02.28.13

Cantwell: May Oppose Obama Health Agency Nominee, Due to Delay of Cost-Saving Basic Health Program

Basic Health helps drive down costs for states and low-income consumers, yet program delayed by administration until 2015

WASHINGTON, D.C. – Today during questioning of a top federal official responsible for implementing health care reform, U.S. Senator Maria Cantwell (D-WA) said she may not support President Obama’s nominee for administrator of the Centers for Medicare and Medicaid Services (CMS) due to the administration’s failure to implement a key part of the law that could bring significant cost-savings to states and low-income consumers.

Marilyn Tavenner, Acting Administrator of CMS, was renominated by President Obama earlier this month. Cantwell said today at a Senate Finance Committee hearing that she was concerned about supporting Tavenner due to the slow implementation of the Cantwell-championed federal Basic Health Plan Option (FBHO), which was enacted into law as part of the Affordable Care Act. CMS is tasked with implementing the FBHO.

The program was intended to be made available to states beginning in 2014 along with state exchanges and/or Medicaid expansion, but the Department of Health and Human Services (HHS) has delayed its implementation until 2015. Delaying Basic Health one year means low-income consumers will be forced to shoulder higher costs on the exchange or forgo coverage and depend on the state for health care costs in the interim.

Today during the hearing, Cantwell asked Jonathan Blum, Acting Principal Deputy Administrator and Director, Center of Medicare, Centers for Medicare and Medicaid Services (CMS), why HHS was delaying Basic Health cost-savings, effectively shifting the burden to states and low-income consumers until 2015.

“Somehow the agency seems to be very anxious – instead of implementing the law in 2014 as called by in the Affordable Care Act – seems to be anxious that somehow giving this population just above the Medicaid rate a more affordable benefit plan as outlined in the first chart is somehow against the interest of the overall Act,” Cantwell said at today’s hearing. “And if you could shed any light on that I’d certainly appreciate it.”  

Blum responded: “I haven’t personally worked on this issue so I can’t speak to the decision-making behind it. I do believe – I do understand that Marilyn Tavenner has promised to provide you a schedule of how we plan to implement this provision. But we are happy to work with you and to help.”

“Well, Ms. Tavenner definitely will not have my support and I’m not interested in how she’s going to implement the Act. I’m interested in the commitment to the administration to live up to the way the Affordable Care Act’s provisions say it should be implemented,” Cantwell said. “Right now I can’t get anybody at CMS to own up to the fact that states under the law could receive 95 percent of the tax credits to provide cheaper care to the beneficiaries, instead of making them out-of-pocket expenses.”

Cantwell continued: “So I’m not interested in having the schedule of what date it’s going to be implemented. I’m interested in the agency making sure that it doesn’t thwart a more cost-effective solution to somehow save the exchange. When that’s really a false issue in my viewpoint.” 

Watch a video of Cantwell’s entire exchange with Blum today.

During the hearing, Cantwell also questioned Blum on the cost-savings of rewarding efficiency in the Medicare reimbursement system with the replacement of the current fee-for-service system with a new “value-based index” formula Cantwell authored that rewards quality of care instead of quantity of services.

Plans on the state exchange would be offered to consumers ineligible for Medicaid with income below 400 percent of the federal poverty level (FPL), while Basic Health would be offered to those ineligible for Medicaid with incomes between 138 and 200 percent of the federal poverty level. See this chart Cantwell referenced at the hearing today.

Compared to the exchange, a consumer would pay far less in average annual out-of-pocket costs under Basic Health: $96 compared to $434, according to 2011 estimates by the Urban Institute. Premiums would also be significantly cheaper: $100 under Basic Health compared to $1,218 on the exchange. See related chart Cantwell referenced today at the hearing.

Modeled after Washington state’s successful Basic Health Plan, the federal Basic Health Plan Option enables states to negotiate directly with health insurers to provide high quality health care coverage at a lower cost to those ineligible for Medicaid. The plan would be 95 percent federally funded under Cantwell’s provision. Washington state’s program has operated for more than two decades, providing quality and cost-effective managed care for those ineligible for Medicaid but below 200 percent of the federal poverty level.

In recent weeks, Cantwell has been pushing Administration officials to explain why the program isn’t being implemented in 2014, at the same time as state exchanges, as the law advises. On February 13, during a Finance Committee hearing, Cantwell questioned President Obama’s Treasury Secretary nominee and former White House Chief of Staff, Jacob Lew, about the delay and urged him to help push forward on its implementation. The following day, February 14, during another Finance Committee hearing, Cantwell questioned an HHS official on the agency’s support of the program.

A complete transcript of Cantwell’s entire exchange with Blum today follows:

Senator Maria Cantwell: Thank you, Mr. Chairman, and again thank you for having this hearing and many of the other hearings you are having on this subject on the implementation of the Affordable Care Act. I think it is of the utmost importance given the size and the scale of its impact on the economy that the agency is held accountable during this process. And I certainly appreciate the reminder that Mr. Blum used to be a member of the staff here. So maybe he could become an extra ordinary emissary to the agency as it relates to its communications. Because I think there are many things that many members here have shown a level of frustration about on the implementation of the Affordable Care Act.  I wanted to follow with my colleagues Senator Wyden and Grassley about the value index for the physician payment. You’ve talked about what’s happening with hospitals and the physician payment. I actually have three questions for you so hopefully I can get through all that in five minutes but the progress of that value index as it relates to physicians and why we don’t just put out a global rate. And if you fall below that you are rewarded and you fall above that you are penalized. And some progress on the rebalancing from nursing home care to community based care. Do you see that as a big cost saver? So if you could start with those two.

Mr. Jonathan Blum, Acting Principal Deputy Administrator and Director, Center of Medicare, Centers for Medicare and Medicaid Services, Baltimore, MD: Sure, thank you for the questions. I believe that the value modifier physician payment change that was authorized in the Affordable Care Act has the potential to be one of the most significant changes to the fee-for-service Medicare programs. It is also one of the hardest, probably the hardest policy we are working to implement from a couple different perspectives. The challenge is that Medicare beneficiaries who have many chronic conditions see many physicians. They can see 12 to 15 different physicians in the course of a year. And how you can assign the accountability for the patient’s total care is very challenging when they are seeing multiple primary care physicians and multiple specialists. So we have chosen to phase in the value modifier by first starting with large physician groups who are over 100 professionals because we have the greatest confidence that we can assign the value and quality to that large practice. We are very much committed to the policy, committed to the schedule that was outlined by the Congress. But this is the hardest policy that we are going to need all the advice from this committee and the physician community. But we have started the process that will take effect 2015 but you will see more rule making this year to continue the phase-in.

Senator Maria Cantwell: I think it starts in 2013 and is not fully implemented until 2017 or something. I think we have lots of time so it’s good to hear that you think it’s one of the biggest cost-savings. I wanted to ask you about the Basic Health Plan. One of the issues here on saving dollars within the Medicare budget is, because Medicare is going to take everything that we have. Just because of the aging population and living longer. So we want to get it right. But in the Affordable Care Act we have two  provisions, the Basic Health Plan, which is annual costs and premiums a lot lower than what they would face on the exchange. And then this particular population is a very narrow population on the exchange. But somehow the agency seems to be very anxious – instead of implementing the law in 2014 as called by in the Affordable Care Act  – seems to be anxious that somehow giving this population just above the Medicaid rate a more affordable benefit plan as outlined in the first chart is somehow against the interest of the overall act. And if you could shed any light on that I’d certainly appreciate it.

Mr. Blum: I have a couple ways to respond Senator. I haven’t personally worked on this issue so I can’t speak to the decision-making behind it. I do believe – I do understand that Marilyn Tavenner has promised to provide you a schedule of how we plan to implement this provision. But we are happy to work with you and to help...

Senator Maria Cantwell: Well, Ms. Tavenner definitely will not have my support and I’m not interested in how she’s going to implement the Act. I’m interested in the commitment to the administration to live up to the way the Affordable Care Act’s provisions say it should be implemented. Right now I can’t get anybody at CMS to own up to the fact that states under the law could receive 95 percent of the tax credits to provide cheaper care as the first chart shows to the beneficiaries, instead of making them out of pocket expenses. So I’m not interested in having the schedule of what date it’s going to be implemented. I’m interested in the agency making sure that it doesn’t thwart a more cost-effective solution to somehow save the exchange. When that’s really a false issue in my viewpoint. So thank you so much. 

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