HHS hopes to touch up initiatives that fall short

July 1, 2011

Flexibility is the new mantra among federal health policy officials, as the Obama administration rolls out alternative programs likely to appeal more to providers and patients.

Another policy change aims to boost enrollment in new insurance plans for individuals unable to purchase affordable coverage due to chronic health problems. The Pre-Existing Condition Insurance Plan was established by the Patient Protection and Affordable Care Act (PPACA) to provide coverage to high-risk patients until they can obtain insurance through exchanges in 2014.

Initially, the main fear was that the $5 billion provided for the program would be highly inadequate to fund temporary coverage for the 4 million uninsured Americans estimated to be eligible for the risk pools. But enrollment fell way short of expectations, with only about 20,000 people signed up as of May of this year. Long waiting periods, cumbersome rules and costly premiums were identified as serious impediments.

Premiums for plans operated by the federal government would drop as much as 40% in 18 states, a move that would bring rates more in line with coverage sold on the individual market. And to make enrollment easier, HHS will require only a letter from a doctor, instead of a coverage denial statement from an insurance company.

MORE ACO OPTIONS

Most notable are new initiatives to encourage healthcare providers to form Accountable Care Organizations (ACOs) and offset the vehement objections to the Medicare Shared Savings program announced in late March. A "Pioneer ACO Model" will allow established health systems such as Geisinger and Intermountain to launch Medicare ACOs quickly and to gain more of their expected savings in exchange to taking on greater financial risk.

Alternatively, an "Advance Payment Initiative" will give inexperienced ACO sponsors access to shared savings up front to help them finance these new organizations. The Centers for Medicare and Medicaid Services (CMS) also will offer learning sessions to inform ACO leaders about operating challenges and managing financial risk.

These changes aim to address provider warnings that the ACO shared savings program is too costly and restrictive. The American Hospital Assn. estimated that starting an ACO could cost a hospital $11 million to $26 million in the first year-much more than the $1.8 million suggested by CMS. The American Medical Group Assn. told CMS in May that few of its members would participate. In addition to high start-up costs, providers cite excessive quality measure requirements, retrospective attribution of patients, and an impractical patient opt-out system.

Insurers applaud efforts to move away from FFS but have raised concerns that ACOs will lead to provider consolidation. CMS is slated to issue final ACO regs in the next month or so, in order for the program to begin next year.

Jill Wechsler, a veteran reporter, has been covering Capitol Hill since 1994.