Actuarial Value: What Does It Mean?

Actuarial value is a term that has been frequently used in connection with health plans on the the federal and state exchanges. Let's take a minute to understand the term as a way to better understand the health reform law.

Actuarial value refers to the share of health care expenses the plan covers for a typical group of enrollees. The four tiers of health plans established by the ACA - bronze, silver, gold, and platinum - are based on the concept of actuarial value.  Each represents a different level of health insurance coverage. Thus, a platinum plan covers the greatest share of enrollees' medical expenses overall, while a bronze plan covers the least.

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For example, in a bronze plan, 60% of an individual's health care expenses are paid for by the plan.  The individual will then be responsible for 40% of expenses through some combination of deductibles, co-pays, and coinsurance, collectively called "cost-sharing."  The higher the actuarial value, the less patient-cost-sharing the plan will have on average.

The levels of coverage provided by the ACA are key to each individual's coverage and how each will perceive the effects of health care reform. 

For an estimate of deductibles and coinsurance that would meet the tier thresholds defined in the ACA, please visit this study by the Kaiser Family Foundation.  It explains the the coverage tiers established in the ACA, presents the actuarial estimates from thee well-established actuarial and benefits consulting firms, and discusses the potential policy implications.

Health Care Reform Propels Shift in Mental Health Business Model

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By now, many patients may have noticed a change in their doctors' offices. Perhaps you've been asked to sign new confidentiality agreements, or maybe your doctor moved into a larger office with more providers. The phenomenon of large provider groups gobbling up small health care provider practices has arrived, and it's having an especially significant effect on mental health providers. 

Psychiatrists and psychologists are feeling a loss of autonomy, as their patients and schedules are now being chosen and managed by larger institutions.  In some cases, these providers are also taking significant cuts to their paychecks.  Blue Shield of California, for instance, recently asked psychologists on their plans to accept anywhere from a 10- to 30- perfect discount for patients who will buy health plans through Covered California. (Kaiser Health News, 10/24/13.)

As more and more patients expect their mental health care to be covered by insurance, there may soon be a trend away from smaller practices who may not accept as many insurance plans. As patients

But the shift from solo/small practices toward large medical groups isn't all bad, especially not for patients. 

For patients, it may mean lower prices, especially when for mental health services. Where as patients might have paid $150 out of pocket for a therapy session, those same sessions may now be covered by insurance via the 2008 mental health parity law.  Mental health parity requires private and public insurers to cover mental health needs, if at all, just as they do physical health conditions, such as similar co-pays for for physical and mental health services.

In addition, quality of care has great potential to increase as a result of this shift. For example, mental health providers are becoming increasingly integrated into multidisciplinary practice and health clinics.  When a psychologist or psychiatric nurse practitioner sits alongside internists and pediatricians, a more holistic approach to patient care develops that can cut back on unnecessary tests and treatments, potentially saving money for institutions, as well as patients.

Post-Shutdown Bill Leaves ACA Intact

Two weeks ago, our federal government shutdown on the promise by House Republicans that they would continue to fund the government only if the ACA was repealed. However, the final, bipartisan agreement reached yesterday that brought the federal government shutdown to a close left the ACA fully intact.  Infact, the bill that the President signed into law included just one, relatively small, ACA provision: The legislation calls for new procedures by which HHS must strengthen income verification for individuals applying for federal tax subsidies to help pay for premiums of health plans purchased on the insurance exchanges. 

                                                       

Under the rule, HHS still would require applicants' income be verified against their IRS and Social Security records, and when that cannot be achieved, checked against employer records submitted to Equifax. The rule also allows state exchanges to check a statistically valid sample of applicants in cases where an applicant claims income more than 10% below what IRS and Social Security records show, and where there is no Equifax data ("The Economy Hub," Los Angeles Times, 10/16). 

Despite two weeks of intensive, 24/7 repairs, healthcare.gov remains badly broken.  This is especially problematic for states whose have chosen to let the federal government run their exchanges.  Many media outlets have also reported that the technical glitches associated with open enrollment for state health exchanges may have received more attention if not for the shutdown.  Perhaps now that the government has re-opened for business, the ACA will see the triumphant roll-out many supporters predicted.

Pharmacists Have Expanded Duties in CA

California may have found one solution to the primary-care physician shortage. On October 1, Gov. Jerry Brown signed Senate Bill No. 493 that will expand the ability of pharmacists to serve patients and collaborate with other healthcare providers.  The result will be an increase in access to care and efficiency, as patients without primary-care providers can now receive treatment from their local pharmacist, instead of trying to find a doctor in their network or waiting until their condition worsens to visit the emergency department.

The legislation authorizes pharmacists to administer drugs and routine vaccinations, as well as order and interpret tests to monitor drug therapies.  Advanced-practice pharmacists will gain board recognition to perform additional functions normally performed by a physician or nurse practitioner, such as patient assessments.

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The bill, in its original form, allowed pharmacists to perform these duties without the collaboration of a physician. However amendments were put in place to include integration with a physician and create the advanced-pharmacist designation, with appropriate education and training.

The primary-care provider shortage in California is expected to worsen as the ACA expands coverage to millions of uninsured Californians. The goal of this legislation is to create another avenue of access to healthcare for patients who are unable to access a primary-care provider.

Public Health: How is it Affected by the Government Shutdown?

A special thanks to to Nili Yolin and the American Health Lawyers Association for providing this update. Their alert is posted below:

In the early morning of October 1, the federal government officially went dark. The shutdown came in the aftermath of the Senate's decisive vote to reject a House of Representatives plan that would have kept the government funded for several more months but delayed implementation of key portions of the Affordable Care Act (ACA) for one year.

The impact of the shutdown will be felt across all health care sectors as many federal employees face furloughs of unknown duration. In particular, the U.S. Department of Health & Human Services (HHS) announced in its Contingency Staffing Plan (Plan) that more than half of its employees will be furloughed. HHS' Plan is based on federal guidance that allows agency programs to continue only if they either do not rely on annual appropriations, or they involve the safety of human life or the protection of property.¹ According to HHS, the following programs and services will continue:

• Funding for Medicaid and the Children's Health Insurance Program will continue uninterrupted because funding has already been set aside for these programs;
• Funding for Medicare will likewise continue uninterrupted but only in the short term. If the political impasse stretches beyond several weeks, the program could be disrupted by the reduction in HHS staff;
• The Centers for Medicare & Medicaid Services (CMS) will continue to implement the ACA, "including coordination between Medicaid and the Marketplace, as well as insurance rate reviews, and assessment of a portion of insurance premiums that are used on medical services";²
• State and federal health insurance exchange programs will open as planned, though it is not clear how the information technology (IT) that underpins the exchanges will function since they are operated by government contractors;³
• The National Institutes of Health (NIH) will continue to provide patient care for current NIH Clinical Center⁴ patients;
• The U.S. Food and Drug Administration (FDA) will be able to operate only for "vital activities" such as high-risk recalls and other "critical public health issues";
• The Substance Abuse and Mental Health Services Administration will continue programs such as the Suicide Prevention Lifeline using the balance of available grants; and
• Other programs supported through mandatory funding such as the Centers for Disease Control and Prevention (CDC) Global HIV/AIDS Program will continue.

However, several programs important to public health will be disrupted if a congressional compromise cannot soon be reached. For example:

• Outside of matters related to "imminent threats to the safety of human life or protection of property," CMS, FDA, NIH, and other federal agencies will not publish regulations or other guidance during the shutdown;
• CMS will not fund task forces that work to prevent health care fraud and abuse, and will scale back on Medicare provider audits;
• The CDC seasonal influenza program, which tracks flu outbreaks and certain infectious diseases, will come to a halt;
• No action will be taken on any grants related to medical research, improvement of the health care system, and monitoring of substance abuse programs;
• No new patients will be admitted to the NIH Clinical Center. NIH-funded researchers may continue to work for as long as their money holds out but additional funds will not be released during the shutdown; and
• FDA will not be able to support much of its food-safety activities, such as routine inspections and public notification programs. FDA's laboratory research and some compliance and enforcement activities will be suspended.

Although providers can take comfort in the fact that Medicare and Medicaid program reimbursement will proceed, a government shutdown for any period of time beyond three or four weeks could impede certain critical administrative functions, such as Medicare claims processing, and therefore impact their pocketbooks. Likewise, while substantial ACA implementation will continue, long-term furloughs could affect certain components of the law (such as the exchanges) because they depend on government employees to help run the IT component, among other aspects of the program. Thus, the magnitude of the shutdown's impact will depend on how long it endures.

Too Many Rules for Med Devices?

New rules for medical device makers, both in the U.S. and abroad, may make it more difficult for medical device companies to succeed, some say.

Both Sides of the Aisle Oppose Medical Device Tax

On Capitol Hill, GOP senators are trying to attach a repeal of a medical device tax to a government spending measure.  The repeal is part of an ongoing effort to defund the ACA.  The healthcare law imposes a 2.3% excise tax to help pay for the healthcare overhaul.

Lawmakers on both sides of the aisle express dislike for the tax.  However, it is most unpopular among Republicans in both houses, marked by Sen. Orrin Hatch's (Utah) lively description of the tax a "stupid dumb-ass thing."  Sen. Hatch and other opponents of the tax say it would put tens of thousands of jobs at risk, and hinder the health IT industry that creates pacemakers and artificial hearts. Among the democrats who oppose the tax are Sens. Amy Klobuchar (Minn.), Al Franken (Minn.), Kay Hagan (N.C.) and possibly Whip Dick Durbin - though Durbin would only support a repeal of the tax if it didn't negatively affect the overall funding for the healthcare law.

Supporters of the 2.3% medical device tax argue the healthcare law could eventually offset at least some of the cost of the tax.  As the number of insured grows, supporters say, so would the demand for medical devices and health tech innovation.

EU Rules May Slow U.S. Approvals

The European Parliament will soon vote on new regulations to close loopholes in their medical device laws. Currently, the EU has a much easier process for medical device companies to test their products and accumulate patient data.  It is precisely this simpler process that facilitates faster device approval in the U.S. - health tech companies can more easily gather the data they require in Europe to then get approval in the U.S., the world's most profitable health care market with the most stringent approval process.

The different between the system in the EU and U.S. stems from the government agency that oversees device approvals. In the U.S., the approval process is handled by the Food and Drug Administration.  In the EU, private reviewers known as "notified bodies" are hired by manufacturers to vet products and grant so-called CE marks that allow devices to be sold in the EU.

"If the rest of the world begins to raise the bar of approval to the U.S. level , it will surely damage investment in innovation and patient progress will plateau," said Kevin Sidow, CEO of Moximed of Hayward, CA, whose knee-implant system was approved in Europe.

ACA Could Survive a Government Shutdown

States that run their own insurance exchanges say they expect to be able to function in the face of a federal government shutdown.  
However states whose exchanges are being run by the Feds may not. The possibility of a federal government shutdown became more late last week, when congressional Republicans voted to fund the government but not the implementation of the Affordable Care Act.  Although the Democrat-controlled Senate is unlikely to follow suit, if the two legislative bodies cannot agree on a spending bill by next Monday, the government will shut down on Oct. 1.

While state-run exchanges could continue to operate with state funds and federal grants already paid to them, states are uncertain about whether they will have access to draw-down grants and other grants awarded but not yet deposited in the state's bank account.

The White House Office of Management and Budget (OBM) stated that entitlement programs could continue to run because funding for those programs comes from an "indefinite appropriation."  In other words, there are some permanent programs that do not require annual appropriations from Congress to operate. This was seen during the longest government shutdown, from Dec. 16, 1995 - Jan. 6, 1996, when Social Security continued to operate as a "permanent program."

IMPACT ON ACA'S INFORMATION TECHNOLOGY

One of the major concerns is how a shutdown would affect the IT component of the ACA, called the federal data services hub.  The hub is responsible for shepherding personal information from IRS databases, other federal agencies and private data companies back to the state exchanges to determine eligibility for premium subsidies.

"The OBM says that a contractor responsible for running the IT part of the state exchanges 'may continue to proceed with its work' during a shutdown if the agency they are working for 'already obligated funds representing the entire price under a contract' before the shutdown." (Reuters.)

CMS declined to say whether the IT contracts for Obamacare meet that criterion.

ACA's Contraception Mandate May Be Headed for SCOTUS

Three Circuit Court of Appeals have now weighed in on the Affordable Care Act's mandate for coverage of contraception services.  Under the ACA, employers are required to cover a range of birth control methods on their employee health plans. Currently, explicit exemption from the contraception mandate exists for churches and houses of worship. Employees of such places will, however, be able to obtain birth control directly from their insurance companies.

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Yesterday, the 6th Circuit Court of Appeals upheld the new law in Autocam v. Sebelius, Autocam is owned by the Kennedy family, practicing Roman Catholics, who argued this mandate would violate their religious beliefs. The court sent the case back to the district court with orders to dismiss the company's challenge, stating that Autocam lacked standing to challenge the ACA under the Religious Freedom Restoration Act, as it is a company and not an individual. (A somewhat surprising holding in light of Citizens United.)

This case is just one of several dozens across the country challenging the rule mandating contraception coverage since the regulations were announced in 2011.

In late July, the 10th Circuit Court of Appeals in Denver found an arts and crafts chain, Hobby Lobby, may be exempt from the requirement. Taking the opposite approach one week later, the 3rd Circuit held that a Pennsylvania Mennonite cabinet-making company could not be exempt because corporations cannot exercise religious freedom like a person can.

The difference of opinion could mean the Supreme Court is slated to decide the fate of the mandate.

Confused about Obamacare? Ask your local pharmacy!

Pharmacies across the country are becoming part of the effort to educate the public about the Affordable Care Act.

As part of a partnership between HHS (The Department of Health and Human Services) and Rite-Aid, licensed insurance agents will be available in nearly 2,000 Rite-Aid Stores to give FREE advice about Obamacare.

Agents will provide answers to questions about health benefits under the new law, as well as help people apply for coverage, financial assistance, or Medicaid coverage starting October 1 - the first day of open enrollments on health insurance exchanges.

Other U.S. pharmacy chains have also announced their plans to help provide health insurance enrollment.

• CVS Caremark will provide free health insurance enrollment at its stores.

• Walgreens has teamed up with Blue Cross/Blue Shield to promote the new healthcare law benefits.

• SoloHealth, which operates more than 3,200 digital health screening kiosks in Walmart, Sam's Club, and Safeway, announced Monday that it now includes information about the new healthcare law on it's screens.

• Winn-Dixie Pharmacy, Thrift White Pharmacy, and BI-LO Pharmacy will also help customers learn about Obamacare.