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Obama Administration Backs Off on ACA Rules for 2017 Health Plans Justice Scalia’s Death Leaves Healthcare Cases in Limbo Virtual Reality: More Insurers Are Embracing Telehealth
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C O N T E N T S
4 Obama Administration Backs Off on ACA Rules for 2017 Health Plans
6 Justice Scalia’s Death Leaves Healthcare Cases in Limbo
9 Virtual Reality: More Insurers are Embracing Telehealth
14 IBM Deal to Buy Truven Will Add 8,500 Clients and Boost Data Trove to 300 Million Patients
Affiliated Practice
Obama administration backs off on ACA rules for 2017 health plans By Bob Herman
In a major win for the industry, health insurers will not be forced to have minimum quantitative standards when designing their networks of hospitals and doctors for 2017, nor will they have to offer standardized options for health plans. The CMS released a sweeping final rule (PDF) Monday afternoon that solidifies the Affordable Care Act's coverage policies for 2017. The agency proposed tight network adequacy provisions and standardized health plan options in late November, which fueled antipathy from the health insurance industry. Monday's rule relaxes those aggressive proposals, a move that likely will raise the ire of consumer groups that have pushed for stronger insurance protections for patients. It does, however, include some victories for transparency advocates. The federal government, for example, will now have to publish all changes to premium rates, not just increases that are subject to review. The rule addresses several other issues, including surprise medical bills and the 2017 open-enrollment period. Health insurers that sell plans on the federal marketplace put pressure on the CMS to scale back some of the policies in the draft version of the regulations. Network adequacy was among the most pressing concerns. Many exchange plans use HMOs or narrow networks of hospitals and doctors as a way to keep premiums lower, which most consumers say is at the top of their minds. However, regulators and consumers were concerned that the plans overly restricted where patients could go to receive care. The agency proposed that all ACA plans on the federal exchange in 2017 be required to have networks in which hospitals and doctors were within certain travel times or distances from members. Some medical specialties, under the proposal, were to have minimum provider-to-member ratios to ensure patients had enough access to care. Hospitals, physician groups and consumer groups cheered the CMS' proposal, though some argued for more specific network adequacy standards. But it was departure from the state-by-state approach endorsed by the National Association of Insurance Commissioners. Integrated systems and large insurers also disapproved of the proposal, saying it would raise their costs and consumers would end up paying higher premiums. In the final rule, the CMS abandons its proposal in favor of giving states time to “actively implement these provisions” through the NAIC's model law. However, the agency said it “will revisit this proposal in future rulemaking.” Another major proposal that drew industry flak was instituting so-called “standardized options” for health plans. The government wants to make shopping on the exchanges as easy as possible for consumers and turned to a policy that has been used in some state-based exchanges. Standardized options basically require health plans in each metal tier to have the same levels of basic benefits to make comparison shopping simpler. For example, all bronze offerings would have a $6,650 annual deductible. Deductibles and cost-sharing limits for silver plans would depend on if the consumer qualifies for the ACA's cost-sharing reductions. Large insurers vigorously opposed that proposal. Aetna, for instance, told the CMS in a comment letter, “Do not pursue standardized plans.” The CMS actually approved a set of standardized options for 2017 exchange plans. Insurers are not required to adhere to the parameters but can offer the standardized plans “if they choose.” “We recognize that these cost-sharing structures may not be appropriate for all issuers or all markets,” the CMS said. “We are not requiring issuers to offer standardized options, nor limiting their ability to offer other (qualified health plans), and as a result, we do not believe that standardized options will hamper innovation or limit choice.” The optional standardized plans could be attractive to consumers who crave simplicity in their health insurance shopping. But without a mandate, it's uncertain how many of those plans will be offered next year. The CMS finalized a broad array of other measures. Starting for the 2017 insurance season, all changes to premiums—increases and decreases—will be publicly posted for consumers to see. Most insurers opposed those moves on the grounds that it would confuse people and undermine competition. But the final rule sides with other stakeholders who have argued for more transparency during the opaque rate-setting process. The rule also addresses the surprise medical bills that patients see when an out-of-network doctor involved in their care at an in-network hospital bills them for the balance not covered by their insurer. Starting with 2018 plans, the CMS said, all services provided by an “out-of-network ancillary provider in an in-network facility” will go toward the member's in-network annual cost-sharing limit. However, the provision does nothing to prohibit balance billing, and the CMS still defers to states that have more stringent laws that tackle surprise bills. “Our intent in establishing this policy beginning for the 2018 benefit year is to permit us to monitor ongoing efforts by issuers and
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providers to address the complex issue of surprise out-of-network cost sharing at in-network facilities across all CMS programs in a holistic manner, and amend our policy in the future to accommodate progress on this issue, if warranted,” the CMS said. The final rule also builds on recent changes to how people can buy coverage outside of open enrollment. Last week, the CMS tightened up the circumstances when people are allowed to buy coverage outside of open enrollment. Insurers complained that people were gaming the system by waiting until they were sick to sign up for coverage outside of open enrollment, although there's little evidence of actual abuse.
The CMS now mandates that special enrollees provide hard documentation of their triggering events, including the birth or adoption of a child, marriage, moving and losing employer coverage. Other provisions include some tinkering to the ACA's risk-adjustment model that compensates plans depending on how costly their members are. America's Health Insurance Plans, the lobbying group for health insurers, said it is still reviewing the final document, but some of the reversals from the draft rule are likely to boost the industry. “While CMS is taking some positive steps to provide greater stability for the exchanges in 2017, we must stay focused on policies and solutions that promote choice and affordability for consumers in the future,” Matthew Eyles, AHIP's executive vice president of policy and regulatory affairs, said in a statement. Families USA, a group that supports President Barack Obama and the ACA, said the rule was “good but could be better for consumers.” It applauded the optional of standardized plans but was “very disappointed” that the CMS didn't stick with the time and distance standards for provider networks. “If a plan doesn't have enough providers, or they are too far away, consumers can't get the true benefits of health insurance,” Joe Ditré, senior director of enterprise and innovation at Families USA, said in a statement. “We urge states to take swift action to implement quantitative network adequacy standards.” The next open enrollment for the ACA's insurance marketplaces, according to the rule, will run from Nov. 1 through Jan. 31, 2017—the same as it was for 2016 plans. Those dates will also hold true for the 2018 benefit year. Starting with the 2019 signup period, however, the CMS will shorten open enrollment to Nov. 1 through Dec. 15. JANUARY 2016
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Justice Scalia’s death leaves healthcare cases in limbo By Lisa Schencker and Adam Rubenfire
The death of U.S. Supreme Court Justice Antonin Scalia, who famously said the Affordable Care Act should be called “SCOTUScare,” leaves in limbo a number of healthcare-related cases. The news also quickly sparked a debate over who would replace him amid the presidential campaign. Scalia died Friday, presumably of natural causes, at a ranch in Texas. He was 79. The Supreme Court justices are considering a number of important healthcare cases focusing on topics including abortion and the ACA's contraception mandate. The court is also weighing a case about data sharing with potential implications for insurers and state healthcare reform efforts and another case with the potential to reduce—or increase—the number of False Claims Act suits brought against healthcare providers and other companies. Scalia's absence could make a difference in some of those cases. Scalia was a stalwart conservative, known for his colorful writing and acerbic jabs toward justices with whom he disagreed. He joined a dissenting opinion in the 2012 case that upheld the ACA's individual mandate and penned the dissenting opinion in last year's King v. Burwell decision, which allowed Americans in all states to receive insurance premium subsidies. Scalia felt that the Supreme Court justices had gone so far in ostensibly rewriting the ACA, that it should be named after them. President Barack Obama Saturday said he intends to nominate a new justice, but it's unclear whether he would be able to, given Republican opposition to filling the seat before a new president takes office. It's possible the court could hold off on hearing those four big healthcare cases until a new justice replaces Scalia, said Josh Blackman, an associate professor of law at South Texas College of Law who's written extensively on the Supreme Court. He said that's happened in the past. Or, if the court moves forward with those cases and ends up in a 4-4 split, the decisions in the circuit courts will stand, said Tim Jost, a law professor at Washington and Lee University. The risk of such 4-4 decisions is high, especially in cases involving politically polarizing issues, considering that four of the remaining justices are generally considered liberal, three are considered conservative and one, Justice Anthony Kennedy, is often a swing vote. In those very divisive cases, it will be more difficult for the conservatives to score a real win without Scalia. “On really controversial cases where there would have been a 5-4 split, the business of the court essentially stops because you won't have a precedential decision from the court,” Jost said. “You won't have a decision from the court binding on the whole country.” In such a split, the lower court's decision would remain in place, but only for the area of the country served by that circuit. That could make for some messy results, including in the challenge over the ACA contraception mandate. That challenge was brought by religious not-for-profits opposed to an Obama administration policy that says if they want to opt out of the ACA's contraception mandate, they must submit a form to their third-party administrator or provide information to HHS so the government can arrange contraception coverage. They oppose having to play any part in providing birth control to employees. That's the kind of challenge that could result in a 4-4 split--but such an outcome would lead to different rules across the country. That's because seven circuit courts have sided with the government, and one has sided with the religious not-for-profits. Some, however, have speculated the government was more likely than not to win that case anyway, with or without Scalia. A 4-4 split in the abortion case, however, would leave intact a Texas law that requires doctors at abortion clinics to have admitting privileges at local hospitals and providers to comply with the same standards as ambulatory surgical centers. That case is known as Whole Woman's Health v. Cole. A federal appeals upheld the law, saying it didn't impose an undue burden on a woman's right to get an abortion. The law has resulted in the closures of many Texas clinics. More broadly, the case has potential implications when it comes to how all states may regulate abortions. The Supreme Court this term is also considering a case, Gobeille v. Liberty Mutual Insurance Co., on whether a self-funded insurer should have to turn over certain information—such as on claims and member eligibility—to the state of Vermont for its all-payer database. The state argues it needs the data to improve the cost and effectiveness of healthcare and that a ruling against it could also limit reform efforts in other states with similar databases.
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The court is also weighing a case, Universal Health Services v. United States ex rel Escobar, about fraud lawsuits that's caught the attention of major healthcare organizations and associations. That case is over the validity of a legal theory now used to bring many fraud lawsuits against healthcare organizations. The case has the potential to reduce—or increase—the number of False Claims Act suits brought against providers and other companies. But Blackman said it's too early to say exactly how Scalia's death might affect those or other cases. The task of replacing Scalia will surely become a protracted political battle because Obama will need the Republican-dominated Senate's majority approval to fill the spot. Conservatives were quick to assert Saturday that a replacement justice shouldn't be appointed before the 2016 presidential election. Rarely, a president has made “recess appointments” to the Supreme Court without the Senate's consent when it was in recess, according to a Congressional Research Service report. But that hasn't happened since the 1950s and was highly controversial then. Just hours after the death was announced, Republican presidential candidate Sen. Ted Cruz (R-Texas) tweeted that “we owe it to (Scalia), & the nation, for the Senate to ensure that the next President names his replacement.” Senate Majority Leader Mitch McConnell said in a statement that “the American people should have a voice in the selection of their next Supreme Court Justice. Therefore, this vacancy should not be filled until we have a new President.” Senate Minority Leader Harry Reid tweeted that the president can and should send a nominee to the upper chamber right away. “The Senate has a responsibility to fill vacancies as soon as possible,” he added. The vacancy leaves presidential hopefuls with a lot more to consider as they continue to campaign. “It certainly emphasizes the importance of the Supreme Court in the next election, which to me, has always been the most important factor in any event because the Supreme Court always has the last word,” Jost said. Scalia was appointed by President Ronald Reagan in 1986, after Chief Justice Warren Burger retired and was replaced by William Rehnquist. He was previously appointed by Reagan to sit on the D.C. Court of Appeals.
FEBRUARY 2016
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SOVEREIGN HEALTH DOES. To take care of patients, not paperwork To deal with health conditions, not health plans To be a physician, not an administrator
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Virtual reality: More insurers are embracing telehealth By Bob Herman Blue Cross and Blue Shield of Alabama resisted paying for most telehealth services for years after their introduction. The insurer, which holds a near-monopoly of the state's commercial market, had cost concerns about the still-evolving technology that electronically connects patients with doctors and other clinicians. There wasn't even a clear definition of what qualified as a telehealth visit. Should doctors submit a telehealth claim for every patient phone call? Should real-time video visits be the primary catalysts for payment? Should telehealth be used mostly for primary-care treatments such as ear infections and colds? Should it include more specialized care like psychiatry? “What is the definition of telemedicine?” asked Doug McIntyre, vice president of network operations at BCBS of Alabama. “People struggled to really tell us what that is.” But BCBS of Alabama, which operates in a mostly rural state where many people have trouble accessing care, recently shifted gears, in large part because of rapid advances in enabling telehealth technologies. As of last Dec. 1, the insurer began paying providers for five telemedicine services, including behavioral health and stroke. Amid rising demand, the insurer determined that the technology used to treat patients in those categories was “indistinguishable from a face-to-face visit,” McIntyre said. Earlier last year, BCBS of Alabama also struck a deal with Teladoc to add telehealth for urgent care to its group benefit plans. More private insurers are paying for telehealth services, a trend experts say will boost relatively low levels of utilization. More than half of states now have laws with rules addressing telehealth coverage. Nearly all payers now believe telehealth will help rural members access providers and may attract companies that want to offer modern conveniences to employees of the Netflix generation, who expect on-demand services. Insurers are also hoping telehealth will live up to its hype by keeping people out of more expensive healthcare settings. “They've begun to see the financial value in making these offerings available,” said Nate Lacktman, a healthcare lawyer at Foley & Lardner who specializes in telehealth matters. Looking ahead, telehealth advocates and providers see seniors on Medicare as the next major arena for growth. Roughly 1 in 5 people older than 65 live outside of a metropolitan area, and seniors usually have worse access to primary-care physicians and specialists if they live in rural areas. Many older adults in urban and suburban areas also face difficulties traveling to their doctors' offices for frequent appointments. “When you're looking at the chronic condition situations, or simple rural situations (for telehealth), they're (equally) or more relevant to the older population,” said Patricia Smith, former CEO of the Alliance of Community Health Plans. But Medicare still has restrictive rules for telehealth payment. Insurance, provider and technology trade groups are stepping up their lobbying efforts to pass legislation that will force Medicare to provide greater financial support for the service. The origins of telemedicine stretch back to the space race in the 1960s. NASA wanted to see how a zero-gravity environment affected astronauts' vital signs. NASA's desire to monitor the health of its faraway astronauts nurtured a curiosity in “Earth-bound physicians trying to diagnose or treat a patient in a remote location,” reads a 1996 essay in the Bulletin of the Medical Library Association. Today, telehealth includes everything from telephone consultations and live video feeds via Skype to digital CT scans and remote monitoring of intensive-care units. Behavioral health, dermatology, radiology, infectious disease and stroke are commonly covered service lines, and primary-care services are becoming a major focus, since they usually involve quicker diagnoses. MH Takeaways While more commercial insurers cover telehealth services, adoption remains low as Medicare drags its heels in expanding the offering to patients outside rural areas. Health insurers have traditionally resisted paying for a technology that made bold and untested claims about reducing costs, even though the argument in favor of it seemed compelling. A $50 telehealth visit to diagnose an ear infection is much cheaper than a $600 trip to an emergency department. Reducing physician office visits by elderly patients with multiple chronic conditions held out a similar promise. But telehealth didn't have much of a track record. Teladoc, which has a member base of more than 12 million people, admitted as much when it went public in 2015: “The telehealth market is relatively new and unproven, and it is uncertain whether it will achieve and sustain high levels of demand, consumer acceptance and market adoption,” the company stated. The big fear among payers is that telehealth will merely become an add-on to existing services—a reimbursed phone call or Skype chat that comes before or after the office visit. Medicare, in particular, has been “afraid it's going to blow the doors off spending,” said Jon Linkous, CEO of the American Telemedicine Association, a related trade group. FEBRUARY 2016
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However, the progression of higher-quality video equipment, smartphones and faster Internet connections is beginning to allay skeptics' cost concerns. Clearer, sharper telehealth interactions presumably will prevent patients from making duplicative inperson visits. As more people come to value telehealth, it's likely insurance purchasers will assume telehealth visits are covered by their plans. States are moving quickly to establish standards. Twenty-nine states and the District of Columbia have private telehealth coverage laws, with eight of those states enacting new laws in 2015 alone. The National Conference of State Legislatures estimates 32 states will have laws in effect by 2017. The statutes vary wildly, Lacktman said, but they broadly mandate commercial insurers to pay for telehealth services. Some stipulate coverage only for certain media, such as real-time video. Others require specific criteria only if payers choose to offer telehealth. Insurers in 23 states with stricter telehealth parity laws have to cover telehealth services at rates equivalent to inperson visits. Medicare, on the other hand, restricts telehealth payment to extremely narrow circumstances, reserving it as an outlet only for seniors who live in rural communities. For example, patients must live outside a metropolitan area, and they must be physically located at specific clinical sites when receiving telehealth. Medicaid's coverage is more in line with private payers since the CMS gives wide latitude to the states. Coverage of live video telehealth services is almost universal. But the extent of coverage varies. California's Medicaid program, for instance, permits telehealth services to be provided to anyone in any setting, while Idaho Medicaid will pay only for telehealth if the patient is in a rural area with a shortage of providers. A majority of Medicaid programs do not have geographical restrictions, according to the Center for Connected Health Policy. Many large national carriers, including Aetna, Anthem and UnitedHealthcare, cover virtual physician visits in urban and suburban areas, as well as for their rural beneficiaries. In fact, most major commercial insurers and self-insured employers will include some kind of telehealth benefit.
It's a centerpiece offering for some insurance startups like Oscar. Copays and deductibles usually apply, but total out-of-pocket costs usually don't exceed $50 for a basic visit. “With today's modern family and professional life and the practicalities of getting to the doctor, we need to offer the access and
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convenience of a virtual visit,” said Michael Radeschi, director of product management at Highmark, a Blue Cross and Blue Shield affiliate based in Pittsburgh. He cautioned that the technology can't replace all the nuances of in-person clinical care, despite rhetoric from technology optimists who say medicine eventually will be able to be delivered through an iPad. “If we found ourselves at 40% to 50% of professional services that were telehealth, we'd be a little nervous,” Radeschi said. Most insurers use third-party companies to manage telehealth functions. Teladoc, Doctor on Demand and American Well are among the nascent field's leaders. Anthem created its own telehealth joint venture with American Well called LiveHealth Online. Despite a growing willingness to pay for telehealth, it still hasn't penetrated primary care in any significant way. Only 15% of 1,500 family physicians used telehealth in their practices, according to a survey last fall from the Robert Graham Center for Policy Studies, the American Academy of Family Physicians and Anthem. More than half of the doctors surveyed said a lack of payment was the top barrier to using telehealth in their practices. Many physicians had no idea what Medicare, Medicaid or private insurers paid for telehealth services. “Insurers could do a better job of informing physicians of what their current reimbursement is,” said Miranda Moore, a health economist at the Robert Graham Center. Demand from healthcare consumers also remains meager, although it is growing. Demand was tepid after Highmark entered virtual medicine with Teladoc, so it expanded its service by adding Doctor on Demand and American Well to its networks. Those two vendors emphasize video visits, whereas Teladoc is more Web- and telephone-based. Not much has changed yet. “It creates a lot more buzz than it does use,” Radeschi said. Only 4% to 5% of Highmark's national commercial members have used telehealth services, and the usage rate in the insurer's Affordable Care Act exchange plans is below 2%. John Jesser, president of Anthem's LiveHealth Online, said his telehealth firm manages “thousands” of visits a year, but he declined to share specific figures. Anthem is pushing LiveHealth Online more—15 million Anthem members across group, individual and Medicare Advantage plans now have access to it. But most people don't know it's part of their plan. “This is like the early days of Amazon when you were still able to buy books,” Jesser said. The limited uptake in the commercial market is still way ahead of Medicare, which almost always sets the bar for private insurance determinations. The American Telemedicine Association's Linkous called Medicare the “Luddite” of telehealth because of its strict limits on how, when and where it can be provided. “If you're a prisoner, a Medicaid recipient or an employee, you can get a telemedicine service,” Linkous said. “But if you're a Medicare recipient, you can't really, so it's a little crazy.” Medicare paid only $17.6 million in telemedicine services in 2015, practically a rounding error in the $634 billion program. The Congressional Budget Office has been highly skeptical of claims that telehealth coverage will reduce Medicare spending, and the budget scorekeeper recently said it doesn't have enough data to weigh in.
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Congress is taking up the issue. A bipartisan group of legislators introduced a bill this month, the CONNECT for Health Act, that would loosen some of Medicare's rules. Telehealth and remote patient monitoring would become standard for Medicare's alternative payment models and Medicare Advantage. The CMS has acted on a few fronts. For example, Medicare will waive some telehealth requirements for Next Generation accountable care organizations. Linkous expects there will be full Medicare coverage for telemedicine within the next decade because baby boomers and employees who have already used the services are “going to start demanding it.” McIntyre of BCBS of Alabama recently used Teladoc for what he called a persistent, annoying cough. An antibiotic didn't help, so the provider recommended during the five-minute call that he try an oral steroid. It worked for McIntyre, which saved him time and money. But he wonders how many people have that kind of seamless experience. “My fear is what percentage of those people has a Teladoc appointment and then is going back to the doctor anyway?” McIntyre said. It's that fear, however faint, that still lingers among many insurers as they expand payment for telehealth services. The flip side, advocates argue, is that telehealth will inevitably help patients, even if there is the occasional in-person follow-up. The modality allows physician groups to treat patients outside of traditional hours, and eliminates the costs associated with wasteful travel and wait times. Further, people living in remote regions can receive necessary care they otherwise might not have gotten. “Do we really want to ration care by inconvenience, or do we want to find ways to deliver valuable care as conveniently and inexpensively as possible?” Dr. David Asch, a professor of medicine and medical ethics at the University of Pennsylvania, wrote in an editorial last November for the Annals of Internal Medicine. And that's the rationale that has been winning over payers. “We're underserved in almost every county of the state in most specialties,” McIntyre said. “If this provides that opportunity for someone to get care they need, then it's a good thing.”
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IBM deal to buy Truven will add 8,500 clients and boost data trove to 300 millionpatients
By Joseph Conn
Computer giant IBM is paying $2.6 billion to buy Truven Health Analytics to bolster the healthcare capabilities of its Watson cognitive computing system. The company says the deal will bring in more than 8,500 clients, according to a press release. Those Truven clients include hospitals, clinicians, health plans, employers, life science companies, and state and federal government agencies. Data brought over from the deal will also swell IBM's existing health-record data set to about 300 million patient lives, the company said. “Data is important,” said healthcare information-technology industry veteran Todd Cozzens, managing partner at Leerink Capital Partners, an asset-management affiliate of investment bank Leerink Partners, which specializes in healthcare. Cozzens said the Holy Grail is matching claims data with clinical data. That allows for analysis of the reasons for patients' admissions, as well as their co-morbidities and care outcomes. That information has traditionally come only from Truven, Heath Catalyst, Cerner Corp. or Epic Systems Corp. “It's a race for who can come up with the most valuable data. That is the future of healthcare—what are the most effective drugs, care paths and what combination of therapies works best,” Cozzens said. The deal for privately held Truven Health will be IBM's fourth health-related acquisition since launching its Watson Health cloudcomputing platform last April. Watson uses machine learning and natural-language skills to analyze and find trends in data from a wide variety of sources. IBM has been promoting Watson and its related technology as powerful tools that also can be used in retail and other industries. In addition to the company's client list and its data, IBM will be getting one more valuable asset with the Truven acquisition— talent—from epidemiologists to consultants,creating a “dream team” that “will bring our global footprint of talent to 5,000,” according to Dr. Kyu Rhee, chief health officer at IBM Watson Health. The goal is preparedness for the shift to value-based care, Rhee said. “You ultimately want the improved health of a population. Part of the challenge has been that sometimes the data that we've used to identify the opportunities to improve health have only been part of the picture, part of the puzzle. What we're doing at Watson is putting these elements together.” The Truven deal is expected to close later this year.
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