The Democrat-controlled legislature passed a New Mexico health insurance exchange bill that has a strong chance of being vetoed by Governor Susana Martinez, who leans toward waiting for the dust to settle on PPACA litigation. The health insurance exchange would be a nonprofit public corporation with the ability to negotiate with insurers over the qualification of health plans in the exchange. It would also have the ability to assess carriers, qualified employers, individuals and producers to generate funding for its operation.
Posts Tagged ‘health insurance exchange’
Thursday, March 31st, 2011
A bipartisan Colorado health insurance exchange bill was introduced last week by Sen. Betty Boyd (D), Chairman of the Health and Human Services Committee, and Rep. Amy Stephens (R), House Majority Leader. The bill focuses on governance and would create a health insurance exchange that is a nonprofit unincorporated public entity governed by a board of directors. Directors would be appointed by the governor and legislative leadership, and can include insurance industry representatives. The board would not have rulemaking authority; the exchange would be market based and competitive, and all health insurance companies authorized to do business in the state would be eligible to participate. The bill has the support of Governor Hickenlooper but faces opposition from consumer advocates who favor little insurer input and Republicans who don’t want to implement federal health care reform. The bill sponsors, however, believe an exchange mechanism will be a good addition to the state’s private health insurance market, regardless of whether the PPACA survives its legal challenges.
Friday, March 25th, 2011
The Nevada Division of Health Care Financing and Policy (DHCFP) has scheduled another set of public meetings to discuss the purpose and general requirements of a Nevada health insurance exchange, Earlier this month, DHCFP held a set of public meetings that focused on outreach, education and enrollment to establish a basis of understanding what the PPACA requires in establishing a health insurance exchange. The new public meetings are expected to focus on an overview of the commercial market, individual and small group market rules, risk adjustment in the exchange, the role of the exchange in rating, and certifying health insurance plans for participation.
Friday, March 25th, 2011
Governor Nathan Deal has announced that he will no longer pursue legislation to implement a Georgia health insurance exchange this session. In a statement, he said he favors waiting for an expedited ruling expected from the 11th Circuit Court of Appeals on the constitutionality of PPACA. The governor said he believes the court will affirm a lower court ruling against the PPACA. In the meantime, he will create an advisory committee to study options for a health insurance exchange. Also, the Georgia Department of Insurance has applied to HHS for a waiver of the MLR requirements.
Tuesday, March 15th, 2011
With a law as complex as the Patient Protection and Affordable Care Act (PPACA), unintended consequences are always a concern. Last week The Wall Street Journal reported that the physician community is witnessing the emergence of a significant unintended consequence — since tax-advantaged flexible spending accounts can no longer be used to pay for over-the-counter medications without a prescription, under the law, many patients are now visiting their doctors expressly for the purpose of getting new prescriptions for the OTC medications. The change in the law was meant to discourage wasteful spending on some health products and raise revenue. Instead, critics say the provision is driving up health care costs. Unintended consequences of the health care reform law is an area of focus for Aetna insurance, and will continue to urge flexibility in the implementation process to help address potential unintended consequences.
Federal
In response to various requests for clarification (including from Aetna insurance), federal regulators
last week issued a Question & Answer document that further refines the previous proposed rule on student health. In short, this clarification makes it clear that nothing from
PPACA applies to student health plans until policy years beginning in 2012 or until academic year 2012-2013.
The Q & A also clarified that the proposed regulation must be finalized to show what parts of the PPACA would apply to student health plans. This is welcome news in the college
and university community. Aetna is communicating with its clients in a manner that is consistent with last week’s clarification, though many schools were hearing conflicting advice
from state regulators.
The House-passed continuing resolution includes language that would “prohibit the use of funds to pay any employee, officer, contractor, or grantee of any department or agency to implement the provisions” of the PPACA. In a letter to Finance Committee Chairman Max Baucus, HHS Secretary Kathleen Sebelius made several claims that, should the de-funding provisions in the resolution be enacted into law, seniors will lose access to Medicare Advantage plans and other services. Senate Republicans were quick to dispute these allegations stating, the scenarios the Secretary envisions are not allowed under Congressional rules, are not assumed by the Congressional Budget Office (CBO), and can be prevented by HHS. Senator Orrin Hatch and Ways and Means Committee Chairman Dave Camp also sent Secretary Sebelius a letter expressing their disappointment in what they called the letter’s “baseless allegations,” and expressing hope that “the urgency with which this letter was sent to Chairman Baucus is also being applied in answering a growing backlog of serious questions.” The CBO also released a letter regarding the impact of the resolution, including the impact of the de-funding provisions on Medicare Advantage. The letter shows the de-funding provisions would have a minimal MA budgetary impact of $5.7 billion over 10 years.
States
Governor Jan Brewer’s Special Advisor on Arizona health insurance Health
Care Innovations held a meeting last week with the state’s major health insurers, including Aetna
insurance, to discuss identifying IT gaps the state must address to develop the online product selection and enrollment mechanism for an insurance exchange. Social Interest Solutions, the organization that developed the enrollment form currently used by Medicaid applicants, provided
a demonstration of that application process. Individual interviews will be conducted with the IT staff of each company to obtain recommendations for the new system.
The Real Estate Committee last week voted out a substitute prior-approval rate bill that retains all the problematic sections of the original bill. The sections of concern cover public hearings, new subpoena powers for the Attorney General and Connecticut health insurance Healthcare Advocate, multiple notice requirements, and new definitions of inadequate, excessive, and unfairly discriminatory. The only change is that the Commissioner would have to promulgate regulations to carry out the proposed public hearing process. The full contingent of Republicans and Rep. Linda Schofield (Dem.) voted against the bill, with Schofield stating that she was concerned the bill gets rid of any timeline under which the Department must act and would require public hearings, nonsensically, for group rates. She also said the bill would provide the Attorney General and Advocate with extraordinary subpoena powers. The Chairs indicated that the bill is a work in progress.
Florida health insurance Insurance Commissioner Kevin McCarty has disclosed that he will be submitting a medical loss ration (MLR) waiver request to HHS this week.
Georgia health insurance Insurance Commissioner Ralph Hudgens has indicated he will be submitting an MLR waiver request to HHS within a week. Aetna insurance continues to work with the Chamber of Commerce and plan sponsors to help defeat legislation that would apply prompt-pay requirements to self funded plans, in violation of ERISA.
Oklahoma health insurance Last week State Rep. Mike Ritze, one of two doctors serving in the Oklahoma legislature, called on state officials to turn down $54 million that would be used to implement the new federal health care law. Shortly thereafter, Governor Mary Fallin joined other state leaders in announcing that Oklahoma will accept the grant to help design and implement the information technology infrastructure to operate an Oklahoma health insurance exchange. Fallin listed the creation of such an exchange as one of her top priorities in her State of the State address earlier this month. She and others announced their support for the grant after working with state agencies to ensure that no unworkable federal mandates were included.
Later in the week, the legislature continued taking steps forward to reduce the number of uninsured Oklahomans. House Speaker Kris Steele authored a bill that defines the membership and appointments to the Health Care for the Uninsured Board (HUB), which is designed to establish a system of counseling, including a website, to educate and assist consumers in selecting an insurance policy that meets their needs. The seven-member HUB consists of representatives from the Insurance Commissioner’s Office, the Oklahoma Healthcare Authority, insurance companies, agents and also consumers. The purpose of HUB is to implement a market-based insurance exchange. The bill passed the House Public Health Committee at the end of the week and will proceed to the floor of the House.
Texas health insurance Legislators are wrestling with to what extent they should intervene in what residents eat, drink and breathe. In a state with some of the nation’s highest obesity and diabetes rates, supporters of various proposals say they are trying to give Texans more ways to combat unhealthy decisions by others, as well as make good choices for themselves. The president of the Texas Medical Association testified last week in favor of a bill banning the sale of unhealthful drinks (sugary fruit juices, sodas, whole milk) to students during school hours. Other related bills would allow the state to raise taxes on sweet sodas and fine restaurants for not posting nutritional information.
About 30 percent of Texas schoolchildren are obese or overweight, according to the Texas Public School Nutrition Policy. And last month, Republican Comptroller Susan Combs released a report saying obesity cost Texas businesses $9.5 billion in 2009 — that could rise to $32 billion by 2030 due to the cost of health care services, absenteeism, decreased productivity and disability. Legislators will continue debate on these bills until the session adjourns on May 31.
Tuesday, March 8th, 2011
When the nation’s governors came calling at the White House last week, President Obama greeted his guests with the offer of new flexibility toward implementation of the Patient Protection and Affordable Care Act (PPACA). The President said he is willing to give states an earlier opportunity to opt out of certain key requirements of the law, but only if the states can find their own way to cover as many people without added costs. If Congress agrees to the new approach, states could gain exemptions by 2014 rather than 2017. But a number of governors expressed skepticism that the proposal offers them any real benefits, given the difficulty states would have meeting the President’s caveats. Some prefer to continue to pursue outright repeal. Still, the change in timing means exemptions could be earned in the same year that some of the most controversial provisions of the law go into effect. And, with the governors’ immediate focus on rising Medicaid costs, the proposal reportedly would let states send HHS officials a combined request to alter Medicaid and their approach to health care reform.
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.
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.
Tuesday, February 22nd, 2011
When House Republicans voted Friday to block funding for health care reform implementation (see below), it was with the knowledge that most Americans disapprove of the tactic. A new CBS News poll shows 55 percent of Americans disapprove of the defunding effort while just 35 percent support it. The poll also shows, however, that the Patient Protection and Affordable Care Act (PPACA) continues to be unpopular overall. Just 21 percent think the law will make the health care system better while 23 percent believe it will make things worse. Perhaps most interesting of all is that 44 percent are unsure of what the law does, and they don’t know enough to say what the impact will be. The results seem to suggest the law has gained no traction with the populace in the past year but that voters have a keen sense of fair play in how the issue is addressed.
Federal
To keep the government operating for fiscal year 2011 (September 2010 through September 2011), Congress has been passing a series of continuing resolutions (CR) that continue the
funding for a set period of time. The current CR runs out the first week in March, so the House last week passed yet another CR, shipped it off to the Senate and headed out of town
for a President’s Day recess. Included in the just-passed CR are provisions that would de-fund parts of the 2010 individual health insurance reform law, such as prohibiting the use of federal funds to pay government employees
to work on or to implement the PPACA. The Senate will surely reject this CR because of both the de-funding provisions and the $61 billion in spending cuts for the current fiscal
year. Congress will once again confront a looming funding deadline when it returns from recess in a week.
While there is increasing health-related “action” in Congress, such as the de-funding effort and the soon-to-be successful effort to repeal the 1099 requirement, the implementation process within the agencies continues unabated. This is where the real action is, with post-regulation guidance likely to be issued on several fronts in the very near future. Sub-regulatory guidance is expected to touch on the following areas or answer certain questions: 1) Whether group plans, as of 2012, will be allowed to offer a Medicare Advantage-only plan alongside a stand-alone PDP; 2) whether and how insurers have to report PBM administrative costs for medical loss ratio (MLR) purposes; 3) FAQs on the parameters (e.g., national vs. state-by-state reporting) of an insurer’s MLR requirement for ex-pat business; 4) revised rules on already-issued claims and appeals rules; and 5) clarification of the length and breadth of the types of “new business’ that can be sold under a limited benefits plan or mini-med waiver. All of these items will have a bearing on operations at Aetna health insurance and Golden Rule insurance.
States
The Obama administration has awarded $241 million in grants to seven states to develop a health insurance
exchange. Developing the technology to make such a virtual marketplace work is expected to be costly, however. Administration officials hope the grants awarded last week will
allow a few states to build systems as “early innovators” that others will be able to adopt. The states receiving grants, which were appropriated by the law last year, are: Kansas
($31.5 million), Maryland ($6.2 million), Massachusetts ($35.6 million), New York ($27.4 million), Oklahoma ($54.6 million), Oregon ($48.1 million) and Wisconsin ($37.8 million). A
sign of the sometimes odd nature of health care politics, Kansas, Oklahoma and Wisconsin have Republican governors who have complained bitterly about the new law and are challenging
its constitutionality in federal court.
Arizona health insurance Governor Jan Brewer was advised by HHS Secretary Kathleen Sebelius that the maintenance of effort provision of the PPACA does not preclude the state from removing childless adults from the Arizona Health Care Cost Containment System (Medicaid) because the expansion was part of a demonstration project. The Governor and many legislators support this reduction as a means to help address the state’s significant budget deficit. While many view the development as a positive, a legal challenge at the state level is possible because the coverage expansion resulted from a ballot initiative. Also, the health insurance exchange bill was voted out of the House Banking and Insurance Committee by a 4-2-1 margin. Discussion was robust, with Republican members questioning the need to take any action in light of pending litigation against the PPACA. The view that the bill should continue to move to the floor for a full vote prevailed.
The Connecticut health insurance Committee held a hearing last week on a bill that would require public hearings on rate increases. The bill would compel hearings in some cases, and would give the state attorney general and health care advocate the right to argue on behalf of consumers at the hearings and call witnesses. In addition, the bill would change existing law, which states that rates can’t be “excessive”, by defining excessive as “unreasonably high.” Industry representatives said the legislation would conflict with federal reform laws, add administrative burden on the Insurance Department and, ultimately, increase costs. Keith Stover, lobbyist for the Connecticut Association of Health Plans, testified that rates already have to be actuarially sound and that medical insurance costs are, in fact, increasing. The Insurance Department said lawmakers should hold off on changes until incoming Commissioner Thomas Leonardi reviews the plan.
The Public Health and Insurance committees held a joint hearing on the SustiNet public option bill, the insurance exchange bill, the “pooling” of all public employees bill (to be known as the Connecticut Health Partnership) and a bill to allow the state to pool state employee and Medicaid pharmaceutical purchasing. The most important development of the day was the Malloy Administration’s written testimony. The state’s Budget Director Ben Barnes was not only tepid toward SustiNet as a whole, he was quite clear that the SustiNet bill gives too much budgetary power to a quasi-public agency (almost $8 billion in state health spending) and raises questions about SustiNet’s cost and savings projections. He pointed out that certain Medicaid concepts in the bill are against federal law, including allowing the agency to set Medicaid rates.. Speaker of the House Chris Donovan sat with Hartford Mayor Segarra, and they advocated strongly for the Speaker’s “pooling” bill to allow cities and towns to buy into the state’s health insurance plan. It eventually would allow small businesses and nonprofit organizations to buy in (also part of the SustiNet plan). This bill was vetoed in 2008.
Georgia health insurance John Price, an Aetna insurance local market head, Southeast Region, has been appointed to Commissioner Hudgens health insurance advisory group to help provide the Commissioner with expertise on health insurance issues. Also, the Commissioner of the Department of Community Health announced Friday that the current Managed Medicaid contracts (Wellcare, Amerigroup, Centene) will be extended for 12 months while the new Governor reviews the program.
Ohio health insurance Pooling of Ohio public school district employee health plans will be considered by the General Assembly. A study found that there is the potential for $138 million in savings if the state leverages the greater buying power of pooling 191,000 employees enrolled in 613 public school district health plans. Seventy-two percent of Ohio school districts purchase employee health insurance through consortia, but they are typically composed of 10 or fewer districts and do not result in savings, the study found. The report also calls for the state to find ways to encourage school districts to pursue lower-cost, high-deductible health insurance plans that could reduce district costs up to another 37 percent over current employee health care plans. As Ohio struggles with the economic downturn and an $8 billion budget deficit, limiting collective bargaining rights is also front and center in the Statehouse so that the Administration ultimately may change the structure of pensions and health care benefits.
Texas health insurance Lt. Gov. David Dewhurst and Sen. Jane Nelson have reintroduced two health care-related bills that died in the House in 2009. One would bring “outcomes-based payments” to Texas’ Medicaid and the Children’s Health Insurance Programs. The other would allow private insurers, major employers and government employees’ insurance plans to experiment with new financial approaches, such as accountable care organizations (ACO). ACOs are an arrangement in which doctors and hospitals share risk, and potential savings, for bringing care costs below targeted levels. The legislation would begin rewarding the state’s health care industry for preventive care and treatments that are coordinated to prevent duplication and waste. The bills will be referred to a committee and debated by both the Senate and House during the current legislative session, ending in late May.
Senators tasked with taking a close look at the Medicaid program got a dose of the difficulties involved in trimming services in a state where services considered optional turn out to be not so optional. They heard testimony on multiple examples of how Medicaid cuts would affect people in the system. Because of the restrictions contained in the federal health care reform law, budget planners have less latitude in where to look for cuts in the Medicaid program. The Senate subcommittee will eventually pass on its recommended budget solutions to the Finance Committee charged with approving an overall budget that makes up a shortfall of more than $20 billion this session.
Thursday, February 10th, 2011
By any measure, last week was a big one for the future of individual health insurance reform. It started with a federal judge in Florida ruling the Patient Protection and Affordable Care Act (PPACA) unconstitutional. Just two days later the U.S. Senate, unlike the House, voted down an effort to repeal the not-quite-one-year-old law. But a vote in the North Carolina House last week illustrates that the states will be just as important a battleground for health care reform over the next couple of years. North Carolina House members voted to try to block the requirement that citizens buy health insurance coverage. And, Florida has announced it will cease implementation of the health care law until the lawsuits are decided — likely by the U.S. Supreme Court. The process of refining or even reshaping federal health care reform is likely to go on for years.
A federal district court judge has ruled that the individual mandate provision of the health reform law was an unconstitutional exercise of regulatory power by the federal government under the Commerce Clause and that the rest of the PPACA was not “severable” from the mandate provision and, therefore, the whole law could not survive under the Constitution. This is but one case among many around the country focused on the constitutionality of the law, but it is the most prominent because 26 states from all over the country are plaintiffs. However, the decision is conclusive of little. First, the jurisdiction of this federal district court is limited to a handful of counties in Florida. Second, no Circuit Court has yet ruled on this or any other case either in support or against the mandate or other provisions of the law, and the Supreme Court is down the road. Third, it is not yet clear how the insurance provisions will fare in the higher courts should the mandate itself not survive. This key subordinate issue is expected to be clarified first in the May 2011 oral arguments in the 4th Circuit (the Virginia case) where the Department of Justice will reportedly “embrace” the notion that the mandate and the insurance access provisions are linked and not severable. If the cases out there are not fast-tracked to the Supreme Court (right now, quick action is favored by the states and other plaintiffs but opposed by the DOJ and the Administration) we will likely not see a decision until mid-2012 or just before the November elections that year.
The Senate last week handily (81 to 17) passed a bill to repeal outright the PPACA provision that imposes on business a burdensome and costly 1099 reporting requirement for any payment to any payee of $600 or more. While the House of Representatives has to agree (quite likely) to the repeal and the President is expected to sign it if it gets to his desk, it is unclear when and how this item will proceed through the Congress and whether it becomes a legislative vehicle for other “fixes” to the health reform act. During the same floor debate, the Senate considered and defeated a Republican amendment to repeal the entire PPACA. This vote got only 47 votes; it needed 60. It is unclear whether the Senate Republican leadership will force the Senate to vote yet again on total repeal at a later date.
The Senate Judiciary Committee held a hearing last week on the constitutionality of PPACA with three witnesses testifying that the act is constitutional and two saying it is not. Rather than settle the issue, the hearing can be seen to have energized each side to rally around its position. It is still going to take Congressional action or (more likely) a Supreme Court opinion to settle this issue.
Connecticut health insurance The Joint Committee on Insurance and Real Estate held a hearing on a number of insurance bills, including legislation that would require the insurance commissioner to hold a symposium for public comment prior to approving any individual or group long-term care policy rate filing. The Connecticut Association of Health Plans (CTAHP) testified in opposition to the bill as being unlikely to be of any practical assistance to the Department of Insurance’s rate review process. Requiring symposiums with every rate increase would tax the limited resources of the DOI and delay the rate review process. The Committee also heard testimony on two bills re-introduced from last session that would prohibit the offset of retirement benefits under disability income policies and prohibit the offset of SSDI dependent benefits under disability income policies. Both bills would increase the cost of disability premiums for employers.
Governor Dannel P. Malloy announced the appointment of Thomas B. Leonardi to serve as the new commissioner of the state Department of Insurance. Currently, Leonardi is Chairman and CEO of Northington Partners, Inc, an insurance specialty venture capital and investment banking firm founded in 1989 and based in Avon, CT. Leonardi was quoted as saying the job “requires a balanced approach, which includes efficient and timely responses to consumer complaints, making sure that products are clearly marketed and suitable for those people to whom they are sold, and, importantly, making sure that insurers in Connecticut are financially sound and able to pay policyholders’ claims as they come due.” He noted that the insurance industry has been a key part of Connecticut’s economy but that insurance jobs have been in decline. “Connecticut’s families need affordable and reliable health insurance coverage and they need good jobs. My goal as Insurance Commissioner will be to do everything within my power to make sure they get both.”
Florida health insurance After the Florida Court ruling regarding the PPACA, Governor Rick Scott announced the state would not pursue any further health care reform activity. Governor Scott stated, “We are not going to spend a lot of time and money with regard to trying to get ready to implement that until we know exactly what is going to happen, I hope and I believe that either it will be declared unconstitutional or it will be repealed.” In addition, the Commissioner of Insurance announced the state would be returning the grant received from HHS for rate review and would no longer be seeking a waiver of the medical loss ratio requirements.
Georgia health insurance Aetna health insurance is awaiting direction from the Governor’s office regarding possible legislation related to health insurance exchanges. We have been informed the health underwriters will be asking legislators to file a bill closely following the NAIC model legislation, but nothing has been filed yet. We are continuing a dialogue with the new Commissioner of the Department of Community Health regarding the Managed Medicaid Program, a potential RFP and expansion of the program.
Michigan health insurance The Republican-controlled 95th General Assembly convened for its two-year legislative session in mid-January. The assembly is scheduled to recess on December 31, 2011, but remaining legislation at that time carries forward to 2012. Newly elected Governor Rick Snyder gave his first state-of-the-state address, identifying his top priority as the state’s $1.6 billion budget deficit for fiscal year 2012. Cuts to state programs are likely, and the governor and legislature will consider swapping the Michigan Business Tax with a flat corporate tax. Industry-related issues include granting the insurance commissioner the statutory authority to implement PPACA, development of an insurance exchange, rate review requirements, individual market reforms, and benefit pooling of public employees.
Texas health insurance The Speaker of the House is expected to appoint committee members this week, and they can look forward to consideration of a number of bills of interest to Aetna health insurance and its customers. These bills include a mandate for emergency or other medical, hospital, or surgical expenses incurred as a result of intoxication or influence of any narcotic; expansion of the autism mandate to all state employees and individual plans; a requirement that health care providers make good faith efforts to collect copayments or deductibles unless the enrollee demonstrates special financial need or hardship; creation of a state-based health insurance exchange; a requirement to elect the Commissioner of Insurance; an HIV-testing mandate, prohibition of abortion through an exchange; and a mammography mandate that also provides for supplemental breast cancer screening if a physician finds the enrollee has dense breast tissue and additional risk factors.
Additionally, the Senate State Affairs Committee released its official interim report this week. Outlining steps already taken by the Employee Retirement System, Teachers Retirement System and Medicaid, the interim report recommends that state-funded health plans continue to pursue evidence-based payment reform as well as monitor developments on accountable care organizations. The report discusses the new Healthy Texas program and reports there are now 17 groups with 31 total enrollees. On the topic of value-based insurance design, the report cautions that the savings achieved accrue over time and short-term pressures may make VBID less feasible than originally hoped. Finally, the report reviews the current landscape for hospital billing and collection practices. The Committee encourages the DOI’s current efforts to collect reimbursement data on this topic and provide consumers with rate information on an aggregated basis.
Wisconsin health insurance Newly elected Governor Scott Walker signed his first bill into law that was part of the “Wisconsin is Open for Business Special Session.” The special session was called to take up a package of pro-business legislation. As part of Walker’s pro-business legislative package, Act 1 eliminates state taxes on Health Savings Accounts (HSAs). Under the new law individuals may claim a nonrefundable income tax credit for 6.5 percent of the allowable amount that they claim as federal tax deductions for their HSA contributions, or claim 6.5 percent of the federal tax−exempt earnings relating to an HSA, or both.
Wednesday, February 2nd, 2011
Without being too specific, President Obama signaled a willingness to consider changes to the Patient Protection and Affordable Care Act (PPACA) during his State of the Union speech last week. The only detail referenced, though, was the proposed elimination of a tax-reporting provision of the law that is unpopular with small businesses because of the new administrative burdens it creates. The provision mandates that small businesses provide a 1099 form to any entity from which they purchase more than $600 in goods and services, starting in 2012. The proposed elimination drew bipartisan applause during the speech. But if both sides of the aisle appear to like that particular revision, it is far less clear that consensus can be reached on any of the other proposals floated so far. A new survey shows that Americans remain divided on the health care law, with the percentage having an unfavorable view of the law growing. But the survey also found that a majority of Americans are opposed to using tactics such as blocking appropriations as a means to slow or undercut implementation of the law.
A pattern seems to be developing on the House side of Congress as Republicans are now flexing their majority muscles via Congressional hearings aimed at questioning the legality and practicality of the health care reform act passed in 2010. It was the Ways & Means Committee’s turn last week as the committee heard from two small business owners who expressed concern about future health insurance costs, their ability to maintain current levels of coverage, and barriers to expanding and hiring new employees. Committee Chairman Dave Camp (R-MI) noted the inherent conflict of imposing new taxes (e.g., on insurers) and expecting cost containment nonetheless. Rep. Richard Neal (D-MA) discussed the importance of the individual health insurance coverage requirement, emphasizing that the success of market reforms is closely linked to bringing everyone into the system. Austan Goolsbee, Chairman of the President’s Council of Economic Advisors, testified regarding the Administration’s expectation that the new law will succeed in holding down costs, and he highlighted the value of the small employer tax credits. On the flip side, Douglas Holtz-Eakin, former CBO Director and President of the American Action Forum, cautioned that the law frontloads new taxes and backloads new spending, thereby creating the illusion of federal deficit reduction. Holtz-Eakin testified that the law will have a detrimental impact on employment, wages, and economic growth.
Another health care hearing last week was held by the House Budget Committee, which focused on the fiscal consequences of the health reform law. Rep. Paul Ryan (R-WI), the committee chairman, emphasized that “health care spending is driving the explosive growth in our spending and our debt.” He criticized the new law as a “centrally planned, bureaucratically run health care system” and expressed interest in building bipartisan support for policies that create incentives to enhance quality, reduce costs, and promote patient satisfaction. Richard Foster, chief actuary of the Centers for Medicare & Medicaid Services (CMS), testified that the health reform law (from 2010 through 2019) will increase national health expenditures by an estimated $311 billion, or 0.9 percent, compared to prior law. He also discussed the impact of Medicare funding cuts and indicated that some of the savings may be “unrealistic.” Foster expressed particular concern about productivity adjustments for hospitals, skilled nursing facilities, and home health agencies, stating that simulations by his office suggest that roughly 15 percent of Part A hospital providers would become unprofitable within 10 years as a result of the productivity adjustments.
Arizona health insurance : While the legislature is focused primarily on the budget and the governor’s request for a Medicaid waiver, bills are beginning to be introduced. Of interest are: a proposed requirement that state employees be offered a wellness program as part of their health benefits; a mental-health parity mandate; a proposed requirement that the sponsor of a benefit mandate review data evaluating the effectiveness of the treatment or service; and a proposed exemption of health-care-sharing ministries from regulatory oversight on the premise that such practices do not constitute the business of insurance.
California health insurance : As the legislature continues to introduce bills in advance of the February 18 deadline, several repeat bills have already been introduced, including mandates on mental health, acupuncture and maternity services. A new mandate has been proposed to require health plans to cover fertility preservation services for cancer patients. The legislation, sponsored by the American Society for Reproductive Medicine, would require coverage of services such as ovarian suppression, freezing of eggs and ovarian tissue, and fertility services after treatment of the cancer.
Illinois health insurance : A formal health insurance exchange bill has not yet been introduced for consideration in the General Assembly. However, the Health Insurance Rate Review Act has been introduced to create an independent, quasi-judicial Health Insurance Rates Review Board to determine whether proposed “insurance rates are reasonable and justified.” The bill sets forth duties and prohibited activities concerning the board, and it would allow the Governor to make all of the appointments. The bill would set requirements and procedures that health insurance carriers must follow in filing current and proposed rates and rate schedules, and it would allow the new board to review and approve/reject all rates and rate schedules filed or used by a carrier. Rate standards, public notice, and hearings are all addressed. The General Assembly is expected to consider quite a few bills and hold hearings on both exchanges and rate review during the current session.
Oklahoma health insurance : Last week the Department of Insurance held a meeting of the Oklahoma State Healthcare Exchange as a first step in the creation of a strategic road map. The Department announced the creation of Key Advisory Work Groups to develop recommendations on exchange-related issues. Each work group and sub-group will be responsible for researching and developing recommendations on language to be used for the development of a strategic plan during the next three months. The key issues of study will include: governance and administrative structure, eligibility process and infrastructure, enrollment, information technology, carrier and plan selection, financial management, and education and marketing. Stakeholders attending the meeting were asked to volunteer to participate on groups for which they have knowledge and leadership experience. The Department hopes to assign volunteers to their preferred committees in the next few weeks so that workgroup meetings can get underway.
Texas health insurance : While publicly affirming his opposition to the federal health care reform bill, Rep. John Zerwas is explaining health insurance exchange legislation he drafted through an op-ed piece published in multiple major newspapers in the state. Zerwas argues that Texas could be forced to cede regulatory control of a significant chunk of its health insurance market to the federal government if it fails to create its own exchange this session. He explained that a desire to avoid such oversight has generated broad support for his bill from groups that include the Texas Association of Business, Texas Hospital Association, Texas Medical Association, Texas Restaurant Association and two Texas health insurance industry groups, as well as Republicans and Democrats in the legislature. Though supportive of efforts by Texas Attorney General Greg Abbott and others to have the health care bill ruled unconstitutional, Zerwas said his connector proposal is about bringing down the cost of coverage by promoting competition and ensuring that Texas families and Texas employers have the right to choose their own coverage. He called passage of the bill good policy, regardless of whether PPACA is repealed, replaced or unfunded. The legislature will debate the bill during the current session, which will end June 1, 2011.
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