Federal

Owing to multiple blizzards in Washington, Congress
started its President's Day recess a full week early and conducted no
official business last week. However, there was some legislative drama
as Senate Majority Leader Harry Reid pulled the rug out from under
Finance Committee Chairman Max Baucus by scrapping the Baucus jobs bill
(without warning), which contained many health insurance
items, and replacing it with a stripped down, narrow jobs bill. Whether
the health items Baucus originally inserted with Republican help will
make it back to the table remains fuzzy. Among the health items that
have been dropped are: the COBRA eligibility extension (to May 31); the
“doc fix” (to October, 2010) of Medicare reimbursement rates; and the
favorable statutory direction to CMS to calculate the 2011 Medicare
Advantage rates "as if" the doc fix were in place.

States

California health insurance
The Office of Patient Advocacy released a report card on the state’s
HMOs last week. Aetna received 3 out of 4 stars. The goal of the report
card is to allow consumers to compare how well health plans use
personal medical records and help address conditions such as asthma,
arthritis and diabetes.

COLORADO: Governor Bill Ritter held a
press conference to announce what he calls "the next round of reforms
that represent common sense." His legislative package includes bills to
preclude insurance companies from charging different rates due to a
person's gender, ensure that women have access to breast cancer
screening, assure plain language is used in insurance forms,
standardize insurance applications and explanations of benefits, and
encourage greater use of online tools to enroll people in public
programs. Apart from the Governor's proposals, a bill that would
establish a public option was also introduced.

CONNECTICUT:
In a short legislative session of only three months, the Insurance
& Real Estate Committee wasted no time in putting forth an agenda
that includes many concept drafts for repeat legislation from previous
sessions. These include prohibiting health insurance copayments for
preventive care, limiting prescription drug copayments, prohibiting
Social Security disability payment offsets, and exempting the Municipal
Employees Health Insurance Plans from the premium tax on small group
premiums. In addition, the committee reintroduced legislation that
includes nearly a dozen new health benefit mandates. The Council for
Affordable Health Insurance, an independent think-tank, says that
health insurance mandates could increase premiums in Connecticut by
more than 50 percent overall.

GEORGIA: A bill was proposed
last week that would impose significant restrictions on insurers'
ability to rescind health insurance policies. Aetna, through the
Georgia Association of Health Plans and AHIP, met with the legislator
sponsoring the bill to express concerns with the bill.

INDIANA:
The legislative session is at halftime, and the insurance agenda is now
limited. Most insurance issue bills are officially dead, including a
bill that would have prohibited health plan provisions requiring a
contracted provider to accept more than a certain number of patients;
coverage for dialysis treatment regardless of whether the facility is
contracted or not and without certain benefit restrictions; and a bill
that would have allowed out-of-network assignment of benefits. However,
Aetna is expecting that a bill requiring insurer and HMO annual
reporting of premium cost composition, including administrative costs,
may be resurrected. A bill that restricts dental insurers and HMOs from
establishing fee schedules for non-covered services passed the Senate,
with our amendment to accommodate most of the key concerns expressed by
opponents of the bill. As the bill stands, dental insurance plans may
impose fee schedules for covered services, regardless of whether the
plan actually pays for the services rendered.

KANSAS: An
amended version of S.B. 389 related to dental services passed the
Senate Financial Institutions and Insurance Committee on February 11.
The amended bill prohibits any contract between a health insurer that
offers a health benefit plan and a dentist from containing a provision
that requires the dentist to accept a fee schedule for services unless
the service is a covered service. Committee amendments added to the
definition of a “health benefit plan” the following: any subscription
agreement issued by a non-profit dental service corporation; any policy
of health insurance purchased by an individual; the state children’s
health insurance plan; and the state medical assistance program under
Medicaid. We will continue to update you as this bill progresses and
hope to make favorable changes as the bill moves through the House.

MASSACHUSETTS:
Governor Deval Patrick filed a 40-page bill that proposes giving the
insurance commissioner the power to hold public hearings on rate
adjustments and essentially cap health care price increases. Rate
increases for individuals would be held to the rate of medical
inflation; those sold to employers with 50 or fewer workers could not
exceed one and a half times the level of medical inflation. The
legislation would also impose a two-year moratorium on any new health
benefit mandates. Legislative leaders praised the intent of the
governor’s plan but declined to promise support. Strong opposition is
expected from medical provider groups. The Governor simultaneously
announced emergency regulations to take immediate effect that will
require health insurers to submit proposed small business rate
increases for review by the state 30 days before they take effect.
Several other proposed provisions include a requirement that insurers
offer at least one coverage plan with a limited network of health care
providers costing at least 10 percent less than health plans with
access to more physicians. The Massachusetts Association of Health
plans is lobbying in support of a bill introduced by Senate Insurance
Chair Richard Moore that would create a cheaper health insurance
product for small employers by capping payments to providers at just 10
percent above Medicare rates. The Massachusetts Medical Society is
against that proposal.

MISSOURI: An autism coverage mandate
bill was amended and “perfected” by the Senate and then sent to the
Government Accountability and Fiscal Oversight Committee from which it
must emerge before returning to the floor of the Senate. In addition to
two mandate-related amendments, a third amendment to the bill allowing
for limited cross border sales of health insurance also passed. In its
current form, the bill contains a mandated offering of the coverage in
the individual market. Coverage is limited to treatment ordered by a
licensed physician or psychologist whose treatment plan the carrier is
entitled to review every six months. Coverage for applied behavior
analysis (ABA) is limited to $52,000 annually (down from the $72,000 as
introduced) for persons under age 21. Meanwhile in the House, a bill
containing significant language relating to the credentialing of autism
service providers also passed. The bill also contains a mandate to
offer coverage in the individual market and to groups of fewer than 25.
Groups of 25 to 50 would be entitled to an exemption from the mandate
if they could demonstrate an increase in premiums tied to the mandate.
The bill limits annual coverage of ABA ($36,000 for children ages 3-9;
$20,000 for children ages 9-21). Aetna will continue to monitor the
status of these mandates, but it appears fairly clear at this point
that something will pass on the issue of autism.

NEW JERSEY:
Last week Governor Chris Christie declared a fiscal state of emergency
calling a special session of the legislature to lay out his plan for
dealing with state’s current $2.2 billion budget shortfall. His plan
calls for significant cuts or eliminations across 375 state programs
and withholding $500 million of state education aid. Of note on the
program side is a $12.6 million reduction in Charity Care funding to
hospitals, which pays for care to uninsured residents. In legislative
action, the Assembly Financial Institutions and Insurance Committee
held a three-hour public hearing on out-of-network reimbursement. Much
of the hearing focused on the markedly higher billing practices of
ambulatory surgery centers and one non-par hospital. Aetna presented
testimony regarding its experience with the non-par hospital, citing
their disparate year-over-year increase in charges compared to other
similarly situated hospitals. Chairman Schaer indicated the committee
will work over the next several months to craft a solution.

NEW
YORK: With Democratic Senator Hiram Monserrate officially expelled from
the Senate, the Democratic majority (31-30) now faces an uphill battle
getting the 32 votes needed to pass legislation. However, both the
Senate and the Assembly moved forward with a public hearing on the
Executive Budget proposal for health, including the section mandating
the prior approval of rate adjustments. The Health Plan Association
testified on behalf of the industry. If enacted, Governor Paterson's
proposal for an 85 percent medical loss ratio and a prior approval
hearing process for all rate adjustments would essentially amount to
government control of health insurance, undermining the private health
insurance market in New York. Price controls would weaken health plan
solvency, hurt providers and virtually eliminate innovation and
efficiency. At the same time, the proposal ignores the underlying cause
of the increasing cost of health insurance -- the increase in the
actual costs of health care services.

OKLAHOMA: The second
session of the 52nd Oklahoma Legislature convened in Oklahoma City on
February 1. Legislators quickly turned to the state’s $1.3 billion
budget deficit described by Governor Brad Henry (D) in his eighth and
final state of the state address and FY 2011 executive budget. During
his address, the Governor focused on his plans for resolving the $1.3
billion budget deficit through precise budget cuts. His only reference
to health insurance was to encourage the expansion of Insure Oklahoma,
a program developed by the state in partnership with small employers to
provide affordable health coverage. The legislature is scheduled to
adjourn on May 28 but only after addressing a range of legislation
including several bills of interest to Aetna.

SOUTH DAKOTA: A
dental fee schedule bill (S.B. 108) unanimously passed the Senate
Commerce Committee and is expected to be taken up by the full Senate
early this week. The bill prohibits any contract between a health
insurer that offers a health benefit plan and a dentist from containing
a provision that requires the dentist to accept a fee schedule for
services unless the service is a covered service. Aetna will continue
to follow the bill's progress as it progresses.

TENNESSEE:
Several bills have been proposed that would make changes to the state's
external review law. Aetna and other industry representatives will be
meeting with the Tennessee Department of Commerce and Insurance
regarding its proposed changes to the external review law. The bill
proposed by the TDCI most closely mirrors the model legislation
proposed by the National Association of Insurance Commissioners.

UTAH:
The Speaker of the House has introduced a health reform bill addressing
health information technology, individual and small group market
reforms and transparency. The overarching theme of the reforms is
micromanagement of rates and rating factors, and a broadening of the
Insurance Commissioner's authority. The transparency provisions apply
plan designs and benefit descriptions submitted by carriers, and would
require providers to make available, upon request, a price list for
services on both an inpatient and outpatient basis.