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Showing posts with label formularies. Show all posts
Showing posts with label formularies. Show all posts

Formulary Policies a Battleground In HHS Proposal on Nondiscrimination

P&T Journal - March 2016 for the original online article go HERE.  

Are Tiering and Cost Sharing Civil Rights Issues?

Is the federal government once more on the cusp of tweaking rules for marketplace, Medicare, Medicaid, and other federally funded health programs with regard to formularies and P&T committees? It could happen. Patient advocacy groups and drug companies are pushing for more aggressive requirements with regard to things such as pharmaceutical cost sharing and utilization management techniques. Health insurers and pharmacy benefit managers (PBMs) are fighting against that.

The political venue for this is the proposed rule the Department of Health and Human Services (HHS) issued last September on Section 1557 of the Patient Protection and Affordable Care Act.1,2 It bans discrimination in health care and jumps off from previous nondiscrimination laws in the areas of voting rights, education, access to facilities, and much else. Those earlier, existing laws prohibit discrimination on the basis of race, color, national origin, sex, age, or disability.

However, the upcoming nondiscrimination rule from the HHS has prompted concerns from various quarters for a couple of reasons. The proposed rule extends the definition of sex discrimination to include discrimination based on gender identity. It will also require hospitals, health plans, physician offices, pharmacies, state and local programs, and others to do some things they currently do not do under existing civil rights laws in terms of notification, training, and translation services for patients. The HHS estimates the industry-wide cost at $558 million over a two-year period.

Interestingly, the proposed rule nowhere mentions the application of Section 1557 to “formularies.” That word doesn’t appear anywhere in the proposed rule’s text. Neither does “P&T committee.” The proposal concerns itself with such issues as access to facilities for the disabled, translation services for non-English speakers, and how health plans, hospitals, and other providers must describe and provide medical services for transgender and gay individuals. That said, many, if not most, of the 2,000-plus comments that arrived on the HHS doorstep in the wake of the proposed rule raise, among other concerns, the issue of formularies, either pressing for extension of Section 1557 to formularies or opposing it.

“It is our understanding that the department continues to face pressure from several patient advocacy groups and pharmaceutical manufacturers to prevent or severely restrict application of clinically based utilization management and formulary design processes under a pretext that use of step therapy, tiering, or other such tools are in fact discriminatory practices in and of themselves,” says Jonah Houts, Vice President of Corporate Government Affairs for Express Scripts, Inc.

Lisa Joldersma, Vice President of Policy and Research for Pharmaceutical Research and Manufacturers of America (PhRMA), says, “The evidence on today’s formulary landscape clearly indicates that too often plan formularies have designs that discourage individuals with certain disabilities from enrolling in their plans. Across HIV classes, certain cancer classes, and medicines that treat multiple sclerosis, many marketplace plans are putting all medicines, brand and generic, on the highest cost-sharing tier.”

Drug Access in Federal Health Plans Has Long Been a Controversy


The issue of formulary “discrimination” has come up over the past few years in the context of marketplace and Medicare Part D/Medicare Advantage guidance—which has no legal standing—and proposed rules dealing mostly with appeals to denials of particular drugs. Health plans have argued against the Centers for Medicare and Medicaid Services (CMS) addressing tiering and cost-sharing requirements and are doing so again with regard to the proposed 1557 rule.

“We recommend revising the rule to provide specific safe harbors with respect to pharmacy benefits, so that formularies designed by a pharmacy and therapeutics committee would not be considered discriminatory,” says David Schwartz, Head of Global Policy for Cigna Federal Affairs. “CMS has already issued detailed rules on drug formularies and the department should defer to CMS’s rules to ensure uniform, clinically based, sound formulary decisions.”

Again, the only rules the CMS has issued on formularies deal with time frames for health plans to respond to appeals of denials of specific medications, mandating that all drugs be provided in certain “protected classes” of drugs, and, with regard to marketplace formularies, establishing the standard for which drug classes must be made available.

That is not to say the CMS and the HHS are not worried about drug cost-sharing policies adopted by health plans and how P&T committees arrive at those formularies. The CMS has already been doing an outlier analysis that assesses marketplace plans’ cost-sharing requirements. Year 2015 and 2016 “Letters to Issuers in the Federally-facilitated Marketplaces” sent by the CMS promised to perform “an outlier analysis on QHP [qualified health plan] cost sharing (e.g., co-payments and co-insurance) as part of the QHP certification application process.” Both letters go on to say that “outliers may be given the opportunity to modify cost sharing for certain benefits if CMS determines that the cost-sharing structure of the plan that was submitted for certification could have the effect of discouraging the enrollment of individuals with significant health needs.” QHPs are required to ensure nondiscrimination in each of the 10 categories of essential health benefits they must provide, one of which is prescription drugs. In that vein, the 2015 letter said, “CMS intends to review plans that are outliers based on an unusually large number of drugs subject to prior authorization and/or step therapy requirements in a particular category and class. We encourage states performing plan management functions in an FFM [federally facilitated marketplace] to implement this type of review.” 3,4

The 2017 draft “letter” went further. It said: “CMS is also concerned about adverse tiering, which occurs when a formulary benefit design assigns most or all drugs in the same therapeutic class needed to treat a specific chronic, high-cost medical condition to a high cost-sharing tier. Since adverse tiering is potentially discriminatory, this review may examine the tier placement of prescription drugs to determine whether QHPs are also consistently placing drugs used to treat these medical conditions on a high cost-sharing tier.” 5

These “letters,” whether to marketplace health plan or Part D providers, are advisory. They do not have the force of law. Moreover, while the CMS has apparently been applying outlier analyses to federally regulated formularies, the agency has never published the results of these, nor published a list, for example, of “bad practices,” which might guide health plans.

Timothy Jost, Emeritus Professor at Washington and Lee University, who has written widely on federal health policy, notes that the CMS and states review marketplace and Part D plans annually and, if they feel an individual plan uses drug tiering in a discriminatory fashion, they can kick the plan back for remediation. Jost adds that where states review marketplace plans, “they are all over the lot” in how they enforce marketplace essential health benefit standards as they apply to pharmaceutical access.

The CMS has, however, established federal policies related to P&T committees operating in Medicare Part D plans. There is some concern among PBMs and health insurers that the HHS might extend those policies, or even enrich them, in the context of a final Section 1557 rule. “As we share the department’s priorities in preventing discriminatory practices from occurring in health care, our concern focuses on whether any future proposals affecting the P&T committee process will enhance the protections already available to patients, or add only complexity and costs to plan compliance at the expense of patients and sponsors,” says Express Script’s Houts.

First in its Call Letter for 2015 and again in its 2016 letter for Medicare Part D plans, the HHS laid out refinements of “independence” requirements for P&T committees. A minimum of two members on each P&T committee must be independent from the plan sponsor and drug manufacturers, but not the PBM. The 2016 letter, for example, required that the sponsor’s P&T committee clearly articulate and document processes to determine that members who are supposed to be independent are indeed independent, and committees must have a policy to manage recusals due to conflicts. Those processes must be enforced by “an objective party,” which may be a representative of the PBM—as long as that representative is not also a member of the sponsor’s P&T committee.

Jost believes the HHS may have its work cut out for it in applying Section 1557 to formularies and P&T committees. He believes nondiscrimination in the context of disabilities, as is the case with Section 1557, is different than nondiscrimination with regard to health status, which is what the marketplace plans are charged with avoiding. Also, the proposed rule doesn’t raise the issue of discriminatory formularies. “The HHS is limited in going off in a new direction if that direction is not mentioned in the proposed rule,” Jost explains. “But it could issue a final rule and another proposed rule dealing with formulary discrimination.”

Allyson Funk, Senior Director of Communications at PhRMA, thinks the HHS could and should apply Section 1557 to formularies. “We would like to see additional clarification in the final rule which would be a logical outgrowth of the proposed rule’s prohibition on ‘benefit designs that discriminate on the basis of race, color, national origin, sex, age, or disability in a health-related insurance plan or policy, or other health-related coverage,’ ” she says.

Expansion of Current Nondiscrimination Policies ... or Not


Complaints about current discrimination have been loud from transgender advocacy groups, who have been among those pressing for formulary expansion provisions. But they have been equally concerned about availability of medical services. In the proposed rule, the HHS said “coverage for medically appropriate health services must be made available on the same terms for all individuals, regardless of sex assigned at birth, gender identity, or recorded gender.” It used pelvic exams as an example. They cannot be denied for an individual for whom a pelvic exam is medically appropriate based on the fact that the individual either identifies as a transgender man or is enrolled in the health plan as a man.

The HHS goes on to say that coverage cannot be denied for gender transition. If, for example, a health plan or state Medicaid agency denies a claim for coverage of a hysterectomy that a patient’s provider says is medically necessary to treat gender dysphoria, the HHS Office of Civil Rights (OCR), if it gets a complaint, will evaluate the extent of the plan’s coverage of hysterectomies under other circumstances. The OCR will also carefully scrutinize whether the covered entity’s explanation for the denial or limitation of coverage for transition-related care is legitimate and not a pretext for discrimination. But the HHS makes it clear that a final rule will not require covered entities to cover any particular procedure or treatment for transition-related care; nor do they preclude a covered entity from applying neutral standards that govern the circumstances in which it will offer coverage to all its enrollees in a nondiscriminatory manner.

However, the HHS proposed policy on transgender access to services is not totally clear to everyone. “As it is currently worded, the proposed rule suggests that clinicians who recommend screening tests and similar services usually performed only on those of the individual’s birth gender may be acting in a prohibited manner. We do not believe this was HHS’s intention,” says Ashley Thompson, Acting Senior Executive of Policy at the American Hospital Association.

Nondiscrimination Beyond Medical Services


Whatever the HHS decides in the final rule, any edicts will affect not just the kinds of services that hospitals, physicians, and pharmacies will have to provide, but potentially even the continuation of certain federally funded health programs. For example, Unite for Reproductive & Gender Equity (URGE) wants some federally funded health programs to be canceled because they do not square with Section 1557. It cites abstinence-only-until-marriage (AOUM) programs currently funded by HHS and administered by the Family and Youth Services Bureau within the Administration for Children and Families. “AOUM programs are inherently discriminatory against LGBTQ [lesbian, gay, bisexual, transgender, and queer] young people,” says URGE. According to the Society for Adolescent Health and Medicine, “in addition to abstinence-only classes being unlikely to meet the health needs of LGBTQ youth, as they largely ignore issues surrounding homosexuality, they often stigmatize homosexuality as deviant and unnatural behavior.”

But insurance companies worry about how antidiscrimination laws newly applied to transgender individuals might adversely affect them. According to Cigna’s Schwartz:
While Cigna supports measures of diversity and inclusivity, there are operational procedures today that may be construed as violating Section 1557, albeit unintentionally. Claim adjudication programming helps to protect against abusive billing practices by using edits, such as gender identifiers, to identify an anomaly; such as a male gender indicator on a claim for an annual well-woman exam or a female gender edit for a prostate exam. Medical claim adjudication procedures as well as pharmacy claim adjudication procedures would be impacted by the proposed rule. Furthermore, based on the language in the proposed rule, it is unclear if a gender question on an application is even acceptable or if it could be construed as sex stereotyping.
Disability groups are concerned that Section 1557 regulations would allow private entities to essentially decide for themselves when their provider network is “readily accessible” to people with disabilities. “A large for-profit insurance carrier could arbitrarily decide that, among the great majority of its providers who operate in existing facilities, only 10% need to be physically accessible or have accessible equipment,” says the Consortium for Citizens with Disabilities (CCD). “Moreover those accessible providers could be clustered together in some central location, and whenever a member calls member services and mentions the need for accessibility, that member will be actively directed toward ‘the accessible provider offices.’ ”

Groups representing the deaf also cite shortcomings in interpretation services currently available and thus the need for Section 1557 regulations to specify more rigorous requirements than those in the current nondiscrimination laws. “Too often, patients who use ASL [American Sign Language] are denied access to health care because most providers do not provide qualified ASL interpreters,” reports the National Association of the Deaf. “Furthermore, the department should emphasize that by no means should family members act as interpreter for the deaf or hard of hearing patient. Many health care entities mistakenly believe that it is perfectly acceptable to utilize family members as interpreters. In fact, the website for the American Medical Association states that ‘qualified interpreters may include: family members or friends,’ which demonstrates an incorrect understanding of the regulatory definition for a ‘qualified interpreter’ (QI).”

Implications for Pharmacies and Hospitals


As opposed to formularies, the Section 1557 proposed rule does have specific requirements for brick-and-mortar health facilities covered by the upcoming rule. They would have to notify patients that they offer auxiliary aids and services, free of charge, in a timely manner, to individuals with disabilities. The notice would need to be translated into at least 15 different languages.

Another requirement would force hospitals, pharmacies, and health plans to provide language assistance services, including interpreter and translation services for non-English speakers and similar services for the deaf. Those have to be available at the point a service is being provided.

In the case of an individual with limited English proficiency, the covered entity must offer that individual an on-the-spot, qualified, oral interpreter, who generally may not be a family member and almost never a child. There is an exception which is narrow in scope. Interpreters at a remote location can be used.
The American Pharmacists Association (APhA) is making the argument that pharmacies shouldn’t be covered (though hospital pharmacies, as part of a hospital’s corporate structure, would be) to the same extent as other “covered providers.” Retail pharmacies do not get marketplace, Medicare, or Medicaid reimbursement, though, in the latter case, they do receive dispensing fees. The APhA believes the amount of federal financial assistance a covered entity receives for a particular service should be a determinative or heavily weighted factor when imposing requirements related to Section 1557 and in OCR’s determinations related to nondiscrimination claims. Scaling down the requirements on pharmacies is important, in the APhA’s view, because of the mandates related to things such as translation services for customers, to give one example.

“APhA is very concerned that OCR requires the notice to include a statement that the covered entity provides auxiliary aid and services and language assistance services, free of charge, and makes no mention of the inclusion of a disclaimer or caveat related to the fact that the provision of services is balanced against the burden placed on the entity,” says Thomas E. Menighan, Executive Vice President and CEO of APhA. “Such a notice basically provides a guarantee of the services and fails to factor in the burden on the entity which OCR claims to consider.”

Pharmacies currently providing translation services (written or oral) have noted that costs may be considerable. Additionally, written translation services are effective only if the patient is literate. Pharmacists may also have difficulty identifying which language the patient is speaking, further exacerbating the difficulty of connecting the patient to a qualified QI. Even if a QI can be found, those without the appropriate medical training may be unable to accurately translate technical information, making such services less meaningful to patients and a source of potential liability for pharmacies.

At least hospitals and pharmacies know what they are in for when the Section 1557 final rule is published. The rule’s impact on QHP and Part D formularies is harder to predict. The political pressure has been building on the HHS to take a stronger stand on tiering and associated practices. But given the very recent disclosures of the money major health insurers are losing on their marketplace plans, it may be hard to justify putting out of reach what the plans have long argued are major, justifiable cost-control practices.

Author bio: 
Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.

Qualified Insurance Plans on Health Exchanges May Reduce Drug Availability

P&T Journal
November 2013 - for a PDF copy of the published version go HERE.

Hospital Pharmacies Could Face New Pressures

Hospital pharmacy directors around the country are trying to figure out how their formularies match up with the formularies that will be used by the qualified health plans (QHPs) selling Obamacare policies in their state. "Hospital pharmacy formularies and QHP formularies will probably never be aligned as they have differing financial agendas, costs, etc., due to purchasing differences," says one West Coast pharmacy director who declines to be named given the political sensitivity of the issue. "If the hospital and the plan are aligned it would be best for patient care as there would be no changes between ambulatory care and hospital care and medication reconciliation. But that will probably not happen unless all incentives are aligned or one entity has control of the entire process/longitudinal care."

Of course, differences between commercial plan formularies today and hospital formularies are widespread. But the arrival of QHPs presents a whole new dynamic for hospital pharmacists. That is because QHP formularies must meet minimum federal drug access standards, which commercial, and even Part D, formularies do not. In addition, the QHPs are under intense pressure to reduce premiums, co-pays and co-insurance--again, a challenge of a different order than that faced by employer health plans, for example. Restricting drug access, whether through utilization reviews or off-formulary restrictions--may be the sharpest knife in the QHP apron.
 
But QHP formulary construction is only one of the issues that will be sorted out as the state health insurance exchanges open for business on January 1, 2014. The exchanges were conceived as a way to make health insurance affordable for about 40 million Americans who are without it. They are divided into two groups. The first is the quasi-poor, who earn too much to qualify for Medicaid currently, but would enter Medicaid as a result of what has come to be called Obamacare. The second is the better-off, self-employed and those working for smaller companies, neither of whom currently has health insurance.

The second group will buy their health insurance from the QHPs--the designation under Obamacare--in their state. The roster of QHPs will differ from state to state. All of them will have to provide benefits consistent with the federally-designated essential health benefit (EHB) standard, which is broken down into 10 categories.

One of those categories is pharmaceuticals. It is the only one of the 10 where the Department of Health and Human Services (HHS) established a minimum requirement. The EHB rule on pharmaceuticals says the QHBs in a given state must provide prescription drug coverage that is at least the greater of the following: (1) one drug in every United States Pharmacopeia (USP) category and class; or (2) the same number of prescription drugs in each category and class as the EHB-benchmark plan designated by the state. In most instances, the states chose a small group plan as a benchmark. In California, for example, that is the Kaiser small group plan. 

So for purposes of complying with the EHB pharmaceutical category requirement, every QHP in California must, at a minimum, have a formulary which has the same number of drug categories and classes as the Kaiser small group plan formulary. And the QHP must have the same number of drugs in each class as Kaiser, although they can be different drugs, as well as different formulations.  Or the QHP has to follow the USP option. In fact, almost all, if not every, QHPs will echo the benchmark formulary, a likely scenario given that the trade group for health plans--called America's Health Insurance Plans (AHIP)--tried to convince the HHS to delete the USP option. AHIP was unsuccessful. 

QHPs can have more drugs in a class than their state benchmark plan. The variability of benchmark formularies across the country is pretty striking. Avalere Health, a Washington, D.C. consulting firm, looked at the 50 states and assessed the number of total drugs each state's benchmark plan offered on its formulary. Some formularies were "open" and included 98 percent of the drugs sold today. Others like California were closer to 50 percent. 

Avalere came up with its percentages by looking at all 50 benchmark formularies, and taking the highest number of drugs, regardless of the state, in each category and class. This denominator was 1032. Then it looked, for example, at the Kaiser small group formulary in California and totaled up the drugs it offers in its categories and classes. That number is 644. Colorado is the low state on that totem pole, with 565, and Connecticut is at the top, with 1023.

Most QHPs will not supplement the benchmark because limiting drug access will be one of the few levers plans have to control plan costs. "Plans have significant flexibility on formularies," says Caroline Pearson, Vice President at Avalere. "That is something we will have to watch." The QHPs will use that formulary flexibility when setting drug deductibles, tiers and the exact drugs they will cover. Most commercial plans today charge dollar co-pays in higher drug tiers. However, based on some initial submissions from some states, QHPs could charge co-pays in the 30 percent to 50 percent range for their tier 4 drugs, especially in "bronze" plans. "That is just not done today," notes Pearson.

Conventional wisdom says formulary restrictions will have their biggest impact on out-patient access at retail pharmacies, and be of only limited concern to in-patient pharmacies, since drug costs for in-patients are bundled into the diagnosis related groups (DRGs). Moreover, the final EHB rule from the HHS said not a word about whether drugs on an in-patient pharmacy could count toward the QHPs "counts" in each category and class.

The Centers for Medicare and Medicaid Services (CMS) did attempt to clarify that question  after the final rule came out. "The CMS did say it would allow medical benefit drugs to count toward minimum requirements on pharmacy, but I don't think they realized the full implications," says a drug company policy expert. "There could be some gaming. Allowing medical benefit drugs to count toward the minimum requirements for pharmacy benefit drugs is like comparing apples to oranges."

Here is how that might work. Take the case of QHP A operating in a state with a benchmark formulary requiring 10 drugs for a chemotherapy "class." One class can cover multiple conditions. Further assume that the typical benchmark formulary today includes 10 oral drugs, perhaps the most recently-approved ones. If a hospital in that QHP's network instead uses five IV chemotherapy agents for that particular class, those five would count toward the 10 on the QHP formulary, and knock off the QHP formulary five of those other orals, some of which might be the only oral agent available for that condition. 

The second potential impact affects a hospital serving numerous QHPs. What if each of those QHPs uses a slightly different formulary? Would the hospital in-patient formulary be compelled to carry all the drugs on all the formularies of the, for example, 12 QHPs currently operating in California. 

Greg Low, RPh, PhD, Program Director, MGPO Pharmacy Quality & Utilization Program Performance Analysis & Improvement, Massachusetts General Hospital in Boston, thinks there may be a potential impact on MGH from that scenario, but he believes it will be very small. "The inpatient P&T does consider how frequently its formulary is causing switches and non-formulary requests," he explains. "The hospital does make some effort to align with ambulatory insurer’s formularies, but this is a tertiary concern to safety, efficacy, and economics."

Low illustrates a common situation. "For example, Nasonex (mometasone) is a formulary product for many of our local payers, but is not on the hospital formulary," he states. "A patient who uses Nasonex who is admitted will either use MGH’s formulary nasal steroid (fluticasone), go through MGH’s non-formulary process, or if the drug is unnecessary during the admission it would simply be restarted at discharge."

Ah, but for both in-patient and out-patient pharmacies, there is the rub: non-formulary process. The EHB final rule is unclear as to when QHPs have to pay for a non-formulary product. Drug companies wanted the HHS to lay out specific requirements such as more specific appeal rights for EHB pharmacy benefits, which should include shorter timelines for appeals determinations. The HHS did not include any additional safeguards in the final rule, or alter its proposed rule language in the slightest on that score. Instead, it said "additional guidance regarding our expectations for the required exceptions process is forthcoming in sub-regulatory guidance." It added that its research shows that a large number of plans already offer this option (i.e. access to non-formulary drugs) in the market today. "It is expected that plans that currently have such a process in place will not be expected to modify their existing process."

Besides HHS requirements for formulary coverage within the "pharmaceuticals" category under the EHBs rule, insurance plans will also have to meet anti-discriminatory standards which apply to all 10 categories, but have unique relevance when applied to pharmaceutical access. The big issue here has been whether plans can use utilization management techniques to tamp down unnecessary or overly-expensive drug costs. 

The final rule simply states the Affordable Care Act's prohibition against discrimination in formulary design and drug access but goes on to approve the use of "reasonable medical management techniques." It explicitly endorses the use of prior authorization, but a plan could not implement prior authorization in a manner that discriminates on the basis of membership in a particular group based on factors such as age, disability, or expected length of life that are not based on nationally recognized, clinically appropriate standards of medical practice evidence or not medically indicated and evidence-based. The final rule states: "For example, a reasonable medical management technique would be to require preauthorization for coverage of the zoster (shingles) vaccine in persons under 60 years of age, consistent with the recommendation of the Advisory Committee on Immunization Practices."

It is clear that QHPs will be relying on medical management and utilization reviews to keep patient drug costs under control. Molina Healthcare, Inc. will be offering a QHP in nine states. Like many of the other QHPs operating across the country, Molina has had a low profile. Companies such as United Healthcare, Cigna, Aetna and the other "big boys" have been missing from almost all states. Molina, started in California as a clinic in 1980, has had a thriving Medicaid managed care business in nine states. It is using those platforms to establish QHPs serving primarily lower income but not poor individuals looking for individual or family insurance on an exchange. In California, Molina will be offering exchange policies in Los Angeles, San Diego, and San Bernadino/Riverside areas where its Medicaid business is currently located, for the most part.

California has established different requirements for the QHP drug benefit than most other states. In the Golden State, all  QHPs must offer the same benefit structure with regard to co-pays and deductibles in each of the four health insurance categories. The least expensive, and therefore least expansive, is the bronze plan. Moving up the ladder is silver, gold and then platinum. So, for example, all QHPs in California must assess a 30 percent co-pay for tier 4 drugs in a bronze plan. For a bronze HSA, the co-pay is 40 percent. In a platinum plan that slides down to 10 percent. That is different in other states where QHPs have flexibility on co-pays as long as they meet an "actuarial value" for that level plan. In the case of bronze, that means the insured--on average--must pay 40 percent of the costs of coverage.

In California, because the pharmacy benefit structure is prescribed by the state, the QHPs try to keep premiums low by keeping costs low. Hashim says the key will be keeping administrative costs low, getting discounts from hospitals for medical charges and then "doing a great job in medical management," which will include prior authorization for off-formulary drugs which physicians may prescribe for patients. 

Besides carefully watching drug utilization and probably restricting off-formulary drug access, QHPs have also been careful in establishing hospital networks. "Where you can get the most competitive hospital contract is a big driver on how you can price your product," explains Hashim. "We have a Medicaid plan in the Sacramento area, but we couldn't get good rates from the providers up there so we aren't offering a QHP there." New Mexico is the only one of the nine states Molina is operating in which requires a QHP to serve the entire state.   
  
Molina, for example, is including about 80-90 percent of the physicians in its Medicaid networks in its QHP networks and 65-75 percent of its physician specialists. But only 40-50 of its Medicaid hospitals have been included in its QHP networks. Molina is not alone, not in California nor in any state, in picking and choosing the hospitals it wants in its networks. In some states, where there is a dominant hospital provider, the hospital has all the leverage, and can force Molina or any other QHP to pay commercial rates, somewhere around twice Medicare rates. That might be the case in eastern Wisconsin, for example, where Aurora Health Care has 15 hospitals and sits astride the health care delivery system like a colossus. In Los Angeles, where there might be much more hospital competition, Molina might get away with paying a hospital five percent above Medicare. 

Whether Molina or any other QHP in Wisconsin or any of the other 49 states survives is dependent not only on getting reasonable hospital rates but also getting a steady flow of new, profitable patients sent their way via Obamacare. The president and the Democrats in Congress who wrote the ACA, felt that if they "built it"--to parrot a famous line from the movie Field of Dreams--"they will come." But it isn't clear new patients are going to stream in the doors of QHPs starting January 1, 2014. The standoffishness of the major health insurance companies would seem to indicate some healthy skepticism about the profitability of the exchanges. United Healthcare, Aetna, Cigna and other majors have been standoffish. The health plans chosen for the state run plans such as Covered California and New York Health Benefit Exchange are a mishmash of companies, and the list rarely includes the "big guys." The California list of QHPs includes Blue Shield of California, Anthem Blue Cross and Kaiser Permanente. But the remainder of the list is filled in with what appear to be local and regional plans such as the Chinese Community Health Plan, Contra Costa Health Plan, Molina and Valley Health Plan, to name a few of the "no name" entrants. New York's players have a similar cast. Empire Blue Cross and Empire Blue Shield are the only known entities among that state's 12 QHPs.

Early indications are that there will be fewer uninsured signing up on exchanges than originally expected, at least at the start. During a webcast on September 16 hosted by the three major hospital trade groups, Dr. Mandy Cohen, senior adviser to the CMS administrator, told the participating hospital officials that HHS continues to focus its outreach efforts on the “younger cohort”—the 17.8 million uninsured individuals between the ages of 18 and 35—of whom more than 90 percent will be eligible for some sort of financial benefit for health insurance. Meanwhile, Cohen said, HHS continues to concentrate on eight states where more than 50 percent of the nation's uninsured individuals reside: California, Florida, Georgia, Illinois, New York, North Carolina, Ohio and Texas.
    
Hospitals are supposed to help with the education and sign up of prospective health exchange entrants. But a report published on September 18, 2013 by PwC's Health Research Institute (HRI) concludes that while the new customer base could provide a much-needed financial boost, few hospitals have developed comprehensive strategies to identify, educate and help enroll people in health plans sold through the new exchanges.

HRI  interviewed executives from major health systems that collectively represent more than 150 hospitals across 25 states, as well as national hospital associations and patient advocacy groups to understand their plans, progress and concerns related to participation in the 51 new state exchanges. Many providers have been slow to promote the expanded coverage options, HRI discovered. Health systems attribute delays in their enrollment efforts to multiple factors, including: "reform fatigue;" the need to finalize contracts with insurers; the slow trickle of information from regulators; and the desire for additional regulatory guidance, especially in the area of outreach designations and certification requirements.

"As the health industry moves from wholesale to retail, the customer takes center stage," said Ceci Connolly, managing director, PwC Health Research Institute. "Outreach and education should be top-of-mind for hospitals and health systems, but many are still coping with operational issues to ensure readiness for open enrollment. These companies will have to shift into gear quickly to focus on their consumer strategies and how to attract and retain a diverse mix of exchange customers."

Some of that caution may have to do with worries about reimbursement, either with regard to the commercial rates hospitals will be paid, or with regard to new enrollees choosing mostly the cheaper, bronze level plans, which are suppose to charge holders 40 percent of actuarial value, when cost-sharing, deductibles are added up. That 40 percent is the average for all people holding that bronze level coverage in a given plan. So that 40 percent will translate into a different dollar amount from state to state. Regardless, bronze level policy holders may leave hospitals with significant amounts of unpaid bills. Adding to that hospital angst in some states is the rejection of the Medicaid expansion, meaning the hope of transitioning current uninsured patients to Medicaid becomes a pipedream.
   
The promise of Obamacare may be illusionary, or it may be fulfilled. What is certain is that how hospitals will fare in this brave new world is, well, uncertain.