Individual Mandate Regulations

The Department of Treasury has issued the final implementing regulations for the "Shared Responsibility  Payments,"  more commonly known as the "individual mandate."

http://www.ofr.gov/OFRUpload/OFRData/2013-21157_PI.pdf

A quick scan reveals no surprises, a more detailed reading to follow.

The mandate is controversial and the large role of the IRS in enforcing the mandate is also controversial.

Scaring Grandma

October 1^st is a major implementation date for the Affordable Care Act (ACA), often referred to as Obamacare.

On October 1^st the state health insurance exchanges will open and a new era in health insurance begins. 

There are no significant Medicare changes on October 1^st.

There is a great deal of confusion, as evidenced by media reports, among Medicare beneficiaries. Some of the confusion is natural, considering the complexity of Obamacare, and some is intentional (my own political party spreading and encouraging the misinformation). And the con artists and scammers are using this to con the elderly.

The ACA does not make immediate or dramatic changes to Medicare. The ACA will make changes to Medicare, many of them in the relationship between providers and the government, many largely irrelevant to patients. The U.S. health care system will evolve into something different, impacting all of us in some way or another.

There are plenty of real problems with the design and roll out of Obamacare, there is no need to scare senior citizens.

The Provider Blues

The Other Side of the Equation

Obamacare is in the news every day, with much discussion of jobs and exchanges and insurance and many other topics. My beat is the other side, the provider side, and a great deal of confusion and chaos lives there.

What are providers supposed to be doing?

improve quality

cut costs

install complex EMR systems able to link into EHR networks

work through a massive transition to ICD-10 coding

move into a complex “big data” environment

move to innovative delivery and revenue models

(ACOs, bundling)

overall, develop and implement new and unknown clinical and business models

So what's the problem?

No one, in or out of government, can tell us what the destination is. This is a ginormous lab experiment with patients as the white mice.

ACA - Trouble in Paradise

ACA - reality sets in

A letter from union leaders to Sen. Reid and Rep. Pelosi (July 2013)

Dear Leader Reid and Leader Pelosi:

When you and the President sought our support for the Affordable Care Act (ACA), you pledged that if we liked the health plans we have now, we could keep them. Sadly, that promise is under threat. Right now, unless you and the Obama Administration enact an equitable fix, the ACA will shatter not only our hard-earned health benefits, but destroy the foundation of the 40 hour work week that is the backbone of the American middle class.

Like millions of other Americans, our members are front-line workers in the American economy. We have been strong supporters of the notion that all Americans should have access to quality, affordable health care. We have also been strong supporters of you. In campaign after campaign we have put boots on the ground, gone door-to-door to get out the vote, run phone banks and raised money to secure this vision.

Now this vision has come back to haunt us.

Since the ACA was enacted, we have been bringing our deep concerns to the Administration, seeking reasonable regulatory interpretations to the statute that would help prevent the destruction of non-profit health plans. As you both know first-hand, our persuasive arguments have been disregarded and met with a stone wall by the White House and the pertinent agencies. This is especially stinging because other stakeholders have repeatedly received successful interpretations for their respective grievances. Most disconcerting of course is last week’s huge accommodation for the employer community—extending the statutorily mandated “December 31, 2013” deadline for the employer mandate and penalties.

Time is running out: Congress wrote this law; we voted for you. We have a problem; you need to fix it. The unintended consequences of the ACA are severe. Perverse incentives are already creating nightmare scenarios:

First, the law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing our current health benefits.

Second, millions of Americans are covered by non-profit health insurance plans like the ones in which most of our members participate. These non-profit plans are governed jointly by unions and companies under the Taft-Hartley Act. Our health plans have been built over decades by working men and women. Under the ACA as interpreted by the Administration, our employees will treated differently and not be eligible for subsidies afforded other citizens. As such, many employees will be relegated to second-class status and shut out of the help the law offers to for-profit insurance plans.

And finally, even though non-profit plans like ours won’t receive the same subsidies as for-profit plans, they’ll be taxed to pay for those subsidies. Taken together, these restrictions will make non-profit plans like ours unsustainable, and will undermine the health-care market of viable alternatives to the big health insurance companies.

On behalf of the millions of working men and women we represent and the families they support, we can no longer stand silent in the face of elements of the Affordable Care Act that will destroy the very health and wellbeing of our members along with millions of other hardworking Americans.

We believe that there are common-sense corrections that can be made within the existing statute that will allow our members to continue to keep their current health plans and benefits just as you and the President pledged. Unless changes are made, however, that promise is hollow.

We continue to stand behind real health care reform, but the law as it stands will hurt millions of Americans including the members of our respective unions.

We are looking to you to make sure these changes are made.

James P. Hoffa
General President
International Brotherhood of Teamsters

Joseph Hansen
International President
UFCW

D. Taylor
President
UNITE-HERE

Early Retirement?

There is some buzz about the possibility or probability of physicians retiring early due to unhappiness with PPACA (Obamacare). Bitching and whining is hardly new for physicians, and there are plenty of people wanting to put a bad spin on Obamacare.

So I have worked my way through a part of my national network; and have a decidedly non-scientific survey about the buzz.

Some possible trends:

The electronic medical records installation and networking is a major nightmare, with many older physicians resenting the cost and hating the input devices.

Many physicians believe their only financial sanctuary is a closer integration or even employment by a hospital or integrated network, and many are bitter about a forced marriage with possibly a dysfunction partner (physician relations with hospitals have always been tense at best).

The rate of change or at least the ubiquitous talk about change (ACOs, bundling, extensive quality metrics) gets tiresome; death by meetings and memos.

The Medicare push to prevent hospital re-admissions has interfered with clinical judgment and put elderly patients at risk; ditto for earlier discharges. Nursing home and hospice work is a tiresome pain in the butt.

The stock market is coming back, and with it physician 401(k) balances.

The physical health of older physicians is not optimal, 30 -  40 years of stress and sleep deprivation take a toll (consistent with my observations over the decades).

So, smoke or real fire? Time will tell

Making Odds

Making Odds

At the pace quickens I am setting odds on the potential success of various Obama initiatives.

Electronic medical records (networked) are a major success in 2014.        0%

Electronic medical records (networked) are a modest success by 2014.   30%

Electronic medical records (networked) are a major league fail.                70%

Health care exchanges work effectively after a brief shake down.              0%

Health care exchanges have a troubled first year but then gain ground.      40%

Health care exchanges work but are very troubled.                                   40%

Health care exchanges are a complete dud.                                                20%

I hope I am wrong.

Complexity Blogging

More Complexity Grumbling

I have made the point many times that if anything stops Obamacare it will be the inability to implement an extremely complicated program. Call it “Tom's Theory of Complexity.”

The feds have now published (link below) the draft application for financial assistance in health care exchanges and low income plans. Oh boy.

With attachments this could easily run 30 + pages, and of course someone is going to have to process this (there will be an online version). Having helped people with paperwork for nearly 40 years I can guarantee this will be intimidating and confusing to many people.

Complication is the enemy of implementation. Count on it.

http://cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10440.html

PS: HR Block has already positioned itself as a likely fee-for-service form fill-in service. Somebody is going to profit here.

Could Obamacare Collapse?

How Obamacare Could Fail

One of my non-scientific methods of gauging the current state of the health care system is by the requests I receive for writing and editing.

For example, I have recently received four requests to write about failed electronic medical records systems (no surprise there).  Others include the progress of accountable care organizations (ACOs), the future economics of physician groups, compensation models for physicians, hospital/physician relations and new regulatory issues for nursing homes.

So all of this gets me thinking; what could happen to create a catastrophic failure of Obamacare?  My thoughts….

Accountable Care Organizations:  ACOs could fail to work as hoped by the feds, this could collapse the foundations of Obamacare

Failed integration efforts: hospitals and systems are integrating multiple services, creating much larger and much more complex organizations, not  all of them will work

Exchanges:  the shopping experience becomes a confusing mess (high probability IMHO)

Payment Innovations:  innovations such as fee bundling fail to be feasible

Employer meltdown:  employers engage in wholesale dumping to the exchanges (not impossible in such a weak economy)

So, what are the odds of catastrophic failure?  50% - 50% in my opinion.

Tom

Essential Benefits

The final regulations were published on "essential benefits." No major surprises.

The best "plain English" summary we can find is at:

http://www.healthinsurance.org/blog/2013/02/22/hhs-gets-specific-on-acas-essential-benefits/

PPACA Update

The slow march toward full implementation continues.

Exchanges –  As of today 17 states will create their own exchange, seven states will partner with the government, and 26 states have defaulted to the federal program (if anyone asked we would suggest defaulting in order to let the feds do the early heavy lifting).

Perhaps the most important questions now are:

Will any of the exchanges be ready on time?

Will the products be affordable?

How will employers respond?

Employer Response – there is a great deal of discussion but very few decisions have been announced (although some are likely in place but not announced).

Will a generally weak economy and slack labor market play into the decisions? Time will tell.

A strategy of self-insuring may gain favor, and we will do a separate post on that topic.

Providers – the word heard most often is “chaos.”  Providers are trying to prepare for a system as yet poorly defined. Some trends are emerging (integration, the early ACOs) but it is too early to tell how anything will work.

Issues in primary care and rural health care are likely to be especially acute.

Consultants and health care focused lawyers are raking it in – so somebody wins.

EMR - Salvation or Policy Failure?

Health Care Thoughts:  Electronic Medical Record Meltdown

In the past I have predicted the EMR focus of the Obama administration might not work as well as intended. Sadly, and many billions of dollars later, I may be correct.

(The New York Times has run many pieces on this, the latest on the hard copy business page on 1/11/2013.)

And next year we make the ICD-10 conversation, sort of throwing gasoline on a raging fire.

There are a multitude of problems:

Too many vendor systems, making EMR to EHR linkages difficult

Crazy long and complex federal regulations

The input devices irritate physicians and disrupt the flow of the office practice

Medicare thinks EMRs are inflating billings, due to text cloning and auto-coding

The hospital and nursing home systems are often distractions to nursing

Going totally paperless is largely a myth so far

HIPAA security issues abound

So where will EMRs work? Based on recent observations perhaps in very large integrated systems where every provider is on the same system, although some of the front line personnel are singing the same sad songs as others.

E-prescribing may be one area with some success.

 

PPACA Penalty/Tax

The Congressional Budget Office predicts in 2016 up to 6 million largely middle income workers will pay the PPACA "tax" or "penalty" or whatever we decide to call it, averaging about $1200. This is about 50% higher than previous estimates of impacted taxpayers.

A weak economy plays into the increased estimate.

According to the CBO, most of the payers will be in the middle class. Does this constitute a middle class tax increase?

In this political season hot rhetoric is flying from both sides. Expect the charges and counter charges to continue.

PPACA and Employers

One of the more suspenseful issues of PPACA (aka  Obamacare) is the question of employer conduct in 2014 and after.

Question is, will employers drop health insurance and punt workers into the state exchange system? Some new perspectives have been added to the debate. (Both assume PPACA will not be repealed or materially altered before 2014, an issue to be settled by the 2012 election.)

The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT)  have weighed in on the question (https://www.cbo.gov/publication/43082) . (Warning, very long)

This report tries to cover multiple options and scenarios, but I think it comes to a Goldilocks conclusion, not to hot and not too cold, but something in the middle of the range of possibilities.

A McKinsey and Company (MC) study (http://www.mckinseyquarterly.com/How_US_health_care_reform_will_affect_employee_benefits_2813) reaches much different conclusions.

McKinsey sees up to 30% of employers dropping employer–sponsored insurance (ESI), and perhaps more as awareness spreads and 2014 approaches.  MC also suggests exploration of any number of employer options, some good for employees, some not.

My spin? If the labor market remains weak, and underemployment and limited employee options continue, more employers will drop ESI and employees will have little so say or do about it.

There is a lot to digest here. More analysis required.

Physicians "Rationing" Care

Nine physician panels have recommended less testing of patients presenting with various conditions and diseases and less treatment for some diagnosis.

For Details: New York Times

http://www.nytimes.com/2012/04/04/health/doctor-panels-urge-fewer-routine-tests.html?_r=2&ei=5065&partner=MYWAY&pagewanted=print

Much of this is low hanging fruit, such as using less antibiotics for sinusitis.

Other recommendations may be more controversial. In 2009 evidenced based recommendations to do less breast cancer screening were met with a firestorm of criticism. Current recommendations to do less cancer screening may meet a similar fate.

There will be another controversy, whether or not these guidelines would protect a physician using conservative treatment protocols from malpractice suits. In my experience, probably not.

Eventually payment bundling and new payment schemes may accomplish the "rationing" via a different route.

Stay tuned.

Regulatory Train Wreck

In early 2009 (following up work by the Bush administration) DHHS decreed that all providers would convert from ICD-9* coding to ICD-10* coding by October 1, 2013,

Most medical billing requires both an ICD code (disease or condition) and a CPT code (treatments given).

This conversion was to take place at the same time as PPACA (Obamacare), a multitude of quality reporting initiatives, audit programs and a major push for electronic health records. This avalanche was especially difficult for physician practices

Vast resources were expended for technology, planning and process management, extensive training programs were being developed, and then....

DHHS came to its senses and has indefinitely deferred the conversion. Ghastly poor judgment by the technocrats. Poor judgment has costs and consequences.


* International Statistical Classification of Diseases and Related Health Problems, Editions 9 and 10, usually known as ICD-9 and ICD-10. The conversion would have increased the number of reportable codes by about 500%, required reprogramming of an immense number of IT systems, and massive training initiatives.

Irony Alert

The Obama administration has issued administrative regulations requiring health insurance companies to provide "plain English" explanations of health insurance coverages.

The regs, issued by the IRS and the DOL, are 150 pages of barely readable bureaucratic gibberish.

This continues a trend of the administration writing long and complex administrative regulations. Lawyers are celebrating.

Accountable Care Organizations - Second Attempt

Accountable care organizations (ACOs) are the keystone of PPACA (Obamacare) as far as restraining costs and improving quality.

Early this year there was great excitement about ACOs in the provider community, but the publication of the (first phase) Medicare ACO rules threw cold water on the concept.

The rules were at best complicated and convoluted and providers ran for the hills. The administration tried calming the fleeing providers with fast track and modified programs, without much success.

On October 20th the Obama administration published revised Medicare ACO rules. The "simplified" rules run 696 pages! Most of us are still reading and analyzing, but the response seems to be less one of fear and more one of disinterest - but time will tell.

The administration finally got smarter and announced modifications to antitrust policy so Obama's DOJ would not be wrecking the work of Obama's DHHS.

Bad news though, employers and insurers see the possibility of intense ACO activity as anti-competitive.

This is a mess.

IOM Recommendations

The Institute of Medicine (IOM) an influential organization long known for criticizing health care providers and advocating reform, has issued process recommendations for deciding the "essentials" of health insurance plans. An essentials list is required by DHHS by 2014 for all health plans available on the state health exchanges. The essentials should balance quality of care with projected premium costs.

PPACA does specify ten (10) broad areas of coverage, but not a specific plan menu.

The IOM study was a disappointment to some because it did not specify benefits, as this would have been a good discussion starter and would have given DHHS some political cover. The IOM focused on an approach to making the decision, and it is to start with costs and then work into benefits.

IOM also suggested an annual review of the programs beginning in 2016, and some waiver flexibility for states to customize plans.

Not exciting, but very very important.

see: http://www.iom.edu/Reports/2011/Essential-Health-Benefits-Balancing-Coverage-and-Cost.aspx

Bundled Payments Proposal

PPACA (Obamacare) included initiatives to create "bundled payment" plans for Medicare (which would likely encouraged bundled payment for other payers as well).

This week the CMS Innovation Center issued directives encouraging creation of four (4) models of bundling services.

Rather than paying for quantity of services, Medicare wants to pay for quality and outcomes (this can become problematic in elder care).

This could be one PPACA initiative that actually brings some significant results, or the bureaucrats could bungle it. Time will tell. For now providers are on board or even ahead of CMS, racing to get ahead of the changing revenue cycle.

There are significant business complications in making this shift, so we do not expect quick progress or instant success.

ACOs Becoming IPWACOCs?

Accountable Care Organizations (ACOs) are the keystone of the Obamacare efforts to improve quality and control costs.

After considerable initial enthusiasm providers have cooled on the ACO concept, especially as envisioned by the Center for Medicare and Medicaid Innovations. Why? Apparently.....

* ACOs are very difficult to organize and assemble
* ACOs are very difficult to operate and manage
* ACOs are unlikely to provide gain sharing dollars higher than new administrative costs

So is there good news? Yes.

Providers appear to be picking various components of the ACO concept and creating new and innovative models for improving care and containing costs.

It is way too early to declare a trend or to make definitive statements, but it appears providers are creating Innovative Projects With ACO Characteristics, or IPWACOCs.