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Health Care Reform Memo:
July 1, 2013

Deloitte Center for Health Solutions publication


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The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the administration and implications for the C-suite and various stakeholder groups.
 

My take: Connecting the dots: costs and value to consumers 

From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

While the Supreme Court’s end of session rulings seemed to dominate the headlines last week, economic news was nonetheless notable: adjusted for spending, the U.S. gross domestic product (GDP) of our economy last quarter grew at an annual rate of 1.8 percent, below earlier Commerce Department expectations of 2.4 percent.

The analysis that followed explained that lower than expected spending by consumers in several categories—including health care—explained the lower growth. While consumers were spending more than in previous months for cars and housing, they were spending less on health care and education. While the Department’s data showed consumer spending up 0.3 percent in May and income up 0.5 percent, other economic indicators were less optimistic: at the halfway mark of 2013, the Dow was up 14 percent, but down 1.4 percent in June. And last month, the Federal Reserve announced its intent to slow down its quantitative easing program in the last half of the year, which many conclude might lead to higher interest rates and perhaps a moderate increase in inflation.

What does all this mean in health care? We are a capital intense industry. All of our sectors purchase goods and services on credit, borrow money for growth, or invest from earnings. The economic environment ahead might mean costs of capital increase, possibly pinching margins. But that’s the normal course of business for stakeholders in health care: our CFOs are constantly evaluating capital requirements and sourcing to optimize returns and COOs are vigilant about supply chain and labor costs to minimize unnecessary spending. Ultimately, the system passes through its costs to consumers—through higher costs in insurance premiums and out-of-pocket costs, through costs embedded in the price of every product we buy and indirectly in the taxes we pay for government programs.

Since assuming the leadership of the Center for Health Solutions in 2006, studies of consumers’ opinions about health costs and analysis of their spending patterns have been a central focus of our research. And in that time frame, not much changed:

Costs are largely unknown to consumers. They understand what they pay out-of-pocket as co-pays and deductibles and what they pay at retail for over-the-counter products and little more. And for those in the military where co-pays and deductibles are rare and those lacking insurance coverage, even less so.

When all costs of health care are accounted for—including things like supervisory care services for family members and other expenses not usually included in the industry’s calculations—we spend $10,392 per capita for health care in the U.S. and total out-of-pocket costs represent $404 billion1. And the majority of consumers consider the system wasteful, inefficient and difficult to navigate.2

So as we enter the last half of the year and carefully navigate the myriad of issues related to the implementation of the Affordable Care Act (ACA), budgetary constraints are likely and consideration of the industry’s costs and the relationship to value proposition, must be front and center in every sector.

Ultimately, the winners in our industry will be those that see—and effectively pursue—a clear correlation between their role and the delivery of value to consumers.

I closed the 2008 Survey of U.S. Health Consumers with a statement that rings true today: “They are neither `patient’ nor patients. They are consumers.”

Paul Keckely
Paul Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

Sources:
1 The hidden costs of U.S. health care: Consumer discretionary health care spending, Deloitte Center for Health Solutions, December 2012
2 Deloitte Surveys of U.S. Health Consumers (2008-2012), Deloitte Center for Health Solutions

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Implementation 

Poll: 43 percent of uninsured population unaware of ACA’s individual mandate 

  • 81 percent of all respondents (insured and uninsured) are aware of the ACA provision requiring most people to buy health insurance or pay a fine.
  • 43 percent of the uninsured population is unaware that they must acquire health insurance or pay a fine starting January 1, 2014.
  • 75 percent of all respondents claim they are at least somewhat familiar with the ACA, with insured individuals being more knowledgeable than uninsured individuals: 77 percent vs. 65 percent, respectively.
  • 43 percent of the uninsured population reported not having health insurance because it was too expensive.

(Source: Gallup telephone poll of 2,048 U.S. adults conducted June 20-24, 2013)

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Federal hub readiness focus of committee request 

Friday, House Ways and Means Committee Republicans asked U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius to brief the committee on the ACA’s federal data hub—the computer network that pulls information from the Internal Revenue Service (IRS) and other government agencies to verify whether individuals are eligible to shop on the health insurance exchanges (HIXs) and whether they qualify for insurance subsidies or Medicaid. They also requested information about how the hub will protect against breach of personal health information. They asked the Secretary to report back to the committee by July 12, 2013.

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HHS: 120 issuers apply for FFEs 

Last Tuesday, Gary Cohen, Director of HHS’ Center for Consumer Information and Insurance Oversight (CCIIO) reiterated that HHS is reviewing health plans offered by 120 issuers for the federally-facilitated exchanges (FFEs) that will open for enrollment October 1. The review process involves ensuring each applicant meets ACA qualifications for coverage of essential health benefits, actuarial value, network adequacy and nondiscriminatory benefit designs for people with medical problems.

Seventeen states and DC are creating their own state-based exchanges and these states are reviewing plans on their own timelines. Seven states are involved in state-partnership marketplaces, in which the states review plans or conduct consumer assistance functions, or both. The remaining 26 states will have full FFEs.

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CMS: $290 million cut to home health agencies in 2014 

Last week, the Center for Medicare & Medicaid Services (CMS) released a 123-page proposed rule with updated payment rates for home health agencies for calendar year (CY) 2014, per Section 3131 of the ACA. The goal: to adjust payments to more accurately reflect the “cost” of delivering home health services, resulting in a $290 million reduction in funding. The rule includes rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit rates and the non-routine supplies conversion factor and addresses ICD-10 implementation and various other updates. Comments on this proposed rule will be accepted until August 26, 2013.

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Final rule on preventive health services requirements for religious employers release 

Friday, the U.S. Department of Treasury, U.S. Department of Labor and HHS issued a 110-page final rule on preventive services that must be covered with no cost-sharing by group health plans and health insurance issuers.

Important dates: group health plans and health insurance issuers must be compliant for plan years beginning on or after January 1, 2014. The amendments made to the religious employer exemption apply to group health plans and health insurance issuers on or after August 1, 2013.

Highlights:

  • Definition: “religious employer” simplified and clarification provided on which employers are exempt from the requirement to cover contraceptive services (primarily houses of worship).
  • Other organizations, such as non-profit religious organizations, including religious hospitals and institutions of higher education, “will not have to contract, arrange, pay for or refer contraceptive coverage to which they object on religious grounds, but such coverage is separately provided to women enrolled in their health plans at no cost.”
  • “With respect to an insured health plan, including a student health plan, the non-profit religious organization provides notice to its insurer that it objects to contraception coverage. The insurer then notifies enrollees in the health plan that it is providing them separate no-cost payments for contraceptive services for as long as they remain enrolled in the health plan.”
  • “With respect to self-insured health plans, the non-profit religious organization provides notice to its third party administrator that [it] objects to contraception coverage. The third party administrator then notifies enrollees in the health plans that it is providing or arranging separate no-cost payments for contraceptive services for them for as long as they remain enrolled in the health plan.”

Related: Thursday, the Colorado 10th Circuit District Court of Appeals ruled that Hobby Lobby is entitled to request a preliminary injunction to avoid fines for not complying with the ACA’s employer requirement to cover contraceptives under its group health insurance policy per the Religious Freedom Restoration Act and the Free Exercise Clause and that the Anti-Injunction Act does not apply to the case. The judges did not grant Hobby Lobby a preliminary injunction but remanded the case back to the lower court suggesting this course of action. On Friday, Oklahoma-based federal district court ruled that Hobby Lobby would be protected from complying with the law and issued a temporary restraining order until another hearing can be held to determine a more permanent solution.

Background: the retailer announced it will not cover contraceptive services for employees after a Supreme Court decision not to block the contraceptive coverage requirement. Beginning July 1, 2013, a penalty will be assessed for employers who do not cover contraceptives.

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HHS goal for HIX coverage: 7 million by March 2014 

Last week, HHS Secretary Sebelius announced the goal for this year’s open enrollment period (from October 2013 to March 2014) is that 7 million people gain insurance coverage through HIXs. HHS has launched several consumer education tools to increase awareness of the new health insurance opportunities established by the ACA. Efforts include the launch of a new healthcare.gov website and call center, which went live last Monday and partnerships with prominent national organizations.

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HHS finalizes HIX rule 

Last week, CMS issued a 139-page final rule covering eligibility for exemptions and “miscellaneous” minimum essential coverage provisions taking effect August 26, 2013. Notable changes from the proposed rule:

  • Hardship exemption: in certain circumstances, individuals will not be required to purchase health insurance coverage in 2014. The hardship exemption applies to individuals with such low incomes that no comprehensive coverage will be affordable; individuals ineligible for Medicaid due to their state’s decision not to expand eligibility; individuals that have been determined to be eligible for affordable self-only employer-sponsored coverage, but employer-sponsored family coverage is unaffordable; Indians who are eligible for services through an Indian health care provider; and individuals that face other circumstances that prevent them from obtaining coverage under a qualified health plan on a case-by-case basis.
  • Role of IRS vs. HIX: exemptions for people who are not lawfully present in the U.S., with a household income below the filing threshold, who cannot afford coverage and/or those who experience a short insurance coverage gap will only be available through the federal tax filing process. Religious conscience and most hardship exemptions are available only through HIXs.
  • Minimum essential coverage will also include: self-funded student health coverage and state high-risk pools for plan or policy years that begin on or before December 31, 2014, after which sponsors of such plans may apply to be recognized as minimum essential health coverage; Refugee Medical Assistance; Medicare Advantage (MA) plans; and any additional coverage that is designated by HHS in future rulemaking. Minimum essential coverage does not include coverage that is only for vision care or dental care, workers’ compensation, or coverage for a specific disease or condition.

The IRS also published a notice on eligibility for specific types of minimum essential coverage and outlines requirements that other types of individual coverage must meet to qualify. Highlights:

  • Employees and dependents who choose to wait until the 2014-2015 plan year to enroll in coverage will not be subject to the shared responsibility provision for the months in 2014 that are part of the 2013-2014 plan year.
  • Individuals are considered eligible for the following minimum essential coverage only if they are actually enrolled: Medicare Part A coverage requiring a premium, state high-risk pools, student health plans and certain TRICARE programs.
  • An individual subject to a waiting period before he or she can enroll in the Children’s Health Insurance Program (CHIP) is not treated as eligible for CHIP and therefore may receive a premium tax credit.

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CMS delays face-to-face requirement for DME 

CMS delayed the requirement by 90 days that patients must have a face-to-face meeting with a physician or physician’s assistant prior to receiving durable medical equipment (DME) (Section 6407 of the ACA). Even though most physicians and medical equipment suppliers have no issues conforming to the policy, the new October 1 deadline will give extra time to physicians and medical suppliers who still need to establish protocols for compliance.

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CMS launches a redesign of the Physician Compare website 

Last week, in compliance with ACA specifications, CMS launched a redesigned Physician Compare website aimed at increasing functionality and usability, improving accuracy of the database, better assisting users in making informed health care decisions and setting the stage for future quality measures. Notable change: an “Intelligent Search” function that uses a variety of databases to expand consumer search options about physician performance and characteristics.

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ACOs considering moving from the Pioneer Program to Medicare Shared Savings Program 

According to Inside Health Policy, up to five Pioneer Accountable Care Organizations (ACOs) are considering switching to the Medicare Shared Savings Program (ACA Section 3022) and ten of the 32 Pioneers are considering dropping out of the demonstration altogether because of disagreement over the quality metrics used to evaluate performance.

For more information on ACOs, see the June 17, 2013 Monday Memo on Health Care Reform.

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Legislative update 

FDA tackles tobacco products, food safety, counterfeit drug websites

Tobacco product oversight  

Last week, the U.S. Food and Drug Administration (FDA) exercised its authority to regulate tobacco products for the first time, approving two products that “do not raise different questions of public health” and denying four products based on the fact that they were not “substantially equivalent to a predicate product already on the market.”

Background: under the Family Smoking Prevention and Tobacco Control Act of 2009, a new tobacco product can be marketed if it is “substantially equivalent” to another product on the market. If substantial equivalence is not met, the FDA may deny the marketing of the product, as the role of the FDA is to ensure that the new product does not increase risk to the public’s health. However, the law states that a finding of substantial equivalence does not mean “that the product is safe or safer than its predecessor product, or less harmful in general.” Substantial equivalence does not mean that companies may label their products as FDA-approved.

ACA Section 1201 allows insurers in the individual and small group markets to increase tobacco users’ premiums by 50 percent over non-users. For family coverage under a group health plan or health insurance coverage, the tobacco rating varies based on the portion of the premium that is attributable to each family member covered under the plan or coverage. The advanced premium tax credit (APTC) calculation for low income purchasers does not apply to premium tobacco surcharges. According to a 2011 survey from the Centers for Disease Control and Prevention (CDC), 9 percent of adults ages 18 and over were current cigarette smokers, 21 percent were former smokers and 60 percent had never smoked more than 100 cigarettes in their lifetime. Among adults under age 65, 16 percent with private health insurance coverage were current smokers compared with 32 percent who were uninsured and 34 percent who had Medicaid health care coverage.

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Federal court gives FDA timeline to finalize food safety laws 

Last Friday, a federal court gave the FDA two years to finalize several key food safety laws, including preventive controls, produce safety, foreign supplier verification, food facility registration and third-party accreditation (to assure neutrality of audits). The FDA must publish all of the rules by November 30, 2013 and finalize the rules by June 30, 2015. The Center for Food Safety (CFS) filed a lawsuit last year against the FDA due to the agency’s missed and inadequate deadlines for writing food safety rules, as mandated by the Food Safety Modernization Act (FSMA). CFS cited seven rules the FDA failed to release.

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FDA shuts down counterfeit websites 

Last week, the FDA announced it had shut down 1,600 online websites that sell counterfeit drugs and issued warning letters to others that operate copycat sites appearing to represent major retailers.

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Other Legislative updates

SGR repeal update: House introduces draft legislation 

Friday, the House Energy and Commerce Committee released draft legislation to repeal the sustainable growth rate (SGR) formula used by Medicare to reimburse physicians, replacing it with a system based on quality measures and fee-for-service (FFS).

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Retailers push for ACA employer mandate delay, change in definition of “full-time worker” 

Last week, in a House Committee on Energy and Commerce hearing, the National Retail Federation (NRF) urged Congress to delay ACA employer requirements set to take place January 1, 2014 at least one year and revise the definition of a full-time worker from 30 hours to 40 hours per week. NRF Vice President Neil Trautwein’s testimony expressed concern with new requirements for employers to “look-back” over the previous year to determine a part-time and variable hour employee’s average hours per week, stating that retail and chain restaurants will be forced to spend more time, effort and money on compliance rather than sales.

Background: an employer with at least 50 full-time employees or a combination of full-time and part-time employees that is equivalent to at least 50 full-time employees (e.g., 100 half-time employees equals 50 full-time employees) falls under Employer Shared Responsibility provisions established by ACA Section 1513. A full-time employee is an individual employed on average at least 30 hours per week (thus, half-time would be 15 hours per week). According to recent reports, part-time employees make up 23 percent of the total workforce in the U.S., with 15 percent being eligible for benefits; 68 percent of the total full-time workforce is covered by their employers’ health plans vs. 8 percent of part-time employees. For more information on employer opinions regarding the ACA, please see the Deloitte Center for Health Solutions’ 2012 Survey of U.S. Employers.

(Source: ADP Research Institute, “ADP’s 2012 Study of Large Employer Health Benefits: Benchmarks for Companies with 1,000+ Employees,” 2013)

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Immigration legislation passes in the Senate 

Thursday, the Border Security, Economic Opportunity and Immigration Modernization Act passed in the Senate 68-32. The 1,200-page bill doubles U.S. Border Patrol agents to 40,000, requires 700 miles of fencing and other radar detection along the Mexican border and costs $50 billion. Employers are required to check the legal status of job applicants through the government’s E-Verify system and immigrants could receive permanent residency status or U.S. citizenship after a 13-year period after fines and back taxes are paid. They would not qualify for any means-tested federal programs, including Medicaid, CHIP, Social Security, etc. during this period.

For more background information about the immigration legislation and its impact on the U.S. health care system and costs, see the June 24, 2013 Monday Memo on Health Care Reform.

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Health care legislation introduced last week 

  • Representative Devin Nunes (R-CA) introduced legislation (H.R. 2500) proposing to modernize payments for ambulatory surgical centers under the Medicare program.
  • Representative Jim McDermott (D-WA) introduced legislation (H.R. 2499) proposing to extend the exclusion from gross income for employer-sponsored health coverage for employees’ spouses and dependent children to coverage provided to other eligible designated beneficiaries of employees.
  • Representative Ami Bera (D-CA) introduced legislation (H.R. 2484) proposing to provide incentives to physicians to practice in rural and medically underserved communities.
  • Representative John Conyers (D-MI) introduced the Nurse and Health Care Worker Protection Act of 2013 (H.R. 2484) proposing to establish a safe patient handling, mobility and injury prevention standard.
  • Representative Lois Capps (D-CA) introduced legislation (H.R. 2477) proposing to provide coverage of cancer care planning and coordination under the Medicare program.
  • Senator Mark Kirk (R-IL) introduced legislation (S. 1220) proposing to preserve access to rehabilitation innovation centers under the Medicare program.
  • Representative Greg Walden (R-OR) introduced legislation (H.R. 2504) proposing to ensure more timely access to home health services for Medicare beneficiaries under the Medicare program.

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State update 

State round-up: Medicaid 

To date, 23 states and DC have said they will or are likely to expand their Medicaid programs; 23 states have indicated they will not expand their programs in 2014:

Expected to expand Medicaid Will not expand Maybe
AR, AZ, CA, CO, CT, DC, DE, HI, IA, IL, KY, MA, MD, MN, ND, NJ, NM, NY, NV, OR, RI, VT, WA, WV AL, AK, FL, GA, ID, IN, KS, LA, ME, MO, MS, MT, NC, NE, OK,SC, SD, TN, TX, UT, VA, WI, WY MI, NH, OH, PA

Democratic Governor Republican Governor Independent Governor

Sources: NASHP. Updated June 27, 2013.

  • Last Thursday, California Governor Jerry Brown (D) signed Medicaid expansion into law. Up to 2.5 million individuals will be eligible to enroll in Medicaid under expansion; 1.8 million are projected to enroll.
  • June 24, Arkansas’ Department of Human Services released a draft of the waiver request the state will submit to HHS to move forward with the state’s Medicaid “private option” for expansion. The state Legislature approved the plan in April, but Arkansas must have federal approval before proceeding. The state’s waiver proposal, if approved, will allow the state to use premium assistance to purchase health insurance coverage through the HIX for eligible Medicaid beneficiaries. Federal approval for this waiver depends on the cost saving potential of the private option compared to traditional Medicaid expansion.
  • The Mississippi House and Senate have rejected Medicaid expansion, but the legislature and Governor plan to reauthorize the existing Medicaid program—set to expire today. Expansion would have added about 300,000 new residents to the current 700,000 Medicaid recipients in the state.

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State round-up: HIX 

Seventeen states—12 led by Democratic governors, four led by Republicans and one Independent—and the Democratic mayor of DC have announced plans to operate state-based exchanges. Seven states—five led by Democratic governors and two led by Republicans—will participate in state-partnership exchanges. The remaining 26 states will default to a federally-facilitated exchange.

State-based exchange State- partnership exchange Federally- facilitated exchange
CA, CO, CT, DC, HI, ID, KY, MA, MD, MN, NM**, NV, NY, OR, RI, UT*, VT, WA AR, DE, IA, IL, NH, MI, WV AK, AL, AZ, FL, GA, IN, LA, KS, ME, MO, MS, MT, NC, ND, NE, NJ, OH, OK, PA, SC, SD, TN, TX, VA, WI, WY

Democratic Governor Republican Governor Independent Governor

*Individual market will be a federally-facilitated exchange; small business health options program (SHOP) will be a state-based.

**Feds will help run the individual market in 2014.

Source: HHS

  • Rhode Island announced 2014 premium rates for plan years beginning January 1, 2014 ranging from $311.68 per month to $313.85 per month in the individual market and from $324.58 per month to $371.41 per month in the small group market. Four carriers will be participating in the state-based HIX: two carriers will be participating in the HIX individual market and all four in the HIX small group market.
  • Massachusetts will be submitting a waiver to HHS to request exemption from the ACA’s health insurance market rating requirements. State officials are concerned that the requirements in the ACA will be disruptive to the market reforms the state implemented beginning in 2006. Specifically, state lawmakers are concerned that the rating rules would increase premiums by over 50 percent.

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State round-up 

  • Louisiana has one of the worst dentist shortages in the country, according to a study released by the Pew Charitable Trusts on June 25. The underserved population for dental care in the state is more than 24.4 percent of Louisiana’s population; Mississippi ranked number one for the largest population underserved by dentists, with Louisiana and Alabama tied at second. In 2011, 48.4 percent of Medicaid-enrolled children did not receive dental care in Louisiana. To compound the problem, on July 1, the state plans to cut its Medicaid reimbursement rates for dentists by 3 percent, decreasing payments by $2.8 million. Nearly 42 percent of the state's dentists are over 55 years old.
  • On June 24, the California Senate Committee on Appropriations unanimously approved a bill proposing to increase transparency and accountability for the state's Department of Health Care Services (DHCS). The bill (AB 209) is aimed at matching the oversight levels that exist for the Managed Risk Medical Insurance Board with the oversight for DHCS. The author of the bill, assembly member Richard Pan (D-Sacramento), believes DHCS can use existing funding to create transparency measures that will lead to increased efficiency and cost savings in the long run. DHCS runs the state's Medi-Cal managed care plans and policy experts believe this bill will help the state examine Medi-Cal's enrollment gaps and avoidable costs.
  • The Oregon House passed legislation (SB 604) on June 24 that creates a one-stop, on-line credentialing verification system that will share information about providers with insurers, hospitals and coordinated care organizations. The Senate passed the bill earlier in month and awaits Governor John Kitzhaber's (D) approval. If signed into law, this system will be the first in the country. The system is estimated to save the state up to $150 million in administrative waste. The Oregon Health Authority will have until January 1, 2016 to launch the database. Funding for the system will come from user fees and the system will be administered by the state agency. A similar bill (HB 2020) would require coordinated care organizations to adopt a single credentialing process for mental health providers.
  • Parents in Oregon who choose not to vaccinate their children will be required to watch an educational video on vaccines or visit a doctor in order to allow their kids access to school or daycare. Prior to the new law, parents were only required to sign a form claiming the vaccines violated religious or other beliefs. Last year, just over 6 percent of Oregon kindergarteners had at least one required vaccine exempt, which is the highest rate in the nation and is a result of parents’ concerns with vaccine side effects. This concerns public health experts, who support the new law and hope the video will provide parents with more information. Opponents of the law claim it infringes upon religious freedom. A similar law was enforced in Washington in 2011, resulting in the unvaccinated rate due to religious exemptions falling by nearly 25 percent.

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Industry news 

Supreme Court ruling on Mutual Pharmaceutical v. Bartlett significant  

Last Monday, the Supreme Court ruled 5-4 that federal law pre-empts state law, concluding generic drug manufacturers can’t be held liable for design defect claims.

My take: this ruling adds notable uncertainty to the relationship between generic and branded manufacturer relationships. Pay-to-play agreements, already under scrutiny and related transactions between the sectors, raise risk issues for parties in both sectors.

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Provider consolidation: two deals announced last week 

  • Baylor and Scott & White Healthcare reach merger agreement: the two Texas organizations finalized their merger agreement last week to become the largest not-for-profit system in Texas—$7.7 billion in assets and $6 billion in revenue. Scott & White owns an insurance plan. The deal is expected to close this fall.
  • Tenet-Vanguard: Tenet will purchase the hospitals owned by Vanguard in a $4.3 billion transaction paying $21/share. With Vanguard, Tenet will operate 79 hospitals in 16 states. The deal is expected to close by the end of the year.

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Plan to pay primary care for care coordination 

On July 1, Blue Cross and Blue Shield of Georgia will launch a medical quality incentive plan that pays primary care doctors up to 30 percent more than the defined reimbursement for quality and care coordination. The incentive pay program will initially include more than 250 physicians serving 58,000 patients in four cities, with the possibility it will expand state-wide.

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Clinical trial subject recruitment challenging 

Per a poll sponsored by Research America, the Association of Clinical Research Organizations, the Clinical Research Forum, Friends of the National Library of Medicine and the Clinical Trials Transformation Initiative:

  • 72 percent of U.S. adults say it’s likely they’d participate in a trial if recommended by their doctor, but only 22 percent said their doctor has ever mentioned the possibility.
  • Consumers are unclear about the value of clinical research to drug discovery.

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Resident training rollout starts; “July effect” focus 

The first phase of the Accreditation Council for Graduate Medical Education Next Accreditation System rollout will be in place for seven residency specialty areas next month. It requires institutions to monitor resident competency in the following factors: patient care, medical knowledge, practice-based learning, systems-based learning, professionalism and communication. If successful in the pilot phase, it will be used with the remaining 19 specialty programs. Notably, a key focus in implementing the new competence-monitoring program is to reduce the turnover of residents in July which, per an Annals of Internal Medicine study last year, was associated with higher mortality and lower quality in teaching hospitals.

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Drugstore chain announces retail clinic deal 

Walgreen Co. announced a new clinic adjacent to Johns Hopkins East Baltimore medical campus. Deerfield, Ill.-based Walgreen operates clinics in 20 states and DC.

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New delivery system research journal launched 

Health Care: The Journal of Delivery Science and Innovation launched last month under Editors in Chief Amol Navathe, MD, Ph.D. and Sachin Jain, MD, MBA—both Harvard faculty. The initial issue focus is payment reform.

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Quotable 

“It appears we are much more willing to share personal information with banks than our doctors. About 87 percent of Americans are willing to share personal financial details with their financial institutions, but only 58 percent are willing to share personal medical details with their doctors...We apparently aren’t that forthcoming with our doctors, a finding that’s really not shocking, if you think about it. Only 56 percent of the survey’s respondents are willing to share family history and only 51 percent were willing to offer details about diet or exercise.”

—Mark Veverka, “Unplugged: Who's got your personal data?” USA Today, June 25, 2013, global survey of 5,000 adults conducted by Infosys

“Look for employer health care costs to climb by about 6 percent next year. The hike would be even bigger, 8 percent or so, if employers didn’t plan changes to trim costs…Three percentage points of the hike result from changes in the health law: increased enrollments, a new $63-per-worker reinsurance fee and the likelihood of higher premiums charged by insurers as they seek to offset their own higher costs. And even steeper climbs are in the offing for some industries, with retail, hotel and restaurant employers hit hardest. One reason: the January 1 expiration of a waiver allowing them to offer workers minimal-benefit plans…mini-med plans. Another: these industries rely heavily on part-time employees typically not eligible for coverage. But the law extends coverage to all putting in 30 hours or more a week.”

—The Kiplinger Letter, April 26, 2013

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Fact file 

  • Meaningful use: 77 percent of hospitals and 55 percent of office-based physicians have adopted electronic medical records; $14.6 billion of $22.5 billion allocated has been spent from the American Recovery and Reinvestment Act health information technology (HIT) fund. (Source: HHS)
  • Observation stays in hospitals: observation services for more than 48 hours: 3 percent of Medicare enrollees in 2006 vs. 8 percent in 2011; CMS proposed that admissions that are reasonable should be coded as admissions and therefore means Medicare would spend $220 million more annually due to the higher cost for admissions. To offset, it is proposing a 0.2 percent cut to inpatient payments in 2014. (Source: CMS Health Indicators Warehouse)
      Observation cases/1,000 Medicare beneficiaries Admissions/1,000 Medicare beneficiaries
    2007 26 338
    2011 33 312
  • C-section rate: the C-section rate settled in at 31 percent from 2009-2011—down from 33 percent from 1996-2009. (Source: CDC)
  • Hospital uncompensated care: $3.9 billion in 1980 to $41.1 billion in 2011; ranging from 5.1-6.4 percent of total expenses per each year 1980-2011. (Source: AHA, “Uncompensated Hospital Care Cost Fact Sheet,” January 2013)
  • System ACO participation: 60 percent of multi-hospital systems elected not to pursue ACOs due to risk. (Source: Modern Healthcare survey of 150 multi-hospital systems representing 2,245 hospitals and 68,000 employed physicians)
  • Jobs: 38,000 additional health information technicians will be needed from 2010-2020, a 21 percent increase; number of certified coding professionals: 40,000 in 2008 (average salary $43,100) to 90,000 in 2013 (average salary $47,796). (Source: U.S. Department of Labor)
  • High-deductible plans: 19 percent of workers with health insurance have high-deductible plans—up from 4 percent in 2006. (Source: Kaiser Family Foundation)
  • Obesity: 28.9 percent of adults 20 or older in 2012 vs. 19.4 percent in 1997; up 0.2 percent from 2011 to 2012. (Source: CDC)
  • Young invincibles: 27 percent of the targets for expanded coverage—young invincibles—do not use traditional banking services or other means whereby exchanges could verify eligibility for subsidies. (Source: John Graves, Department of Health Policy, Vanderbilt University)
  • Out-of-pocket costs: consumers pay 23.6 percent of the amount insurers pay physicians; AMA estimates automating the claims processing and payment systems would save $12 billion annually—21 percent of the administrative costs of the practice. (Source: AMA 2013 National Health Insurer Report Card)
  • Global population: world population will increase from 7.2 billion in 2013 to 9.6 billion in 2050; more than half of its growth will be in African countries. (Source: United Nations, “World Population Prospects: The 2012 Revision,” June 13, 2013)
  • Global economy: 73 of the world’s 500 largest companies based on revenues were Chinese—second only to 132 U.S. firms. (Source: Fortune)

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