By John Reichard, CQ HealthBeat Editor

October 10, 2014 -- The cost of expanding insurance coverage under the health law in fiscal 2014 was far lower than budget experts predicted when Congress passed the overhaul four years ago, according to figures released this week by the Congressional Budget Office (CBO).

The preliminary numbers capture the expenses for the fiscal year during which the main coverage expansion provisions of the law kicked in.

The Treasury paid out $13 billion in subsidies to help lower-income Americans pay premiums for plans sold on insurances exchanges and in some cases, cover their out-of-pocket costs. By comparison, CBO projections in March 2010 pegged the cost of the subsidies at $19 billion for the fiscal year that ended Sept. 30.

The other way Americans gained coverage under the law was through expansion of Medicaid. Fiscal 2014 federal outlays for the program grew $36 billion, according to CBO's budget review, which was released Oct. 8.

CBO did not specify how much of that amount went to cover Americans who joined the program because of expanded eligibility criteria. But based on past trends, it appears that about half of the amount was for that purpose.

CBO originally projected that federal Medicaid spending would total between $320 billion and $335 billion in fiscal 2014. Its latest numbers show the tally to be $302 billion.

The original estimate assumed all states would expand their Medicaid programs. But after the Supreme Court ruled in June 2012 that states could opt out without jeopardizing their existing funding for the program, only about half have done so.

Critics of the law including former CBO Director Douglas Holtz-Eakin have warned that the costs of the subsidies and of expanding Medicaid will endanger the nation's long term financial health. Employers in growing numbers may drop coverage and send their workers to exchanges to buy subsidized coverage, he has warned.

The CBO report also included estimates of overall Medicaid and Medicare spending in fiscal 2014. Medicaid spending grew 13.6 percent and Medicare spending a more modest 2.7 percent. The Medicare total was $509 billion, about $100 billion less than CBO thought it would be in 2010.

By Kerry Young, CQ HealthBeat Associate Editor

October 10, 2014 -- Scoffed at by many conservatives and partly abandoned by Democrats, nonprofit health cooperatives (Co-Ops) that sell coverage to the uninsured are in some ways defying expectations.

All 23 active coops plan to sell insurance in 2015, reaching a total of 26 states, according to the Centers for Medicare and Medicaid Services. The Co-Ops are proceeding even though some attracted only sparse enrollment for 2014, and a failed Vermont project stoked skepticism about this program.

"I was mildly surprised at the apparent success, at least in terms of enrollment, of a couple of them," said Scott Harrington, chairman of the department of health care management at the University of Pennsylvania's Wharton School, in an interview.

Among the early standouts, according to Harrington, is CoOpportunity Health (CoOp), which serves Nebraska and Iowa. CoOp pegs its current enrollment at about 93,000. Only Health Republic Insurance of New York has attracted more customers, with an enrollment of about 150,000, has more customers, according to a survey by CQ HealthBeat. Twenty of the coops provided enrollment estimates and figures. Oregon's Health Co-Op and InHealth of Ohio declined to do so, while Tennessee's Community Health Alliance didn't respond to phone and email inquiries.

In the next rung of reported enrollment figures are Kentucky Health Cooperative, with enrollment of about 57,000, Consumers Choice Health Plan of South Carolina at about 49,000, and Maine Community Health Options, at about 40,000. At the lowest end of the scale, Minuteman Health of Massachusetts had enrollment of about 1,800.

The immediate challenge for many of the coops is to quickly grow to cover at least 50,000 to 100,000, and then continue to expand, Harrington said.

"You need to be looking at 100,000 plus, ideally more than that in terms of enrollment, in part to manage volatility, but also to be able to spread the fixed costs associated with running the operation over a somewhat sizeable client base," Harrington said, noting that outlook is "more dicey" for smaller coops.

"It's not clear that they are going to generate sufficient scale to by any means thrive," he said.

The co-ops meant to assuage Democrats angered by the lack of a public, or government, option in the 2010 health law (PL 111-148, PL 111-152). Their early progress has been monitored by Republicans on the House Oversight and Government Reform Committee. A February hearing "Health Insurance Co-ops: Examining Obamacare's $2 Billion Loan Gamble" focused on $2 billion of start-up loans that need to be repaid in five years and solvency loans, which the coops have 15 years to repay.

Rep. James Lankford, R-Okla., chairman of Oversight's health panel, cited federal estimates in saying an $860 million loss could be expected from the failure of some coops, calling the program "an investment disaster.". Democrats have allowed the whittling of funds for new coops from a one-time target $6 billion to about $2 billion.

It's not possible to tell yet how well the coops are managing, in part due to safety nets that apply broadly to insurers, said Robert Laszewski, president of consulting firm Health Policy and Strategy Associates and a former chief operating officer for a health and group benefits insurer.

In addition to the special loans for Co-Ops, the Co-Ops will benefit from risk adjustment provisions in effect through 2016 to insulate the insurers from absorbing larger-then-expected losses.

"We don't know what the real prices are yet," Laszewski said. "We won't until 2017, and that's particularly true of the co-ops."

Coop backers admit that these new insurers face significant challenges. Some risk adjustment payments are delayed well past the time that insurers would face higher-than-expected claims, which is more of a challenge for new firms, said Jan VanRiper, the director of the trade association for the National Alliance of State Health Co-Ops.

Co-Ops are especially vulnerable because they try to serve formerly uninsured individuals who are likely to have deferred health care costs, she said. The firms also began their first enrollment period amid the technical problems that plagued the federal health exchange and some state marketplaces. The co-ops are marketed themselves as more consumer oriented than the giants in the field, many of which are publicly traded.

"The expectation, of course, was that with more competition in those markets, prices would be driven down, hence benefiting not only private payers but governments that subsidized some premiums for private payers," VanRiper said. "Not only have prices been driven down, but Co-Ops are offering a consumer-driven alternative to traditional insurance.

By Rebecca Adams, CQ HealthBeat Associate Editor

October 6, 2014 -- The Obama administration will use payroll data starting next year to find out how many workers each of the nation's 15,000 nursing homes employs to help patients, federal officials said last week. The process is part of an effort to improve the quality of care offered by nursing homes, home health agencies and other medical providers.

Part of the initiative comes from a bipartisan law that President Obama recently signed. The legislation, known as the IMPACT Act, could lead to significant long-term changes in the way that the providers are paid. The rest of the efforts are being done through rulemaking and executive actions.

Consumers have long been frustrated by the difficulty of comparing nursing homes and home health agencies. The administration said the new requirements would give consumers more tools. Besides more accurate information about staffing levels, the Centers for Medicare and Medicaid Services (CMS) also will beef up requirements for states to inspect nursing homes regularly and post results online.

Federal officials also will expand the current ratings system, which is presented in an online tool known as Nursing Home Compare, with additional quality measures. The website allows consumers to compare nursing homes within a geographical area based on quality ratings that federal officials award based largely on data supplied by the institutions. The administration also said it would expand the use of nationwide surveys of nursing homes as another way to check the information that nursing home provide.

And the conditions of participation for home health agencies will change for the first time since 1989. The nation's approximately 12,500 agencies will face new requirements, outlined in a proposed rule released early last week, that aims to improve quality assessments and communications systems. The rule is designed to improve patients' rights by clarifying the process for conducting violation investigations, and addressing verified problems.

"We are focused on using as many tools as are available to promote quality improvement and better outcomes for Medicare beneficiaries," said CMS Administrator Marilyn Tavenner. "Whether it is the regulations that guide provider practices or the information we provide directly to consumers, our primary goal is improving outcomes."

Consumers often are particularly skeptical about self-reported staffing data from nursing homes. The lack of verification "raises the possibility of gaming the system," one administration official acknowledged in a recent call with reporters. Some providers have been accused of inflating the number of nurses and other staffers temporarily before a reporting deadline in order to win a higher quality rating that is then touted in marketing materials.

The administration will use funding from the IMPACT Act to install an electronic system that will use quarterly reports that can be traced back to payroll data from the providers. The information will reveal the number of employees at each facility, the amount of turnover and retention among workers and the mix of personnel.

The nursing homes will report the staffing data to CMS in 2015, and the public is expected to be able to see it in 2016.

Federal officials also are evaluating whether the current ratings system needs to be adjusted. An unusually high number of nursing homes have better than average scores, which raises questions about the reliability of the ratings. The new methodology is expected to tap more independent sources instead of self-reported data.

And nursing homes will have to add some measures. Starting in January, facilities will report on the amount of antipsychotic medications they give to patients. Other metrics that are planned to be added later include information on how many patients are re-admitted to hospitals after being discharged.

The American Health Care Association and National Center for Assisted Living, a trade group which represents more than 11,000 nursing homes, assisted living homes, and facilities for people with disabilities, already encourages its members to track similar data.

"We believe the improvements we are making to the Five Star system will add confidence that the reported improvements are genuine, are sustained, and are benefiting residents," said Patrick Conway, deputy administrator for innovation and quality and CMS chief medical officer.

The law (HR 4994) that Obama signed, which authorized some of the funding for the federal changes, was a noncontroversial measure that built off recommendations from the Medicare Payment Advisory Commission.

The law requires providers to submit standardized data on the care they give to nursing home patients and those that have had a hospital stay. MedPAC and the Health and Human Services Department will report back to Congress with new proposals for post-acute care payments, such as using bundled or site-neutral payments that would reduce differences in the payments that different kinds of providers get for similar types of patients. MedPAC commissioners pushed in their March report for a common, uniform assessment tool of post-acute care providers.

Mark Parkinson, the president and chief executive officer of the American Health Care Association and National Center for Assisted Living (NCAL), said the law "opens new opportunities to enhance the quality care we deliver every day" and called it a "critical step forward in improving lives for millions of Americans."

Parkinson said the providers look forward to helping to implement the law and would work "to ensure the new quality measures are helpful to those we care for and their families."

October 9, 2014 -- Health and Human Services (HHS) Secretary Sylvia Mathews Burwell signaled last week that the federal government is unlikely to step in anytime soon to ensure that health insurers are offering sufficiently broad provider networks or that the lists of providers that plans give to consumers are up-to-date and accurate.

The National Association of Insurance Commissioners (NAIC) is already trying to come up with revisions by December to their state law template addressing the issue. The organization is expected to vote on approving the draft and recommending it to state officials next year. NAIC senior health and life policy counsel Jolie Matthews said two weeks ago that the model state law may add requirements for insurers to update their provider lists on a regular basis.

Burwell referenced that work in a briefing with reporters when she was asked whether HHS officials will tighten their own standards. The wide-ranging briefing also covered the fight against Ebola, electronic medical records, payments to insurers that are not as profitable as expected, the federal health enrollment website and the upcoming marketplace enrollment period.

"The role of the state insurance commissioners in the networks is the place where" changes are likely to emerge, said Burwell. "We want to continue to listen and understand how the marketplace is working."

The health care law (PL 111-148, PL 111-152) requires networks to be adequate and to include a sufficient number of providers that serve low-income, medically underserved patients.

But many consumers have complained that some plans' networks offered in the new marketplaces leave out the largest or most important hospitals or physician groups in their communities.

The law also requires insurers to offer provider directories online, but consumers and research groups examining the issue also have found it hard to figure out which providers are actually in the network because the information often is outdated or confusing.

Burwell said that because HHS officials project that the number of plans offered nationwide will increase by 25 percent this year, "we're hopeful that that's going to increase more competition and diversity of the type of plans that will be in place."

HHS officials will provide "any support we can to efforts of state insurance commissioners if they have questions or need help as they're thinking through how to work on this issue," said Burwell.

Consumer and patient advocacy groups are concerned that some large children's hospitals or cancer treatment centers that are well-regarded in the community are among the providers that are not covered by insurers.

A Robert Wood Johnson Foundation––Urban Institute case study of six states released last month found that in four of them, insurers made significant changes to the providers included in their networks as they designed their marketplace coverage. In the other two states, at least some insurance companies narrowed provider networks in order to exclude more expensive providers and try to keep costs lower than they otherwise would be. Across all six states, insurers and state officials reported confusion from both consumers and providers about which providers were in insurers' networks.

Insurers may drop providers or providers may decide to stop participating in a network at any time during the year, according to insurance industry lobbyists.
Burwell said she believes the adequacy of provider networks and accurate information is "an issue for the entire system," including employer-provided insurance, and "not simply a marketplace-based issue."

She also suggested that some consumers may accept narrower networks if the plans hold down costs.

"One of the things that we saw last year in terms of what many consumers make their decisions on, and you see it in the private employer place, is actually they do make that decision often based on price and so as we continue to move forward we're going to learn––and we want to continue to learn— what consumers are making choices on and have that inform how we try and shape and influence," Burwell said. "But it is a marketplace. It is an open market and that is part of the system we have and that we support and work within."

Asked whether a consumer should have the ability to switch plans during the year if the patient's provider is no longer covered by an insurer, Burwell suggested she would think about it further.

"As we work through this and understand what the consumer actually cares about and wants, those are things that we will incorporate into our thinking," she said.

October 7, 2014 -- Wal-Mart Stores Inc., the nation's biggest private employer, will stop offering health benefits in January to employees who work fewer than 30 hours per week. Wal-Mart's move is significant because of its size and potential influence on other businesses, as well as its history of workforce complaints about benefits and labor practices.

The health care law (PL 111-148, PL 111-152) requires employers to offer affordable coverage to people who work at least 30 hours weekly. But Wal-Mart officials said that new federally subsidized health insurance marketplace plans created by the law are a viable alternative to company-sponsored coverage.

"Today the health care landscape is changed," Wal-Mart spokesman Randy Hargrove said in a recent interview. "There's a wider selection of plans."

The benefits cutoff affects about 30,000 employees, or 5 percent of the retailer's part-time workers.

The corporation will hire for one year a company to help its workers choose a government-subsidized or private insurance plan, or enroll in Medicaid, the federal-state program for low-income people, Hargrove said. Wal-Mart will not give workers any stipends to help with the costs.

"We don't make these decisions lightly," Sally Welborn, Wal-Mart's senior vice president of global benefits, said in a blog post explaining the decision. She also said the company will ask workers to pay more of their medical costs. Premiums for the lowest-cost option, a basic plan for a single person only, will rise by $3.50 every two weeks to $21.90 per biweekly pay period, starting Jan. 1.

Wal-Mart officials said rising health costs prompted the decision. Hargrove said health costs were $500 million higher in the fiscal year that started in February than in the previous year.

Other retailers—such as Target, Trader Joe's and Home Depot—also have announced plans to drop coverage for part-time employees who do not work at least 30 hours.

Some employees may qualify for Medicaid, depending on how many hours a person works and the eligibility rules of the state in which the worker lives. The average wage for all hourly employees is $11.83 per hour, Wal-Mart spokesman Kory Lundberg said in an interview.

Cashiers at Wal-Mart are among the lowest-paid among retail chains, according to a National Bureau of Economic Research paper published this summer, although managers' pay compares favorably with the company's competitors. The research showed that Wal-Mart cashiers earned $8.48 an hour on average.

Lundberg disputed the amount, saying it was based on incomplete data, but declined to release the average pay for cashiers.

Wal-Mart has come under fire in recent years from consumer groups and Democratic critics who have said that the company's relatively low pay is a drain on federal taxpayers because of the number of employees who qualify for food stamps and Medicaid.

Company officials noted that they will pay about 75 percent of workers' premiums while workers will pay 25 percent. Nationwide, American workers in all industries contribute on average 18 percent of the premium for single coverage and 29 percent of the premium for family coverage, according to a large survey by the nonpartisan Kaiser Family Foundation released last month. Wal-Mart officials did not immediately provide a breakdown of any difference in the amount that the company contributes based on whether it is individual or family coverage.

In her blog post, Welborn also touted benefits that the company is required by the health care law to cover, such as full coverage of preventive benefits and no lifetime cap on payments for health care costs.

"We had to make some tough decisions," said Hargrove.

By Rebecca Adams, CQ HealthBeat Associate Editor

October 8, 2014 -- Administration officials recently showed off a simplified application for new enrollees to sign up in health law marketplaces that cuts the number of computer screens users fill in from 76 to as little as 16.

The federal website healthcare.gov should be able to handle significantly more traffic than last year, officials said. People will be able to enroll on their mobile phones. And the revamped site's ability to transfer enrollment information to health insurers is in final testing before the next open enrollment period, which begins on Nov. 15.

While serious technical problems plagued the launch of healthcare.gov a year ago, this year's challenges may be more focused on signing up more consumers, keeping people enrolled and helping customers make the best choices for themselves from among an increased number of plans.

Administration officials have an "obsessive focus on consumers," Centers for Medicare and Medicaid Services Principal Deputy Administrator Andy Slavitt told reporters. Slavitt, who as a federal contractor won praise for helping to fix the flawed website, and CMS Marketplace Chief Executive Officer Kevin Counihan, who ran Connecticut's well-regarded health insurance marketplace, were brought in this summer to ensure that this year's experience goes smoother than the website's troubled debut.

"We didn't bring you here today to show you this today and say we've got the whole world solved," Slavitt told reporters, after a demonstration of the simplified application for first-time users. People who face complex situations will still have to use the original application, which is also online. The website will automatically adjust the application process based on consumers' responses to a set of questions that are asked early in the online enrollment process.

"This is going to be a continuously improving set of capabilities" for consumers, said Slavitt.

The simplified application is available now. People can sign up for coverage before the official open enrollment period starts on Nov. 15 if their personal circumstances–such as employment, access to health insurance, marital status, the number of people in a family and residency–have changed since the last enrollment period ended in April. About 20,000 people have already used the forms, said Slavitt, and roughly 70 percent of those signing up for the first time will be able to use them.

The simplified process isn't available to people who got a marketplace plan last year, and a major concern for administration officials is making sure that people remain happy with coverage and stay enrolled. Those who are renewing coverage can fill out an electronic form with some–but not all–of their information already entered in computer fields. One challenge is that people who want to maintain their existing arrangements will need a 14-character identifying number for the insurance, which is available through plan documents or by calling a federally-funded call center. If a consumer doesn't have the code, the individual also could re-select the plan from the options listed on the website.

Another hurdle is encouraging people who have a plan to shop around and make sure that they are still getting the best deal available for them. The insurance premiums and other costs may have gone up, or a patient's doctor may no longer be in a plan's network.

CMS will send notifications to enrollees to urge them to re-evaluate their options, said Counihan. The administration also will work with agents or brokers who advise customers. A larger number of workers at call centers also will be available to help people enroll.

Consumers will need to make changes to their accounts by the 15th day of each month in order for the changes to take effect on the first day of the following month.

Returning customers who don't take any steps to change coverage will have their plan automatically renewed on Jan. 1. They will get the same subsidy that they received last year, but the costs of coverage may change. People should update their financial information to make sure they're getting the right subsidy, say consumer groups and administration officials.

As of Aug. 15, about 7.3 million people had paid their premiums to get coverage. The Congressional Budget Office projected that a total of 13 million returning and new customers will be enrolled for the full year in 2015.

Enrolling that many people and making sure they are pleased with the coverage could be difficult. The administration also is still months away from automating programs to send payments to insurers, including money for the subsidies that most consumers get to discount their coverage.

Still, administration officials seem pleased that the technical problems are expected to be less difficult for consumers than last year. Instead of the approximately 10 days of testing before last year's Oct. 1 open enrollment start, federal officials started almost six weeks of complete end-to-end testing yesterday.

Slavitt said the administration is in a "very different spot from last year when we were building from whole cloth."