Tagged CMS

Feds Urge States To Encourage Cheaper Plans Off The Exchanges

For those who make too much money to qualify for health insurance subsidies on the individual market, there may be no Goldilocks moment when shopping for a plan. No choice is just right.

A policy with an affordable premium may come with a deductible that’s too high. If the copayments for physician visits are reasonable, the plan may not include their preferred doctors.

These consumers need better options, and in early August federal officials offered a strategy to help bring down costs for them.

The guidance is from the Centers for Medicare & Medicaid Services, which oversees the insurance marketplaces set up by the Affordable Care Act. CMS is encouraging states to allow the sale of plans outside of those exchanges that don’t incorporate a surcharge insurers started tacking on last year.

Many insurers added the premium surcharges last fall to plans sold on the individual market. It was a response to the Trump administration’s announcement that it would no longer pay the companies for the “cost-sharing reduction” subsidies required under the health law. The subsidies help cover deductibles and other out-of-pocket costs for lower-income consumers who buy marketplace plans.

Insurers typically added the cost to silver-level plans because those are the type of plans that consumers have to buy in order to receive the cost-sharing subsidies. “Silver loading,” as it’s called, added an estimated 10 percent to the cost of those plans, according to the Congressional Budget Office.

People who qualified for federal premium subsidies — those with incomes up to 400 percent of the federal poverty level (about $48,000 for one person or $100,000 for a family of four) — were shielded from the surcharge because their subsidies increased to cover the cost.

But people with higher incomes faced higher premiums. The new guidance is geared to help them.

“It encourages states to encourage silver loading only on the exchange,” said Aviva Aron-Dine, vice president for health policy at the Center on Budget and Policy Priorities.

But some analysts say they’re unsure if the new federal policy will make a difference since states have already implemented similar strategies.

Many states moved last fall to limit silver loading to plans sold on the exchanges, while allowing or, in the case of California, requiring, very similar plans to be sold off the exchanges without the extra premium charge.

Yet CMS’ endorsement of the strategy removes doubts states may have had, said David Anderson, a research associate at Duke University’s Margolis Center for Health Policy who has tracked the issue.

Eighty-three percent of people who bought a plan during the open-enrollment period for 2018 qualified for premium tax credits. The average monthly premium per subsidized enrollee was $639; after accounting for premium tax credits, however, enrollees owed just $89 on average. That amount was 16 percent lower than the monthly premium the year before.

For people who don’t qualify for premium tax credits, the picture is very different. The average monthly premium for 2018 was $522. That total was 28 percent higher than the previous year’s total of $407, according to an analysis by the Center on Budget and Policy Priorities of CMS enrollment data.

In general, federal rules require that insurers charge the same rates for identical qualified health plans that are sold on and off the exchanges. The CMS guidance suggests that the unloaded plans could be tweaked slightly in terms of cost sharing or other variables so that they are not identical to those on the marketplaces.

Tracing what type of coverage is purchased off the exchange is difficult because there is no centralized source. Consumers can buy plans directly from insurers, or they may use a broker or an online web portal. According to one such portal, eHealth, 28 percent of unsubsidized consumers on its site bought silver plans in 2018, while 42 percent bought bronze plans, whose coverage is less generous than silver plans and typically have lower premiums. Conversely, on the exchanges nearly two-thirds of people bought silver plans in 2018 while 29 percent bought bronze plans, according to federal data.

If fewer insurers add the CSR load to silver plans sold off the exchange, those plans may be more affordable next year than they were in 2018, said Cynthia Cox, director of health reform and private insurance at the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

“This makes silver plans an option for [unsubsidized] people who wanted to buy a silver plan but might have been pushed off onto a bronze plan,” she said.

Consumers who want to consider off-exchange plans have to find them first. Some experts suggest checking with insurers that are selling on the marketplace in an area, because it’s possible that they’ll also be selling plans off the exchange.

But that’s not a given. A health insurance broker can help people find and evaluate plans sold off the exchange. But experts urge consumers to stay on their toes and make sure they understand whether the plans they’re considering provide comprehensive coverage.

Starting in October, insurers can offer short-term plans with limited benefits that last up to a year.

“Differentiating between the two may not be easy, and the off-exchange unsubsidized market is the target market for short-term plans,” said Anderson.

Please visit khn.org/columnists to send comments or ideas for future topics for the Insuring Your Health column.

Feds Urge States To Encourage Cheaper Plans Off The Exchanges

For those who make too much money to qualify for health insurance subsidies on the individual market, there may be no Goldilocks moment when shopping for a plan. No choice is just right.

A policy with an affordable premium may come with a deductible that’s too high. If the copayments for physician visits are reasonable, the plan may not include their preferred doctors.

These consumers need better options, and in early August federal officials offered a strategy to help bring down costs for them.

The guidance is from the Centers for Medicare & Medicaid Services, which oversees the insurance marketplaces set up by the Affordable Care Act. CMS is encouraging states to allow the sale of plans outside of those exchanges that don’t incorporate a surcharge insurers started tacking on last year.

Many insurers added the premium surcharges last fall to plans sold on the individual market. It was a response to the Trump administration’s announcement that it would no longer pay the companies for the “cost-sharing reduction” subsidies required under the health law. The subsidies help cover deductibles and other out-of-pocket costs for lower-income consumers who buy marketplace plans.

Insurers typically added the cost to silver-level plans because those are the type of plans that consumers have to buy in order to receive the cost-sharing subsidies. “Silver loading,” as it’s called, added an estimated 10 percent to the cost of those plans, according to the Congressional Budget Office.

People who qualified for federal premium subsidies — those with incomes up to 400 percent of the federal poverty level (about $48,000 for one person or $100,000 for a family of four) — were shielded from the surcharge because their subsidies increased to cover the cost.

But people with higher incomes faced higher premiums. The new guidance is geared to help them.

“It encourages states to encourage silver loading only on the exchange,” said Aviva Aron-Dine, vice president for health policy at the Center on Budget and Policy Priorities.

But some analysts say they’re unsure if the new federal policy will make a difference since states have already implemented similar strategies.

Many states moved last fall to limit silver loading to plans sold on the exchanges, while allowing or, in the case of California, requiring, very similar plans to be sold off the exchanges without the extra premium charge.

Yet CMS’ endorsement of the strategy removes doubts states may have had, said David Anderson, a research associate at Duke University’s Margolis Center for Health Policy who has tracked the issue.

Eighty-three percent of people who bought a plan during the open-enrollment period for 2018 qualified for premium tax credits. The average monthly premium per subsidized enrollee was $639; after accounting for premium tax credits, however, enrollees owed just $89 on average. That amount was 16 percent lower than the monthly premium the year before.

For people who don’t qualify for premium tax credits, the picture is very different. The average monthly premium for 2018 was $522. That total was 28 percent higher than the previous year’s total of $407, according to an analysis by the Center on Budget and Policy Priorities of CMS enrollment data.

In general, federal rules require that insurers charge the same rates for identical qualified health plans that are sold on and off the exchanges. The CMS guidance suggests that the unloaded plans could be tweaked slightly in terms of cost sharing or other variables so that they are not identical to those on the marketplaces.

Tracing what type of coverage is purchased off the exchange is difficult because there is no centralized source. Consumers can buy plans directly from insurers, or they may use a broker or an online web portal. According to one such portal, eHealth, 28 percent of unsubsidized consumers on its site bought silver plans in 2018, while 42 percent bought bronze plans, whose coverage is less generous than silver plans and typically have lower premiums. Conversely, on the exchanges nearly two-thirds of people bought silver plans in 2018 while 29 percent bought bronze plans, according to federal data.

If fewer insurers add the CSR load to silver plans sold off the exchange, those plans may be more affordable next year than they were in 2018, said Cynthia Cox, director of health reform and private insurance at the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

“This makes silver plans an option for [unsubsidized] people who wanted to buy a silver plan but might have been pushed off onto a bronze plan,” she said.

Consumers who want to consider off-exchange plans have to find them first. Some experts suggest checking with insurers that are selling on the marketplace in an area, because it’s possible that they’ll also be selling plans off the exchange.

But that’s not a given. A health insurance broker can help people find and evaluate plans sold off the exchange. But experts urge consumers to stay on their toes and make sure they understand whether the plans they’re considering provide comprehensive coverage.

Starting in October, insurers can offer short-term plans with limited benefits that last up to a year.

“Differentiating between the two may not be easy, and the off-exchange unsubsidized market is the target market for short-term plans,” said Anderson.

Please visit khn.org/columnists to send comments or ideas for future topics for the Insuring Your Health column.

Medicaid Officials Target Home Health Aides’ Union Dues

Medicaid home care aides — hourly workers who help the elderly and disabled with daily tasks like eating, getting dressed and bathing — are emerging as the latest target in the ongoing power struggle between conservatives and organized labor.

About half a million of these workers belong to the Service Employees International Union, a public-sector union that represents almost 1.9 million workers in the United States and Canada. The union is an influential donor to liberal politicians and boasted strong ties to the Obama administration.

A proposed rule from the federal Centers for Medicare & Medicaid Services would prohibit home health aides paid directly by Medicaid from having their union dues automatically deducted from their paychecks, though it doesn’t name the fees explicitly.

Blocking these direct Medicaid payments means the workers — especially those who don’t work in a single, centralized office, or don’t have a credit card or a bank account — are far less likely to pay dues, diminishing the union’s potential influence.

CMS’ language affects only “individual providers” — that is, those who aren’t employed by the private, for-profit agencies that dominate this industry. Individual providers, who are technically state employees, are far more likely to be unionized.

The directive, which would overturn an Obama administration policy put in place to ease the collection of union dues and pay for other fees, such as health benefits, could take effect by the end of this year. A month-long comment period, ending Monday, has attracted more than 3,300 responses.

“This is just another way to make life more difficult for public-sector unions,” said Jake Rosenfeld, an associate professor of sociology at Washington University in St. Louis, who studies unions and their influence.

The proposed rule comes on the heels of June’s landmark Supreme Court ruling, in which a 5-4 majority held that public-sector workers don’t have to pay unions for the cost of collective bargaining, calling it a violation of their free speech.

That decision expanded on the Supreme Court’s 2014 ruling in Harris v. Quinn, in which the high court found that home care workers must explicitly state their desire to be in a union before the organization can collect dues. But because these workers are not attached to a single office or meeting point, organizing them into a collective unit poses a distinct challenge; collecting membership dues, even more so.

As union membership has waned in other sectors, organized labor has doubled down on home care, lobbying liberal governors to declare thousands of workers as state employees, rendering them eligible to organize and engage in collective bargaining.

The median annual salary for home health aides in 2017 was $23,100, with about 67 percent turnover in 2017. The federal Bureau for Labor Statistics projects that demand for home care will increase by as much as 41 percent from 2016 to 2026, as more Americans age.

Both SEIU and the National Employment Law Project, an advocacy group, said that, if the rule takes effect, they expect to file a lawsuit seeking to reverse the decision. And a spokesperson for California Attorney General Xavier Becerra, who has frequently clashed with the White House, said the state will “take any action necessary” to blunt its impact.

In states where home care workers are unionized, the group can have the state withhold membership fees from their paycheck and transfer them directly to the union. Workers must actively choose to join the union.

In California, where most home care workers don’t work for private agencies, about 250,000 belong to the state SEIU chapter.

“They’ll effectively lose their voice on the job and their ability to advocate,” said Laphonza Butler, president of SEIU Local 2015, the California branch of the union.

Beyond California, home care aides have unionized in states including Connecticut, Massachusetts, Minnesota, Illinois, Oregon, Vermont and Washington.

The government is arguing that federal law does not allow states to divert Medicaid dollars to pay for a home care worker’s other benefits, such as health care or job training.

“The law provides that Medicaid providers must be paid directly and cannot have part of their payments diverted to third parties outside of a few very specific exceptions,” said Tim Hill, acting director for CMS’ Center for Medicaid and CHIP Services, in a statement.

Supporters of the rule, such as the National Federation of Independent Businesses, argue it stops powerful unions from using taxpayer dollars to pad their lobbying budget.

But it’s a controversial take. Critics said CMS’ argument inappropriately casts workers’ paychecks as government property, instead of as their own money. And they said it leaves vulnerable workers — arguably, the backbone of elderly care — unable to fend for themselves.

“When a state pays a worker, and the worker pays the union, it’s the worker’s money going into the union,” said Benjamin Sachs, a professor at Harvard Law School who studies labor law. “CMS doesn’t have the authority to decide.”

Some conservatives suggested that limiting union membership is less about home care policy and more about curtailing a powerful liberal lobbying force.

“There have been steps taken in underlying law and practice to provide extra favors to public sector unions. They are as much political bodies as they are representatives,” argued Thomas Miller, a resident fellow at the conservative American Enterprise Institute.

But labor advocates warned the consequences could be steep, and not just for home care workers.

Surveys from the National Employment Law Project suggest that unionized home care workers stay in their jobs longer when represented by unions, partially because they can negotiate better pay and benefits. Higher pay also makes the job more appealing, especially as need grows.

That, many experts argued, means patients also benefit.

“We can be putting more money into making these good quality jobs. The shortages and turnover we are facing —it is not rocket science what is causing that,” said Caitlin Connolly, who runs the National Employment Law Project’s campaign to increase home care wages. “If we made these quality jobs, we would be able to ensure that people had access to quality care.”

Must-Reads Of The Week From Brianna Labuskes

The next time I even hint that we’re drifting into a slow news period, feel free to remind me not to jinx things: This week was bursting with industry moves, health law attacks, midterm strategizing, and, oh yeah — an indictment.

A quick programming note before we dive into all that: The Breeze is going on hiatus as I breeze out of town for a bit. But I’ll be back Aug. 31, just as we really start heading into midterm season, so look for me again then.

Now for the news you may have missed:

This week’s swipe at the health law focused on accountable care organizations (shorthand explanation: a program that took a carrot-and-stick approach to getting hospitals, doctors and other providers to coordinate, with the end result of higher-quality, more efficient care). They were supposed to save the government billions of dollars, but data show they’ve failed to measure up to the promise, so the program is being overhauled.

The Washington Post: Trump Administration Proposes Further Dismantling of Affordable Care Act Through Medicare

Rep. Chris Collins (R-N.Y.) was charged with fraud in connection to alleged insider trading after an investigation into his ties with Innate Immunotherapeutics, an Australian biotech firm.

Politico: GOP Rep. Chris Collins Charged With Securities Fraud

If that all sounded vaguely familiar, it’s because back when then-HHS secretary nominee Tom Price was being vetted for any possible ethics violations, his connection to both Innate and Collins was put in the spotlight. And just a small plug: KHN did deep reporting on this, and you can read the stories here.

Medicare Advantage got some leverage to curb drug costs this week by way of “step therapy” (or, as it’s known to critics, “fail first”). Essentially, the private plans will be able to require that patients try cheaper versions of drugs before moving on to more expensive ones. To be clear: This is a pretty distant cry from campaign promises to let Medicare negotiate drug prices, and there’s no guarantee patients will actually see any savings from this move.

Stat: Private Medicare Plans Will Be Able to Use a New Tool to Lower Drug Costs

Would a Netflix model work for drugs? That’s what Louisiana wants to find out. Under the proposal, the state would pay a subscription-type fee to be able to cover all of its Medicaid patients who need hepatitis C treatment. Beyond the click-baity notion, though, experts warn that because drug prices are such a moving target (with some costs coming down quickly) the state may not actually save money.

Stat: Louisiana Explores a ‘Netflix’ Subscription Model for Buying Hepatitis C Drugs

For even some moderate Democrats, “Medicare-for-all” is a pipe dream involving all sorts of politically unpopular complications like trillions of dollars in government spending (the current point of contention). But on the trail, it’s a rallying cry. Gubernatorial candidates, especially, are embracing it, suggesting their states become early testing grounds for universal coverage plans that have been more rhetoric than action so far.

The Washington Post: Tossing Aside Skepticism, Democratic Candidates for Governor Push for State-Based Universal Health Care

The Hill: Ocasio-Cortez: ‘Medicare for All’ Is ‘Not a Pipe Dream’

Apart from “Medicare-for-all,” Democrats could have a winning health issue with drug prices. The problem? They can’t really coalesce behind a plan, all these “concessions” as of late are making it harder to attack the administration, and, uh, there may be a lack of interest in cutting off campaign cash this close to the elections.

Stat: Drug Prices Could Be a Winning Issue for Democrats — If Only They Had a Plan

The idea to penalize legal immigrants’ use of Medicaid has been rumbling around for a bit now, but it picked up some speed in recent days. Though it could be a winning issue for Republicans on the trail, the argument isn’t really backed up by the data. It turns out that legal immigrants are likely subsidizing native-born Americans’ health care.

The New York Times: Plan to Punish Immigrants for Using Welfare Could Boost G.O.P. Candidates

The Hill: Study: Immigrants Have Lower Health-Care Costs Than People Born in US

Buckle up, there were industry moves galore this week. I’ll try to keep it quick:  Billionaire Carl Icahn came out against Cigna’s attempts to acquire Express Scripts, saying it is (in my favorite vocab usage of the week) a “$60 billion folly”;  Rite Aid called off its (unpopular) merger with Albertsons; the American Medical Association came out against CVS’ deal with Aetna; and GM signed an exclusive deal with a health system to provide care for its workers.

The Wall Street Journal: Carl Icahn Publicly Opposes $54 Billion Cigna-Express Scripts Deal

The Wall Street Journal: Rite Aid, Albertsons Call Off Merger Amid Investor Opposition

Reuters: American Medical Association Opposes Merger of CVS and Aetna

The Wall Street Journal: GM Cuts Different Type of Health-Care Deal

If that wasn’t enough news for you, here’s my miscellaneous file: A billionaire and his PTSD clinics have become entangled in the fierce debate over VA privatization; a look at how Zika babies are faring as they grow up is sobering in the breadth of damage the virus has done; an app can warn those recovering from addiction when they’re in neighborhoods or with acquaintances that could trigger a relapse; and a medical examiner is writing to doctors personally each time one of their patients dies from an overdose — and it’s working.

ProPublica: Steve Cohen Is Spending Millions to Help Veterans. Why Are People Angry?

The Washington Post: 1 In 7 Babies Exposed to Zika in U.S. Territories Have Birth Defects, Nervous System Problems

Stat: Can An App’s Warnings to Avoid Triggers Prevent Opioid Addiction Relapses?

Los Angeles Times: Coroner Sent Letters to Doctors Whose Patients Died of Opioid Overdoses. Doctors’ Habits Quickly Changed

 —

And don’t miss one of my favorite long reads of the week (which I got sucked into while on deadline, thank you very much) about an Appalachian odyssey and a hunt for ALS genes.

Stat: Appalachian Odyssey: Hunting for ALS Genes Along a Sprawling Family Tree

Have a great weekend, all!

Trump Administration Sinks Teeth Into Paring Down Drug Prices, On 5 Key Points

Three months after President Donald Trump announced his blueprint to bring down drug prices, administration officials have begun putting some teeth behind the rhetoric.

Many details have yet to be announced. But experts who pay close attention to federal drug policy and Medicare rules say the administration is preparing to incrementally roll out a multipronged plan that tasks the Centers for Medicare & Medicaid Services (CMS) and the Food and Drug Administration with promoting competition, attacking the complicated drug rebate system and introducing tactics to lower what the government pays for drugs.

Mark McClellan, director of the Duke-Margolis Center for Health Policy in Durham, N.C., and a former CMS administrator, said that although none of the initial steps has “fundamentally transformed drug prices,” there is “a lot going on inside the administration.”

Two HHS officials who are rolling out the plan, Dan Best and John O’Brien, described their efforts to Kaiser Health News not as a public relations strategy but a push to reform the system.

“This administration is trying to go after root causes” of high drug prices, said Wells Fargo analyst David Maris.

But others are not so optimistic.

Ameet Sarpatwari, an instructor in medicine at Harvard Medical School in Boston, said policies the administration has rolled out thus far “alone will not translate into meaningful cost savings for most Americans.”

Broadly, the strategy falls under a handful of steps:

1. Attacking The Rebates

Health and Human Services Secretary Alex Azar has said Americans “do not have a real market for prescription drugs” because drug middlemen and insurers get a wide range of hidden rebates from drugmakers, but those savings may not be passed on to consumers or Medicare. In July, the administration submitted a proposed rule that could change the way rebates are handled.

Details of the proposal have not been made public. But O’Brien, a deputy assistant secretary at HHS, explained during a recent conference on federal drug spending sponsored by the Pew Charitable Trust: “You don’t have to use market power to get rebates, you can use market power to obtain discounts, to actually lower the price of the drug on the front end.”

Umer Raffat, an investment analyst with EverCore ISI, said “it’s not clear [that drug prices are going down]” but the “rebate structure is changing.”

2. Bringing More Negotiation To Medicare

This week, CMS Administrator Seema Verma announced that Medicare Advantage insurers can use a step-therapy approach to negotiate better prices for Part B drugs — those administered in hospitals and doctors’ offices. These private plans will be allowed to require patients to first select the least expensive drug before stepping up to more costly drugs if the original medications aren’t working.

The administration is also looking at ways to introduce more competition into Part B drug purchasing. That idea was mentioned deep inside the annual Medicare outpatient payment rule released last month.

Peter Bach, director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes in New York, pointed to the possible introduction of a competitive purchasing program in which a firm negotiates with drugmakers to buy their drugs and then sells them to the doctors and hospitals that will administer the medications. Bach said that helps ensure that hospitals and doctors can’t make more money by prescribing more expensive drugs.

Currently, Medicare pays the average sales price plus 6 percent to doctors or hospitals when they purchase drugs, a pricing mechanism that can benefit the providers if the drug costs go up. If there were a third party buying the drugs, it would “have a huge effect,” Bach said.

3. Paying For Value

Trump’s blueprint calls for CMS to encourage “value-based care” to lower drug prices, shifting from paying a set fee for drugs to basing payments on how well the patient does on them.

Louisiana’s Medicaid program could show the way. The state is working with CMS to explore a subscription-based model to pay for hepatitis C medicines. Louisiana would pay a fixed price to a drug manufacturer that would then get unlimited access to treat patients enrolled in Louisiana’s Medicaid program or in prison.

The program would move “from a big payment upfront to paying less over time based on actual outcomes,” said McClellan, who also serves on the boards of health care giant Johnson & Johnson and insurer Cigna.

CMS also approved a Medicaid waiver from Oklahoma in June. Medicaid programs are allowed to negotiate drug prices. Oklahoma’s plan would expand that to negotiate additional prescription price reductions based on value-based purchasing agreements.

Still, CMS’ recent rejection of a related Massachusetts proposal makes it difficult to believe negotiating drug prices will really happen, said Sara Rosenbaum, a professor of health law and policy at George Washington University.

That proposal would have allowed Massachusetts’ Medicaid program to choose drugs based on cost and how well the medicines work.

“They have been very good and quite careful with their [Medicaid] program and so why not let them try this?” Rosenbaum said.

4. Tackling Foreign Drug Costs

Pharmaceutical makers often sell their drugs at substantially lower prices in many foreign countries than they do in the United States. Trump emphasized in May that “it’s time to end the global freeloading once and for all,” saying U.S. consumers were paying part of the cost of the medicines that patients in other countries use.

He directed U.S. Trade Representative Robert Lighthizer to address the situation. Lighthizer’s office declined to comment.

When Sen. Todd Young (R-Ind.) asked during a Senate health committee hearing in June whether trade agreements with other countries should be used to “level the playing field,” Azar’s response was swift: “We absolutely believe we should be using our trade agreements to get them to pay more even as we have our job to pay less.”

Avalere Health President Matt Brow, who has been involved in talks with the administration, said it’s clear the focus on overseas pricing isn’t going away and the administration is “talking a lot about how to get the president what he wants.”

5. Increasing Competition

FDA Commissioner Scott Gottlieb has become the Trump administration’s lead proponent for increasing competition among drugmakers.

Competition resonates with Americans “because people see it every day in their experience in Costco and other places,” said Rena Conti, an assistant professor at the University of Chicago.

Gottlieb has announced plans to bolster the use of generic drugs and an “action plan” to encourage the development of biosimilars, which are copycat versions of expensive biologic drugs made from living organisms.

And to combat anti-competitive behavior in the market, Gottlieb said the FDA has passed along information to the Federal Trade Commission and hinted at potential action to come: “I think we’ve handed them some pretty good facts.”


KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

Medicare To Overhaul ACOs But Critics Fear Fewer Participants

Accountable care organizations were among the key initiatives of the Affordable Care Act, designed to help control soaring Medicare costs.

ACOs were expected to save the government nearly $5 billion by 2019, according to the Congressional Budget Office.

It hasn’t come anywhere close.

On Thursday, the Trump administration proposed an overhaul to the program, which was designed to encourage doctors and hospitals to work together to coordinate care by reducing unnecessary tests, procedures and hospitalizations. The move could dramatically scale back the number of participating health providers.

Administration officials say ACOs have led to higher Medicare spending.

The announcement was just the latest in a steady drumbeat of moves by Trump administration officials to unwind health policies set in place by the Obama administration.

Medicare ACOs began in 2012 and today enroll more than 10 million beneficiaries. If they provide care for less than certain cost targets — while meeting quality of care standards — then they get to share in any of the savings. Commercial insurers and Medicaid have also adopted ACOs in the past decade.

About 82 percent of the 561 Medicare ACOs are set up so that they are not at risk of losing money from Medicare. They can share in any savings they achieve. The rest are in a model where they can gain a higher share of savings, but also risk paying back money to Medicare if they do not meet their savings targets. Those ACOs have been more successful in saving money, Medicare officials said.

The Medicare program said it would phase out its no-risk model beginning in 2020.

A recent industry-sponsored survey showed 70 percent of ACOs would rather quit than assume such financial risk.

Seema Verma, administrator of the Centers for Medicare & Medicaid Services, said it’s wrong to have ACOs that can only make profits but not risk any losses. “We want to put the accountability back into Accountable Care Organizations,” she said during a briefing with reporters.

Existing ACOs will have one year to switch to a model accepting financial risk. New ACOs will have two years.

Currently, ACOs have up to six years to shift to a model where they share in financial risk.

These and other proposed changes would save Medicare $2.2 billion over the next decade, Verma said.

The proposal drew rare praise from a former Obama administration official. Andy Slavitt, who once headed CMS, tweeted: “CMS is proposing changes to Medicare pay for value (ACO) models. … At first look, they look positive to me.”

CMS estimated that its new policy would lead to a drop of about 100 ACOs by 2027.

Industry observers say that prediction seems modest at best.

“That does not seem too realistic,” said Ross White, manager of the Center for Health Care Regulatory Insight at KPMG, a large consulting firm. “This is going to come as quite a shock to a lot of current participants, although the administration has been sending these signals for several months. … It definitely seems like they are trying to ratchet down and squeeze the dollar savings out and not have participants in it for the wrong reasons.”

Clif Gaus, the CEO of the National Association of ACOs, blasted the proposal, saying it will “upend the ACO movement” and introduces “many untested and troubling policies.”

CMS is “pulling the rug out from ACOs by redoing the program in a short timeframe,” he said.

He added that the “likely outcome will be that many ACOs quit the program, divest their care coordination resources and return to payment models that emphasize volume over value.”

Tom Nickels, executive vice president of the American Hospital Association, also criticized the new ACO rules. “The proposed rule fails to account for the fact that building a successful ACO, let alone one that is able to take on financial risk, is no small task; it requires significant investments of time, effort and finances.”

Under the new plan, CMS also wants to require doctors in ACOs to inform their patients that they are in an ACO. That has not occurred previously, because unlike HMOs, ACOs do not restrict which providers they can see.

Verma, who has repeatedly said unleashing the free market principles will help control costs and improve quality, said ACOs are driving more hospitals and doctors into mergers, which leads to higher costs.

“We want to work with ACOS that are serious about delivering value. We can no longer run a program that is losing money for taxpayers,” she said.

Podcast: KHN’s ‘What The Health?’ Coming Soon: ‘Long-Term Short-Term’ Plans

The Trump administration’s new rule allowing “short-term” insurance plans to be used for up to three years has touched off a big reaction in health policy circles. Supporters of the change say those who can no longer afford comprehensive health insurance will have the ability to purchase lesser but cheaper plans. But opponents worry that consumers who fail to read the fine print will end up with plans that won’t cover care they need.

Reaction is similarly divided over an administration rule change that will make it easier for managed-care plans participating in Medicare to negotiate the price of drugs provided in doctors’ offices or hospitals. Insurance groups call it a small but positive step; patient groups worry it will make it harder for those with serious medical problems to get the medication their doctors recommend.

This week’s panelists for KHN’s “What the Health?” are Julie Rovner of Kaiser Health News, Anna Edney of Bloomberg News, Margot Sanger-Katz of The New York Times and Kimberly Leonard of the Washington Examiner.

Among the takeaways from this week’s podcast:

  • The Trump administration says its promotion of short-term health plans is designed to help people who don’t get government subsidies find more affordable health coverage and will provide some help to people who are not going to buy a plan on the federal health insurance marketplaces anyway. But the policies tend to limit many types of care, such as maternity expenses, prescription drugs and mental health issues.
  • In addition to concerns that these plans will destabilize the Affordable Care Act marketplaces, some consumer advocates say people looking at the plans don’t realize the extent to which they lack patient protections. For example, one may not cover hospital expenses if a patient is admitted over a weekend or pay for care needed for injuries if the patient was drunk.
  • As part of the administration’s effort to meet President Donald Trump’s promise to curb prescription costs, federal officials announced this week that private Medicare Advantage plans can require patients being prescribed drugs from a doctor or in a hospital to first try the cheapest drug options. But some patient advocates object, saying consumers and their doctors should be able to decide what is the best therapy.
  • The federal indictment announced this week against Rep. Chris Collins (R-N.Y.) renews questions about why a member of Congress with a large role in a biotech company was allowed to be a member of a House committee that oversees health issues. After the indictment, House Speaker Paul Ryan stripped Collins of his seat on the Energy and Commerce Committee.
  • New York Gov. Andrew Cuomo, a Democrat, surprised many people with his announcement that insurers would not be able to factor in to premium prices the expectation that fewer people will buy marketplace plans because the health law’s coverage penalties expire in 2019.

Plus, for “extra credit,” the panelists recommend their favorite health stories of the week they think you should read, too:

Julie Rovner: NPR’s “Doctors With Disabilities Push For Culture Change In Medicine,” by Elana Gordon

Anna Edney: The Atlantic’s “Women More Likely to Survive Heart Attacks If Treated by Female Doctors,” by Ed Yong

Margot Sanger-Katz: ProPublica’s “The Shadow Rulers of the VA,” by Isaac Arnsdorf

Kimberly Leonard: The Washington Post’s “A Huge Clinical Trial Collapses, and Research on Alcohol Remains Befuddling,” by Joel Achenbach

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