Federal

With Congress on recess last week, there is no Federal report for this week.

States

ARIZONA: Governor Jan Brewer has vetoed a bill that would have authorized cross-border sales of Arizona health insurance in the state. In the weeks since the bill passed out of the legislature, her office was bombarded by both opponents and proponents of the bill, including state Senator Nancy Barto, the bill sponsor and chairman of the Banking and Insurance Committee, whose op-ed on the legislation ran in the Arizona Republic last week. While acknowledging the need for a competitive and vigorous insurance market in Arizona, the governor cited two reasons for the veto: First, a concern that the Department of Insurance would have limited jurisdiction over foreign carriers, potentially putting the state’s citizens at risk; and second, discomfort over the fact that foreign insurers would be able to sell policies free of the mandated benefits legislators had determined should be afforded to consumers.

CALIFORNIA: The Assembly’s Health Committee voted 12-7, along party lines, to approve Assembly Member Mike Feuer’s bill that would allow state officials to reject California health insurance rate hikes deemed “excessive” in the individual, small or large group business segments. The measure would allow state regulators to deny, approve or modify proposed increases in health insurance premiums, deductibles or copayments. In addition, the bill would allow any consumer to intervene in a regulator’s decision by filing a civil lawsuit.  Intervener fees would be paid by the insurer submitting the rate increase proposal. The bill secured the 12 votes it needed to move out of the health committee and will be debated by the full Assembly before the end of June. Similar legislation passed the Assembly last year but was defeated in the Senate. Hospitals, physician groups and business organizations have joined health insurers in opposing the bill.

COLORADO:  After a rocky start, the Colorado health insurance exchange bill passed the Senate by a vote along party lines. It is now in the Republican-controlled House where it has yet to be placed on the hearing calendar. House co-sponsor Amy Stephens is expected to seek non-substantive amendments aimed at reframing the legislative declaration portion of the bill. Rep. Stephens has publically stated her support of an exchange mechanism in the absence of a federal requirement. The goal of the amendments is to provide her with some political cover in the face of expected opposition by fellow Republicans, and the Tea Party in particular, who are opposed to any federal health reform implementation. Also, after circulating late-in-the-session drafts of legislation to bring state law into conformity with the ACA concerning preventive care and adverse determinations and appeals, the Division of Insurance has decided not to file the bills.

CONNECTICUT: Under a legislative agreement with Governor Dannel Malloy announced last week, the Connecticut health insurance SustiNet bill is going to be amended from a broad public option to a more limited version of the Connecticut Healthcare Partnership pooling bill. The compromise removes two pieces of the SustiNet proposal: opening the state employee pool to small businesses and individuals, and offering state-run insurance to the public (the public option). The compromise bill would allow municipalities and nonprofits to enter the state employee plan but not small business or individuals. It also would create a new SustiNet board that would serve in an advisory capacity to the governor on health reform efforts in the state. SustiNet supporters last week held a rally to try to revive their original bill. But the governor is unlikely to agree to a public option, given its very significant costs to the state. When the SustiNet concept was created, federal health reform had not yet passed.  Now that it has, the governor is looking toward ACA as a way to increase access to health care affordably.

MAINE: The Republican Chairs of the Insurance Committee have introduced sweeping health care reform legislation designed to increase consumer options by attracting more carriers to the state and allowing more flexibility in products. The bill would expand rating bands in the small group and individual markets, repeal the geographic access provision that requires plans to contract with virtually every provider in the state, repeal the rule mandating certain standardized benefit plans, return to a file-and-use rate review process, allow captive insurers in Maine, allow cross-border selling in Maine, and create an Individual market reinsurance mechanism to be known as the “Maine Guaranteed Access Plan.” The new reinsurance fund would levy an assessment on all covered lives to fund a portion of the premiums for high-cost claimants. The new assessment would be capped at $4 per covered life. The bill was voted “Ought to Pass” out of the Insurance Committee along party lines.

MONTANA:  Both legislative chambers passed a joint resolution that calls for an interim study on establishing a health insurance exchange. Citing the wide ranging potential implications of not creating an exchange, the resolution requests a legislative council to direct an interim joint committee to consider the feasibility of creating an exchange or participating in a regional exchange. Issues for study include: options being considered in other states; variations on exchange functions; the scope of services to be offered by the exchange; potential for an exchange to facilitate cross-border sales; impact of including an application for a Medicaid waiver to allow premium assistance inside the exchange; whether the exchange should define levels of contributions and plan criteria; feasibility of premium aggregation; and interactions with producers and effect on compensation.  The interim committee would also be charged with studying potential cost savings and the provisions that would be needed to neutralize the cost of state employees participating in the exchange. Following the study,    recommendations will be made to the legislature regarding whether the state should proceed with establishing its own exchange or joining a multi-state exchange.  Stakeholders, including health insurer representatives, will be included in the deliberations.

NEVADA: A bill that would create the Silver State Nevada Health Insurance Exchange has been referred to the Commerce, Labor and Energy Committee but is not yet scheduled for its first hearing. Concurrently, Commissioner Brett Barratt continues to host stakeholder informational meetings across the state. The vast majority of the attendees at the five meetings held to date have been brokers. On another ACA issue, the state was advised that its application for a one-year medical loss ratio (MLR) waiver has been deemed “complete” by HHS. In other business, the Speaker’s rate review bill has passed in the House and is now in the Senate. In its current form, the bill would require prior approval of rates and forms with a 30-day deemer; transparency with completed filings published on the DOI website and all of a carrier’s policies, certificates of coverage and medical loss ratio data published on its own website; public hearings at the request of consumers or insurers; and the establishment of a Consumer Advocate position to represent the public.

NEW YORK: Senate Insurance Chair Jim Seward and Senate Health Chair Kemp Hannon held a roundtable discussion on insurance exchanges last week. About 10 representatives of stakeholder organizations invited to participate and generally urged caution and called for maintaining consumer choice, not creating a new regulatory bureaucracy, including all state mandates, and not incurring additional regulatory burdens and duplications of authority.  The Senate is expected to introduce a fairly lean exchange bill, with the goal of creating a governance framework for 2011. This could take the form of a public benefit corporation or a quasi-public authority, but not a new agency or nonprofit corporation.

NORTH DAKOTA:  The legislature has passed an insurance exchange bill that is expected to be signed by Governor Jack Dalrymple.  This would be the first exchange bill to be passed by a Republican legislature and signed by a Republican governor. The purpose of the bill is to establish a framework for developing more specific policy positions and eventually an implementation plan for the exchange in North Dakota.

OKLAHOMA: A Senate bill that would create an Oklahoma health insurance exchange was filed last week shortly after Oklahoma’s Governor, Speaker of the House and President of the Senate announced an agreement to move forward on the issue. The bill would create the Health Insurance Private Enterprise Network, which would fulfill the stated purposes and functions of a federal exchange under ACA. The bill is short on details but would create a seven-member Board of Directors, including three   gubernatorial appointees (one representing carriers, one representing employers, and one representing providers). The board would also include a consumer representative (appointed by the Speaker of the House, an agent/broker (appointed by the Senate Pro Tem), the Insurance Commissioner (who also serves as Chair), and the Secretary of HHS. The Board will also appoint an executive director. The bill would require as-yet unspecified “public and private funding”, not to include the $54 million early innovator grant from the federal government. The stated goals of the Network are to promote/encourage portability of coverage; promote a competitive, market-based system that includes an aggregate premium system/defined-contribution insurance alternative; encourage carriers and providers to work together to provide quality, cost effective care; and establish a fair and impartial producer referral network for individuals and small employers. The Network would not have regulatory authority, discriminate against any qualified plan, or replace the outside market. Proponents of the bill will attempt passage before the legislature adjourns May 27.

TEXAS:  The Senate unanimously approved Sen. Jane Nelson’s bill to find extensive cost savings in Texas health insurance Medicaid program, the primary health care provider for children, the disabled and the very poor. The measure would expand Medicaid managed care into South Texas, where it has long been carved out. The move is expected to save the state $290 million over the biennium. Pulling prescription drug sales into the managed care program, the changes would require most Medicaid patients to use medicines on a state preferred drug list at a projected savings of $51 million a biennium. And, it would ensure people with disabilities receiving attendant care services at home are using a Medicaid contractor, saving an estimated $28 million a biennium. The measure also directs the comptroller to continue to collect a $5 per-person fee on patrons of strip clubs — a proposal that’s been tied up in court — until a final legal judgment has been reached. The projected cost savings have already been worked into the budget proposal Senate lawmakers are trying to bring to a vote.

VERMONT: The Senate voted 21-9 to approve an amended version of the single-payer legislation that previously passed the House on March 24. The bill will now go to a conference committee. As passed by the House, the bill would establish an exchange by 2014 that would eventually become the foundation for a single-payer system. The single-payer system, Green Mountain Care, would begin in 2017, the year when the ACA allows states to request waivers to opt out of certain requirements as long as an alternative approach would achieve the same coverage goals. The bill would permit earlier implementation of the system, upon receipt of federal approval. Other provisions include new rate review requirements. For rate increases that cumulatively would be 5 percent or greater during the plan year, health insurers would be required to submit a summary that includes a brief justification of requested rate increases, additional information for rate increases of over 10 percent, and any other information required by the insurance commissioner. Senate amendments, however, include a series of requirements that would have to be met before the Green Mountain System can be established, including a demonstration that the system would slow the growth of medical costs. Governor Peter Shumlin has indicated that he will sign either form of the legislation.

A bill that would require Arizona health insurance carriers to provide written claim reports to plan sponsors up to twice a year, upon request, has been favorably amended in the House to make compliance less onerous. Modeled after a Texas law enacted in 2007, the bill originally required the reports to be provided within 30 days of a request. The type of information that can be requested includes aggregate claims and premium by month, the number of employees covered and pending claims.

Republican-sponsored legislation that would permit cross-border sales of individual health insurance remains in play despite strong opposition by the business community and consumer advocates. The bill would require that out-of-state insurers be subject to the jurisdiction of another state’s department of insurance; maintain reserves not less than the amount required in Arizona; register with the Arizona Department of Insurance (DOI); and that the coverage offered meet, at a minimum, the benefit requirements of the state where the company holds a certificate. The DOI would have authority to revoke the foreign insurer’s registration for reasons that include: inadequate reserves; failure to comply with the unfair practices and fraud statute; and violation of the prompt-pay law. The bill was amended in the House and now goes back to the Senate.

COLORADO:

As the deadline for filing legislation approaches, the Division of Colorado health Insurance released drafts of two bills aimed at bringing the state’s preventive coverage and adverse determination appeal requirements into conformity with the federal health reform law. Health insurers will have a small window of opportunity to provide comments before the bills are formally introduced. Also, a bill was filed to reclassify any product containing pseudoephedrine or ephedrine as a prescription drug to help prevent access to the drug by people illegally manufacturing methamphetamines. The bill has raised strong concerns because it would require a prescription for frequently used allergy medicines and drastically increase medical costs. The sponsor has introduced a joint memorial to Congress requesting the federal government address the issue.

CONNECTICUT:

The fiscal note for the Connecticut health insurance Healthcare Partnership bill, which would allow voluntary municipal and small employer pooling with the state employees’ health plan, has been released and indicates the legislation would be costly to the State. Known costs (those concerning the administration of the program) would be hundreds of thousands of dollars. Other costs that could not be precisely determined include those associated with the public option (similar to the SustiNet legislation but on a much smaller scale) and lost tax revenue from the premium tax.

In other action, the Judiciary Committee passed the Cooperative Health Care Agreements bill out of committee. The legislation would permit health care providers to enter into cooperative arrangements that would not be subject to certain antitrust laws, after approval by the Attorney General. In past years, health insurance plans have successfully argued against action on the bill despite support from the committee’s membership, including both Democrats and Republicans. However, this year the new Chairs have brought the bill forward for a vote. It will now go to the House floor where it will assessed for a fiscal note. The bill still has a long road to travel, including through the Insurance Committee.

FLORIDA and GEORGIA:

The Florida Office of Insurance Regulation and Georgia Department of Insurance have both asked health plans for additional information to help support their requests to HHS for a waiver from MLR regulations under ACA. The requests were prompted by an initial response from HHS asking for the additional information.

GEORGIA:

A bill that includes a prompt-pay provision that would
require third-party administrators to pay for service claims in the same timely fashion as primary insurers, or face penalties, has been passed by both chambers. The bill is opposed by the Georgia Chamber of Commerce, as it would erode current employer protections under the federal Employee Retirement Security Income Act (ERISA). The Georgia Chamber will ask Governor Deal to veto this legislation.

MARYLAND:

Governor Martin O’Malley signed several bills into law last week that will impact Aetna insurance and its customers. The Health Benefit Exchange Act of 2011 establishes the Maryland Health Benefit Exchange as a public corporation and an independent unit of state government. The law sets the purposes, powers and duties of the insurance exchange, establishing the Board of Trustees and providing for the qualifications, appointments, terms, and removal of members of the Board. It requires the board to appoint an executive director of the Maryland health insurance exchange, with the approval of the Governor, and determine the executive director’s compensation. The effective date is June 1, 2011. Another law alters the circumstances under which a person has the right to a hearing and to an appeal from an action of the Maryland Insurance Commissioner. The law provides that provisions of federal law apply to specified health insurance coverage issued or delivered by insurers, non-profit health service plans, and HMOs; authorizing the Commissioner to enforce specified provisions of law. The effective date is July 1, 2011.

MICHIGAN:

Newly elected Governor Rick Snyder continues to push for a 1 percent tax on all Michigan health insurance claims, which would require insurers and third-party administrators to pay $400 million in order to generate $1.2 billion in revenue for Medicaid. The tax would replace the existing 6 percent tax on all products among the 14 Medicaid HMOs. The $400 million tax would trigger $800 million in matching funds from the federal government, thereby generating $1.2 billion in total. Should the tax be passed, the Governor promised no cuts to Medicaid reimbursement rates, services or eligibility. The claims tax is the same type being phased out in Maine that was used to fund the Dirigo Health Plan.

MISSOURI:

The attorney general, a Democrat, broke with his party last week and urged a federal judge to invalidate the central provision of the new Missouri health insurance law. The filing of the brief by Attorney General Chris Koster, a onetime Republican state legislator who switched parties in 2007, underscores ACA’s political tenuousness in a critical Midwestern swing state. Koster’s action followed months of pressure from state Republicans that he join attorneys general from other states who are challenging the constitutionality of the law. Instead, Mr. Koster chose to file a “friend of the court” brief in the U.S. Court of Appeals for the 11th Circuit. In Missouri, a ballot referendum aimed at nullifying the law was approved by nearly three to one last year, and the legislature recently passed resolutions urging Koster to join the legal challenges. In a letter to the Republican leaders of the legislature announcing his decision to oppose the law, Koster acknowledged that the legislative resolutions, though nonbinding, were impactful as they give voice to the political will of state residents. His central argument echoed those made by plaintiffs in a number of the lawsuits.

NORTH CAROLINA:

Legislation was introduced last week prohibiting most favored nation clauses in North Carolina health insurance contracts. The Insurance Committee in the House has already held one hearing on the bill.

OKLAHOMA:

Governor Mary Fallin last week joined other state leaders in announcing that Oklahoma will establish an Oklahoma Health Insurance Private Enterprise Network to prevent the establishment of a federal health care exchange in Oklahoma. To address concerns expressed by some, state leaders added specific safeguards into legislation to prevent the implementation of a federal health care exchange, while creating an Oklahoma-based health insurance network.  The Health Insurance Private Enterprise Network, based on a concept by the conservative Heritage Foundation and legislation passed by the legislature in 2009, would increase access to portable, private, affordable health insurance plans through a market-based network featuring competition and offering choice to consumers. The network would be governed by a board made up mostly of private sector members and chaired by the Insurance Commissioner.  The network would be funded through state or private resources. The state will not accept the federal $54 million Early Innovator Grant. The legislation is expected to be amended onto a pending bill and make its way through the legislative process. which is scheduled to end May 27, 2011.

TEXAS:

A bill designed to squeeze savings out of social programs won unanimous approval from a Senate budget subpanel last week. The bill includes about 10 ideas for greater economies – primarily in Medicaid but some in food stamps and the Children’s Texas Health Insurance Program. The biggest single savings — $290 million over the next two years — would come from eliminating a South Texas “island” of fee-for-service payments under Medicaid. Since 2003, Cameron, Hidalgo and Maverick counties have been exempt from the managed care trend at work elsewhere in Texas. The bill also would save $51 million by carving prescription drugs into Texas Medicaid managed care programs and requiring most Medicaid patients to use medicines on a state preferred drug list; save $15.9 million by moving children from the State Kids Insurance Program to the Children’s Health Insurance Program; and save $28 million by requiring Texans with disabilities who receive in-home attendant care services to use a Medicaid state program first at a lower cost to the state. The measure now heads to the full Senate Finance Committee, which is crafting its version of the much-reduced budget for 2012-13.

Federal
Last week a Florida federal judge clarified (at the request of the Obama Administration) his earlier decision back in January 2011 in which he ruled that the PPACA’s individual health insurance mandate is unconstitutional. He also wrote that the mandate could not be severed from the rest of PPACA and, therefore, the whole law had to be set aside as unconstitutional.  In last week’s rather colorful ruling, the judge chided the government for sitting on its hands for weeks before asking for the clarification. He re-emphasized that the mandate and the whole law are unconstitutional and chastised the government both for failing to appreciate, as a matter of law, that the prior Declaratory Judgment was the “functional equivalent” of an injunction (meaning that the government could not proceed with implementation) and for having the temerity to suggest otherwise. The judge did not stop there, which would have halted all implementation of the PPACA had he done so. He instead decided that the government’s motion to clarify was also a motion to “stay” the imposition of the original ruling, and he granted the stay.  But he conditioned it with the requirement that the government file an appeal within seven days seeking an expedited “fast-track” appellate review, either in the Court of Appeals (11th Circuit) or the U.S. Supreme Court. This filing requirement is the major takeaway from last week’s ruling because it accelerates the timeline for the litigation, to the applause of the state and others who oppose the law. The Administration and the proponents of the law are less happy, since stringing out the ultimate decision would make it more difficult, if not impossible, to dismantle.

With House approval (314 to 112) last week, Congress is well on the way to repealing the 1099 provision of the PPACA, which imposes a costly and burdensome reporting requirement on employers.  Earlier this year, the Senate also voted to repeal the 1099 provision; however, the two chambers are worlds apart with respect to paying for the repeal. While the House version pays for the repeal by revising the rules for repayment of excess premium subsidies down the road, the Senate version doesn’t directly pay for it and only gives OMB the authority to go find the money. A House-Senate Conference (or an unofficial compromise) will be needed to resolve this impasse.

The anticipated government shut-down on March 4 was put off last week when both chambers passed (and the President signed) a two-week extension of a continuing resolution to keep the government officially funded until March 18.  This particular resolution actually cuts federal spending for the current fiscal year by $4 billion, which means that the House Republican savings target of $60 billion for FY 2011 is now down to $56 billion. Congress could very well bump along with such short-term resolutions throughout the spring. But at some point, the Republicans in the House and the Democrats in the Senate will have to permanently fund FY 2011 and get on with the FY 2012 budget, which is supposed to be in the works right now.
Multiple health-care-related hearings were held on Capitol Hill last week. In testimony before the House Energy and Commerce Committee, Mississippi Gov. Haley Barbour voiced support for funding Medicaid with block grants, under which the federal government would give states a set dollar amount for Medicaid rather than paying a percentage of costs. Under this system, states would have “total flexibility” to manage their Medicaid programs, according to Barbour.  The panel’s Democrats were quick to dismiss the idea of block grants, saying the change would harm vulnerable beneficiaries. Karen Ignagni, the President and CEO of America’s Health Insurance Plans, testified before the House Ways and Means Committee Subcommittee on Oversight Health Plan Programs to Combat Fraud, Waste, and Abuse. Her testimony addressed two issues: how health plans’ fraud detection units are using cutting-edge techniques to identify practices leading to substandard care – including overuse, underuse, or misuse of medical treatment; and suggestions for improving fraud detection and prevention in both public and private programs.  Part of her testimony also focused on the medical loss ratio (MLR) regulation, which she said will hurt the insurance industry’s efforts to detect and prevent fraud.

The Government Accounting Office (GAO) last week released a study that shows “nearly 10 percent all Medicare payments are fraudulent or otherwise improper, and the government isn’t doing enough to stop them.”  The Medicare “fraud margin” is 9 percent, nearly triple the profit margin for the health plan industry (3.58 percent). The GAO also provided correspondence to the Hill on Medicare Private Sector Initiatives to Bundle Hospital and Physician Payments for an Episode of Care.  As one of the five largest national payers, Aetna insuranceae was interviewed and provided relevant materials. The GAO found that ongoing private sector bundling initiatives that achieve savings are an important consideration, in light of Medicare’s financial challenges. Bundled payments are feasible for Medicare, but there are several obstacles to overcome — such as manual claim processing systems, resistance to limiting provider choice and the lack of standard definitiions.

States

With the California health insurance deadline for the introduction of legislation during the 2011 session looming, and now passed. several health care-related measures were reintroduced, such as a single payer/universal care bill, prior approval and rate regulation, and mandatory autism coverage. In addition, a host of bills are in play that take another step toward implementing federal reform but appear to be inconsistent with PPACA. As in past years, legislators have proposed a host of new mandated benefits – 15 in total. They include several new ones, including the proposed elimination of step therapy for pain medications, fertility preservation services and forensic medical evaluations. The state’s mandate commission is reviewing the cost and public benefit of each of these proposed mandates and will issue a report that should be publicly available by the end of March.

Democratic Senator Irene Aguilar, the sponsor of a Colorado health insurance single-payer bill, engaged in a verbal confrontation last week with a representative of the Colorado Association of Industry and Commerce regarding the potential impact of her bill on employment in the state. Subsequent to a rally on the steps of the Capitol, the bill was voted out of committee, 4 to 3, along party lines. The bill has little hope in the Republican-controlled House and may not reach the Senate floor without some Republican support.

As in the past two years, the Connecticut Health Insurance Committee approved Speaker Chris Donovan’s bill called An Act Establishing the Connecticut Healthcare Partnership. This bill would open the expensive state employee health plan to small businesses, nonprofits and other groups. The goal is to attract a number of new employee groups to the state employee plan – nearly all of whom already have health insurance. In addition, the new state-run health plan would compete directly against the private marketplace. Given the high benefit levels, state employee plans are among the most expensive in the state. As such, this bill would not offer small businesses any real cost relief, achieve intended cost savings or increase the number of people with insurance. It could lead to substantial cost increases for taxpayers. The 11-9 committee vote was mostly along party lines, with most Democrats supporting the measure (except Sen. Joan Hartley and Rep. Linda Schofield), and all Republicans opposing it. This bill passed in 2008 and again in 2009, but was vetoed both times by former Governor M. Jodi Rell.

The Governor and Commissioner of Georgia Health Insurance are considering issuing an executive order that would create an Exchange Review Board. The Board would then consider and possibly develop legislation to implement a state insurance exchange in 2012. A bill is expected to be filed creating this advisory committee and is supported by the Governor’s office. The Governor may then follow with an executive order. Also, Aetna insurance expects an MLR waiver request to be filed by the DOI sometime this month.

The Department of Louisiana Health Insurance has indicated it will file an MLR waiver request this week despite indications from the Governor’s office that he does not approve of the request.

The Senate Appropriations Subcommittee on Oklahoma Health Insurance and Human Services passed a bill last week that would create a website to permit Oklahomans to see approximate pricing information for medical procedures and pharmaceutical products. The bill requires the Insurance Department, in collaboration with the State Department of Health, to establish and maintain an online health care information system that permits consumers to see pricing information from different types of providers and pharmaceuticals. The bill states that the purpose of the website is to serve as a resource for insurers, employers, providers, purchasers of health care and state agencies to continuously review health care utilization, expenditures and performance. It would also enhance the ability of consumers and employers to make informed, cost-effective health care choices. The bill would require that the presentation of data in the system allow for comparisons in the context of geography, demographics, general economic factors and institutional size.

Also of interest is a bill passed by the Senate Rules Committee last week that would allow Oklahoma to opt out of federal health care reform requirements. The bill asserts state control in the regulation of health care, would create a compact between certain states and would set forth formulas for figuring the right to federal funds for each member state. The bill also would create the Interstate Advisory Health Care Commission and establish membership requirements and duties of the commission. Primarily the commission would assist the legislatures of member states in the regulation of health care. It states the formation of this compact is contingent upon approval from the U.S. Congress. Democrats in Oklahoma’s Senate opposed the bill, some saying that it would force Oklahoma to rely on other states for regulating Oklahomans. Both bills will continue through the legislative process, which is scheduled to end in late May.

Rep. John Zerwas’ bill authorizing the creation of a state Texas health insurance exchange encountered mostly smooth sailing last week when it was heard by the House Insurance Committee. Going by the name of the Connector in the bill, the primary purpose of the exchange is to prepare Texas for changes in health insurance markets set to roll out in three years as part of federal health system reform. One important change in the new bill language presented at the hearing was the absence of an individual mandate to buy an insurance product. Groups expressing support for the bill included the Texas Association of Business and the Texas Hospital Association, among others. The bill was left pending by the Committee and will likely see more changes before it is brought to a vote. The Texas legislature continues in its regular session until June 1, 2011.

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.

Aetna health insurance no longer offers Aetna Advantage Plans for Individuals, Families and the Self Employed plans in Colorado health insurance.

Why is Aetna health insurance making this change?
After reviewing the Aetna portfolio of Individual health insurance plans in Colorado, Aetna insurance determined they can no longer meet the needs of the customers while remaining competitive in the individual health insurance market.

While this decision was not easy, a number of factors were considered before making this important decision. In keeping with the best interests of Aetna insurance customers, Aetna believes there are other insurers who can better meet their needs.

Impacting to existing members
Existing individual health insurance plans will receive one final renewal period. Depending on the plans’ renewal dates, some existing plans may not receive a full 12 month coverage period on renewal.

Plans with anniversary dates on or between February 1, 2011 and July 31, 2011

• Will renew each plan for a further twelve (12) month period and coverage will cease at the end of the renewal period.

• For example, if a plan’s anniversary date is on April 1, 2011, there will be one further renewal period of twelve months and coverage will end on March 31, 2012.

Plans with anniversary dates on or between August 1, 2011 and January 31, 2012

• Will renew each plan until July 31, 2012. Effective August 1, 2012, all coverage under the plans will end.

• For example, if a plan’s anniversary date is on September 1, 2011, the plan will receive one further renewal until July 31, 2012.

How will individual pre-65 members be notified of this change?

• All existing Aetna insurance policyholders will be notified by mail on or about February 1, 2011.

While Aetna will continue to administer their individual health plan for at least another year, policyholders are strongly encouraged to seek alternative health insurance coverage prior to their policy termination date indicated above.

Aetna health insurance appreciates your understanding regarding this decision.

Health Care Reform

New Health Care Reform Law Means Tax Increase for Middle Class: According to a report recently received by congressional staffers, the new health care reform law will result in higher taxes for approximately 14.7 million middle class Americans. Taxpayers can currently deduct medical expenses in excess of 7.5 percent of their adjusted gross income (AGI). Starting in 2013, most taxpayers will only be able to deduct expenses greater than 10 percent of AGI. By limiting the medical expense deduction – a provision widely used by taxpayers who either have a serious illness or are older – the new law is expected to save billions of dollars. However, according to the Joint Committee on Taxation, those taxpayers earning less than $200,000 a year will pay roughly $3.9 billion more in taxes in 2019 alone because of the new limits for this deduction.

Members of Congress Baffled by Health Care Reform Provisions: According to the Congressional Research Service, the new health care reform law may have serious unintended consequences for members of Congress and their employees. Due to ambiguous and confusing language, members of Congress and their staff members may lose access to the Federal Employees Health Benefits Program, effective immediately. Rep. Jason Chaffetz (R-UT) said lawmakers were in the same boat as many Americans, trying to figure out what the new law meant for them. Congressman Chaffetz asked, “If members of Congress cannot explain how it’s going to work for them and their staff, how will they explain it to the rest of America?”

Additional Activities
Massachusetts Court Rejects Bid to Increase Premiums: Last month, insurance executives in Massachusetts attempted to increase their companies’ premiums by as much as 32 percent, citing the expected rise in medical costs associated with insuring individuals and small group customers in Massachusetts. Insurance Commissioner Joseph Murphy rejected the proposals, citing the increases as “excessive.” As a result, representatives from six of the insurance companies sued, claiming the state does not have the authority to cap premiums. On Monday, a Superior Court Judge in Suffolk County ruled against the insurance providers on procedural grounds for not exhausting all administrative remedies within the Department of Insurance before seeking legal intervention.

Unemployment Benefits Extended Again: On Monday, Senate Democrats advanced a measure temporarily extending the unemployment benefits that expired during the recent two-week congressional recess. Democrats achieved cloture (the only formal procedure that Senate rules provide for breaking a filibuster) with 4 key Republican votes in the Senate. The $9.2 billion bill would extend long-term unemployment benefits along with COBRA health care subsidies for unemployed Americans. It would also extend an annual increase in payments to doctors who treat Medicare patients. The unemployment benefits and health care subsidies will continue until May 5, while the other changes will expire on April 30.

The Senate’s action late Monday set the stage for a final vote on the legislation. On Thursday evening, the bill passed 59-38 , and the measure was sent back to the House, which was expected to vote and send it to President Obama for his signature.

Another State Joins Lawsuit Against Health Care Reform Bill: This week, Georgia Governor Sonny Perdue appointed a special assistant attorney general to lead the state’s challenge against the health care reform law. Georgia joins 18 other states in alleging that the new law infringes on Americans’ Constitutional rights by mandating that individuals  purchase health care coverage or pay a penalty. Frank Jones, the state’s pro bono special assistant attorney general, will represent the State of Georgia and join the multiparty lawsuit filed on March 23 in a federal court in Florida. Other states in the suit include Alabama, Arizona, Colorado, Florida, Idaho, Indiana, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washington.

Insurance Commissioner Won’t Comply with Law: Also in Georgia, Insurance Commissioner John Oxendine refused a request from the U.S. Department of Health and Human Services to create a pool for high risk insurance plans. His decision to opt out of creating a high risk pool will not affect the cost of insurance for any patients. However, the federal government, instead of the state, will oversee the distribution of certain federal health care funds in Georgia health insurance to ensure that high risk patients receive subsidized premiums on health insurance.

Chairman Waxman Cancels Hearing: House Energy and Commerce Committee Chairman Henry Waxman (D-CA) issued a statement on Wednesday cancelling a hearing called to listen to concerns from major corporations about how they will be impacted by the health care reform bill. Over the past few weeks, several company executives contacted Chairman Waxman and expressed their feelings that the new law may ease their costs if it is implemented properly. Companies like AT&T, Verizon and Caterpillar made news last month when they informed investors they would need to take billions of dollars in write-downs because of changes in how health care subsidies will be taxed.

Public Opinion
Polls this week show that the number of Americans favoring repeal of the health care reform law continues to rise following the law’s enactment. At the same time, President Obama’s job approval ratings have slipped since passage of health care reform.

More Americans Strongly Favor Repeal: In a recent Rasmussen report, 58 percent of Americans – up 4 points from last week – support repealing the new health care reform law. Further, 52 percent of likely voters continue to feel the legislation is bad for the country.

Similar results were found in a new study conducted by Indiana University. Researchers at the Center for Health Policy and Professionalism Research found that 58 percent of Americans are in favor of repealing the health care legislation.

Obama’s Approval Ratings Slip: In a recent AP/Gfk poll, 52 percent of Americans said they disapprove of the way President Obama is handling health care reform, up 6 points since last month. At the same time, 50 percent disapprove of his performance overall, which is up from 46 percent just a month ago.

Looking Ahead
As lawmakers shift their attention to debating financial reform and climate change legislation, President Obama continues to travel the country to discuss with Americans the details of the new health care reform legislation.