A service of the California Health Care Foundation

Five Health Care Issues To Watch in 2012

Not to be a Grinch, but “Road to Reform” doesn’t celebrate the 12 days of Christmas.

We do, however, cherish the 10 years of staggered Affordable Care Act implementation.

It’s the gift that keeps on giving for health wonks — and columnists on the health reform beat.

After a packed 2011, here are five issues springing out of last year’s reform law that bear watching in 2012.

1. The Supreme Court battle over ACA

It’s an open question: Are those 10 years of reforms even constitutional?

The high court is poised to give its answer next year.

Health wonks already have circled March 26-March 28 on their calendars, when the justices will devote a record five-and-a-half hours of oral argument to discuss the Affordable Care Act’s legality.

The current schedule:

  • Day 1: Whether the court can even rule on the ACA before 2014, when its major provisions take effect.
  • Day 2: Whether the ACA’s individual mandate is constitutional.
  • Day 3: Whether striking down the mandate means striking down the law, and if the Medicaid expansion is permissible.

The case matches the Obama administration against the National Federation of Independent Business and 26 states. Based on split lower-court decisions and the current roster of justices, predictions about the high court’s verdict — whether the law will be upheld, partially struck or fully struck down — are all over the map.

But veteran court watchers do offer one near-guarantee: A hearing in March means a ruling by June.

2. The payment reforms contained in ACA

Regardless of the law’s long-term future, a bevy of ACA cost-control pilots and quality-improvement initiatives will formally debut in the coming weeks.

The sheer momentum of these initiatives could reshape how the industry pays for care.

“It should be a landmark year as several key programs — the Pioneer ACO Model, the Shared Savings Program, the Bundled Payments for Care Improvement Initiative and the Health Care Innovation Challenge — all launch across 2012,” the Advisory Board Company’s Rob Lazerow told California Healthline.

(The Advisory Board Company produces California Healthline for the California HealthCare Foundation.)

Notably, the Pioneer program — which includes six California organizations among its 32 participants — goes online on Jan. 1. The HHS initiative is designed to reward health systems that are already prepared to assume new risks as “accountable care organizations” — for example, by taking on more population management responsibilities.

Meanwhile, the $1 billion Innovation Challenge is a grant-making program that incents new workforce and care delivery models. Provider applications are due next month.

Lazerow, who’s spoken with dozens of hospitals and health systems, added that “leaders of progressive organizations are excited” to choose from the range of voluntary payment innovations.

3. The health insurance exchanges mandated by ACA

The Obama administration’s final rule on health insurance exchanges is slated to be released in early 2012, about two years before the Jan. 1, 2014 deadline for states to have them up and running.

Critics are saying that might be too late.

Launching a health insurance exchange will require months of technical work and considerable financial investment. As Health Access details, California is moving quickly to get its exchange up and running. But many other legislatures continue to wrestle — especially with the law facing unresolved court challenges —  between crafting their own insurance exchanges or defaulting to a yet-to-be-defined federal alternative.

HHS is expected to announce details of that fallback option by June. But the actual federal exchange may not be ready by 2014, either.

“It will be an enormous uphill battle to get this thing launched on time,” health industry consultant Robert Laszewski told Kaiser Health News. “[Federal officials] have a Herculean task, even if everyone was cooperating.”

4. The health IT needed to bring ACA to life

The insurance exchanges aren’t alone in needing an injection of technical know-how.

Achieving the ACA’s promise of affordable, quality care will require health care providers to adopt sophisticated technologies that monitor patients and enable effective data transmission.

At the center of this effort is the government’s meaningful use incentive program to encourage electronic health record adoption. John Lynn, a blogger at Health IT Blog Network, predicted that next year would see more of the same; 2012 “will be all about Meaningful Use: Meaningful Use, ACOs, Meaningful Use … and a little more Meaningful Use covered in Meaningful Use,” according to Lynn. 

EHRs’ rise also will allow providers to start combing through large health information sets. Writing in iHealthBeatCalifornia Healthline‘s sister publication — Jane Sarasohn-Kahn notes that data analytics for addressing readmissions rates “should take off in 2012,” given the ACA’s financial incentives for controlling hospital readmission rates.

Meanwhile, health IT expert Brian Ahier flagged another pending development: The Office of the National Coordinator for Health IT’s pending rule on Nationwide Health Information Network (NwHIN) governance.

The proposed rule — which ONC is expected to publish in early 2012 — will address a number of key health IT policy and governance questions, Ahier told California Healthline. For example, it will establish “rules of the road” for all NwHIN participants to be confident in the health information exchanges’ security and confidentiality, he said.

5. The election to decide ACA’s future

Austin Frakt — a health economist and blogger at The Incidental Economist — has spent weeks writing about the Medicare premium-support debate, health care cost controls and a range of other reform topics.

Yet Frakt knows that next November is already casting a long shadow over his policy debates.

“As a policy wonk it pains me,” Frakt said, “[but] the election is more important to long-term health policy than anything else in 2012.”

Simply put, if President Obama wins re-election — and the Supreme Court upholds the law — the ACA is probably here to stay.

(It’s not inconceivable that economic issues or a major backlash could force Obama to retreat from a Democratic law; President George H.W. Bush oversaw a repeal of President Reagan’s Medicare Catastrophic Care Act.)

But if a Republican takes the White House, the ACA’s future is immediately in flux. Although it would be very difficult for that president to roll back the law entirely, given the steady implementation of reforms and the health industry’s own push to keep the law alive.

And more than the ACA is in the balance next year. A Republican victory might mean a turn toward premium support models after all, with the Wyden-Ryan Medicare reform plan gaining favor among the GOP presidential candidates.

Publishing Break

“Road to Reform” will return in 2012 — making predictions about what 2013 holds for health care, no doubt — as California Healthline goes on a publishing break starting Friday.

And to help you have a very wonky holiday, here’s one last national roundup of reform news for 2011.

Administration Actions

  • HHS on Monday rejected Michigan’s request for a waiver from the medical-loss ratio regulations under the federal health reform law (Baker, “Healthwatch,” The Hill, 12/19). Under the rule, private insurers must spend at least 80% in the individual market or 85% in the group market of their premium dollars on direct medical costs (Zigmond, Modern Healthcare, 12/19). Officials said insurers that are unable to meet the MLR standards could stop providing coverage, resulting in higher costs and fewer options for consumers (Anstett, Detroit Free Press, 12/19).
  • Last week, HHS rejected Florida’s request for a waiver from the medical-loss ratio rule under the federal health reform law (Bandell, South Florida Business Journal, 12/15). Under the rule, private insurers must spend at least 80% in the individual market or 85% in the group market of their premium dollars on direct medical costs (Pecquet, “Healthwatch,” The Hill, 12/15). Florida officials said the MLR rule it could disrupt the state’s private health insurance market, which includes only a few companies but covers for about 840,000 individuals (Fineout, AP/Miami Herald, 12/15).
  • This week, the Department of Justice said that the federal health reform law has helped the department recover about $2.4 billion in health care fraud cases in 2011. The federal government recovered about $1.8 billion from drugmakers, which led to states recovering another $421 million from the industry in cases involving illegal pricing, false claims and FDA violations (Baker, “Healthwatch,” The Hill, 12/19). Tony West of DOJ’s civil division said a joint DOJ-HHS task force created by the Obama administration “essentially raised health care fraud to a cabinet-level priority” (Pickler, AP/Miami Herald, 12/19).
  • Last week, CMS released draft regulations that outline procedures for drugmakers and device makers to report payments to physicians, as required by the Physician Payment Sunshine Act under the federal health reform law (Yukhananov, Reuters, 12/14). Under the proposed rule, manufacturers covered by Medicare, Medicaid or CHIP must disclose all payments or transfers of items of value to physicians and teaching hospitals (CQ HealthBeat, 12/14). Manufacturers would face a fine of $150,000 for failing to report payments, and $1 million for knowingly failing to disclose the data (Reuters, 12/14). Public comments on the proposed rule will be accepted until Feb. 17 (CQ HealthBeat, 12/14).

Effects on States

  • The federal government faces substantial technical, political and financial obstacles in developing a health insurance exchange on behalf of states that do not set up their own. Through the federal exchange, individuals and small businesses will be able to access a website comparing insurance policy offerings by price, coverage and quality. In addition, the federal exchange must be able to help applicants determine if they are eligible for Medicaid, federal subsidies or various tax credits. The exchange also will include a Federal Data Services Hub that will unite data from different agencies, such as the Internal Revenue Service (Appleby, Kaiser Health News/Washington Post, 12/20).

In the States

  • In a study released recently, the Colorado Health Institute reported that the number of primary care physicians in the state would need to increase by between 83 and 141 by 2016 to meet the health care needs for the estimated 510,000 residents who will gain health coverage under the federal health reform law. Researchers said that when the law’s individual mandate takes effect in 2014, as many as 380,000 residents will obtain coverage through private plans and an additional 130,000 individuals will obtain coverage through Medicaid, resulting in between 256,010 and 432,420 additional annual visits to physicians (Sealover, Denver Business Journal, 12/12).

On the Campaign Trail

  • Republican presidential candidate and former House Speaker Newt Gingrich’s (Ga.) record on health care could put him at odds with many Republican voters. Interviews and records indicate that Gingrich that he supported the individual mandate in the federal health reform law, telling health care executives in a May 2009 conference call, “We believe there should be a must-carry; that is, everybody should have health insurance.” He also has been active in promoting several recent programs that have given the federal government a larger role in the health care system, a prospect with which many Republicans disagree (Rutenberg/McIntire, New York Times, 12/16).

On the Hill

  • Last week, House Republicans acknowledged that they would not be able to repeal the Community Living Assistance Services and Supports Act before the end of the year but pledged to revive repeal efforts in 2012 (Pecquet [1], “Healthwatch,” The Hill, 12/13). The long-term health care program, which was created by the federal health reform law, was intended to provide coverage to workers if they become unable to care for themselves because of injury or illness. GOP lawmakers said the House Ways and Means Committee will begin markup on a CLASS repeal proposal early next year (Pecquet [2], “Healthwatch,” The Hill, 12/13).

Rolling Out Reform

  • The Obama administration‘s efforts to ease some of the federal health reform law’s requirements on insurers, employers, physicians and other groups has garnered “cautious praise” from some overhaul opponents. For example, the administration has exempted nearly 1,500 employers and health plans from measures that prohibit caps on benefit and granted waivers to exempt insurers from medical-loss ratio rules. Observers say the efforts could alleviate the possible political backlash during President Obama‘s re-election campaign, but many allies of his administration are frustrated with the strategy (Levey, Los Angeles Times, 12/14).
  • In its first year, CMSCenter for Medicare and Medicaid Innovation launched 12 initiatives — from accountable care organizations to primary care projects — that are reshaping how people think about the U.S. health care system, according to a recent Commonwealth Fund report. The report outlined CMMI’s achievements over the past year, highlighting a dozen initiatives that have helped the health care industry move toward more coordinated, integrated care. The federal health reform law allotted $10 billion to CMMI, which was launched in November 2010 to help it test payment and service delivery models that aim to reduce spending and boost care quality (Fiegl, American Medical News, 12/15).

Studying Its Effects

  • In a survey released last week, the Deloitte Center for Health Solutions reported that nearly 75% of physicians are concerned about physician shortages, longer wait times and crowded emergency departments as more people gain health coverage through the federal health reform law. Nine out of 10 respondents polled also believe that their insurance reimbursements will be lower because of the law. The poll of 501 physicians also found that about 44% believe the health reform law was “a good start,” but another 44% said the law was “a step in the wrong direction” (Radnofsky, “Health Blog,” Wall Street Journal, 12/13).
  • Last week, CDC‘s National Center for Health Statistics reported that the number of uninsured young adults nationwide has dropped by 2.5 million since the federal health reform law took effect in 2010. A provision in the overhaul allows dependents up to age 26 to remain on their parents’ health insurance plans. According to HHS policy analysts, about 10.5 million young adults ages 19 to 25 were uninsured when the provision took effect in the third quarter of 2010, but that figure dropped to about eight million by the second quarter of 2011 (Alonso-Zaldivar, AP/San Francisco Chronicle, 12/14).
  • In a study released last week, the UC-Berkley Center for Labor Research and Education reported that more than one million additional U.S. residents could gain health coverage if a provision in the federal health reform law is modified. The provision stipulates that if workers contribute more than 9.5% of their incomes toward employer-sponsored health benefits, they qualify for federal subsidies to purchase health plans through state insurance exchanges (Pecquet, “Healthwatch,” The Hill, 12/13). The report recommended that the provision be modified to determine affordability based on the cost of a family plan (Bunis, CQ HealthBeat, 12/13).

Categories: Insurance, Road to Reform, The Health Law

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