June 24, 2010
Compiled by Jennifer Hansen*
Insurers Will Receive Presidential Warning While Administration To Release Regulations To Protect Consumers
June 22, 2010
President Obama will warn health insurance executives at a White House meeting Tuesday against trying to increase premium rates before the new law takes effect, The New York Times reports. "The White House is concerned that health insurers will blame the new law for increases in premiums that are intended to maximize profits rather than covering claims." Though states, not the federal government, retain the power to regulate rate hikes, Washington will soon have the ability to shine a "bright spotlight" on insurance prices, according to HHS Secretary Kathleen Sebelius.
"Our message to them is to work with this law, not against it; don't try and take advantage of it or we will work with state authorities and gather the authority we have to stop rate gouging," David Axelrod, a senior Obama adviser, told the Times (Sack and Stolberg, 6/21).
The warning won't be Obama's first stern words for the industry, The Wall Street Journal reports. "For months, the White House blasted insurers for sharply increasing premiums and denying care to customers as Democrats tried to rally support for the legislation. But no industry is more critical to making the law roll out smoothly, and since March when the president signed the law, the Obama administration has tried at times to strike a more cooperative tone." Beginning next year, insurers will have to spend as much as 85 percent of premiums collected on medical costs, a threshold the Kansas insurance commissioner, a Republican, said some smaller insurers may struggle to meet (Adamy, 6/22).
Kaiser Health News: "Scott Serota, president and chief executive officer of the BlueCross and BlueShield Association, is one of the health insurance executives who will attend. 'It's a good opportunity to discuss pragmatic ways to implement (health) reform regulations,' said Brett Lieberman, a BlueCross and BlueShield spokesman." The meeting is set to start at 11:45 a.m. (Carey, 6/21).
The Associated Press: After the meeting, Obama is "expected to announce regulations for implementing consumer safeguards enacted by the law, according to administration allies who were briefed in advance and spoke on condition of anonymity." The new regulations apparently will include an end to lifetime and annual spending limits and the practice of rescission—dropping coverage after people become sick, among other things (Alonso-Zaldivar, 6/22).
The Hill's sources also expect regulations covering those provisions of the law, and in a blog post, the publication adds that "the expected regulations are what's called an interim final rule, which means they will have force of law but can be retroactively modified depending on industry and consumer feedback after they're adopted" (Pecquet, 6/21).
Politico Pulse spoke to health consultant Alec Vachon, who says, "We expect the regulation will follow the statute, which is straightforward on these issues. . . . But it's surprises we really look for" (Haberkorn and Kliff, 6/22).
Health Reform Includes Changes To Denied Claims,
Health Savings Accounts
June 22, 2010
News outlets examine some changes to the health care system that health reform will bring, including help for those with denied insurance claims and health savings account modifications.
The New York Times: "The new health law makes the system somewhat more consumer-friendly. Starting this fall, patients in all health plans can contest claim denials in an independent state-level review procedure—a recourse that has not generally been available to employees of companies that pay their employees' health claims directly." The change is significant in that more than half of all covered workers are in "self-funded" plans, but the provision won't apply to "grandfathered" plans—"those in existence on March 23. . . . Nor does the new law make it any easier for consumers to sue for punitive damages or for pain and suffering. Under Erisa, the Employee Retirement Income Security Act of 1974, people covered by employer health plans can sue in federal court only for the cost of the benefit that was denied them." States have independent review of denials but some require consumers to pay up to half the cost of such a review (Andrews, 6/21).
Kaiser Health News' Insuring Your Health column, on the changes to health savings accounts: "The health-care overhaul law makes two specific changes involving HSAs: Starting in January, you can no longer use those funds tax-free for over-the-counter medications unless they're prescribed by a doctor. In addition, if you use your HSA for nonmedical expenses, you'll be hit with a 20 percent penalty instead of the current 10 percent." Health policy experts argue on the accounts' usefulness and if they act as a tax-shelter for the healthy and wealthy. HSAs are available mostly to people with insurance plans with high deductibles. "Some insurers who offer high-deductible plans say the health-care overhaul is imposing new regulations that will make it harder for them to operate. Earlier this month, nHealth of Richmond announced that it was shutting its doors, saying its business model couldn't be sustained under rules that will require insurers to spend 80 to 85 percent of the amount they collect in premiums on clinical services and quality measures, or give customers a rebate" (Andrews, 6/22).
The Hill, in the meantime, reports that AARP has released its latest policy briefs to help its millions of members understand the health reform law and the changes it will bring to the system better. "The latest briefs address provisions of the reform law that expand Medicaid, help seniors receive care at home, expand the healthcare workforce and eliminate preventable hospital readmissions" (Lillis, 6/21).
Doctors, Pelosi Pan Senate-Passed 'Doc Fix' Plan
June 21, 2010
USA Today: Doctors are limiting the number of new Medicare patients they are seeing, concerned about reimbursements pay from the federal program. "Recent surveys by national and state medical societies have found more doctors limiting Medicare patients, partly because Congress has failed to stop an automatic 21% cut in payments that doctors already regard as too low. The cut went into effect Friday, even as the Senate approved a six-month reprieve." The American Academy of Family Physicians says 13 percent of doctors that responded to a survey didn't participate in Medicare last year and the AMA says 17 percent of those they surveyed restrict the number of Medicare patients in their practice, but the Centers for Medicare and Medicaid Services say that 97 percent of doctors accept Medicare. "The AARP, the nation's largest consumer group representing seniors, is taking notice. Some U.S. areas already face a shortage of primary care physicians. Policy director John Rother says the trend away from Medicare threatens to make it worse" (Wolf, 6/21).
The New York Times: The $6.4 billion bill passed by the Senate "would reverse a 21 percent cut in physician payments that was to kick in Friday, raising the possibility that some doctors might begin to turn away those covered by Medicare. The legislation, known on Capitol Hill as the doc fix, was approved without a roll-call vote after leaders of both parties agreed to pull it out of a stalled package of tax changes and safety-net spending." The cost was offset by changes in billing regulations in Medicare, antifraud provisions and pension rule changes that soothed the concerns of Republicans wary of debt spending (Hulse, 6/18).
The Hill: The $6.5 billion fix, which still must be approved by the House, came too late to avoid the criticisms of doctors. "The American Medical Association was irate. 'This is no way to run a major health coverage program—already the instability caused by repeated short-term delays is taking its toll,' American Medical Association President Cecil Wilson said in a sharply worded statement. 'About one in five physicians say they have already been forced to limit the number of Medicare patients in their practice. Nearly one-third of primary care physicians have already been forced to take that action. The top two reasons physicians gave for these actions were the ongoing threat of future cuts and the fact that Medicare payment rates were already too low'" (Pecquet, 6/19).
Roll Call: House Speaker Nancy Pelosi, D-Calif., also blasted the bill. "'I see no reason to pass this inadequate bill until we see jobs legislation coming out of the Senate,' Pelosi said in a Friday night statement meant to press the Senate to act on a broader package extending expired middle-class tax breaks and jobless benefits. That 'extenders' package—which includes a longer extension [of the higher pay levels for physicians]—has languished in the Senate for two weeks" (Hunter, 6/18).The (Prescott, Ariz.) Daily Courier
: Doctors in that community are restricting the number of Medicare patients they see to save their practices from financial hardship. "The federal government requires doctors who treat Medicare patients to follow stringent paperwork guidelines, including logging the hours spent with these patients. Doctors fear that the Obama health care plan will increase the amount of paperwork doctors have to fill out, which puts time constraints on patient visits. . . . If millions more Americans go on a federal-government operated health plan and the feds continue to decrease doctors' reimbursements, more physicians say they will move toward accepting increasing numbers of privately insured patients and not treat those on Medicare" (Cook, 6/20).
Feds To States: Set Up Health Insurance Pools For High-Risk Patients By July 1
By Mary Agnes Carey
KHN Staff Writer
June 17, 2010
Federal officials, eager to launch one of the signature programs of the new health law, have told states that they must provide more information by the end of next week on how they intend to run the high-risk health insurance pools.
The program is designed to provide health insurance to people who have been denied coverage due to a pre-existing medical condition and have been without coverage for at least six months. It will start enrollment on July 1 and begin coverage on Aug. 1, according to guidance that Jay Angoff, director of the Department of Health and Human Service's Office of Consumer Information and Insurance Oversight, sent to state officials last week. The high-risk pools are intended to offer coverage until subsidies and new health insurance exchanges begin in 2014.
The high-risk pools are one of a handful of early benefits the administration is promoting, such as provisions that allow some people up to age 26 to stay on their families' insurance plans, ban insurers from excluding children because of preexisting conditions, and put an end to lifetime limits on health costs insurers impose on some policyholders.
Twenty-nine states and the District of Columbia volunteered to run their own pools and will get a share of the $5 billion funding in the health bill designated to fund them. Nineteen states said they would leave that task to the federal government, with some arguing that the federal funding may dry up and leave them on the hook. HHS says it will ensure that the funds will last for the duration of the program in states where it will administer the pools. But a recent report by the nonpartisan National Institute for Health Care Reform, a think tank funded by automakers and the United Auto Workers, suggested that the $5 billion would be insufficient to cover the number of people who may qualify for the coverage.
In his letter, Angoff assured state officials who may be worried about funding the start-up costs of high-risk pools that any expenses incurred, such as costs of developing or modifying accounting or enrollment systems would be covered by the federal government. The contracts HHS has asked states to submit by June 25 will include details on how they would run the high-risk pools and how much they would cost, among other items.
In remarks Wednesday to the American Nurses Association President Barack Obama urged states running high-risk pools to enroll people as soon as possible. The pools, Obama said, would "ensure that folks who have been shut out of the market because they've been sick can access more affordable insurance starting right away." KHN's Christopher Weaver contributed to this report.
Justice Department Asks Court To Throw Out States' Lawsuit Challenging Health Overhaul
June 18, 2010
Responding to a legal challenge from 20 states to the health overhaul, the Obama administration says it has constitutional power to regulate interstate commerce and impose taxes, The Wall Street Journal reports. The lawsuit, led by Attorney General Bill McCollum, a Florida Republican, contends that Congress can't require Americans to buy insurance. The response argues that isn't the case: It's a tax on not having coverage, not a requirement to get it. "Congress was entitled to pass a law punishing people who go without coverage because their decision could impose future costs on the nationwide health system, the filing said." The filing also argued that the states don't have standing to challenge the law, because the provisions in question don't take effect until 2014 and therefore all damages are "speculative" (Adamy and Perez, 6/18).
The Associated Press: "McCollum said Thursday that the government's defenses clash with comments Obama made during the health care debate, 'including the president's insistence on national television that the purchase mandate was absolutely not a tax.' In its arguments for the motion to dismiss, the Justice Department says the requirement to buy coverage is an exercise of Congress' constitutional power to tax and spend. 'The Supreme Court has long held that an exercise of this power is valid, even if it has a regulatory function, even if the revenue purpose is subsidiary, and even if the moneys raised are 'negligible', wrote a team of government lawyers led by Assistant Attorney General Tony West." The judge set a Sept. 14 hearing date on the motion to dismiss (Kaczor, 6/17).
The Jacksonville Observer: "[T]he federal government also argued against charges that the reform effort illegally requires states to expand Medicaid programs, which McCollum and others say is a direct violation of states' rights guaranteed in the 10th Amendment of the U.S. Constitution." The 10th Amendment says states retain powers not explicitly granted to the federal government. The administration "argues that Congress has the power to determine how federal money appropriated for Medicaid may be spent and can give states an option of setting up their own health exchanges or having the federal government do so." Other Medicaid changes have cleared court challenges, and states can drop out of the program altogether if they don't like new requirements (6/18).
Here's McCollum's statement responding to the filing, courtesy of Foster Folly News (6/17).
Politico Pulse adds that the federal response says "Congress has the authority under the commerce clause (the 'necessary and proper' clause) and its power to tax 'to promote the general welfare.' The last point is likely to reignite the debate over whether the individual mandate penalty is a tax—and one that would surely hit those making under $250,000 that President Obama said he wouldn't tax. The court filing hedges that argument by calling it a tax with a 'regulatory function' based on a volitional event" (Kliff and Haberkorn, 6/17).
This information was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery. © Henry J. Kaiser Family Foundation. All rights reserved.
*We would like to thank Jennifer Hansen, Esquire (Hooper Lundy & Bookman Inc., San Diego, CA), for selecting the articles for this week's compilation.
Member benefit educational opportunity:
Attend the Payors, Plans, and Managed Care Practice Group Annual Luncheon
to receive an intermediate level of insight and practical information on recent healthcare HIPAA privacy and security developments, including HITECH Act breach analyses
(June 28, 2010; Seattle, WA). This luncheon is sponsored by Berkeley Research Group LLC.