By Kerry Young. CQ HealthBeat Associate Editor

November 4, 2013 -- Concerns about costs and affordability outpaced technical glitches as the main cause for delayed enrollment among early shoppers on the new health insurance exchanges, according to a survey done for the nonprofit Commonwealth Fund.

This research identified 682 people who may qualify to use the new marketplaces because they had reported either that they were uninsured or had bought coverage through the individual market. Of this group, as of late October, 118 had looked at exchange plans and Medicaid options either online, in person with a counselor, on the phone or by mail. And of those, about one in five enrolled in coverage.

Many people may not have been able to get complete information yet about the subsidies for which they qualify, said Sara R. Collins, a vice president at  the Commonwealth Fund and an author of the study. That may help explain why concerns about cost showed up so strongly in the survey results. Among the 96 respondents who shopped but said that they didn't enroll, almost half—48 percent—said they were not certain that they could afford a plan. The survey also found that 42 percent of this group thought that deductibles and co-payments were too high. More than a third—37 percent—said that they had experienced technical difficulties in using the website.

The survey results do suggest that traffic will increase on the marketplaces as a March 31 deadline for obtaining coverage approaches. Looking at the pool of 667 people who had either not enrolled after shopping, had not begun doing research on the exchanges or were not deeply aware of them, 34 percent said that they were very likely to use the exchanges to find and enroll in a plan. Another 24 percent said they were somewhat likely to do so.

The report suggested that the almost 60 percent of the 667 people who had not yet enrolled, but were likely do so by the end of March, amounted to a "display of patience from people who lack comprehensive health insurance" that "suggests that federal authorities will have another chance to remedy current technical problems.

"For the vast majority of uninsured people in the United States, the temporary barrier of a malfunctioning website could pale in comparison to the permanent barriers they have faced in the past and which are redressed by the law: paying the full premium for a plan despite low income, and being charged a higher premium, having a service excluded from their plan, or being turned down altogether because of a preexisting condition," the report said.

The survey was conducted by Social Science Research Solutions. They conducted 4,035 telephone interviews. The survey had an overall margin of error of plus or minus 4.3 percentage points.

• Commonwealth Study (PDF)

By Rebecca Adams, CQ HealthBeat Associate Editor

November 8, 2013 -- The Obama administration last week issued its long-anticipated final rule on mental health coverage. The regulation largely pleased patient advocates, but some were disappointed that the rule does not spell out that Medicaid managed care plans must abide by the parity requirements.

Health and Human Services (HHS) Secretary Kathleen Sebelius, speaking late last week at a forum on mental health policy organized by former first lady Rosalynn Carter, touted the new rule and the role that the health overhaul will have in bringing new protections to people with mental health or substance abuse issues. The health care law (PL 111-148, PL 111-152) requires plans in the new marketplaces to provide mental health coverage in a similar fashion as coverage for physical needs.

"This is the largest expansion of behavioral health coverage in a generation," said Sebelius. The secretary said that in the past six months, two of her family members have had behavioral health crises. She and HHS officials did not elaborate.

The final rule clarifies several issues that had been vague or confusing in a February 2010 interim final rule.

The regulation released last week says that insurers cannot apply different standards for physical and behavioral health for intermediate care that is at a level between inpatient hospital care and outpatient care.

The rule also removes an exemption that was in the interim final rule that allowed insurance companies to set different standards for physical and mental health when an insurer found that a service was not "clinically appropriate." Federal officials said the exemption was confusing.

And the rule clarified the kind of information patients have are entitled to receive from insurers about their benefits. It also says patients have a right to internal and external appeals if an insurer denies a claim for care.

Congress passed the mental health protections in 2008 in a law (PL 110-343) that requires insurers to cover mental and physical health equally, if a plan includes mental health. Insurers are not supposed to set different co-pays or deductibles or treatment limits for mental health than for physical health services.

The rule will apply to people with private insurance, such as employer-sponsored coverage and the individual and small-business markets, including the new health care law marketplaces. The insurers would have to comply with the regulation starting on July 1, 2014. If an insurer's plan year renews later—such as on Jan. 1, 2015—then the changes would take effect then.

One thing that mental health advocates were disappointed in is that the rule will not apply to Medicaid managed care plans, although federal law and other federal guidance policies include those plans. Federal officials had previously released a guidance letter saying that those Medicaid health plans are supposed to comply with the parity protections. Federal officials told reporters on a recent call that the Centers for Medicare and Medicaid Services (CMS) will release additional guidance to states on that issue later.

"This is a major problem," said Director of Federal Legislative Advocacy for the National Alliance on Mental Illness Andrew Sperling. Other advocates felt reassured that future CMS policies would make sure that the plans comply. Medicaid is the largest payer in the country for behavioral health issues.

The way that the parity rule applies to Medicaid beneficiaries depends on what type of Medicaid coverage they are enrolled in and what state they live in.

People who will be signing up for Medicaid under the health law expansion of the program will be covered by the requirements. But if a recipient is in the traditional fee-for-service Medicaid that was already in place before the program was expanded, whether they get parity protections depends on where they live since each state has the power to decide what kind of state requirements to set.

Congressional Reactions Vary

Supporters of the administration cheered the announcement, while critics said the White House sat on it for too long.

Sen. Debbie Stabenow, a proponent of stronger protections for behavioral health, called the announcement "another step toward strengthening America's mental health services and making sure treatment is available for the thousands of Americans living with mental illness." The Michigan Democrat is pushing for action on a bill (S 264) she introduced with Missouri Republican Roy Blunt that would establish criteria for federally qualified community behavioral health centers and allow them to receive Medicaid payments for their services.

"These rules bring us closer to ensuring that we treat mental health the same as physical health, and individuals and their families who are struggling with mental health can get the care and support they need," Stabenow said in a statement.

But Rep. Tim Murphy said the wait for the final rule "reflects a typical dismissal of the health care needs of those seeking mental health services." The Pennsylvania Republican has pressed for the House to address mental health as chairman of the Energy and Commerce Oversight Subcommittee and is writing legislation expected to address treatment options, privacy laws and other issues.

"I am frustrated how mental health is continually put on the back burner," he said.

The administration took almost four years to sort through the approximately 5400 comments they got on the February 2010 interim rule. Patient advocates had hoped that the final rule would be in place earlier this year so that coverage in the new marketplaces that will kick in on Jan. 1 could reflect the changes.

Rule Answers Advocate Questions

Many other issues that the final rule resolves should satisfy patient advocates.

One is the question of whether health insurers can impose non-quantitative limits on services for mental health in ways that are different than those for physical health. Sebelius said that the policy will clarify coverage of intermediate care, such as partial hospitalization or intensive outpatient care for people with mental health issues, or outpatient substance abuse treatment. This intermediate care is sometimes needed after a patient has received inpatient hospital care.

"That's a very critical space for a lot of individuals on the road to recovery," Sebelius said at the Carter Center forum.

An administration official said late last week that limits that restrict patients to geographic areas or certain facilities will not be able to be more restrictive than those on patients for physical conditions. Patients seeking mental health treatment, for instance, will be able to get care out of state if they would be able to do so for a medical condition.

Health plans also will have to apply similar medical management tools to mental and physical health, said Sebelius. One major problem, said Paul Summergrad, president-elect of the American Psychiatric Association, is that insurers sometimes require physicians to get pre-authorization through time-consuming methods to hospitalize people with mental health issues even when those types of requirements are not in place for people with medical problems. Doctors may end up having to have a half-hour conversation on the phone with an insurance company representative in order to get approval for hospitalization, when the doctor would have only to send an electronic communication after a patient is already admitted for a physical problem. Summergrad is an internist and a psychiatrist.

A similar problem arises if behavioral health patients are required to try low-cost treatments or medications first to see if those would work before getting doctor-recommended care that is more expensive. The rule says that insurers can't have different standards for behavioral health than physical health.

The administration also will require insurers to provide patients with more information about coverage so that it is easy to make comparisons between mental health care and medical or surgical benefits, said Sebelius. One area that has been difficult for patients to analyze is whether insurers are using the same criteria for all kinds of care as to whether a service is medically necessary and eligible for coverage.

Some Cost Relief for Insurers

Federal officials recently said that the changes aren't expected to drive up premium costs significantly. If insurers' costs go up by 2 percent or more because of the regulation in the first year of implementation, then they can get a one-year exemption from parity requirements for the following year. In later years, it's easier to claim an exemption because insurers' costs only have to go up by 1 percent over a year.

Administration officials said that most large health care plans have complied with the 2008 law's provisions for quantifiable limits. For instance, most have gotten rid of higher cost-sharing for inpatient behavioral health care services in recent years. Many also have stopped charging different deductibles for mental health and substance use services.

But advocates said that the rule was a long-overdue relief. They said the rule was needed to clarify several issues that were tough to understand and enforce under the interim rules.

"We need to know what the rules are," said Summergrad in an interview. "Not knowing has made it much more difficult to hold insurers accountable when abuses of the system occur."

By Emily Ethridge and Melissa Attias, CQ Roll Call

November 8, 2013 -- Allowing more consumers to keep health insurance plans that do not meet the health care law's requirements looks to be a difficult problem for the administration and Congress to solve.

Republicans have pressured President Barack Obama on the announced plan cancellations, saying they violate his promise that people who liked their current insurance could keep it. Obama recently indicated that he would look into ways to allow more people to keep their current coverage.

In addition, the House will vote on a Republican plan to do that on Nov. 15 and two more measures in the Senate, including one from Democrat Mary L. Landrieu of Louisiana, share the same goal.

Another idea suggested by one health policy expert is that the administration could offer subsidies to consumers who would experience large price increases with new health plans.

Despite all that interest, there appears to be no easy fix to the issue. Changing the requirements of the health care law (PL 111-148, PL 111-152) to allow more plans to continue would put insurance companies in a messy situation, experts say. In addition, some Democrats are not supportive of the idea, saying that continuing the subpar insurance plans would be bad for consumers.

"The President or the Congress could wave a magic wand over this cancellation problem and say, 'Never mind,'" said Robert Laszewski, an insurance industry consultant, in an email. "But it is a lot more complicated than that. Ironically, while the Obama administration is not ready for Obamacare, the insurance industry is."

Under the law, consumers who have plans that were in effect before the law's passage can keep them, as they would be grandfathered plans. However, non-grandfathered plans are subject to the law's minimum benefit requirements and consumer protections, and any plans that changed significantly and don't meet the requirements must be canceled.

Obama has apologized to people whose plans are being canceled, and said in an interview with NBC News that he had asked his team to "see what we can do to close some of the holes and gaps in the law."

He did not speak to specific legislative fixes, including a Republican bill (HR 3350) the House plans to vote on that would allow people to keep their plans for another year. House Democratic leaders plan to oppose the measure, according to a leadership aide.

Yet even if members of Congress and the administration were to line up behind a proposal to stop plans from being canceled, it's unclear whether insurers would actually be able to make it happen.

Laszewski notes it has taken months for insurers to get their computer systems and insurance plan and rate filings ready for Jan. 1. Resetting the old policies that are being cancelled in the computer systems would also take companies months, he said.

"Each company would have to reset each of thousands or hundreds of thousands of policies by Jan. 1" said Laszewski, president of Health Policy and Strategy Associates, Inc. "I don't see how they could do it."

G. William Hoagland, senior vice president at the Bipartisan Policy Center, agreed that it could be an "administrative nightmare" for insurers if people have been terminated, although he said he thinks it could be overcome. His bigger concern is the "unintended consequences" on premiums for 2015.

Hoagland, a former vice president at Cigna, said large companies who had their actuaries develop their premiums for the 2014 enrollment period likely made assumptions that consumers whose plans are being cancelled would enroll in plans on the exchanges. That would spread the risk for their pool, he said. But if insurers do not get the enrollment of this population that they expected, he added, that could cause 2015 premiums to be "adjusted upward."

Meanwhile, America's Health Insurance Plans spokeswoman Clare Krusing said in an email that the group has "a number of concerns" about how allowing people to keep their current plans would work.

But she also said that current policies do not have to comply with the new requirements until they renew throughout next year. She said insurers in many cases are allowing people to renew their current policies this fall so they do not have to change coverage until a year from now.

To avoid those problems for insurers, the administration could take a different path. Rather than allow the current policies to continue, the administration could offer subsidies to people who are losing their current coverage and would see a large increase in premium costs for a plan on the exchange.

Dan Mendelson, president of the consulting firm Avalere Health, says that providing subsidies would be beneficial to the administration because it would increase exchange enrollment. It also would address the risk pool issue.

"Enroll a lot of people in these plans, and people are basically okay with the insurance, then they've succeeded and they can move on to fight the next fight," said Mendelson, a former Clinton administration official.

"Giving people money usually works," he added.

During the NBC interview, Obama said he wanted to make sure people could afford the more comprehensive plans on the exchanges.  "We are proud of the consumer protections that we put into place. On the other hand, we want to make sure that nobody is put into a position where their plan has been cancelled, they can't afford a better plan," Obama said. "So we're going to have to work hard to make sure that those folks are taken care of."

That move to provide subsidies would also prevent Obama from having to continue plans he described as "subpar" and lacking the law's required consumer protections and minimum benefit standards.

"I don't believe that it is realistic to expect that everyone's going to be able to keep their coverage that they had in the old world," said Mendelson. "A lot of that old world coverage is prohibited because the administrative costs are so high, the benefits are inadequate."

In any case, congressional Republicans are moving ahead with the bill, from Michigan Republican Fred Upton, that would allow insurers that provided coverage in the individual market as of Jan. 1, 2013, to continue to offer that coverage in 2014 outside of the new insurance exchanges. The bill would also allow those plans to be treated as grandfathered plans so people who keep them would not be subject to individual mandate penalties.

A House Rules Committee aide said the legislation is likely to be considered under a closed rule, which would block lawmakers from offering amendments on the floor.

But even as some Democrats have expressed concern about constituents losing their coverage, that doesn't mean they're on board. House Democratic leaders indicated to their conference they would oppose the bill, according to a leadership aide, who said in an email that the measure "would not strengthen the health care reform law, but instead aims to undermine it."

Still, the Upton bill could be more palatable to insurers than Senate legislation (S 1642) by Landrieu. That measure would allow an individual to keep the coverage they were enrolled in on Dec. 31, as long as the person meets requirements like continuing to pay premiums, or unless the insurer cancels all of its coverage on the individual market and stops operating as an insurer.

While the Upton bill would allow insurers to continue the coverage, Landrieu's appears to require them to do so in most cases. And the Upton proposal permits the plans to continue to be sold only through 2014, while Landrieu's doesn't specify an end date. Co-sponsors of the Landrieu bill, all Democrats, are Kay Hagan of North Carolina, Joe Manchin III of West Virginia and Mark Pryor of Arkansas.

The goal of both the Upton and Landrieu measures is also similar to another Senate bill (S 1617) from Wisconsin Republican Ron Johnson.

Hoagland said he is positive that the administration would prefer that relief be provided through the regulatory process rather than legislation. Not only would legislation take some time, he said, but it could also open the door to other issues that members would like to fix. He also noted that given the degree to which the administration has found flexibility in the law so far, he would be surprised if they couldn't find a way to act on this without Congress.

Upton, however, said that regulatory action would not be acceptable.

"Rather than another regulatory patch or holiday weekend blog post the president ought to embrace the bipartisan call for legislative action to allow Americans to keep the health plans they know and like, and can afford," he said in a statement about his bill.

By Melissa Attias, CQ Roll Call

November 5, 2013 -- A top Obama administration official in charge of overseeing the health care law rollout recently said that officials are looking at a target projection of 800,000 Americans newly enrolled in health insurance coverage by the end of November.

However, Department of Health and Human Services aides would not clarify the comments made by Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner at a Senate hearing, so it was unclear whether that number applies to both the state and federal insurance exchanges or just the federally run exchange. Administration officials have said they will not release enrollment figures for the troubled federal exchange until mid-November but have cautioned the numbers will be low.

"Our projections are constantly changing based on the experience on the ground," said Joanne Peters, a spokeswoman for HHS. "We have always anticipated that the pace of enrollment will increase throughout the enrollment period."

Peters added, "As Secretary Sebelius said before Congress last week, even prior to Oct 1, we expected the first month's numbers to be low and we have since faced challenges with the website not working the way it should. We are focused on reaching as many people as possible to make sure that they know about the benefits they are entitled to under the Affordable Care Act."

The number emerged at a hearing of the Senate Health, Education, Labor and Pensions Committee when Tavenner was asked about "the target enrollment number for the end of November for the exchange" by Sen. Richard M. Burr, R-N.C.

"For the end of November?" asked Tavenner. "I think we are looking at, between October and November, I think that number was, I want to say around 800,000." Last week, internal exchange "war room" documents released by the House Oversight and Government Reform Committee indicated that there were just six enrollments on the first day of operation of the problem-plagued federal health insurance exchange. There were 248 by the second day.

Meanwhile, the top Democrat and Republican on the Senate panel agreed on at least one thing: the troubled website for the new federal exchange will get fixed. But they had fundamentally different opinions about whether the overhaul is taking the country in the right direction.
Senators from both parties peppered Tavenner with questions at the hearing, demanding specific answers about how the administration plans to move forward with the rollout of the law (PL 111-148, PL 111-152).

Although the questioning was generally less heated than when administration officials testified before House panels controlled by Republicans last week, Senate Democrats did not mince words. Barbara A. Mikulski of Maryland, for one, expressed concern about a "crisis of confidence" that could prevent the new system from succeeding.

In response to questions from ranking Republican Lamar Alexander, Tavenner also said CMS is in the process of putting together information on enrollment and that it will be available next week. Members of Congress have been pressing for enrollment numbers, which officials repeatedly have said they would release in mid-November.

Also, House Ways and Means Chairman Dave Camp subpoenaed CMS for enrollment data after Tavenner responded to his request from last week without turning over the figures.

Tavenner wrote in her Nov. 4 letter that the agency "is focused on providing reliable and accurate enrollment-related information" through a process it expects to continue over the next two weeks, with the data released in mid-November.

She said the documents about enrollment cited by Camp "appear to be notes and do not reflect official enrollment-related statistics." And she closed by expressing appreciation for Camp's patience and said that the agency would provide the information as soon it's available.
But Camp said in a letter that accompanied the subpoena that administration officials including Tavenner have received status reports on enrollment and refuse to turn them over to policymakers.

"Congress needs to know what you know so Congress, the American people's representatives, can also take corrective action," the Michigan Republican wrote. "Both Republicans and Democrats need to understand the full extent of the crisis if we are going to find a fair and workable solution for the American people."

According to the committee, Camp demanded the documents by close of last week.

Opening the Senate hearing, Chairman Tom Harkin, D-Iowa, said he wanted the website working so the overhaul will succeed, not be torn down like many have been working to make happen. He called it "a machine that will be fixed" and listed some of the benefits of the new law.

"That's the big picture and we shouldn't forget it," Harkin said at the hearing, at which Tavenner was the sole witness.

Alexander, R-Tenn., also said he was sure the administration would be able to fix the website and that he's not very worried about the penalties that take effect next year. But he said he's more concerned about the individuals who are getting cancellation notices for their current coverage.

Alexander voiced support for a measure (S 1617) from Wisconsin Republican Ron Johnson that he said would put into law President Barack Obama's promise that individuals could keep their health plans if they like them. When Alexander asked whether the administration would support it, Tavenner said she had not looked at Johnson's bill. She also encouraged those individuals receiving cancellation notices to go on the exchange website and look at their options, noting that some of them may qualify for subsidies.

Harkin said he's heard a lot of concern from Republicans about cancellations, but that he didn't hear much in the past when insurance companies would cancel policies if someone got sick.

"What we're saying is, that's over with. That old value system was no good for this country," Harkin said.

Outreach and Education

Mikulski told Tavenner she is worried that there is such a "crisis of confidence" in the new system that the young and healthy people needed to make the law a success will not enroll. She asked if the administration has a plan to restore young people's interest, which Tavenner said was the case.

"I believe that there's been a crisis of confidence created in the dysfunctional nature of the website, the cancelling of policies and sticker shock from some people," said Mikulski, who also serves as chairwoman of the Senate Appropriations Committee.

While the goal this month is to stabilize the website, Tavenner said CMS has a targeted plan that includes young people and large populations of the uninsured that draws on a combination of media, including television, radio and some print. And she said she thought the administration would be able to restore confidence in the program, maintaining that the website has already been improved.

In addition, Washington Democrat Patty Murray asked about the administration's plan to get information to people whose plans are being cancelled. Tavenner said they are going to be discussing the issue soon and that she would get back to her with information.

"I think that's really important because a lot of them are just seeing 'Your policy's been cancelled by Obamacare' and not being told 'Here is what your options are,'" said Murray, the chairwoman of the Budget Committee.

North Carolina Democrat Kay Hagan also asked about education and outreach and questioned what steps the administration would take if the site is not working, such as delaying the penalties on individuals who do not purchase insurance. Hagan has called for an extension of open enrollment and waiving the penalties for two months. But Tavenner said there are no plans to delay the individual mandate and maintained that the website is working now and performance improvements being made.

Security Concerns

Senators from both parties also asked Tavenner several questions related to the security of the website—an issue that Tavenner said she thinks there has been a lot of confusion about. Tavenner said the security of the hub, which serves the federal and state exchanges, went through end-to-end testing and was signed off on. It's the exchange itself that went through security testing by component and got a short-term authorization to operate, she said, since CMS officials knew they would be making software upgrades.

"I think there's confusion about what was tested and what was not tested," Tavenner said.

Harkin noted that he's found that security is a "paramount concern" from talking to other senators. Consumers have to be completely sure that their information is secure when they fill out an application, he said.

"I just think this is an issue that really has to really be focused on thoroughly so there's absolute assurance that that is secure," Harkin said.

Georgia Republican Johnny Isakson also asked whether Tavenner was aware of a separate June report from the Health and Human Services Department inspector general that found that contractor Quality Software Services, Inc. had not sufficiently implemented required security controls for USB ports and devices, putting the personal information of more than 6 million Medicare beneficiaries at greater risk. Tavenner said she was not aware of it.

Obama Remarks

At an Organizing for Action political event last week, Obama tried to reassure supporters of the health care law that their work on the overhaul is already making a difference and will continue to do so. While he reiterated his frustration with the federal exchange website, he also emphasized that open enrollment only began one month ago and that everyone will have the opportunity to sign up for coverage.

"I know you're not happy about it because as long as the website is not working the way it should, it makes it harder for you to help them get covered," Obama said. "And that's unacceptable and I'm taking responsibility to make sure that it gets fixed. And it will be fixed."

Like in his speech in Boston in October, Obama also tried to ease concerns about individuals receiving cancellation notices for their current health coverage and explain his promise that if people liked their plans, they could keep them. And he urged supporters to continue their outreach and education efforts for the law.

"I have run my last political campaign, but I'll tell you what, I've got one more campaign in me—the campaign to make sure that this law works for every single person in America," Obama said. "And I'm asking for your help."

Obama will also meet with volunteers in Dallas, Texas, who are helping educate and enroll people in health coverage through the insurance exchanges.

By Rebecca Adams, CQ HealthBeat Associate Editor

November 7, 2013 -- The Medicare Payment Advisory Commission (MedPAC) has started to explore whether it will eventually recommend that Medicare remove some of the disparities between what it pays skilled nursing facilities and inpatient rehabilitation facilities to treat patients recovering from serious medical problems.

The push is part of a broader discussion about whether Medicare should pay more for care in some types of facilities than it does in others, if the patients have similar conditions and have similar health outcomes.

The MedPAC staff and several commissioners referred to the debate as a "stepping stone toward broader reform." MedPAC Chairman Glenn Hackbarth called it "a starting point" and noted that among the commissioners there is "near unanimous affirmation of the direction" that the panel is considering.

MedPAC analysts said that IRFs are paid 10 percent to 90 percent more than skilled nursing facilities, even though the institutions offer similar services, treat some of the same conditions and see similar results in improvements in patients' health.

The commission plans to study three medical conditions treated in the two settings: major joint replacements, hip fractures and strokes. The panel will develop a common metric to compare the prices between the two facilities, using a per-discharge metric like inpatient rehab facilities do rather than a per-day payment system like skilled nursing facilities.

MedPAC Executive Director Mark Miller said he hopes to have some results by the March and April MedPAC meetings that could form the basis of a deeper analysis by the commissioners. In explaining the goal of the commission in the spring, Miller said, "I wouldn't say a recommendation necessarily. That will really depend on what we find. The research has to settle out to have a pretty clear idea of where we're going."

In future years, Miller said the work may evolve so that Medicare payment rates "become much more agnostic about setting." But he said, "That's a long run out."

Most commissioners agreed with the idea of moving toward more uniform payments, regardless of whether patients are in a skilled nursing facility or an IRF. But a few expressed some reservations.

Bill Hall of the University of Rochester School of Medicine said he endorsed the concept but wanted to interject a word of caution because, he said, the facilities do provide different types of services to patients with different ability levels. At an IRF, patients are supposed to undergo more than three hours of therapy per day, something that is not required of patients at nursing facilities.

He said that a rehab facility looks more like a hospital, with sophisticated equipment and specialists buzzing around, while a typical skilled nursing facility looks more like a nursing home with accoutrements.

"We almost never send an older Medicare patient to an IRF," he said, because the frailer patients wouldn't be able to do the hours of therapy that are involved. The vast majority of stroke patients go directly to skilled nursing facilities, he said.

He suggested that "we should entertain some consultation" from rehab therapy groups.

"The last thing I'd like to see is to disenfranchise Medicare patients from getting IRF services in the rare cases that they get them," he said.

The discussion may evolve in future years into a recommendation for a combined prospective payment system for at least some of the post-acute care facilities.

Commissioner Mary Naylor of the University of Pennsylvania School of Nursing said, "I saw this as part of the path toward rationalization."

By Kerry Young, CQ HealthBeat Associate Editor

November 7, 2013 -- Medicare may need to ask accountable care organizations (ACOs) to accept some financial risk as part of a larger effort to make health care both more effective and less expensive, members of the Medicare Payment Advisory Commission (MedPAC) recently said.

While not making an official recommendation, many MedPAC members said that they favored increased use of a two-sided approach for accountable care organizations, meaning that they enter arrangements in which they would share in both potentials savings and losses.
The alternative is a one-sided arrangement, with no potential for shared losses for the ACOs.

"Ultimately, these ACOs need to be accountable for delivering on outcomes including cost lower than fee-for-service," which is Medicare's more traditional payment model, said MedPAC member Scott Armstrong of Group Health Cooperative in Seattle.

MedPAC staff asked the commissioners to consider whether they want to give guidance in their next report to Congress and the Centers for Medicare and Medicaid Services about expected changes to be made next year to the shared savings programs. These programs are intended to give doctors, hospitals and other providers of medical care new incentives to shift away from the traditional Medicare fee-for-service model, and seek a more coordinated approach to health care that experts say could result in lower costs and better results.

MedPAC also earlier considered changes to ACOs at an April meeting. MedPAC staff then said that 252 ACOs are working to coordinate care for 4.1 million people on Medicare.

ACOs are expected to take steps that result often in improved care, such as reducing the need for hospital readmissions. The saving-sharing "allows the providers to capture that efficiency on their bottom line in a way that fee-for-service doesn't, and in a world where fee-for-service payments are fundamentally under a lot of pressure," said Michael Chernow of Harvard Medical School, vice chairman of MedPAC.

Slow Transition Suggested

Many MedPAC members stressed the need for a gradual shift toward adding risk-sharing to the savings-sharing, the so called "one-sided" approach. MedPAC Commissioner Craig Sammit of HealthCare Partners in Torrance, Calif., questioned whether to add incentives to the shared-savings-only option to draw more medical practices to ACOs.

He asked whether the one-sided approach needs "to be even more attractive next time to bring another tranche along, or will people just stay in the comfort zone of fee-for-service?"

"We kind of need to make one-sided more attractive to bring more or make fee-for-service less attractive, so that we keep moving forward."
Several MedPAC members said that medical practices and hospitals would need time to adjust to the notion of risk-sharing, and should be allowed some time to operate under agreements that only shared savings to adjust to this new model.

MedPAC members also stressed the need for ACOs to build greater ties with the people whose medical outcomes will determine the success of cost-sharing models.

"How in the world can a group be accountable for care for a population of patients that they don't have a relationship with?" asked MedPAC Commissioner Armstrong.

MedPAC Chairman Glenn M. Hackbarth said that policymakers will need to keep in mind what payment alternatives remain for medical practices and hospitals in designing any changes for ACOs.

The old traditional Medicare fee-for-service model encourages "a volume-focused business," he said.

"For a voluntary ACO, you have got to make the terms really delicious" to compete widely against the model, he said.

But, the success of the ACO program may not rest on how common they become, he said. The ACO programs may be most attractive to physician groups, and less so to hospital groups and larger university health programs, he added.

"If all of the academic medical centers are out, if there are no hospital based ACOs, if they are all sponsored by physician organizations, is that necessarily a bad thing?" Hackbarth said. "I could imagine that, in fact, that may be ultimately the most sustainable model on an ACO, and trying to jimmy the rules so that it attractive to academic medical centers may compromise your design."