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Cruz Plan Gets Thumbs Up From HHS But Thumbs Down From Most Everyone Else

Contradicting the opinion of most policy experts, a draft report from the Trump administration forecasts better enrollment and lower premiums for everyone who buys their own health insurance if a controversial amendment proposed by Sen. Ted Cruz of Texas were to become law.

The draft surfaced just as Republican senators were lunching with President Donald Trump on Wednesday to talk about the next steps in the health care debate.

“The Republicans never discuss how good their healthcare bill is, & it will get even better at lunchtime,” tweeted Trump, before the group convened.

But findings from the draft report drew immediate criticism from health policy experts as opaque and misleading.

“The details get a bit dicey,” said Craig Garthwaite, director of the health care program at Northwestern University’s Kellogg School of Management. “No one I’ve talked to thinks [the analysis] is well done.”

The forecasts in a draft analysis by the Department of Health and Human Services are exactly opposite from what many experts predict.

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Still, the HHS analysis did provide some insight into how HHS envisioned that the Cruz plan, part of the Senate bill that appeared to die this week, could have worked. Particularly notable: The analysis assumes annual deductibles of $12,000, which means consumers would have to pay that amount — which is far higher than allowed under the ACA — before most benefits are covered.

On Wednesday, health care developments continued to unfold at a breakneck pace, and with a zigzagging trajectory, when the Senate Budget Committee posted on its website yet another bill. This one is an updated version of the 2015 “repeal and delay” bill, which is likely the measure the Senate will consider next week if a vote to start debate succeeds.

It would repeal all of the taxes that paid for the Affordable Care Act’s benefits, roll back the expansion of Medicaid (but not cap the underlying program), nullify the requirement for most people to have insurance and rescind the financial aid for low- and moderate-income Americans.

Late in the afternoon, the Congressional Budget Office released an updated estimate of an earlier analysis concluding that the new “repeal and delay” measure could result in 32 million fewer Americans having coverage and premiums doubling by 2026. By 2020, according to CBO, “about half the nation’s population would live in areas having no insurer participating in the non-group market.” The new bill does not include the Cruz amendment, the subject of the HHS report.

Opposition to the Cruz amendment from powerful health care sectors, like the insurance industry, is cited as one reason why the Senate was unable to muster enough votes to move the whole Senate bill forward for debate this week.

Last Friday, the insurance industry trade lobby sent a harsh warning to Congress, saying the Cruz amendment “is simply unworkable in any form and would undermine protections for those with pre-existing medical conditions, increase premiums and lead to widespread terminations of coverage.”

Today, the HHS report took a very different view.

First reported in the right-leaning Washington Examiner, it forecasts far more people covered by insurance in 2024 if the Cruz plan were adopted, as compared with how many would be insured under the Affordable Care Act.

It also projects premiums would fall, both in plans that meet all the rules of the ACA, and in plans Cruz proposes, which would not have to follow the rules. The Cruz plans would have lower premiums, however, because they could come with far fewer benefits — and could reject people with medical problems or charge them more.

Insurers and actuaries said the Cruz proposal would result in a segmented market, with younger and healthier people drawn to the skimpier, less expensive plans. That, in turn, would leave older or sicker enrollees in the ACA-compliant plans, causing their premiums to spiral upward.

But the analysis by HHS shows premium costs for ACA-compliant plans would go down by more than $250 a month in 2024 when compared with what they would be under current law. The Cruz plans would be super cheap, at under $200 a month under the rosiest scenario outlined.

Experts today immediately pounced on the department’s methods — in as much as they could be determined, since the full report was not released.

(HHS did not respond to requests for comment or for the release of the full report.)

For starters, the draft report, they say, compares premiums for a 40-year-old with the “weighted average” of all people of all ages purchasing ACA plans now.

“It’s not apples to apples,” said Matt Fiedler, a fellow at the USC-Brookings Schaeffer Initiative for Innovation in Health Policy.

It cited its own “proprietary model” used to determine how many people would switch from ACA plans to the new Cruz plans, without spelling out its assumptions. Not including such details is highly unusual and makes the results difficult to analyze, said Garthwaite, adding: “There’s nothing in this that gives me any hope that the entire report will be any more accurate, complete or unbiased.”

Meanwhile, over lunch at the White House, President Trump asked senators to skip all or part of their August recess in order to work on another proposal to repeal and replace the ACA. He promised premiums that would be significantly lower, without citing details on how that would occur.

Postcard From Capitol Hill: Lawmakers Put Women’s Health Care In Its Place

The atmosphere at a House Appropriations Committee lunch meeting on women’s health midday Wednesday was predictably charged.

The Trump administration has proposed to defund Planned Parenthood and make severe cuts in other women’s health programs, such as Title X, a 40-year-old program that provides grants for family planning, and grants for teen pregnancy prevention.

Much of the male-dominated debate — over chili dogs and orange juice — was nominally about where women prefer to seek health care. But the central character was abortion.

Democratic representatives introduced several amendments related to women’s health, including one restoring teen pregnancy prevention grants and another striking language that would allow employers to exclude certain procedures from their health plans if they found them morally objectionable. All of the amendments failed in the Republican-controlled body.

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“No taxpayer dollars should be used to fund abortion, and I’ll fight any effort to dilute or get around that,” declared Rep. Martha Roby (R-Ala.), who prefaced her comments by calling herself “proudly pro-life.”

Federal funds are already prohibited for abortions under the Hyde Amendment, passed in 1976.

So the question of where women should be able to obtain health care has become an odd proxy for the abortion issue. According to Planned Parenthood, 60 percent of women who use their clinics consider it their main source for medical attention.

“We see community health centers as a more appropriate provider, and those are funded in the bill,” said Rep. Tom Cole (R-Okla.).

Rep. Evan Jenkins (R-W.Va.) agreed, saying women in his state — home to only one Planned Parenthood clinic — prefer to get their care at community health centers. “When we have an opportunity to defund Planned Parenthood and invest in community health centers, that’s good for West Virginia,” Jenkins said.

But money saved by defunding Planned Parenthood isn’t slated for community health centers, whose funding isn’t changing under the Trump administration’s proposed budget.

Rep. Barbara Lee (D-Calif.) pointed out: “We may disagree in terms of a woman’s right to choose abortions, but I hope we can agree that women should be able to make their own health care decisions.”

Read CBO Score Of Repeal-Only Bill

On Wednesday, the Congressional Budget Office released its estimates on an amendment to H.R. 1628 that would repeal the Affordable Care Act outright.

This is the CBO’s fourth review of repeal-and-replace-related legislative drafts. Below are past scores from the Senate’s Better Care Reconciliation Act, released June 26, and the House-passed American Health Care Act, released May 24.

Fraud And Billing Mistakes Cost Medicare — And Taxpayers — Tens Of Billions Last Year

Federal health officials made more than $16 billion in improper payments to private Medicare Advantage health plans last year and need to crack down on billing errors by the insurers, a top congressional auditor testified Wednesday.

James Cosgrove, who directs health care reviews for the Government Accountability Office, told the House Ways and Means oversight subcommittee that the Medicare Advantage improper payment rate was 10 percent in 2016, which comes to $16.2 billion.

Adding in the overpayments for standard Medicare programs, the tally for last year approached $60 billion — which is almost twice as much as the National Institutes of Health spends on medical research each year.

“Fundamental changes are necessary” to improve how the federal Centers for Medicare and Medicaid Services ferrets out billing mistakes and recoups overpayments from health insurers, he said.

Medicare serves about 56 million people, both those 65 and older and disabled people of any age. About 19 million have chosen to enroll in Medicare Advantage plans as an alternative to standard Medicare.

Federal officials predict the Medicare Advantage option will grow further as massive numbers of baby boomers retire in coming years.

Standard Medicare has a similar problem making accurate payments to doctors, hospitals and other health care providers, according to statistics presented at the hearing. Standard Medicare’s payment error rate was cited at 11 percent, or $41 billion for 2016.

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Last week, Attorney General Jeff Sessions announced the arrest of 412 people, some 100 doctors among them, in a scattershot of health care fraud schemes that allegedly ripped off the government for about $1.3 billion, mostly from Medicare.

CMS official Jonathan Morse said that the “largest contributors” to billing mistakes in standard Medicare were claims from home health care and inpatient rehabilitation facilities.

Some lawmakers appeared frustrated that CMS cannot say for sure how much of the “improper payments” in both Medicare options are caused by fraud. The agency uses the term broadly to cover billing fraud, waste and abuse, as well as simply overcharges and underpayments.

“When trying to understand how much fraud is in Medicare, the answer is simply we don’t know,” subcommittee Chairman Vern Buchanan (R-Fla.) said.

Yet he added that “it doesn’t take a big percentage [of fraud] to get a giant number” of dollars.

CMS official Morse did little to clear up any confusion over billing mistakes. In his written testimony, he said that improper payments are “most often payments for which there is no or insufficient supporting documentation to determine whether the service … was medically necessary.”

In his testimony, GAO official Cosgrove focused on the Medicare Advantage program. He took aim at a little-known government audit process called Risk Adjustment Data Validation, or RADV. These audits require health plans to submit a sample of patient records for review.

Cosgrove said that the RADV audits take too long to complete and failed to focus on health plans with the greatest potential for recovery of overcharges. He also said that CMS officials had not done enough to make sure the payment data they use are accurate. As a result, “the soundness of billions of dollars in Medicare expenditures remains unsubstantiated,” according to written testimony.

The GAO, the watchdog arm of Congress, has previously criticized CMS for its failure to ferret out overcharges in Medicare Advantage. In an April report, GAO found that CMS has spent about $117 million on the Medicare Advantage audits since 2010 but recouped just under $14 million in total.

Payment errors and overcharges by Medicare Advantage plans were the subject of a lengthy investigation by Kaiser Health News and the Center for Public Integrity. Federal officials have struggled for years to weed out billing irregularities by Medicare Advantage plans, according to CMS records obtained through a Freedom of Information Act lawsuit filed by the Center for Public Integrity.

The investigation found that Medicare Advantage payment errors result mostly from flaws in a billing formula called a risk score. Congress expected risk scores would pay higher amounts for sicker patients and less for people in good health when it began phasing in the billing scales in 2004.

But since then, a wide range of CMS audits and other reviews have found that Medicare wastes billions of tax dollars annually because some health plans inflate risk scores by exaggerating how sick their patients are. One CMS memo made public through the FOIA lawsuit referred to risk-based payments as essentially an “honor system,” with few audits to curtail fraud and abuse.

Even when RADV audits have detected widespread overpayments, CMS officials have failed to recoup money after years of haggling with the health plans.

In January, Kaiser Health News reported that Medicare had potentially overpaid five Medicare Advantage health plans by $128 million in 2007, but under pressure from the insurance industry collected just $3.4 million and settled the cases.

Morse testified on Wednesday that CMS is still in the process of completing appeals of RADV audits from 2007. He said that payment errors have been calculated for 2011 and that reviews for 2012 and 2013 were underway.

These results are years behind schedule, according to CMS documents, which show the results were expected in early 2014. In the past, officials have said that they expected to collect as much as $370 million from the 2011 audits.

Morse said on Wednesday he didn’t know when the 2011 audit results would be released. “Hopefully soon,” he said after the hearing. “I actually don’t know.”

KHN’s coverage related to aging & improving care of older adults is supported by The John A. Hartford Foundation.

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