The Blue Cross Blue Shield Foundation of Massachusetts (BCBSF) put out an annual survey this week on the Massachusetts health reform law, along with a Health Affairs piece that has left me shaking my head. The presentation of the results seems to overstate the findings and draws unlikely conclusions about the federal law.
In my humble opinion, Health Affairs has lost some credibility with the pieces they publish on Massachusetts. Editor-in-chief Susan Dentzer admitted the publication’s bias in a recent speech to the Massachusetts Association of Health Plans.
On the actual BCBSF report, just a couple of comments:
The survey is a great way to capture a snapshot of what is taking place in Massachusetts, but the phone survey method should always be taken with a grain of salt.
Self-reported ER visits are predictably unreliable. Individuals know they should not have gone to the ER for their care, so they are prone to underreport their true actions. One year of a slight decline in visits is not worth a major finding; only a multi-year downward trend in ER visits will be noteworthy. Most state data has shown the opposite for ER visits. So, survey results from one year and one state report using administrative data (cited in the Health Affairs article) should be cautiously interpreted. I hope the trend holds, but the survey data should not be used as a talking point in support of the Massachusetts law– yet.
The study has a odd way to define affordability: “…there have been gains in the affordability of care for adults since 2006, as evident in a lower burden from out-of-pocket health care spending (excluding premiums)…” Why would you exclude premiums in your definition? This exclusion is like celebrating a decrease in the price of printer ink while ignoring the increase in the price of the actual printer.
The discussion section of the Health Affairs article contains a heavy does of spin and takes every opportunity to highlight a positive slant on the data. There is only minor passing mention of possible differences in states, and no mention of differences between the Massachusetts and Federal laws.
Taken together, Massachusetts’s experience under the 2006 reform initiative, which became the template for the structure of the Affordable Care Act, highlights the potential gains and the challenges the nation now faces under federal health reform.
….
Just as Massachusetts’s 2006 health reform legislation provided the template for the Affordable Care Act, so the state’s experience under that legislation provides an example of the potential gains under federal health reform. Of course, the trajectory of policy and health reform will vary across the states, given the wide differences in their political, economic, and cultural environments and the wide range in the different states’ starting points
The comparison has become a messaging tactic by liberals and supporters of the federal law, most recently illustrated by John McDonough in his Families USA piece. These folks want the public to think Massachusetts is the same as the rest of the country, and the ACA will have the exact same impact nationally as it has locally.
I will offer just two examples why this is unlikely:
1) Do health policy officials really believe that the outcomes from a
high-income; geographically compact; historically heavily regulated insurance market; non-profit dominated insurer and provider market; medically and technologically advanced state, with a younger and more active demographic makeup; and a culture of health insurance
state, such as Massachusetts play out in the same manner in as a
low-income; geographically spread out; drastically different regulated insurance environment; mixed with both private and non-profit insurers; dealing with scarcity in medical infrastructure; heavily employed in service and tourism industries; ethnically diverse; and without a culture of insurance
state, such as New Mexico?
2) Differences between the two health care laws will lead to significantly different behavior and outcomes. One example: In Massachusetts, if employees are offered employer based insurance, they are not allowed into the exchange. (The only way into the exchange is if employees were to go uninsured for 6 months.)
In the ACA, entry into the exchange is based on an “affordability” threshold of 9.5% of your income or an actuarial value of your employer based insurance of less than 60. In other words, it is much easier to access the exchange and the economics are very good for employers to dump their employees into the exchange. This is a completely different world in public policy and a much more expensive one at that.
Liberal blogger Matt Yglesias over at Slate recently made a great point about the difference between health care costs and spending. It is one that I hope local pols on Beacon Hill will keep in mind as they consider payment reform legislation that will regulate by price controls.
The health care system in the United States has a lot of problems, but I think people are sometimes too pessimistic about it. This happens largely through slippage between the phrases “health care spending” and “health care costs.” Everyone knows, for example, that economy-wide spending on tablet computers has surged over the past three years. But nobody says “tablet costs are skyrocketing.” What happened is that iPads came on the market, followed by a bunch of lame competitors nobody liked, followed by the Kindle Fire which is cheap enough to open up a whole new market segment.
By the same token, it always bears noticing that the health care that’s so expensive in 2011 is qualitatively different from the cheaper health care of 1961. [The] chart, delivered to us by Austin Frakt, illustrating steady progress in fighting cardiovascular disease illustrates the point.
That’s not to let the health care status quo off the hook for its myriad flaws, but simply a reminder that “health care” is not a static target.
On December 20th, Governor Deval Patrick, and the entire Massachusetts Congressional delegation, congratulated themselves on the resolution of a six month delayed renewal of the Massachusetts Medicaid waiver. The waiver will run for the next 3 years. I blogged on Pioneer Institute’s website about the recent waiver delay here, here, here, and here. But for those that may not be as familiar, in essence the waiver serves as the foundation for the Massachusetts health care reform.
At first glance at the new waiver, it does appear that the state squeezed substantial sums out of the federal government, but where that money ends up is the critical question. The media largely reprinted the press release, and completely ignored the historical context of the waiver, as well as the most basic breakdown of funding distribution. Below are a few takeaways from the waiver, and an outline for why ongoing issues with safety net hospitals in Massachusetts will potentially explode under the federal Affordable Care Act (ACA). [Sidebar: In my opinion, many elements of the Massachusetts reform do not translate to predictions of behavior at the national scale, but the discussion here highlights one element that will have a direct application.]
The real story of the waiver is the continued funding of safety net hospitals at unsustainable levels, and the lack of reform at these institutions. I came to this conclusion by comparing funding data from the 2011 and 2008 waivers, and by pulling state hospital data from 2010 for the following service and payer categories:
Service Category
Payer
Inpatient Discharges
Outpatient Visits
Emergency Visits
Medicaid
Medicaid Managed Care
Self-paying
Health Safety Net
Commonwealth Care
The waiver and service numbers lead with the following takeaways:
The Waiver Provides a Huge Increase in Funding to Acute Hospitals, with a Majority of Funds Going to Two: Boston Medical Center (BMC) & Cambridge Health Alliance (CHA)
2008 Waiver
2011 Waiver
Acute Hospital Funding
$1,090,700,000
$2,177,100,000
Funding for Acute Hospitals as % of all Hospital $s
24%
49%
BMC and CHA % of Acute Hospital Funds, Not including their HSN funds
63%
66%
When you include health safety net (HSN) money, CHA and BMC end up receiving roughly 76% ($1,663,588,000) of the money available to acute hospitals in the 2011 waiver.
It should be noted that the total waiver money available to ALL hospitals did decrease by $200 million from the 2008 to 2011 waiver. However, the cuts were not evenly distributed. While seven acute hospitals were selected in the waiver to receive “Delivery System Transformation Initiative”(DST) funds to the tune of $628 million over 3 years to move away from fee-for-service payment methods, other safety net hospitals and non-acute hospitals will see a much lower percentage of funds as a result, and some see outright cuts. For example, state-owned non-acute hospitals operated by the Department of Mental Health and Department of Public Health will see a $41 million decrease in the aggregate.
If the goal was to help vulnerable hospitals move to a new payment methodology, this waiver failed. The waiver left flexibility to account for new payment reform legislation that may be passed in the next few months on Beacon Hill, and therefore the waiver section on DST methods was left blank. However, one is left to ask how other community and safety net hospitals not named in the waiver will make the transition towards reform if the waiver is built on the assumption that hundreds of millions of additional dollars is required to do so?
2011 Waiver
BMC, without HSN $
$466,700,000
CHA, without HSN $
$974,600,000*
All Other Acute Funding (with all HSN $, BMC & CHA receive ~ 48%)
$735,800,000
Total Acute Hospital Funding
$2,177,100,000
* $125.5 million was authorized through a demonstration amendment approved on Aug 17, 2011.
BMC and CHA have a disproportionate number of visits and discharges being paid for by the Health Safety Net (HSN), especially for outpatient services. (Note:The percentages for visits and discharges below are in reference to my payer breakdown outlined at the beginning, unless otherwise noted.)
The HSN was formed as part of the 2006 reform, to reimburse hospitals for the care given to the remaining uninsured (currently at ~1.9%). There is no question that BMC and CHA serve a high volume of traditionally challenging populations. These two institutions see 24% of all outpatient & emergency room visits, and inpatient discharges.
Yet, according to the Division of Health Care Finance and Policy, BMC and CHA are not seeing the sickest patient mix. While they see a high volume of patients, the percent of visits for the 5 major payer categories in my analysis look very similar to other hospitals such as Mass General Hospital, or other safety net hospitals such as Quincy Medical Center. However there is one big exception that should worry policymakers—HSN outpatient visits.
BMC
CHA
% of 2010 Visits and Discharges Paid for by HSN
18%
20%
While the proportion of HSN funded services may not strike some as unusual at first when talking about BMC and CHA, since both do not hide the fact that they serve many HSN patients. However, a further breakdown of the numbers reveals a surprising fact; BMC and CHA are significant outliers in HSN outpatient services.
Hospital
% of Biz from HSN Outpatient Care, 5 Payer Analysis
HSN Outpatient Visits
HSN Outpatient Visits as a % of All Outpatient Visits at Hospital
BMC
16%
139,285
9.98%
CHA
16%
67,442
10.75%
Signature Healthcare Brockton Hospital
11%
8,731
9.65%
Mass General Hospital
8%
21,224
2.27%
Beth Israel Deaconess Medical Center
7%
11,176
1.59%
Steward Carney
6%
2,496
2.98%
Quincy Hospital
4%
1686
2.72%
Lowell General Hospital
2%
939
.95%
As an example of the difference in scope for services given to HSN patients at BMC: 1,632 inpatients, 17,501 in the ED, and 139,285 outpatients. BMC accounts for 60% of outpatient HSN visits for the seven hospitals named in the waiver.
Why does this difference in the type of service matter? Outpatient services are often by nature premeditated. This is in direct opposition to the goal of reform in 2006 and is costing taxpayers hundreds of millions of dollars in the process. These major hospitals were going to move away from relying on reimbursement for the uninsured coverage they provided, and see more and more individuals with Medicaid and Commonwealth Care as time passed. Instead, as state lawmakers did not keep their promise to increase Medicaid reimbursement levels over time, it appears CHA and BMC (along with a few others at a much smaller scale) have set up a system that caters to significant numbers of patients that these institutions seek out in order to receive the slightly higher reimbursement from the HSN. Not surprisingly, HSN demand ballooned up to $470 million last year, no doubt due to a down economy, but also because these hospitals have targeted HSN outpatient services. This brings us to the national story–
Massachusetts’ inability to successfully transition safety net hospitals into a more sustainable financing model, should major raise questions about the financing of the national law.
The ACA, is funded, in part, with future cuts in Medicare Disproportionate Share Hospital (DSH) payments. In Massachusetts, a good portion of the money set aside in the now defunct uncompensated care pool was transferred to individuals in the form of subsidies to purchase insurance. The new system promised to be more transparent and economically efficient.
However, BMC and CHA have flexed their political muscle time and time again, receiving temporary “transitional” assistance on multiple occasions. The original reform included special carve outs for these providers, and subsequent waiver renewals have only enforced the status quo. In effect, the federal government is propping up these institutions with state complicity.
The Medicaid waiver struggle has played out three times in Massachusetts, each time proving to be a big lift despite the same party occupying the corner office of the White House each time (Romney and Bush, and Patrick and Obama the last two times). One is left to wonder, if it is such a challenge to move these institutions away from dependence on supplemental transitional government money, how will the process play out with hundreds of billions on the line, a national spotlight, Congressional interest, and seniors impacted by Medicare cuts in the ACA?
On a final note, the waiver highlights the Major Surgery that is Scheduled for Commonwealth Care. The Commonwealth will receive $1.3 billion less for the program over the next three years compared to the 2008 waiver.
2008 Waiver
2011 Waiver
CommCare Funding
$2,333,500,000
$1,007,900,000
Pioneer has been writing about the coming tidal wave for the Commonwealth Care program for almost a year now, and the waiver flushes this out starkly. A majority of current Commonwealth Care members will be transferred to the Medicaid program, and as a result the Connector currently faces many policy decisions on how best to proceed.
I would welcome your feedback on this blog both in the comment section below or at josh[at]pioneerinstitute.org or on Twitter at @josharchambault
Dave deBronkart gave an interesting talk at a TED conference site last year that highlights the potential of patients having access to their own health data.
This afternoon the Patrick Administration announced a new deal with Federal HHS on the Medicaid waiver that serves as the backbone of our reform law. The last waiver expired in June of 2011.
It is a 3-yr $26.75 billion deal.
I need some more details before I can figured out how exactly this waiver will mesh with the Governor’s payment reform bill. But until then, some early thoughts:
The Patrick administration looks like they withdrew a number of requests to get this deal done.
The Massachusetts waiver deal raises some interesting questions for the future of the national health reform law. [Even if I think the lessons to be learned from Massachusetts are somewhat limited to the national plan.]
A foundational assumption of the Massachusetts reform was that as patients obtained insurance, the cost of care for individuals without insurance would go down. The record has been mixed on this front.
If safety net hospitals in Massachusetts cannot transition to a new care model that allows them to be more self-sustaining with 98% coverage, how much will the PPACA ultimately cost when similar hospitals in 49 other states try to adjust? This waiver includes an additional $120 million a year to try to push a transition that was supposed to take place organically 3-5 years ago.
The new PPACA entitlement is in part funded with reductions in payments to similar hospitals across the nation, but the precedent set here by the federal government should call into question that basic “savings” assumption.
I am glad to see that CMS has included some benchmarks for the state to hit in order to receive funding.
Massachusetts officials will be happy with more federal funding for the reform, as it means less of a future hit to the state budget, but taxpayers are smart enough to know they pay for both state and federal spending.
I was recently asked by a reporter for some trends that I expect to see in 2012. I thought I would share my bullet points on the Pioneer blog:
In no particular order.
Continued provider consolidation, both locally and nationally.
Greater cost-shifting from Medicare and Medicaid, as both federal and state government continue to cut reimbursement levels. On a related side note, I think over the next few years you will see cash-based pre-paid practices opening in Boston.
Gains in the use of high-deductible and health savings account plans nationally. The question for 2012 is whether Massachusetts will break out of its status quo and catch up.
The story I will be watching for in 2012: The interaction between cost saving reforms (global budgets, ACOs, limited networks, etc) and individuals that have put off care because of the economic downturn. When will these folks reenter the medical system in a meaningful way? And how will we pull apart and separate the impact of the economy from the reforms being implemented? In my mind, the true test for the sustainability of any reform will be revealed when the economy turns around and these patients start to return to receive the care they have been putting off. (Perhaps, I am a year off, and this will not be a full blown story until 2013, or even 2014, which if the ACA remains on the books, we could have a prefect storm brewing for 2014 as coverage is widely expanded and latent demand returns to the system)
The Connector held its annual retreat this past weekend, and since the omnipresent Health Care for All (HCFA) representatives were not in attendance to write up a summary, I thought I would provide an overview of what was discussed at the meeting, and outline some of the future challenges for the Connector. The agenda can be found here.
Basic Health Plan
The Connector is seriously thinking about offering a basic health plan, an option in the ACA, and is one of the few states in the nation to be doing so. (When the Connector posts the slides from Saturday, I will link to them for more detail on the different circumstances being modeled.)
With a BHP the federal government would pay a state 95% of the cost of tax credits and subsidies that they would have spent without a BHP. This may result in the feds covering 100% of the cost of running a BHP depending on how a state set up a program, and is a very different funding structure when compared to the current 50% FMAP reimbursement for CommCare or Medicaid.
There are lots of policy tradeoffs with a BHP. (I will write on this more in the future if the state decides to move forward with a BHP.) But just as an example, the BHP can be contracted out or run by the state. If state run, one can imagine Medicaid II, but without take-one take all rules. In other words, under current law, if a provider accepts one Medicaid patient, they can’t turn down any other because they are on Medicaid. This is the government’s “solution” to the historical practice of under reimbursing for the care of these patients. As a result of being underpaid, some doctors just decide to not accept any Medicaid patients.
The Massachusetts Medical Society has documented the challenge these folks are facing finding internists (only 53% accepting new patients) and family physicians (62%). I don’t believe the government imposed access rules hold for the BHP. In a future downturn, the state would cut BHP payments (they are doing it with Medicaid now), and these low-income patients would be caught between a rock and a hard place, as no provider will take them. They are functionally uninsured.
Finally, in a recent NEJM piece John Graves, Rick Curtis, and Jonathan Gruber (who sits on the Connector Board) predicts significant churning and increased instability of coverage for those on the edge of eligibility between a BHP and the exchange.
This blog post is part 4 of 4 from the Connector meeting.
The Connector held its annual retreat this past weekend, and since the omnipresent Health Care for All (HCFA) representatives were not in attendance to write up a summary, I thought I would provide an overview of what was discussed at the meeting, and outline some of the future challenges for the Connector. The agenda can be found here.
State Budget Considerations
The Commonwealth will have to finance state mandates that are over and above the federally set essential health benefits (EHB). The Connector has identified at least 7 current mandates that are unlikely to be in EHB. The Legislature will need to reopen the discussion over mandates.
40,000 legal immigrants will be enrolled back into Commonwealth Care due to a lawsuit. The current Bridge program only has 15,000 legal immigrants, so the Connector will have to welcome back the Bridge enrollees and 25,000 additional immigrants picking up the additional cost in the process, till at least 2014.
One of the biggest changes will be enrollment in the subsidized CommCare program. The ACA, transfers a significant number of enrollees into Medicaid or a Basic Health Plan(BHP) (more on this in the 4th blog post) out of CommCare. This would leave the Connector with just over 60,000 enrollees, a huge drop in revenues, and a floundering unsubsidized CommChoice program. What became clear from Board members was that the Connector should be scared about future power and market share. Numerous board members wanted to discuss how the Connector could best position itself to keep the reins of power in the health care market.
A few other observations.
The small business and broker representatives were silent on Saturday. Not a single question or comment. They are some of the newer appointed officials, but this leaves the conversation to be dominated by government and union officials.
Is the tension escalating on the left? There was a lengthy conversation about the role of liberal advocacy groups going forward in Connector policy decision making. Some Board members expressed frustration with these groups and advocated for “education about the reality of the situation,” while others wanted to protect the access and input these groups have had since the Patrick Administration has been in office.
State officials are concerned about future cuts in federal funding. Given that the federal government finances a considerable portion of the Massachusetts reform, and is being debated in secret waiver negotiations, this issue could mean big changes in program design.
To the credit of the Connector staff, they presented ACA implementation as a chance to design Connector 2.0. I hope they mean that. But the sympathy shown by staff to Board concerns about the evils of– the private sector, competition, and greater choice for consumers—I have little confidence of real reform.
Shouldn’t the opposite question be asked– what reforms would be best for taxpayers and for possible consumers of Connector products?
This blog post is part 3 of 4 from the Connector meeting.
The Connector held its annual retreat this past weekend, and since the omnipresent Health Care for All (HCFA) representatives were not in attendance to write up a summary, I thought I would provide an overview of what was discussed at the meeting, and outline some of the future challenges for the Connector. The agenda can be found here.
The main theme of the retreat was the Affordable Care Act’s (ACA) impact on the Massachusetts reform. Connector staff, confirmed what Pioneer’s research has shown, that the Connector we know today will look very different by 2014. Here are a few of the examples of the policy discussions ahead:
The Connector will need to figure out changes to the individual mandate (MEC in the federal law) vs our current minimum creditable coverage.
Adjustments to the penalty and affordability schedules.
Changes to employer responsibilities.
Matching essential health benefits (EHB)– in the federal law vs. our mandated benefits.
Changes to the seal of approval process, by which insurance plans are approved to be sold in the Connector.
The return of an employee choice model. (Pioneer has written on the design failures and manipulation of the CP program by staff the first time around, hopefully the Connector can learn from past mistakes.)
Big changes to the Young Adult Plans. The state may have to offer a catastrophic insurance plan for the first time, which a few Connector Board members are ideologically opposed to, but Governor Romney envisioned as the basic level of coverage in the 2006 law.
There will be some shifting in the metallic tier levels within the exchange.
The introduction of navigators into the Massachusetts market.
The incorporation of risk adjustment mechanisms, risk corridors, and reinsurance programs.
While these provisions are not exhaustive, they do outline some major policy discussions ahead, and many have financial consequences for the state budget. I will cover some of the budget fall out in the next post.
This blog post is part 2 of 4 from the Connector meeting.
The Connector held its annual retreat this past weekend, and since the omnipresent Health Care for All (HCFA) representatives were not in attendance to write up a summary, I thought I would provide an overview of what was discussed at the meeting, and outline some of the future challenges for the Connector. The agenda can be found here.
I must mention a moment that I found especially troubling.
Politics at the Connector.
Secretary Gonzalez made a statement during a conversation about protecting the reputation of the Connector and media coverage that struck me as odd. He said that the Connector needs to be seen positively as it means a great deal to the political future of the Governor and the President. He encouraged board members to use the Connector staff as a resource so they are “well armed with information” to present a positive story about the Connector.
Appropriate political positioning for a quasi-public agency? I will let you decide.
This blog post is part 1 of 4 from the Connector meeting.
