Re: CMS-9964-P: Proposed Rule, Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2014
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1 December 31, 2012 Centers for Medicare and Medicaid Services Department of Health and Human Services Attention: CMS-9964-P P.O. Box 8016 Baltimore, MD Re: CMS-9964-P: Proposed Rule, Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2014 To Whom It May Concern: The National Association of Community Health Centers, Inc. (NACHC) is pleased to respond to the proposed rule issued by the U.S. Department of Health and Human Services (HHS) concerning HHS Notice of Benefit and Payment Parameters for 2014 at 45 C.F.R. Parts 153, ( the Proposed Rule ). NACHC is the national membership organization for federally qualified health centers (hereinafter interchangeably referred to as health centers or FQHCs ) throughout the country, and is a Section 501(c)(3) tax-exempt organization. It is critical to the success of multiple health reform initiatives established under Title I, Subtitle D of the Patient Protection and Affordable Care Act ( PPACA or Affordable Care Act ) 1 that the coverage to be offered on Affordable Insurance Exchanges ( Exchanges ), in Basic Health Programs (if applicable), and in non-grandfathered plans in the individual and small group markets, as defined under PPACA 1302(b) -- include a meaningful range of primary, preventive, and specialty care services. Health centers will be critical in ensuring that the primary and preventive care components of this coverage are readily available through QHPs. I. Background There are, at present, more than 1200 health centers with more than 8000 sites serving more than 20 million patients nationwide. Most of these health centers receive federal grants under Section 330 of the Public Health Service (PHS) Act (42 U.S.C. 254b) from the Bureau of Primary Health Care (BPHC), within the Health Resources and Services Administration (HRSA) of HHS. Under this authority, health centers fall into four general categories: (1) those centers serving medically underserved areas, (2) those serving homeless populations within a particular community or geographic area, (3) those serving migrant or seasonal farmworker populations within similar community or geographic areas, and (4) those serving residents of public housing. To qualify as a Section 330 grantee, a health center must be serving a designated medically underserved area or a medically underserved population. In addition, a health center s board of 1 PPACA, Pub. L No , enacted on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No , enacted on March 30, (Following HHS s practice, we refer below to these two pieces of legislation collectively as the Affordable Care Act, or ACA.)
2 directors must be made up of at least fifty-one percent (51%) users of the health center and the health center must offer services to all persons in its area, regardless of one s ability to pay. BPHC s grants are intended to provide funds to assist health centers in covering the otherwise uncompensated costs of providing comprehensive preventive and primary care and enabling services (such as translation, transportation services, smoking cessation classes, etc.) to uninsured and underinsured indigent patients, as well as to maintain the health center s infrastructure. Patients from eligible communities, who are not indigent and are able to pay or who have insurance, whether public or private, are expected to pay for the services rendered. Approximately 35 percent of health center patients are Medicaid recipients, approximately 7.5 percent are Medicare beneficiaries, and approximately 40 percent are uninsured. After the implementation of the Medicaid eligibility expansion and the launch of the Exchanges January 1, 2014, the Kaiser Commission on Medicaid and the Uninsured estimates that health centers will serve approximately 18.4 million Medicaid recipients and 4.5 million Exchange enrollees by II. Comments on Risk Adjustment The Affordable Care Act establishes a permanent risk adjustment program to provide payments to health insurance issuers that cover higher-risk populations and to more evenly spread the financial risk borne by issuers. This program is of interest to NACHC because health center patients are often sicker, have more extensive medication needs, and are more at-risk than patients seen by other primary care providers. NACHC is particularly concerned that the proposed risk adjustment model will not go far enough to encourage QHPs to contract with FQHCs. Worse still, NACHC is concerned of the potential that QHPs will actively avoid contracting with FQHCs in order to avoid enrolling these higher-risk populations. Therefore, NACHC urges HHS to refine this risk adjustment program to include additional demographic factors to ensure that QHPs have adequate incentive to serve populations served by FQHCs. In the Premium Stabilization Rule (77 FR 17220), HHS laid out a regulatory framework for the risk adjustment program. Under established by that Rule, a risk adjustment model uses an individual s recorded diagnoses, demographic characteristics, and other variables to determine a risk score, which is a relative measure of how costly that individual is anticipated to be. This Proposed Rule sets forth the specific payment parameters for risk adjustment. Under the Proposed Rule, HHS will establish risk adjustment criteria and methods that will be implemented by States that operate an HHS-approved Exchange unless States propose an alternative risk adjustment methodology that meets Federal standards. Risk adjustment will transfer dollars from health plans with lower-risk enrollees to health plans with higher-risk enrollees. From 2014 through 2017, it is estimated that $45 billion will be transferred between insurers. HHS states in the Proposed Rule that the purpose of risk adjustment is to protect against adverse selection by allowing insurers to set premiums according to the average actuarial risk in the individual and small group market without respect to the type of risk selection the insurer would otherwise expect to experience with a specific product offering in the market. It further states that this should lower the risk premium and allow issuers to price their product close to the average actuarial risk in the market. This should, in HHS s view, mitigate the incentive for health plans to avoid unhealthy members. 2 Kaiser Comm n on Medicaid and the Uninsured, Community Health Centers: Opportunities and Challenges of Health Reform (Aug. 2010), p. 8. 2
3 A. The Proposed Risk Adjustment Model Will Not Reflect the Expected Population The population of patients who purchase insurance under the Exchange will reflect a broad, diverse array of individuals, including many low and moderate income individuals and families, some of whom have never been covered under commercial insurance. Accordingly, the risk adjustment model will need to be incredibly robust to identify higher-risk enrollees in order to prevent adverse selection by the QHPs. In the Proposed Rule, however, HHS proposes a risk-adjustment model based on individuals enrolled in commercial health insurance plans using commercial claims data from a selection of large employers and health plans. Specifically, HHS will base an individual s risk score exclusively on an enrollee s age, gender and diagnoses. In regard to diagnostic adjustments, HHS will use the hierarchical condition categories (HCC) groupings developed for the Medicare population. Although the HCC diagnostic adjustments are robust, it is based upon a limited range of demographic adjustments, and appears inadequate to reflect the population expected to be covered by QHPs. For instance, the adjustments do nothing to reflect an enrollee s social and cultural circumstances, which are also important predictors of the use of health services. Furthermore, many newly insured individuals lack diagnostic records, giving demographic and other factors even greater significance. Additionally, the proposed risk adjustment model uses an even narrower set of factors for risk adjustment purposes than other federal insurance programs. For example, under the Medicare Part D program, CMS increases the risk score for enrollees who are institutionalized in nursing homes, for enrollees who are dually eligible for Medicare and Medicaid, and for enrollees who are eligible for the Part D low-income subsidy. These demographic factors are essential components of the Part D risk adjustment models because elderly patients that qualify for nursing home care by definition will have more health problems and functional impairments (and poorer health outcomes) than other elderly patients who do not qualify for nursing home care. Moreover, elderly patients who qualify for Medicaid or the Part D lowincome subsidy have lower socio-economic status, which is strongly correlated to chronic disease, poorer self-perceived health status, and decreased functioning. 3 B. The Risk Adjustment Model Should Include Additional Demographic Factors As contemplated by the Premium Stabilization Rule, NACHC urges HHS to incorporate additional demographic characteristics into the risk adjustment model to make it more likely to reflect an individual s likely actual costs. In particular, we recommend adjustments be made for socioeconomic status and for enrollees who receive care from an essential community provider (ECP). 1. Socioeconomic Status The risk adjustment model should incorporate adjustments for enrollee s socioeconomic status by including information regarding an individual s income or poverty level and her or his eligibility for 3 See, e.g., Kaplan GA and JE Keil, Socioeconomic factors and cardiovascular disease: a review of the literature, Circulation (1993)
4 cost sharing reductions and advanced payments of the premium tax credit. These data will both be readily available to the Exchanges and could be used in the risk adjustment model established by HHS. 2. ECP Patient Recognizing the critical role served by certain providers, Congress required that in order to be certified as a QHP a plan must, at a minimum, include within health insurance plan networks those essential community providers, where available, that serve predominately low-income medically-underserved individuals, such as health care providers defined in section 340B(a)(4) of the Public Health Service Act... PPACA 1311(c)(1)(C). Health centers qualify as essential community providers (ECPs) under the statute and implementing regulations. See 45 C.F.R (c). Notably, individuals who receive care at health centers often are sicker and more at-risk than patients seen by other primary care providers. 4 Consequently, if the risk adjustment model is not adequate, then QHPs may have an incentive to avoid contracting with health centers as primary care providers in order to avoid enrolling that higher risk population. Furthermore, the incentive for health plans to avoid contracting with health centers is amplified by the fact that QHPs pay FQHCs according to their Medicaid prospective payment system (PPS) rate: If any item or service covered by a qualified health plan is provided by [an FQHC as defined in the Medicaid provisions of the Social Security Act] to an enrollee of the plan, the offeror of the plan shall pay to the center for the item or service an amount that is not less than the amount of payment that would have been paid to the center under section 1902(bb) of such Act... for such item or service. Id. 1302(g); see also 45 C.F.R and (implementing these statutory provisions). Accordingly, Congress directive that QHPs contract with essential community providers cannot be implemented unless HHS removes the incentive to avoid patients served by such providers. To counter-act that incentive, HHS should use information related to whether an individual receives care from essential community providers in developing a risk score for each enrollee. This data will also be readily available to the Exchanges and could be used by HHS in the risk adjustment model established by HHS. * * * * NACHC urges HHS to improve risk adjustment by implementing these recommendations as soon as possible. Many QHPs will receive newly insured enrollees with high risks for whom the proposed risk adjustment model based on age, gender, and diagnoses will produce inadequate risk scores. These 4 See Report to Congress, HHS/HRSA, BPHC, Efforts to Expand and Accelerate Health Center Program Quality Improvement (undated), p. 10. For example, nationally, 11% of health center patients have hypertension, as opposed to 4% of patients seen by office-based physicians; 9% of health center patients have mental disorders, as opposed to 5% of patients seen by office-based physicians; and 7% of health center patients have diabetes, as opposed to 3% of patients seen by office-based physicians. 4
5 inadequate risk scores will lead to adverse selection and the potential for QHPs to avoid contracting with health centers, if not all essential community providers. Thank you for the opportunity to comment on the Essential Health Benefits Bulletin. Please do not hesitate to contact me by telephone at (202) or by at if you require any clarification on the comments presented above. Respectfully Submitted, Roger Schwartz, Esq. Associate Vice President and Legal Counsel National Association of Community Health Centers 5
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