Health Affairs, the nation’s leading peer-reviewed health policy journal, is focused on the intersection of health, health care, and policy. Its mission is to serve as a high-level, nonpartisan forum to promote analysis and discussion on cost, quality, and access in the health arena.
In 2012, the American Board of Internal Medicine (ABIM) Foundation, in partnership with Consumer Reports, founded the Choosing Wisely® campaign, to raise awareness among physicians and patients about avoiding unnecessary tests, treatments, and procedures. The Institute of Medicine estimates that up to 30 percent of care in the United States is waste. At the campaign’s five-year mark, Health Affairs is releasing two articles on what has and has not been accomplished in this effort. Both studies will also appear in the journal’s November issue.
Valuable For Providers Who Knew About It, But Awareness Remained Constant
In this study, the authors evaluated telephone surveys of physicians, administrated in 2014 and 2017 by ABIM to examine physicians’ attitudes toward and awareness of the use of low-value care. The share of physicians who were aware of the Choosing Wisely campaign increased a modest 4 percentage points, from 21 percent to 25 percent. Respondents found the campaign materials helpful to physicians (81 percent in 2014 and 86 percent in 2017). However, that did not deter physicians from ordering unnecessary tests, with the most common justification identified in the 2017 survey being malpractice concerns (87 percent of respondents). “The discrepancy between the proportion of physicians who report that defensive medicine is a barrier to reducing the use of low-value care and empirical research that finds little evidence of the practice of defensive medicine deserves further investigation,” the authors conclude. “Multifaceted interventions that reinforce the Choosing Wisely guidelines through personalized education, continued follow-up, and tailored feedback will be necessary to overcome the substantial perceived and real barriers to reducing the use of low-value care.”
The authors, Carrie Colla and Alexander Mainor, are affiliated with the Dartmouth Institute for Health Policy and Clinical Practice, Geisel School of Medicine, Dartmouth College.
This study was supported by the ABIM Foundation and Agency for Healthcare Research and Quality (AHRQ).
How To Fulfill The Promise In The Next 5 Years
In this analysis, the authors discuss the Choosing Wisely® campaign’s accomplishments over the past five years and summarize what steps could fulfill its promise. They take note of movement’s growth since its founding, with seventy new societies signing on, ; more than 400 recommendations issued, and a steady increase in the number of studies testing interventions to reduce low-value care (see the exhibit below).
Exhibit 1: Cumulative Numbers Of Choosing Wisely Participating Societies, recommendations, And Published Articles On Interventions To Reduce Low-Value Care, 2012–16
Source: Authors’ analysis of information from Daniel Wolfson (ABIM Foundation, personal communication, June 29, 2017) and Jennifer Maratt (University of Michigan and Veterans Affairs Ann Arbor Healthcare System, personal communication, July 24, 2017) and of data on articles from PubMed and the Web of Science.
To better implement Choosing Wisely recommendations, the authors suggest new interventions, such as more consistently targeting the drivers of different types of low-value service utilization. They also suggest that more rigorous study designs are needed, to better explicate interventions’ potential effects and reduce the use of low-value care. To make these ideas reality, the authors recommend incentivizing professional societies to collaborate on approaches, with the ABIM Foundation serving as the convener. “Patients facing high deductibles also have a stake in ensuring that they do not receive unneeded services,” they conclude. “Choosing Wisely has created a principal pathway through which patients and their doctors can discuss when health care services may not be needed…. Several important steps still remain to fulfill the promise of Choosing Wisely. It is now time to take those steps.”
The authors, Eve Kerr, Jeffrey Kullgren, and Sameer Saint, are affiliated with the Center for Clinical Management Research at the Veterans Affairs Ann Arbor Health System and with the University of Michigan, also in Ann Arbor.
Clinicians and patients value thoroughness. However, as new testing and treatment options have multiplied over the past few decades, the desire to leave no stone unturned has had unintended consequences. Patients can be harmed by too much care, just as when they receive too little care. Until recently, the former danger had been largely overlooked.
While the exact toll is hard to quantify, nearly every family in the country has been subject to overtesting and overtreatment in some form. The consequences include physical suffering, from unnecessary surgeries or avoidable side effects, as well as “financial toxicities” that damage household budgets to the point of crowding out food and basic security.
The launch of the Choosing Wisely campaign was a turning point in teaching clinicians to weigh both the benefits and costs of care. Led by the ABIM Foundation, the campaign began with a call to the medical professions to identify lists of frequently ordered tests or treatments that “providers and patients should question.” Choosing Wisely has grown to include 75 partners that have published 490 recommendations, and the campaign has spread to 18 countries.
Moving Medical Education From Thoroughness To Appropriateness
Since the inception of Choosing Wisely five years ago, the culture of medical education has evolved from primarily valuing thoroughness to instead valuing appropriateness. In 2013, the ABIM Foundation and Costs of Care, a global nongovernmental organization focused on making care better and more affordable, collaborated to develop a set of “Choosing Wisely competencies,” in consultation with stakeholders across health professional education. The group proposed three general competencies for all clinicians: knowing “why,” “when,” and “how” to choose wisely (see Exhibit 1). The University of California–San Francisco Center for Healthcare Value subsequently developed interprofessional competencies with greater specificity, stratified by levels of expertise, to enable more ready translation. These competencies have since been applied to the creation of multiple value-based health care curricular programs nationally.
Exhibit 1: Competencies For Choosing Wisely
Source: Moriates C, Arora V, Shah N. Understanding value-based healthcare. New York (NY): McGraw-Hill; 2015. Used with permission.
With greater clarity in the goals of “value-based” training, teaching resources proliferated. The “Teaching Value and Choosing Wisely Challenge” provided an early landscape analysis by putting out a call to identify both existing curricula and bright ideas. From 2013 to 2016, this call received 234 submissions across 14 clinical disciplines, representing six distinct pedagogical strategies. This challenge has become an annual call with growing reach and visibility, including collaborations with the American College of Physicians (ACP) in 2015, the Association of American Medical Colleges in 2017, and the Leapfrog Group in 2017.
Several submissions to the challenge developed into sustained programs, including the “Teachable Moments” series in JAMA Internal Medicine and a successful annual resident “High-Value Care” contest at Banner Good Samaritan (now Banner University of Arizona Medical Center Phoenix). Key conceptual ideas such as “SOAP-V” (the idea of including value assessments into daily inpatient oral presentations) and the “I-CARE” conference (Interactive Cost Awareness Residency Exercise) have now been adopted at multiple medical training programs across the United States.
A handful of widely used, off-the-shelf resources emerged as well. In 2013, The ACP and the Alliance for Academic Internal Medicine introduced a free high-value care curriculum, which has been adopted by many internal medicine resident programs across the United States. In 2015, McGraw-Hill published an introductory clinical textbook on value-based care, which was subsequently adopted in a broad array of medical school and postgraduate courses. The new Dell Medical School at the University of Texas at Austin released a set of interactive, adaptive online learning modules in 2017, aiming to teach the basic foundation of value-based health care to medical learners at any stage of training.
The Next Hurdle: Moving From Appropriateness To Affordability
Despite great strides in educating clinicians to choose wisely among the panoply of available diagnostic and treatment options, significant challenges remain to ensure that their recommendations are affordable. Necessary care can still be expensive. The average US worker has experienced a 230 percent increase in his or her out-of-pocket medical expenses over the past decade. The majority are deeply concerned about the risk of being saddled with an unexpected and untenable bill.
Clinicians are equally in the dark and often lack insight into how their decisions impact what patients pay. Furthermore, clinicians often do not know what legitimate options may exist to limit their patients’ financial exposure. Opportunities to help patients optimize their health insurance coverage, develop payment plans, or consider the trade-offs of less-expensive alternatives are frequently lost.
Clinicians have innumerable responsibilities, and many believe that acting as financial agents is beyond their scope of duty. Moreover, prices are rarely available at the point of care. Nonetheless, the overwhelming majority of patients expect clinicians to be able to answer basic questions about cost.
Figuring out how to do this well is likely to be the next major hurdle for medical educators to contend with. Trainees will need a framework to identify patients at risk and to be able to either answer questions that arise or refer patients to someone who can answer. Because each patient’s needs may be unique, clinicians may need to work in concert with case managers, financial counselors, social workers, and other members of the interprofessional team to optimize plans for individual patients.
To begin addressing this need, Costs of Care has begun defining the “cost conversation”—an increasingly common occurrence in clinics, hospitals, and pharmacies across the United States. We produced a series of free, continuing medical education-approved video modules that demonstrate common pitfalls in having these conversations as well as practical solutions. To incentivize greater focus on this type of education, we partnered with the health care transparency company Amino to publically certify every physician in the country who completes our basic training in talking to patients and colleagues about costs.
This is a first step, but it will not be enough, and given the idiosyncrasies of how US health care is financed, the second and third steps may be even harder. Fortunately, medical education is capable of driving necessary transformation against the odds. The focus of the clinical professions on simply doing more, no matter what the cost, persisted for more than half a century. Today, in a recent shift largely driven by a community of committed educators, appropriate care has become a professional norm. To truly do all we can to prevent harm, educators will have to play an equally critical role in ensuring patients can navigate the system affordably.
The authors are all directors at Costs of Care, a nonprofit organization that has received grant support from the ABIM Foundation for programs related to teaching value. Drs. Shah, Moriates, and Arora receive royalties from McGraw-Hill for the textbook Understanding Value-Based Healthcare.
The US health care system is plagued by the use of services that provide little clinical benefit. Estimates of expenditures on overuse of medical services range from 10–30 percent of total health care spending. These estimates are typically based on analyses of the geographic variation in patterns of care. For example, researchers at the Dartmouth Institute focused on differences in care use between high-spending and low-spending regions with no corresponding reductions in quality or outcomes. An analysis by the Network for Excellence in Health Innovation (formerly known as the New England Healthcare Institute) identified significant geographic variation in the rates of both surgical and non-surgical services such as coronary artery bypass grafting, back surgery, cholecystectomy, hip replacements, diagnostic testing, and hospital admission.
This variance-based approach to estimating overuse has been very useful at highlighting the problem of inefficiency in the health care system but has done little to direct initiatives designed to reduce unnecessary tests and procedures. The aggregate approach does not help clinicians or managers identify exactly how they should change their practice patterns. As a result, it has been hard to reduce overuse. Identifying the significant overuse of medical services in the health care system is only the first step; now we need to develop evidence-based solutions to reduce unnecessary services and improve efficiency.
The History Of Choosing Wisely
The Choosing Wisely initiative, announced in 2012 by the ABIM Foundation and Consumer Reports, was designed to spark conversations among physicians, patients, payers, and purchasers about the overuse of tests and procedures, and to support physician efforts to help patients make smart and effective care choices. Specialty societies identified specific services that were unnecessary in specific situations. With more than 80 participating specialty societies, Choosing Wisely has identified more than 500 commonly overused tests and procedures and published recommendations for their proper use. For example, the American College of Emergency Physicians recommends avoiding computed tomography (CT) scans in low-risk patients with minor head injury.
The Choosing Wisely campaign began in an environment when efforts to reform health care were polarized by discussions of “rationing” and “death panels.” The initiative focused on quality, safety, and doing no harm to counter suspicions of dual agency and cost reductions motivated by profit; this allowed both the public and clinicians to begin to see reducing unnecessary care as in the best interest of the patient.
Choosing Wisely appealed to the professionalism of physicians and other clinicians as articulated in the Physician Charter on Medical Professionalism, which included a commitment to manage health care resources. The campaign was conducted in a way that respected the autonomy of physicians, relying on and enhancing their professional pride and sense of mastery, instead of functioning as yet another quality initiative imposed from above. Specialty societies took a leadership role in partnership with a wide swath of consumer and patient groups, helping physicians and patients accept the message of “more is not always better.”
The unexpected nature of societies taking the lead on this issue, potentially in conflict with their members’ economic self-interest, helped make the campaign stick. Similarly, the simplicity, concreteness, and credibility of the recommendations allowed them to be deployed in a variety of settings at a variety of levels in the organization. Implementation has been accelerated through the support of the Robert Wood Johnson Foundation (RWJF), which has provided two grants to support putting the Choosing Wisely recommendations into practice.
Choosing Wisely In Action
The front line empowerment fostered by Choosing Wisely was evident when the University of Vermont Medical Center asked faculty and residents to submit ideas for high-value care projects targeting tests and treatments that could be performed less frequently. Interventions on seven projects were completed. Key reported outcomes included:
a 72 percent reduction in the use of blood urea nitrogen and creatinine lab testing in patients with end-stage renal disease who were on hemodialysis and hospitalized;
a 90 percent reduction in dual-energy x-ray absorptiometry (DEXA) screening on women ages 65 and older without clinical risk factors for osteoporosis; and
a 71 percent reduction in the use of portable chest x-rays in mechanically ventilated patients who were not intubated that day and did not have a procedure performed.
Vanderbilt University Medical Center drove cultural change through a “challenge” to all house staff and residents aimed at reducing unnecessary daily lab orders. After educational sessions, teams were sent weekly emails on tracking use in a friendly monthly competition. This resident-originated focus and intervention resulted in significant reported decreases of daily blood counts and basic metabolic panels.
Crystal Run Healthcare, a multispecialty practice with 350 clinicians, also sponsored a contest designed to advance Choosing Wisely recommendations. Eric Barbanel, MD, a practicing physician at the clinic, was the champion for the winning project, which focused on four recommendations from the American Academy of Family Physicians. The interventions included peer education, clinical decision support, and data feedback. Decreases in annual electrocardiograms (EKGs), magnetic resonance imagings (MRIs) for low back pain, and DEXA screening were reported.
The campaign has also relied on regional health collaboratives to help drive local public awareness of the issue of overuse. Two grantees supported by RWJF, HealthInsight Utah and Maine Quality Counts, have used town hall meetings to engage in conversations with patients and the broader public about Choosing Wisely.
The Choosing Wisely campaign has focused first on adaptive change—on “why” there is concern about overuse by clinicians and patients, and on developing a consensus set of common values and purposes. The campaign has emphasized evidence about benefits and harms and the pursuit of enhancing quality, safety, and doing no harm. The aim has been to win both the hearts and minds of physicians so that they would be more engaged in improvement efforts, something often missing in efforts to change behaviors in clinical practice. The rapid introduction of purely technical solutions (that is, clinical decision support through electronic medical records) often alienates clinicians who don’t know the values and motivation behind the need for such solutions.
Choosing Wisely has had some success in raising awareness of overuse and incorporating recommendations into practice. But results from national studieshave been mixed, highlighting the need for further formal evaluation of the initiative’s impact.
More importantly, other strategies needed to complement Choosing Wisely must be jumpstarted. Specifically, more needs to be done to address some of the other underlying drivers of overuse in the health care system, notably perverse payment incentives; eliminating unnecessary services will be challenging as long as providers face financial incentives to provide more care and patients have no incentives to avoid care. Choosing Wisely is an attempt to change attitudes and mindset, but changing attitudes is hard when incentives are misaligned.
Payment reform can play a role in changing physician behavior by minimizing rewards for doing unnecessary tests and procedures. In fact, some evidence suggests population payment has disproportionately reduced use of potentially unnecessary tests and procedures. But it is not always easy to design payment reform such that the incentives are fully experienced at the point of care. Moreover, although evidence suggests these payment models lower spending without sacrificing quality, the effects have generally been modest and surely more could be done. And reinforcement works both ways: Just as payment reform can make the task of changing attitudes through Choosing Wisely easier, winning hearts and minds can amplify the effectiveness of any payment reform strategy.
Benefit design can also help reduce use of potentially unnecessary services by increasing patient out-of-pocket spending for those services. However, higher out-of-pocket spending can be a significant financial burden on patients, and in many cases they are not well suited to make nuanced decisions about care. Most evidence suggests that when faced with higher cost sharing, patients reduce use of appropriate and inappropriate care in similar proportions. Value-based insurance design (VBID)—which aims to increase cost-sharing for less effective treatments and decrease cost sharing for more effective treatments—can help encourage patients to specifically reduce overuse of low-value care. However, VBID is not a panacea and must be implemented in a way that avoids adverse selection and excessive complexity. Engaging clinicians in explaining and implementing benefit design changes will be necessary to help patients better navigate the choices they will confront.
Even if Americans were not grappling with high health care spending, avoiding potentially unnecessary services would be important. But with fiscal pressures driving changes by private and public purchasers that often have deleterious consequences, eliminating potentially unnecessary services—and thus delivering cost savings while increasing quality—is more important than ever. Choosing Wisely exemplifies efforts of the professional societies to engage on the issue; by appealing to the professionalism of physicians and other clinicians, it can provide the foundation for promoting delivery of appropriate care.
Professionalism as a force to improve quality has an opportunity to show its value along with the technical approaches and the environmental changes needed (for example, payment reform). The design of Choosing Wisely, which included few rules, much autonomy for engagement and design, and little central control, produced an activated professionalism. Appealing to the intrinsic motivations of physicians offers an underused path to achieve widely shared policy goals such as reducing the cost of our health care system while enhancing its quality. Professionalism can also appeal to patients and give them confidence in their physicians’ counsel that unnecessary care truly is unnecessary. Given the activity that has been unleashed in health systems and clinical practices throughout the United States, professionalism should not be overlooked as part of our broad health care transformation strategy.
On October 23, 2017, Governor Kim Reynolds and Insurance Commissioner Doug Ommen announced that Iowa has withdrawn its 1332 state innovation waiver proposal. In a late afternoon press conference, Governor Reynolds and Commissioner Omen announced that the federal government had informed them that it would be several weeks yet before it could tell Iowa how much pass-through funding the state would receive to pay for its waiver program. With open enrollment just days away they could not proceed in the face of that uncertainty. Iowa therefore withdrew its request.
Iowa had applied for a stopgap waiver in June under section 1332 when the insurers that had been covering Iowa’s individual market stated that they would not be returning for 2018, leaving it potentially with a statewide bare market. In the face of this, Iowa worked an arrangement with Wellmark, Iowa’s Blue Cross Blue Shield plan. Wellmark would provide coverage at premium rates negotiated with the state. Iowa would withdraw from the federally facilitated exchange and make its own eligibility determinations for premium credits. It would offer credits to all enrollees, including higher-income enrollees.
Iowa insurers would offer only a single standard silver plan, which would have a high deductible but reasonably generous cost sharing for some services before the deductible attached. Iowa proposed to terminate cost-sharing reductions (CSRs) for low-income enrollees. It would use the pass-through payments of money the federal government did not spend on CSRs or on federal premium tax credits to fund its own generous premium credits. Iowa would tighten up on the special enrollment periods (SEPs) currently offered through the FFE and impose a 12-month continuous coverage requirement for some SEPs.
By the time Iowa finally submitted its final waiver application in late August, another insurer, Medica, had committed to covering all Iowa counties. Iowa, however, contended that its stopgap plan was still needed because Medica intended to increase its premiums 56 percent.
Iowa submitted its final proposal only two months before open enrollment period. CMS solicited comments on the proposal and raised questions about the proposal’s compliance with section 1332. Iowa submitted two supplemental proposals with which it would have restored most of the CSRs, but problems with its proposals remained.
In the end, Iowa’s hope that the federal government would cover the full cost of its premium credits and reinsurance proposal proved unrealistic, sinking the proposal. The federal government is in fact only able under 1332 to pass through the funds it would have saved by reduced federal premium tax credits and CSR payments, less any revenues the federal government would have lost because of the proposal. Iowa was not willing to help cover the cost of its proposal, so the proposal proved nonviable.
Governor Reynolds and Commissioner Ommen were bitterly critical of the Affordable Care Act at their press conference. The complained that the ACA had ruined Iowa’s insurance market and that section 1332 was far too inflexible to allow them to fix it. But, as an article by Politico’s Paul Demko describes, there is plenty of blame to go around.
Like a number of other states, Iowa has allowed individuals who were covered by ACA noncompliant plan to remain in those plans. While nationally about ten percent of individual market participants remain in non-compliant plans, in Iowa half do, undoubtedly seriously undermining the ACA-compliant market risk pool. Wellmark, the Iowa Blue Plan with which the state negotiated the stopgap plan, was the only Blue plan in the country to sit out the first two years of the ACA marketplace and then withdrew again two years later, choosing to negotiate its own deal with the state rather than help preserve the ACA market. Iowa complained at the press conference that the ACA was creating insurer monopolies across the country, but the state was pushing a proposal negotiated specifically with one insurance company (although presumably others could have gotten a similar deal).
Finally, the Trump administration’s threats to the CSR payments, and ultimate withdrawal of the CSR payments at the last minute, drove up the cost of ACA plans. The administration also withdrew 80 percent of navigator funding from two of three Iowa navigator programs (causing one to withdraw) and 90 percent of advertising funding nationally, further dampening projected exchange enrollment and driving up insurer premiums.
Iowa could have simply applied for a reinsurance proposal, as did Alaska, Minnesota, and Oregon, all of which now have approved 1332 waivers. The governor and insurance commissioner contended that this would simply have prolonged the collapse of their market, but a Rand analysis of the Iowa waiver concluded that a reinsurance program could have reduced premiums as much as the stopgap proposal at far less cost.
Massachusetts Waiver Effectively Denied
Also on October 23, 2017, the Centers for Medicare and Medicaid Services effectively rejected Massachusetts’s application for a 1332 waiver. Massachusetts had asked that the money that would have been spent on CSR reimbursement instead be passed through to the state to fund a premium stabilization fund that would allow its insurers to avoid raising premiums in the face of CSR funding uncertainty.
Without specifically addressing the question of whether states could claim pass through of CSR payments now that they are no longer being made, CMS concluded that the Massachusetts waiver application was submitted too late for it to obtain public comment on the proposal before the beginning of open enrollment, and therefore did not meet section 1332’s timeliness requirement. CMS, therefore, rejected the proposal as “incomplete.”
Judge Appears Skeptical Of States’ Position In California CSR Case
Judge Vince Chhabria spent over an hour and a quarter of the afternoon of October 23, 2017 hearing arguments on the motion for a preliminary injunction requested by attorneys general from eighteen states and the District of Columbia in California v. Trump, the case challenging the administration’s termination of CSR payments. It was less, however, a hearing than a prolonged grilling of the attorney representing California, resembling every law student’s Socratic method interrogation nightmare.
To be awarded a preliminary injunction a plaintiff must show that it will be irreparably harmed if immediate relief is not granted. Judge Chhabria seemed convinced that not only were consumers who purchased coverage through the exchanges not worse off without CSRs; they were in fact better off without them—and would be worse off were he to grant relief. He noted that California has required insurers to load the increased cost of the loss of CSRs onto on-exchange silver plans, thus increasing premium tax credits for consumers who qualify for them, in turn making gold and bronze plans more affordable while not increasing the cost of silver plans. Premiums for plans off the exchange are not being increased, so consumers who do not qualify for premium tax credits are no worse off because of the change. Restoring the CSR payments at this point, Judge Chhabria argued, would simply create confusion and make gold and bronze plans less affordable.
There is some truth to Judge Chhabria’s argument with respect to California, which reacted early and intelligently to President Trump’s anticipated order. In many states, however, premiums are increasing to the same extent for consumers both on and off the exchange (as will be true in Iowa). This will drive nonsubsidized consumers from the market, with the healthiest likely exiting first (as was noted by Governor Reynolds and Commissioner Ommen). Moreover, as the Families/NHELP amicus brief observed, insurers now face an incentive to avoid low-income enrollees, for whom they will incur increased CSR costs without increased premiums.
Moreover, a number of states did not even load the full cost of the CSR loss onto silver plans, increasing premiums for all plans. Finally, the CSR funding cut is going to induce confusion and cause consumers to make bad choices across the market.
Judge Chhabria also appeared skeptical of the states’ argument on the merits. He seemed to believe that in fact Congress did not appropriate funding for the ACA, probably through an oversight, and has not done so since. He asked a couple of technical questions of the federal government’s attorney but did not press the government on its argument that the CSR funding had in fact not been appropriated.
White House Lays Out Its Objectives In ACA Fix
Finally, on the evening of October 23, 2017, the White House reportedly released a series of “Short Term Obamacare Relief Principles,” which it would like to see included in a bipartisan short-term ACA fix. These include:
A moratorium in individual mandate penalties for 2017 and employer mandate penalties for 2015, 2016 and 2017;
Increasing contribution limits for health savings accounts and allowing them to be used for insurance premiums, direct primary care and health care sharing ministries;
Expanding access to short-term limited duration insurance and association health plans, and exempting enrollees from the individual mandate penalty; and
Giving states additional flexibility through 1332.
It is hard to believe that Democrats would agree to these conditions, a number of which were part of Republican ACA repeal bills that failed to make it through the Senate this summer. It is interesting, however, that the administration is asking for legislation to make changes with respect to association plans and short-term coverage that it had proposed to achieve through executive order. This suggests that the administration does not believe that it in fact has the authority to make the changes it would like to make on its own.
Judge Chhabria painted an overly rosy picture of the overall state of ACA markets in the wake of President Trump’s decision to end CSR payments. However, in states like California whose insurance departments took steps to mitigate the damage, the primary beneficiaries of the ACA are not in fact worse off because of the funding termination; indeed, some are better off. In fact, the Democrats arguably have less to lose from the CSR termination than do Republicans, who are likely to take the blame for the premium increases higher-income consumers, like those in Iowa, are experiencing. The Democrats have little incentive, therefore, to make major concessions to the Trump administration in these negotiations.
Just three weeks ago, CMS came under severe criticism for failing to act expeditiously on Oklahoma’s 1332 reinsurance waiver and only approving part of Minnesota’s waiver. I was among the critics, suggesting that the agency’s action threatened the delicate bonds of trust between CMS and the states. Channeling the Oklahoma letter withdrawing its pending waiver, I said the agency had some serious fence-mending to do if it wanted states to continue pursuing 1332 waivers.
The agency has responded and I want to be among the first to commend CMS Administrator Seema Verma and her tireless staff for their prompt approval of Oregon’s waiver. It took the agency nine months to approve Alaska’s pioneering reinsurance waiver, three months to partially approve Minnesota’s waiver, and just 40 days to approve Oregon’s proposal. This is precisely the streamlined process that the Alexander-Murray bipartisan bill envisions for relatively simple “look-alike” waivers. (To be clear, this process should not apply to complex waivers that raise new issues meriting more extended review.)
While the Oregon approval is important, I expect a residue of doubt will remain as states soak in the news. Were the Oklahoma and Minnesota decisions the new norm and Oregon an aberration? Or does the Oregon decision represent a return to the consistent support that CMS had provided to states on reinsurance waivers?
Most importantly, can states rely on the checklist published in May 2017? Can they be confident that if they go through the hard work of identifying a state funding source and standing up a state-based reinsurance program, they can count on the federal government to “pass through” the federal cost savings? Even better, will Congress follow through on fixing the statutory ambiguity that caused CMS to backtrack on passing through the federal savings related to Minnesota’s Basic Health Plan (BHP)?
A Step CMS Could Take To Reassure States
CMS cannot control whether Congress and the President enact the Alexander-Murray bill that would clarify a state’s right to get BHP savings as well as tax credit savings. But there is one more step the agency could take that would go a long way to removing the ongoing concerns that states have about the processing of reinsurance waivers.
CMS could invite Oklahoma to immediately reinstate its waiver application, expeditiously approve it, and then work with the state to adjust 2018 rates. I recognize that it is late in the day to be adjusting 2018 premiums, but this past week’s experience with CSRs suggests that late adjustments are possible, and doing so for a single state with a single carrier should be manageable. If it is truly impossible, CMS should approve the waiver for 2019-2022.
I do not know how Oklahoma would respond to such an invitation, but I do know that Oklahoma should be offered the same expeditious treatment that Oregon received. Unless there are substantive flaws in Oklahoma’s application that only came to CMS’s attention after the pre-approval materials were prepared and shared with Oklahoma, there is nothing that distinguishes Oklahoma from the other three approved states.
The Complications Presented By Oklahoma’s Waiver Are Not Unique To That State
The fact that the current projections in Oklahoma’s application are outdated is not a distinguishing feature, since that is emphatically the case for all three approved waivers given the President’s recent termination of CSR payments. CMS did not include a pass-through funding number in Oregon’s approval letter, presumably because it depends on how the CSR complications are resolved this fall. Those complications include last-minute rate increases to load CSR costs into Oregon rates, as well as the potential that Congress will restore CSR payments or act in some other way that requires adjusting the numbers yet again. The same complications may require adjustments for Alaska and Minnesota.
CMS would have to work through those complications with Oklahoma too, but nothing is gained from requiring Oklahoma to start over from scratch with a 2019 waiver. Indeed, Oklahoma should have the same legal rights to work through whatever adjustments are necessary in the same way that Alaska, Minnesota, and Oregon will — within the context of an approved five-year waiver that requires mid-course corrections.
As a former state regulator with an abiding faith in state innovation, my hope is that CMS and Oklahoma can patch up any misunderstandings from last month and put Oklahoma back on the path to expedited approval of its waiver. The beneficiaries would be not just Oklahomans but also the dozen or more states with their eyes on 2019 reinsurance waivers, not to mention a much larger audience hoping for constructive state-federal partnerships in the next phase of bringing health security to all Americans.
Doctors of osteopathic medicine have been around since the late-1800s but are gaining increasing attention due to their recent dramatic growth. While doctor of osteopathic medicine training was originally more focused on spinal manipulation, today it is very similar to the training for medical doctors and accepted as equivalent by state licensing agencies and most residency programs. The Accreditation Council for Graduate Medical Education (ACGME) and the American Osteopathic Association (AOA) have teamed up to establish a single accreditation system for all graduate medical education (residency) programs. By 2020, the single accreditation system will further narrow the distinction between medical doctors and doctors of osteopathic medicine as all residents and fellows will have to meet the same training standards.
Doctors of osteopathic medicine currently make up about 8.5 percent (N = 81,115) of licensed physicians, but that percentage will increase in the coming years. After doubling osteopathic medical school enrollment over the past decade, doctors of osteopathic medicine now comprise 26 percent of first-year medical students in the United States with further increases expected, as shown in Exhibit 1 below. As a consequence of this growth, doctors of osteopathic medicine represented approximately 17.6 percent of physicians entering the graduate medical education pipeline in the United States in 2015 when factoring in doctors of osteopathic medicine beginning residency training in ACGME-accredited residencies (N = 3,347) and the approximately 2,000 that entered AOA-accredited residencies (Note 1).
Despite concerns among some academic medical leaders that the increase in medical school graduates will lead to more students not being matched in ACGME residency training programs, the match rate for doctors of osteopathic medicine in the National Resident Matching Program (NRMP) grew from 75 percent to 82 percent between 2013 and 2017 even though the number of doctor of osteopathic medicine applicants increased by 24 percent (2,677 to 3,590). In 2017, 99 percent of graduating doctors of osteopathic medicine seeking graduate medical education were matched, with approximately 52 percent entering through the NRMP, 43 percent through the AOA match, and the balance through the military match and other match placements, such as the SF (San Francisco) Match.
Exhibit 1: Osteopathic Medical School First-Year Enrollment Growth, 2002–20
The Single Graduate Medical Education Accreditation System
The ACGME and the AOA are transitioning to a single accreditation system, which will be fully implemented in 2020. Accredited AOA programs are in the process of application and review by the ACGME. Currently, only doctor of osteopathic medicine graduates can apply for AOA residency training programs, but the single accreditation system will allow medical doctor graduates (including international medical graduates) to also apply for all residency slots. However, medical doctors will need to meet prerequisite requirements for programs with “Osteopathic Recognition.” This could make training programs, which were previously only accredited by the AOA, more competitive and impact future match rates for both training pathways. However, there is a concern that some rural AOA residency programs may close as a result of single accreditation, potentially reducing the number of trainees who are likely to practice in rural areas.
Background On Current Student Profile
Between 2009 and 2016, the percentage of females matriculating in an osteopathic medical school has decreased slightly from 47 percent to 46 percent, while the number of under-represented minorities increased from 7 percent (337) to 8.5 percent (577); an increase of 71 percent in terms of actual matriculants. Among the 2016 entering students, 21 percent are from a small town or isolated rural area, 13 percent are the first in their family to attend college, and 8 percent are from a family that received public assistance (for example, aid to families with dependent children, food stamps, Medicaid, public housing) or personally received public assistance. Average MCAT scores and GPAs have been rising slightly along with the increase in doctor of osteopathic medicine enrollment—an indication that admission standards remain high.
Data show that medical school location has a major impact on ultimate practice location. The majority of doctor of osteopathic medicine schools are located in health professional shortage areas or medically underserved areas. A number of schools are in mid-size cities in rural areas, such as Tulsa, Oklahoma, and Fort Smith, Arkansas, and in smaller, rural communities, such as Dothan, Alabama; Kirksville, Missouri; and Lillington, North Carolina.
Such locations increase the likelihood that graduates will end up practicing in rural and underserved locations. While doctors of osteopathic medicine practice in all 50 states, 86 percent of doctors of osteopathic medicine are located in one of the 27 states with a doctor of osteopathic medicine school as of July 2015. In the past two years, the number of schools has continued to increase, and there are now doctor of osteopathic medicine schools in 31 states. State variation in the percentage of doctors of osteopathic medicine in the workforce ranges from a low of 1.4 percent in Louisiana to a high of 20.9 percent in Oklahoma, as shown in Exhibit 2 below.
Exhibit 2: Percentage Of Doctors of Osteopathic Medicine In The Physician Workforce, By State
Source: Association of American Medical Colleges State Physician Workforce Data Book, 2015. Note: D.O. is doctor of osteopathic medicine.
Doctors Of Osteopathic Medicine And Primary Care
As the nation grapples with concerns over primary care shortages, it is important to note the role doctors of osteopathic medicine play in the primary care supply. Nearly half (45 percent) of doctors of osteopathic medicine practice primary care, and they account for 10 percent of all primary care physicians. In comparison, 34 percent of medical doctors are primary care physicians.
There is some concern about the declining percentage of doctors of osteopathic medicine practicing primary care, which is also a concern among medical doctors. In 2015–16, the majority of doctors of osteopathic medicine (59 percent) entered ACGME residency training in a family medicine, internal medicine, or pediatric residency program compared to 41 percent of US medical doctors and nearly three out of four (73 percent) international medical graduates. Some will go on to pursue subspecialty training, further reducing those numbers. Doctors of osteopathic medicine also have a second pathway for pursuing primary care through AOA-accredited residencies, which are not included above.
Nonetheless, a 2015 report by the American Academy of Family Physicians shows that the percentage of doctor of osteopathic medicine graduates in primary care has been declining from highs of 56 percent of doctor of osteopathic medicine graduates in the mid-1990s during the height of managed care to 42 percent in primary care among more recent graduates. Over the past few years, student interest in primary care careers as been relatively low with only one in five doctor of osteopathic medicine matriculants stating an interest in a career in primary care. While more doctor of osteopathic medicine students graduate with intentions to practice primary care than did when entering medical school, the percentage of doctors of osteopathic medicine who ultimately become primary care physicians could potentially drop even lower in future years.
The doctor of osteopathic medicine workforce is growing rapidly with no signs of decreases in the quality of students accepted or their success in matching into a residency training program, which has been steadily rising. Given the doctor of osteopathic medicine workforce’s higher likelihood of practicing in rural communities and of pursuing careers in primary care, doctors of osteopathic medicine are on track to play an increasingly important role in ensuring access to care nationwide, including for our most vulnerable populations.
Since some residencies are jointly accredited by both the ACGME and the AOA, it is difficult to determine the number of residents that are AOA-accredited only. Using 2015 data, the authors worked backwards to estimate the number of doctors of osteopathic medicine entering residency by estimating 98 percent of doctor of osteopathic medicine graduates (5,472 x 0.98) entered residency training, subtracting out the number known to enter ACGME (3,347) to thereby estimate the number entering AOA residency programs (2,016), and adding that to the number of ACGME residents entering the pipeline (28,456) to get the total number of residents entering the ACGME and the AOA pipeline (30,472).
Ms. Erikson previously received limited financial support from the American Association of Colleges of Osteopathic Medicine to review and compile data on the osteopathic workforce.
With the legislative effort to repeal and replace the Affordable Care Act (ACA) stalled for now and the Trump administration moving to dismantle the law by all available regulatory means, the constructive among us are compelled to explore paths forward for our health care system that may be viable in the long run. Not coincidentally, before the quixotic rise and fall of the Graham-Cassidy bill, we saw a boomlet in the debate over a Medicare-for-all approach to universal coverage. So I would like to continue our inquiry into what the concept really means and try to answer the question: Is a bipartisan solution possible?
In my previous post, I introduced the concept of Medicare Advantage Premium Support for All (MAPSA). In brief, I posited that a national system that drives bona fide competition among private insurers (Medicare Advantage) and traditional Medicare by empowering consumers with advanceable tax credit subsidies could not only succeed in delivering universal, portable coverage, but that there is enough spending in our current system to finance it.
I was deeply encouraged by the robust positive and, equally helpful, critical feedback I received on this modest proposal. As I confessed at the outset, the thesis raises innumerable questions, with much more investigation and documentation necessary to prove the concept. With your help, I aim to explore these questions in future posts.
This post will take a closer look at the type of plan options we would have if we move to a Medicare-for-all system. In other words, it will explain the program’s current benefit design, how it varies in the Medicare Advantage program or with the purchase of supplemental coverage (Medigap), apparent gaps that may need to be addressed, and the strengths of the otherwise terminated coverage programs that should likely be maintained to optimize the MAPSA regime.
So let us continue this journey together, intrepid travelers, and define the system our country deserves.
Traditional Medicare And Part D
When Medicare began, it was comprised by two key components: an inpatient benefit (Part A) and an outpatient benefit (Part B), which loosely mirrors the Blue Cross Blue Shield model that evolved about a generation prior.
Generally, Medicare Part A has no premium; workers pay into the Medicare Trust Fund via a payroll tax and become eligible when they turn 65 or other criteria are met. In 2017, Part A had a $1,316 deductible for hospital stays, with additional costs kicking in after 60 and 91 days. Additional inpatient and related services are covered under this benefit, such as skilled nursing care and home health, each with their own coinsurance regime that I will not delve into here. Importantly, Medicare Part A has no limit on out-of-pocket costs—in other words, no catastrophic cap.
Medicare Part B covers clinician visits, clinical lab tests, outpatient hospital services, durable medical equipment, and more. In 2017, the deductible is $183 with 20 percent coinsurance for most services. Preventive screenings are covered for no additional cost. Like Part A, Part B currently has no limit on out-of-pocket costs. We’ll come back to that.
In 2003, Congress established a prescription drug benefit in Medicare, referred to as Part D. More akin to its neighbor, Part C (Medicare Advantage), Part D relies on private insurance carriers and pharmacy benefit managers to deliver a drug benefit within certain parameters. In 2017, the base benefit featured a $400 deductible, 25 percent coinsurance up to $3,700, a (now diminishing) coverage gap until the enrollee has spent $4,950 total out of pocket, and then 5 percent coinsurance after that. Plans may deviate from this model, but their approach must be actuarially equivalent to it.
With these three components taken together, Medicare covers almost all of the essential health benefits (EHBs) mandated under the ACA with an actuarial value of 84 percent (see Issue 9), which is approximately halfway between the gold and platinum tiers of coverage established by the ACA. There are some gaps between Medicare and EHBs that I will address later in this post.
Low-income individuals enrolled in Medicare get support from Medicaid, including via the so-called Medicare Savings Programs (MSPs). Those who are fully eligible for Medicaid (so-called duals) have access essentially to any benefit their state plan covers that isn’t included in Medicare. This includes reducing their premium and cost-sharing responsibilities to what they would pay under Medicaid.
Beneficiaries who are not fully eligible for Medicaid but have income below 130 percent of the federal poverty level can also get assistance with their Part B premiums and, in some cases, cost sharing. Complexly, if endearingly, referred to as the QMB (quimby, [Qualified Medicare Beneficiary]), SLMB (slimby, [Specified Low-Income Medicare Beneficiary]), and QI (Qualifying Individual) programs, the MSPs provide some degree of built-in means testing to the Medicare benefit that enhances the value for low-income enrollees.
Participation rates in these programs are remarkably low, however, with less than a third of eligible people enrolling in them. Furthermore, coordination between these state-based Medicaid programs and federal Medicare is challenging at best. In a MAPSA world, the Medicare subsidies embedded in Medicaid and the MSPs could be automatically included in the benefit delivered to those eligible, perhaps with a maintenance of effort provision applied to states to make it affordable. For more on that, you’ll have to wait for my financing post. It’s going to be a hoot.
For the prescription drug program, there is a low-income subsidy for individuals with incomes below 150 percent of the poverty level. Thirty percent of all Part D enrollees received the low-income subsidy in 2014; many are auto-enrolled. Most of these beneficiaries pay no premium and have no deductible, although those above 135 percent of poverty level may be required to make some out-of-pocket contribution. This chart helpfully puts eligibility requirements and benefits under the low-income subsidy program in one place.
For those who can afford it, there are supplemental insurance plans that traditional Medicare enrollees can buy to cut down their out-of-pocket spending. These Medigap plans are tightly regulated and are labeled A through L based on the degree of protections they offer. This chart provides a helpful overview of the plan offerings in 2012. Some Medigap plans include a catastrophic cap, although Congress recently moved to prohibit enrollment in the two most comprehensive plan options, under the theory that first-dollar coverage of health care services can increase overall program costs
Around 20 percent of Medicare beneficiaries buy Medigap plans. This is due in part to the fact that they are fairly expensive, averaging more than $2,000 per year in 2010 on top of the standard Medicare premium. While Medigap plans are subject to guaranteed issue requirements, they mimic commercial plans in being rated by age, sex, and smoking status in states that do not require community rating. They are also not available to individuals younger than age 65 in some states. With the ascent of Medicare Advantage, Medigap plans have been declining in popularity. Under MAPSA, Medigap could be the starting point for higher-income households to purchase enhanced coverage or for employers to provide these extra benefits to workers.
Medicare Advantage, initially established as Medicare+Choice in 1997, is the commercial coverage component of Medicare in which private insurers offer competing benefit packages that meet federally mandated guidelines. One-third of Medicare beneficiaries enrolled in a Medicare Advantage plan in 2017, and they had, on average, 19 plans to choose from including health maintenance organizations, preferred provider organizations, and private fee-for-service options.
The “base benefit” for Medicare Advantage must include Part A and B benefits, and 88 percent of plans include the Part D drug benefit as well (so-called MA-PDs). Medicare Advantage enrollees pay the Part B premium, and there may be additional premiums if Part D or other optional benefits are included, although 81 percent of Medicare Advantage enrollees were offered “zero premium” MA-PD plans in 2017. Thirty-one percent had access to plans for less than the “base” Part B premium.
In 2017, on average, Medicare Advantage plans were paid on par with Medicare spending. Plan payment varies by region, although, in part due to statutorily set regional benchmarks. If the premiums they bid are below those benchmarks, plans can allocate some of the difference, a portion of which is otherwise rebated to them by the Centers for Medicare and Medicaid Services (CMS), toward additional benefits for their enrollees beyond what traditional Medicare covers.
For example, while, unlike traditional Medicare, Medicare Advantage plans are required to cap out-of-pocket spending for medical benefits at $6,700, in 2017, the average out-of-pocket cap was a bit below that at $5,332. For beneficiaries enrolled in these plans that have no additional premium, they are basically getting this core benefit of Medigap for free.
Furthermore, the majority of Medicare Advantage plans include preventive dental care, eye care, and hearing assistance. In 2016, almost 40 percent of plans included nurse hotlines, 34 percent included gym memberships, and 25 percent included non-emergency transportation. A substantial majority of those plans were offered with zero additional premium. This recent Health Affairs blog post has a very helpful chart summarizing the array of extra benefits enrollees have access to.
The last thing to note about Medicare Advantage is that it features three special plan options targeted to the unique needs of certain populations. These Special Needs Plans cater to beneficiaries residing in institutional settings, those with chronic illnesses, and those dually eligible for Medicare and Medicaid. Initially authorized on a temporary basis, Congress has recently advanced legislation to extend them permanently.
Gaps To Address: Catastrophic Coverage, Long-Term Services And Supports, And Kids
First of all, I want to avoid pretending we are going to resolve all of the Medicare program’s flaws in the same fell swoop that we expand it to cover everyone. I have no appetite to count the number of times, in its 50-plus years, Congress has amended the underlying law, and I truly shudder to fathom how many regulations CMS has issued implementing it. Suffice it to say, that work is going to continue, as it should, as new technologies evolve, innovative payment and delivery reforms are adopted, flaws come to light, and so forth.
The truth is, the Medicare program enjoys enviable popularity among its beneficiaries, greater than any other coverage program we have. So let’s not let the perfect be the enemy of the (very) good. At the same time, if we’re going to universalize it, it would be irresponsible not to acknowledge the program’s flaws with open eyes and adopt an intention to remedy them to the degree feasible.
This brief letter from leaders at the Center for Medicare Advocacy cuts right to the chase: The lack of vision, hearing, and dental coverage is an obvious gap in Medicare’s benefit design, as is the lack of a catastrophic cap in traditional Medicare or Part D.
Some of these challenges are remedied by the MSPs and low-income subsidy for lower-income beneficiaries and Medigap for those with more resources. Also, as noted, Medicare Advantage plans offer a cap on out-of-pocket spending and often cover some of these missing benefits. So you could argue that the broader Medicare “market” will solve these challenges for the vast majority of participants.
While adding these benefits to the standard Medicare package would clearly be preferable, if we are serious about this we have to be excruciatingly careful about cost. Just taking dental coverage, for example, in which a typical plan costs around $750 per year, adding that to Medicare just for its current enrollees would cost around $40 billion per year.
With regard to including catastrophic coverage in traditional Medicare, I refer you to this postmortem of the enactment and rapidly ensuing repeal of the Medicare Catastrophic Coverage Act in the late 1980s, published by Health Affairs in 1990. Including a catastrophic cap is still actively debated, although often in conjunction with making the convoluted cost-sharing structure of Medicare Part A more uniform and aligned with that of Part B.
There are at least two gaps in Medicare coverage that are especially important to consider in the context of a MAPSA regime where we purport to phase out other major coverage options currently offered, especially Medicaid and commercial insurance. They are long-term services and supports (LTSS) and early and periodic screening, diagnostic, and treatment (EPSDT) services. For more on how Medicaid and Medicare benefits differ, I refer you to this helpful side by side.
(Side note: because the Department of Veterans Affairs, Tricare, and Indian Health Service together only cover approximately 5 percent of the population, I intend to set aside disposition of them for purposes of this inquiry. Suffice it to say that it’s this guy’s opinion that, wherever our health system goes, the care and coverage value delivered to these populations should be maintained or enhanced.)
With limited coverage under Medicare and very few, if any, viable commercial options, Medicaid has become the de facto source of long-term care for our country, especially for those with lower income. This includes not just institutional (primarily nursing home) care but home and community-based services as well. LTSS provide assistance to individuals who have trouble completing routine tasks due to age, chronic illness, or disability.
LTSS are expensive, with nursing home care costing on average $91,250 per year, although home and community-based options are considerably less expensive. Total national spending on these services was $310 billion in 2013. Excluding certain administrative costs, and so forth, Medicaid spent $123 billion on LTSS that year, which accounted for about 28 percent of total program spending.
Under MAPSA, these costs could continue to be borne by an ongoing partnership between states and the federal government, a vestige of the otherwise repealed Medicaid program. Alternatively, a new benefit could be added to Medicare to cover these costs, which may be preferable although, again, the price tag could prove prohibitive.
Last, but certainly not least, we have to take care of our kids. Medicare has been honed around the needs of senior citizens and the disabled. The vast majority of the benefits translate perfectly well to the pediatric population, although. While there are some other nuances to consider, I suggest that EPSDT, vision and dental, and neonatal care are the benefits currently covered by Medicaid or under the ACA that must be added to Medicare to ensure no child is worse off under the new system.
In Medicaid, EPSDT provides a wide range of preventive, diagnostic, and treatment services in a more robust way than the program affords adults. It ensures any treatment or service deemed necessary is paid for so long as it falls under one of the very broad categories of Medicaid coverage. Caps on the benefit are not allowed. Despite its comprehensiveness, the cost of EPSDT is relatively low.
Furthermore, the ACA mandates coverage of vision and dental health services for kids, as well as neonatal care. Pediatric dental plans may be sold separately in the exchanges, and that could be a model adopted under MAPSA, although a pediatric vision benefit is mandated for all plans. Medicaid also requires coverage of vision and dental care for kids. Again, in a pediatric context, covering these services and neonatal care is not likely to tip the scale meaningfully when it comes to spending.
On a related note, Medicare also does not cover contraceptive services, which are a mandatory benefit under the ACA and Medicaid. The Trump administration’s recent move to expand exceptions to this requirement for employers is only the most recent demonstration of the political volatility of the topic. It’s not an overstatement to say that it, not to mention disposition of existing Hyde Amendment restrictions on federal funding of abortion, could undermine an otherwise bipartisan agreement on broad-based reform. For now, I will simply point out that evidence strongly supports the conclusion that access to contraception reduces unwanted pregnancies and health care spending. The rest we’ll put off to another day.
Conclusion And Next Steps
I would suggest that the key takeaway here is that the Medicare benefit is pretty darn robust, an excellent place to start for a universal coverage regime. With some minor exceptions, it covers everything we would need, has built-in assistance for low-income people, and provides pathways for employers or higher-income households to buy additional benefits. With Medicare Advantage, it would provide additional choices for families to pick a plan that’s best for them, while fostering competition among private carriers on premium, quality, and other factors consumers care about.
As noted, there are some clear flaws that would need to be confronted, especially the lack of a catastrophic cap in the traditional program and exclusion of LTSS or EPSDT coverage. With this in mind, in a subsequent post, I will try to sort out what the existing spending in our system (federal, state, employer, and household) could afford if repurposed toward an advanceable tax credit for the purchase of a Medicare plan.
Additional must-do’s on the list include considering the impact on providers, transitional issues for families, employers, and states as we consolidate our multisiloed regime, and (perhaps most importantly) political viability.
On October 21, 2017, attorneys general from eighteen states and the District of Columbia filed their responsive brief in California v. Trump, in which they are seeking an order preventing the Trump administration from halting cost-sharing reduction (CSR) payments reimbursing insurers for reducing cost-sharing for low-income consumers as required by the Affordable Care Act (ACA).
The states reiterate their argument that the text and legislative plan of the ACA demonstrate that Congress appropriated funding for the CSR payments through the ACA’s premium tax credit appropriation; they also argue that the insurance markets created by the ACA cannot function on an annual appropriation basis. The states reject the administration’s argument that they should seek relief through the CSR payment case pending in the District of Columbia, noting that the D.C. case involves different issues than their case and that both the states and the administration have argued that the D.C. court has no jurisdiction in any event because the House of Representatives lacks standing to sue.
The states describe again the irreparable injuries they will suffer in terms of increased insurance costs, insurer market exits, more uninsured individuals, and increased administrative burdens if the termination of CSR payments is not enjoined. They also argue that a preliminary injunction is necessary to preserve the status quo and to avoid “chaos, uncertainty, and confusion.”
Four amicus briefs were filed in support of the states. The National Health Law Program filed a brief representing Families USA and over two dozen other consumer organizations. The NHELP brief sets forth research into consumer behavior illuminating why premium increases will hurt consumers even in states that take action to ensure that the increases are covered by increased premium tax credits for many consumers. In states that fail to take appropriate action, consumers will be even more disadvantaged. Moreover, termination of CSR payments will induce insurers to try to avoid low-income consumers, as they will get the same premiums from higher-income enrollees without having to reduce cost sharing. The mere threat of CSR payment termination has already driven insurers from exchanges, reducing consumer choice.
The brief describes the situations of particular consumers affected by the confusion and worry caused by the CSR defunding. Finally, in support of the states’ argument that President Trump is violating the constitutional requirement that the president take care that the laws be faithfully executed, the brief lists seventeen actions President Trump has taken to undermine the ACA leading up to the cancellation of the CSRs.
A second brief was filed in support of the states by America’s Health Insurance Plans, demonstrating that the CSR funding cutoff will in fact do serious, irreparable damage to insurers and the consumers they cover. This brief argues that payments must in fact be made monthly and that an eventual recovery of lost payments in the Court of Claims is not an adequate substitute.
Democratic members of the House of Representatives filed a third amicus brief in support of the states. The legislators assure the court that the intention of the Congress that passed the ACA was to fund the CSR payments from the same appropriation as the premium tax credits, with which they were repeatedly paired in legislative language. Action taken since 2010 has consistently demonstrated that CSR payment funding was appropriated, according to the brief.
A fourth brief supporting the states was filed by Santa Clara County, which is both an insurer and a health care provider. The county argues that it will be injured in both capacities by the administration’s action. The American Hospital Association, Catholic Hospital Association, Federation of American Hospitals, and Association of American Medical Colleges jointly filed a brief nominally in support of neither party, but in fact supporting the states’ argument that the termination of the payments will cause harm that Congress could not have intended.
Finally, one amicus brief was filed in support of the administration by the House of Representatives. The House reiterates the argument that it made in its D.C. lawsuit against the administration (before the administration switched side) that Congress has never appropriated funding for the cost sharing reductions.
On October 20, 2017, the federal government filed a response to the states’ motion for a temporary restraining order and injunction in California v. Trump. The attorneys general of eighteen states and the District of Columbia sued the federal government on October 13 challenging as illegal President Trump’s decision to cease cost-sharing reduction (CSR) payments; these payments reimburse insurers for the reductions in out-of-pocket limits, deductibles, and other cost-sharing that the insurers are legally required to offer low-income enrollees in silver marketplace plans. On October 18, the states moved for a temporary restraining order and preliminary injunction to keep the payments flowing.
The Government’s Argument
The basic contention of the government’s brief is the argument that the House of Representatives made successfully to the federal district court in its lawsuit against the Obama administration—that the cost-sharing reduction requirements of the ACA are separate from its premium tax credit provisions and that, while the ACA appropriated funding for the premium tax credits through the tax refund provision of the Internal Revenue Code, Congress has never appropriated funding for the CSR payments. Since Congress has never appropriated funding for the CSR payments, the government cannot reimburse the insurers for reducing cost sharing, and the court cannot order it to do so. Until its recent change of position in the House litigation, the government argued that in fact the CSR funding had been appropriated.
The government further argues that the plaintiff states are not suffering the irreparable injury from the CSR funding cutoff that must be shown to gain an injunction; indeed, they have not been injured at all, and thus do not have standing to sue. The government argues that the states have not shown that any insurers have left the individual market because of the government’s decision. Any premium increases due to the funding cutoff will not happen until future years since rates are locked in for 2017. And in any event, increased premiums will be covered by increased tax credits. (This ignores the fact that many individual market enrollees do not receive tax credits and will have to bear the full cost of premium increases).
Any injury that may result is to insurers and to health plan enrollees, not to the states themselves, the government argues. Moreover, the statute nowhere requires the government to make CSR reimbursement payments monthly, so insurers had no right to count on receiving October payments in any event. When it allowed the states to intervene in the suit filed by the House, the Court of Appeals for the District of Columbia Circuit ruled that they in fact have injury sufficient to establish standing to challenge a decision that the CSRs should not be paid, but the government says in a footnote that it disagrees with this ruling.
Judge Chhabria’s Questions And The Government’s Answers
If the administration plans to argue that the states cannot get emergency relief in this case because they are also parties by intervention on the appeal of the House of Representatives case in the Circuit Court for the District of Columbia, explain how they would get a request for emergency relief adjudicated promptly in that case.
Given the fact that the ACA requires the government to reimburse insurers for cost sharing reductions, is there any reason to believe the insurers would not win if they sued in the Court of Claims? If so, how does that affect the merits or the balance of the harms in this case?
Can the government provide a state-by-state breakdown of the states where insurers have raised their rates in anticipation of the government ceasing cost-sharing reduction payments? How do we know the increases are due to this rather than some other cause?
How common is it for Congress to require (and not just authorize) expenditures by the executive branch without appropriating permanent or annual funding? Has there been litigation on this issue?
In response to the first question, the government argues that the case in the D.C. Circuit, in which the states have intervened as parties, involves the same facts and legal issues, and that the states should not be able to litigate the issue in two separate courts. The government does not explain, however, how the states could get an injunction in the D.C. Circuit, rather arguing that the question should be litigated in the D.C. district court that enjoined the payment of the CSR reimbursement in the first place (an order that is now stayed pending the D.C. Circuit appeal). The government acknowledges its position, however, that the D.C. courts have no jurisdiction over the case to begin with since the House of Representatives has no standing to sue to stop the CSR payments.
As to the second question, the government argues emphatically that insurers can recover any money they may be due—without conceding that the statute requires any payment at all—in the Court of Claims. The government cites the example of the numerous lawsuits that insurers have filed against the government in the Court of Claims when the government failed to pay them money owed them under the ACA’s risk corridor provisions. Some of those cases have been pending for over a year and a half, however, and are nowhere near final resolution.
In response to the third question, the government attaches an affidavit describing premium increases that insurers have made for 2018 to accommodate the nonpayment of the CSRs. Most states have allowed premium increases for 2018, which in turn have been permitted by CMS, but no further increases will be allowed at this time.
Responding to the last question, the government offers a list of program where federal laws have established a payment program funded through annual appropriations, the most prominent of which involves the Medicaid program. The government points to a handful of instances where such programs have not been funded, resulting in litigation. In its brief in the case brought by the House, the government argued that Congress passed a law in 1997 to end the creation of such “appropriated entitlements.”
Finally, the government asks that, if the court concludes an injunction is appropriate, it not apply nationwide and be stayed pending an appeal. The government notes that an injunction would require it to pay more than $600 million a month, and that an order for it to do so would not be appropriate until appellate review was concluded.
The government nowhere refers to or explains President Trump’s tweets as to his intentions in ending the CSR payments, cited throughout the states’ brief. The states will file their responsive brief on October 21.
Also on October 20, CMS posted at its REGTAP.info website a set of frequently asked questions describing the technical aspects of the CSR funding cutoff. CMS is not only ending future CSR payments, but also reconciliation proceedings for discrepancies in past CSR payments, unless plans have been overpaid.
CMS Letter Tells Iowa How Its 1332 Waiver Request Will Be Assessed
On October 19, 2017, the Centers for Medicare and Medicaid Services sent a letter to Iowa responding to its request for a 1332 state innovation waiver. In its request, Iowa asked the federal government to waive a number of provisions of the ACA to allow it to make its own premium credit eligibility decisions, with insurers directly enrolling Iowa residents in standard plans. It essentially asked the federal government to cover the full cost of its alternative program, as well as a reinsurance program.
CMS has not yet ruled on Iowa’s request. The October 19 letter informs Iowa as to how CMS will determine whether the state meets the section 1332 requirement that innovation waivers not increase the federal deficit, as well as section 1332’s formula for determining the amount of pass-through payments.
Iowa essentially stated that its proposal would increase enrollment in Iowa, and the federal government should pay what it would have paid in premium tax credits for all of the new enrollees. CMS has responded that CMS can only provide the amount of funding that would have been provided for premium tax credits in Iowa had it not implemented a waiver. Moreover, CMS will subtract from this amount the costs it will incur from the Iowa program and the money the federal government will lose because of lost exchange user fees and reduced individual and employer mandate penalties (employer mandate penalties would not be owed in Iowa because the penalty only applies to an employer if an employee collects premium tax credits through an exchange).
For Iowa’s request to be approved, it will need to make up the difference in the cost of its proposal and the amount the federal government can offer. This is very unlikely to happen.
Health Affairs is planning a theme issue focusing on the State of California, scheduled for publication in September 2018. The theme issue will examine developments, trends, and emerging priorities within the State of California, as well as the larger framework of the federal policy environment and how the state is responding.
We plan to publish about 20 peer-reviewed articles in the issue, including several invited overview papers that will highlight distinguishing features of California and activities and trends in the state that bear watching by others.
In filling out the issue, we will put a premium on empirical work–original research, systematic reviews, well-designed case studies–that presents evidence and analysis aimed at supporting future decision making in the state and highlighting lessons for observers in other states and at the national level. We will also consider a small number of commentaries and welcome submissions from leading researchers and scholars, analysts, industry experts, and health and health care stakeholders.
We invite all interested authors to submit abstracts for consideration for this issue. Editors will review the abstracts and, for those that best fit our vision and goals for the issue, invite authors to submit full papers for consideration for the issue.
In order to be considered, abstracts must be submitted no later than 11:59PM Eastern time, November 6, 2017. We regret that we will not be able to consider any abstracts submitted after that date.