Insuring Resources Commentary:
I'm posting this article because it illustrates how difficult the rules implementation will be in regard to the much broader and much more controversial PPACA.
It does appear that the rules the Obama administration is attempting to implement might be overreaching the boundaries set by the legislation. I'll quote a specific passage from the article below:
The purpose of the law was to ensure parity in benefits for patients, not “parity in provider reimbursement,” said Justine Handelman, executive director of the Blue Cross and Blue Shield Association.
I've put other key passages in italics below including the opinion of House Democrats who support the Obama admin.'s administrative rules efforts.
What do you think? And what impact do you see this type of struggle having on the implementation of PPACA rules?
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Fight Erupts Over Rules Issued for ‘Mental Health Parity’ Insurance Law
by Robert Pear- NY Times 5/9/10
A huge fight has erupted over rules issued by the Obama administration to enforce a 2008 law that requires equal insurance coverage for the treatment of mental and physical illnesses.
The fight offers a taste of the coming battle over rules to remake the health care system under legislation pushed through Congress by President Obama.
Insurance companies and employer groups are lobbying the White House to delay and rework the rules on “mental health parity.” Insurers and many employers supported the 2008 law, but they say the rules go far beyond the intent of Congress and would cripple their cost-control techniques while raising out-of-pocket costs for some patients.
Advocates for patients generally support the rules, saying they will eliminate many forms of insurance discrimination against people with mental illness. The rules are also supported by the American Medical Association, the American Psychiatric Association and House Democrats, most notably Representative Patrick J. Kennedy of Rhode Island.
The goal of the law is to abolish discriminatory insurance practices frequently applied to coverage for the treatment of mental health disorders and substance abuse. Under the law, insurers cannot set higher co-payments and deductibles or stricter limits on mental health benefits than they set for the treatment of physical illnesses like cancer and diabetes. For decades, such disparities have been common.
Insurers and employers agree that the law prohibits them from setting numerical limits on hospital inpatient days and outpatient visits for mental health services if they do not impose such limits on other types of medical care.
But insurers say the Obama administration went overboard when it tried to regulate “nonquantitative treatment limits.” These include the techniques used by insurers to manage care, the criteria for selection of health care providers and the rates at which they are paid.
The Blue Cross and Blue Shield Association, Aetna and other insurers have urged the federal government to drop this aspect of the rules. The purpose of the law was to ensure parity in benefits for patients, not “parity in provider reimbursement,” said Justine Handelman, executive director of the Blue Cross and Blue Shield Association.
But Carol A. McDaid, a lobbyist for a coalition of mental health advocates, said, “Patients are not getting access to mental health care because many insurers are not paying enough to cover the cost of services.”
This may have three consequences for patients and their families, advocates say. Patients may be unable to find mental health experts in their health plan’s network of providers. If they go outside the network, they typically pay more. And if they cannot afford it, they may not receive treatment at all.
The American Psychiatric Association said that nonquantitative treatment limits, though less visible than limits on the number of doctor visits or hospital days, could be more insidious.
Dr. James H. Scully Jr., chief executive of the association, said some insurers had tried to “circumvent the law” by “imposing new requirements for prior authorization and the submission of treatment plans for mental health services where there were no comparable requirements on the medical-surgical side.”
Insurers strenuously object to one provision of the rules that requires them to maintain a single deductible for all medical and mental health services combined. This is a significant departure from the industry’s current practice of separate deductibles.
As a result of the change, insurers say, many mental health patients will face higher out-of-pocket costs because the combined deductible will almost surely be higher than the current one for mental health services alone.
But in a letter to the administration last week, leading House Democrats said Mr. Obama was right to prohibit separate deductibles. The law, they said, was adopted to end such inappropriate distinctions between medical and mental health care services.
A number of companies like Aetna, Magellan Health Services and ValueOptions specialize in managing mental health benefits.
In issuing the new rules, the Obama administration praised the work of such companies, saying they increased the use of mental health care while holding down costs.
But Pamela B. Greenberg, president of the Association for Behavioral Health and Wellness, which represents these companies, said the new rules would “hamstring” their ability to use the tools that have proved effective in managing mental health benefits.
In a suit over the rules, Magellan and other companies said the concept of nonquantitative limits was “boundless and ill defined” and would reach virtually every policy and procedure used to manage mental health benefits.
One premise of the law is that mental illnesses often have a biological basis and can be treated as effectively as many physical ailments. But insurers say it is impossible to use the same techniques in managing the treatment of colon cancer and schizophrenia, or heart failure and major depression.
Showing posts with label implementation issues. Show all posts
Showing posts with label implementation issues. Show all posts
Monday, May 10, 2010
Thursday, May 6, 2010
Haggling Over the Implementation Rules Begins
Insuring Resources Commentary:
An overused cliche is "the devil is in the details". Well many believe this health care legislatiobn is the devil, so you can imagine the fight over many of these details. As the federal HHS moves toward the implementation of the first health care rules the debate may not be as public, but it certainly will be contentious within the states themselves and between several states and HHS. On that last note, several states have infomred HHS that they will not establish their own High Risk Pool but instead let the feds do it. About 35 states already have high risk pools and the PPACA ,mandates their creation in the remaining states.... but, those states can allow the federal gov't to do it in their stead.
The article below concerns the PPACA's requirment regarding medical loss ratio's. This is "insurance-speak" for the percentage of premiums they spend on medical expenses. Defining what a “medical expense” is, it turns out, is crucial.
------ ------- ------- -------
It’s a simple question, but one with a complex answer: In health insurance, what counts as a medical expense?
Claims for visits to physicians clearly fit the bill; likewise for surgeries and hospital stays. But what about a 24-hour nursing hotline? Does a flier in the mail that encourages subscribers to reduce sodium intake count? Or a new computer system to better manage care for multiple chronic conditions?
This question is far from rhetorical. Under health care reform, insurers will be required to maintain certain “medical loss ratios,” insurance-speak for the percentage of premiums they spend on medical expenses. Defining what a “medical expense” is, it turns out, is crucial.
Insurers will have to spend at least 85 percent of subscriber premiums on medical expenses in small- and large-group markets and at least 80 percent in individual policies.
Insurers will have to report their medical loss ratios to the Department of Health and Human Services by the end of each year. Those who do not meet the requirements will face penalties.
The new law is meant as consumer protection to ensure that the vast majority of subscriber premiums go toward medical care rather than administrative costs or company profits.
But it has also forced a complicated, drawn-out debate among insurers, legislators and regulators over how best to define medical loss ratios.
Discussions and research on the subject began well before health care reform became law and will surely continue past June 1, the deadline for the first draft of medical loss ratio regulations.
The debate highlights how the Affordable Care Act, despite its breadth and length, still leaves much space for policy and political maneuvering.
Until now, insurer spending on medical expenses has gone largely unregulated. Only 13states set minimum medical loss ratios in the individual market, and even fewer police the group market.
The National Association of Insurance Commissioners recommends setting minimum loss ratios between 50 percent and 60 percent in the individual market, depending on characteristics of different policies.
States, though, have taken great liberty with these recommendations. North Dakota, for example, requires policies for individuals to reflect a minimum of 55 percent on medical expenses. In New Jersey, insurers must meet an 80 percent target.
A recent Senate report found that of six major insurance companies surveyed — Aetna, Cigna, Coventry, Humana, UnitedHealth and WellPoint — only Cigna would have met the proposed individual market target in 2009. The number, however, jumps to four in the large-group market.
Legislators are worried that insurers will reclassify administrative costs as medical to inflate their medical loss ratio in order to comply with the new law.
The Senate report singled out the insurance company WellPoint as already engaging in such behavior, shifting costs enough to raise its medical loss ratio 1.7 percent.
“This ‘accounting reclassification’ means that the company has converted more than a half-billion dollars of this year’s administrative expenses into medical expenses,” the report concludes.
WellPoint does not dispute reclassifying some previously administrative costs. But it says the costs reclassified, which included a nurse hotline and expenditures on a clinical health policy, fell well within the bounds of the proposed health care regulations, which allow “activities that improve health quality” to be counted as medical.
“We reclassified costs that are incurred to improve our members’ health and medical outcomes, and this is appropriate accounting treatment,” said WellPoint spokeswoman Kristin Binns. “We did not reclassify costs for network contracting, claims or customer service. In fact, we selected benefits that have been discussed as being part of the Medical Costs Ratio calculation in the various federal health reform proposals in an effort to be consistent with them.”
Insurance companies will help develop and comply with new medical loss ratio regulations. Robert Zirkelbach, communications director of industry group America’s Health Insurance Plans, says they “support transparency” when it comes to explaining how premiums are spent. But he also describes the new numbers as “arbitrary” and not based on any current industry practices.
The process highlights tensions between insurance companies and government officials tasked with regulating them.
A Senate aide familiar with the issue recalls “enormous pushback” from some insurers to requests for medical loss ratio information. “It was striking,” the aide said, “given how much they relied on that data for their analysts.”
The National Association of Insurance Commissioners, a consortium of state-level officials, is supposed to play middleman between legislators and insurers.
In the Affordable Care Act, the Department of Health and Human Services designated NAIC as the agency that would draft definitions and regulations of the medical loss ratio provisions.
NAIC currently has two task forces at work on the issue, both holding weekly conference calls and circulating numerous proposals and calls for input.
One recent phone call, attended by POLITICO, attracted insurance commissioners, consumer advocates and insurers. All discussed the best way to calculate a medical loss ratio.
Public comment on the medical loss ratio provision closes May 14 and, by the end of the month, NAIC will submit a first draft of guidelines to the Department of Health and Human Services.
“Ultimately, our process is pretty objective,” said Kim Holland, NAIC secretary and treasurer, who is Oklahoma’s insurance commissioner. At the end of the day, she says, complicated areas of insurance policy are regulated in the same way as simpler provisions: “We’ll develop a standard, require insurers to meet it, and, if they don’t, they will get sanctioned.”
Read more: http://www.politico.com/news/stories/0510/36703_Page2.html#ixzz0nARF1RBu
An overused cliche is "the devil is in the details". Well many believe this health care legislatiobn is the devil, so you can imagine the fight over many of these details. As the federal HHS moves toward the implementation of the first health care rules the debate may not be as public, but it certainly will be contentious within the states themselves and between several states and HHS. On that last note, several states have infomred HHS that they will not establish their own High Risk Pool but instead let the feds do it. About 35 states already have high risk pools and the PPACA ,mandates their creation in the remaining states.... but, those states can allow the federal gov't to do it in their stead.
The article below concerns the PPACA's requirment regarding medical loss ratio's. This is "insurance-speak" for the percentage of premiums they spend on medical expenses. Defining what a “medical expense” is, it turns out, is crucial.
------ ------- ------- -------
It’s a simple question, but one with a complex answer: In health insurance, what counts as a medical expense?
Claims for visits to physicians clearly fit the bill; likewise for surgeries and hospital stays. But what about a 24-hour nursing hotline? Does a flier in the mail that encourages subscribers to reduce sodium intake count? Or a new computer system to better manage care for multiple chronic conditions?
This question is far from rhetorical. Under health care reform, insurers will be required to maintain certain “medical loss ratios,” insurance-speak for the percentage of premiums they spend on medical expenses. Defining what a “medical expense” is, it turns out, is crucial.
Insurers will have to spend at least 85 percent of subscriber premiums on medical expenses in small- and large-group markets and at least 80 percent in individual policies.
Insurers will have to report their medical loss ratios to the Department of Health and Human Services by the end of each year. Those who do not meet the requirements will face penalties.
The new law is meant as consumer protection to ensure that the vast majority of subscriber premiums go toward medical care rather than administrative costs or company profits.
But it has also forced a complicated, drawn-out debate among insurers, legislators and regulators over how best to define medical loss ratios.
Discussions and research on the subject began well before health care reform became law and will surely continue past June 1, the deadline for the first draft of medical loss ratio regulations.
The debate highlights how the Affordable Care Act, despite its breadth and length, still leaves much space for policy and political maneuvering.
Until now, insurer spending on medical expenses has gone largely unregulated. Only 13states set minimum medical loss ratios in the individual market, and even fewer police the group market.
The National Association of Insurance Commissioners recommends setting minimum loss ratios between 50 percent and 60 percent in the individual market, depending on characteristics of different policies.
States, though, have taken great liberty with these recommendations. North Dakota, for example, requires policies for individuals to reflect a minimum of 55 percent on medical expenses. In New Jersey, insurers must meet an 80 percent target.
A recent Senate report found that of six major insurance companies surveyed — Aetna, Cigna, Coventry, Humana, UnitedHealth and WellPoint — only Cigna would have met the proposed individual market target in 2009. The number, however, jumps to four in the large-group market.
Legislators are worried that insurers will reclassify administrative costs as medical to inflate their medical loss ratio in order to comply with the new law.
The Senate report singled out the insurance company WellPoint as already engaging in such behavior, shifting costs enough to raise its medical loss ratio 1.7 percent.
“This ‘accounting reclassification’ means that the company has converted more than a half-billion dollars of this year’s administrative expenses into medical expenses,” the report concludes.
WellPoint does not dispute reclassifying some previously administrative costs. But it says the costs reclassified, which included a nurse hotline and expenditures on a clinical health policy, fell well within the bounds of the proposed health care regulations, which allow “activities that improve health quality” to be counted as medical.
“We reclassified costs that are incurred to improve our members’ health and medical outcomes, and this is appropriate accounting treatment,” said WellPoint spokeswoman Kristin Binns. “We did not reclassify costs for network contracting, claims or customer service. In fact, we selected benefits that have been discussed as being part of the Medical Costs Ratio calculation in the various federal health reform proposals in an effort to be consistent with them.”
Insurance companies will help develop and comply with new medical loss ratio regulations. Robert Zirkelbach, communications director of industry group America’s Health Insurance Plans, says they “support transparency” when it comes to explaining how premiums are spent. But he also describes the new numbers as “arbitrary” and not based on any current industry practices.
The process highlights tensions between insurance companies and government officials tasked with regulating them.
A Senate aide familiar with the issue recalls “enormous pushback” from some insurers to requests for medical loss ratio information. “It was striking,” the aide said, “given how much they relied on that data for their analysts.”
The National Association of Insurance Commissioners, a consortium of state-level officials, is supposed to play middleman between legislators and insurers.
In the Affordable Care Act, the Department of Health and Human Services designated NAIC as the agency that would draft definitions and regulations of the medical loss ratio provisions.
NAIC currently has two task forces at work on the issue, both holding weekly conference calls and circulating numerous proposals and calls for input.
One recent phone call, attended by POLITICO, attracted insurance commissioners, consumer advocates and insurers. All discussed the best way to calculate a medical loss ratio.
Public comment on the medical loss ratio provision closes May 14 and, by the end of the month, NAIC will submit a first draft of guidelines to the Department of Health and Human Services.
“Ultimately, our process is pretty objective,” said Kim Holland, NAIC secretary and treasurer, who is Oklahoma’s insurance commissioner. At the end of the day, she says, complicated areas of insurance policy are regulated in the same way as simpler provisions: “We’ll develop a standard, require insurers to meet it, and, if they don’t, they will get sanctioned.”
Read more: http://www.politico.com/news/stories/0510/36703_Page2.html#ixzz0nARF1RBu
Friday, April 30, 2010
Examples of Insurers Stepping Up, Implementing Reform Measures Early
Insuring Resources Commentary:
The vast majority of insurers act with integrity and follow the law appreopriately. This article illusatrates how some are implementing reform rules early, it can only help them in the race to insure the currently uninsured. I highlight some key aspects below....
----- ----- ----- ----
Health insurers adopt some new rules early-
By David S. Hilzenrath
Washington Post Staff Writer
Friday, April 30, 2010
After being criticized as obstructionists during the long health-care debate, insurance companies now are implementing some popular provisions even sooner than the law demands.
Major insurers said this week that they will soon end the practice known as rescission, which involves going back and scrutinizing the applications of people who develop costly illnesses and dropping their coverage based on even minor or innocent misstatements.
In addition, dozens of health plans will allow dependents up to age 26 to stay on their parents' plans by this spring, months ahead of the September deadline -- a step that will be especially helpful to many families with students graduating from college.
Those promises follow an industry pledge not to exploit a potential loophole in a requirement that insurers cover children with preexisting conditions.
"Our focus right now is on implementing these reforms in a way that's going to minimize disruption and provide greater peace of mind for the more than 200 million people we serve," Robert Zirkelbach, a spokesman for the industry group America's Health Insurance Plans, said Thursday.
In each case, the industry's concessions were requested by the Obama administration or members of Congress. By quickly complying, insurers could repair their battered image and build goodwill with the administration, which drove the legislation to passage this year largely by going on the offensive against insurers.
For all concerned, the health-care battle is not yet over. Government officials must now translate the new legislation into more detailed regulations, and the industry's fortunes could rise or fall based on the eventual fine print. Meanwhile, candidates for House and Senate seats will be debating the legislation's merits.
The administration and congressional Democrats could benefit politically if voters see favorable results from the new law before they go to the polls in November.
Many Americans will find themselves unable to take advantage of the insurers' offer to extend family coverage for young adults this spring. The federal government told its workers last week that it is legally prohibited from granting that option until Jan. 1, 2011.
"Though we are eager to provide coverage to young adults prior to Jan. 1, the current law governing the FEHB [Federal Employees Health Benefits] Program specifically prohibits us from doing so," the Office of Personnel Management said. "We are working diligently with the Congress to address this matter."
Families covered by private-sector employers may have to wait, too. At big companies, it is often the employer rather than the insurer calling the shots; many large employers pay medical claims out of their own coffers and simply enlist insurers to administer the coverage.
Officials at two organizations for large employers, the National Business Group on Health and the ERISA Industry Committee, said Thursday that they did not know of any member companies offering to expand coverage for young adults ahead of schedule.
"Every employer I know is still trying to figure out what to do with this provision," said Steven Wojcik, vice president for public policy at the National Business Group on Health. "They're waiting, not sure how to react."
Employers are reluctant to make a short-term change before they know the long-term rules, said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, which takes its name from a federal law.
Employers are trying to figure out how to implement the provision, not just when. Questions include whether they will charge families additional premiums to let young adults stay on or rejoin their health plans. The law does not prohibit them from doing so.
The Internal Revenue Service removed one impediment for employers this week when it clarified that employees can take advantage of expanded coverage for dependents on a tax-free basis.
Spokesmen for some insurance companies interviewed Thursday said they did not know details of how their coverage for young adults will work, including whether it will involve extra premiums and whether the dependents' medical status will affect premium costs.
The White House posted a list of dozens of insurers that will offer the early coverage, including WellPoint, Cigna, Aetna, United HealthCare, Humana, Kaiser Permanente, and BlueCross and BlueShield plans. The offer could spare insurers the headaches of dropping people this spring only to restore them a few months later. The fact that young people tend to be healthier could mitigate costs.
WellPoint said earlier this month that, beginning June 1, its health plans will automatically keep dependents up to age 26 on their parents' policies in the individual market and in group health plans where the employers buy insurance. Employers that use WellPoint in a strictly administrative role will have the option of not offering extended coverage, WellPoint said.
Secretary of Health and Human Services Kathleen Sebelius asked WellPoint to end rescissions after a news report accused it of targeting women with breast cancer. WellPoint disputed the article but agreed to the request.
Congressional Democrats asked other companies to do the same.
Karen Ignagni, president of America's Health Insurance Plans, replied Wednesday that her group is committed to implementing the new standard for rescissions in May. Insurers are still permitted to revoke policies if the applicant made a fraudulent or intentional misrepresentation.
"It's heartening to see that the insurance companies who employed these terrible practices -- and fought reform -- are coming around doing the right thing by instituting the ban right away," Nancy-Ann DeParle, director of the White House Office of Health Reform, said in a statement. "We'll be watching closely and holding them to their word."
The vast majority of insurers act with integrity and follow the law appreopriately. This article illusatrates how some are implementing reform rules early, it can only help them in the race to insure the currently uninsured. I highlight some key aspects below....
----- ----- ----- ----
Health insurers adopt some new rules early-
By David S. Hilzenrath
Washington Post Staff Writer
Friday, April 30, 2010
After being criticized as obstructionists during the long health-care debate, insurance companies now are implementing some popular provisions even sooner than the law demands.
Major insurers said this week that they will soon end the practice known as rescission, which involves going back and scrutinizing the applications of people who develop costly illnesses and dropping their coverage based on even minor or innocent misstatements.
In addition, dozens of health plans will allow dependents up to age 26 to stay on their parents' plans by this spring, months ahead of the September deadline -- a step that will be especially helpful to many families with students graduating from college.
Those promises follow an industry pledge not to exploit a potential loophole in a requirement that insurers cover children with preexisting conditions.
"Our focus right now is on implementing these reforms in a way that's going to minimize disruption and provide greater peace of mind for the more than 200 million people we serve," Robert Zirkelbach, a spokesman for the industry group America's Health Insurance Plans, said Thursday.
In each case, the industry's concessions were requested by the Obama administration or members of Congress. By quickly complying, insurers could repair their battered image and build goodwill with the administration, which drove the legislation to passage this year largely by going on the offensive against insurers.
For all concerned, the health-care battle is not yet over. Government officials must now translate the new legislation into more detailed regulations, and the industry's fortunes could rise or fall based on the eventual fine print. Meanwhile, candidates for House and Senate seats will be debating the legislation's merits.
The administration and congressional Democrats could benefit politically if voters see favorable results from the new law before they go to the polls in November.
Many Americans will find themselves unable to take advantage of the insurers' offer to extend family coverage for young adults this spring. The federal government told its workers last week that it is legally prohibited from granting that option until Jan. 1, 2011.
"Though we are eager to provide coverage to young adults prior to Jan. 1, the current law governing the FEHB [Federal Employees Health Benefits] Program specifically prohibits us from doing so," the Office of Personnel Management said. "We are working diligently with the Congress to address this matter."
Families covered by private-sector employers may have to wait, too. At big companies, it is often the employer rather than the insurer calling the shots; many large employers pay medical claims out of their own coffers and simply enlist insurers to administer the coverage.
Officials at two organizations for large employers, the National Business Group on Health and the ERISA Industry Committee, said Thursday that they did not know of any member companies offering to expand coverage for young adults ahead of schedule.
"Every employer I know is still trying to figure out what to do with this provision," said Steven Wojcik, vice president for public policy at the National Business Group on Health. "They're waiting, not sure how to react."
Employers are reluctant to make a short-term change before they know the long-term rules, said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, which takes its name from a federal law.
Employers are trying to figure out how to implement the provision, not just when. Questions include whether they will charge families additional premiums to let young adults stay on or rejoin their health plans. The law does not prohibit them from doing so.
The Internal Revenue Service removed one impediment for employers this week when it clarified that employees can take advantage of expanded coverage for dependents on a tax-free basis.
Spokesmen for some insurance companies interviewed Thursday said they did not know details of how their coverage for young adults will work, including whether it will involve extra premiums and whether the dependents' medical status will affect premium costs.
The White House posted a list of dozens of insurers that will offer the early coverage, including WellPoint, Cigna, Aetna, United HealthCare, Humana, Kaiser Permanente, and BlueCross and BlueShield plans. The offer could spare insurers the headaches of dropping people this spring only to restore them a few months later. The fact that young people tend to be healthier could mitigate costs.
WellPoint said earlier this month that, beginning June 1, its health plans will automatically keep dependents up to age 26 on their parents' policies in the individual market and in group health plans where the employers buy insurance. Employers that use WellPoint in a strictly administrative role will have the option of not offering extended coverage, WellPoint said.
Secretary of Health and Human Services Kathleen Sebelius asked WellPoint to end rescissions after a news report accused it of targeting women with breast cancer. WellPoint disputed the article but agreed to the request.
Congressional Democrats asked other companies to do the same.
Karen Ignagni, president of America's Health Insurance Plans, replied Wednesday that her group is committed to implementing the new standard for rescissions in May. Insurers are still permitted to revoke policies if the applicant made a fraudulent or intentional misrepresentation.
"It's heartening to see that the insurance companies who employed these terrible practices -- and fought reform -- are coming around doing the right thing by instituting the ban right away," Nancy-Ann DeParle, director of the White House Office of Health Reform, said in a statement. "We'll be watching closely and holding them to their word."
Tuesday, April 27, 2010
Implementation Discussion
Insuring Resources Commentary:
As the Dept of Health and Human Services begins the process of developing the administrative rules to implement the PPACA the industry and advocates are gearing up to influence this process.
The article below discusses the implementation of the Medicaid expansion, the temporary high risk pools, the fines, and the numerous pilot programs that the PPACA authorizes. The federal HHS will also need to set up the rules for the COOP programs (which the articel below fails to mention). That program authorizes the creation of Consumer Operated and Oriented Plans (COOPs) ---- these are non-profit health plans that can be created in states using federal grant funds. These grants will allow the creation of the COOPs by 71/1/2013.
WISCONSIN:
In Wisconsin I'll be heavily involved as the Commissioner of Insurance has stated that his Health Insurance Advisory council (which I am appointed to) will play a large role in advising OCI on implementation of its rules.
For instance, the PPACA requires each state to establish an Ombudsman office to aide consumers in navigating the State Health Insurance Exchanges. The OCI will also develop the rules regarding the implementation of both state-based Exchanges. The Small business Health Options Program (SHOP) is a state- based exchange for small businesses. In addition there will be a Health Insurance Exchange for individuals to gain access to insurance if they don't have employer-based coverage.
------- ------- --------- ---------
Next phase in health care war: Applying the law
Cabinet braces for lobbying blitz by industry advocates
April 27, 2010
By John Fritze
USA TODAY
WASHINGTON — The debate in Congress over President Obama's health care law is done. The battle over how to carry out the law is just getting started.
Dozens of special-interest groups that helped shape the 10-year, $938 billion health care measure over the past year — from insurance companies to patient advocates — are gearing up for a second wave of lobbying as the Obama administration prepares to implement the law.
The U.S. Chamber of Commerce, which opposed the measure in Congress, is fighting to protect businesses that might be required to provide insurance, for instance. Drugmakers who supported the bill are monitoring how much they may have to discount prices.
Watchdog groups say patients can get lost in the lobbying blitz. "Industry dominates this process even more than they dominate the legislative process," said Robert Weissman of Public Citizen. "It's more of an inside game."
Congress gave sweeping power to federal agencies, especially the Department of Health and Human Services, to fill in gaps lawmakers left in the 906-page legislation — an effort that will take years. The law refers more than 1,000 times to Cabinet secretaries who will make decisions on how to carry out the law.
For example, the law requires insurance companies to spend 80% of premiums on medical claims, as opposed to administrative costs, by 2011. But it directs the health department to decide whether gray-area expenses, such as health-and-wellness programs offered by insurers, count as care or overhead.
Karen Ignagni, president of the industry group America's Health Insurance Plans, said her staff is "already geared up" and is providing data and suggestions on that and other issues to the department. But, she said, agencies implementing the law will weigh many arguments before making a decision.
"I don't think regulators are influenced by the classic sense of lobbying," she said. "There's a level playing field."
Unlike the legislative process, much of the battle over regulations takes place behind the scenes, Weissman said. The public may comment on proposed decisions, but many groups try to gain access to decision-makers early on, he said.
The health department declined to discuss industry attempts to influence implementation, but Secretary Kathleen Sebelius said in a statement that the department is "working closely with states, insurers, providers and other partners. … We want to hear from everyone."
Other looming battles over the new law include: •The health department must create high-risk insurance plans to provide temporary coverage for people with pre-existing conditions. Private insurers are watching to make sure those plans don't affect their bottom line, said Mark Pauly, a University of Pennsylvania health economist.
•Firms with more than 50 full-time employees would face fines in 2014 if they don't provide health insurance to workers. The Treasury Department must determine who qualifies as a full-time employee, a decision that will affect businesses on the edge of the 50-worker threshold. "We really have to make our case early," said Randel Johnson with the U.S. Chamber of Commerce.
•Health department officials must develop a review process to judge dozens of pilot programs created in the law — and decide whether they should be expanded. The National Partnership for Women & Families, a patient-advocacy group, wants the process to take quality of care into account. "It can't just be about saving money," the group's president, Debra Ness, said. "We also want to make sure they deliver better care."
Health care interests spent heavily on lobbyists as the legislation worked its way through Congress. In all, health industries spent $652 million in 2009, up 14% from 2008, according to the non-partisan CQ Moneyline.
Last year, the Obama administration passed a sweeping series of rules requiring federal agencies to disclose contacts their officials had with lobbyists about the economic stimulus. Similar rules do not exist for the health care law.
"We all want to … meet with folks to describe some of the issues and concerns we think need to be navigated," said Ron Pollack of Families USA, which supports the law. "I have no doubt that industry and others are going to be doing the same thing."
As the Dept of Health and Human Services begins the process of developing the administrative rules to implement the PPACA the industry and advocates are gearing up to influence this process.
The article below discusses the implementation of the Medicaid expansion, the temporary high risk pools, the fines, and the numerous pilot programs that the PPACA authorizes. The federal HHS will also need to set up the rules for the COOP programs (which the articel below fails to mention). That program authorizes the creation of Consumer Operated and Oriented Plans (COOPs) ---- these are non-profit health plans that can be created in states using federal grant funds. These grants will allow the creation of the COOPs by 71/1/2013.
WISCONSIN:
In Wisconsin I'll be heavily involved as the Commissioner of Insurance has stated that his Health Insurance Advisory council (which I am appointed to) will play a large role in advising OCI on implementation of its rules.
For instance, the PPACA requires each state to establish an Ombudsman office to aide consumers in navigating the State Health Insurance Exchanges. The OCI will also develop the rules regarding the implementation of both state-based Exchanges. The Small business Health Options Program (SHOP) is a state- based exchange for small businesses. In addition there will be a Health Insurance Exchange for individuals to gain access to insurance if they don't have employer-based coverage.
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Next phase in health care war: Applying the law
Cabinet braces for lobbying blitz by industry advocates
April 27, 2010
By John Fritze
USA TODAY
WASHINGTON — The debate in Congress over President Obama's health care law is done. The battle over how to carry out the law is just getting started.
Dozens of special-interest groups that helped shape the 10-year, $938 billion health care measure over the past year — from insurance companies to patient advocates — are gearing up for a second wave of lobbying as the Obama administration prepares to implement the law.
The U.S. Chamber of Commerce, which opposed the measure in Congress, is fighting to protect businesses that might be required to provide insurance, for instance. Drugmakers who supported the bill are monitoring how much they may have to discount prices.
Watchdog groups say patients can get lost in the lobbying blitz. "Industry dominates this process even more than they dominate the legislative process," said Robert Weissman of Public Citizen. "It's more of an inside game."
Congress gave sweeping power to federal agencies, especially the Department of Health and Human Services, to fill in gaps lawmakers left in the 906-page legislation — an effort that will take years. The law refers more than 1,000 times to Cabinet secretaries who will make decisions on how to carry out the law.
For example, the law requires insurance companies to spend 80% of premiums on medical claims, as opposed to administrative costs, by 2011. But it directs the health department to decide whether gray-area expenses, such as health-and-wellness programs offered by insurers, count as care or overhead.
Karen Ignagni, president of the industry group America's Health Insurance Plans, said her staff is "already geared up" and is providing data and suggestions on that and other issues to the department. But, she said, agencies implementing the law will weigh many arguments before making a decision.
"I don't think regulators are influenced by the classic sense of lobbying," she said. "There's a level playing field."
Unlike the legislative process, much of the battle over regulations takes place behind the scenes, Weissman said. The public may comment on proposed decisions, but many groups try to gain access to decision-makers early on, he said.
The health department declined to discuss industry attempts to influence implementation, but Secretary Kathleen Sebelius said in a statement that the department is "working closely with states, insurers, providers and other partners. … We want to hear from everyone."
Other looming battles over the new law include: •The health department must create high-risk insurance plans to provide temporary coverage for people with pre-existing conditions. Private insurers are watching to make sure those plans don't affect their bottom line, said Mark Pauly, a University of Pennsylvania health economist.
•Firms with more than 50 full-time employees would face fines in 2014 if they don't provide health insurance to workers. The Treasury Department must determine who qualifies as a full-time employee, a decision that will affect businesses on the edge of the 50-worker threshold. "We really have to make our case early," said Randel Johnson with the U.S. Chamber of Commerce.
•Health department officials must develop a review process to judge dozens of pilot programs created in the law — and decide whether they should be expanded. The National Partnership for Women & Families, a patient-advocacy group, wants the process to take quality of care into account. "It can't just be about saving money," the group's president, Debra Ness, said. "We also want to make sure they deliver better care."
Health care interests spent heavily on lobbyists as the legislation worked its way through Congress. In all, health industries spent $652 million in 2009, up 14% from 2008, according to the non-partisan CQ Moneyline.
Last year, the Obama administration passed a sweeping series of rules requiring federal agencies to disclose contacts their officials had with lobbyists about the economic stimulus. Similar rules do not exist for the health care law.
"We all want to … meet with folks to describe some of the issues and concerns we think need to be navigated," said Ron Pollack of Families USA, which supports the law. "I have no doubt that industry and others are going to be doing the same thing."
Monday, April 19, 2010
Health Insurers Analyzing Reform's Impact
Insuring Resources Commentary:
I've highlighted a couple of key points in the article below.
1. It is assumed that insurers will take advantage of the opportunity to "cherry-pick" customers while they still can--- in other words avoid covering the sickest individuals until they are mandated to do so.
2. Medicaid expansion will be a boon for insurers as states will seek to contract with managed care insurers to reduce costs per individual as the coverage expands to include many more individuals. This makes perfect sense and is an obvious way to improve health outcomes for individuals on Medicaid as managed care does generally reduce costs and improve care. And yet again, Wisconsin is way ahead on this as the state has contracted with managed care HMOs for years in its Medicaid program.
3. The third item is where the Feds need to ensure that the rules are tight on what insurers can do related to the risk-adjustment rules moving forward. The tighter the rules, the more effective this reform package will be in the long-run at controlling costs.
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Health insurers weighing options to get ahead of reform
By David S. Hilzenrath
Washington Post Staff Writer
Sunday, April 18, 2010
The idea was simple enough: Make sure that health insurers spend the vast majority of their revenue on patient care, instead of using it for things such as advertising, profits and executive pay.
To that end, the new health-care law says an insurer must give money back to consumers if it devotes less than 80 percent of premiums to paying medical claims and improving care. For insurers serving large groups, the target is 85 percent.
But even before the health-care overhaul was signed into law last month, one of the nation's largest insurance companies reclassified certain expenses in a way that increased its so-called medical-loss ratio. In January, WellPoint began including under medical benefits such costs as nurse hotlines, "medical management," and "clinical health policy," a WellPoint executive said in a March briefing for investors.
Redefining medical spending to make the requirement more attainable is just one way insurers might adapt to the new legislation.
Weeks after the law was enacted, insurers are still scouring it to figure out precisely what it allows. Many of the details won't be known until government officials translate the legislative language into specific regulations, and some of the tightest restrictions won't take effect for years. In the meantime, health insurers face tactical and strategic choices that could alter their short-term fortunes. Should they boost premiums before rates become subject to greater oversight? Should they step up efforts to avoid people with preexisting conditions before they are required to accept even the sickest applicants?
Some analysts say the new law gives insurers powerful motivation to try to increase profits and reserves while they still can.
"They will absolutely try to cherry-pick as much as they can get away with between now and when the legislation is fully implemented," said Wendell Potter, a former spokesman for big insurer Cigna.
Insurers might conclude that they should "get our prices up while we can because after the revolution we're not going to be able to," said Mark V. Pauly, a health-care economist at the Wharton School at the University of Pennsylvania.
But for all the incentives to get more aggressive in the short term, there are also counter-incentives, and it is hard to tell how they balance out.
From an economic standpoint, raising rates could cause insurers to lose business, especially in the more competitive markets.
From a regulatory standpoint, charging excessive premiums during the next few years could give authorities grounds to bar insurers from new marketplaces known as exchanges when they open for business in 2014.
From a political standpoint, pushing limits while officials are still writing the rules could boomerang for insurers. WellPoint's plan to raise rates in California by 39 percent fueled arguments for reform earlier this year and helped drive the legislation to final passage.
Some of the openings for insurers are plain to see. For example, although the law bans annual and lifetime limits on the dollar value of benefits, it does not ban limits measured in other terms. That leaves the door open to limits based on, say, the number of courses of treatment for an expensive problem such as infertility.
The coming expansion of Medicaid could trigger a land rush by private insurers seeking to manage care for Medicaid beneficiaries. In a report issued Thursday, big insurer UnitedHealth Group said state Medicaid programs serving low-income Americans could save billions of dollars by moving recipients into managed care.
(Private insurers have made the same argument about Medicare in years past, but the government has concluded that it was overpaying private health plans to care for Medicare beneficiaries. It cut such reimbursements in the recent legislation.)
Other issues are more complex.
Turning away the seriously ill while insurers still can might seem like an obvious choice. To be sure, the fact that insurance companies will be prohibited from rescinding policies once people get sick gives them cause to be more selective in the first place, said industry analyst Carl McDonald of Oppenheimer & Co.
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But in the not-too-distant future, some insurers will be subject to a process called risk-adjustment, which will attempt to neutralize the incentive to cherry-pick. Under risk-adjustment, health plans that attract disproportionately healthy populations will be penalized, and plans that attract disproportionately sick populations will be awarded additional payments. Depending on how the risk-adjustment rules are written, insurers could lock in a lasting advantage by cherry-picking more vigorously now, or they could see that benefit erased, said Jerry Flanagan of the advocacy group Consumer Watchdog.
Similarly, the requirement that insurers devote 80 or 85 percent of premiums to medical claims and related expenses creates conflicting incentives. At its simplest, it encourages insurers to cut overhead expenses. In addition, it might give insurers pause before raising copayments and deductibles, turning away applicants with preexisting conditions, or squeezing payments to doctors and hospitals, because each of those steps would reduce medical spending and make it harder for insurers to meet the required ratios.
On the other hand, the target ratios might give them added incentive to raise premiums. By doing so, they could keep overhead and profit fixed, even as those items decline as a percentage of the premium dollar.
WellPoint spokesman Jon Mills said in an e-mail that it is appropriate for his company to reclassify expenses related to the management of members' health.
In effect, WellPoint turned more than $500 million of administrative items into medical expenses, the Senate Commerce Committee's Democratic staff said in report Thursday.
Scott Serota, chief executive of the Blue Cross and Blue Shield Association, said the insurers in his group "are committed to make sure that both the letter and the intent of this law is implemented in a manner in which benefits all Americans.
"The cynic can find all kinds of opportunities here," he said. "That's just not what we're going to do."
I've highlighted a couple of key points in the article below.
1. It is assumed that insurers will take advantage of the opportunity to "cherry-pick" customers while they still can--- in other words avoid covering the sickest individuals until they are mandated to do so.
2. Medicaid expansion will be a boon for insurers as states will seek to contract with managed care insurers to reduce costs per individual as the coverage expands to include many more individuals. This makes perfect sense and is an obvious way to improve health outcomes for individuals on Medicaid as managed care does generally reduce costs and improve care. And yet again, Wisconsin is way ahead on this as the state has contracted with managed care HMOs for years in its Medicaid program.
3. The third item is where the Feds need to ensure that the rules are tight on what insurers can do related to the risk-adjustment rules moving forward. The tighter the rules, the more effective this reform package will be in the long-run at controlling costs.
----------- ---------------- --------------
Health insurers weighing options to get ahead of reform
By David S. Hilzenrath
Washington Post Staff Writer
Sunday, April 18, 2010
The idea was simple enough: Make sure that health insurers spend the vast majority of their revenue on patient care, instead of using it for things such as advertising, profits and executive pay.
To that end, the new health-care law says an insurer must give money back to consumers if it devotes less than 80 percent of premiums to paying medical claims and improving care. For insurers serving large groups, the target is 85 percent.
But even before the health-care overhaul was signed into law last month, one of the nation's largest insurance companies reclassified certain expenses in a way that increased its so-called medical-loss ratio. In January, WellPoint began including under medical benefits such costs as nurse hotlines, "medical management," and "clinical health policy," a WellPoint executive said in a March briefing for investors.
Redefining medical spending to make the requirement more attainable is just one way insurers might adapt to the new legislation.
Weeks after the law was enacted, insurers are still scouring it to figure out precisely what it allows. Many of the details won't be known until government officials translate the legislative language into specific regulations, and some of the tightest restrictions won't take effect for years. In the meantime, health insurers face tactical and strategic choices that could alter their short-term fortunes. Should they boost premiums before rates become subject to greater oversight? Should they step up efforts to avoid people with preexisting conditions before they are required to accept even the sickest applicants?
Some analysts say the new law gives insurers powerful motivation to try to increase profits and reserves while they still can.
"They will absolutely try to cherry-pick as much as they can get away with between now and when the legislation is fully implemented," said Wendell Potter, a former spokesman for big insurer Cigna.
Insurers might conclude that they should "get our prices up while we can because after the revolution we're not going to be able to," said Mark V. Pauly, a health-care economist at the Wharton School at the University of Pennsylvania.
But for all the incentives to get more aggressive in the short term, there are also counter-incentives, and it is hard to tell how they balance out.
From an economic standpoint, raising rates could cause insurers to lose business, especially in the more competitive markets.
From a regulatory standpoint, charging excessive premiums during the next few years could give authorities grounds to bar insurers from new marketplaces known as exchanges when they open for business in 2014.
From a political standpoint, pushing limits while officials are still writing the rules could boomerang for insurers. WellPoint's plan to raise rates in California by 39 percent fueled arguments for reform earlier this year and helped drive the legislation to final passage.
Some of the openings for insurers are plain to see. For example, although the law bans annual and lifetime limits on the dollar value of benefits, it does not ban limits measured in other terms. That leaves the door open to limits based on, say, the number of courses of treatment for an expensive problem such as infertility.
The coming expansion of Medicaid could trigger a land rush by private insurers seeking to manage care for Medicaid beneficiaries. In a report issued Thursday, big insurer UnitedHealth Group said state Medicaid programs serving low-income Americans could save billions of dollars by moving recipients into managed care.
(Private insurers have made the same argument about Medicare in years past, but the government has concluded that it was overpaying private health plans to care for Medicare beneficiaries. It cut such reimbursements in the recent legislation.)
Other issues are more complex.
Turning away the seriously ill while insurers still can might seem like an obvious choice. To be sure, the fact that insurance companies will be prohibited from rescinding policies once people get sick gives them cause to be more selective in the first place, said industry analyst Carl McDonald of Oppenheimer & Co.
ad_icon
But in the not-too-distant future, some insurers will be subject to a process called risk-adjustment, which will attempt to neutralize the incentive to cherry-pick. Under risk-adjustment, health plans that attract disproportionately healthy populations will be penalized, and plans that attract disproportionately sick populations will be awarded additional payments. Depending on how the risk-adjustment rules are written, insurers could lock in a lasting advantage by cherry-picking more vigorously now, or they could see that benefit erased, said Jerry Flanagan of the advocacy group Consumer Watchdog.
Similarly, the requirement that insurers devote 80 or 85 percent of premiums to medical claims and related expenses creates conflicting incentives. At its simplest, it encourages insurers to cut overhead expenses. In addition, it might give insurers pause before raising copayments and deductibles, turning away applicants with preexisting conditions, or squeezing payments to doctors and hospitals, because each of those steps would reduce medical spending and make it harder for insurers to meet the required ratios.
On the other hand, the target ratios might give them added incentive to raise premiums. By doing so, they could keep overhead and profit fixed, even as those items decline as a percentage of the premium dollar.
WellPoint spokesman Jon Mills said in an e-mail that it is appropriate for his company to reclassify expenses related to the management of members' health.
In effect, WellPoint turned more than $500 million of administrative items into medical expenses, the Senate Commerce Committee's Democratic staff said in report Thursday.
Scott Serota, chief executive of the Blue Cross and Blue Shield Association, said the insurers in his group "are committed to make sure that both the letter and the intent of this law is implemented in a manner in which benefits all Americans.
"The cynic can find all kinds of opportunities here," he said. "That's just not what we're going to do."
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