Week of March 15, 2010

The White House last week continued to rail against rising health insurance
premiums to help build popular support for his health care reform
package. But the effort to focus the blame for rising costs on insurers
was questioned, in particular, by state insurance experts and
economists quoted in a New York Times story last week. Insurance
commissioners said that trying to hold down premiums before costs were
under control would be very risky. This approach could mean solvency
issues in some cases, they told the Times. To help educate Americans
about the true drivers of rising health care costs, America's Health
Insurance Plans, the industry trade association, last week launched a
new national ad campaign. The ad demonstrates that health insurance
company costs represent a small slice of the overall health care cost
pie.

Federal

With a cadre of staff operatives searching for the right health insurance
reform provisions among those previously discarded from the House,
Senate and the President’s proposals, Democratic leadership has been
relentlessly pursuing every possible pathway to pass a final bill. The
expected process would have: 1) the House pass the Senate-adopted
reform bill (which most House members hate), 2) the House passing a
bill to "fix" all the things it hates using a reconciliation
legislative vehicle, followed by 3) the Senate passing the very same
reconciliation bill -- requiring only 51 votes in the Senate. The House
Budget and Rules Committees are expected to start the review, hearing
and mark-up process of the reconciliation bill this week. The Senate
commitment to using reconciliation was made official in a scathing
letter from Leader Harry Reid to the Minority Leader. Along the way the
two Chambers will need to see the latest CBO "scores" on the bill
before voting, and 216 House Democrats will have to resolve policy
disagreements over abortion, federal health insurance rate review and
authority, and other substantive issues. Additionally, the House will
have to trust that the Senate can pass the reconciliation measure
without changing one comma. Partisanship has blossomed into open
hostility over health reform. Whether Congress can overcome these
policy, process and political mine fields remains as murky as ever, but
Democrats have chosen to try and will push for resolution by the Easter
recess.

The Senate has passed Jobs Bill II and shipped it off to
the House, where passage is not certain. Within the bill are two
health-related items of note. First, the COBRA eligibility and subsidy
program will be extended to the end of 2010. (These provisions are set
to expire at the end of March.) Second, the bill contains a suspension
until September 30, 2010 of the cut to physician Medicare
reimbursements for the current calendar year. (This provision is also
set to expire at the end of March.) Aetna urged Congress to apply the
"doc fix" to next year's reimbursement as well, since insurers’
Medicare rates are based on what doctors are paid, but in the end
Congress failed to make this change. Aetna and the industry will
continue to find ways both to establish a more lasting, if not
permanent, doc fix and to devise a legislative solution to the
disconnect between doctor reimbursement and Medicare Advantage rates
for 2011 and beyond.

States

ARIZONA: Budget issues remain
front and center as the governor and Republican leadership proposed a
plan they hope will close the $700 million deficit this year and reduce
the anticipated $2.6 billion deficit in 2011. Righting the state's
fiscal ship has become a very partisan exercise, with the Republicans
supporting reductions in Medicaid and KidsCare, and the elimination of
full-day kindergarten. As the special session on the budget is running
concurrently with the regular session, no other bill hearings were
held. The oral chemotherapy parity bill may be dead for this year as
proponents did not meet the deadline for submitting amendatory language.

CALIFORNIA:
The Assembly Accountability and Administrative Review Committee chaired
by Assemblyman Hector De La Torre held a hearing last week to examine
how the Department of Managed Health Care (DMHC) and the Department of
Insurance (CDI) has handled issues surrounding the rescission of
policies in the individual market. According to a report prepared for
the committee by Bryan Liang, director of the Institute of Health Law
Studies at the California Western School of Law, fewer than 300 of
6,000 former policyholders are participating in health insurers'
agreements to settle such cases. Republican committee members were
highly critical of this witness, while De La Torre was critical of the
Departments. The DMHC reported that since their settlements were
completed there have only been nine rescissions over the past two
years, proof that the DMHC and the health plans have revamped their
processes for rescission and have worked to address the problem.

COLORADO:
A bill mandating maternity and contraceptive coverage in individual
policies continues to receive significant attention in the Senate. The
most recent amendment proposes requiring maternity coverage in at least
three of the plans marketed by an insurer. It would also allow a
current member of a plan without maternity coverage to switch to a plan
with maternity coverage from the same carrier during the first
trimester. The other major bill would require that second level appeals
be performed by physicians who are actively involved in clinical
practice. This measure is counterintuitive in the current economy,
since it would result in outsourcing appeals and drive up costs for
plan sponsors and their employees.

CONNECTICUT: A proposal that
would require health insurance plans to cover oral chemotherapy in the
same way that intravenous chemotherapy is covered made it through the
legislature's Insurance and Real Estate Committee last week. Currently,
many health plans treat the two kinds of cancer treatments differently.
Chemotherapy treatments that come in pill form are often categorized as
prescription drug benefits that can require patients to pay a larger
share of the cost. Cancer patients, doctors and patient advocates spoke
in favor of the bill, while insurers and the Connecticut Business and
Industry Association opposed it, arguing that it would put a mandate on
health plans that could raise costs and make it more difficult for
employers to afford insurance.

GEORGIA: A bill restricting the
use of rescissions in individual health insurance policies passed a
Senate committee last week. Aetna continues to work with its trade
organizations to educate legislators about the adverse effect of this
type of legislation. Discussions also continue regarding legislation
affecting the use of rental networks.

KANSAS: Roughly half way
through the legislative session, several health care bills are still
moving through the process. On the regulatory front, the Insurance
Department has proposed a regulation that would mandate coverage of
routine patient care costs while the insured is enrolled in a cancer
clinical trial – a mandate that was rejected by the legislature in
2008. A hearing will be held on April 20, and Aetna will have an
opportunity to present testimony on this issue. Bills still alive
include mandates for autism and orally administered chemotherapy,
legislation prohibiting dental contracts that require the dentist to
follow a fee schedule for non-covered services, and a ban on "most
favored nation" clauses by some insurers. Another bill would allow
small employers to create individual HRAs to fund premium payments on
individual policies, require administering insurers to offer employees
the option of receiving health insurance coverage through a
high-deductible health plan with an HSA, and requiring insurers who
offer small group health plans to offer high-deductible health plans
with HSAs, while authorizing tax deductions for health insurance
premiums for individual insurance policies. Separate legislation would
amend the definition of "eligible employee" to include part-time
workers (currently less than 30 hours per week). Pending legislation
concerning hospital charges would prohibit charging private-pay
patients more than 25 percent of what the hospital's highest volume
private payer would pay for the same goods or services. Legislation
that died includes a telemedicine mandate and creation of a health care
insurance database for employers.

KENTUCKY: Health issues that
are being hotly debated by the legislature right now include an autism
mandate, a dental bill that would not allow insurers to hold dentists,
optometrists or ophthalmologists to a fee schedule for non-covered
services, and a bill setting a reimbursement floor for chiropractic
services. The chiropractic services proposal would allow chiropractors
to bill, and would require insurers to reimburse, an evaluation and
management (E&M) CPT code on each and every visit. In addition to
billing for follow-up services for manipulations and other therapies,
the chiropractor would be allowed to submit, and the insurer required
to pay, for another E&M code on each and every visit. The
legislation would also add a new mandated benefit to the Kentucky
statutes. Currently, reimbursement for chiropractor visits is required
only if the chiropractor performs a service already covered by the
health benefit plan. Under the proposal, any service within the scope
of practice of a chiropractor that is billed would become a mandated
benefit. Finally, the bill would require health benefit plans to
provide reimbursement without the chiropractor having to provide any
documentation that the services were medically necessary. Each of these
bills has, or is expected to, pass at least one chamber.

SOUTH
DAKOTA: Several important legislative deadlines are approaching,
resulting in a flurry of activity. Bills or resolutions not passed by
the second chamber by March 9 died. But the Governor has already signed
a bill that amends the premium rate-setting procedure for the high-risk
pool so that rates for a given classification are 150 percent of the
average actively marketed premium. The pool will have to offer three or
more plan designs, remove coverage requirements for the plans (such as
disease management) and remove set cost-sharing values. The bill was
signed by the Governor on March 1 and will become effective on July 1,
2010. The Governor has also signed a bill prohibiting rating based on
injuries caused by domestic violence and legislation requiring refunds
of premiums for partial months, in the case of mid-month cancellations.
Both chambers have passed legislation prohibiting contract language
requiring dentists to accept a fee schedule for non-covered services,
and the bill awaits the Governor's signature. Finally, the legislature
passed a resolution opposing the federal health care reform proposals
passed in the U.S. Senate and House.