By Marissa Evans, CQ Staff

July 2, 2015 -- The 16 states that, along with the District of Columbia, already operate their own health insurance marketplaces under the Affordable Care Act didn't appear to have much at stake in the Supreme Court ruling that allows qualified residents of states without marketplaces to continue receiving federal health insurance subsidies.

But the June 25 ruling in King v. Burwell provided a potentially attractive benefit for the marketplace-running states: the option to scrap high-cost and hard-to-run marketplaces in favor of one supported or run entirely by the federal government.

The ruling upheld an important part of the health law—saving 6.4 million people from losing subsidies that help them pay for health insurance on the healthcare.gov federal marketplace.

The case challenged whether the law allowed residents of the 34 states that didn't set up marketplaces to receive the subsidies.

At least three states with their own marketplaces—Minnesota, Vermont, and Hawaii—have taken steps to switch to the federal system after finding their own marketplaces were too much of a financial, technical, or administrative burden. The court's ruling means they can make that move without disqualifying their residents for subsidies.

"If you have an IT system that's not really working then there's an advantage to shifting to healthcare.gov, which for the most part is working, but you know that comes with challenges," says Jennifer Tolbert, director of state health policy at the Kaiser Family Foundation.

The federal marketplace went through a glitch-filled rollout in 2013, preventing many people from signing up for plans.

Since then, the administration has made improvements, allowing it to handle more traffic and giving people a chance to browse plans.

Though the federal government is offering up the healthcare.gov back-end to states for free, the switch still presents challenges for consumers.

In states that make the switch, Tolbert says, residents who bought insurance through the state-based exchange would have to reapply for coverage through healthcare.gov and wouldn't be able to renew their current coverage.

And some of the existing state exchanges connected their data to federal Medicaid eligibility systems to help residents sign up for that insurance program for the low-income and disabled population. That system integration—and millions of dollars spent to build it—would be lost if those states switched over to healthcare.gov, Tolbert says.

Minnesota Democratic Gov. Mark Dayton persuaded his state legislature this past session to establish a task force to examine the financial viability of the state's exchange, MNsure. The site was hobbled by glitches during the first open enrollment period in 2013. Despite some improvements since then, it has had trouble enrolling Medicaid beneficiaries.

Vermont Health Connect has been grappling with a host of technology problems. The most troubling has been a backlog of 8,000 Vermonters who still can't make simple changes to their information.

Vermont Democratic Gov. Peter Shumlin set a series of strict deadlines for the state's new vendor, Optum, ahead of the next open enrollment on Nov. 1. But lawmakers are already considering options in case the site still isn't working.

Democratic Vermont Rep. William J. Lippert, chairman of the House Committee on Health Care, says that he'll be leading committee meetings over the summer and fall to assess potential alternatives for Vermont Health Connect. He says the committee is going to look at the site's financial viability and ongoing costs.

"We want to make sure we have something in place that is actually affordable and we've already spent a great deal of money. But the ongoing costs are a concern," Lippert says.

Even if Vermont were to switch over to healthcare.gov, the move wouldn't be simple, according to Lippert. Vermont residents receive state subsidies on top of federal subsidies to help them buy insurance. Lippert says the state would have to determine how to continue the state portion for those customers after switching to the federal exchange.

Meanwhile, officials in Hawaii plan to use federal help to run the state's Health Connector exchange. After spending $130 million and encountering technology issues during the first open enrollment period in 2013, Hawaii will rely on the healthcare.gov's back-end this fall to sign up residents for insurance. The state will be following New Mexico, Nevada and Oregon, which already use the federal system.

For now, states can use the federal back-end without charge, but the Centers for Medicare and Medicaid Services has said these states will have to start paying in 2017.

Jeff Kissel, Hawaii Health Connector's executive director, says that with only about 40,000 Hawaii residents signed up for health insurance through the exchange, the ongoing and future costs were too high to justify maintaining an independent site.

"You get to the point where the burden of maintaining the infrastructure is so substantial that the opportunity to let the federal government help us was a very sensible choice," Kissel says.

July 10, 2015 -- The Centers for Medicare and Medicaid Services (CMS) took two major steps this week to push health care sectors into pilot programs that link federal payments to quality of care delivered.

The agency intends to require hospitals in 75 regional markets to participate in a five-year program involving reimbursement for hip and knee replacement surgery. Hospitals would continue to be paid through Medicare's traditional fee-for-service model, but there would be a later assessment of how well patients had from the time of surgery through 90 days after discharge. Hospitals judged to have performed poorly could owe Medicare money, while others seen as doing well could collect an additional payment. 

CMS earlier this month released a plan for another test of quality-linked payments in which participating organizations would be effectively auto-enrolled. In this program, home health agencies operating in nine states would face reductions or increases in payments based of assessments of how well their patients fare and how the organizations carried out certain tasks dictated by CMS.

These two proposals represent a shift away from CMS' past emphasis on voluntary participation on such test programs, said Ellen Lukens, a senior vice president at the consultant Avalere Health.

"It's a big step for CMS," said Lukens, who earlier in her career was a policy analyst at the agency's Office of Legislation, in an interview.

The two announcements also are in keeping with a goal set by Health and Human Services Secretary Sylvia Mathews Burwell of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality-based payment models by the end of 2016, and 50 percent by the end of 2018. 

There was immediate pushback about the proposed hip and knee replacement demonstration program, which CMS expects to save $153 million over five years.

"On initial review, we have some concerns about what appears to be the conversion of an evolving demonstration project to a mandatory, hospital-driven payment framework," said David D. Teuscher, president of the American Academy of Orthopaedic Surgeons, said in a statement.

Premier Inc., which works with about 3,400 U.S. hospitals, described the approach taken in the hip-and-knee demonstration program as CMS requiring "too much, too fast." 

"A voluntary, national program would ensure that only providers who are ready to take on this challenge enter the program, avoiding unintended consequence, said Blair Childs, Premier's senior vice president of public affairs, in a statement.

By Kerry Young, CQ Roll Call

July 1, 2015 -- A Medicare program that tests whether house calls by physicians and other medical professionals can improve the care of frail elderly people with chronic diseases has won significant GOP support, even though the effort was launched as part of the Affordable Care Act.

The House could soon clear a bill (S 971) that would extend by two years the Independence at Home project, initially authorized for three years in the health law (PL 111-148, PL 111-152). The Senate passed the extension bill April 22 by voice vote, and Rep. Mike Burgess, R-Texas, introduced in May an identical House measure (HR 2196). The House Ways and Means Committee on June 2 agreed by voice vote to report the Senate-passed version of the bill to the full chamber.

In the committee's report, Ways and Means members noted that lawmakers long expressed an interest in such home care, with legislation having been introduced in each chamber since the 110th Congress (2007-2009). The Centers for Medicare and Medicaid Services (CMS) last month announced that the Independence at Home program appeared to have lowered Medicare expense by $25 million in its first year.

Unlike like other CMS programs testing new approaches to payment, the Independence at Home model doesn't provide upfront financial assistance to medical practices and organizations seeking to participate. Instead, participating organizations stand to get incentive payments if they meet targets for quality of care and savings.

Sen. Edward J. Markey, D-Mass., has described the program as "bringing the house calls of yesteryear into the 21st century." He has said he intends to see it expanded a demonstration model into a permanent Medicare program. It could have great benefit for people facing Alzheimer's disease as well as other chronic conditions, he said.

"It is a program where nurse practitioners, physicians, and nursing homes are able to say: `We are going to help to keep your loved one at home. We will give you the help that makes that possible'," Markey has said.

By Kerry Young, CQ Roll Call

July 8, 2015 -- Medicare said it expects to expand use of advance medical directives, which include end-of-life planning, as part of a test program involving home health agencies in nine states. 

"Advance care planning ensures that the health care plan is consistent with the patient's wishes and preferences," the Centers for Medicare and Medicaid Services (CMS) said in a proposed 2016 payment rule for home health services, which outlined plans for a value-based purchasing model. "Increased advance care planning among the elderly is expected to result in enhanced patient autonomy and reduced hospitalizations and in-hospital deaths."

CMS' actions on advance care planning are being closely watched this week. The Office of Management and Budget (OMB) recently completed its review of CMS' proposed 2016 physician reimbursement rule. The document is seen as a likely vehicle for reimbursing doctors for time they spend counseling Medicare beneficiaries about treatment options when facing terminal illness or rapid declines in health. CMS hasn't said when the proposal physician payment rule will be publicly released.

Any outcome is likely to draw some criticism. In the past year, the agency has faced calls from groups such as AARP and the American Medical Association to create a new payment for advance care planning. The groups, along with lawmakers in both parties and chambers, likely will be disappointed if the rule doesn't establish this payment. But there has been continued criticism of the approach, which was linked to "death panels" during the debate over the 2010 health law. The conservative Alliance Defending Freedom remains among those opposed to the idea, and thus likely critics of a proposed new payment. 

The discussion of advance care planning in connection with the new test program was part of CMS' proposed 2016 payment rule for home health agencies, released July 6. CMS listed more than two dozen quality measures that would be used in judging the performance of agencies and organizations participating in the Home Health Value-Based Purchasing program. These providers of home health services could see their payments increased or reduced as much as 8 percent by how their performance is judged.

Among the measures is a check by home health workers of whether patients over 65 have advance care plans, with these seen as mapping their wishes and preferences for treatment.
Home health workers would report whether such a plan was included in the patient's records or if a surrogate, such as a family member or friend, had been identified to make these decisions if needed. The workers would also note cases where the patient opted to decline these discussions.

This work is meant to allow patients a chance to plan for the "what ifs" that can occur in terms of their health, CMS said. Advocates for advance care plans have long argued that this approach spares family members and friends from having to guess how a loved one would want to be treated when that person may be too ill to participate in these decisions. Advance care directives allow patients to make clear that they want every medical intervention possible provided to them, or state that they don't wish to undergo certain treatments, such as ventilation, when nearing death.

By Kerry Young, CQ Roll Call

July 7, 2015 -- Medicare officials have estimated saving as much as $730 million by 2022 through a combination of changes in how the program pays agencies and companies that care for the elderly and disabled in their homes.

A recently proposed rule includes changes that would result in a net decrease of $350 million, or 1.8 percent, in payments next year to home health agencies, according to the Centers for Medicare and Medicaid Services (CMS).

Creating what amounts to a competition among home health agencies based on quality of care delivered could produce another $380 million in savings by 2022, CMS said.

In the 2016 payment rule, CMS outlined a Home Health Value-Based Purchasing (HHVBP) Model program that it would test in nine states. Payments to individual home health agencies, or HHAs, within the boundaries of selected states could rise of fall as much as 8 percent depending on their performance relative to peers, CMS said in the proposed rule. There would be no aggregate change in total home health payments.

Expected savings from the program would come from keeping people healthier, CMS said. The agency said a very conservative estimate would yield a 6 percent annual reduction in hospitalizations and a 1 percent annual drop in admissions to skilled-nursing facilities. CMS would take steps to randomize the selection of the states to be chosen, and, at least in the initial outline, would require all home health agencies in the boundaries of selected states to be included in the test.

Such steps are necessary because Medicare-providers are generally reluctant to participate voluntarily in models in which their Medicare payments could be subject to possible reduction, the agency said.

Still, CMS made a point of requesting comment on alternative geographic selection methodologies for participants in the test.

About 3.5 million people enrolled in Medicare received home health services annually, costing the program $17.9 billion. Expansion and improvement of such services has been seen as way that CMS can prepare to handle the demands of aging baby boomers, yet at the same time, agency officials have been challenged to respond to complaints about misuse and fraud in connection with these services.

The proposed 2016 payment rule reflects a broader drive to tie Medicare reimbursement to the quality of care delivered, not just the volume of services. The national per-visit payment for a home health aide for an organization that submits required quality data to CMS, for example, would rise to $61.09 from $57.89 this year, while the payment for the same visit for an organization that doesn't submit this data would be $59.89.

With the proposed value-based purchasing model, CMS officials intend to build off what they have learned from similar programs, including one involving hospital care. People want to be taken care of in their homes and communities whenever possible, and CMS aims to make sure that care in the home is supported by a value-based care delivery model that is consistent with the rest of the system, said Andy Slavitt, the acting administrator of CMS, in a statement. The goal is that no matter where the care is delivered, it is supported by a payment system that rewards providers who deliver the highest quality outcomes.

By Kerry Young, CQ Staff

July 6, 2015 -- Patrick Conway is leading what's been described as a $10 billion venture capital firm within the federal government's Centers for Medicare and Medicaid Services (CMS).

But instead of funding fledgling biotech firms or surgeons tinkering with new medical devices as private venture capitalists do, the Center for Medicare and Medicaid Innovation (CMMI), headed by Conway since 2013, provides money for hospitals and medical practices trying to improve care while reining in costs.

"That capital infusion allows them the time and resources to redesign their practices," Conway tells CQ, adding that one participant in a CMMI program told him he would have had to mortgage his home several times over to get access to money for this purpose on his own. "These small physician practices are essentially small businesses," he says.

It's still too early to judge how well CMMI's projects will do. The results from its $1 billion Health Care Innovation awards program have been mixed so far. The biggest success to date for CMMI appears to be a program meant to better coordinate treatment of patients, known as the Pioneer Accountable Care Organization model. Medicare's expenses appear to have been shaved by roughly $385 million through work done by hospitals and medical groups participating in the program.

Mark McClellan, who led CMS in the George W. Bush administration, credits this progress in part to the multiple roles that Conway plays within the agency. A talented data cruncher, Conway also oversees the Center for Clinical Standards and Quality within CMS and is the agency's chief medical officer. In these posts, Conway works with officials throughout the agency to speed feedback to doctors and others participating in CMMI test programs.

"Things like that are not strictly part of CMMI since they go to the more fundamental design of Medicare's data systems and how Medicare interacts with providers, but it is definitely part of his portfolio," says McClellan, who now leads the Health Care Innovation and Value Initiative at the Brookings Institution. "It is making a difference."

The innovation center's future, however, is less certain. The 2010 health care overhaul, which created CMMI, set a fiscal 2019 deadline to spend the $10 billion initially provided by Congress. The law calls for continued funding after that, but GOP opposition could be an obstacle. An even more immediate threat is a draft spending bill released last month from House GOP appropriators that would rescind the center's remaining $6.8 billion.

A pediatrician who graduated from Baylor College of Medicine in 2002, Conway brings added credibility by continuing to practice medicine. The married father of three small children finds time for weekend shifts every six weeks or so at a children's hospital, work that he describes as "recharging" for him.

Conway frequently recalls how he witnessed, early in his training, the death of a baby due to an infection from a tube placed in the chest. At the time, many doctors considered such hospital-acquired infections unavoidable. Since then, there's been a campaign to head them off with more thorough cleaning of skin and equipment, with some of this work done by CMMI projects.

Conway says he sees a rapidly accelerating "trajectory of improvement" currently taking place in American health care. "It's really moving in the right direction."