Most insured through Kynect will pay more in 2016; Kentucky Health Cooperative seeks 25 percent increase

By Molly Burchett
Kentucky Health News

The federal health law requires that insurers planning to significantly increase premiums for policies on a health-insurance exchange to submit their rates by June 1 for review. Many insurance carriers across the country, including four in Kentucky, are requesting double-digit increases in insurance premiums for 2016.

For the individual market, the requested average rates from companies already participating in the Kynect exchange are:

• Anthem Health Plans, 14.6 percent increase;
• CareSource Kentucky, 11.8 percent increase;
• Humana Inc., 5.2 percent increase;
• Kentucky Health Cooperative, 25.1 percent increase;
• WellCare Health Plans, a 9.28 percent decrease.

The rates are not final, but are subject to approval by the state Department of Insurance, "so we don’t yet know what the final numbers will be," Gov. Steve Beshear said. "Changes still may occur. Rates should be finalized sometime in mid-July. We do expect that some plan rates will go down, some will go up and some will stay close to the same as last year."

Consumers will have more choices when enrollment opens, because the exchange is adding three new insurers to its individual market. United Healthcare will be offering coverage statewide, Aetna policies will be available in 10 counties, and Baptist Health Plan, now Bluegrass Family Health, will offer coverage in 79 counties. CareSource will expand its coverage area from 16 to 67 counties.

With these additions, at least three insurers will be offering Kynect coverage in every county, said Ronda Sloan of the Department of Insurance.

"When open enrollment begins this fall, Kentuckians should seek information about their individual plans, not average costs," Beshear said. "System-wide averages don’t give a good picture of what an individual’s out-of-pocket costs may be."

It is also important to keep in mind that premiums cannot be viewed in isolation, and you should look at the individual market dynamics that impact how much consumers pay for their health care coverage.

Why are most rates going up?

For an insurance company to survive, its cost of providing benefits should be less than the premiumums paid for those benefits. Companies now have had more than a full year of claims data to inform pricing structures, and many insurers are finding that people who buy policies on exchanges are considerably older and sicker than anticipated, reports Megan McArdle of Bloomberg News.

As a result, insurers are incurring greater costs of providing benefits than expected. Initially, the U.S. Department of Health and Human Services said that about 40 percent of the exchange policies should be bought by people between 18 and 35, the most healthy age group, to keep the exchanges financially stable. However, according to HHS data, that group accounted for only 28 percent of the policies in 2014 and 2015.

Not only do older people have more complex and more costly health needs, rising premiums in some state-based exchanges are due in part to the uncertainty in the overall health-insurance marketplace. First, there is much uncertainly about the reform law's "risk corridor program," which was designed to have insurers share the financial risk of offering policies on Obamacare exchanges from 2014 through 2016.

The program creates a pool of money to reduce risk for insurers: Those that pay out less in benefits than they collect in premiums pay into the pool; those whose premiums don't cover the cost of providing benefits take money from the pool. However, a recent Standard & Poor's report says the risk corridor will probably not get enough money from insurers with profitable exchange plans, so many insurers must raise premiums to support themselves.

Kentucky Health Cooperative needs shoring up

In another potentially worrisome sign, some insurers had risk-corridor receivables that exceeded half of their reported capital, and Kentucky Health Cooperative had the second-highest level of receivables as a percentage of capital: 117 percent, reports CNBC. That helps explain why it has asked for the largest average increase in premiums this year, 25 percent, and last year, 20 percent. The cooperative is one of several start-ups funded by the reform law to encourage competition in states; it sells most of the 106,000 private policies on Kynect.

Other reasons for the overall premium increases include rising health-care costs, especially for prescription drugs, Larry Levitt, senior vice president of the Kaiser Family Foundation, said on "PBS NewsHour" Wednesday night.

Speaking nationally, Levitt said state regulation means the requested premiums "will come down, in some cases by a lot." He said "Insurers are jockeying for position in these new marketplaces [so] there are some good deals to be had, but consumers really have to look around,"

David Blumenthal, president of The Commonwealth Fund, which researches health and social policy, said exchanges like Kynect "give people the ability to comparison-shop much more easily than before."

Medicare starts to overhaul the way it pays providers, rewarding them for quality, penalizing them for shortcomings

By Molly Burchett
Kentucky Health News

The Obama administration on Monday set a timeline for historic changes in how it pays doctors, hospitals and other health providers under Medicare, shifting away from the program's traditional fee-for-service model and towards a model that rewards care quality.

Rather than give the usual yearly fee increases to Medicare doctors for every procedure or service, the Department of Health and Human Services will tie 30 percent of traditional, fee-for-service payments to models like "accountable care organizations," which base payments (and penalties) on patients' health outcomes. The goal is for half of all Medicare payments to be handled this way by 2018, reports Jason Millman of The Washington Post.

"Today's announcement is about improving the quality of care we receive when we are sick, while at the same time spending our health-care dollars more wisely," said HHS Secretary Sylvia Burwell. "We believe these goals can drive transformative change, help us manage and track progress and create accountability for measurable improvement."

Medicare is the country's largest payer for health-care services, so these payment changes will affect doctors' offices and hospitals across the country. Many experts have viewed this broader shift to rewarding care quality as long overdue, but it's still uncertain how well the approach will work.

"We still know very little about how best to design and implement [value-based payment] programs to achieve stated goals and what constitutes a successful program," concluded a 2014 Rand Corp. study funded by HHS, Millman reports.

Some health-care professionals said Medicare is just aligning with what is already working in the private sector by moving away from fee-for-service, reports Alex Wayne of Bloomberg Businessweek.  “The private sector is further ahead than Medicare right now,” said Justine Handelman, vice president for legislative and regulatory policy at the Blue Cross and Blue Shield Association.

Since Medicare is already limiting payments as part of the 2010 health-reform law, the government must “ensure that only reforms proven to be efficient and effective are put in place,” Chip Kahn, CEO of the Federation of American Hospitals, told Wayne. “Further cuts would undermine our ability to invest in delivery system innovations needed to continue this trend.”

The announcement marks the first time that goals have been set to fundamentally change the way Medicare pays for health care, giving providers incentives to reduce unnecessary services.

Dr. Douglas Henley, CEO of the American Academy of Family Physicians, told CNBC: "We're all partners in this effort focused on a shared goal. Ultimately, this is about improving the health of each person by making the best use of our resources for patient good. We're on board, and we're committed to changing how we pay for and deliver care to achieve better health."

The price for health care could be right, if it's known

By Molly Burchett
Kentucky Health News

People often shop around and compare prices when making a large purchase, and some consumer advocates, employers and health plans are pushing for price transparency in health care so it's easier for consumers to compare prices. However, many questions remain about whether or not price transparency is possible, or if it would even affect health costs and outcomes.

Making it easier for consumers and patients to compare prices encourages them to look around for a better deal, says a study published in the Journal of the American Medical Association. The study focused on the use of Castlight Health's online pricing platform and explored whether there was a reduction in costs to employers and employees for laboratory tests, advanced imaging services and clinician office visits.

Lab tests and imaging saw the biggest savings in the study, dropping 14 percent and 13 percent, and primary care offices visits also dropped by 1 percent, according to the study. Additionally, the study showed that claim payments were lower for all services for employes who used Castlight versus those employees who did not.

But less expensive care doesn't always equal higher quality care. Price transparency’s impact is realized only to the extent that it empowers consumers and influences their behavior, and price is only one of the variables that consumers need to evaluate the value of health services.

"One thing the study can't answer is whether patients are making better decisions or just cheaper ones. They're finding lower-cost options, the study finds, but it doesn't tell us how patients are taking into account things like patient satisfaction, years of clinician experience and other provider characteristics," writes Jason Millman of The Washington Post.

Another important thing the study both can't and wasn't designed to predict is whether transparency will reduce overall health spending, writes Millman. Health-care economist Uwe Reinhardt writes, in a separate JAMA editorial, that early results of research suggest that price transparency in health care can result in less spending.

Other experts have expressed doubts about this "free market" approach. In a Huffington Post article, physician and systems theorist Deane Waldman says that price is not one of the pieces of information consumers need to re-install free market forces into health care because the present health-care market in the U.S. is not free.

"The consumer can have all the information in the world, but without control of his/her own money, and without sellers competing for those dollars, the market will not work. One cannot have the advantages of free market forces if the market is not free," writes Waldman.

Similarly, Reinhardt says that comparing the costs of procedures only works if people have a choice between healthcare providers. That may be a major complication for Kentuckians in rural areas where providers may be scarce or insurance coverage may not be comprehensive.

Massachusetts is the first state to mandate some level of price transparency. However, resistance from both provider and payer communities suggests that large-scale adoption of transparency initiatives will likely be both heavily debated and slow.

Edelen says rural hospitals are top issue for rural U.S. and rural Kentucky; says some pols in state want to give up on rural Ky.

By Molly Burchett and Melissa Patrick
Kentucky Health News

BOWLING GREEN, Ky. – State Auditor Adam Edelen has finished his series of town-hall meetings across the state to get a better understanding of the struggles faced by rural hospitals, but this isn't the last you will hear from him about the brewing crisis among these hospitals – a crisis that he says is not just a Kentucky problem but "the most important issue facing rural America."

Hours before his last town hall, in Bowling Green on Sept. 19, Edelen told Kentucky Health News that the tour was not just about assessing the finances of these hospitals, because he has heard politicians in both parties say "We just have to give up on rural Kentucky. . . . I'm passionate about not giving up on rural Kentucky."

Challenges faced by rural hospitals are very different than those faced by suburban or urban hospitals, Edelen said, so a "one-size-fits-all" approach won't keep Kentucky's rural hospital network in vibrant or sustainable.

He noted that Medicare and Medicaid reimburse hospitals at below the cost of providing care, with the expectation that they will make it up from private payers, but such payers are in short supply at many rural hospitals because the economic recovery is "nonexistent in rural areas."

Changes in the health-care system

Some rural hospitals are expressing concerns about the expanding Medicaid rolls under the Patient Protection and Affordable Care Act, but Edelen said in the interview that most of the complaints he heard are about Kentucky’s move to put Medicaid under managed care in 2011.

He said in Bowling Green that Kentucky rolled out in six months what should have taken 18 months, creating a "extraordinarily complex" and costly Medicaid system that still has no-pay and slow-pay issues. Then came the PPACA, generally known as Obamacare, creating an unprecedented level of complexity.

The extra administrative overhead is particularly difficult for small hospitals and health-care providers, he said, and payment disputes with managed-care companies can be existential threats to community hospitals with small cash reserves. The Nicholas County Hospital in Carlisle closed in May.

"We've got a number of hospitals in Kentucky who have less than 15 days of cash reserves," Edelen said. "One hospital in particular told me that leaders meet weekly to figure out about who's getting paid and how much just to keep the doors open. . . . County officials are afraid they are going to lose their hospital, while the cabinet says all is well."

Cabinet for Health and Family Services Secretary Audrey Haynes said in an email, "There is little doubt that Kentucky's health-care industry has gone through tremendous transformation since November 2011." She said managed care within and "many other important changes . . . have created a health-care delivery system with more accountability; increased focus on prevention and early detection; decreased use and high costs of our emergency rooms for non-medical emergencies; and are actually treating and managing both mental and physical healthcare of our Medicaid consumers to achieve healthier outcomes."

Haynes added, "With the assistance of managed care, we saved Kentucky taxpayers $1.3 billion of state and federal funds in the last biennium budget ending June 2014," while providers "had a record revenue year, receiving over $3.4 billion." She concluded, "I realize the implementation of managed care has not always been easy for our hospitals and other health-care providers, but we continue to work closely with them and make adjustments and improvements."

Edelen said in the interview that hospitals "know their business models have to change," but health-access to care is still an issue, and if hospitals close, those issues will grow. He said he understands that not all rural hospitals can survive, but "You gotta try."

He also said rural hospitals are needed to deliver on the promise of Obamacare: "What's the good of having everybody insured if there's no one to provide care?" What's the government doing to soften the blow coming with these health-care changes?"

Kentucky is not alone

Kentucky has handled implementation of the reform law better than other states, Edelen said, but there are still big problems that no one is thinking about.

Like other rural hospitals across the country, community hospitals in Kentucky have long relied on federal subsidies of facilities with high numbers of Medicaid patients and uninsured people. Since the reform law was designed to cut the number of uninsured, it will also phase out Disproportionate Share Hospital (DSH) Medicaid payments to hospitals by 2020.

Kentucky's DSH money shrank by 4.2 percent in the fiscal year that ended June 30. The allocation is determined federally, but state officials have considerable discretion in how the cuts are applied to individual hospitals.

"I fear that the disappearance of DSH payments could be a death knell for Kentucky's rural hospitals," which would have serious economic repercussions for their communities, Edelen said. "We have an opportunity to be a thought leader here because this is going on all over the nation."

Nationwide, many rural hospitals are closing down just like the hospital in Nicholas County. Reuters reported that 24 rural hospitals have closed across the country since the start of 2013, double the pace of the previous 20 months, leaving whole communities without quick access to acute care.

"This needs to be an issue for rural America in the 2016 presidential campaign," Edelen said. "Now that the Farm Bill's passed, this is the most important issue facing rural America, and the competition's not even close."

Not just a health-care problem

Research shows rural hospitals contribute significantly to local economies. Health care accounts for 15 percent to 20 percent of all jobs in rural communities,  Dr. Mary Wakefield, now the administrator of the federal Health Resources and Services Administration, told a congressional hearing in 2000. Furthermore, health services and schools are important quality-of-life factors for attracting and retaining employers and retirees.

"When you lose your rural hospital you lose not only one of the primary employers in a county, but you tend to lose the leading corporate citizen," Edelen said in the interview. "You lose things like ambulance services and providers networks and then the burden on health departments becomes more pronounced; that is not sustainable long term."

For prosperity, a community needs an educated work force, a healthy economic environment and a network that provides health care, he said. "These are the things that are the non-negotiables in the 21st Century if you are going to bring prosperity to every part of Kentucky," he said in Bowling Green.

Edelen told the audience of about 120 that he wanted them to go home and talk about this issue in their communities to make Frankfort, with its "fifteen-minute attention span," pay attention. "Kentucky at its core is always going to be a state with a rural character," he said.

The auditor's office is compiling a report that will also include a financial "stress test" of 66 rural hospitals. Edelen said he aims to release it in November or December. "I want to clearly define the problem," he said, "and then facilitate a conversation to solve the problem."

He said in Bowling Green, "What this is really about in a nutshell is whether the political leadership in Kentucky is going to give up on rural Kentucky."

Health-care forum examines 'incredible change' in Kentucky's health-care system, looks forward to more access to care

By Molly Burchett and Al Cross
Kentucky Health News

What does health-care reform mean to Kentucky? What impact has Medicaid expansion had? Can we work together to do care differently in Kentucky? Answers to these questions and more were offerd by national, regional, and local health care experts Sept. 16 in Louisville at the Foundation for a Healthy Kentucky's annual Howard L. Bost Health Policy Forum.

This year's topic was "Doing Care Differently," but as foundation chair David Bolt, deputy director of the Kentucky Primary Care Association, told the crowd, "It could have just as easily been named after the Bob Dylan song, 'The Times They Are A-Changin'."

As a health-care provider for 44 years, Bolt said, "I have lived through almost every change since the implementation of Medicare and Medicaid. And I am actually excited about the changes I see on the horizon." He said he thinks the late Dr. Bost would look at what Kentucky is doing and say," It's about time we moved away from a treat-'em-and-street-'em mentality to integrated health care delivery services and systems rooted in accountable outcomes and founded in a value-drive system of improving health."

One of the biggest recent changes in Kentucky health care is Gov. Steve Beshear's expansion Medicaid at the beginning of the year, which offered coverage to Kentuckians under 65 in households up to 138 percent of the federal poverty level. As a result, Medicaid is now the largest health-care payer in the state, serving 1.1 million Kentuckians, one out of every four, Cabinet for Health and Family Services Deputy Secretary Eric Friedlander told the crowd.

"We had incredible enrollment. It's an incredible change." said Friedlander. "We hope it is a change for the better."

Friedlander said enrollment in every county exceede estimates for the state by the accounting firm PriceWaterhouse Coopers, based on estimates from the Congressional Budget Office. Those estimates anticipated 55 percent of eligible persons enrolling in the first year, leveling out at 70 percent in future years. Instead, enrollments through June were almost double the prediction.

Medicaid paid more than $284 million to Kentucky health-care providers in the first half of this year for treating the newly eligible Medicaid beneficiaries, with hospitals receiving 48 percent of those reimbursements, Friedlander said. He said that number will be $1 billion to $2 billion by the end of the year. (Medicaid payments sometimes take months to complete.)

The federal government is paying the entire cost of the newly eligibles through 2016. State officials have said that they won't be able to update cost estimates for 2017 a few more months because additional data must be collected about enrollees after the insured population has stabilized.

"Medicaid expansion is not static," Friedlander said. "It is dynamic, and the individuals that make up that enrollment are constantly changing."

Friedlander said employment in Kentucky health care has increased by 3,800 jobs, but the study estimated that 7,600 jobs would be added in the first year. This means enrollment is almost double what was projected yet job expansion is almost half. That undercuts Beshear's contention, based on the study, that Medicaid expansion will pay for itself by adding heath-care jobs.

As more Kentuckians get insurance, there may be shortages of primary-care doctors, especially in rural areas of states like Kentucky, reports Kaiser Health News. That need could be overstated, Sheila Schuster, a clinical psychologist and executive director of the Advocacy Action Network, said at the forum.

Kentucky has 3,929 advanced practice registered nurses, Schuster said, 54 percent more APRNs than in 2010. A new state law that took effect July 15 "removed a barrier that was keeping them from opening practices," she said. The law allows APRNs to prescribe non-narcotic drugs independently after they have prescribed under physician supervision for four years.

The law was passed after negotiations among the Kentucky Medical Association, the Kentucky Academy of Family Physicians and the Kentucky Coalition of Nurse Practitioners and Nurse Midwives. Schuster suggested that other such compromises are needed to expand access to health care.

"We aren't playing very well with each other in the sandbox," she said, adding that turf battles need to be set aside to keep health-care innovation people-centered.

The forum was co-sponsored by KET, Louisville's Health Enterprises Network, the Kentucky Health Information Exchange, the Kentucky Medical Association and Leadership Kentucky.