After a lengthy discussion with the private sector, including Aetna health insurance, the Department of Labor has issued favorable guidance on government enforcement of certain internal claims and appeals rules as originally authorized under PPACA.  The current grace period, which runs out in July of this year, has now been extended to plan years beginning on or after January 1, 2012 with respect to four key areas of major insurer and employer concern, including the cultural and linguistic notice requirements, disclosure of treatment and diagnostic codes and their descriptions to members, the urgent care turnaround timeframe for initial requests, and the strict compliance standard. Aetna health insurance is concerned that these requirements could be confusing to members and will be costly and burdensome. These requirements are no longer subject to a good faith implementation requirement during the enforcement grace period, and the DOL has indicated that an amendment will be issued to the original 2010 interim final regulations in this area. For the rules on which the enforcement grace period expire in July (i.e., other required notices on statements of adverse determinations), implementation will take effect on plans written or renewed beginning July 1, 2011.

External review standards continue to be discussed. HHS is expected to issue future guidance on whether a state external review process meets the federal standard for external review.  The scope of federal external review process (for self funded, or the federal-operated process applicable to certain insured business) was not addressed by this guidance but may be addressed in the future.

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.

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.

The Affordable Care Act extended to insured group health plans the non-discrimination provisions found in the Internal Revenue Code, which previously had been applicable only to self-insured group plans. Effective for Plan Years which begin after Sept. 23, 2010, non-grandfathered health insurance plans are prohibited from discriminating in favor of highly compensated employees, and a penalty is imposed of $100 per day per participant on plans that discriminate. However, in Notice 2011-1, the IRS has delayed the application of the non-discrimination provisions of the Affordable Care Act until after regulations or other administrative guidance of general applicability have been issued. Notice 2011-1 also indicates that the penalty for failure to comply with the non-discrimination provisions will also not apply until the required regulatory guidance is issued.

The health insurance reform act that was passed in March requires that policies starting now or in the future cannot exclude, limit, or deny medical coverage to children under 19 based on any health problems that developed before seeking medical coverage. Therefore, there will be no more exclusions for children with pre-existing conditions.

Premiums could double for everyone by mid 2011. Your best choice is to buy health insurance now and lock in a low rate for several years. Many carriers allow you to lock in rates for more than a year at a very small cost per month.

Senators Introduce New Legislation to Increase Transparency and Competition in Insurance Industry
Senators Mark Pryor (D-AR), Jay Rockefeller (D-WV) and Barbara Boxer (D-CA) introduced “The Insurance Competition and Transparency Act” (S. 3685) in the Senate Committee on Commerce, Science and Transportation on Aug 2. The legislation would authorize the Federal Trade Commission (FTC) to use its authority under the Federal Trade Commission Act to “investigate and disclose information about practices employed by insurance companies that may reduce competition in the marketplace.”

The bill goes a step further and explicitly states that since many insurance companies have non-profit status, it would eliminate the exemption under the Act for non-profit insurers. S. 3685 is based on an amendment that was filed by Senators Pryor, Rockefeller and Boxer during the Senate’s health reform debate in December 2009.

Senate Passes Child Nutrition Bill
Led by the Senate Agriculture Committee Chairwoman Blanche Lincoln (D-AR) and Ranking Member Saxby Chambliss (R-GA), the Senate passed the “Healthy, Hunger-Free Kids Act of 2010” (S. 3307) by unanimous consent on Aug. 5. The legislation authorizes a $4.5 billion increase over 10 years for school lunches and other nutrition programs. It also gives the Agriculture Department authority to set nutrition standards for foods sold in vending machines and in a la carte lines in schools.

Of the $4.5 billion, the legislation provides $1.2 billion to increase the number of children receiving food, in an effort to meet President Barack Obama’s pledge to end childhood hunger by 2015. The remaining $3.2 billion would be used to improve the quality of school meals. The cost of the legislation is entirely offset. Review the Congressional Budget Office’s budgetary impact report.

Chairman Tom Harkin (D-IA) of the Senate Health, Education, Labor and Pensions Committee commended Agriculture Committee Chairwoman Lincoln for her work on the bill, noting that it passed both the Agriculture Committee and the full Senate without a single dissenting vote.

The House of Representatives still needs to pass its version of the bill, “The Improving Nutrition for America’s Children Act” (H.R. 5504), in order for President Obama to sign the bill before Sept. 30, when many of the programs are set to expire. The House Education and Labor Committee approved the measure on July 15.

The American Academy of Pediatrics also commended the Senate for its action on the legislation and pushed the House to follow the Senate’s lead. “The AAP urges the House to follow the Senate’s swift action on this bill and pass strong child nutrition legislation when Congress reconvenes in September. All children deserve a healthy future, which starts with access to healthy, nutritious meals every day.”  See the American Academy of Pediatrics’ entire statement.

• Temporary retiree reinsurance program.
• National risk pool, small business tax credit.
• $250 rebate for Medicare members who reach the “doughnut hole”.

Health Insurance Reforms:

• No lifetime benefit limits based on dollar amounts.
• Allowed restricted yearly limits on the dollar value of certain benefits.
• No coverage rescissions/cancellations (except for fraud or internal misrepresentation).
• No cost-sharing obligations for preventive services.
• Must have dependent coverage up to age 26.
• New internal and external appeal process.
• No pre-existing condition exclusions for dependent children (under 19 years of age).
• New health plan disclosure and transparency requirements.

2011
Insurance Reforms:

• New uniform coverage documents and standard definitions are developed.
• Must have minimum medical loss ratios.

Medicare Reforms:

• Start of Medicare Advantage cost-sharing limits.
• Medicare beneficiaries who reach the doughnut hole to get a 50% discount on brand name drugs.
• Primary care doctors and general surgeons practicing in underserved areas, such as inner city and rural communities to get a 10% bonus.
• Medicare Advantage plans begin having payments frozen.

Other:

• Yearly fee for brand-name drug manufacturers.
• Start of voluntary long-term care insurance program giving a cash benefit to help those with disabilities stay in their homes or pay nursing home cost: benefit starts 5 years after paying coverage fee.
• Increased funding for community health centers to provide care for many low-income and uninsured people.

2012

• Hospitals, doctors and payers encouraged to join forces in “accountable care organizations”.
• Hospitals with high rates of preventable readmissions facing reduced Medicare payments.

2013

• Individuals making $200,000 a year or couples making $250,000 would have a higher Medicare payroll tax of 2.35% on earned income – up from the current 1.45%. A new 3.8% tax on unearned income, such as dividends and interest, also added.
• Contributions to flexible spending accounts (FSAs) limited to $2,500 a year – indexed for inflation. And the threshold for deducting medical expenses on taxes goes from 7.5% to 10% income.
• Medical device manufacturers have a 2.9% sales tax on medical devices; with exemptions for some, like eyeglasses, contact lens, and hearing aids.
• No more deduction for expenses allocable to Medicare Part D subsidy for employers who maintain prescription drug plans for their Medicare Part D-eligible retirees.

2014
Coverage Mandates & Subsidies:

• New Individual and employer coverage responsibilities.
• New Individual affordability tax credit and expanded small business tax credits.

Health Insurance Exchange & Insurance Reforms:

• State individual and small group health insurance exchanges operational.
• Guaranteed issue, guaranteed renewability, modified community rating and minimum benefit standards (“essential benefits” plan) effective.
• No more lifetime and yearly dollar limits for essential benefits.
• New taxes on health insurers.

2018

• New tax (“Cadillac tax”) on employer-sponsored health plans that offer policies with generous coverage levels.

2020

• Doughnut hole coverage gap in Medicare prescription benefits is fully phased out. Seniors continue to pay the standard 25% of their drug costs until they reach the threshold for Medicare catastrophic coverage.

These are some of the arguments of more than a dozen states that have filed lawsuits. The lawsuits challenge the constitutionality of the reform. Their arguments also include that the government should not force citizens to buy health insurance.

It will be several years before the reforms take effect, and opponents are trying to ensure that they never will.

But significant improvements have already been made and insurers are also moving into compliance ahead of schedule. New rules forbid insurance companies from denying coverage to children, young adults can now stay on their guardians’ policies until age 26, and setting a lifetime limit on benefits will be banned soon.

Let’s not forget the true objective and that is to reduce costs. The Obama administration  must demonstrate that reforms will eventually bring down costs. This is the true test.

Health Care Reform
Health Care Reform Debate Alive and Well: Democrats continue to sell their plan for health care reform to Americans in the face of mixed public opinion, simultaneously battling Republicans pushing for its repeal.

Congressional lawmakers address concerns about the new health care reform legislation, particularly among senior citizens , who make up a disproportionate share of voters in midterm elections. Democrats and the administration are eager to publicize certain provisions of the bill, like retaining young adults on their parents’ plans until age 26, as a way to gain support and to turn voters away from Republicans who called for its repeal.

On Tuesday, President Obama held a nationally televised town hall meeting at a senior center in Maryland to highlight the distribution of $250 rebate checks for senior citizens who hit the so-called “doughnut hole ” in Medicare’s prescription drug coverage. The first round of checks was mailed yesterday and serves as the law’s first monetary benefit.

State Battle Against Health Care Reform Law Continues: On Monday, Virginia Attorney General Ken Cuccinelli disputed the administration’s claim that the state lacks standing to challenge the new federal health care reform law. The lawsuit filed by Cuccinelli in the Eastern District Court cites a Virginia law that exempts state residents from being required to have health care coverage. Sebelius argued that states cannot simply pass a statute that would nullify a federal law. A hearing to determine next steps is set for July 1.

Public Opinion
Americans Want Repeal of Health Care Reform: A recently released Rasmussen report suggests that Americans are strongly in favor of repealing President Obama’s health care reform law. Fifty-eight percent of those polled favor repeal, while 62 percent believe the new legislation will increase the budget deficit. In addition, 57 percent predict health care costs will increase, while 51 percent feel the quality of care will decrease as a result of the new health care reform law.

Looking Ahead
Democrat lawmakers are expecting to pass the jobs bill next week but will need Republican support in order to get the 60 votes needed for passage. One provision of the bill, a 21 percent cut in Medicare payments to doctors, is being delayed as the bill moves through Congress and would ultimately be blocked if the legislation passes.