Those factors make high blood pressure a topic of interest for Medicare, Medicaid, Medicare Advantage plans, and other private health plans. Health insurers and providers increasingly are focusing their efforts to reduce health care costs for people with chronic conditions, who account for a large portion of health costs and spending. The Centers for Medicare and Medicaid Services (CMS) estimates Medicare beneficiaries with two or more chronic conditions accounted for 93 percent of Medicare spending in 2011, or about $276 billion.  Several million of those newly insured under the Affordable Care Act (ACA) starting in 2014 likely have undiagnosed, untreated, or poorly managed hypertension.

Health information technology (HIT), electronic health records (EHR), and health data are vital to identifying which treatments are most effective. Payors increasingly are keeping track of chronic disease care data to evaluate physicians and hospitals, incorporating those metrics into payment reforms and policy changes. CMS, for example, recently launched a data dashboard tool to help researchers, physicians, and policymakers gather information about how to increase the quality and reduce the cost of care. Health IT also facilitates chronic care management and patient engagement, through remote patient monitoring, e-prescribing, and telehealth.

Hypertension Care Expenditures Reach $42.9 billion:

The Agency for Healthcare Research and Quality (AHRQ) has long gathered extensive data on health costs and spending. AHRQ frequently produces statistical briefs using data from the Medical Expenditure Panel Survey (MEPS). Subjects for recent briefs include avoidable hospitalizations among seniors in nursing homes, health care associated infections in hospitals, and expenditures on common conditions among young women.

Hypertension is the focus of the latest AHRQ statistical brief, and is a good resource to inform health policy for chronic conditions. An overview of the findings:

• In 2010, about 58.6 million persons or 25.1 percent of adults age 18 and older were treated for hypertension.
• Direct health care spending to treat hypertension totaled $42.9 billion in 2010, with almost half ($20.4 billion) in the form of prescription drugs.
• Annual expenditures for those treated for hypertension averaged $733 per adult in 2010.
• The mean expenditure per person for the treatment of hypertension was higher for Hispanics and non-Hispanic blacks ($981 and $887, respectively), than for non-Hispanic whites ($679) and non-Hispanic others ($661).

Read the full brief here.

Research on Hypertension:

Health Affairs is another good resource for research about the effects of high blood pressure on chronic disease, health costs, prescription drug benefits, employee health care, and health care policy in general. Below are several abstracts for Health Affairs articles on the subject.

Mobile Clinic In Massachusetts Associated With Cost Savings From Lowering Blood Pressure And Emergency Department Use

By Zirui Song, Caterina Hill, Jennifer Bennet, Anthony Vavasis, and Nancy E. Oriol

Mobile health clinics are in increasingly wide use, but evidence of their clinical impact or cost-effectiveness is limited. Using a unique data set of 5,900 patients who made a total of 10,509 visits in 2010–12 to the Family Van, an urban mobile health clinic in Massachusetts, we examined the effect of screenings and counseling provided by the clinic on blood pressure. Patients who presented with high blood pressure during their initial visit experienced average reductions of 10.7 mmHg and 6.2 mmHg in systolic and diastolic blood pressure, respectively, during their follow-up visits. These changes were associated with 32.2 percent and 44.6 percent reductions in the relative risk of myocardial infarction and stroke, respectively, which we converted into savings using estimates of the incidence and costs of these conditions over thirty months. The savings from this reduction in blood pressure and patient-reported avoided emergency department visits produced a positive lower bound for the clinic’s return on investment of 1.3. All other services of the clinic—those aimed at diabetes, obesity, and maternal health, for example—were excluded from this lower-bound estimate. Policy makers should consider mobile clinics as a delivery model for underserved communities with poor health status and high use of emergency departments.

Hypertension, Diabetes, And Elevated Cholesterol Among Insured And Uninsured U.S. Adults

By Andrew P. Wilper, Steffie Woolhandler, Karen E. Lasser, Danny McCormick, David H. Bor, and David U. Himmelstein

In this paper we explore whether uninsured Americans with three chronic conditions were less likely than the insured to be aware of their illness or to have it controlled. Among those with diabetes and elevated cholesterol, the uninsured were more often undiagnosed. Among hypertensives and people with elevated cholesterol, the uninsured more often had uncontrolled conditions. Undiagnosed and uncontrolled chronic illness, which is common among insured people, is even more frequent among the uninsured.

How Cumulative Risks Warrant A Shift In Our Approach To Racial Health Disparities: The Case Of Lead, Stress, And Hypertension

By Margaret Hicken, Richard Gragg, and Howard Hu

Blacks have persistently higher rates of high blood pressure, or hypertension, compared to whites, resulting in higher health costs and mortality rates. Recent research has shown that social and environmental factors—such as high levels of stress and exposure to lead—may explain racial disparities in hypertension. Based on these findings, we recommend a fundamental shift in approaches to health disparities to focus on these sorts of cumulative risks and health effects. Federal and state agencies and research institutions should develop strategic plans to learn more about these connections and apply the broader findings to policies to reduce health disparities.

Drug coverage and drug purchases by Medicare beneficiaries with hypertension

By J Blustein

Research has shown that older Americans with prescription drug coverage purchase more medications; however, it is unclear whether they are more likely to purchase essential medications. This study addresses that question by examining the relationship between drug coverage and medication purchases among older Americans with hypertension. It finds that drug coverage has a significant impact: It lowers the likelihood that persons with hypertension will go without antihypertensive drugs, and it raises the number of tablets purchased among those who purchase these essential drugs.

Wellness Incentives In The Workplace: Cost Savings Through Cost Shifting To Unhealthy Workers

By Jill R. Horwitz, Brenna D. Kelly, and John E. DiNardo

The Affordable Care Act encourages workplace wellness programs, chiefly by promoting programs that reward employees for changing health-related behavior or improving measurable health outcomes. Recognizing the risk that unhealthy employees might be punished rather than helped by such programs, the act also forbids health-based discrimination. We reviewed results of randomized controlled trials and identified challenges for workplace wellness programs to function as the act intends. For example, research results raise doubts that employees with health risk factors, such as obesity and tobacco use, spend more on medical care than others. Such groups may not be especially promising targets for financial incentives meant to save costs through health improvement. Although there may be other valid reasons, beyond lowering costs, to institute workplace wellness programs, we found little evidence that such programs can easily save costs through health improvement without being discriminatory. Our evidence suggests that savings to employers may come from cost shifting, with the most vulnerable employees—those from lower socioeconomic strata with the most health risks—probably bearing greater costs that in effect subsidize their healthier colleagues.

Inpatient hospital services make up the single largest category of Medicare spending, at $133 billion in FY 2011, or about 25 percent of the Medicare budget. Inpatient hospital visits, along with post-acute care, are paid under Medicare Part A. Funding for Part A hospital insurance comes from payroll taxes, the Part A deductible, and taxpayer subsidies.

Outpatient hospital services, ambulatory care, some home health care, and physician visits are covered under Medicare Part B.  Medicare Part A and Part B services are available through Medicare Advantage health plans and traditional fee-for-service Medicare.

MedPAC Recommendations on Medicare Hospital Reimbursement:

Each year, the Medicare Payment Advisory Commission (MedPAC) reports to Congress on whether fee-for-service Medicare payment policies are adequate and on reforms to Medicare payment methods and care delivery models.

For example, last year MedPAC recommended equalizing payments for physician evaluation and management services, regardless of whether they were in a hospital or in a doctor’s office. Increasingly, providers bill for evaluation and management visits as hospital services, instead of physician office services, because the hospital visits have a higher payment rate.

For FY 2014, recommendations for Medicare hospital payments in the 2013 MedPAC Report to Congress are more straightforward:

“Congress should increase payment rates for the inpatient and outpatient prospective payment systems in 2014 by 1 percent. For inpatient services, the Congress should also require the Secretary of Health and Human Services to use the difference between the statutory update and the recommended 1 percent update to offset increases in payment rates due to documentation and coding changes and to recover past overpayments.”

Medicare Hospital Margins, Usage Data:

While the recommendation seems relatively simple, MedPAC’s excellent staff and savvy Commissioners puts a lot of thought into determining whether Medicare payment rates are where they should be.  MedPAC reports often include lots of data about access to care, and the prevalence and financial health of providers, including profit / loss margins.

Here are some of the more interesting data on hospitals receiving Medicare payments:

• The number of hospitals – 4,800 – and the range of services offered both continue to grow.
• Hospitals reduced 30-day mortality rates across five prevalent clinical conditions and readmission rates improved slightly from 2008 to 2011.  Preventable hospital readmissions are a major contributor to wasteful health care spending.  As part of the Affordable Care Act (ACA), the Centers for Medicare and Medicaid Services (CMS) launched a Hospital Readmission Reduction Program that financially penalizes hospitals with high readmission rates, starting in FY 2013.  MedPAC’s report to Congress says it’s too early to say whether the program has reduced readmissions.
• Overall Medicare hospital margins declined from -4.5 percent in 2010 to -5.8 percent in 2011, meaning hospitals on average serve Medicare patients at a loss. MedPAC expects the overall margin of roughly -6 percent to remain for 2013.
• However, Medicare hospital margins were a positive 2 percent for hospitals that consistently perform well on cost, mortality, and hospital readmission measures.

Learn More About Hospital Payment Issues:

To learn more, read the full report, and please check out the MedPAC and hospital sections of this blog for more on a wide range of issues.  Also see my previous post about an interesting statistical brief on hospitalizations, Hospital Admissions: Trends in Hospitalizations.

Recent Pace in Health Care Cost Growth:

There has been a string of good news for health costs and spending in the past few months. The Congressional Budget Office (CBO) 10-year spending projections for Medicare dropped 2 percent, compared to its previous estimate, and its Medicaid budget projection fell 5.5 percent. The Kaiser Family Foundation reported relatively slow growth for employer-sponsored insurance (ESI) average premiums in 2012 – 4 percent for family health coverage. USA Today reported health spending as a share of the economy shrank to 17.04 percent last year, compared to 17.12 percent in the year before.

One key statistic seemed to explain much of the good news. The Centers for Medicare and Medicaid (CMS) Office of the Actuary (OACT) found that national health expenditures grew 3.9 percent each year from 2009 to 2011, the lowest level of growth in 50 years. Health costs still grew faster than inflation but were a big improvement on growth rates of the early 2000s, which reached almost 10 percent per year.

Health Spending Slowed Because the Economy Slowed:

But the good news might only be temporary. A new analysis from the Kaiser Family Foundation finds that 77 percent of the drop in health care spending was because of a broad economic downturn during the Great Recession. Though the recession ended in 2009, health spending lags behind economic changes over a period of six years, the brief says.

A quick overview of the findings:

• Annual health spending growth is expected to stay where it is for the next few years but reach 7.1 percent by 2019.
• That estimate is based on economic changes alone, regardless of other factors, and assumes excess growth – the level health spending increases above inflation rates – remains at its 20-year average of around 1.6 percent.
• The numbers do not include an expected one-time growth increase in health spending of 2-3 percentage points, when millions more Americans get coverage after 2014 because of the Affordable Care Act (ACA) health reform law.
• There is some evidence changes in U.S. health care system are contributing to lower rates of growth, such as the rise of managed care plans and additional cost-sharing.

Cost Control Efforts in Public and Private Sectors:

While costs are expected to increase more rapidly in the near future, both the public and private sectors are engaged in a wide variety of efforts to contain costs, with payment reform and delivery reform given the highest priority.

The health reform law encourages several Medicare payment reform models, such as Accountable Care Organizations (ACO) and bundled payments, intended to create incentives for Medicare providers to curb unnecessary medical care. Wasteful health care accounts for about one third of health care spending, and is estimated to reach up to $1 trillion each year.

Care coordination models for Medicare-Medicaid dual eligibles, which account for a third of the Medicare and Medicaid budgets, also have the potential to reduce costs and improve care.  Medicaid health plans and Medicare Advantage Special Needs Plans for dual eligibles (D-SNP) are central to state demonstrations testing that theory. Private health plans and large employers also are focusing on care coordination and payment reform to keep costs down and improve care.

For more on the subject, see the payment reform section of this blog.  Also check out my post, 7 Ideas to Reduce Costs and Improve Outcomes in Medicare and Medicaid.

Medicare and Medicaid Spending on Dual Eligibles:

Even among dual eligibles, certain sub-populations have outsized impacts on health costs. For a breakdown, see this recent report from the Medicaid and CHIP Payment and Access Commission (MACPAC). MACPAC is a counterpart to the Medicare Payment Advisory Commission (MedPAC), and is charged with advising Congress on the federal Medicaid policies.

MACPAC’s 2013 report to Congress looks at average Medicare and Medicaid health spending for four subgroups of all-year, full-benefit dual eligibles. Full-benefit dual eligibles represent three quarters of the dual eligible population and receive full benefits from both Medicare and Medicaid.

The MACPAC report breaks down full-benefit dual eligibles into four categories based on what type of long-term services and supports (LTSS) they received.  The categories are:

1. Dual eligibles who received Medicaid financing for nursing home care or other institutional long-term services and supports.

2. Those who received services under Medicaid Home and Community-Based Services (HCBS) waivers, which provide a wide range of home-based, non-medical services and supports. This group does not include anyone who received Medicaid institutional care.

3. People who received home and community-based services but not through an HCBS waiver under s. 1915 of the Social Security Act. People in this group include those receiving Medicaid home care benefits under the Medicaid State Plan, such as home health or personal care services, but not those receiving any Medicaid nursing home care.

4. Dual eligibles who did not use any Medicaid long-term care services, including no nursing home or home and community-based services.

Institutionalized Dual Eligibles the Most Expensive:

MACPAC’s analysis of Medicare and Medicaid spending across the various subgroups of dual eligibles reveals interesting data.  Because CMS fails to make more timely readily available, the report uses 2007 data.  Naturally, the number of dual eligibles and their health costs have grown since then. Here are some of the findings:

• Institutional service users on average cost Medicare and Medicaid $69,505 per person in 2007.
• Institutional service users cost 40 percent more than the next-most expensive group and four times more than dual eligibles who did not use long-term services and supports.
• HCBS waiver users cost the second-most on average ($49,457), followed by non-waiver HCBS users ($35,164), and non-LTSS users ($14,835).
• For institutional and HCBS-waiver users, the two most expensive groups, Medicaid paid about two thirds of the cost with Medicare paying the rest.
• Medicare paid 56 percent of health spending on non-waiver HCBS users and 81 percent of spending on non-LTSS users.

MACPAC’s excellent analysis has a number of helpful graphs that break down the numbers in different ways. See the full report here.

Learn More About Dual Eligible Spending:

Dual eligibles have become a hot topic in health policy circles in large part because of their huge effect on federal and state health spending, their highly complex clinical characteristics, and the need to integrate financing and care delivery across Medicaid and Medicare.  The Sellers Dorsey team is busy working with health plans and other organizations to integrate care for dual eligibles.

To learn more, browse the dual eligibles section of the Piper Report.

The cycle of temporary fixes to the SGR creates a great deal of uncertainty for physicians and patients with health coverage through Medicare fee-for-service or Medicare Advantage. Physician groups and hospital systems for years have advocated for a permanent fix to the SGR. But Congress would need to find at least $138 billion to offset the cost of a permanent doc fix, a major sticking point and a big part of the reason why temporary fixes have become the norm.

The ongoing uncertainty and annual threat of huge payment cuts has also meant that physicians rarely receive an annual rate increase.  Since 1998 when Congress enacted the SGR formula, most years physicians have received either no rate increase or a modest one percent increase. As a result, Medicare reimbursement has fallen far behind increases in cost of running physician practices.

MedPAC Recommendations for the SGR:

Around this time every year, the excellent staff at the Medicare Payment Advisory Commission (MedPAC) makes recommendations to Congress about Medicare payment policies. Once again this year, MedPAC’s report has recommended that Congress get rid of the SGR as soon as possible. If left unchanged, MedPAC says, the policy has the potential to cause doctors to drop Medicare patients, destabilizing the Medicare program, and limiting access to physician services for beneficiaries.

MedPAC suggests a four-part plan to get rid of the SGR:

1. Repeal the SGR and avoid linking future Medicare physician payments to cumulative payments for services.

The quantity of services provided is part of the SGR’s formula. As quantity increases, payment rates decrease, which was intended to discourage physicians from charging Medicare for unnecessary medical care. But, as MedPAC points out, the SGR has no mechanism for rewarding physicians who reduce the quantity of services. Under the SGR, if the aggregate amount of services increases payment rates go down for everyone. Instead of the SGR, Congress should enact a 10-year fee payment schedule, with different, improved Medicare Part B rates for primary care services.

2. CMS should collect data to improve Medicare payment accuracy and identify overpriced services within the fee schedule.

3. Medicare should encourage physicians to move from traditional fee-for-service Medicare into Accountable Care Organizations.

Accountable Care Organizations (ACOs) are composed of multiple providers, mostly hospitals, physicians, and health systems. Through the Medicare Shared Savings Program, ACOs can earn a portion of savings by controlling health costs and spending.

ACOs and other payment reforms present major challenges, as well as opportunities, for physicians. See my previous post on this issue for some ideas on how physicians can ready themselves for payment reforms ahead, at Physician Payment Reform: Preparing for Value-Based Reimbursement.

4. SGR repeal must be fiscally responsible.

Earlier this year, the Congressional Budget Office (CBO) dramatically reduced its estimate of how much it would cost Medicare to repeal the SGR and hold its payment rates constant. Though previous estimates put the 10-year cost around $250 billion, the CBO now expects the cost to be $138 billion. That still is a lot of money. Congress could try to offset the costs with cuts throughout the Medicare budget. For example, MedPAC’s report says, Congress could reduce payment rates for providers – such as hospitals, home health care providers, and nursing homes – and it could increase out-of-pocket costs for Medicare beneficiaries.

MedPAC Data on Access to Physician Services:

MedPAC’s report to Congress also includes some interesting data on whether Medicare beneficiaries have adequate access to physicians. A few highlights from the report:

• In a 2012 MedPAC survey, 77 percent Medicare beneficiaries said they never had to wait longer than they wanted to for routine care. Seventy two percent said so among people ages 50 to 64 years in private health plans.
• 72 percent of Medicare beneficiaries said they had no trouble finding a primary care physician to treat them, according to the 2012 survey. Seventy five percent said so among those ages 50 to 64 years with private health insurance.
• Minorities in Medicare have less trouble waiting for care than do minorities with private health insurance.
• There are no statistically significant differences in access to care among rural and urban Medicare enrollees.
• 30 percent of beneficiaries saw physician assistants or nurse practitioners for some or all of their care. The figure was slightly higher, 36 percent, for those with commercial health coverage.
• From 2009 to 2011, the number of physicians and other health professionals providing services to Medicare beneficiaries kept pace with growth in the beneficiary population.

The physician payment section of MedPAC’s report is full of additional data on utilization rates and physician participation rates. You can read the physician chapter here, and access the full report here.

Post-acute care often serves the elderly, so Medicare is the largest, most influential payor. In 2010, post-acute care was the third-largest spending category in the fee-for-service Medicare budget, after physician and inpatient hospital services. Per capita Medicare spending was $1,446 on post-acute care, $1,862 on physician services, and $3,655 on hospital inpatient services.

Post-acute care should not be confused with long-term care (increasing referred to as long-term services and supports or LTSS).  State Medicaid programs are, by far, the largest buyers of long-term care.  Medicare only covers a limited range of skilled, largely post-acute care and does not cover genuinely long-term care or custodial care or home-based supportive services.  Medicaid does.

Post-Acute Payment Policy Troubles in Medicare:

Much of Medicare’s money for post-acute services sometimes goes to inefficient and low-quality care, according to the Medicare Payment Advisory Commission (MedPAC) 2013 Report to Congress. MedPAC releases a trove of data and recommendations each year to help improve Medicare payment policies, and the reports are often excellent. The 2013 report’s findings on post-acute care payment were some of the most interesting. This quotation sums it up well:

“Medicare’s definition of and payments for PAC services fail to establish incentives for providers to deliver efficient, high-value care.”

MedPAC found several specific issues to inform that statement. Here are some of the findings pulled from the report:

• Post-acute care is not a well-defined term and the need for these services is not always clear. Patients who need PAC receive varying amounts of services, while other patients might be better served by going without PAC or by staying in the hospital a few more days.
• Many PAC providers furnish similar services, yet Medicare pays different rates for them depending on the setting.
• Without a common quality assessment instrument for PAC services, the quality of care and patient outcomes cannot be compared across settings, making it impossible to evaluate the comparative efficacy of services provided in different settings.
• Providers have no incentive to consider the cost to Medicare of a patient’s total episode of care. Providers receiving a fixed prospective payment may discharge patients to another provider or setting to keep their own costs below the Medicare payment, even if that increases Medicare spending over the course of treatment.
• PAC service use reflects financial incentives to increase volume under the fee-for-service payment model. For example, Medicare’s day-based payments to skilled nursing facilities encourage more days.
• There are no incentives for care coordination across providers to promote safe care transitions and to prevent costly hospital readmissions.

Recommendations to Improve Medicare Post-Acute Care Payments:

MedPAC’s reports to Congress rarely identify a problem without recommending a solution, and the 2013 report proposed several remedies for Medicare post-acute care payment.

1. Bundled Payments and Accountable Care Organizations

Bundled payments, or episode-based payments, pay for all associated costs for a given condition for a specific patient. The new Center for Medicare and Medicaid Innovation (CMMI) has experimented with bundled payments to reduce costs for complex, expensive episodes. Among CMMI’s models is one that combines payment for care from both acute hospital and post-acute providers. Click here to read more about CMMI’s Bundled Payments for Care Improvement (BPCI) initiative. Employers and private health plans also are dabbling in bundled payments. See my previous blog post, Four Payment Reform Models of Keen Interest to Large Employers.

Accountable Care Organizations (ACO) are another effort to create incentives for providers to deliver higher quality care at a lower cost. Multiple providers band together to create an ACO, which assumes some of the risk of cost-overruns in care. If providers deliver quality care at a lower cost, they share some of the savings with Medicare through the Centers for Medicare and Medicaid Services (CMS) Shared Savings Program.

2. Common Assessment

A common tool to measure quality would help CMS determine which PAC services are effective and which are not. CMS finished a demonstration project for common assessment in 2011 and concluded that implementing it would be feasible.

3. New Quality Measures

MedPAC is developing new quality measures specific to post-acute care, which it believes will help compare providers across categories and could eventually tie care outcomes to Medicare payments.

4. Expanding Medicare’s Hospital Readmission Policies

Medicare currently has a the Hospital Readmission Reduction Program to penalize hospitals with high readmission rates, created as part of the Affordable Care Act (ACA) health reform law. MedPAC recommends expanding the program to include post-acute providers, which would hold them jointly responsible with hospitals for preventing readmissions.

Learn More:

MedPAC’s reports to Congress are full of additional recommendations for Medicare payments to other providers. You can read the full report here, and you can check the MedPAC section of this blog for more posts on the subject. 

But many important details of the plan remain unclear. A big one is the question of whether QHPs can be as affordable as traditional Medicaid coverage. Having more people enroll in exchange health plans is likely to bring down the cost of those plans. But the Medicaid provider reimbursement rates are far below what private health plans pay providers, with Medicaid usually paying at least 40 percent less. Even with many more enrollees, QHPs are likely to be more expensive than traditional Medicaid and Medicaid managed care.

I came up with an idea for how states such as Arkansas can use CMS’s actuarial value calculator for QHPs to keep Exchange-based Medicaid costs in line with traditional Medicaid and Medicaid health plans. Read that post here: A way to lower premiums under Arkansas Medicaid Expansion Plan.

Many More Issues for Medicaid Expansion Through HIX:

Affordability is not the only unresolved issue for this new approach to the ACA Medicaid expansion. A recent Milliman brief does an excellent job at going through some of the additional considerations for the Arkansas Medicaid plan. Other states are considering whether to follow Arkansas’s lead, such as Tennessee and Ohio, which makes resolving these issues all the more important.

Here are some of the most interesting points the authors – Robert Damler, Kaitlyn Shaw, and Seema Verma – make in the brief:

• Medical Loss Ratio: Plans in the exchanges are required to have medical loss ratios of 80 percent or more, meaning they must spend 80 percent of premiums on clinical services and quality improvement. That might be an issue for some Medicaid health plans interested in serving Medicaid beneficiaries on the exchanges, though the average medical loss ratio for Medicaid health plans in 2011 was about 85 percent.

• Demand for Services: The Medicaid expansion, HIX, and ACA requirement for most people to purchase health insurance will drive up the demand for services from hospitals, physicians, pharmacies, and other providers. It is possible, given the increased demand and the tight supply of providers, that providers will no longer want to accept Medicaid’s lower reimbursement rates, which is yet another reason why the affordability issue is complicated.

• Reinsurance, Risk Corridors, Risk Sharing: There are three ACA risk adjustment programs to transfer money from health plans with relatively healthy enrollees to ones with relatively unhealthy and expensive enrollees. The risk adjustment programs are intended to counterbalance the ACA’s restrictions on charging higher premiums for groups of people who tend to be more expensive to cover, such as women and older people. Under an Arkansas-style plan, it is unclear whether plans with Medicaid beneficiaries would be part of the ACA’s risk adjustment programs. Medicaid beneficiaries tend to have higher morbidity, and therefore are more expensive, compared to private health plan enrollees. So including them in the risk programs could drive up costs for everyone.

• Medicaid Drug Rebate Program: Federal mandatory rebates and state supplemental rebates result in substantially lower Medicaid costs for prescription drugs.  Today, these large rebates apply to Medicaid drug utilization, whether through fee-for-service or Medicaid health plans.  Will QHPs be able to access these deep rebates for drug utilization by their Medicaid members?  If not, this would add an additional cost compared to traditional Medicaid managed care.

To read the full brief, see here.

Things get complicated quickly as there are types of “dual eligibles,” each treated differently in terms of what Medicare and Medicaid pays for.  Federal law requires state Medicaid agencies to cover most Medicare premiums, deductibles, and co-payment for most dual eligibles.  For some types of dual eligibles, the state has options to cover more than the federal minimums.  This is further complicated by interaction of Medicare and Medicaid benefit designs, differences in what and who is covered under Medicaid State Plans, differences between Medicaid and Medicare provider rates, and the treatment of post-eligibility contributions to cost of care in a skilled nursing facility.

Full-Benefit Dual Eligibles:

Full-benefit dual eligibles – those who are fully enrolled in both Medicare and Medicaid – are the most common group, representing about 7.2 million of the nation’s 9.4 million dual eligibles.  They are fully eligible for both programs, meeting the respective eligibility standards for both programs.  There several pathways for Medicare eligibility but far more for Medicaid.  About 60 percent of full-benefit dual eligibles are low-income seniors and the other 40 percent are persons under 65 with severe disabilities.

Full-benefit dual eligibles have no cost sharing in Medicare Part A or Part B.  The state Medicaid program pays for their Medicare Part A hospital deductible, Medicare Part A coinsurance, Medicare Part B monthly premium, and Medicare Part B deductible and 20 percent co-payments.

For the Medicare Part D prescription drug benefit, full-benefit dual eligibles are exempt from any monthly premium, annual deductible, costs under the doughnut hole, and all but nominal co-payments on drugs if they live at home.  Under the Medicare Modernization Act (MMA), state governments must help cover the cost of drug benefits for full-benefit dual eligibles.  These “claw back” payments from states to the Center for Medicare and Medicaid Services (CMS) total over $6 billion annually.

Qualified Medicare Beneficiary (QMB Only):

Qualified Medicare Beneficiaries (QMBs) are individuals enrolled Medicare Part A, have income of 100% of the Federal Poverty Level (FPL) or less, and have assets that do not exceed three times the limit for Supplemental Income Security (SSI) eligibility.  QMB Only individuals are not otherwise eligible for full Medicaid benefits under the State Plan.

Medicaid pays their Medicare Part A premiums (if any) and Medicare Part B premiums.  To the extent consistent with payment rates under the Medicaid State Plan, the state Medicaid program also pays for Medicare deductibles, co-pays and coinsurance for Medicare services provided by Medicare providers.

For the QMB Only population, Medicaid does not pay for services not covered by Medicare Part A or Part B.

QMB Plus (Qualified Medicare Beneficiary with Medicaid):

A “QMB Plus” is an individual who meets the QMB eligibility described above but is also eligible for benefits covered through their state’s Medicaid program.

For QMB Plus beneficiaries, Medicaid pays the Medicare premiums, co-pays, coinsurance, and deductibles the same as it does for the QMB Only population.  However, unlike the QMB Only population, QMB Plus individuals may also receive Medicaid services.

Qualifying Individuals (QI):

Qualifying Individuals (QIs) are Medicare beneficiaries with incomes above 120% and less than 135% of the FPL.  They must also meet an asset test (in 2013, $7,080 for an individual and $10,620 for a couple).  Using an annual, capped allocation of federal funds, state Medicaid programs pay for the Medicare Part B premiums of QI beneficiaries.  There are individuals who do not otherwise meet Medicaid eligibility levels and therefore receive no Medicaid benefits.

A Specified Low-Income Medicare beneficiary (SLMB) is an individual who is enrolled in Medicare Part A and Part B, has income that exceeds 100% of the FPL but is less than 120% of the FPL, and whose resources do not exceed a specified limit.  For SLMBs, Medicaid pays the individual’s monthly Medicare Part B premiums.

SLMB Plus:

A “SLMB Plus” is a Medicare beneficiary who meets SLMB eligibility and also also meets the financial criteria for full Medicaid coverage.  Like with QI and SLMB Only individuals described above, Medicaid pays for the monthly Medicare Part B premium.

However, SLMB Plus population is also entitled to all benefits available to fully eligible Medicaid recipients under the State Plan.  Typically, this is by qualifying for Medicaid by spending down excess income to the medically needy income level or by qualifying as an institutionalized person under a specific income level set in the State Plan.

Therefore, for the SLMB Plus population, the state Medicaid program provides full Medicaid benefits.  The state pays Medicaid rates for Medicaid services provided by Medicaid providers.  For services covered by both Medicare and Medicaid, Medicaid will only pay to the limit set in the State Plan.  Since Medicare payments are typically in excess of Medicaid rates, the state will consider the any Medicare payments to a provider as payment in full.

Learn More About Dual Eligibles and Cost Sharing:

State Medicaid coverage of Medicare cost sharing for different types of dual eligibles is highly complex and, for some populations, varies by state.  To learn more, CMS has a technical FAQ on Medicare Cost Sharing for Dual Eligibles.  For your inner wonk, it has an especially helpful, detailed description of federal policy and state options.

In addition, there are other programs to help low-income Medicare beneficiaries pay for Medicare cost sharing.  Examples include the Medicare Part D low-income subsidy and the Qualified Disabled and Working Individuals (QDWI) program.

It is important to note that the savings for low-income Medicare beneficiaries are available whether the individual receives the Medicare Part A and B services through traditional Medicare fee-for-service or a Medicare Advantage health plan.  However, for most Medicare consumers, Medicare Advantage plans offer lower overall cost sharing than unmanaged fee-for-service.

Of course, for Medicare beneficiaries, the best sources of consumer information is the Medicare.gov website, the 800-MEDICARE hotline, state Medicaid eligibility offices, and their State Health Insurance Assistance Program (SHIP).  SHIP offices offer one-on-one counseling and assistance to Medicare beneficiaries and their families.

Finally, the Piper Report has dozens of other articles on dual eligible issues you may find interesting.

Compared to the time and expense of traditional methods of communications – writing letters, mass mailings, town hall meetings, phone calls – social media provides Members of Congress with many advantages in communicating with their states or districts.  Social media, of course, does not replace these traditional methods of constituent communications but social media – particularly, Twitter, Facebook, blogs, and YouTube – is now essential for public officials.  Email too has become routine.  Before 1995, most Members of Congress rarely, if ever, communicated with constituents via email.  In 2011, Members of the House received 243 million emails and Senators received 83 million emails.

A fascinating, data-rich report by the Congressional Research Service (CRS) explains the latest trends in the use of Twitter and Facebook by Senators and Congressmen (collectively described here as Members of Congress).

Facebook and Twitter Use among Members of Congress

In 2009, less than half (39 percent) of Members of Congress had Twitter accounts.  As of 2012, a large majority of Senators and Congressmen had official accounts registered with both Twitter and Facebook:

Of Members of the House of Representatives:

• 75 percent had both Twitter and Facebook accounts.
• 14 percent had only a Facebook account.
• 4 percent had only a Twitter account.
• 7 percent had neither.

Of Senators:

• 67 percent had both Twitter and Facebook accounts.
• 11 percent had only a Facebook account.
• 11 percent had only a Twitter account.
• 11 percent had neither.

Facebook and Twitter Use by Political Party and Chamber of Congress

Generally speaking, Republicans have been more active in social media than Democrats.  By 2012, 56 percent of Members of Congress with Twitter accounts were Republicans, while 44 percent of Members with Twitter accounts were Democrats.  Overall, Republicans had higher adoption rates for both platforms in both chambers of Congress.

• House Republicans were the most likely group to use social media, with most (87 percent) having a Twitter account and almost all (95 percent) having a Facebook account.
• House Democrats had an 80 percent adoption rate for Twitter and a 90 percent adoption rate for Facebook.
• Of Senate Republican offices, 83 percent used Twitter and 81 percent used Facebook.
• Of Senate Democrat offices, 78 percent used Twitter and 77 percent used Facebook.

Frequency of Twitter and Facebook Use on Capitol Hill

During the study, Members of Congress posted, collectively, an average of 504 Tweets per day and 266 Facebook posts per day.  Senators were the most active users of both social media platforms.

By Chamber:

• Senators were somewhat more active in both Twitter and Facebook, posting an average 1.5 Tweets per day and .7 Facebook posts per day.
• Members of the House posted an average 1.2 Tweets per day and .6 Facebook posts per day.

By Political Party:

• Republicans used both Twitter and Facebook more often that Democrats did.  Republicans posted an average 1.3 Tweets per day and .7 Facebook posts per day.
• Democrats posted an average 1.2 Tweets per day and .5 Facebook posts per day.

By Party and Chamber:

• Senate Republicans were the most frequent users of Facebook with .8 posts per day.
• House Democrats were the least frequent users of Facebook with .5 posts per day.
• Senate Republicans were the most frequent users of Twitter with 1.5 Tweets per day.
• House Democrats were the least frequent users of Twitter, with 1.1 Tweets per day.

What are Congressmen and Senators Saying on Social Media?

CRS analyzed Congressional Tweets and Facebook posts, and divided them up into seven general categories.  Each Tweet or post could be counted in more than one category.  The categories are listed below in order of prevalence:

• Position Taking:  These involve taking a stand on a policy or issue, including specific bills.
• District or State:  These include mentions of trips or events in a Members home state or district.
• Official Congressional Action:  These posts include mentioning an official duty of the Members job, including taking a vote or attending a House or Senate Committee hearing.
• Policy Statement:  These posts reference public policy but do not take a political stance on the matter.
• Media:  These include mentions of upcoming media appearance and often link to a media source.
• Personal:  These posts are specific to the Member’s personal life and are unrelated to work, such as mentioning a favorite sports team.
• Other Topics:  These are items that do not fit in the other categories.

To read the full CRS report – Social Networking and Constituent Communications: Members’ Use of Twitter and Facebook – click here (PDF).  For these insights on social networking by Senators and Congressmen, CRS draws on a wealth of data collected by the Lyndon B. Johnson School of Public Affairs at the University of Texas.

The employer mandate – called “shared responsibility” in federal law and IRS rules – imposes penalties on employers if at least one of their full-time employees receives a federal premium subsidy through a Health Insurance Exchange (HIX).  This means that some employers will be subject to the ACA penalties even if they offer health insurance coverage.  The penalties will not apply to employers with fewer than 50 employees or if an employer’s full-time employees are eligible for Medicaid.

The Congressional Budget Office (CBO) projects that employers will pay $130 billion in penalty payments over the first ten years of ACA (2014-2023).  CBO assumes that most employers will offer federally compliant employer-sponsored health coverage and few will drop coverage.  If CBO’s projections turn out to be rosy, federal penalty collections would be much higher than $130 billion.  The penalties will be paid to the IRS.

The Affordable Care Act creates a two-part calculation for determining:

1. Which employers are subject to the penalty.
2. Which employees in a firm are counted for purposes of the penalty.

The two parts of the calculation count part-time and seasonal workers differently, creating confusion for employers.  While counter intuitive, to determine whether an employer has 50 or more “full-time” employees, part-time employees are counted.  But the penalty, if applicable, is levied only on the basis of full-time employees (i.e., those working at least 30 hours a week on average).  Even then, there are nuances in the rules regarding seasonal works, new employees, and so forth.

To avoid the penalty, employers must also offer full-time employees with health insurance coverage that is both adequate (coverage all services in the federally-mandated essential health benefit package) and affordable (the employee’s share of costs is less than 9.5 percent of their income).

Potential Employer Penalties Under the Affordable Care Act

The ACA employer mandate, the penalties, key definitions, and implementation issues are detailed in a helpful new report by the Congressional Research Service (CRS), which is part of the Library of Congress.

The CRS briefing paper, written for Members of Congress, House and Senate Committees, and Congressional staff, describes:

Employer penalty calculations, including:

• Employers subject to the penalty.
• Amount of ACA tax penalties for employers.
• Penalty for employers not offering health insurance coverage.
• Penalty for employers offering health insurance coverage.

Implementation issues regarding the ACA employer mandate, including:

• Coverage requirements for employers, including definitions of dependent coverage, affordable coverage, and adequate coverage.
• Determination and potential application of employer penalty for different categories of employees.
• Definition of key terms such as employer, full-time employee, part-time employee, seasonal worker, variable hour employee.
• Methodology to determine full-time status of an employee (i.e., time frames, on-going employees, new employees reasonably expected to work full-time, and variable hour and seasonal employees).
• Effective dates for the ACA employer penalty.
• Reporting and other requirements for employers under the Affordable Care Act.

It is, of course, very important for every employer to consult with their health benefits advisers, legal counsel, actuaries, and tax experts to understand the requirements, options, and implications for company finances; employee wellness, retention, and recruitment; and company public relations.

To read the 18-page briefing on the ACA employer mandate and associated penalty, click here (PDF).

Feel free to explore my other blog posts on employer health care issues or the Affordable Care Act and health reform.