In This Issue...

HHS: Insurance Marketplace Will Be Ready

The new health insurance exchanges mandated by the Affordable Care Act will be ready to go live in just a few weeks, with open enrollment beginning as scheduled, according to Department of Health and Human Services (HHS) Secretary Kathleen Sebelius. "We are on target and ready to flip the switch on October 1," she said. The government website for health insurance,, is already operational, and consumers can log on and create an account ahead of the October 1 deadline for insurers to begin offering plans via the website. Insurance purchased this year will go into effect as early as January 2014.

Sebelius also announced a new report that found that premiums in the government's Health Insurance Marketplace will be nearly 20% lower in 2014 than previously expected. The Affordable Care Act requires health insurers in every state to publicly justify any premium rate increases of 10% or more. Health insurance companies now generally have to spend at least 80 cents of every premium dollar on healthcare or improvements to care, or provide a rebate to their policy holders. In addition, when the Health Insurance Marketplace opens for enrollment, consumers will be able to make "apples to apples" comparisons of quality health insurance plans, Sebelius said.

The HHS report noted that preliminary premiums appear to be affordable even for young men, who traditionally pay high rates. For example, in Los Angeles—the county with the largest number of uninsured Americans in the nation—the lowest cost plan in 2014 for a 25-year-old individual costs $174 per month without a tax credit, and $34 per month for an individual whose income is $17,235. This plan offers a catastrophic coverage for $117 per month for an individual.

More information about how the Health Insurance Marketplace will work is available online.

More Regional Sharing of Lab Data

Prodded onward by the government's meaningful use requirements for electronic health records (EHR), health information exchange between hospitals and other providers jumped 41% between 2008 and 2012, according to new research from the Office of the National Coordinator for Health Information Technology (ONC), Farzad Mostashari, MD, and other ONC researchers (Health Affairs 2013;32:1346–54). In 2012, 80% of hospitals with at least a basic EHR and a connection to a regional health information organization (HIO) were exchanging data on laboratory results, making lab information number one among types of data hospitals share. Other types include radiology reports, clinical care summaries, and medication lists.

The research indicates that in 2012, six in 10 hospitals actively exchanged electronic health information with providers and hospitals outside their organization. Meaningful use, which requires eligible hospitals to exchange data with outside organizations using different EHR systems and share summary-of-care records during transitions of care, can help accelerate hospital use of health information exchange as a means to enhance care quality and safety, according to Mostashari. "We know that the exchange of health information is integral to the ongoing efforts to transform the nation's healthcare system and we will continue to see that grow as more hospitals and other providers adopt and use health IT to improve patient health and care," he said. "Our new research is crystal clear: health information exchange is happening and it is growing. But we still have a long road ahead toward universal interoperability."

Highlights of the new study show that 58% of hospitals exchanged data with providers outside their organization in 2012, more than doubling during the study period. In addition, the proportion of hospitals that adopted at least a basic EHR and participated in an HIO grew more than fivefold from 2008 to 2012. One area that the research found needs more attention is that of care summaries and medication lists. The research found that only about one-third of hospitals exchanged clinical care summaries or medication lists with outside providers.

State-level and other data collected in the study is available online from ONC's Health IT Adoption and Use dashboard.

In WellPoint Settlement, a Warning on HIPAA

The managed care company WellPoint will pay the Department of Health and Human Services (HHS) $1.7 million for leaving social security numbers and other information accessible over the Internet, according to HHS. The settlement stems from alleged violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy and Security Rules.

In announcing the settlement, HHS said the case should serve as a warning to HIPAA-covered entities to take caution when implementing changes to their information systems, especially when those changes involve updates to web-based applications or portals that are used to provide access to consumers' health data using the Internet. The case also highlights the fact that, beginning this month, liability for many of HIPAA's requirements will extend directly to business associates that receive or store protected health information, such as contractors and subcontractors.

In the case of WellPoint, the HHS Office for Civil Rights (OCR) began its investigation following a breach report submitted by WellPoint as required by the Health Information Technology for Economic and Clinical Health, or HITECH Act. The HITECH Breach Notification Rule requires HIPAA-covered entities to notify HHS of a breach of unsecured protected health information. WellPoint's report indicated that security weaknesses in an online application database left the electronic protected health information of 612,402 individuals accessible over the Internet. OCR's investigation indicated that WellPoint did not implement appropriate administrative and technical safeguards as required under the HIPAA Security Rule.

HHS advised healthcare providers, insurers, and other HIPAA-covered entities that whether systems upgrades are conducted by covered entities or their business associates, HHS expects organizations to have in place reasonable and appropriate technical, administrative, and physical safeguards to protect the confidentiality, integrity, and availability of electronic protected health information—especially information that is accessible over the Internet.

More information is available from the OCR HIPAA website.

Congressional Committee Approves "Doc Fix"

Taking a big step toward the so-called doc fix, a remedy to the infamous sustainable growth rate (SGR) formula for physician payment, the House Energy and Commerce Committee has unanimously passed a bill repealing and replacing the SGR. This formula was meant to limit how much Medicare pays physicians by tethering it to the nation's overall economic growth, but now has failed to keep pace with the rapid increase in the cost of healthcare compared to other elements of the economy. Observers are now waiting to see how Congress will decide to pay for the measure if both houses pass it: in prior years, congressional advisers have floated the idea of cutting the Medicare payment rates for lab tests as a way to pay for a permanent fix.

Established in 1996, the SGR formula is widely recognized as deeply flawed, and Congress has had to act each year to intervene to prevent massive cuts to physicians under Medicare. If Congress wants a long-term solution for the SGR problem, it needs to come up with money elsewhere to keep physician payment at a reasonable level, more than $10 billion a year. The Medicare Payment Advisory Commission (MedPAC), an advisory group to Congress on Medicare payment, has several times recommended cutting the clinical lab fee schedule by up to 10% as a way out.

House Energy and Commerce Committee members emphasized their intent to finally end the SGR conundrum, and noted that their bill is also aimed at improving the quality of care provided by physicians under Medicare by moving away from the fee-for-service paradigm. "The time of temporary fixes and kicking the can down the road has ended. The bipartisan committee draft we approved today permanently repeals the SGR and places us on a path to paying for innovation and quality, not volume of services, and puts doctors, not bureaucrats, back in charge of medicine," said Health Subcommittee Chairman Joe Pitts (R-Pa.). "It is the first meaningful reform policy to repeal the SGR since it was created and a product of over two years of work by this committee."

Quality reforms under the bill would come in several phases that together herald the long-anticipated move away from volume-based reimbursement to value-based reimbursement. At first, the bill would stabilize physician reimbursement and cap increases. Then, payment formulas would begin including quality measures in order for physicians to receive full payment. Finally, physicians could choose to switch to capitated reimbursement models and drop fee-for-service completely. Physicians who refuse to leave a fee-for-service system would be punished with a permanent 5% pay cut.

More information about the bill is available on the committee's website.

Device Tax Payments Surpass $1 Billion Mark

Medical device manufacturers, including those that serve the in vitro diagnostics industry, have now paid an estimated $1 billion to the Internal Revenue Service for the medical device excise tax that came into effect this year as part of the Affordable Care Act, according to a coalition of industry groups including the Advanced Medical Technology Association, the Medical Imaging and Technology Alliance (MITA), and the Medical Device Manufacturers Association.

"The $1 billion threshold is frightening as every dollar spent paying for this medical device tax threatens medical innovation and American jobs," said Gail Rodriguez, executive director of MITA. "MITA is pleased to see bipartisan support for repeal of the tax building in both the House and the Senate, but Congress cannot wait any longer to repeal this burdensome tax and protect jobs and essential research and development funding."

Under the 2.3% tax, device manufacturers are required to pay an estimated average of $194 million per month in medical device tax payments. The U.S. medical device industry helps employ 2 million nationwide and invests nearly $10 billion in research and development annually, the companies noted.

Bipartisan majorities in the House of Representatives and Senate have supported repeal of the device tax. In March, a bipartisan coalition of 79 Senators voted to adopt an amendment to the Fiscal Year 2014 Senate Budget Resolution to repeal the tax. In the House, Reps. Erik Paulsen (R-Minn.) and Ron Kind (D-Wis.) introduced the "Protect Medical Innovation Act," garnering a bipartisan group that has grown to 253 co-sponsors, including 34 Democrats, since introduction.

More information about medical device tax repeal efforts is available from the AdvaMed website.