Six policy topics every healthcare executive needs to understand

October 3, 2017

New healthcare terms and topics constantly crop up. Here are six to keep an eye on right now.

Cost-sharing reduction (CSR) payments is one policy topic under intense political discussion. Part of the Affordable Care Act (ACA), the goal is for CSRs (subsidies paid by the federal government to insurers that lower the amount qualified consumers pay for deductibles, copayments, and coinsurance on the individual marketplaces) to help insurers cover low- and medium-income people.

President Trump approved the September CSR payment to insurers, but he has discussed withholding the monthly payments as a way to better motivate Congress to repeal the ACA.

Here’s more on CSR payments, and brief synopses of five other policy topics you need to understand.

1. CSR payments

“CSR subsidies reduce patient cost sharing by lowering deductibles, copayments, and out-of-pocket limits in the individual exchange market, providing enhanced financial protection for low- and middle-income families with earnings of 100 to 250% of the federal poverty level ($29,425 per individual and $60,625 per family of four in 2015),” says Phillip Haas, clinical assistant professor, health services, School of Public Health, University of Washington. “Qualifying individuals must enroll in a silver plan to receive CSRs and benefit from lower maximum out-of-pocket limits, copayments, coinsurance, and deductibles that increase the actuarial value of their silver plans beyond the standard 70% without increasing their premiums. To compensate insurers for the additional cost of CSRs, the federal government is paying them $7 billion in 2017, rising to projected levels of $10 billion in 2018 and $16 billion by 2027.”

The U.S. House of Representatives has challenged the legality of CSR payments without an explicit appropriation, says Haas. A district court judge ruled in favor of the House but the ruling has been appealed by HHS, and the payments continue, pending the appeal. If a court order or a unilateral decision by the Trump administration ends CSR payments, the insurers would face significant revenue shortfalls this year and next, which would increase the likelihood of insurers exiting the exchange market, he says. Those insurers remaining in the exchanges would need to increase their silver plan premiums to offset the loss of CSRs by an estimated 19%, according to the Kaiser Family Foundation.

The continuing uncertainty regarding CSRs is resulting in insurers exiting the exchanges and decreasing the stability of the overall individual market, says Haas.

Next: Topic #2

 

 

2. Medical homes

Also called “advanced primary care practice models” or “patient-centered medical homes,” the topic generally refers to primary-care practices that rely on a team-based approach to care, says Cristina Boccuti, associate director, Program on Medicare Policy at The Henry J. Kaiser Family Foundation.

Health insurers that support the model typically provide monthly care management fees or other resources to the practice to support certain activities, including communication with patients outside of office visits, coordination with specialists, and data collection for reporting patient outcomes and quality improvement, she says, adding that evidence of savings and quality improvements associated with medical homes, so far, is mixed.

Starting in 2019, Medicare payments to physicians will incorporate bonuses or other payment incentives if they are affiliated with qualifying medical homes, says Bocutti. For some, the term “medical home” is confusing because decades ago it was sometimes used to refer to nursing homes or nursing facilities.

Next: Topic #3

 

 

3. Bundled payments

Also known as “episode-of-care payments,” the topic refers to one payment for all services provided to a patient for a course of treatment over a defined period of time, says Boccuti.

“For example, for a patient undergoing a knee replacement, rather than paying separate fees to the surgeon, the anesthesiologist, the hospital, the physical therapist, bundled payment approaches would combine these fees into a single payment,” she says. “If total expenses for an episode of care are lower than the target price of the bundle, then the affiliated providers may share in the ‘savings.’ Alternatively, if their costs for that episode of care exceed the bundle’s target price, then the providers may lose money on that episode.”

Bundled payments tend to be more common in managed care environments, but Medicare is currently testing several different bundled payment programs, some of which are voluntary and others are mandatory,” she says. Preliminary results have shown potential savings for some, but not all clinical episodes.

Next: Topic #4

 

 

4. Low-value care


It’s estimated that up to 30% of care provided in the United States annually is wasted on unnecessary services, say Kristen Peck, research project director, Dartmouth Institute for Health Policy & Clinical Practice and Alexander Mainor, health policy fellow, Dartmouth Institute for Health Policy & Clinical Practice. “Often referred to as ‘waste,’ ‘overuse,’ or ‘unnecessary,’ low-value care is the specific term for care that’s unlikely to benefit the patient given the cost, available alternatives, and patient preferences.”

The ABIM (American Board of American Medicine) Foundation launched the Choosing Wisely initiative in 2012, encouraging national medical specialty societies to create lists of “Things Providers and Patients Should Question,” identifying potentially low-value services and procedures, says Peck. “Choosing Wisely now has 71 lists, and the campaign is growing every year. As the need to reduce costs in the healthcare system gains increasing attention, managed care executives will likely be hearing more about both the Choosing Wisely campaign and low-value care.”

Next: Topic #5

 

 

5. High-need, high-cost

As the prevalence of advanced payment models continues to increase, many providers and healthcare systems are turning to care management and coordination as cost-control levers. The most-costly population is referred to as “high-need, high-cost,” says Peck. “These patients have multiple chronic conditions along with at least one functional limitation or a lack of ability to perform routine daily tasks.”

High-need, high-cost patients are often cited as composing 5% of the population, but accounting for 50% of annual healthcare spending, says Peck. The complex, costly needs of these patients are so profound that five research foundations have recently initiated a collaborative focused on improving health outcomes and lowering their cost of care. The participating organizations are The Commonwealth Fund, The John A. Hartford Foundation, Peterson Center on Healthcare, the Robert Wood Johnson Foundation, and The SCAN Foundation.

Next: Topic #6

 

 

6. Socialized medicine

This is a term used to describe systems of universal healthcare: medical and hospital care for all at a nominal cost by means of government regulation of healthcare and subsidies derived from taxation, says Haas. “It’s important for healthcare executives to know this term because of historically negative associations with socialism in American culture; the term is sometimes used pejoratively in American political discourse.”  

Socialized medicine was coined by the public relations firm Whitaker & Baxter working for the American Medical Association in 1947 to disparage President Harry Truman’s proposal for a national healthcare system, he says. “It was a label at the dawn of the Cold War meant to suggest that anybody advocating universal access to healthcare must be a communist. The phrase has retained its political power for six decades.”

 

Aine Cryts is a writer based in Boston.