Health Reform Weekly

A weekly compilation from Aetna of health care-related developments in Washington, D.C. and state legislatures across the country.


Week of September 3, 2013

A study published in the Journal of American Medicine shows that programs designed to improve quality and reduce costs, such as Accountable Care Organizations (ACO), can also lower costs for patients outside the program who see the same providers. An ACO is a network of doctors and hospitals that shares responsibility for providing care to a specific group of patients. There are already more than 428 ACOs in the U.S., serving an estimated 14 percent of the population, including both Medicare and private-insurance patients.

Many ACO agreements only a cover a portion of the patients in a health care network, which means the rest of the patients served by those providers are in a traditional fee-for-service model. However, researchers at the Harvard Medical School say there appears to be a “spillover savings” for all patients in the network – savings were significant, in excess of 3 percent, according to the study.


The Congressional Budget Office (CBO) has lowered its projection of spending growth in the
fee-for-service portion of Medicare over the next few years. CBO had previously projected annual spending growth of 3.1 percent per year between 2010 and 2020. The new projection estimates average annual growth of 1.9 percent between those years. The CBO report notes that the slowdown in spending growth is not driven by the economic recession’s effect on beneficiaries’ demand for services but rather other factors, such as the way care is delivered to beneficiaries.

Also last week, the U.S. Department of the Treasury released the final rule on the requirement for individuals to maintain minimum essential coverage.  This final regulation defines the types of minimum essential coverage that will satisfy the coverage requirements, identifies those individuals subject to the requirements, and describes how individuals can request an exemption. The Department did not issue final rules on whether certain types of coverage – such as Medicaid coverage for medically needy individuals, and limited benefit TRICARE programs – will qualify as minimum essential coverage. The Department plans on addressing these issues through future regulations that will be finalized prior to January 1, 2014.    


CALIFORNIA: The Department of Health Care Services last week delayed the launch of its dual eligible demonstration project. Cal MediConnect, previously scheduled to start Jan. 1, 2014 is now slated to launch no sooner than April 2014. Cal MediConnect aims to integrate Medicare and Medi-Cal services and funding for about 1 million Californians who are eligible for both programs. The demonstration project will target eight California counties when it is launched.

MASSACHUSETTS: The Center for Health Information and Analysis (CHIA) released the Massachusetts Acute Hospital Financial Performance Report for Fiscal Year 2013 Quarter 2 (FY13Q2)Overall, acute hospital financials remained strong, although the median total margin for all hospitals decreased from 3.8 percent in FY12 to 3.0 percent in FY13Q2. Teaching and Disproportionate Share Hospitals (DSH) showed stronger financial performance in most categories than community and non-DSH hospitals. DSH hospitals’ profitability increased from 2.2 percent in FY12 to 3.5 percent in FY13, while non DSH hospitals’ profitability decreased from 4.2 percent in FY12 to 2.8 percent in FY13.

MICHIGAN: The Republican-led Senate passed ACA Medicaid expansion on a 20-18 vote – the House had passed ACA Medicaid expansion earlier. Approximately 470,000 residents are expected to gain coverage under Healthy Michigan. However immediate effect of the law failed, which means that the state will lose millions that was to be provided by the federal government to implement the plan on time. In addition, there may be some confusion among consumers as enrollment on the Michigan exchange is scheduled to begin on January 1, while Medicaid expansion will not begin until April 1. Nevertheless, adoption of the expansion is a major accomplishment for the Snyder administration, as he is one of nine Republican Governors to endorse some form of Medicaid expansion.

NEW MEXICO: Illustrating the speed with which it is moving to ensure that the New Mexico exchange is operational by October 1, the exchange board adopted a plan of operation at its August 16 meeting after a minimal comment period, drawing objections from key stakeholders. Ultimately the board voted to adopt the plan but agreed to receive public comments and consider amendments at its September 20 meeting. The board also adopted an “employee choice” model through which the employer will choose what medical level it wishes to fund and employees will be able to choose any plan within that category offered by any of the five carriers participating in the exchange.

UTAH: After months of speculation about whether Utah would expand Medicaid, Governor Gary Herbert announced that he will make his decision in conjunction with the legislature when it convenes in 2014. Legislative opposition to expanding this coverage remains high. The governor has two consultant reports outlining the impact of expansion and the cost to state over a 10-year period to aid his decision-making process.

WYOMING: The Joint Labor, Health and Social Services Interim Committee recently discussed a potential bill that would expand Medicaid using a model similar to Arkansas’ plan. Under the proposal put forth by committee co-chair Rep. Elaine Harvey, the state would apply for a CMS waiver to use federal funds to offer coverage to the Medicaid expansion population through the federally facilitated “marketplace”.  The committee will decide whether to take any formal steps to move the proposal forward at its next meeting in the fall.  Earlier this year, lawmakers voted against traditional Medicaid expansion.



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