States May Drop Medicaid Expansion, CMS Says

 

Cheryl Clark, for HealthLeaders Media , August 9, 2012

The federal announcement this week that states may choose to expand their Medicaid programs to 138% of the federal poverty level for some period of time, and then later drop out, could provoke some states deeply opposed or on the fence to reconsider.

But the news doesn’t answer many of the big questions that remain, says Matt Salo, executive director of the National Association of Medicaid Directors.

Earlier this week, Cindy Mann, director of the Centers for Medicare & Medicaid Services’ Center for Medicaid and the Children’s Health Insurance Program (CHIP) spoke in Chicago at the National Conference of State Legislatures in an effort to clarify the issue.

“A state can decide when to come in, if to come in and also, if a state does adopt the expansion and determines at a later time, for whatever reason, that it does not want to maintain the expansion, it could also decide, because it’s a voluntary program, to drop the expansion,” Mann told the American Hospital Association, which included the statement in a news briefing late Tuesday.

“The ability to opt out is certainly better than no option,” Salo says, adding that “some states have been reluctant because “they had felt trapped by the permanency of it. But I don’t think that in and of itself is enough to say that states will feel better about adopting the Medicaid expansion.”

Too many other questions about how the Medicaid expansion would work need to be answered soon, says Salo, whose organization last month sent a list of 47 questions about the protocols for the expansion programs to CMS. 

Questions about the Medicaid expansion provisions of the Affordable Care Act emerged June 28 after the U.S. Supreme Court ruled on a provision of the law that said if states did not expand their Medicaid programs to 138% of the federal poverty level, the point at which subsidies for the federal exchanges would kick in, would not lose all their federal Medicaid funding match, which ranges around 50%.  The court declared that invalid, saying that states could opt out of the expansion to 138% without losing all their funding.

Some 30 states, including many that challenged the constitutionality of the Patient Protection and Affordable Care Act, such as Texas and Florida, have said they don’t intend to expand, while others are await further clarifications before announcing their decisions.

The issue is a hot button one for hospitals, whose leaders worry that in states that don’t expand their Medicaid programs, millions of patients will remain uninsured, as if the PPACA had never existed. That would require hospitals to shoulder the costs of care when patients need it emergently.

Meanwhile, these hospitals are shouldering billions in reimbursement cuts and reduction in disproportionate share funds that they agreed to in anticipation that all states would expand their Medicaid programs.

Joy Wilson, health policy director at the National Conference of State Legislatures, the group holding the meeting where Mann spoke, said lawmakers in attendance seemed interested in the new option. “There was some comfort in that if they were if their states decided to do the expansion, and for whatever reason it didn’t work out fiscally, they would have an option to reverse that course,” she says. “There was some feeling that was a good thing.”

Wilson adds that many states “just don’t know what they’re going to do yet because they don’t have all their facts in front of them.”

One particular sticking point remains in what Salo and others call “the moving parts.”

States may now have a patchwork of programs to deal with the welfare or healthcare needs of the uninsured, provided they have no other source of coverage.  If a state expands its Medicaid program, the need for those patchwork programs—providing food, medicines, housing—would go away,  or at least be greatly reduced, and much harder to start up again. It could mean saying no to other sources of federal or state or philanthropic funds that the states could never get back.

Compounding the problem is that while federal funds pledge to pay for 100% of the Medicaid expansion for the first three years, after that the funding begins to drop to 90%, forcing states to pick up the tab for a large number of patients it didn’t have to pay for before.

Salo says that while he’s glad CMS has clarified this issue, there are dozens of remaining questions about how the expansion programs will work.  “The question that remains unanswered, which is still the most important one, is whether states can expand to a federal poverty level to a partial level below 138%?” he asks.

Take a hypothetical state that covers citizens with Medicaid up to an income level of 70% of the federal poverty level.

“If a state says no, we’re not expanding, the exchange subsidies will kick in at 100% of the federal poverty level, but there will still be a gap for people who earn incomes below 100%, and they will have nothing,” he says. In this example, anyone earning between 71% and 99% of the federal poverty level will have no coverage and will not be eligible for health insurance exchange subsidies.


Cheryl Clark is a senior editor and California correspondent for HealthLeaders Media Online.

Berwick on Analytics: Technology Is Ready, but Doctors Need Help

Scott Mace, for HealthLeaders Media , May 15, 2012

If Marcus Welby, MD, were practicing on TV today, would he be letting data drive his decision-making? I’m on a journey to find the answer to this and related questions. Last week this journey took me to Atlanta for a HealthLeaders Media Roundtable on business intelligence and predictive analytics, and then onward to North Carolina for a conference dedicated to healthcare analytics.

While in North Carolina, I got to sit down with Don Berwick, MD, former administrator at the Centers for Medicare & Medicaid Services, and prior to that, founding CEO of the Institute for Healthcare Improvement. We talked about data analytics, but our discussion ranged far and wide around healthcare IT. Here is a portion of our conversation.

HealthLeaders Media: How far along is healthcare with its adoption of analytics?
Berwick: I certainly see the potential. At CMS we did do some early trials with Oak Ridge National Laboratory, which has tremendous data capacity. [CMS] gave them access to privacy-protected Medicare information. They have tremendous analytic capacity, and it was stunning what they did. I remember visiting Oak Ridge, and they had modeled some uses of Medicare and Medicaid data, and they were coming up with insights right away, of geographic patterns of variation that I don’t think Health Services researchers knew about.

HealthLeaders Media: Why was Oak Ridge doing this? I don’t think of them usually in this space.

Berwick: Oak Ridge is not just a Department of Energy supplier. They work with other government agencies that want to contract with them to do essentially analytics and data mining. The one place I saw analytics working was in our early work on predictive analytics for fraud. The Affordable Care Act suite of efforts to reduce fraud involves the traditional what they call pay-and-chase, which is enforcement. You find something wrong and you prosecute. We were working with the Department of Justice and the FBI and local law enforcement to catch criminals. That’s traditional and effective. You need to do it. But it’s, after all, after the horse has left the barn.

So upstream from that, there’s prevention. Make sure that the people that want to offer home healthcare or durable medical equipment, that they’re qualified to do so, they don’t have a history that makes you suspicious, and since there’s a very high concentration of fraud in certain parts of Medicare payment, one’s able to target prequalification as an area. But I thought the most promising was predictive analytics, which was take the data and turn loose the ability to go through it looking for weird patterns. The technology was ready.

Along about this time, I took a vacation with my wife in Turkey. I got online to buy a ticket for an internal flight in Turkey from Istanbul to an interior village, and I’d say a minute or two later, my cell phone rang, and it was American Express saying, “Just checking—a purchase was made in Turkey. Is this you?” Well it’s the same thing, where we can get not just retrospective but almost real-time signals. I remember the first run of predictive analytics, the volume of insights and ideas and hot spots that were spotted, it was really something.

HealthLeaders Media: I was listening to a podcast with Dr. Lynn Vogel, CIO of MD Anderson Cancer Center, who told an interviewer that the number of facts going into physicians’ decisions on treatment is growing exponentially. What’s the healthcare system going to do about that?

Berwick: It is doing [things] about it. I don’t know what Dr. Vogel meant by that comment particularly, but there are at least two meanings. One is that the science base is expanding vastly. A few years ago, I did a Google search to see how many randomized clinical trials in the world are underway right now, and the number that came up in the search was 40,000. At any one time there are 40,000 randomized trials underway. The concept that an individual human mind could possibly search through that and find out what’s relevant to your needs when I see you in my office, that obviously is folly. There has to be some intermediation of the science so that someone, some technologically supported, trusted agent is digesting that and making it available. We’re quite a way along there. We’ve had wonderful work, professionally led by the American College of Physicians and the American College of Surgeons and the cardiologists to do exactly that: intermediate between the scientific wealth and direct application. So I think that’s going okay. I’m sure it could be better. There’s been some ambivalence in public policy around this. This is the big debate about clinical effectiveness research, which is this kind of confusing question as to should we use science in decision-making? We actually are asking that question. Hopefully we’ll get over that at some point.

On the [care] delivery side, the data stream is overwhelming now. Every beep on a monitor is a data point. There are some successes. For example, Intermountain Healthcare has for years had in the ICU real-time data collection, multiple facts about a patient that can help guide action in real time. You’ll see more and more of that. I don’t think that’s conventional. I think most docs are still bathing in that kind of data without much help.

HealthLeaders Media: In all the debate about Meaningful Use, it seems to me that the incentives don’t encourage knowledge transfer from the successful innovators, like Intermountain, to those who are following.

Berwick: We’re just barely in Phase 1. The concept of meaningful use is going to grow. What doctor in the end would not want access, if it were technically available, to the answer to the question, Who does the best at this, or What does Mayo think, or Where’s the best science? We’re just in an adolescent moment in terms of evolution of that kind of knowledge transfer. Right now, my daughter is a second-year resident in medicine at the Brigham hospital in Boston. When I was in training, the message was, put it all in your head. Get it in your head. Read it, memorize it, and then spout it out at Rounds. They carry their iPhones on Rounds. So a question comes up, and they’re using their iPhones and iPads right there to get the information. Why would they store it in their head if it’s in the world? That’s a basic human factors design idea. Knowledge in the world is more useful than knowledge in the head. Young doctors and nurses are coming from a totally different mindset about access to knowledge.

 

Hospitals face more cuts

Looming Budget Cuts Make Hospital Belt-Tightening Increasingly Difficult

John Commins, for HealthLeaders Media , March 5, 2012

The economy might be on the rebound, but the nation’s hospitals should still brace for the possibility of $360 billion in cuts in Medicaid, Medicare, and other federally funded healthcare programs and services over the next decade.

Moody’s Investors Service said in a credit outlook that the ongoing reductions in federal funding for healthcare in the fiscal 2013 budget and beyond could make it disproportionately more difficult and more expensive to borrow money for hospitals that rely on Medicare.

“If adopted, the cuts would reduce reimbursement to hospitals, forcing these institutions to continue finding additional expense savings or new sources of revenue to avoid the credit negative deterioration of their profit margins,” Moody’s said in a budget analysis.

“Most hospitals have been adjusting to negative credit trends since 2008, and many have improved their quality and efficiency substantially. But past operating savings reflect harvesting ‘low-hanging fruit,’ while future savings will be harder to achieve and will require more wrenching change.”

Medicare rate increase reductions installed under the healthcare reforms will enter their third year when the fiscal 2013 budget takes effect in October. Over the next decade, Moody’s says, about $268 billion in Medicare reductions could adversely impact funding for critical access hospitals, graduate medical education, and bad debt relief.

Moody’s noted that the Medicare Payment Advisory Commission in January recommended a Medicare rate adjustment of 1% for the coming budget cycle, which is less than half the rate of inflation in the overall economy.

Lisa Goldstein, associate managing director at Moody’s, told HealthLeaders Media that hospitals have done a good job confronting cost growth. “Low-hanging fruit examples would be reductions in work force, not filling existing positions, matching clinical needs with nursing skill sets better, looking at supply costs, negotiating bigger discounts with vendors, buying in bulk for example,” Goldstein says.

However, she believes the “wrenching change” that hospitals may now have to undertake will be considerably more involved.

“‘More wrenching change’ speaks to the next level of cost reduction and expense management, which is more about gaining efficiencies. That is taking apart the fundamental basic building blocks of patient care and recreating them all over again in a more efficient manner,” she says. “We have heard from providers across the country, examining how they deliver healthcare, the processes, the operations, the patient flow to become more efficient and extract permanent savings that way.”

The federal budget also calls for about $52 billion in cuts to federal funding for Medicaid in the coming years. Moody’s said those changes could include replacing current funding formulas with a single matching rate for each state, rebasing disproportionate share payments, and limiting the federal funding match for provider taxes.

“A limit on federal matches for provider tax payments would be a significant development because these programs have proliferated significantly over the past several years, and receive on a combined basis an increasing amount of federal support,” Moody’s said.

“Prior to 2008, 15 states operated provider fee programs. Today, this number has grown to 33, with another three states considering a program. These programs most benefit hospitals with high exposure to indigent populations and their elimination would negatively affect those hospitals the most,” the report said.

Goldstein says the federal government could eventually shut down provider tax schemes as a cost cutting measure for the federal deficit. “Most hospitals realize that these provider tax programs may not go on forever,” she says. “We look to hear how those hospitals and management teams will lower their reliance on these funds. How are you going to manage if this program abates one day?”


John Commins is an editor with HealthLeaders Media. He can be reached at jcommins@healthleadersmedia.com.