Private Payers News

Health Insurance Marketplace Cuts Costs, CMS Boosts Quality

By Vera Gruessner

- The health insurance marketplace has brought more competition among health payers as well as more benefits to consumers in need of healthcare coverage and unable to purchase plans with more costly premiums. The Centers for Medicare & Medicaid Services (CMS) has recently announced that approximately 80 percent of consumers will be able to purchase healthcare coverage with premiums under $100 per month after tax credits.

Affordable Care Act

The open enrollment period for purchasing plans through the health insurance marketplace will begin on November 1, 2015 and coverage will start on January 1, 2016.

With many insurance plans including premiums falling below $75 per month, the health insurance marketplace seems to be a much more affordable system for consumers. With greater demand for coverage after the Affordable Care Act was passed, this also benefits payers financially.

The Department of Health and Human Services (HHS) also found that, after the second enrollment period, returning consumers who had switched their plans gained a significant cost savings of about $400 on their 2015 annual premiums.

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  • “For most consumers, premium increases for 2016 are in the single digits and they will be able to find plans for less than $100 a month,” Kevin Counihan, CEO of the Health Insurance Marketplaces, said in a public statement.

    “If consumers come back to the Marketplace and shop, they may be able to find a plan that saves them money and meets their health needs… Last year, over half of re-enrolling consumers on HealthCare.gov shopped and half of those who shopped selected a new plan – that sort of choice and competition was limited prior to the Affordable Care Act.”

    Ever since the Patient Protection and Affordable Care Act along with the HITECH Act were passed, healthcare reforms have been changing the industry significantly, especially with regard to medical payment models. The health insurance marketplace and the move from fee-for-service payments to value-based care have brought higher quality care and better outcomes throughout the nation.

    The Hospital Value-based Purchasing Program established by CMS is also another attempt at healthcare reform that is pushing forward quality instead of quantity. Fee-for-service payment systems have often led physicians and providers to conduct more tests and unnecessary diagnostic services in order to receive a higher reimbursement.

    Value-based care such as bundled payments only allow providers to be reimbursed in one lump sum covering all of the services offered to manage a medical condition in a specified time frame.

    The Hospital Value-based Purchasing Program adjusts what hospitals receive through the Inpatient Prospective Payment System by figuring out the quality of care patients receive. At this point in time, CMS predicts that approximately $1.5 billion will be available for value-based incentive payments next year.

    This new program has allowed CMS to reimburse providers for acute inpatient care based on the quality of services provided instead of solely the quantity of tests and treatments. Next year, it is expected that hospitals will see a ‘positive payment adjustment’ when it comes to MS-DRG payments.

    The best-performing hospitals in 2016 will receive a 3 percent net change in their reimbursement. The worst performing hospitals will see a reduction of 1.75 percent at maximum and will not obtain any incentive payments. This new program is meant to bring more quality care for the patient community.

    However, the latest report from the Government Accountability Office (GAO) shows that the incentives and penalties provided by the Hospital Value-based Purchasing Program have not made a major impact on hospital quality measure performance.

    Nonetheless, the GAO report did find that hospital readmission rates fell significantly after the introduction of a CMS incentive program punishing hospitals for high rates of hospital readmissions.

    “GAO’s analysis found no apparent shift in existing trends in hospitals’ performance on the quality measures included in the HVBP [Hospital Value-based Purchasing] program during the program’s initial years. However, shifts in quality trends could emerge in the future as the HVBP program continues to evolve. For example, new quality measures will be added, and the weight placed on clinical process measures— on which hospitals had little room for improvement—will be substantially reduced,” the report stated.