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Health Care Costs Increase 7.3 Percent In 1 Year

Tuesday, May 17th, 2011

Last week, Milliman released its annual Milliman Medical Index, and it shows that the average American family’s medical costs have doubled in less than nine years and increased 7.3 percent from 2010 to 2011. The results also show that hospital spending, which accounts for 48 percent of total health care spending, accounts for more than 60 percent of this year’s total increase. And, outpatient facility costs increased more than any other component. The medical index illustrates the complexity of the health care cost problem, while legislative remedies to date have focused principally on health plan rate review processes and medical loss ratio restrictions.

Interestingly, a new Yahoo Finance analysis of quarterly financial data shows that the health plan sector of the health care system ranked only 143rd out 215 in terms of profit margin.

Federal

In yet another political statement, a Republican-controlled House Committee last week approved legislation to repeal the maintenance of effort (MOE) requirements for the state Medicaid and CHIP programs. The requirements, which prohibit states from reducing Medicaid eligibility for adults until 2014 and for children until 2019, were passed as part of the Affordable Care Act (ACA) and the federal stimulus bill.  Republicans view the MOE provision as one more example of big government telling the states what to do for yet another entitlement program.  Repealing the provision would reduce Medicaid/CHIP enrollment and save $2.1 billion over 10 years, but it will likely not become law given the Democratic Senate and White House. Its only chance of adoption would be as part of a really big compromise deal on the budget and deficit later this year.

States

CONNECTICUT: State legislators plan to pass a consensus bill creating a Connecticut Health Insurance Exchange by the end of session on June 8. Three exchange bills have cleared committees and differ largely in the make up of their boards.  The Administration supports SB 921 which creates a governance framework for the Exchange, establishing a quasi-public authority with a 13 member board that includes industry representation. The board is charged with making recommendations to the Governor and legislature on Exchange policy issues by January 1, 2012.

The rate review bill is still active and if enacted would: require a lengthy notice timeline for proposed increase, and a public hearing for any increase over 10%; authorize the Healthcare Advocate and the Attorney General to be parties to any hearing; define “excessive” to include consideration of such factors as commissions, transfer of funds to holding or parent company, the rate of return on assets or profitability compared to similar filers, and a “reasonable” profit margin.  Due to the $2.3M annual cost to the state, it does not currently have the support of the Administration. However, a negotiated bill is likely to pass this session.

INDIANA: The legislature has adjourned, and its accomplishments this session include passing a bill that makes changes to eligibility levels in the Medicaid program and ACA-conforming Indiana health insurance law — including coverage of children to age 26, grievances, and rescissions.  The new law also prohibits any requirement that any state resident purchase coverage under a health plan, but it allows residents to delegate to their employers the authority to purchase or decline to purchase coverage under a health plan. The legislature also passed legislation that requires insurance reimbursement for certain services provided by a licensed athletic trainer under the athletic trainer’s scope of practice.  The law also prohibits an insurer from requesting a substitution of a treatment (drug, device or therapy) from an insured’s physician or contacting an insured concerning certain substitutions. The legislature also passed changes to the School Corporation Health Insurance Act that specify new requirements and recommendations for school corporation employee health insurance coverage programs.

KANSAS: The legislature adjourned last week after the Senate approved a budget late Thursday night and the House followed suit in the early hours of Friday morning. The two chambers also agreed to blend 12 health-related bills into a single measure, House Bill 2182. Of interest to Aetna and its customers, the new bill includes a statutory version of the Health Care Freedom Act, which states that no person, provider or employer can be forced to participate in any health care system or to purchase Kansas health insurance. Other provisions would require pharmacy auditors to give advance notice, adopt a (still unfunded) Health Information Technology Act, require changes to the DOI internal and external review procedures (consistent with ACA), require an increase in the high-risk pool’s cap and the addition of children as participants, and prohibit abortion coverage with a separate coverage rider.

MAINE: The Senate voted 24-10 to approve the Individual and Small Group Market Reform bill with several amendments. The bill now goes to the House for concurrence and possibly further amendments. The amended version would:

Expands and alters community rating bands over five years, allowing insurance policies to be more accurately priced according to various risk factors “to the extent permitted by the federal Affordable Care Act” (in amended version);
Establishes a reinsurance program for high cost individuals using existing funding sources, ACA funds as permitted, and a covered lives assessment (capped at $4 for the pool, and $2 for the pool’s net losses, if any, in the amended version);
Allows individuals to purchase insurance in four other states (NH, RI, CT and MA);
Conforms state loss ratios to federal standards;
Repeals the standardized State Health Plan;
Loosens the geographic access standards by allowing insurers to offer incentives to members to use providers based on cost and quality;
Provides a wellness tax credit for employers with 20 or fewer employees;
Permits the creation of captive health insurance associations, and allows smaller businesses (up to 50 employees) to band together purchase insurance.

NEW JERSEY: The legislative proposal put forth by Governor Chris Christie and Senate President Stephen Sweeney to change employee benefits by legislation rather than through collective bargaining continues to get a very cool reception in the Democratic-controlled legislature. The lack of support for the Senate President’s legislation by members of his own party severely limits the bill’s chances of success, given the Democrats’ advantage in both chambers. Reform of public sector health benefits is directly tied to the pending budget, so a resolution is anticipated by early June.

In other legislative news, the Senate advanced legislation to avert an anticipated $300 per employee unemployment insurance tax on employers. This employer tax would be triggered this summer due to the insolvency of the state Unemployment Insurance Fund.  The bill making its way through the legislature would incrementally increase the tax over three years to lessen the immediate financial impact on employers. Also, Commissioner Tom Considine, Department of Banking & Insurance (DOBI), last week expressed the Department’s continuing concern over the implementation of ACA.  He specifically cited the timeline for establishing a state health insurance exchange as a concern.

NEW YORK:  The Senate Insurance Committee and the Senate Banking Committee Chairs each announced that their committees will be considering the nomination of Governor Cuomo’s Chief of Staff Ben Lawsky to be the Superintendent of the newly merged entity for Banking and Insurance to be known as the Department of Financial Services. Prior to joining the Cuomo Administration, Lawsky was a federal prosecutor and special assistant in then-Attorney General Cuomo’s office. He is also a former judiciary counsel to Senator Chuck Schumer. Mr. Lawsky is expected to be confirmed by both Committees. The merged entity would then have a separate Deputy Superintendent for Banking and one for Insurance serving under Lawsky. Those would be appointed positions and do not require Senate confirmation.

With only 16 session days left, there is speculation that the state will not pass enabling legislation for a health insurance exchange. New York can apply for a five-year grant under ACA to create an exchange but only if it has passed key state legislation. Setting up the exchange will be expensive, which is why consumer advocacy groups want New York to be able to access the federal grant money. According to an April 20 state document on planning the exchange, New York anticipates spending at least $52.7 million on planning the exchange between fiscal years 2011 and 2014. The state received a $27.4 million federal Early Innovator Grant award and anticipates receipt of at least another $11.7 million through enhanced federal Medicaid matching funds. The Department of Insurance (DOI) announced it will hold a series of public forums throughout the state in the next two weeks to allow New Yorkers to present their ideas on the design of an exchange.

NORTH CAROLINA: A North Carolina health insurance exchange bill has been accepted and found favorable by first the House Insurance Committee and then the House Appropriations Committee. Committee changes include adding another board member. The bill now also would prohibit the Exchange Authority from imposing penalties and other fees on individuals who cancel enrollment because they become eligible for other coverage options.

OKLAHOMA: The Department of Insurance’s newly created Oklahoma health insurance Exchange Workgroups on Enrollment/Eligibility and Funding both met last week. The Funding group discussed sustainability models and recommendations, as well as the NAIC White Papers on exchange funding. Aetna presented feedback, specifically noting that funding for insurance exchanges should not be limited to insurance assessments and instead should be as broad-based as possible. Exchanges should evaluate all available funding sources to support continuing administrative and operational expenses, including available grants, fees, assessments and taxes. The groups also discussed pending legislation that would create the framework for an exchange, which is still making its way through the legislative process. The session is scheduled to adjourn by May 27, and many now assume an exchange will not be created legislatively until the next legislative session in the spring of 2012.

PENNSYLVANIA: The Senate has unanimously confirmed Governor Tom Corbett’s nomination of Michael Consedine for the post of Pennsylvania health Insurance Commissioner. The vote followed the Senate Banking and Insurance Committee’s unanimous approval of the nomination.  Consedine, who has headed the Insurance Department as Acting Insurance Commissioner since January, previously served as a partner at the law firm of Saul Ewing, where he was Vice Chair of its Insurance Practice Group.  Prior to joining Saul Ewing 12 years ago, Commissioner Consedine served as Insurance Department Counsel.

TEXAS: The House of Representatives gave final approval last week to legislation that extends the life of the Texas Department of Insurance and sets tighter guidelines for the review of rate increases. One key amendment is a page of language that would provide the state some flexibility to proceed on planning for a Texas health insurance exchange. The measure was amended during debate to allow 3-Share programs to be considered qualified health plans even though ACA does not appear to allow for that. The bill now moves to the Senate for Committee debate and floor approval prior to the scheduled adjournment date of May 30.

Governor Rick Perry signed legislation last week that the state’s largest physician organization promoted as a bill that will help rural communities recruit physicians. Sponsored by Sen. Robert Duncan and by Rep. Garnet Coleman in the House, the bill was approved in the House last week and was then signed almost immediately by Governor Perry. The new law will allow critical access hospitals, sole community hospitals, and hospitals in counties of 50,000 or fewer to employ physicians. Most of these hospitals are run by local governments. Texas is one of the first states to statutorily pass clinical protections for physicians who choose employment.

WASHINGTON: Governor Chris Gregoire signed the Health Benefit Exchange bill creating the exchange as a public-private partnership, with operations set to begin in January 2014. The exchange governing board will include nine members recommended by each legislative caucus and appointed by the Governor. Board members will include those with actuarial expertise and representatives of small business, consumer advocacy and identified areas of the health care system. Health insurer representation is not excluded nor specifically required but would be included on a technical advisory committee.

The new law requires the Washington Health Care Authority and the Legislative Joint Select Committee on Health Reform Implementation to apply for federal grants, develop an operational budget, and devise a plan to achieve financial sustainability by 2015.  A work plan and report on operational considerations are both required, addressing topics such as the role of the exchange in aggregating funds, whether to implement a basic health plan option, whether to merge risk pools, certification of and standards for participating plans, and implementation of effective risk management methods.

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Posted in connecticut health insurance, health care, health insurance exchange, indiana health insurance, kansas health insurance, north carolina health insurance, oklahoma health insurance, pennsylvania health insurance, texas health insurance | No Comments »

Health Insurance Reform State Changes April

Wednesday, April 13th, 2011

Governor Jan Brewer has signed a state budget that includes $1.1 billion in spending cuts and the elimination of programs that Democratic legislators say will have a disproportionate impact on the poor and children of the state. The budget eliminates $385 million from the Arizona Health Insurance Cost Containment System (Medicaid), effectively rolling back the coverage expansion to childless adults that voters approved in 2000. A legal challenge is expected by some because the program changes were not put to a public vote.

A medical loss ratio (MLR) bill sponsored by the California Health Insurance Commissioner was unveiled last week. In short, the legislation would require health insurers to comply with the federal minimum MLR standards and provide an annual rebate to insureds if the amount expended by the issuer on medical-related costs is less than a certain percentage of total revenue. It appears that the author’s intent is to exceed the requirements outlined in ACA and HHS regulations in three possible ways; 1) Federal regulation sets the process and requirements for rebates to consumers, if necessary, but the new bill could permit the state to modify those requirements; 2) the legislation fails to take into account MLR waivers that have been approved by HHS; and 3) the bill continues the misconception that rates filed must meet the federally defined MLR thresholds rather than the plan’s claim experience over the previous year. The bill also would authorize the Director of the Department of Managed Health Care and the Insurance Commissioner to issue guidance and promulgate regulations to implement requirements relating to MLR.

The non-partisan Office of Fiscal Analysis (OFA) has issued the fiscal note for the SustiNet legislation, and their analysis shows that the cost of the plan will be significant. OFA concludes that SustiNet could cost the state up to $483 million annually in new expenditures. This finding comes at a time when the Malloy administration and the General Assembly are trying to balance a budget $3.3 billion or more in deficit. The governor also is concerned about SustiNet’s proposed structure, which would hand decision-making responsibility for the state’s $8 billion-dollar Connecticut health insurance care obligations to a quasi-public authority that has almost no accountability to taxpayers.

Also, the fiscal notes for the health benefit mandates show that all but one of the bills would have to go to the Appropriations Committee. The costs to the state include: $300,000 per year for a bill prohibiting copayments for preventive care services; up to $12,000 per person, per year for eliminating the age cap for health insurance coverage for specialized formula; and at least $2.38 million in FY 2012 and $4.76 million in FY 2013 for a bill concerning out-of-pocket expenses for non-preferred brand name drugs ). In addition, last year’s bill imposing the combined unitary tax was re-introduced. This proposal increases uncertainty and adds to the administrative burdens of businesses and the state by imposing mandatory unitary combined reporting of corporate taxes.

Despite a looming budget crisis in Kansas, the legislature adjourned the major part of the 2010 session on March 31 without approving a spending plan for the next fiscal year. Having used up 75 days of a 90-day session, legislative leaders decided it would be best to wait until for more up-to-date revenue projections before attempting to fashion a spending plan. Legislators will return for the wrap-up session on April 28, when they will try to write a budget with the new estimates. They face a nearly $500 million revenue shortfall despite nearly $1 billion in cuts in the past year from the $6.4 billion budget.

Current bills of interest include legislation that would prohibit Kansas health insurance plans from covering elective abortions, unless offered as a rider and applicable only when the mother’s life is at risk, Another bill would allow children to participate in the high-risk pool and would raise the lifetime limit from $2 million to $3 million. Also, House Bill 2182 has been amended to include seven different pieces of legislation, including the Health Care Freedom Act (anti-federal health reform), the Health Information Technology Act, and agreed-to language from the Pharmacy Audit Integrity Act. All of these topics remain on the table for the legislature when it returns in late April.

The 2011 legislative session concluded with Governor Susana Martinez taking action on two New Mexico health insurance reform bills. She vetoed a bill that would have established a health insurance exchange as an active purchaser and allowed the board of directors to limit the number of qualified health plans that could be offered in the exchange. While noting her support for creating a framework for an exchange, the governor expressed concern that the legislation was premature because of the litigation challenging federal health reform.

Keeping in mind negative consumer reaction to Blue Cross/Blue Shield’s 21 percent average rate request last year, Governor Martinez signed into law legislation giving the superintendent authority to approve rates. Approval will be based on five grounds: 1) compliance with federal law and the Insurance Code; 2) does not contain, or incorporate by reference, any inconsistent, ambiguous or misleading provisions that encourage misrepresentation of the policy or its benefits; 3) the rate is actuarially sound and supported by the actuarial memorandum ; 4) the proposed rate is reasonable, not excessive or inadequate and not unfairly discriminatory; and 5) the proposed rate is based on administrative expenses that are permitted by federal and state law. The Division of Insurance is required to post online plain language explanations of the basis for any rate increase and the company’s supporting financial information, and provide a 30-day public comment period. The decision of the superintendent could be appealed to the Public Regulation Commission and the state Supreme Court.

As Texas health insurance was the main issue, The House of Representatives started with a $164.5 billion budget and ended with the same total. But lawmakers spent the better part of a recent weekend making changes inside the 2012-13 budget before giving it their approval on a largely party-line vote of 98 to 49. The essentials remained the same, leaving public education and health and human services spending short of what it would take to maintain current services. The proposed budget requires none of the remaining $6 billion in the state’s Rainy Day Fund or any new taxes — though it does include $100 million in new fees. Conservatives successfully raided family planning funds in the budget, stripping money from those programs and diverting it to others that include autism, mental health services for kids and trauma care. The budget now heads to a Senate that’s on track to spend more money — about $10 billion more. If they can’t find middle ground, the legislature could go into special sessions after the regular session ends on Memorial Day.

A new report by Texas Comptroller Susan Combs examines why costs are soaring and analyzes various cost-saving proposals under consideration in the legislature. In fiscal 2009, Texas state government spent about $30.2 billion on health care, a 36.1 percent increase from fiscal 2005.  “Health care accounts for more than 34 percent of all Texas government spending from state, federal and other funds,” Combs said. “The state cannot afford to let cost increases consume more and more of our budget.”  The largest share of health care spending is for programs such as Medicaid for the poor, disabled and elderly; mental health services; medical benefits for state employees and retirees, and health care for prisoners. Some of the health care cost drivers identified by the report include costly new drugs; a shortage of health care professionals; an aging population; lifestyle choices such as smoking, increasing Medicaid enrollment; and uncompensated care for the uninsured.  Some of the cost-saving proposals examined in the report include expanding the use of managed care in the Medicaid program; instituting a statewide smoking ban; requiring state employees who use tobacco to pay more for health insurance; and requiring state employees and retirees to pay a greater share of their health insurance benefit costs.

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Posted in HHS, MLR, arizona health insurance, blue cross, blue shield, california health insurance, connecticut health insurance, health insurance exchange, kansas health insurance, new mexico health insurance, qualified health insurance plans, texas health insurance | No Comments »

Kansas Health Insurance Aimed At Blocking Health Care Overhaul

Thursday, March 31st, 2011

A Kansas health insurance proposal aimed at blocking part of the federal health care overhaul from taking effect in the state has advanced in both houses of the legislature. Senators voted 26-10 last week to amend a so-called health care “freedom” measure into a bill dealing with the state’s pharmacy laws. The proposal would prohibit state government from forcing any individual or employer to buy health insurance. The House of Representatives previously had passed the same measure with slightly differing language. Critics say the state can’t overrule a federal law, and they note the U.S. Supreme Court will ultimately decide whether the federal law is constitutional. Both houses will now appoint conference committee representatives to reconcile differences between bills so that a single bill can be submitted to the Governor for his signature.

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Kansas Health Insurance Companies Individual Market

Friday, March 25th, 2011

The Kansas Health Insurance Department held a fact-finding hearing last week on the impact that PPACA’s 80 percent MLR will have on health insurance companies operating in the state’s individual health insurance market and any potential disruption of the market as a whole. The Department asked insurers to provide information in advance of the hearing on the number of individual enrollees by product along with premium information for each product. Larger insurers were also asked for total earned premium for the individual health insurance market, reported MLR figures under state law, and the estimated MLR for 2011. Plans were also asked to provide the total agent/broker commissions, estimated PPACA MLR rebate for the state, net underwriting profit and profit margin, RBC level and whether any notice has been issued for exiting the marketplace.  Aetna health insurance attended the hearing, which was dominated by brokers and agents testifying about the reduction in their commissions by several plans since the beginning of this year. Coventry health insurance also presented testimony about its plans to cut administrative expenses to comply with the new MLR, including changes to its commission structure. The Commissioner indicated that she plans to make a decision in the near future about how to proceed on this issue.

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Posted in MLR, PPACA, aetna health insurance, coventry health care, health insurance companies, individual health insurance, kansas health insurance, small business | No Comments »

Very Busy Week In Individual Health Insurance Reform

Tuesday, March 1st, 2011

If you’re keeping score, three federal judges have now ruled in favor of the constitutionality of the Patient Protection and Affordable Care Act (PPACA) while two have ruled against it. The latest to weigh in was a federal judge in the District of Columbia who last week upheld the constitutionality of the health reform law. The decision reinforces the divided opinion the lower courts have toward the law, which is expected to wind up before the U.S. Supreme Court for a final decision sometime in the next year or two. Predicting an outcome, many analysts agree, will not be easy.

Federal
Group customers offering Medicare Advantage and prescription drug coverage got some good news from the Centers for Medicare & Medicaid Services last week. Last November, CMS announced that group customers would no longer be allowed to offer a Medicare Advantage-only plan alongside a stand-alone prescription drug plan and that as of January 2012 the customer would have to offer an integrated Medicare Advantage-Prescription Drug Plan (MA-PDP). This set off a scramble to get ready for 2012, which would have been a very difficult, if not impossible, timeframe. Aetna health insurance began working with employers and trade groups to reverse or delay the CMS rule. Last week, CMS issued a favorable ruling to suspend indefinitely its November 2010 decision and not require an MA-PDP as the employer’s only option.

There were two important court developments last week related to health care reform and the constitutionality of the PPACA’s individual health insurance mandate, with more to come in the next week or two. First, a federal judge in Florida two weeks ago invalidated the mandate, striking down the whole statute with a declaratory judgment but stopping short of issuing an injunction directing the conduct of the parties. At the same time he said the declaratory judgment was the “functional equivalent” of an injunction.  The plaintiffs (many of the states) have publicly stated that the law no longer applies to them while the defendant (the federal government) has stated that nothing changes until appellate review is complete.  Last week, the Florida judge ordered legal briefs on this issue and is expected to rule shortly on the impact of his prior ruling on the parties involved.  Second, early last week, as expected, the U.S. District Court for the District of Columbia upheld the constitutionality of the PPACA’s individual mandate, making it the third court to so rule. But the score is 3-2, and this is a best of seven series that won’t be settled before at least one Circuit Court decision and an essential Supreme Court opinion are rendered. Both could be well down the jurisprudential road.

States
A California health insurance bill that would bring state tax law into conformity with new federal tax rules governing the health coverage of adult children passed the Assembly Revenue and Taxation Committee by a unanimous vote last week. This conformity is important to employers, plans, and families because it exempts employee contributions toward covering certain adult children from state personal income taxes. It would also reduce a potential administrative burden for employers. Aetna insurance worked with its trade associations and joined a diverse group of interested parties, including labor, to help achieve a bipartisan outcome. The bill is expected to be fast-tracked and may be heard in Assembly Appropriations in the coming weeks.

In Colorado health insurance the newly released 2010 Annual Health Insurance Report of the Commissioner of Insurance contains a wealth of information — much of it collected from the insurance industry for 2009 — about the cost of health insurance and the factors that drive individual and group premiums in the state. The report notes that an estimated 15.7 percent of Coloradans had no health insurance in 2010, which is a slight improvement over 2009. More than 61 percent of Coloradans were covered by either commercial health insurance or a self-insured employer plan, compared to 54 percent in other states nationwide. Roughly 84 percent of premiums collected in 2009 by carriers went directly to the cost of providing health care services; 13.87 percent of premiums was used for administrative expenses and producer commissions. Not all coverage is regulated by the state — just over 40 percent of Coloradans had coverage regulated by the division of Insurance.

The Colorado Trust, a private grant making foundation, has issued a brief called The Economic Impact of Health Reform in Colorado that projects, as a result of national health care reform, insurance premiums will be nearly $2,000 less per year for individuals and nearly $4,000 less for family coverage by 2019. The projections are in part due to slower health care cost growth. Indeed, costs are expected to grow 5.5 percent to 17 percent less in Colorado by 2019 than without reform. Even after accounting for the costs of financing health care reform, this research projects that the state’s economic output will be nearly 1 percent more in 2019 than without reform, and 19,000 new jobs would be added as a result of coverage expansion.

The Connecticut Health Insurance Exchange Planning Committee held its first meeting under the new Administration of Governor Malloy last week.  Jeannette DeJesus, Department of Public Health Deputy Commissioner and the Governor’s Special Advisor on Health Care Reform led the meeting and stated that Senator Crisco’s insurance exchange legislation is the Administration’s proposal, based largely on the NAIC model act. Speaker Chris Donovan also has introduced an exchange bill in the House. Both proposals call for the establishment of a quasi public governing structure but differ on some timelines and board representation. DeJesus said the Administration would work with the House and solicit input form residents and stakeholders around the state to resolve the differences. Passage of a consensus bill is critical to the state’s ability to access Level II federal funding by June 30th. If legislation is not passed, DeJesus said that Connecticut will fall behind in its planning process. The state recently was awarded a $35.6 million federal grant aimed at helping New England states develop a state-of-the-art, online gateway to health insurance options. While Connecticut and other New England states are directly participating, the project is centered at the University of Massachusetts Medical Center in Worcester and the Massachusetts Executive Office of Health and Human Services, supported by the non-profit New England States Consortium Systems Organization. The first meeting of that group will be in March.

Illinois health insurance advocate Governor Pat Quinn signed into law an Aetna-sponsored piece of legislation relating to insurer payments to certain non-participating providers. The bill applies to individual or group accident and health insurance carriers. Effective on June 1, 2011, when an enrollee utilizes a network hospital or ambulatory surgery center and an in-network provider is unavailable for radiology, anesthesiology, pathology, neonatology or emergency department services, the carrier is to ensure that the enrollee shall not incur greater out-of-pocket costs than for participating providers. The enrollee cannot be balance billed by the provider past the insurers’ in-network rate for these non-participating provider services. In addition, the insurer may pay the billed amount or attempt to negotiate the reimbursement with the out-of-network provider. In the event that the insurer and physician cannot agree on a reimbursement amount, either party can initiate binding arbitration within 30 days of receipt of an explanation of medical benefit. The bill is a major victory for consumers.

Kansas health insurance as a result of budget shortfalls, greater political attention is being paid to the significant cost of state Medicaid programs, and Gov. Sam Brownback has said he wants to get rid of the fee-for-service model. The governor has made redesigning Medicaid a priority in his proposed budget, Dispensing with the fee-for-service model would mean using marketplace tools, such as pharmacy benefit managers, to negotiate lower dispensing rates at pharmacies and communicate with physicians about generics. The Kansas Medicaid program could save $62 million in the next decade by using pharmacy benefit managers and other market-based tools, according to a recent study by The Lewin Group. Missouri could save $282 million. Bryan O’Neal, the assistant director of pharmacy at The Kansas Hospital, recently testified that the real opportunity for savings is getting clinical data and cost of medications in front of doctors at the time of prescribing. He recommended using electronic prescription systems, which allow doctors to see patients’ current medications and drug allergies as well as cost and clinical data. More than 500 pharmacies and 2,400 clinicians in Kansas use e-prescribing systems. But some have said legislation working its way through the Kansas and Missouri Senates could undermine the states’ e-prescribing systems by limiting information and discouraging physicians from using them. The bills would establish a separate set of standards for Medicaid and prohibit the use of “intervening parties” or pharmacy benefit managers. The Kansas bill came under fire during a Feb. 10 committee hearing. The lone proponent of the bill at the hearing was a pharmacy representative.

Michigan health insurance In his first budget, Governor Rick Snyder has proposed that the state’s current HMO-use tax on Medicaid plans be replaced by a 1 percent assessment on paid health claims to raise approximately $400 million. The paid claims would be an obligation on insured and self-insured entities. Details regarding this budget proposal, including operational issues and effective date, are unclear at this time. But the  Michigan budget is predicated on the implementation of this provision. If it fails, then the remaining options will be reductions in Medicaid, largely in provider rates and health plan premiums.

A Missouri health insurance bill that would create a health insurance exchange has been introduced by Representative Chris Molendorp, a Republican and chair of the House Insurance Committee. Despite input from a wide range of stakeholders, the complex bill is not likely to sail through the legislative process quickly or easily. It would 1) establish a health benefit exchange to facilitate the purchase and sale of qualified health plans and qualified dental plans in the individual market, and 2) provide for the establishment of a small business health options program to assist qualified small employers in facilitating the enrollment of their employees in qualified health and dental plans.  The bill would still allow for sales of plans outside the exchange. The exchange would be funded by assessments or user fees charged to health carriers and health benefit plans. The bill would establish the exchange as a quasi-governmental agency within the Department of Insurance, Financial Institutions and Professional Registration (DIFP) and under the direction of a 13-member board of trustees. The governor would appoint five members of the board, including a member from a licensed health insurance carrier. The exchange would also require each health carrier seeking certification as a qualified health plan to submit a justification for any premium increase before implementing that increase. Premium rates and contract language would have to be approved by the director of DIFP. The bill would exempt individuals from the federal PPACA mandate if there is no affordable qualified health plan available through the exchange or the individual’s employer. We expect the bill will be heard in Committee this week, after which drafting and negotiations will continue.

Two North Carolina health insurance exchange bills were filed last week. The bill that will likely move closely mirrors the National Association of Insurance Commissioner model legislation and is expected to be passed as a placeholder for legislation to come in 2012.

The Tennessee health insurance Department of Commerce and Insurance announced its legislative package last week, and it included a rate review bill. The bill is broadly written and gives the Commissioner authority to deny any rebates when the solvency of the company is in question.

The Department of Texas Health Insurance announced last week that it is in the process of reviewing and preparing for implementation of the PPACA MLR and rate review rules. They have invited stakeholders to participate in an informal work session on March 2 to obtain input on these topics. Additionally, since insurance carriers are not required to file rates for small group coverage in Texas, Department staff members are seeking input regarding the best and most efficient method of obtaining premium rate information for the small group market.

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Posted in aetna health insurance, california health insurance, colorado health insurance, connecticut health insurance, health insurance exchange, hmo, illinois health insurance, individual health insurance mandate, kansas health insurance, michigan health insurance, missouri health insurance, north carolina health insurance, qualified health insurance plans, tennessee health insurance, texas health insurance | No Comments »

Health Insurance State Reforms

Friday, October 29th, 2010

Connecticut health insurance : The Department of Insurance has submitted its package of proposed legislation for 2011 providing a clear indication of the Department’s current priorities. The package would have to be approved (and/or amended) by the next Administration before any proposed legislation is submitted to the legislature in January. Many of the proposals are re-introductions of bills considered in past years that failed to survive the process. However, some new proposals warrant close review:

  • PPACA authority: This language would adopt PPACA and future changes in their entirety. Once rules are finalized, specific provisions can be drafted in the future.
  • AAC payment/assessment methodology by insurers: Revises the methodology governing the assessment of payments made by domestic insurers. This revision would eliminate an existing inequity in assessments for insurers vs health care centers. The DOI would take the premium data directly from the Annual National Association of Insurance Commissioners (NAIC) statutory blanks which would be retrieved electronically.
  • An Act Concerning Third Party Administrators: The DOI would adopt the National Association of Insurance Commissioners model third party administrator statute. They state that over 100 third party administrators operate in the state without any licensing/registration requirements and absent any statutory oversight.
  • NAIC Model Standard Valuation Law: This proposal makes changes to the Standard Valuation Law, to enable Principles Based Reserving (PBR) of life insurance companies’ actuarial liabilities. PBR uses risk analysis techniques, such as modeling and simulation, to better capture various risks inherent in establishing adequate reserves. Use of a Valuation Manual, which is currently being drafted by the NAIC is intended to be dynamic to consider rapid changes in the marketplace.

Florida health insurance : Florida Insurance Commissioner Kevin McCarty co-signed a letter to National Association of Insurance Commissioners (NAIC) President Jane Cline urging the organization to adopt an amendment to the proposed Regulation for Uniform Definitions and Standardized Methodologies for Calculation of Medical Loss Ratio for Plan Years 2011, 2012 and 2013. The amendment would have excluded producer compensation from the MLR calculations by changing the definition of earned premium. The proposed amendment specifically stated: “For purposes of this regulation only, the term ‘earned premium’ shall not include fees or commissions included in premiums that are collected solely for the purpose of passing such fees or commissions on to an unaffiliated third party insurance producer to the extent such fees or commissions are actually paid.” The NAIC voted down the amendment but also voted in favor of a resolution to continue to work on this issue with HHS as it develops MLR regulations.

Kansas health insurance : Kansas DOI staff recently held a meeting to discuss upcoming legislative proposals that include a health insurance exchange bill and other legislation needed to implement PPACA. Various industry stakeholders were invited. The DOI is also considering a health care database bill that would transfer authority for the administration and collection of health care data required by law from the Kansas Health Policy Authority to the DOI. The staff invited feedback on these topics and promised to provide details about the legislation as soon as they are available.

Missouri health insurance : The Department of Insurance recently issued a bulletinto notify carriers in the individual market of two options regarding issuing policies for children under age 19. The two options listed are: 1) Guaranteed issue for all children under age 19 without limitations or riders based on health status provided throughout the year (while the bulletin states that the Department “expects” carrier to provide coverage throughout the year, the DOI has since clarified that it would prefer that carriers choose this option); or 2) new coverage limited to an open enrollment period — a transitional open enrollment period from September 23 to December 31, 2010, and an annual March open enrollment period beginning in 2011. Under this option, all children under the age of 19 shall be offered coverage on a guaranteed basis, without pre-existing condition exclusions or riders based on health status. If a carrier chooses this option, the carrier may sell child-only policies only during the open enrollment period, with the exception of enrollment of children experiencing a qualifying event. Missouri previously approved Aetna’s removal of the child-only addendum in July, and the company currently does not sell child-only policies in the state.

Texas health insurance : The Texas Department of Insurance has been awarded $2,792,180, the second highest grant in the country, to establish the PPACA consumer assistance program. HHS recently announced the new Consumer Assistance Grants program awards to help states and territories put patients in charge of their health care. These grants will support states’ efforts to establish or strengthen consumer assistance programs that provide direct services to consumers who have questions or concerns regarding their health insurance. These new grants will allow states, that in some cases are partnering with local non-profits, to help strengthen and enhance ongoing efforts to protect consumers.

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Health Insurance Reform State High Risk Pools

Friday, May 7th, 2010

In the new health insurance reform law the states are permitted to create their own high risk pools, expand existing pools, or allow the federal government to create and administer the pools for them.

The following states will operate their own pools:
Alaska, Arkansas, California, Colorado, Connecticut, Illinois, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Vermont, Washington, West Virginia, Wisconsin, and District of Columbia.

The following states will allow the federal government to create and manage the pools:
Alabama, Delaware, Georgia, Hawaii, Idaho, Indiana, Louisiana, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Virginia, and Wyoming.

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Kansas Health Insurance Bans Companies

Tuesday, February 23rd, 2010

American Trade Association, Smart Data Solutions, Real Benefits Association, Serve America Assurance have all been served with a cease and desist order from Kansas health insurance commissioner Sandy Praeger.

This order has been issued because of deceptive advertising and the sales of unauthorized Kansas health insurance. The companies are based out of Tennessee and have been served a cease and desist order from several states.

Consumer complaints allowed the commissioner to take action and recognize who was the cause of the problem. Employees weren’t even licensed in the state. Every person who sells Kansas health insurance must go through the correct licensing procedures and be approved by the state before making any sales or presentations.

States that have filed cease and desist orders against the companies are North Carolina, Missouri, Oklahoma, Connecticut, and Michigan.

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40,000 Children Losing Kansas Health Insurance

Saturday, February 20th, 2010

Kansas health insurance social programs are not fulfilling their duties due to needed budget cuts. Currently, there is a large waiting list that is growing drastically due to layoffs. This is in turn has made a major delay in processing applications. Children are unable to receive benefits from Health Wave because they are still on the waiting list or waiting to be processed.

Over 40,000 children rely on state programs for Kansas health insurance. At this point, parents are worried that their children will not receive the care they need. Health Wave is available for children under the age of nineteen. Comparable coverage can be found using health insurance quotes online.

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Kansas Health Insurance Bills

Thursday, February 4th, 2010

Kansas health insurance : Kansas legislators returned to Topeka recently to begin the 2010 legislative session, and several Kansas health insurance related bills that carried over from the 2009 session are likely to be pursued by lawmakers.  These include bills concerning assignment of benefits, mental health parity, price transparency, and mandates to cover autism, oral chemotherapy drugs, colorectal screening, primary care services provided during cancer clinical trials, prosthetic devices, and others. At the end of the legislature’s opening day, Governor Mark Parkinson delivered his first and only State of the State address, calling for increases in the tobacco and sales taxes to close a $400 million budget gap. He also proposed a public smoking ban, the creation of an emergency fund, support for higher education and the development of a renewable energy corridor in the state. He made no reference to health reform. To date, only two new Kansas health insurance related bills have been introduced, both relating to telemedicine.

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