees in zero premium MA prescription drug benefits remained relatively unchanged (48% in 2015 versus 49% in 2016). Fifty-nine percent of HMO enrollees are in zero premium plans; 38% are in regional PPOs; and 22% are in local PPOs. No zero premium private fee-for-service plans plans were offered in 2015 or 2016.
  • The average out-of-pocket limit for a MA prescription drug enrollee is $5,223, up from $5,041 in 2015 and $4,313 in 2011. The share of enrollees in plans with limits above $5,000 has greatly increased across all plan types. Fifty-two percent of enrollees are in plans with limits above $5,000 in 2016 compared to 46% in 2015. Thirty-seven percent of enrollees in 2016 are in plans with limits at the $6,700 maximum, compared to 32% in 2015 and 17% in 2011. Ninety-nine percent of regional PPO enrollees and 62% of local PPO enrollees are in plans with limits above $5,000 in 2016. In comparison, 45% of HMO enrollees are in plans with limits above $5,000 in 2016.
  • The standard Medicare Part D plan has a $360 drug deductible and 25% coinsurance up to an initial coverage limit of $3,310. That is followed by a coverage gap (the doughnut hole) in which beneficiaries pay a larger share until their total out-of-pocket Part D spending reaches $4,850. After exceeding this catastrophic threshold, beneficiaries pay 5% of the cost of drugs.
  • 95% of Kaiser Permanente’s enrollees are in HMOs. In contrast, enrollment in UnitedHealthcare and Humana plans is mostly in HMOs, but includes significant shares in local and regional PPOs. Humana’s distribution continues the shift from earlier years when a much larger share of Humana’s enrollees was in private fee-for-service plans plans. Enrollment in BCBS plans is split between HMOs (46%) and local PPOs (41%), with the remainder in regional PPOs and other plan types including private fee-for-service plans plans.
  • Kaiser Permanente’s presence is more geographically focused than other major national employers, with a heavy concentration in California, Colorado, the District of Columbia and Maryland.
  • Medicare Advantage enrollment could become more concentrated if Aetna’s acquisition of Humana and Anthem’s acquisition of Cigna are approved, particularly if few divestitures are required. If no divestitures are required in Aetna’s acquisition of Humana, the combined company would account for 25% of Medicare Advantage enrollment nationwide. UnitedHealthcare accounts for 21% of enrollment this year.
  • The Anthem’s acquisition of Cigna would have a less visible affect on the national Medicare Advantage market. Nationwide, Anthem accounts for 3% of Medicare Advantage enrollment and Cigna accounts for another 3%.
  • For many years, CMS has posted quality ratings for Medicare Advantage plans. In 2016, 68% of plans had four or more stars. In focus groups, seniors have said that they don’t use the star ratings to select a plan. Nonetheless, the star ratings may be correlated with factors that seniors do use to select their plan, including provider networks, and plan benefits and costs, and thus may be correlated with enrollment.
  • The Congressional Budget Office projects that about 41% of Medicare beneficiaries will be enrolled in Medicare Advantage in 2026. This growth may prompt some to question what it will mean if the preponderance of beneficiaries are in Medicare Advantage plans.

Medicare Rights Center Supports Part B Drug Payment Model

Medicare Rights Center president Joe Baker testified in support of the CMS proposal to test new ways to pay for prescription drugs under Medicare Part B. He addressed a hearing held by the Subcommittee on Health of the U.S. House Committee on Energy and Commerce. The following is a summary of his comments:

Calls to withdraw the Part B Drug Payment Model fail to acknowledge…unrelenting beneficiary access challenges under the payment system. We applaud CMS for proposing to test solutions could alleviate calamitous cost burdens that cause too many older adults and people with disabilities to forgo necessary care. We urge members of Congress to support and strengthen the proposal by recommending improvements that put patients at the center of the payment model…Challenges affording health care affect nearly one in five callers on the Medicare Rights Center’s helpline. Sky-high cost sharing for Part B prescription drugs is a notable concern, most often for cancer and immunosuppressant medications. People with Medicare and taxpayers deserve a Medicare program that pays for high-value, innovative health care. The Part B Drug Payment Model presents an important opportunity to ensure that the Medicare program meets this high bar. 

CMS Proposes Prior Authorization for Home Health Services

The Partnership for Quality Home Healthcare expressed deep concern about a proposal by the Centers for Medicare & Medicaid Services’ (CMS) that would require prior authorization of Medicare home health services. Under the proposal, CMS must approve physician ordered services before care can be initiated. The Partnership says that this would delay access to services, increase costs to Medicare and to taxpayers, and place burdensome requirements on providers. Other healthcare sectors that require prior authorization have documented care delays of up to 10 days.

Keith Myers, chairman of the Partnership said, “Home health patients are often at greatest risk during the transition from hospital to home. For care to be delayed by several days opens up the possibility for a host of adverse events ranging from missed medication, to new infections, to poor management of chronic conditions. We urge CMS to recognize the potential negative patient consequences that will result from a prior authorization requirement and we urge the agency to not proceed with a prior authorization demonstration program for home health.”

Home health leaders also warn that prior authorization would drive up costs to Medicare since patients would be more likely to be sent to more expensive in-patient facilities or experience a hospital readmission while waiting at home alone for their prescribed post-acute care. The proposed demonstration program would also increase the administrative burden on doctors and home health agencies who already provide extensive documentation on patient eligibility for home healthcare services. The proposal would not reduce fraud and abuse in the home health community, according to the Partnership. Bad actors will submit false records to satisfy the need for prior authorization, just as they do for CMS’ other documentation requirements.

In addition to these policy concerns, home health leaders stress that CMS does not have the legal authority to implement this prior authorization demonstration. The Partnership has offered several proposals to address fraud, including targeting aberrant billing and utilization, having sufficient checks on qualifications and background, and identifying geographic hot spots for fraud.

Last Updated 09/12/2019

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