A project of the Galen Institute

Issue: "Business Impact"

Reform Update: Facing ACA mandates, insurers diversify into technology

Beth Kutscher
Modern Healthcare
Fri, 2014-08-29
"Health insurance companies, now required to spend the lion's share of premium revenue on patient care, are looking for higher investment returns elsewhere. As a result, they're increasingly putting money into technology ventures where they expect to realize higher returns. The medical-loss ratio standard under the Patient Protection and Affordable Care Act requires insurers to spend at least 80% of what they earn from premiums on patient care and related quality improvements. No more than 20% can be used for administrative, marketing and business expenses. The requirement is as high as 85% for large group plans. Tied to that, insurers are trying to maximize their investment returns while also investing in businesses that are exempt from the 80/20 rule. Technology operations check off both those boxes for them. "That's been a catalyst for a substantial amount of investment,” said Joshua Kaye, a Miami-based partner at law firm DLA Piper. “We're really seeing it on a national scale.

More Data to Be Withheld from Database of Physician Payments

Charles Ornstein, Pro Publica
Fri, 2014-08-29
"A new problem has emerged with the federal government's Open Payments system, which is supposed to go live Sept. 30 and disclose payments to physicians by pharmaceutical and medical device companies. A couple weeks ago, the U.S. Centers for Medicare and Medicaid Services said it would be withholding information on one-third of the payments, citing data inconsistencies in company submissions. Now, a source familiar with the matter tells ProPublica that CMS won't disclose another batch of payments: research grants made by pharmaceutical companies to doctors through intermediaries, such as contract research organizations.

How you end up spending $800 million on HealthCare.gov

Nancy Scola
Washington Post
Thu, 2014-08-28
"Signed into law by President Obama on March 23, 2010, the Affordable Care Act has proven to be its own kind of jobs act, especially when it comes to the Washington-area IT community. When, in several places, the bill called for the creation of an "Internet website" to allow Americans to find and sign up for new health insurance coverage, it opened the tap on hundreds of millions of dollars that would eventually go to creating HealthCare.gov's front end and back end, as well as a small universe of accompanying digital sites. On Wednesday, the office of Daniel Levinson, the inspector general of the Department of Health and Human Services, put out a report detailing the dozens of contracts that went into building out the Federal Marketplace project.

The obscure part of Obamacare that takes on executive pay

Jason Millman
The Washington Post
Thu, 2014-08-28
"We all know Obamacare is a pretty big law, with plenty of obscure provisions that don't get much attention. For one, the law targets big executive pay packages at health insurance companies — and based on data released Wednesday, the provision is already going a long way. Companies have long been able to deduct salaries to top executives from their federal tax bills, although since the early 1990s — in an effort to reduce excessive pay — the government has limited the amount to $1 million. Starting last year, a piece of the Affordable Care Act lowered the limit to $500,000 for health insurers (although the $1 million limit still applies to the rest of corporate America). It also eliminates the tax carve out for what tends to be much more lucrative performance pay, like stock options, for health insurers.

Consumers deal with insurance deadline, site glitches

Jayne O'Donnell, USA Today
Thu, 2014-08-28
"Hundreds of thousands of people risk losing their new health insurance policies if they don't resubmit citizenship or immigration information to the government by the end of next week -- but the federal Healthcare.gov site remains so glitchy that they are having a tough time complying. Consumers are being forced to send their information multiple times, and many can't access their accounts at all, immigration law experts and insurance agents say. The Centers for Medicare and Medicaid Services sent letters to about 310,000 consumers two weeks ago, telling them they need to submit proof of their citizenship or immigration status by Sept. 5 or their insurance will be canceled at the end of the month. CMS spokesman Aaron Albright says letters were sent only to people for whom the government has no citizenship or immigration documentation.

3 ways insurers can discourage sick from enrolling

The Associated Press
Thu, 2014-08-28
"Insurers can no longer reject customers with expensive medical conditions thanks to the health care overhaul. But consumer advocates warn that companies are still using wiggle room to discourage the sickest — and costliest — patients from enrolling. Some insurers are excluding well-known cancer centers from the list of providers they cover under a plan; requiring patients to make large, initial payments for HIV medications; or delaying participation in public insurance exchanges created by the overhaul. Advocates and industry insiders say these practices may dissuade the neediest from signing up and make it likelier that the customers these insurers do serve will be healthier -- and less expensive. “It’s the same insurance companies that are up to the same strategies: Take in as much premium as possible and pay out as little as possible,” said Jerry Flanagan, an attorney with the advocacy group Consumer Watchdog."

Reform Update: Ascension deals signal new economic reality in healthcare

Melanie Evans
Modern Healthcare
Thu, 2014-08-28
"Ascension Health, one of the nation's largest hospital owners, is expanding rapidly with a string of announced deals that its CEO says will grow its reach beyond hospitals to keep pace with rapid Obamacare-induced changes in the marketplace. But notably, Ascension is not on an acquisition spree. Its latest deals—in Illinois, Michigan, Arizona and Wisconsin—are not outright purchases, but rather agreements with regional rivals and other national players to jointly own, operate or contract for hospitals and insurance companies. The deals pair Ascension with well-established players in each market and allow the system to avoid costly competition or wasteful duplication by capitalizing on partners' resources that Ascension lacks, said Robert Henkel, Ascension Health's chief executive. The strategy also will allow Ascension to jointly develop broader services to care for patients at home, in nursing homes and other locations outside of hospitals.

Medicare Limbo: A Question Seniors Need To Ask If They're In The Hospital

Northwestern Mutual team
Forbes magazine
Wed, 2014-08-27
"Bill Jacobs spent four nights in a hospital in Florida battling pneumonia. His kids visited each day, fluffed his pillows, brought his favorite Sudoku puzzles and got regular updates from his nurses and doctors. Imagine their surprise when they found out that their 86-year-old father was never actually admitted; instead, he was treated as an outpatient under what Medicare refers to as “observation status.” What difference does that make? Actually, more than you might think. If your parents are on Medicare, the difference between being considered an inpatient or an observation patient could be thousands of dollars out of their pocket, if not more. First, Medicare Part A will cover all hospital services, less the deductible, but only if you’re admitted to the hospital as an inpatient. The one-time deductible covers all hospital services for the first 60 days in the hospital. Doctors’ charges are covered under Medicare Part B.

Another ObamaCare website suffers delays, glitches ahead of launch date

Fox News
Wed, 2014-08-27
"Thought HealthCare.gov had problems? Another federal government-run website created under ObamaCare is suffering the same symptoms as the troubled federal health care exchange -- grappling with delays, data problems and other hiccups as the deadline to take it public nears. At issue is a database known as the Open Payments website. It was created under the Affordable Care Act to shed light on the financial ties between doctors and pharmaceutical companies as well as device manufacturers. The transparency initiative is supposed to include detailed information about drug payments made by doctors as well as the value of gifts and services given by drug makers. Such items can include everything from meals to swanky retreats. The database project, though, is dealing with a minefield of technical problems and confusion over the data. The problems led the Centers for Medicare and Medicaid Services to shut down what is currently a private site for 11 days earlier this month."

Pharma tells the Federal Government: Transparency Works Both Ways

Peter Loftus
Wall Street Journal
Wed, 2014-08-27
"File this under ‘how ironic.’ Drug makers are asking for more transparency from the government agency that is requiring them to be more transparent about how much they pay doctors. The Pharmaceutical Research and Manufacturers of America, or PhRMA, is calling on the Centers for Medicare and Medicaid Services to further explain why the agency has removed one-third of the payment information from an online database that is due to be made public by Sept. 30. Earlier this month, CMS said it would withhold about one-third of the payment data from the so-called “Open Payments” system. The agency also said it would return the records to drug makers because they were “intermingled,” including the erroneous linking of payment information for some doctors to still other doctors with similar names.

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