United States (KaiserHealth) – The Obama administration today unveiled final regulations that detail what information health insurers must provide on new consumer labels mandated by the federal health law to explain their plans.

“All consumers, for the first time, will really be able to clearly comprehend the sometimes confusing language insurance plans often use in marketing,” said Health and Human Services Secretary Kathleen Sebelius in a printed statement. “This will give them a new edge in deciding which plan will best suit their needs and those of their families or employees.”

The standardized forms will be available beginning Sept. 23 for about 150 million Americans with private health insurance, federal health officials.

The rules set the design for easy-to-understand forms describing health insurance benefits. The forms are intended to provide the same details on all policies using the same language – defined in an accompanying glossary — so that consumers can compare policies. The law also mandates coverage examples that explain how much a plan pays on average for common medical conditions. It even eliminates “fine print” by requiring that information be printed in 12-point type, which is larger than the print in a typical newspaper article.

But the bottom line – a policy’s price – is missing. Although an estimated premium price was included the draft rules announced last August, it has been dropped and won’t be required for the form. Other changes from the earlier rules include reducing the number of coverage examples from three to two (having a baby and diabetes care).

Marilyn Tavenner, the acting head of the Centers for Medicare and Medicaid Services, which held the media briefing, said the changes will improve consumers’ understanding of their health options.

“For too many Americans today, choosing a health plan means reading through a human resources book usually the size of a small phone book and important information about eligibility and benefits is often buried in the fine print,” she said. “And it can be confusing to compare one plan to another. For those who purchase health insurance on their own, this process can be even more frustrating. With these new rules we’re making it easier for consumers to find the plan that is right for them.”

– Provided by Kaiser Health News.

View full post on Insurance Stories

Washington, DC, United States (KaiserHealth) – Kansas and Oklahoma are the seventh and eighth states to get the thumbs down from the federal government on their requests to phase in new regulations that could result in health insurance rebates to consumers.

Under the Affordable Care Act, companies that sell individual insurance policies must spend at least 80 cents of each premium dollar on health care or quality improvement for their members. Companies that fall short of the 80 percent standard will have to pay rebates to their customers to make up the difference.

Kansas Insurance Commissioner Sandy Praeger and Oklahoma Insurance Commissioner John D. Doak had asked the federal Department of Health and Human Services for waivers that would allow the state to slowly phase in the requirement.

Both requests were denied Wednesday. HHS official Steve Larsen says he’s seen no evidence that the new requirement will destabilize the individual insurance market in Kansas. In fact, Larsen anticipates that none of the eight companies currently writing individual health insurance policies in Kansas will pull out of the state.

“There were four companies that were, to varying degrees, below the 80 percent,” Larsen told reporters, “all of which we concluded were moving toward the 80 percent, or if they didn’t hit the 80 percent, were very profitable, and certainly could sustain paying rebates to consumers to make sure that consumers get value for their premium dollars.”

But at a public hearing last March, Coventry Health Care of Kansas CEO Michael Murphy said his company was relatively new to the individual market, and would need extra time to meet the requirement: “Application of the 80 percent standard will result in unsustainable losses for Coventry’s individual health plan business, and raise major concerns about our ability to continue operating this segment of business in the state of Kansas.”

According to HHS estimates based on 2010 data, the four Kansas companies could have to pay more than $5 million in rebates to 35,000 customers between now and next August. But insurance commissioner Praeger doubts the rebates will be that much.

“I know it won’t be that high,” Praeger said, “because I know that companies that were in the low 70′s, by the end of 2011 were close to 80, so it won’t be that high.”

Praeger anticipates that once companies get past the next couple of years, none of them will have any difficulty meeting the 80 percent standard.

The nationwide advocacy group, Consumer Watchdog, had urged HHS to deny the Kansas request to phase in the new rules. Spokeswoman Judy Dugan says the 80 percent requirement is the only real financial protection for consumers in the Affordable Care Act.

“The whole idea of this requirement is to get insurance companies to operate more efficiently, and more on behalf of consumers, with less administrative cost—possibly a little less profit—and a lower cost of sale,” Dugan said.

Dugan says it’s possible that some consumers will get rebates this year, but she thinks the main benefit from the new requirement will be seen in the premiums people pay for individual insurance policies. To meet the 80 percent standard, Dugan expects companies to lower their premiums, or to at least hold down future premium increases.

Of the 17 states that have applied to change the rebate rules, eight have been denied, five were approved with modifications, and three are still under review, according to documents from the Centers for Medicare and Medicaid. Only Maine got full approval for its request.

The states that are still under review are Texas, North Carolina and Wisconsin.

– Provided by Kaiser Health News.

View full post on Insurance Stories

Atlanta, GA, United States (KaiserHealth) – ATLANTA—In Georgia, like many other Southern states, opposition to the federal health overhaul runs deep. Yet an overwhelmingly conservative committee of experts carefully, and without rancor, has outlined a plan to give the state a health insurance exchange, a cornerstone of the sweeping health care law passed by Democrats in Congress and signed by President Obama last year.

The panel had the blessing of Republican Gov. Nathan Deal, a former U.S. congressman who describes himself as the first House member to denounce the health law as unconstitutional. Georgia has joined 25 other states in a legal challenge to the law likely to be resolved by the Supreme Court.

But if the 2010 health law is not overturned by the court or repealed, states will have two choices—comply with the law, or wait for the federal government to force it on them.

This reality, and the opportunity to address the dysfunction in state health care systems, has tempered opposition to the Affordable Care Act, not only in Georgia but also in some other Republican-led states.

In Alabama, Gov. Robert Bentley, a physician, also opted to set up a committee to plan for an exchange and fought his legislature’s decision to scale back Medicaid after enhanced federal funding expired. In Virginia, a task force appointed by Republican Gov. Robert F. McDonnell has completed a sweeping review of state health care policies and produced a set of recommendations designed to implement the law if it is not repealed.

Twenty-six of 29 Republican governors have accepted up to $1 million each in federal grants to design state health insurance exchanges, marketplaces where individuals and businesses can shop for medical coverage. In addition, three of these states – Indiana, Mississippi and Nevada — have received $31 million to implement the plans, according to the most recent federal listing of the grants. Arizona Gov. Jan Brewer has requested $29.8 million for one of these grants despite opposition from her own party.

The exchanges aim to encourage competition among insurers and give consumers access to a variety of insurance options. Under the health law, each state must have its exchange in place by Jan. 1, 2014. If not, the federal government will set one up for them.

The deadline has prompted states to “take a more practical approach,” said Tricia Brooks, of the Georgetown University Health Policy Institute, which tracks the progress of the health law. Conservatives in many states have been forced to take a sobering look at their health care delivery systems, “and when they can get away from the politics of all this,” Brooks continued, “they can see that maybe the (new law) isn’t all bad.”

In Georgia, this may well be the case. More than 20 percent of its population lacks health coverage of any kind, ranking Georgia 45th out of 50 states in this dubious category. Only 29 percent of Georgia firms with fewer than 10 employees are offering health coverage. Many small businesses are so crippled by insurance costs that they say they either cannot hire new employees, are losing the ones they have or are unable to expand because they cannot afford it.

“We’ve got to do something,” said Republican State Rep. Richard H. Smith, the chairman of Georgia’s House Insurance Committee. “An insurance exchange can work whether (the health care law) survives or not. We still need to give people access to health insurance.”

Deal appointed the Health Insurance Exchange Advisory Committee in June after being forced to pull an exchange bill when tea party conservatives launched a protest just as the General Assembly was getting ready to vote on it.

“We knew it was going to be controversial,” said Smith, lead sponsor of the House bill. “With this committee, we wanted to give more people a chance to buy in to the idea of an exchange and to understand it.”

The committee, established by a Deal executive order, includes members from Deal’s cabinet, both parties in the General Assembly, the insurance industry, health care providers, business and small business, consumer groups and the tea party.

On Oct. 27 the committee reached consensus on recommendations it would send to Deal. The Georgia exchange should be a quasi-governmental nonprofit that would operate like the state Lottery Corp. It would have a seven-member board of directors, with each director serving up to three, three-year terms. There would be separate pools within the exchange for small businesses and for individuals. “Small business” would be defined as 1 to 50 employees until 2016, when it could rise to 100 employees.

The committee mostly stayed out of the weeds, referring complicated details to the governor’s office for resolution. How and when would providers be reimbursed? How would the exchange pay for itself?

Insurance broker Russ Childers prompted an argument by suggesting that it was impossible for exchange directors to be both knowledgeable and “free of conflicts of interest.” Eventually the panel reworded the language: there should be “a formal process for addressing and resolving conflicts of interest.”

Cindy Zeldin, executive director of Georgians for a Healthy Future, a group that supports the new health law, described the recommendations as “more deferential to industry and less mindful of consumers than I would have liked,” but acknowledged that debate and discussion, both on Oct. 27 and at earlier meetings, was unfailingly “cordial and constructive.”

And “everybody listened,” added tea party representative Ed Painter, a photo shop owner from Dalton, Ga. “I like the free market, and the (new law) isn’t free market. On the other hand, I’d do anything to facilitate real health care reform. It’s a real conundrum for me, and that’s why they put me on the committee. This is hard.”

The lack of bombast was easily noticed at the October meeting. Not a single Republican in the committee room at Atlanta’s Department of Community Health referred to the health care law as “Obamacare,” a term repugnant to Democrats, and no advocate of the new law referred to the health care exchange as “compliance” with the law. “We’re doing what’s best for Georgia,” said independent health care consultant Gerry Purcell—a conservative.

Deal declined to be interviewed for this story, but Blake Fulenwider, Deal’s health policy adviser, said the governor would receive the committee’s formal report by Dec. 15. If the governor decides “to go forward,” Fulenwider said, “I’m confident we can craft an acceptable project for Georgia.” Fulenwider said Deal and the legislature have not yet decided whether to draft a health care exchange bill.

Several committee members credited the federal health law for serving as the “catalyst” for a needed debate, but whether Georgia would build a state health insurance exchange if the act were struck down was “a big unknown,” said Kyle Jackson, state director of the National Federation of Independent Businesses. “There are benefits to a health care exchange, especially for small business,” he said, but without the federal law, “I don’t know if the political will is there to make it happen.”

– Provided by Kaiser Health News.

View full post on Insurance Stories

Washington, DC, United States (KaiserHealth) – Signing up for health insurance during your company’s annual enrollment period, which for many plans is right now, may feel like taking a nasty dose of medicine: You know it’s good for you, but it sure doesn’t go down easy.

On the plus side, nearly two-thirds of companies are still offering health insurance to their employees, according to the Kaiser Family Foundation’s annual survey of employer health benefits. That’s worth a lot.

But that coverage won’t come cheap, as premiums, deductibles and cost sharing continue to rise, sometimes even more steeply than in previous years. More employers are also moving to high-deductible plans that shift increasing expenses onto their employees, requiring them to pay more before benefits kick in. And companies are making it pricier to insure spouses and children.

There is a bright spot, however: Employees who participate in the increasing number of company wellness programs can often reduce premium and other cost increases.

“It makes sense for the employer,” says Ron Fontanetta, a director at benefits consultant Towers Watson. “They’re trying to encourage healthy behavior. If people participate, [employers expect they] will see a reduction in overall costs, while employees will see an opportunity to mitigate their out-of-pocket costs.”

Employees are going to need that helping hand. According to the Kaiser survey, premiums for family coverage rose 9 percent this year, to an average of $15,073 a year. The employee share of that was $4,129. For employer-provided individual coverage, premiums rose 8 percent, with workers typically picking up $921 of the average $5,429 annual tab.

Mary and Jon Berg have coverage through the Las Vegas landscape company where Jon works. Last year, the company asked employees which they would prefer for the company’s two health plans: higher premiums or higher out-of-pocket expenses. Rather than raise premiums, the employees, many of whom don’t have high health-care costs, voted for higher out-of-pocket expenses through deductibles.

The change has been hard on the Bergs.

Mary is being treated for a gastrointestinal stromal tumor, a type of soft-tissue cancer. The couple pays $70 weekly for coverage through the company’s HMO plan. Under the new cost structure, they now have a $250 deductible, and they have been paying $150 every time Mary visits the emergency room, an increase from $50. The changes came on top of the co-payments the Bergs already make of $110 monthly for Mary’s daily Gleevec cancer pill and $750 for annual PET scans, among other out-of-pocket expenses.

They would like to join the company’s other health plan, a PPO that would give them access to a wider network of doctors. But that plan costs an additional $40 a week in premiums and has a $1,500 deductible. That’s more than they can afford. Mary says they’re anxiously waiting to hear now about the cost of coverage for 2012. “They’ve indicated possible premium increases,” she says.

While most people are still enrolled in traditional plans such as HMOs and PPOs, employers continue to shift toward “consumer-driven health plans” or high-deductible health savings plans.

These plans typically have deductibles of at least $1,200 and get their name because they put consumers, however reluctantly, in the driver’s seat for covering that deductible amount before most benefits are covered. (Some preventive services such as annual physicals and mammograms are typically not subject to the deductible.) The plans are accompanied by tax-advantaged savings accounts funded by the employer and/or the employee; employees can use these funds to pay for medical expenses.

Seventeen percent of employers reported that more workers were enrolled in high-deductible health plans than in any other type of plan in 2011, up from just 6 percent in 2008, according to an employer survey by PricewaterhouseCoopers.

These types of plans are particularly popular among the largest firms: More than half of companies with more than 20,000 employees offer one, but the number is growing among companies of all sizes, says human resources consultant Mercer.

For many workers, company wellness programs are helping to limit higher out-of-pocket costs because some employers partially cover deductible or premium expenses for workers who join those programs. During annual enrollment, it’s worth checking closely for these opportunities. An employer may pay a big chunk of the deductible, for example, for employees who take a health risk assessment and agree to health coaching if necessary to get their blood pressure or cholesterol levels under control.

Under the 2010 health-care overhaul law, employers must allow the adult children of their employees to stay on their parents’ plan until they reach age 26 unless those children can get coverage through their own jobs. Insuring these generally healthy young people adds about 2 percent to the cost of a plan, says Tracy Watts, a partner at Mercer. But the firm’s survey data show that more than a third of employers are increasing employee costs for dependent coverage next year.

Coverage for spouses may be pricier as well. If an employee’s spouse can get insurance through his or her own job, some employers are trying to nudge them in that direction by adding a surcharge to the insurance cost.

Unmarried couples may fare better in some respects. Employees at companies that offer domestic partner health insurance benefits typically face an income tax liability on the value of their partner’s coverage. Some companies are increasing the pre-tax pay of such employees to bring it into line with their married counterparts. “It’s an emerging practice,” says Deena Fidas, deputy director of the Workplace Project at the Human Rights Campaign Foundation, an advocacy group. “The numbers are not huge yet.”

– Provided by Kaiser Health News.

View full post on Insurance Stories

United States (KaiserHealth) – Nine Medicare Advantage plans scored top marks on the five-star government rating system for 2012, up from only three plans this year, according to new figures posted by Medicare Wednesday.

That’s a small share of the 569 private Medicare plans, but it’s a laurel much of the industry is now chasing. For the first time, Medicare plans will get big cash bonuses for higher scores, a new reward created by the 2010 federal health law.

The star ratings are part of a push by the Obama administration to increase the quality of care provided by private plans that contract with Medicare. The ratings are based on 36 measures, ranging from rates of hospital readmissions to the volume of consumer complaints a plan gets.

The administration has argued that Medicare Advantage plans cost more than traditional Medicare without providing better results for patients. The 2010 federal health law tried to remedy that discrepancy by cutting plan payments by $136 billion over ten years. But the star-rating bonus system restores some of those losses to high-performing plans.

Five-star plans will also have the ability to enroll members year-round, rather than only during Medicare’s annual open enrollment period, which this year begins Oct. 15 and ends Dec. 7.

Gundersen Lutheran Health System’s Medicare Advantage plan attained its first five-star rating this year and intends to take full advantage of that perk. Gundersen’s chief financial officer, Gordon Edwards, said the Wisconsin-based plan will begin expanding into Iowa in January. The five-stars will allow Gundersen to gain members quickly—while competitors like Humana and UnitedHealth Group have to wait for next year’s enrollment period.

Kaiser Permanente, the California based managed-care organization, operates four of the nine five-star plans. (Kaiser Health News is not affiliated with Kaiser Permanente.) The other five-star winners are a mix of smaller, regional plans.

“Everyone is taking this seriously,” said Sarah Baker, of Health Dialog, a Boston-based insurance analytics firm that is advising plans on how to improve their ratings. Higher ratings now offer a “huge competitive advantage,” she added.

United plans fell well short of five stars this time, but the company is trying to change that. United, the largest insurer by revenue, has set a goal of having all of its members – currently, 2.3 million seniors are on its rolls – in four star or better plans by 2014, said Dr. Rhonda Medows, the chief medical officer overseeing quality for the insurer.

That will be a big leap compared to current scores: In 2011, UnitedHealth Group averaged only 3.18 stars in its 68 Medicare Advantage plans, according to a Barclays Capital research note.

But, United is investing heavily in the ratings, said Medows, launching, for instance, a new Web tool that will let doctors track quality measures that can boost the scores. The results are already showing. The portion of United members in 3.5 star-or-better plans increased by 10 percentage points this year, Medows said.

Overall, health plans boosted their ratings to 3.44 stars on average in 2012 from 3.18 stars this year, a senior Medicare official said in an interview. The official attributed the increase to the health law bonuses.

Beginning in January, plans with three stars or better, will get bonuses of 3 to 5 percent of their total Medicare payments. In November, the Medicare agency expanded the bonus program well beyond what was required in the health overhaul law.

Today’s ratings, based on 2010 data, are the first to reflect what plans have been up to since the health law passed.

The federal Medicare agency did not disclose the total value of the bonuses it will award next year, but an analysis of publicly available Medicare data suggests the 2012 bonuses will exceed $4 billion nationwide.

Given that many Medicare Advantage plans operate on a 3 percent profit margin, even the smallest available bonuses – an additional 3 percent for a three-star plan – are a huge boon, said John Gorman, of Gorman Health Group, a Medicare Advantage consulting firm. Health plans’ quality improvement departments “moved from being a cost center to a potentially game changing profit center,” he said.

For some plans, the bonuses are easing what would otherwise be painful cuts. Group Health Cooperative, a Seattle-based health system and insurer, achieved a five-star rating this year, up from 4.5 last year, and will get the highest possible bonus. Diana Birkett Rakow, a Group Health lobbyist, said without the bonuses, the health plan would have faced cuts of as much as 25 percent in coming years because of the health law. “I don’t know what kind of choices we’d have had to make,” she said.

Plans can use the bonuses to increase benefits available to their members or to reduce the premiums Medicare beneficiaries pay out of pocket, increasing their allure to prospective enrollees.

Star ratings were largely an afterthought to insurers before the health law passed. The rating system was put in place in 2007 to help consumers make more informed choices.

But the new cash incentives have commanded the attention of health plan executives.

Now “the stars equate to dollars,” said Ann Marie Scimmacco, vice president of Fallon Community Health Plan in Massachusetts, and top executives are tuning into quality measures. “We have definitely heard that from the finance department, ‘How can you get to five stars?’” she said.

Plans on the cusp of the top rating that didn’t make the cut this year are not giving up. KelseyCare Advantage, a Houston-based plan affiliated with the Kelsey-Seybold Clinic, scored 4.5 stars in 2011 and 2012, the only plan in that market to do better than a 3.5 star rating.

Our goal next go-around is to be a five star rated plan,” said KelseyCare president Marnie Matheny. “We’ve got initiatives built around every measure.”

– Provided by Kaiser Health News.

View full post on Insurance Stories

Montpelier, VT, United States (KaiserHealth) – Starting now, Vermont begins building a single-payer health system that will move many state residents into a publicly financed insurance program and pay hospitals, doctors and other providers a set fee to care for patients.

Proposed by the governor and passed by the Democratic-controlled legislature, the new program will replace the traditional insurance plans currently used in the state and the traditional fee-for-service reimbursements, giving the state a system different from its 49 counterparts and more like its neighbor to the north, Canada.

Many of the details of the system, including the key issue of financing, still need to be worked out and more legislation will be required to complete the transformation. But Democratic Gov. Peter Shumlin has moved quickly since taking office last January to set the state on a path to create the single-payer system, called Green Mountain Care.

“Under the plan, single payer coverage will be a right and not a privilege, and will not be connected to employment,” he wrote in a recent blog post. “This is groundbreaking. But our success in guaranteeing coverage depends on our ability to control health care costs, so our plan is focused squarely on that goal.”

It will be a unique endeavor; no other state has tried such a dramatic restructuring of its health care system, and national lawmakers backed away from such an option in the health care overhaul debate after vehement opposition from conservatives.

But, Vermont has been a pioneer on other progressive initiatives. It was the first state to recognize gay marriage; and nearly 20 years before the federal health overhaul, Vermont reformed its insurance regulations to bar plans from turning down applicants because of preexisting medical conditions and limit rate variation. It also has one of the nation’s most generous Medicaid programs, as well as a higher percentage of insured residents and health care spending than many other states.

Shumlin recently appointed the five-member Green Mountain Care board, which had an official start date of Oct. 1. That panel will set plans for revamping the state’s health care delivery and payment system including deciding on reimbursement rates.

“Every state in the nation faces a crisis in terms of health care costs rising faster than our ability to pay,” said Anya Rader Wallack, who will chair the Green Mountain board. “What’s unique about Vermont is that we have a governor who has said, ‘I want to fix this problem,’ and he’s put us on a tight timeline for fixing it.”

Here are some of the issues involved:

What would the Vermont law do?

Green Mountain Care would be a state-funded-and-managed insurance pool that would provide near-universal coverage to residents with the expectation that it would reduce health care spending. On May 26, Shumlin signed a bill that started the process. However, the process will take several years. Many key details – such as how to pay for the system – remain unresolved.

The law allows for either a completely public system or a public-private venture where the state could contract out some administrative functions to private insurers. Employers with self-insured plans (usually large companies) would be able to keep their current health coverage.

The law:

–Launches a health insurance exchange as required by the 2010 federal health care law.

–Creates pilot projects to revamp the way health care is delivered and paid for, including possible efforts to use bundled payments, where a provider or group of providers would receive a lump sum for managing specific conditions, or creating a system called an “advanced medical home” in which doctor and other health care providers work together to improve the cost and quality of primary care.

–Establishes the Green Mountain Care Board. The board will provide oversight of cost-control initiatives, review and set rates for medical procedures and design the health benefit package. It will also create a cost projection and recommend a funding plan to the legislature.

How does it fit – or not – with the federal health care law?

Vermont wants to use funds offered in the federal law to build a health insurance exchange that would provide the basis for Green Mountain Care. Under the federal law, all states will have an exchange, or insurance marketplace for individuals and small business, by 2014 – or the federal government will set one up for them. But the law also allows states to seek a waiver from the specific federal requirements for running that exchange if they show they are providing at least equal coverage and benefits another way. Vermont is seeking a waiver to pursue the single payer system and not have to run two duplicative programs.

What are the benefits?

Supporters say that a single-payer system is friendly to consumers and providers and will help reduce the rate of health-care cost increases over time. A Commonwealth Fund report concluded that such a system could cut health care spending by 25 percent after it is fully implemented in about 10 years. After adding coverage for the uninsured and expanding other services, including dental care, the system would save Vermont households and employers nearly $200 million in the first year alone. Savings would come primarily from lower administrative expenses, reduced fraud and abuse, greater delivery system integration and malpractice reform. The report also found that the system would create about 3,800 new jobs and increase the state’s total economic output by more than $100 million in 2015.

Dr. David Himmelstein, a professor at the City University of New York’s School of Public Health and a proponent of a national single payer system, said: “If they follow through like they say they would, it would be a fabulous thing, an enormous gift to the nation.”

What are the criticisms?

Some business owners worry about losing control over how they provide employee insurance and about the potential for more taxes. Others are concerned about legal and fiscal challenges.

In addition is the key concern about the costs for the state. The legislature had to deal with a $150 million shortfall this year. No Republican in the House and only one Republican in the Senate supported the bill. Some House Republicans blasted the governor for not dealing with the hard part — how to finance the plan — until after he campaigns for a second two-year term in 2012.

Meanwhile, some single-payer advocates believe that the new system does not go far enough. Himmelstein said that the law should be more explicit about not having copayments and deductibles and make a greater commitment to global budgeting, in which providers pay for a patient’s healthcare with a set fee for the year.

He also warned that private insurance could undermine government coverage in the same way that the existence of Medicare Advantage plans has prevented the general Medicare program from upgrading its coverage. “The only reason to buy private coverage when there is public coverage is if the public is not good. So it gives the insurance lobby a very strong motive to make the public insurance inadequate since that gins up business for them,” Himmelstein said.

How likely is it that the program will be implemented?

The next few years will prove pivotal in laying the groundwork for implementation. During that time, opponents will be able to organize. They have worked effectively in the past to kill other efforts, including former Gov. Howard Dean’s push to create a single-payer system in’94.

Implementation may also depend on overcoming certain legal challenges including whether the state gets waivers from the federal government for Medicaid and Medicare because the system would change how health providers are paid for services in those systems.

Vermont might also face challenges from self-insured employers, who are protected by federal law from state regulations.

How will the state pay for the system?

Vermont is just beginning to examine potential funding options, including sales, income and payroll taxes. In two years, the secretary of administration will need to recommend a financing plan and then the legislature will vote on it.

First though, the Green Mountain Care Board will have to reexamine the costs of a single payer system and then present its findings to the secretary. “The governor said he won’t ask anyone to support a public financing system until he knows that we can do a sufficient job of cost-containment,” Rader Wallack said. “So, we really see it as we have to do our work immediately in order to show that the system is sustainable before we ask for endorsement of any particular financing plan.”

– Provided by Kaiser Health News.

View full post on Insurance Stories

United States (KaiserHealth) – Worried that the federal government could end up running new insurance marketplaces for dozens of states, the Obama administration is making a new pitch for cooperation to 46 states and the District of Columbia today.

Health officials from the states are meeting in the District of Columbia with the administration, which is proposing several models for ways to divvy up exchange duties between Washington and the states.

The exchanges, which open in 2014, are a key component of the health law, allowing individuals and small businesses to shop for coverage from a range of insurers, see if they qualify for low-income subsidies to help them buy policies – or enroll in Medicaid if they meet income requirements. The federal government will run exchanges for states that can’t – or won’t – do it themselves.

Exchange legislation efforts have failed in 16 states – a demonstration of the widespread opposition to the law in states governed by Republicans. But the bipartisan participation in today’s meeting indicates a level of political pragmatism, even from states who vehemently oppose the law.

Alan Weil, executive director of the National Academy for State Health Policy, described the conundrum Republican governors are facing.

“As political leaders they can say they hate the law, but as head of the executive branch, they have to be prepared,” Weil said. “Some are saying they are so confident [the law is] going away that they are not going to do anything. Some are saying they hope it goes away but for now it’s the law. … They are contingency planning.”

Planning for exchanges is something the Obama administration is working to encourage. “The notion of having many state exchanges completely federally run may not be appealing to the administration,” said Linda Blumberg, senior fellow at the Urban Institute’s Health Policy Center. “The feds have been trying to be more aggressive about discussing partnership options with the states. They are looking for mechanisms for more flexibility to give states a hand in it without this being overwhelming to the states.”

The partnership model helps states decide which functions they are ready to perform and which they would like to leave to the federal government, and for how long, said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at Health and Human Services. “This model allows HHS and the states to be as logical and efficient with our resources as possible, while giving states the opportunity to perform the functions most important to tailoring an exchange to the unique needs of their state.”

A number of states “haven’t been able to put one foot in front of the other because of functional constraints, or because of staffing or political constraints,” said Blumberg.

According to the Center on Budget and Policy Priorities, 10 states have passed or enacted legislation putting them on a path to state-run exchanges, and legislation is pending in seven states.

HHS is today previewing for states three possible options for partnership. In lieu of the federal government taking over the entire exchange operation, a state could choose to share responsibilities for managing the participation of health plans, helping consumers navigate the system, or both. The specific state responsibilities were chosen in part because states already serve some of these functions through insurance commissioners or other parts of their governments.

When it comes to health plans offered through the exchange, for example, states could oversee the selection of plans, collecting and analyzing information on rates and benefits and collecting performance data that the plans must report.

The second option would have states handling the personal component of the exchanges. For example, states would take charge of in-person assistance and manage people who will help consumers navigate the new system. States would also be responsible for consumer outreach and education.

That would leave HHS to handle eligibility and enrollment, with the goal of achieving a seamless experience, where people can move between Medicaid and private insurance coverage on an exchange as their income situations change.

One of the most onerous requirements is the need for states to put in place information technology systems to determine eligibility for varying programs, such as Medicaid and low-income subsidies, Blumberg said. “That’s the most difficult part of getting these exchanges up and running, aside from the politics,” she said. “I could see states looking at that and saying, ‘I don’t know how to do that, but if the government takes a role in doing that, we can do other things.’”

– Provided by Kaiser Health News.

View full post on Insurance Stories

Washington, DC, United States (KaiserHealth) – A provision of the 2010 federal health law seeking to increase Medicare beneficiaries’ share of health care costs is meeting resistance from an unlikely group of 33 state insurance regulators, health insurers and consumer advocates charged with revising Medigap insurance policies that cover most out-of-pocket expenses.

The National Association of Insurance Commissioners assembled the group to come up with ways to raise the beneficiaries’ cost for the most popular and generous Medigap policies, a task Congress assigned to the association in the health law. Since then, the idea of shifting some costs to beneficiaries in Medigap policies has emerged as one of several proposals to reduce the federal deficit.

The proposals suggest that if Medigap policies cover less of beneficiaries’ costs, some seniors will be less likely to overuse Medicare-covered health care services. The Congressional Budget Office estimated in March that such changes could save the government $53 billion in Medicare spending over a decade by strengthening incentives “for more prudent use of medical services.”

In a conference call later this morning, the group will discuss their congressional assignment as well as the broader proposals limiting Medigap policies, which help more than 7 million Medicare beneficiaries – about one sixth of those in traditional Medicare – pay for their out-of-pocket costs. Those costs include monthly premiums, 20 percent of allowed charges for out-patient services such as doctor’s visits and other costs Medicare doesn’t cover. The most comprehensive — and expensive — plans pick up nearly all the costs.

Many of the Medigap group’s members have raised questions about their task, including the effects it could have on seniors’ health and whether changing the plans is legal. Such consensus is something the group’s chairman, Guenther Ruch, an administrator at Wisconsin’s insurance department, doesn’t see very often.

“This is a unique situation where such diverse interests have the same concerns about the potential changes to the Medigap insurance market,” he said.

“Some of those proposals are fairly dramatic in the cost shifting effect onto seniors,” said Mary Beth Senkewicz, Florida’s deputy insurance commissioner, who chairs the NAIC’s senior issues committee, which includes the Medigap group. “This has been a product that has worked very well for a number of years, helping to maintain seniors’ peace of mind, knowing that they have coverage for the gaps in Medicare.”

Bonnie Burns, a policy specialist at California Health Advocates and another member of the Medigap group, questioned whether patients need incentives to reduce their use of medical services.

“Beneficiaries don’t order services, providers do,” she said. “To suggest that Medicare beneficiaries overutilize services on a whim because they don’t have ‘skin in the game,’ is pretty disturbing.”

Although some studies have found that seniors with Medigap policies use more Medicare services, Burns said they may be sicker than the average Medicare beneficiary, which is why they bought Medigap coverage.

Senkewicz said members of the group have also questioned the legality of making changes that apply to policies seniors have already purchased. The policies are contracts between the insurer and the beneficiary which contain certain promises of coverage. When state regulators require changes in insurance, those typically apply only to future policies, she said.

Several members have suggested that Medigap policies aren’t responsible for Medicare’s growing costs.

“These carriers only pay for what Medicare has already determined to be medically necessary,” said Senkewicz. “Those determinations are not made by the insurance company.”

William Schiffbauer, a member of the group and an independent health care attorney who has represented insurers, said the health law requires the group to suggest raising beneficiary cost-sharing in Medigap plans in order to encourage more appropriate use of physicians services, based on evidence published in medical journals. Schiffbauer said that the medical literature reviewed so far does not identify which services are inappropriate and should be discouraged by making them more expensive for patients.

The group is being asked to decide what’s medically necessary — an impossible task, he said.

A review of proposed Medigap changes by the Kaiser Family Foundation in July found that one in five Medigap beneficiaries would face higher out-of-pocket expenses, primarily those with health problems and low incomes. The study also noted that the savings to the Medicare program and Medigap members depend on patients seeking less medical care, including treatment they may really need. (KHN is an editorially independent project of the Kaiser Family Foundation.)

Reducing Medicare spending for the wrong reason – by making it inaccessible — also worries members of the Medigap group, including Ruch.

“There may be seniors who would forego medically necessary care because they can’t afford it — even though they have a Medigap policy,” he said.

Contact Susan Jaffe at jaffe.khn@gmail.com

– Provided by Kaiser Health News.

View full post on Insurance Stories

Washington, DC, United States (KaiserHealth) – For Judy Ariba, one of the most harrowing moments in her battle against a rare form of leukemia occurred after she had already endured a long hospital stay and grueling chemotherapy: Her bill for a prescription cancer drug jumped from $10 to $1,700 a month.

After Judy Ariba’s former employer switched to a new health plan that required her to pay a percentage of her prescription cancer drug rather than a co-pay, her bill jumped from $10 to $1,700 a month. (Photo by Shane Bevel, for USA Today)

“No one has $1,700 a month,” said Ariba, 63, of Siloam Springs, Ark. “I sat here and cried for a while, thinking ‘I’ve gone through all this, and now I will get sicker and die.’”

Ariba’s drug costs soared because her former employer, a Florida-based construction firm, switched to a new health plan that required her to shoulder 25 percent of the $6,800 monthly cost of Tretinoin, a drug for acute promyelocytic leukemia.

Ariba was caught in one of the most difficult issues facing employers and consumers who pay for health insurance: How to deal with an increasing number of expensive “specialty” drugs for conditions ranging from cancer to multiple sclerosis.

The drugs offer hope for curing or managing diseases, but carry hefty price tags. Employers’ spending on specialty drugs, for example, is rising by double digits each year.

To try to control spending, some employers are requiring patients to pay a percentage of the cost of specialty drugs — from 25 percent to 33 percent or more — rather than a flat dollar co-payment. Surveys show that 13 percent to 17 percent of employers have added a specialty category to their drug benefits, and more are likely to adopt them, given that more than 600 specialty drugs are in development.

The idea of paying differing amounts for types of prescription drugs is not new. Employers and insurers have long used “tiers” to set the amounts patients pay for generic drugs, brand-name products and “non-preferred” brand-name drugs. Such policies have helped increase the use of generic drugs and steered patients to the branded products on which insurers receive the largest discounts.

But specialty tiers didn’t catch on until the Medicare prescription drug program, which began in 2006, allowed them for certain costly drugs. Now, about 85 percent of Medicare drug plans include such tiers, according to consulting firm Avalere Health in Washington.

If more employers embrace specialty tiers, with their higher patient costs, “that would be a disaster,” says Amy Melnick of the Arthritis Foundation.

Differing views

The practice of using specialty tiers divides benefit consulting firms. While some say that requiring higher patient payments is a useful tool to control drug spending, others warn their employer clients that the approach could discourage workers from taking needed medications.

If patients skimp on expensive drugs, “it can render the drug ineffective,” says Lisa Zeitel, a senior vice president with Aon Hewitt, a benefits consulting firm. Then the employer has “thrown a lot of money down the drain,” she says.

The controversy has prompted lawmakers in about a dozen states to propose barring or restricting specialty drug tiers. The issue is getting attention at the national level, too: Federal officials will have to decide whether to allow such specialty pricing in the “essential benefit packages” that all insurance sold through new online marketplaces called exchanges will be required to offer starting in 2014.

Depending on the insurer, dozens to hundreds of medications are considered specialty drugs — either because of the way they’re made, their costs or both. Some of the drugs are liquid and are injected, while others are in pill form. Many cost more than $2,000 a month.

Often called “biologics,” specialty drugs are used by only a small percentage of patients. But they represent the fastest-growing category of spending by employers on prescription drugs, according to several recent studies, because of their high cost. Some insurance plans set an upper annual cap on how much patients have to pay out of pocket for such medications, while others leave the policyholder exposed to unlimited costs.

Already, five drugs in this category — Humira, Enbrel and Remicade for forms of arthritis and Avastin and Rituxan for cancer — are among the top 10 selling drugs worldwide by revenue, according to data from Medco, a company that runs pharmacy benefit programs for employers and insurers. Worldwide, the five drugs accounted for $29 billion in sales in 2009.

The drugs are helping to replace revenue expected to be lost as more traditional drugs lose their patent protection and go generic, which causes prices to fall dramatically.

“These are high-margin, long-term (use) drugs,” says David Dross, a consultant with benefits firm Mercer. “That’s the jackpot for drugmakers.”

Robert Zirkelbach, spokesman for America’s Health Insurance Plans, the industry’s lobbying group, says the specialty charges are one way insurers try to keep premiums down, but blamed the real problem on drugmakers: “Why do these specialty drugs cost several hundred thousand dollars for a few years’ treatment? That needs to be part of this discussion.”

Drugmakers counter that such products can cost millions to produce, justifying the cost to insurers. But they don’t like specialty tiers because they’re worried tiers discourage use of the drugs.

“The existence of the specialty tier in America’s health care system, in both the public and private sectors, can risk patients’ health by restricting access to needed treatments,” said Karl Uhlendorf, vice president of Pharmaceutical Research and Manufacturers of America, in a statement.

Spending on specialty drugs grew by 17 percent last year — and similar increases will occur for the foreseeable future, says Richard Faris, a vice president at Medco. Spending on specialty drugs can account for 15 percent to 25 percent of an employer’s total pharmacy benefit costs, he said.

Seeing a gain

It’s not just drugmakers who benefit from the specialty-drug business.

Firms such as Medco often run their own specialty pharmacies, which oversee all aspects of specialty drugs, from purchasing to making sure patients take them correctly. The specialty pharmacy business brought in $11.3 billion for Medco last year, or 17 percent of its overall revenue. Because so many new specialty drugs are expected on the market soon — and a growing number of employers are likely to want additional oversight — Medco projects that its specialty pharmacy could represent 40 percent of the firm’s entire revenue by 2020.

Surveys by benefit management firms, such as Mercer, show many employers try other methods to slow spending on specialty drugs, rather than tiers. Those other steps include requiring patients to try less costly drugs first, or steering patients to designated pharmacies where they’ve negotiated discounts.

Employers sometimes balk at the tiers because they fear that patients might stop using the drugs or will complain to human resource departments about the cost. Some recent studies seem to bear out the utilization concern: Ten percent of patients failed to fill their initial prescription for oral cancer drugs from 2007 to 2009, according to a survey of claims for cancer patients done by Avalere. Patients who owed more than $500 at the pharmacy counter were four times more likely to not fill their prescriptions than those who owed $100 or less. The study looked at people with both employer-based insurance and those on Medicare.

The study alarmed some patient advocates.

“More and more cancer drugs are on those lists, and the cost to cancer patients is going to grow accordingly,” says Stephen Finan of the American Cancer Society Cancer Action Network.

His group and others want limits on how much patients have to pay toward their drugs.

Because no one yet knows what the federal government will require in the essential benefits that must be offered by insurers in 2014, the groups are turning their lobbying to state legislatures, where more than a dozen considered measures aimed at regulating specialty drug payments by patients.

New York has essentially barred insurers from charging patients a percentage of the drug’s cost. Delaware lawmakers put in place a one-year ban on the practice while it is studied further. Meanwhile, proposals to bar or restrict specialty tiers have been introduced in California, Maryland, South Carolina, Massachusetts and several other states. None has passed.

A struggle continues

After calling a patient advocacy group in search of financial help, Ariba was referred to a pharmacy program that said it would pick up her entire share of the cost of the drugs.

Before she could fill her first prescription, the program informed her that her insurer had given them incorrect information and that she would actually have to pay $400 a month toward the medication she must take from now until April.

Ariba, who says she lives on about $1,200 a month in Social Security disability payments and some savings, is devastated.

She already pays more than $600 a month to keep her insurance under a plan offered by her former employer, having quit her job in September while undergoing five-day-a-week chemotherapy.

“I’ll probably have to go that route and pay the $400,” she says. “I have a little money put aside, but it will wipe me out. It’s very frustrating. I have resorted to begging people, saying ‘Can you help me?’”

– Provided by Kaiser Health News.

View full post on Insurance Stories

Washington, DC, United States (KaiserHealth) – For many consumers, the ultimate test for the embattled health-care law is simple: Will it push down insurance premiums — or at least slow their relentless rise?

It’s a pressing question for the Obama administration, which is hoping its signature domestic policy achievement doesn’t end up as an election year albatross. Officials have been jawboning carriers to refrain from big rate jumps and, beginning in September, will require insurers to undergo additional scrutiny before raising premiums 10 percent or more.

But keeping a lid on premiums is hardly a slam dunk: The law doesn’t give the federal government or the states, the traditional regulators of health care, the nuclear option: the power to reject rate increases outright. And states vary widely on whether they have the tools or political will to review premiums aggressively.

“There’s a real affordability crisis that wasn’t created by the federal health reform, but it’s not clear it was solved by [the law] either,” said Micah Weinberg, senior policy adviser with the Bay Area Council, a San Francisco-based nonprofit business organization.

Consider the challenges:

In California, the insurance industry is fighting legislation that would give the insurance commissioner the authority to veto excessive premium increases. In a strange bedfellows alliance, insurers are being supported by doctors, who are worried that their fees would be squeezed by insurers compelled to hold down premiums.

Deciding whether rates are justified requires sophisticated analysis, but some states haven’t allocated money to hire staff and consultants, sometimes for political reasons. Republican-dominated Florida, which has refused to implement the health law, gave back $1 million in federal money aimed at beefing up premium reviews.

Even veto authority doesn’t stop premium increases. Oregon, for example, has approved double-digit increases for some insurers in recent years after reviewing insurer-provided financial information used to justify the requests.

The law does take some steps to tame premiums. It requires insurers to spend at least 80 percent of premium revenue on medical services and quality improvements – or issue rebates to consumers. It makes $250 million in grants available over five years to help states beef up rate reviews. And it requires insurers to disclose more information to justify increases greater than 10 percent, which will “at least ensure the rates being proposed are valid and the assumptions are fair . . . one component of [making sure that] premiums are not increasing at too fast a rate,” said Steve Larsen, the Obama administration’s director of the Center for Consumer Information and Insurance Oversight.

The law also provides for federal reviews of rate increases in states that can’t do effective ones. Already, federal officials have concluded that 10 states – including Virginia – won’t be able to meet the requirements to conduct reviews on at least some policies.

Rate approval authority varies

Still, critics say Congress should have required all states to give regulators the power to reject rates, also known as “prior approval” authority. Without that, “consumers aren’t getting protection they need,” said Carmen Balber, director of the Washington office of Consumer Watchdog, a nonprofit advocacy group.

Currently the District and 26 states, including Maryland and Virginia, have the authority to veto rates deemed excessive for at least some types of insurance, generally policies sold to individuals and small businesses. Seven states, including California, have the power to review rate increases in advance but not to block them.

How will states wield these weapons, and how will insurers respond? It’s a mixed picture. In California, where regulators criticized some proposed premium increases, insurers trimmed them or put them on hold. But Anthem Blue Cross recently went ahead with an average 16 percent increase that was deemed “unreasonable” by regulators.

That’s why California regulators need the authority to block rates, said Janice Rocco, the state’s deputy insurance commissioner. “In states that have the authority to reject excessive rates, they’ve been able to bring down the proposed rate increases.”

Not so, said the Bay Area Council’s Weinberg. He said research he did at the centrist New America Foundation shows that states that have the authority to block premium increases don’t necessarily end up with smaller increases than states without it.

And a report by the Kaiser Family Foundation and Georgetown University’s Health Policy Institute found that although states with veto authority are “better positioned” to negotiate reductions, some states don’t exercise it. Conversely, states without such authority sometimes “get carriers to agree to reductions in rates through informal negotiations.” (Kaiser Health News is an editorially independent program of the foundation.)

In Kansas, for example, regulators can’t reject increases, so they focus on negotiating with insurers to try to hold down premiums, said Sandy Praeger, the insurance commissioner. Last year, Celtic Health insurance was seeking a 25 percent increase on some policies sold to individuals, but agreed to lower it to 18 percent after talks with Praeger and her staff.

By contrast, in New Mexico, which has veto power, officials approved Blue Cross Blue Shield rate increases that averaged 21 percent – then upheld the decision, despite a public outcry – after an extensive review of the insurer’s financial filings.

In any case, consumer advocates and some state officials agree that it’s crucial to make premium setting more transparent. Oregon state Sen. Chip Shields (D) pushed legislation requiring a public hearing for any increase of more than 7 percent. “This should not happen just behind closed doors with regulators and insurers,” he says. But his bill, opposed by insurers, failed to get out of committee. Limited resources hamper states

Reviewing proposed rate increases effectively depends on adequate staff and expertise. Although some states have big insurance departments, others have skeletal staffs. And in 16 states, regulators don’t employ a health-care actuary – an expert who analyzes insurers’ estimates of future costs and their rate requests. Nationwide, insurance department funding is expected to fall next year, according to the National Association of Insurance Commissioners.

Some insurance departments, including those in Virginia and the District, are using million-dollar federal grants – the first round of the $250 million being made available to states under the health law – to hire additional staff.

When states have the resources to dig into insurers’ filings, they have sometimes derailed proposed increases. California officials found math errors last year when they scrutinized a proposal by Anthem Blue Cross to raise rates by as much as 39 percent. The insurer withdrew the request. Last year, District regulators rescinded a previously approved 35 percent increase for CareFirst BlueCross BlueShield for one type of policy after regulators, conducting an intensive review, found mistakes in the insurer’s request. A much smaller increase went into effect.

Ultimately, insurers say, pressuring them on premium increases won’t solve the fundamental problem of rising costs, which is driven by demand from the public as well as big price increases by hospitals, doctors and drug companies.

Underlying costs rising

The main reasons premiums have historically risen is that health-care costs have risen,” said Chet Burrell, chief executive officer at CareFirst BlueCross Blue Shield, which serves Maryland, the District and parts of Virginia.

At least once a year, insurers review the policies they sell, look at the claims and make their best guess about the future use of medical services, the price of drugs and even the demographics of expected enrollees. That information then goes into their estimate for a rate increase, Burrell said.

“Rate setting is as much an art of estimation of what the future will look like as anything else,” Burrell says.

After requests for double-digit increases for 2010, CareFirst’s enrollees used hospitals less than expected, driving costs down. As a result, Burrell said, the insurer has sought only small increases and even some premium reductions this year.

Tired of complaints that underlying costs are the problem, but hearing no consensus from the health-care industry on how to solve it, Massachusetts Gov. Deval L. Patrick (D) introduced a broad proposal to overhaul the way health care is paid for. Part of the proposal would allow regulators to reject premium increases if insurers pay hospitals, doctors and others more than a limit set by the state.

“This is a way to hold industry accountable for moving in direction they all say we should be moving,” said Jay Gonzalez, secretary of the Executive Office for Administration and Finance.

Burrell, whose company does not operate in Massachusetts, is skeptical of the governor’s plan.

“We could say we wish health-care costs would only go up 3 percent, but that doesn’t mean they will,” Burrell said. “It’s a little like saying I will pass a law saying it will only rain on Friday nights because I don’t want to mess up my Saturday picnics. You can’t wish it away.”

– Provided by Kaiser Health News.

View full post on Insurance Stories