Friday, December 23, 2011

Health Reform Talk takes a brief break

With another busy year of health reform coverage coming to an end soon, the authors of Health Reform Talk are taking a brief break after today.

Health Reform Talk will resume its regular insights into health reform the week of January 2.

Happy Holidays and Happy New Year!!

Wednesday, December 21, 2011

HHS issues essential health benefits bulletin

The Department of Health and Human Services (HHS) has issued a bulletin outlining the approach it intends to pursue in rulemaking to define essential health benefits. The Patient Protection and Affordable Care Act (ACA) requires health insurance plans offered in the individual and small group markets, both inside and outside of the Affordable Insurance Exchanges (Exchanges), to offer a comprehensive package of items and services, known as essential health benefits (EHB).

The bulletin addresses only the services and items covered by a health plan, not the cost sharing, such as deductibles, copayments, and coinsurance. The cost-sharing features will be addressed in future bulletins, and cost-sharing rules will determine the actuarial value of the plan.

HHS indicates that it is releasing this intended approach to give consumers, states, employers and issuers timely information as they work toward establishing Exchanges and making decisions for 2014. According to HHS, this approach was developed with significant input from the public, as well as reports from the Department of Labor, the Institute of Medicine, and research conducted by HHS.

Intended regulatory approach. The HHS bulletin indicates that its goal is to pursue an approach that will:

• encompass the 10 categories of services identified in the statute;

• reflect typical employer health benefit plans;

• reflect balance among the categories;

• account for diverse health needs across many populations;

• ensure there are no incentives for coverage decisions, cost sharing or reimbursement rates to discriminate impermissibly against individuals because of their age, disability, or expected length of life;

• ensure compliance with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA);

• provide states a role in defining EHB; and

• balance comprehensiveness and affordability for those purchasing coverage.

Benchmark plan types. HHS indicates it intends to propose that EHB be defined by a benchmark plan selected by each state. The selected benchmark plan would serve as a reference plan, reflecting both the scope of services and any limits offered by a “typical employer plan” in that state as required by ACA Sec. 1302(b)(2)(A). This approach is based on the approach established by Congress for the Children’s Health Insurance Program (CHIP) and for certain Medicaid populations.

States are permitted to select a single benchmark to serve as the standard for qualified health plans inside the Exchange operating in their state and plans offered in the individual and small group markets in their state.

States would choose one of the following health insurance plans as a benchmark:

1) the three largest small group plans in the state;

2) the three largest state employee health plans;

3) the three largest federal employee health plan options; or

4) the largest HMO plan offered in the state’s commercial market.

The benefits and services included in the health insurance plan selected by the state would be the EHB package. Plans could modify coverage within a benefit category so long as they do not reduce the value of coverage.

Consistent with the law, states must ensure the EHB package covers items and services in at least ten categories of care, including preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs. If a state selects a plan that does not cover all ten categories of care, the state will have the option to examine other benchmark insurance plans, including the Federal Employee Health Benefits Plan (FEHBP), to determine the type of benefits that will be included in the EHB package.

Defraying the cost of additional benefits. ACA Sec. 1311(d)(3)(B) requires states to defray the costs of state-mandated benefits in excess of EHB for individuals enrolled in any qualified health plan either in the individual market or in the small group market. Similar to other Exchange decisions, the state may select the benchmark plan.

According to HHS, the approach for 2014 and 2015 would provide a transition period for states to coordinate their benefit mandates while minimizing the likelihood the state would be required to defray the costs of these mandates in excess of EHB. In the transitional years of 2014 and 2015, if a state chooses a benchmark subject to state mandates – such as a small group market plan – that benchmark would include those mandates in the state EHB package.

Alternatively, a state also could select a benchmark such as an FEHBP plan that may not include some or all of the state’s benefit mandates, and, therefore, under ACA Sec. 1311(d)(3)(B), the state would be required to cover the cost of those mandates outside the state EHB package.

Updating EHB. ACA Secs. 302(b)(4)(G) and (H) direct the Secretary to periodically review and update EHB. As required by the ACA, HHS will assess whether enrollees have difficulties with access for reasons of coverage or cost, changes in medical evidence or scientific advancement, market changes not reflected in the benchmarks and the affordability of coverage as it relates to EHB. HHS invites comments on approaches to gathering information and making this assessment and also encourages public input on the entire proposed approach outlined in the bulletin. Comments are due by January 31, 2012 and can be sent to EssentialHealthBenefits@cms.hhs.gov.

SOURCE: Essential Health Benefits Bulletin, Center for Consumer Information and Insurance Oversight, December 16, 2011.

Monday, December 19, 2011

Supreme Court sets schedule for written briefs in health reform cases

The Supreme Court has issued the briefing schedule for the three health reform cases on the constitutionality of the Patient Protection and Affordable Care Act (ACA).

What’s due and when?

Individual mandate (aka minimum coverage provision)
January 6 – Brief of the Solicitor General (SG) on the minimum coverage provision issue (HHS v. Florida (No. 11-398))

February 6 – Respondents’ briefs

March 7 – SG reply brief

Anti-Injunction Act
January 6 – Brief of the Court-appointed amicus curiae (aka friend of the court) on the Anti-Injunction Act issue (HHS v. Florida (No. 11-398))

February 6 – Briefs of the SG and respondents

February 27 – Reply briefs of the SG and respondents

March 12 – Reply brief of the Court-appointed amicus curiae

January 6 – Briefs of petitioners on the severability issue (National Federation of Independent Business v. Sebelius (No. 11-393) and Florida v. HHS (No. 11-400))

January 27 – Brief of the SG

February 17 – Brief of the Court-appointed amicus curiae

March 13 – Reply briefs of the SG and petitioners

January 10 — Petitioners’ brief on the Medicaid issue (Florida v. HHS (No. 11-400))

February 10 – Brief of the Solicitor General

March 12 – Reply brief

Friday, December 16, 2011

CMS says new rules will increase transparency in health care

The Centers for Medicare & Medicaid Services (CMS ) are issuing, on December 19, 2011, a long-awaited proposed rule designed to increase public awareness of financial relationships between drug and device manufacturers and certain health care providers. The CMS says that the resulting transparency should lead to improved, lower cost health care. Manufacturers of drugs, devices, biologicals, and medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program will soon have to report to CMS any payments or other "transfers of value" they make to physicians and teaching hospitals, and manufacturers and group purchasing organizations (GPOs) will have to disclose ownership or investment interests by physicians or physicians' family members, and any transfers or payments of value to those physicians. The regulations implement ACA Sec. 6002, which added Sec. 1128G to the Social Security Act.

Information was originally supposed to be collected by manufacturers and GPOs by January 1, 2012, as required by the ACA, but the CMS is giving them a break and only requiring the gathering of information once the final regulations are published, since the proposed regulations were apparently issued later than originally anticipated. The data will probably have to be reported to the CMS by the end of March 2013.

Officials at the CMS seem quite excited about the potential advantages to health care consumers that the regulations will provide. According to Peter Budetti, M.D., CMS deputy administrator for Program Integrity. “Disclosure of these relationships will discourage the inappropriate influence on clinical decision-making that sometimes occurs while still allowing legitimate partnerships.” Budetti added that, "If your doctor is taking money from manufacturers of prescription drugs, suppliers of wheelchairs or other devices, you deserve to know about it," Under the ACA, violations of the reporting requirements will result in  civil monetary penalties up to $150,000 annually for failing to report, and $1,000,000 for knowingly failing to report.

It remains to be seen how much value this will really create for consumers, however. Applicable manufacturers' and group purchasing organizations' payment and ownership information is to be published by the CMS on a public website, and the regulations specify that the information provided must be downloadable, searchable, and easily aggregated. But, how many consumers really look at government websites, or any websites at all, before going to the doctor? A patient's choice of physician is arguably based more on whether or not the physician is covered under the patient's healthcare plan, on word-of-mouth, or on general availability and geographic location, than on any data to be found on websites so far.

The American Medical Association has a website with general physician information, including physician specialties and medical schools attended, and WebMD has a search tool allowing prospective patients to look for doctors by specialty and location, with some information provided about which doctors accept which plans. There's an assortment of sites out there with comments and ratings by patients of doctors they've seen, but how many people know about and use similar information already in existence on government websites? The Centers for Disease Control and Prevention (CDC), for example, has up-to-date data and statistics on a wide range of topics, such as nursing homes and fertility clinics, but many people may be unaware of the information they can obtain before making important medical decisions. Hopefully, the CMS won't end its efforts to increase transparency with the issuance of final regulations, expected sometime in 2012, and will, instead, work to make the general public aware of the new website. The information is expected to be made public by September 30, 2013. If you feel like adding your two cents' worth to the CMS, it is accepting comments until Feb. 17, 2012. The proposed rule is downloadable at: https://s3.amazonaws.com/public-inspection.federalregister.gov/2011-32244.pdf .

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Wednesday, December 14, 2011

School-based health centers receive more funding via ACA

First our nation's young were allowed to stay on their parents' insurance until the age of 26. Now, the younger set is seeing another advantage from the Patient Protection and Affordable Care Act (ACA). The Health Resources and Services Administration (HRSA), a division of the U.S. Department of Health and Human Services (HHS), has just announced that more than $14 million ($14,552,020, to be exact) has been awarded to 45 American school-based health centers (SBHCs). SBHCs are typically open every school day and staffed by a team of health providers. The HRSA oversees the School-Based Health Center Capital Program.

A total of $200 million in funding from 2010 – 2013, created by the ACA via the School-Based Health Center Capital Program, is available to improve delivery and support expansion of services at SBHCs. Clinics that are recipients of the awards already serve 112,000 children, and the HHS estimates that the $14 million in grants just awarded (the second in a series of awards that will be made available to SBHCs) will allow them to treat an estimated additional 53,000 children in 29 States, by expanding their capacity and modernizing their facilities. In fiscal year 2011, $95 million was awarded to 278 SBHCs.

The HHS is anticipating that the additional funds awarded will allow employers to hire more employees, aside from more healthcare workers, to meet the SBHCs' increasing needs. SBHCs are expected to require additional construction, renovation and new equipment.

An SBHC is often operated as a partnership between the school and a community health organization, such as a community health center, hospital, or local health department that serves as the sponsoring facility for the SBHC. Services, which are a combination of primary care, mental health care, substance abuse counseling, case management, dental health, nutrition education, health education and health promotion, are determined locally through a collaborative approach between the families and students, the community, the school district, and associated health providers. The focus of SBHCs is said to be on prevention and early intervention.

The recipients of these latest grants are in Alaska, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Louisiana, Illinois, Indiana, Kentucky, Massachusetts, Maryland, Maine, Michigan, Mississippi, North Carolina, New Mexico, Texas, Washington, Wisconsin, and West Virginia.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Monday, December 12, 2011

Former CMS administrator Berwick takes aim at ACA's critics

Donald Berwick, MD, whose last day on the job as former administrator of the Centers for Medicare and Medicaid Services (CMS) was December 2, 2011, targeted critics of the Patient Protection and Affordable Care Act (ACA) and exhorted fellow medical professionals to support the purposes of the ACA, in a recent speech at the 23rd Annual National Forum on Quality Improvement in Health Care in Florida. The Forum, sponsored by the Institute for Healthcare Improvement, attracted approximately 6,000 healthcare workers and executives. Berwick was accepting the Picker Award for Excellence. The 65-year-old Berwick, a pediatrician and Harvard professor, has been known to publicly profess his admiration for the British healthcare system.

Berwick made a point of taking aim at the ongoing accusations that the ACA will bring about death panels and rationed care. Berwick characterized the death panel rhetoric as "hogwash" and "fabricated out of nothing but fear and lies." He added that "The true rationers are those who...stand in the way of change....." Berwick went on to say that "When the 17 million American children who live in poverty cannot get the immunizations and blood tests they need, that is rationing. When disabled American lack the help to keep them out of institutions and in their homes and living independently, that is rationing...And it is beneath us as a great nation to allow that to happen."

Berwick's made a number of notable contributions at the CMS, including helping start up the Partnership for Patients program, which, according to healthcare.gov, is designed to improve healthcare quality, safety, and affordability. It is a shared effort by hospital leaders, employers, physicians, nurses, and patient advocates along with state and federal governments.

Unfortunately, Berwick's time at the CMS, after being appointed by President Obama, was a short 18 months, which was the longest he could stay without Congress' approval. Berwick made a point of stating that Congress' approval rating is at an all-time low of 9%. He is succeeded by acting administrator Marilyn B. Tavenner.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Friday, December 9, 2011

Getting Tough On Fraud In MEWAs

The Patient Protection and Affordable Care Act (ACA) provides for protections for businesses and workers with health benefits that are provided through a multiple employer welfare arrangement (MEWAs) and the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) has just issued two proposed rules towards that goal. The proposed rules were published in the December 6 Federal Register.

According to EBSA, “MEWAs frequently have been used by scam artists and criminals to defraud consumers, thus leaving unsuspecting patients with substantial unpaid medical claims.” For employers or employee organizations that have paid premiums or made contributions to a MEWA, and thought they were doing the right thing for their workers and their families, the impact also can be significant, EBSA noted.

The proposed rules call for MEWAs to adhere to enhanced reporting requirements so that employers, workers, and their families will not unexpectedly be cut off from needed health care services. The rules also will increase the DOL’s enforcement authority to protect participants in such plans and allow the department to shut down MEWAs engaged in fraud or other activities that present an immediate danger to the public safety or welfare.

Through MEWAs, unrelated employers, typically small businesses, seek to provide health care and other benefits to their workers at purportedly lower cost than through other traditional forms of coverage, EBSA explained.

The promoters, marketers and operators of MEWAs often have taken advantage of gaps in the law to avoid state insurance regulations, such as a requirement to maintain sufficient funding and adequate reserves to pay the health care claims of workers and their families. In the worst situations, operators of MEWAs have drained their assets through excessive administrative fees or outright embezzlement, resulting in harm to participants and their families. In some cases, individuals incur significant medical bills before they learn that claims are not being paid—and that they are liable and need to pay their medical bills themselves. The ACA includes provisions designed to remedy these gaps.

Wednesday, December 7, 2011

Group Health Premiums Continued To Rise After Reform, But At Smaller Rate

Eighteen months following enactment of health care reform, the cost of group medical benefits continued to rise but those cost increases moderated, according to the November 2011 Employee Benefits Market Survey, conducted by The Council of Insurance Agents & Brokers (CIAB).

“Our latest survey indicated that premium increases have ebbed somewhat after initial shock and uncertainty following enactment of ACA in 2010,” said Ken A. Crerar, president and CEO of The CIAB. “The market has begun to adjust to initial new requirements in health care reform, but some uncertainty may persist as additional aspects are phased in over the next several years,” he added.

Although this survey revealed that all groups—small, medium and large—faced significant price hikes for group health care coverage during the last six months, small groups of 50 or fewer employees saw the largest hikes, with 39 percent receiving increases of 11 percent to 20 percent, compared with 62 percent reporting increases in that range in the CIAB’s May 2011 survey. Thirty-five percent of small groups received smaller increases ranging from 1 percent to 10 percent, compared to 13 percent in the earlier survey. Ten percent of small groups received no changes or price decreases compared to 3 percent in the earlier study.

In medium-size groups with 51 to 500 employees, 69 percent experienced hikes in the range of 6 percent to 15 percent, compared with 75 percent in the May survey. Sixteen percent experienced increases of 1 percent to 5 percent, no change, or decreases, compared to 8 percent in the May 2011 survey. Large accounts of greater than 500 employees also saw some moderation in pricing. Fourteen percent experienced no change or price decreases, compared to 5 percent in the May survey. For the majority (61 percent) of large accounts, prices rose in the range of 1 percent to 10 percent. Prices rose more than 10 percent for 9 percent of large accounts, compared to 21 percent which had increases of that magnitude in the May survey.

Comments from brokers on group medical plan pricing presented a nuanced picture consistent with adjustments underway to ACA, according to the survey. “As a whole, recent renewals have been lower than any other time I can remember,” said one broker. “The trend is lower, renewals more reasonable,” commented another. “We have seen more competitive new business rates coupled with lower renewals,” a third broker added.

Other brokers saw prices rise due to the impact of ACA, but noted that increases were tempered by continued interest in and movement toward consumer driven health plans and wellness plans. These plans typically have higher deductibles. “Interest in high deductible (plans) is taking off,” said one broker. “Deductibles and co-insurance continue to rise to keep the rates down,” another broker commented. Still another noted, “Carriers, especially trusts, seem to be more willing to come off of the original renewal position. (There is) continued interest in high deductible plans, HSAs (health savings accounts).”

Still another development that emerged in this and previous surveys is that carriers and employers are offering fewer options since enactment of the ACA. “In the small to medium account range, we have noticed a tightening of the amount of plan options offered to groups,” one respondent wrote.

In the CIAB’s May 2011 survey, 100 percent of responding group benefit consultants expressed some level of concern about the impact of the ACA on their business, with 59 percent being “very concerned.” By this latest survey that concern had moderated to 97 percent of respondents expressing some level of concerns, with 51% “very concerned” and 46 percent “somewhat concerned.”

Monday, December 5, 2011

States' Continue Own Health Reform Efforts

As the various provisions of the Affordable Care Act are implemented over time, the states continue to apply their own health care reform and cost-containment measures. Below we review some of the states’ recent actions.

California. Gov. Jerry Brown has signed a pair of bills designed to close a loophole that denies women maternity services. More than 200,000 women between the ages of 19 and 44 in California have health insurance plans that do not cover maternity care. The first bill requires health insurance companies to provide maternity coverage as a part of their individual insurance plans, and the second bill requires group health insurance policies to provide women with maternity coverage. These laws take effect on Jan. 1, 2012. Mr. Brown also signed a bill that makes insurers cover autism therapy, including behavioral health treatments. The law will be in effect from July 1, 2012, through July 1, 2014.

Indiana. The Obama Administration has denied a waiver for the Healthy Indiana Plan, the state’s Medicaid program, which means that over 45,000 state residents will lose coverage under the plan unless Indiana makes coverage changes that are more acceptable to the Obama Administration. In 2007, Indiana enacted the plan, an expansion of Medicaid that used consumer-driven (high-deductible) health plans with a spending account supposedly to encourage low-income beneficiaries to take a more active role in their own care. The state also has been promoting so-called consumer-driven health plans to its employee population. The Healthy Indiana Plan’s waiver expires at the end of 2012.

Louisiana. Helped by a $10 million federal grant, state officials and industry leaders have launched a web-based medical records exchange. Supporters of the platform indicated that the Louisiana Health Information Exchange is a way to link disparate health care providers, from primary care doctors to hospitals and pharmacists, so they can collectively provide better and cheaper patient care.
Minnesota. Gov. Mark Dayton has announced that a competitive-bidding process for state health insurance programs will save $242 million over the next two years. The measure was a part of his drive to improve government efficiency. The state required HMOs to competitively bid for state contracts in the seven-county metro area, and the savings will reduce the money taxpayers spend for health care without cutting any services.

New York. Gov. Andrew Cuomo has signed a bill that will require insurers to cover screening, diagnosis, and treatment for autism spectrum disorders. The law includes routine toddler screenings, behavioral health treatments, speech therapy, occupational therapy, and physical therapy. The measure was vetoed last year by former Gov. David Paterson as too expensive, but Mr. Cuomo said the current bill puts an important $45,000 annual cap on the coverage insurance companies would have to fund. The law takes effect Nov. 1, 2012, for insurance policies issued or renewed after that date.

In other New York news, the state’s Department of Financial Services has ordered 11 health insurers to refund $114.5 million to policyholders under minimum medical spending requirements. Implemented in June 2010, health insurers are now required to spend 82 cents of every dollar collected in premiums on medical care or refund the difference to policyholders. The federal Patient Protection and Affordable Care Act imposes a similar minimum medical loss ratio requirement on insurers nationally beginning in 2011. The refunds in New York will be paid to holders of group and individual health insurance policies that cover 573,748 people in the state.

Friday, December 2, 2011

Most insurers have already met health reform’s medical loss ratio standards, GAO says

The early results are in and, as of last year, most insurers have already met the new medical loss ratio (MLR) standards imposed by the 2010 health reform law, the Patient Protection and Affordable Care Act (PPACA), according to newly-released figures from the Government Accountability Office (GAO).

Under the PPACA, beginning in 2011, insurers are required to spend most of their customers' premium payments on medical care rather than on administrative costs or profit. In the large group market, insurers have to spend at least 85 percent of the premium payments on medical care and, in the small group market, they need to spend 80 percent on medical care. If they fail to meet these MLR rules, health reform legislation requires insurers to pay rebates to their enrollees.

These early GAO results are truly preliminary as 2011 numbers don’t have to be submitted to the Department of Health and Human Services (HHS) until June of 2012. However, these numbers are interesting as early indicators of compliance. Based on the early numbers, the GAO says, nearly two-thirds (64 percent) of all credible insurers would have met or exceeded the 2011 MLR standards. According to the GAO, a “higher percentage of insurers in the large and small group markets met or exceeded the standards compared to those in the individual market. Insurers in the individual market averaged higher nonclaims expenses, including expenses for brokers' commissions and fees, than those in other markets.” Seventy-seven percent of large group market insurers and 70 percent of small group market insurers would’ve met or exceeded the MLR standards, the GAO reports, while only 43 percent of insurers in the individual market would’ve met the standards.

In addition, the health reform law requires insurers to report MLRs by state. The GAO reports that, based on the early numbers, it found a “wide range” of reported MLRs for multistate insurers.

Overall, the GAO finds, 85 percent of insured Americans are covered in the large or small group markets. Only 15 percent of insureds are covered in the individual market.

Wednesday, November 30, 2011

Employers accelerate efforts to bring health benefit costs under control

Although the average total health benefit cost growth per employee slowed in 2011 (to 6.1% ($10,146 per year), down from 6.9% in 2010), according to Mercer, a benefits consulting firm, health reform is having an impact on employers’ accelerating efforts to bring health benefit costs under control. Respondents to the Mercer survey expect health benefit costs to increase, on average, by 5.7% in 2012. The cost growth from 2010 to 2011 was much smaller for large employers (3.6%) than for small employers (9.9%), Mercer finds.
Impact of health reform. The Patient Protection and Affordable Care Act (PPACA) requirement that employers extend dependent coverage eligibility to employees' children up to age 26 boosted health plan enrollment by an average of 2 percent, Mercer points out. Employers expect that PPACA provisions effective in 2014 that require employers to extend coverage eligibility to all employees working at least 30 hours per week on average, auto-enroll newly eligible employees, and the new mandate that all individuals obtain health insurance coverage, will result in another increase in enrollment. Retailers and other employers with large part-time populations are likely to be the most affected, Mercer observes.
The PPACA provision of greatest concern to the most employers is the excise tax on high-cost plans with nearly half of the Mercer survey respondents rating it as a "significant" or "very significant" concern. Some have high-cost plans simply because they have an older or less healthy workforce or are located in a high-cost area, not necessarily because they offer very generous plans. Only 39% of employers with 50 or more employees believe their current plans won't reach the excise tax cost threshold, which will be tied to the consumer price index (CPI) and increase each year. Nearly all the rest are determined to avoid the tax if they can: 21% say they "will do whatever is necessary to bring cost below the threshold amounts," and 36% say they will attempt to bring the cost below the threshold amounts, acknowledging that "it may not be possible." Only 4 percent will take no action to avoid the tax, Mercer finds.
"Employers that are concerned about a jump in enrollment in 2014 or the excise tax in 2018 see a need to slow cost growth now," says Beth Umland, Mercer's director of research for health and benefits. "While cost-shifting to employees is still going on, this year we saw more employers adopting strategies they believe will provide better results over the long haul."
Fewer than half of all employers (47%, down from 50% in 2011) say they will shift costs to employees in 2012 by raising deductibles or the percentage of the premium employees pay.
"Best practices" save money. As mentioned, large employers reported a significantly lower average health benefit cost increase than small employers in 2011: 3.6% compared to 9.9%. "The health care reform law may have had a greater impact on small employers than large employers in 2011," says Mercer’s Umland. "But the survey also shows that large employers are doing more to control health benefit cost."
Small employers tend to offer less-generous coverage than large employers, and so were more likely to be affected by new PPACA rules restricting annual benefit limitations and mandating free preventive care. However, they are also less likely to invest in the types of programs that large employers are using to manage cost, Mercer suggests.

Commitment to providing health benefits. Employers remain committed to providing health benefit plans to their employees, even after the PPACA-mandated state health insurance exchanges become available in 2014, Mercer finds. Few large employers say they would terminate their health plans and have employees seek coverage in the individual market instead with 9 percent of all employers with 500 or more employees, but 4 percent of those with 5,000 or more employees, say they would do so.
"Employers have had a year to think about the impact of health reform," says Mercer’s Umland. "When they consider the penalty, the loss of tax savings and potentially grossing up employee income so they can purchase comparable coverage through an exchange, many don't see a financial advantage in dropping coverage."
Small employers were more likely to indicate they would terminate their plans in 2014 --19% of those with 10 to 499 employees, about the same proportion as in 2010. Employers of this size are less likely to offer coverage to begin with; they generally offer fully insured health plans and, with small risk pools and little purchasing power, are vulnerable to large rate increases, Mercer suggests. In 2011, the percentage of small employers offering an employee health plan fell from 57% to 53%.

Other health reform-related findings. Self-funding interest has risen amid concerns that new PPACA regulations will drive up the cost of fully insured plans. Of the 28% of employers with 500 or more employees that have a fully insured PPO, one-third say they are likely to switch to self-funding within the next three years. Just 8% of smaller employers say it's likely they will switch.
Grandfathered status: Only about half of all employers (and 37% of large employers) believe they will maintain the grandfathered status of all their health plans until 2014. One-third had no grandfathered plans in 2011 and 18% expect to lose grandfathered status over the next two years.

Monday, November 28, 2011

Small businesses can now find, compare health insurance plans on HHS website

For the first time ever, an updated Department of Health and Human Services (HHS) website will provide local health plan benefits and pricing information for small business owners, the HHS has announced. On a greatly expanded HHS website, small business owners will have access to an unprecedented detailed review of their health insurance plan choices including, for the first time ever, the ability to research locally available products in an unbiased manner, which will foster a more transparent and competitive marketplace.

Just in time for 2012, this powerful new tool allows small business owners to compare the benefits and costs of health plans and choose those that are best for their employees. "This new information will help business owners navigate what has traditionally been a complicated and confusing decision," says HHS Secretary Kathleen Sebelius. "Both owners and their employees can feel more confident that the plans offered will be the best to suit everyone's needs."

Beyond facing difficulties in analyzing the market, small businesses do not fare as well large employers when negotiating health care prices, with statistics showing that, on average, small businesses spend 18 percent more for the same health insurance coverage. This new HHS tool brings needed transparency to the marketplace, which will help ensure insurance companies will compete for business on the basis of price and quality.

The tool is located on http://www.healthcare.gov/, which was created under requirements contained in the Patient Protection and Affordable Care Act (PPACA), the 2010 health reform law. To access the small business Insurance Finder, go to the home page of http://www.healthcare.gov/ and click on the blue tab (called "find insurance options") at the top of the page.

Available information. The new information added gives small business owners access to the following:
  • Insurance product choices for a given ZIP code, sorted by out-of-pocket limits, average cost per enrollee, or other factors;
  • A summary of cost and coverage for small group products that shows the available deductibles, range of co-pay options, included and excluded benefits, and benefits available for purchase at additional cost; and
  • The ability to filter product selection based on whether the plans are Health Savings Account eligible, have prescription drug, mental health, or maternity coverage, or allow for domestic partner or same sex coverage.
More than 530 insurers have provided information for more than 2,700 coverage plans across all 50 states and the District of Columbia, the HHS says. The Centers for Medicare & Medicaid Services worked to define and collect detailed benefits and premium rating information from insurers across the country to develop the site.

"Tens of thousands of small businesses from across America have already logged-on to www.HealthCare.gov to see what health coverage options are available to them," said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight. "The new, unprecedented ability to search at this level of detail will bring the marketplace into better balance by giving insurance purchasers the power of information."

In addition, the website provides extensive information about consumer rights, tips for how to navigate the market's complexities, and details on how the PPACA provides new protections for beneficiaries.

Wednesday, November 23, 2011

The ACA And Rate Increases For Businesses

The Department of Health and Human Services (HHS) has announced that Everence Insurance of Pennsylvania is charging small businesses unreasonably high premium increases. This is the first federal rate review under the Patient Protection and Affordable Care Act (ACA). Anyone surprised?

Under the ACA, HHS, in conjunction with the states, is charged with establishing an annual review process, which will require insurers to submit a justification for any "unreasonable" premium increases (Public Health Service Act Sec. 2794(a)).

The HHS review found that Everence's 12% rate increase for small businesses in Pennsylvania was excessive. After reviewing the rate, independent experts determined the choice of assumptions the company based its rate increase on reflected national data rather than reliable and available state data. These assumptions resulted in an unreasonably high premium in relation to the benefits provided, according to HHS.

"We have called on this insurer to immediately rescind the rate, issue refunds to consumers or publicly explain their refusal to do so," said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services.

Companies can either reduce their rate hikes or post a justification on their website within ten days of the rate review determination.

For more information about rate review and to find rate increase information in each state, visit http://companyprofiles.healthcare.gov/.

Rate Increases The Norm? 

This latest revelation that a health insurer might be charging an unreasonable rate increase brings back the last few decades of rate activity in the health care industry.

Use to be that there were only two situations in which health insurers raised rates:

  1. Health insurers raised rates when their costs were increasing because…well, because their costs were increasing.
  2. Health insurers raised rates when their costs were not increasing because…well, because they knew that sometime in the future their costs would increase.

Doesn’t seem to leave much room for anything but cost increases, but just in case, insurers now have another reason for cost increases: the ACA itself.

A variety of analysts have looked at the potential costs to employers, and the higher projections suggest that the ACA could add 3% to health care premiums each year (for example, click here.

So you would expect that a friend of mine was quite upset when her retiree health care premiums from a major U.S. oil company increased from $312 to $450 a month, and the increase was blamed directly on the ACA. If HHS thinks 12% is high, what would the reaction be to an increase of 44% (if, that is, the plan were subject to a rate increase review—it’s self funded and not subject to review). 

My friend promptly changed plans--she is healthy so there wasn't much problem. But initially she believed the reason for the rate increase--at least until I explained that it was unlikely the ACA was responsible for such a boost.

And what happens when her new plan uses the ACA to jack up their prices?  For one, she won't be as surprised.

Not yet a subscriber to Wolters Kluwer Law & Business? A comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Already a subscriber to Wolters Kluwer Law & Business? Get this additional information on health insurance rate reviews:

PS: Happy Thanksgiving (Click herefor more on why I am thankful this Thanksgiving).

PPS: This is my final blog posting for Health Reform Talk. After more than 30 years involved in writing about and analyzing health care benefits, I am retiring at the end of the year. I have enjoyed the ups and the downs of the health care scene, and I look forward to the excitement of the Supreme Court deliberations on the ACA next summer.—SAH

Monday, November 21, 2011

Without Pants, There Should Be Rants

What do health care reform and a recent heart attack have to do with each other? Turns out not much, but I’ll get to that later.

I had a mild heart attack Tuesday, Nov. 8, in St. Louis. I was in the Barnes Jewish Hospital Tuesday through Friday, Nov. 8-11. Medication and diet and more exercise should prevent this from happening again. In addition to coming through this with few consequences so far (a few medications, lots of medical follow-up, some cardiac rehab), here are a few events that stick with me about the last few weeks:

  1. When I was admitted to the hospital, I was provided with a pair of blue elastic paper pants to wear while I was in the hospital. Anyone who has worn a hospital gown that closes in the back will appreciate what a great advance this is. I recommend that all hospitals adopt this procedure immediately. Demand it the next time you or someone you know is admitted.
  2. I had two diagnostic procedures (a cardiac catheterization and a contrast MRI), left after three days, and was told I should expect to lead a normal life with few if any restrictions. I wish I could recommend this type if outcome to anyone who has had a heart attack.
  3. One week after I left the hospital, I received a claim denial for the three days in the hospital.  Here was the reason: “Coverage for the requested services has been denied because we have not been able to obtain any requested clinical information from the provider to determine whether or not the particular services are considered medically necessary under the terms of the plan.” I knew that the claims would be approved but was angry that my insurer would send this out so quickly, and yes, I knew it was for certification and there are various hard deadlines for claims denial and appeal—but come on—what if my heart attack had been worse and someone else had to jump through the hoops necessary, etc. Anyway, by the time I called, certification had been given (at least so I was told by phone—I could not get an e-mail confirmation and am still waiting for a mailed reply (another annoyance—sending out the denial was easy, but sending a confirmation that the stay was certified seemed more difficult. Here I recommend persistence and a good knowledge of all the contacts available to help resolve situations (provider, insurer, administrator, employer, Vinnie who runs protection down the street (no--just kidding about Vinnie)).

And why does this have nothing to do with health reform and the Patient Protection and Affordable Care Act? Well, I have good coverage through my employer (despite the denial hiccup), I am familiar with health care systems and insurance, and as far as I can tell I will continue the coverage into the foreseeable future. In 2014, I might see some effects of health reform, but for this medical encounter health reform was largely irrelevant.

Which is probably why many of those millions and millions of individuals who have health coverage through their employers either are oblivious to health reform or are scared it will screw their good deals. Which is probably why it has been so easy to peck away at health reform’s problems and ignore its advantages, which for most will not kick in until 2014.

So, I am thankful for the insurance I have (and wish more workers could have the same), and I am thankful for my medical outcome, and I sure am thankful for the pants.

Not yet a subscriber to Wolters Kluwer Law & Business? A comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Already a subscriber to Wolters Kluwer Law & Business? Get this additional information on health care plan the uninsured:

Friday, November 18, 2011

Most Witnesses At IRS Hearing Criticize Proposed Premium Tax Credit Rules

Many witnesses at a November 17 Internal Revenue Service public hearing on health insurance premium tax credits and employer regulations said that proposed IRS regulations on the health insurance premium tax credit will deny the credit to eligible families and deprive them of access to family health insurance coverage. But one employer group disagreed, testifying that the government had correctly interpreted the law.

Rule’s Impact

Beginning in 2014, the Patient Protection and Affordable Care Act (ACA) provides a refundable health insurance premium tax credit to individuals and families who cannot obtain affordable health insurance through their employers or certain government-sponsored plans. The credit is designed to help taxpayers pay for the cost of health insurance obtained through state-established Health Insurance Exchanges. The taxpayer must have household income between 100% and 400% of the federal poverty level (FPL), cannot be claimed as a dependent, and must file a joint return if married.

An individual cannot claim the credit if the individual is eligible for minimum essential coverage. An employee is eligible for minimum essential coverage (and therefore not entitled to the credit) only if the employee’s share of the insurance premiums is affordable and the insurance coverage provides minimum value.

Coverage is not affordable if the employee’s required contribution to the plan exceeds 9.5% of the applicable taxpayer’s household income for the year. The preamble to the regulations states that the required contribution is the amount that would be paid by the individual for self-only coverage, even if the individual would in fact be purchasing family coverage or other coverage for multiple individuals. This affordability test was the primary issue at the hearing.

Joe Touschner, with the Georgetown University Health Policy Institute Center for Children and Families, testified that the proposed regulation creates a family penalty in the affordability test. This approach will leave children without an affordable option for health insurance, he indicated. Other programs such as the Children’s Health Insurance Program (CHIP) are not a reliable source of alternative coverage, Mr. Touschner said.

He also noted the problem of premium stacking, where a family has to pay more than one premium to provide coverage. These additional premiums would push family insurance costs well in excess of the affordability limits. Mr. Touschner said that the IRS has the regulatory authority to adopt a family-based affordability test.

These comments were echoed by most of the 14 speakers at the hearing. Dana Cope, executive director of the State Employees Association of North Carolina, said “this rule would effectively deny state employees the premium tax credits available” through the exchanges and “would nullify the major goal of the ACA to expand equal access to health care.” She noted that North Carolina’s health plan does not subsidize family coverage and that employees could owe 20% of their family income just to provide coverage for the entire family. Ms. Cope said that the correct interpretation of affordability should be based on the cost of both self-only coverage and family or dependent coverage.

Lynn Quincy of Consumers Union said that the rule would leave dependents uninsured and families underinsured. She also expressed concern that the rule would undermine the system of employer-provided health insurance coverage. She said the rule would be particularly tough on families with income at 200% to 300% of FPL.

Dania Palanker of the Service Employees International Union and Kim Bailey of Families USA strongly opposed the government’s interpretation of the affordability test. Ms. Bailey testified that the rules allowing premium variations for wellness coverage also could drive up the cost of health insurance and impose substantial burdens on families. The wellness surcharge could run as high as 30%of premiums, she stated, and far exceeds the cost of affordable coverage. The wellness costs should be included in applying the 9.5% ceiling on affordable coverage.

Contrary View

The group Employers for Flexibility in Health Care (EFHC), a coalition of businesses and trade associations in retail and service-related industries, took a contrary view. It is necessary to look at the provision as a whole, Anne Phelps of Washington Council Ernst & Young testified. “Treasury correctly interpreted the affordability standard.” She also said that EFHC wants employer-provided health insurance coverage to remain the backbone of the insurance market, but that the law creates many disincentives for employers.

Ms. Phelps commented that the minimum value standard for adequate coverage is not clearly defined. The standard is viewed as requiring 60% of full benefits on an actuarial basis, but should not be interpreted to require a particular kind of plan, Ms. Phelps said. Employers should have the flexibility to offer different kinds of plans. She also asked for penalty relief in 2014 as the new rules are implemented, to avoid discouraging employers from participating and from offering affordable coverage.

Michelle Neblett of the National Restaurant Association supported the EFHC’s testimony. She also asked for flexibility in applying the minimum value standard. She said that insurance reforms will impact costs and are linked to the affordability of a plan. She asked that employers not be tied to a rigid benefits package in offering coverage.

In contrast, Ms. Palanker said that the rules should provide a strong definition of the minimum value standard and should ensure that the plan provides essential benefits across the board. She said it was okay for employers to have flexibility and even offer “below-minimum” value, as long as employees have options to enroll in an exchange.

Wednesday, November 16, 2011

Supreme Court Will Rule On Health Reform Issues Next Year

On Monday, the U.S. Supreme Court granted certiorari and agreed to consider three of the five health care reform-related petitions it reviewed on November 10. The Court has agreed to hear certain issues in the following cases:

  • Federation of Independent Business, et al., v. Sebelius (No. 11-393);
  • Florida, et al. v. HHS (No. 11-400); and
  • HHS v. Florida, et al. (No. 11-398).

In a press conference on Monday, HHS Secretary Kathleen Sebelius said she welcomes the Supreme Court’s decision to hear the lawsuits challenging the Patient Protection and Affordable Care Act (ACA), saying a quick and favorable ruling could encourage reluctant states to move ahead on implementation. “We will have a decision midway though 2012, which means that states that are sitting, perhaps, on the sidelines saying, ‘We really want to know what happens next’ [with the litigation] will fully engage,” Sebelius said. “We are confident that the law is constitutional, will be upheld as constitutional.”

The National Federation of Independent Business (NFIB) and 26 states had filed a petition asking the Supreme Court to review the ACA. In response to the Supreme Court agreeing to hear the case, Dan Danner, president and chief executive officer of the NFIB, said, “The health care law has not lived up to its promises of reducing costs, allowing citizens to keep their coverage or improving a cumbersome system that has long been a burden to small-business owners and employees, alike. The small-business community can now have hope; their voices are going to be heard in the nation’s highest court.”

Issues To Be Considered
Among the issues the Court will consider are the following:

Individual mandate. The court granted the petition in HHS v. Florida, et al. (No. 11-398) on the constitutionality of the individual mandate.

Severability. The Court also agreed to review whether the individual insurance mandate can be considered separately from the other provisions of the Patient Protection and Affordable Care Act (ACA). This was the only question presented in the National Federation case (No. 11-393) and it was Question 3 of the petition in Florida, et al. v. HHS (No. 11-400).

Anti-Injunction Act. In addition, in HHS v. Florida, et al. (No. 11-398), the Court directed the parties to brief and argue the question of whether the Anti-Injunction Act bars the lawsuit challenging the individual mandate provision. Under the Anti-Injunction Act, “No suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person,” and it was intended to maintain the government’s revenues while a taxpayer objected to paying a tax. Under the Act, the taxpayer must pay the tax first, then pursue a challenge. If the Court were to find that the Anti-Injunction Act applies in the health reform case, challenges would have to wait until after the mandate actually had gone into effect in 2014 and was actually enforced against a taxpayer.

Medicaid expansion. The Court also agreed to review the constitutionality of the Medicaid amendments to expand eligibility and subsidies, which was Question 1 in the Florida, et al. v. HHS (No. 11-400) petition. The appeals court had deemed this Medicaid expansion as constitutional. Under this provision, the federal government would pay 100% of the fees associated with the increase Medicaid eligibility and subsidies beginning in 2014 and 2015, after which the percentage will drop gradually each year until reaching 90% in 2020.

The Court has scheduled five and a half hours of oral debate on these issues during March 2012, and a final decision on the issues can be expected in June.

The Court took no action on the three other pending petitions, which are Thomas More Law Center v. Obama (No. 11-117), Liberty University v. Geithner (No. 11-438), and Virginia v. Sebelius (No. 11-420).

Monday, November 14, 2011

Small Business Health Care Credit Claims Lower Than Expected

Claims for the Small Business Health Care Tax Credit provided by the Patient Protection and Affordable Care Act (ACA) have been lower than anticipated despite extensive IRS outreach, an audit by the Treasury Inspector General for Tax Administration (TIGTA) has found.

The ACA provides a tax credit for small business employers who pay at least one-half the cost of health insurance coverage for their employees. The credit was designed to encourage small business employers to offer health insurance benefits. TIGTA reviewed whether the IRS adequately implemented and accurately processed the credit.

The volume of claims for the credit has been low despite IRS efforts to inform 4.4 million taxpayers who could potentially qualify for it. According to the IRS, as of mid-May 2011, just more than 228,000 taxpayers had claimed the credit for a total amount of more than $278 million. The IRS plans to conduct focus groups to determine why the claim rate was so low. The Congressional Budget Office had estimated the credit would cost $37 billion over ten years and that taxpayers would claim up to $2 billion of credit for tax year 2010.

TIGTA found that some taxpayers and tax practitioners made mistakes when completing Form 8941, Credit for Small Employer Health Insurance Premiums, to apply for the credit. That form does not contain all of the data and calculations needed to verify each step of credit eligibility.

TIGTA made several recommendations to make it easier for the IRS to verify eligibility and to correctly process claims for the credit. IRS officials agreed with the recommendations and stated that they plan to take appropriate corrective actions.

For more information, visit http://www.treasury.gov/tigta/auditreports/2011reports/201140103fr.html.

Friday, November 11, 2011

No word yet on Supreme Court’s decision to hear health reform case, but D.C. court speaks

November 10 came and went, and we still don’t know whether the Supreme Court will review one of the health reform cases that I mentioned on Monday. The decision could be revealed this coming Monday, November 14, in the Court’s order list. For now, we continue to wait . . .

In the meantime, other courts continue to rule on health reform cases. The District of Columbia Circuit Court of Appeals has ruled in Seven-Sky v. Holder (No. 11-5047) that the individual mandate in the Patient Protection and Affordable Care Act (ACA) is constitutional. After determining that the Anti-Injunction Act did not bar the lawsuit, the court found that Congress had the authority under the Commerce Clause to enact the individual mandate, which requires individuals to purchase health insurance by 2014 and imposes a penalty on most who do not comply.

Anti-Injunction Act. The shared responsibility payment provision does not implicate the Anti- Injunction Act, according to the court. The Anti-Injunction Act bars pre-enforcement challenges to the assessment and collection of “taxes,” but the shared responsibility payment is labeled a “penalty” in the ACA. Congress labeled other provisions in the ACA “taxes.” This indicates that Congress’ decision to use the word penalty was deliberate, the court wrote. Further, the court said, congressional findings do not show that the purpose of the shared responsibility payment was to raise revenue. Rather, the aim of the payment is to encourage individuals to purchase health insurance. Also, Congress did not provide the IRS with the traditional criminal enforcement or levying powers to collect the payment. Thus, the penalty is not a tax within the meaning of the Anti-Injunction Act, and the lawsuit is not barred.

Commerce Clause. The D.C. court also found that Congress had the authority under the Commerce Clause to enact the individual mandate. The court indicated that the Supreme Court’s Commerce Clause cases do not require “activity” as a prerequisite to regulation. The court likened the current case to the situation in Wickard v. Filburn, 317 U.S. 111 (1942), where the court found that growing wheat for personal consumption could affect the national price of wheat and was, therefore, within Congress’ power to regulate under the Commerce Clause. “Wickard, therefore, comes very close to authorizing a mandate similar to ours, at least indirectly, and the farmer’s “activity” could be as incidental to the regulation as simply owning a farm,” the court wrote.

In addition, the court acknowledged the impact of the mandate on individual liberty. “Appellants’ view that an individual cannot be subject to Commerce Clause regulation absent voluntary, affirmative acts that enter him or her into, or affect, the interstate market expresses a concern for individual liberty that seems more redolent of Due Process Clause arguments. But it has no foundation in the Commerce Clause,” the court wrote.

Dissent. Judge Kavanaugh dissented as to jurisdiction, but did not decide the case on the merits. In a lengthy dissent, he wrote that the Anti-Injunction Act applies because a successful pre-enforcement suit would prevent the IRS from assessing and collecting the penalty from those who do not have health insurance. The ACA contains a provision indicating that the penalty be collected in the “same manner as an
assessable penalty under subchapter B of chapter 68” of the Tax Code. Judge Kavanaugh points out that “penalties under subchapter B of chapter 68 in turn must ‘be assessed and collected in the same manner as taxes.’” (emphasis in original). Because the ACA penalty is to be assessed and collected in the same manner as taxes, and taxes are shielded from pre-enforcement suits by the Anti-Injunction Act, ACA’s penalty likewise is shielded from such suits. Thus, the court lacks jurisdiction to decide this case at this time, he concluded.

White House reaction. Stephanie Cutter, Assistant to the President and Deputy Senior Advisor, reacted quickly to the court’s ruling, posting on the White House blog that “the Affordable Care Act scored another win in court when the District of Columbia Circuit Court of Appeals ruled that the law is constitutional. In upholding the constitutionality of the law, Judge Laurence H. Silberman reaffirmed that Congress has the constitutional authority ‘to forge national solutions to national problems’ like the need to provide affordable, quality health care to all Americans.”

“The ruling is yet another victory for the millions of Americans who are already benefitting from the law including the parents of children with preexisting conditions, women getting mammograms with no out-of-pocket cost, seniors saving hundreds of dollars on their prescription drugs, and one million young adults now newly insured through their parent’s plan,” Cutter wrote.