Governor Haslem (R-TN) has proposed a waiver version of Medicaid expansion for Tennessee. There are three major components of the waiver application:
- For people who work at places that offer employer sponsored insurance, premium assistance credits would be used to help people buy into private coverage.
- Newly eligible Medicaid recipients who don’t have access to employer sponsored insurance but make more than 100% FPL will get a low deductible health plan with health incentive and health savings accounts.
- Tennessee will transform its payment system from capitated private managed care organizations that pay mostly on a fee for service model towards a private managed care system with capitated payments that pay by bundles.
This is actually some really interesting policy making, especially the first and third points.
Newly eligible people who make more than 100% FPL will get a TennCare (the Tennessee Medicaid program’s name) plan that effectively mirrors a maximum cost sharing assistance Silver plan. Utah has a similar waiver requested. People in this bucket will pay 2% of their income in premiums and be on the hook for several hundred dollars of deductibles and co-pays. Deductible and out of pocket maximums can be paid for through the use of state provided health incentive dollars if the people engage in routine preventative care. People who make under 100% FPL will see a benefit package that is far closer to standard Medicaid. There might be nominal ($3.00) prescription drug co-pays, but that is fairly common for most Medicaid programs.
The really interesting thing to me is the payment reform proposal. Tennessee has already begun moving towards Bundled Payments for other state medical programs, but Insure Tennessee would take it to 11. Bundled payments are lump sum payments made to a provider team to cover a particular cost of a diagnosis or collection of diagnosis codes.
The goal is to make the providers much more cost sensitive. For instance, someone who needs a hip replacement would have a bundle payment that will be used to pay for pre-op surgical visits, surgery, the artificial joint, the hospital stay, rehab and any errors that occur at any point in the process of getting someone back on their feet and dancing once they get a new hip. In my region, it would create a very strong incentive for an orthopedic surgeon who has privileges at both the major regional academic medical center and a local community hospital to perform the surgery at the community hospital as the operating room costs and hospital stay costs are probably a third to a half of similar care at the major regional academic medical center. The goal is to move people to the most efficient level of care.
Bundled payments are one of the big payment reform ideas that is being slowly implemented. If it works in Tennessee for both legacy Medicaid and expansion Medicaid, that will mean most if not all of the major commercial insurance players in Tennessee will have gained the experience and the plumbing ability to institute bundled payments for other lines of business. And that could be a game changer in Tennessee.
If the Tennessee legislature approves the plan, and a clean waiver can be written up by the state and approved by the Centers for Medicare and Medicaid Services, expansion could go into play for 10/1/15, but more likely 1/1/16.
That truly is interesting; thank you for the explication.
Can Haslam get away with it, given general Republican craziness?
Cost containment for the same level of care sounds real good.
What is the incentive for providers to get less money? Or am I misreading the concept?
I’m all for efficiency, but as a cancer patient in Tennessee, let me say that the big academic hospital saved my life and the smaller regional hospital might have killed me, had I not refused to go back there. So, is bundling the kind of thing that would only push relatively non-risky procedures to the smaller hospitals?
@Ruckus: A care coordinator/quarterback is designated for each episode of care. In the case of my hip replacement example, the quarterback would be the orthopedic surgeon. He would get a check for $27,000 to cover the entire course of treatment. If she spends more than $27,000, she loses money, if she spends less than $27,000, hookers and blow for her.
So the goal would be to get the quarterback to say “Well, this is a simple hip replacement, so the Local Community Hospital is charging me $6,750 for the operating room, and a 2 night recovery stay VERSUS Big City Medical Center wanting $12,000…. lets go to Local Community Hospital and save 5 large for better hookers and blow….”
@greennotGreen: Bundling would start at pushing the simple stuff out of big city medical centers and back to local community hospitals, while complicated and complex cases would be getting bundle rates to cover going to big city medical center which will see multiple 1 in a 100,000 cases every week.
@Richard Mayhew: Seems like there will be some kerfluffles over how much additional cost of academic care centers should be in the bundling, and how much should be through reform of reimbursement for care at those centers to account for health care professional training, and additional cost of more intensive clinical research.
Also, I’m assuming each person would have their own bundle for care at a particular institution.. “Pushing the simple stuff out of big city medical centers” would be by patient, where the bundling would be triggered by an emergent event or diagnosis or transfer and then cover whatever is follows for that patient. You wouldn’t want to have a patient with two bundles for different services, one at a community and one at an academic center, would you.
The issue of handling excess costs of academic medical centers will be tricky under bundling. Especially since many patients end up at academic medical centers after admission to community hospitals and no one can figure out what is going on, either because it takes expertise not available at a community hospital or there is something funny about the case that just takes a while to figure out.
Any help from RM in getting me to think straight about this would be appreciated, as may be apparent from the comment.
I’m a primary care office manager in a physician owned multi-specialty group in NC. We have been at the forefront in transforming from a fee for service model to a value based model ACO. This is the future of healthcare, our insurance contracts are based on the PCP acting as quarterback in managing the care of patients with chronic conditions. The documentation is time consuming, but beginning this year Medicare will pay for non face to face encounters (form completion, referral calls, etc.) of 20 min per month. I
How about bundling life insurance in as well – I’d like there to be a downside to saving money by just letting me die.
This is roughly how the VA works, at least around here. Clinics for routine and preventive care, regional centers(usually hospitals) for things like MRI and operations. A lot of the clinic preventive care is done by med students or PA. If you dislike the provider assigned to you, you can request a change or go to any clinic. Of course that may not be practical. And I understand that some clinics are pretty badly run. But then so were some private Dr offices that I’ve been in when I had insurance.
Over all it works pretty good but you have to have an understanding about how this kind of mass medical care can be provided. There are waits and prioritization depending on medical issue and severity. I think it’s great and I’m happy with the VA but I understand that not everyone is. Do you foresee problems with this in TN or will most people perhaps not even notice?
I appreciate the expert opinion here–I live in TN and was quite unable to tell whether this was a good proposal or not. As to the Republican craziness referenced earlier, Haslam is not (thank a deity) completely insane
The proposal sweetens the pot for the legislature, who are a bunch of RWNJs, by having the insurance companies agree to cover the over when the federal subsidy drops off. That’s the only reason I have any hope of passage.
Cheap Jim, formerly Cheap Jim
Health savings accounts? That’s the deal where the only advantage is you don’t have to pay taxes on the money but if you don’t spend it within a calendar year, it is forfeited to…I don’t know who, but I know the person whose money it was loses it, right? So A) What if I don’t know I’m going to spend the money later? and 2) What if I don’t have the money to begin with?
Mnemosyne (iPad Mini)
@Cheap Jim, formerly Cheap Jim:
Health Savings Accounts (HSAs) do roll over year-to-year and you keep what’s in them. You’re thinking of Flexible Spending Accounts (FSAs), which are “use it or lose it.” HSAs are more like healthcare-specific 401(k)s, kind of.
Nice job on the title, Richard.
Also, was my other post eated? It’s invisible, but when I tried to repost it, FYWP said “looks like you already said that”