Group Health supports the legislation because it simplifies the process for purchasing health care for all Washingtonians and provides a rating system to help consumers select the best plan. Furthermore, the legislation will provide more choices in health plans while also making it easier for them to retain their coverage when switching from job to job. Washington state again leads as one of the first states to quickly and appropriately enact Health Benefit Exchange Legislation in advance of the 2014 federal deadline.

“The rising cost of health insurance is a significant concern for residents across the state,” said Gov. Chris Gregoire. “Today my signature on the Health Benefits Exchange bill makes it easier for individuals and small businesses to compare, select, and buy affordable health care coverage. The exchange will help take the guess work out of the health insurance process and will assure that consumers get what they pay for.  I thank Group Health Cooperative for leading the way on these important efforts.”

Group Health Cooperative has been an active partner in helping shape an exchange that is both sensible and appropriate for Washington state. The Governor’s office has asked Group Health’s Olympia Medical Center to host the bill signing this Friday, on the second anniversary of President Obama’s signing of the Affordable Care Act, in recognition of Group Health’s quality of care and service in the state of Washington.

Sponsored by Senator Karen Keiser for the Senate version of the bill and by Representative Eileen Cody in the House, this legislation highlights the need to increase affordable access to health care.

“I think our law will create a healthy, vibrant marketplace for consumers and small businesses to serve as a ‘one stop shop’ for affordable health insurance,” said Senator Keiser. “We plan to be open for enrollment by the fall of 2013!”

“I’m excited to have Washington state take the next step toward health care reform,” Representative Cody said. “As we move closer to access to health care coverage for all, we must now work together to decrease cost and improve quality. With the help of progressive organizations like Group Health, Washington can be a leader in these efforts.”

Group Health members are already experiencing the kind of next-generation care that national, state, and local administrations would like to see available to more people in the country. Practices such as electronic medical records, the medical home, patient-centered care, comparative effectiveness, and shared decision-making are already at work, creating the exceptional care experience Group Health members value.

Market Rules

• The legislation builds upon a bill enacted last year that created a nine member exchange board.
• Establishes modest market rules to govern how carriers participate in the individual and small group market; prohibits carriers from only offering plans that attract healthy enrollees or from designing benefits that do the same.
• Carriers offering bronze level coverage outside the exchange must also offer silver and gold coverage. Carriers offering bronze, silver, gold and platinum plans outside the exchange must abide by the actuarial requirements in federal law. 
• Catastrophic coverage can only be sold inside the exchange. 
• The OIC must evaluate prescription drug benefits to ensure variation in consumer costs shares are not structured to result in adverse selection. 
• The exchange must evaluate the market rules by December 1, 2016, and recommend to the legislature whether they should be continued.

Qualified Health Plans

• The exchange is authorized to certify qualified health plans if they meet the state’s insurance laws, the Affordable Care Act requirements for qualified health plans, and have tribal clinics and urban Indian health clinics in their provider networks.
• Provider networks that meet a definition of integrated delivery systems are exempted if federal regulations allow ( final rule still under development). 
• Retainer practices may be offered in the exchange if they meet federal requirements. 
• The exchange must establish a rating system to help consumers choose among plan offerings.

Financing

• The exchange must be financially self-sufficient by January 2015 (or it will be suspended), but may seek federal grants and subsidies, assess health carriers and charge enrollees through premiums. 
• The exchange shall seek input from carriers to develop a funding mechanism that fairly and equally apportions administrative costs of the exchange; changes will be proposed to the 2013 legislature.  
• Third-party payers may pay for premiums of enrollees and employees in the SHOP exchange and may choose from any plan in the exchange offering the same plan metal level selected by the employer.

Essential Health Benefits

• The essential health benefit benchmark plan will be the largest small group plan currently offered by a carrier. All ten of the federally required categories of benefits must be include in that plan, or the OIC may add the missing categories. 
• The OIC must find that a particular plan meets the essential benefit requirements before it may be offered and can take into consideration whether a plan’s benefit design would create a risk of biased selection based on health status. 
• Beginning annually in December 2012, the OIC must submit to the legislature a list of the state’s mandated benefits (and the cost to the state) that, if enforced, will require the state to finance coverage for enrollees receiving a federal subsidy (as required by law). If the state does not allocate funding for these enrollees, the mandates cannot be enforced for other plans in the market.

Federal Basic Health Option

• A federal basic health option (FBHO) may be authorized under certain conditions and with legislative approval. The Health Care Authority (HCA) must certify that sufficient federal funding for the program will be available to cover premium and administrative costs, and that health plan rates will be sufficient to ensure enrollee access to a robust provider network by December 1, 2012. 
• The HCA must consult with stakeholders and perform a Washington-specific feasibility analysis with economic modeling through an independent nationally recognized consultant.
• Principles for implementation of a FBHO: 12-month continuous eligibility with 12-month continuous enrollment (or a financing mechanism that enables enrollees to stick with one plan for a year); obtaining a balance between affordable premiums, cost shares, and provider payment rates that ensure robust provider networks are in place; and measures to assure program transparency.

Reinsurance, Risk Adjusters and the Future of the WSHIP

• OIC is directed to adopt regulations to establish reinsurance and risk adjustment programs and must consider the option of a reinsurance program that is an “invisible high-risk pool.” The latter option would cede the full premium and risk associated with certain high-risk or high-cost enrollees and how such a program could be designed to provide effective care management.  
• Regulations for the reinsurance program must establish a mechanism to collect assessments, include a reinsurance payment formula, and have a mechanism to disburse reinsurance payments. Rules may be adjusted to preserve a healthy market inside and outside of the exchange.  
• OIC must identify data submissions to support operation of the reinsurance and risk adjustment programs, and must contract with one or more nonprofit entities to administer the programs. 
• Assessments from the reinsurance program may be increased to cover cost for preoperational and planning activities.  
• The Washington State High Risk Pool (WSHIP) is authorized to contract with the OIC to administer the state’s risk management functions.  
• The WSHIP is directed to review and perform an analysis of continued access to WSHIP pool coverage for certain populations that will not benefit from federal reform, to be reported to the legislature by December 1, 2012, with any recommendations for restructuring the program.  
• WSHIP assessments (and categories of entities assessed) must be examined to make the assessments fair and equitable and the possibility of credits against the federal reinsurance assessments must be explored.

CBS news story

 A number of health care offsets were included in the legislation to pay for the fix to the Medicare physician payment formula, mostly cuts to providers under fee-for-service Medicare and Medicaid. In addition, funding for the Prevention and Public Health Fund, established by the federal health reform legislation (Affordable Care Act, or ACA), will be reduced by $5 billion. Generally, this payment fix will help retain stability in the health care system overall by helping to preserve access to care and by forestalling additional cost-shifting to private payers that might have occurred otherwise.

The majority of Medicare patients served by Group Health are in the Medicare Advantage (MA) program, which pays a capitated rate that is not directly affected by this Medicare fee-for-service payment change. While fee-for-service payments do inform the overall capitation rate in MA, the current Administration bases its proposed MA rates on the law as currently written. Because this 27 percent reduction is only forestalled through the end of 2012, the proposed rates for 2013 will continue to reflect the assumption that a further reduction in fee-for-service physician payments will occur in 2013, regardless of whether that will actually happen. 

CMS also released its 2013 Advanced Notice and Call Letter on February 17, which gives a preliminary picture of what rates will look like in 2013. As with this year, benchmarks will be blended – that is, a combination of pre-health reform benchmarks and new, generally lower, benchmarks as defined by the ACA, based on a percentage of local fee-for-service costs. These new benchmarks vary by county and phase-in over two, four, or six years, depending on the magnitude of the change. CMS estimates the pre-health reform portion of the benchmarks will increase by a growth rate of 2.3 percent, and the new fee-for-service portion of the benchmarks will increase by a growth rate of 2.6 percent.

In addition to the effects of the blended benchmark and the growth percentage, sequestration is another important factor in determining 2013 rates. Sequestration is a process defined by the Budget Control Act of 2011, where automatic cuts occur at the federal level if Congress doesn’t meet prescribed deficit reduction targets. The Budget Control Act calls for 2 percent cuts to Medicare providers—not benefits—as part of this process. The Administration has not officially announced how it will implement this cut in Medicare Advantage, but they have not factored in this cut to the benchmarks, so the reduction will be made after the bids are submitted. CMS has indicated they will share more information on sequestration in their actuarial user group calls. These factors and others will affect final plan rates in 2013, which will vary significantly by county. However, while more information may emerge, at the moment the overall picture is one of relative stability for MA payment.

Although the health system overhaul itself continues to divide the public, a major poll last year found that 84 percent of Americans support these benefit summaries. The general compliance effective date for both carriers and health plans is September 23, 2012, which is a change from the March 23, 2012 date in the proposed rule. Many carriers were concerned that the earlier date would not give enough time to implement the requirements, which likely includes extensive changes to current IT systems. The September date gives carriers more time for system updates, while giving consumers the new information in time for the popular fall annual open enrollment periods.

Another change from the proposed rule is that enrollee-specific premium amounts are not required as part of the benefit summaries. This is due in part to the large administrative burden required to provide such information that may change throughout the enrollment process.

The final rule continues to require large employer plans, including self-funded plans, to be subject to the requirements, despite heavy push-back from large employers insisting that their plans already supply employees with the benefit summaries they need. The law also requires the forms to give examples of specific coverage explaining how much a plan pays on average for common medical conditions. The initial two medical conditions chosen by HHS are pregnancy and type 2 diabetes. Over time, HHS plans to require four additional coverage examples be included in the forms.

HHS Press Release

Template for the Summary of Benefits and Coverage and Glossary

Final Rule Text

With a U.S. debt crisis and a presidential election looming—and with Group Health paying continually rising prices for care purchased outside our own group practice—the cost-containment drumbeat can seem deafening. But here are 10 reasons why rising costs matter now more than ever:

1. Dollars spent on health care could go to education and other needs.
As former White House Advisor Ezekiel Emanuel, MD, PhD, recently wrote, “The more we spend on health care, the less we can spend on other things we value…middle-class salaries, public education, and other state-funded services.” Money spent on any of those things may promote health more than spending the same on medicine. Also, health care-related debts are weakening American businesses’ ability to compete globally.

2. Lower costs will let more Americans gain access to care.
When insurance premiums rise with the cost of care, fewer people can afford coverage. Emanuel predicted that even after the Affordable Care Act starts providing coverage for the uninsured through Medicaid and subsidies in 2014, some people will still find coverage unaffordable. But bending the curve of cost increases should allow more Americans into the system.

3. Lower costs can be compatible with better care.
Group Health proved this true in our patient-centered medical home evaluation. Results included lower costs, higher quality, fewer hospitalizations and emergency visits, and better patient and provider experiences. Ongoing research seeks to identify more innovations that cut costs while maintaining or improving quality.

4. We know where the money is.
Studies show that the greatest potential for health care savings comes from reducing avoidable hospitalization and improving care for chronic conditions. In the Journal of the American Medical Association, Emanuel recently outlined needed changes, including many under development and/or evaluation at Group Health:

• tracking patients’ health status and physician performance with electronic health records
• more intensive interactions between patients, caregivers, and clinic staff, including using care coordinators, 24/7 access, interventions to increase medication adherence, and specialized clinical services for patients with recurrent problems from chronic disease
• providing services not traditionally covered by fee-for-service reimbursement, such as e-mail, wireless monitoring to increase medication adherence, home evaluations to minimize falls, and lifestyle interventions to improve nutrition and exercise

5. We’re uniquely positioned to help solve the problem.
As a learning health care system conducting non-proprietary research within an integrated health plan, we can study the processes and costs of care and coverage for a large population getting care in real-world clinical settings. This lets us continually refine our ability to design, implement, evaluate, and disseminate innovations that may reduce care costs for Group Health members and others across the United States.

6. We’ve got the connections.
Through Group Health Research Institute’s links to other organizations in the HMO Research Network and other consortia—and our collaborations with universities and medical centers nationwide—we can extend the diversity, power, and reach of our research on costs.

7. It’s the future.
The new Center for Medicare and Medicaid Innovation shows increasing interest in funding research to make care more efficient. Also, the establishment of accountable care organizations (ACOs)—as outlined in the Affordable Care Act—provides new incentives for cost-conscious health care.

8. Improvements are possible.
Other developed nations prove it’s possible to provide higher-quality care at lower cost. Among further glimmers of hope: the Centers for Disease Control and Prevention published a study last month showing a dramatic decrease in amputations among people with diabetes over the past decade, presumably because of better disease control. Such improvements should result in lower costs too.

9. We’re poised to address the problem.
At the Group Health Research Advisory Board Annual Meeting on January 25, leaders from Group Health and our collaborating institutions affirmed GHRI’s recently completed strategic plan. They encouraged the Institute to be more ambitious about solving cost control challenges—for both Group Health and the nation. So a small working group of Group Health leaders will meet soon to plan how GHRI will intensify efforts in cost-related research.

10. It’s our job.
GHRI’s mission is “to improve health and health care for everyone through leading-edge research, innovation, and evaluation.” Reducing costs of care is a pillar of this effort.

The two primary goals of the Task Force were: 1) Identify real-world examples and best practices that facilitate coordinated, accountable, patient-centered care; and, 2) Make recommendations for ensuring that current health information technology efforts support delivery system and payment models shown to improve quality and reduce costs in health care, in ways that best utilize scarce public and private resources.

The report discusses the common attributes of high-performing organizations that align with emerging delivery system reforms and health IT capabilities needed to support them. Group Health is considered to be a high-performing organization by the Task Force, and our successes are captured throughout the report. The report also addresses gaps in health IT capabilities, the barriers to their achievement, and recommendations for accelerating the creation of a health IT foundation that will drive improvements in the quality, safety and cost-effectiveness of care in the U.S.

Health IT plays a critical and foundational role in these new models of care. When well designed and effectively used, health IT saves lives, improves quality, and reduces costs. This report takes a very necessary step in the right direction to help meet the triple aim of improving health, improving the experience of care for patients and families, and reducing the cost of care.

However, much more future work is needed in this field to further drive innovation in health IT, and we hope this report will help encourage policy makers to promote health organizations who are investing and innovating through health IT. Amidst the national and state discussion on furthering health IT capabilities, Group Health continues to forge the way for other organizations in the use and development of health IT for the benefit of our members.

Press release

Report

I believe the support for committed couples is part of respecting our staff and our patients. Respect for all people is a core value of Group Health. Inclusion and equality help build a workforce that reflects and can support the diverse needs of the patients we serve.

“We support our people, both our staff and our patients, and we also support human rights as guaranteed to all citizens of this country,” said Michael Soman, MD, Chief Medical Executive Officer, and President of Group Health Physicians. “Close collaboration and respect, with our colleagues and our patients, are critical to creating better health for individuals and communities.”

Group Health’s position builds on its history of supporting corporate and public policies that promote inclusion and equality. Group Health was recently recognized in the Healthcare Equality Index for its leadership in meeting high-quality standards in serving the LGBT community in its 25 statewide medical centers. The standards include some basic services such as visitation rights and patient non-discrimination policies

States to determine benchmark EHB plan
Under HHS’ intended approach, states would have the flexibility to select an existing health plan to set the “benchmark” for the items and services included in the EHB package. This gives states the option to select a plan that would be equal in scope to the services covered by a typical employer plan in their state, with additional flexibility to adjust with the market as innovative plan designs are developed and advancements in care become available. States will base their package on the benefits offered by: one of the three largest state employee health plans (by enrollment); one of the three largest federal employee health plans; the largest HMO plan offered in the state; or one of the three largest small-group plans in the state. The benefits and services included in the selected health plan would then be considered the EHB package for the state.

Consistent with the Affordable Care Act (ACA), states must ensure the EHB package covers items and services in at least ten categories of care, including preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs. The bulletin addresses only the services and items covered by a health plan, not the cost sharing—such as deductibles, copayments, and coinsurance—that will be required by a qualified health plan. The cost-sharing features and rules will be addressed in future bulletins.

State mandates
The Institute of Medicine (IOM) issued guidance a few months ago that stressed the importance of affordability in an EHB package, along with stressing that only state mandates that are evidence-based should be included in the EHB package. The HHS bulletin has somewhat deviated from the IOM’s guidance, in that it does not specifically address cost and offers a different solution for state mandates. To prevent federal dollars paying for state benefit mandates, the ACA requires states to pay the cost of state mandated benefits (in excess of the EHB package) for individuals enrolled in any plan offered through an Exchange. However, the bulletin provides that as a transition in 2014 and 2015, state mandates included in the benchmark plans would be included in the EHB package for that state, without requiring the state to pay for the cost.

What we are hearing
Patient advocates previously called for a broad national EHB standard that would cover a wide range of treatments, while business groups have said affordability must be a top consideration, even if it means a more limited package. Both segments appear to have concern with the bulletin. It does not address cost as a consideration for the establishment of the EHB package to satisfy the business groups, nor does it address consumer advocate concerns by creating a national standard that will “beef up” plans in states with minimal state mandated coverage. Furthermore, the bulletin continues the uncertainty faced by insurers, consumers and employers over exactly what will be covered in the EHB package.

To add confusion, the issuance of a bulletin by HHS was an unexpected twist, as the issuance of a Proposed Rule and/or Request for Information is the normal protocol for regulations of this kind. It has been speculated that the administration specifically chose to issue a bulletin as it does not have to provide definitive economic estimates of the proposal or determine regulatory impact on small business. Additionally, allowing states to make the decision on the EHB package that works the best for them saves the administration the potential political backlash from not including specific benefits in the package.

Next steps
All eyes are on Washington state as to which option it will choose as its benchmark plan. As a mandate-heavy state, it will be particularly interesting to see how Washington will impose restrictions on the EHB package in an effort to keep coverage affordable in the post-2014 market. Will there be a continued push for additional mandates at the state level, or will the legislature begin to review the current mandates on the books? Either way, HHS has given the state some time to transition current mandates and develop an EHB package that will offer Washingtonians access to affordable adequate coverage.

Essential Health Benefits Bulletin
Fact Sheet on the Informational Bulletin on Essential Health Benefits

Your consumer Board of Trustees has been busy reflecting on 2011 and planning for the future. As part of that reflection process, we’ve considered the Cooperative’s journey from its creation in the great cooperative movement of the post-war years, and coming of age in the turbulent second half of the twentieth century. Our annual membership meetings were lively and exuberant affairs where many important discussions took place.

We’ve been looking at ways to recapture that spirit of engagement in our Group Health as we celebrate the International Year of the Cooperative. Things have changed since 1947, but our members still care deeply about their health and that of their families and communities. Our job for 2012 is to find ways for our members to engage with their Cooperative in ways that work for today’s lifestyles.  As I said at the Annual Meeting, you’ll be hearing more about that in months to come.

In the meantime, with thanks for your continued enthusiasm for Group Health Cooperative, I wish you a holiday season filled with good health.

Here’s a proposal that could lead to positive change, not just for politics, but for patients, providers, purchasers, and policymakers: Uncover and share information on the true costs of care. Coupled with knowledge of health outcomes, this information can provide common ground for understanding the value of various approaches to care—something that’s missing in today’s debates.

In September’s Harvard Business Review, Harvard Business School professors Robert S. Kaplan and Michael E. Porter explained why facts about health care costs are so elusive: Most health care organizations focus only on how much the government and insurers spend, not on the costs health care providers actually incur. Why? The health care system is so complex and uncoordinated that accurate cost information is difficult to find. And costs are often shifted from one type of service or provider to another, or to the payer or patient. The result proves a management axiom: What isn’t measured can’t be improved—or even managed.

“Poor costing systems have disastrous consequences,” Kaplan and Porter write. Providers and payers don’t link cost to process improvements or outcomes, so instead of choosing systemic and sustainable cuts, they make simplistic across-the-board cuts in areas like pricey services, compensation, and staffing. The consequences? Marginal savings, higher total system costs, and poorer outcomes. Introduce high copayments on expensive drugs, for instance, and clinic costs may soar as patients stop drug treatment and get sicker.

What’s the fix? Focus on patients and their conditions—not departmental units, procedures, or services—as the fundamental unit of analysis for measuring cost and outcomes, say Kaplan and Porter: “Account for the total costs of all the resources” that individual patients use as they traverse the system.

We must understand the cost of the patient’s full care experience—from the first sign of a health problem to recovery or death. We need cost data related to all of the patient’s providers (primary care doctors, specialists, nurses, therapists, etc.), all tests, drugs, equipment used—and any home health care or phone or e-mail consultation. How much is needed for administration and other overhead including facility costs, plus the cost of managing insurance coverage?

Where in our nation’s fragmented health care system can we gather such patient-focused information? Right here: For Group Health members who get their care within our own medical centers, we have a comprehensive view of nearly all activities linked to the cost, outcomes, and value of services provided. Still, there have been challenges. Before the 1980s, Group Health collected very little data on cost. Because purchasers paid a flat fee for coverage and services per person, without fees per service, the cost of discrete services may have seemed irrelevant.

But over time, Group Health has become increasingly interested in understanding the cost and outcomes—and therefore the value—of care provided within the system. That understanding, coupled with Lean management, aids our mission to provide “affordable excellence.”

Some cost information is still hard to come by, though—especially for Group Health members who get care outside of our integrated group practice and facilities. Rates set for other insurers and Medicare largely determine these services’ prices.

Still, Group Health and other integrated systems provide a terrific environment for achieving better awareness of the cost and outcomes of care. Collaborating with Group Health managers, researchers can compare the relative value of various approaches, both inside and outside Group Health. We can also partner with institutions across the nation to conduct even larger studies to provide facts needed to design a less expensive, higher-quality health care system.

Our aim is to build a better foundation of knowledge about costs. We must accept the challenge to measure and manage cost and outcomes, creating better value for Group Health members. In so doing, we can take better care of our patients and contribute to a U.S. health care system based more on the light of evidence—and less on the heat of politics.

Read Harvard Business Review article, “The Big Idea: How to Solve the Cost Crisis in Health Care” by Robert S. Kaplan and Michael E. Porter.