Individual Health Insurance Reform Weekly : EasyToInsureME

Week of September 14, 2009

Congress returned to Washington last
week, immediately gathering for President Obama's Wednesday night
address on health care reform. For the first time, the President
outlined his plans for reform, including support for a government
option. He also addressed some of the most incendiary points of the
August Town Hall reform debates and promised to call out those who
"have made the calculation that it's better politics to kill this plan
than to improve it." He tried to reach across the aisle to show where
there is agreement, citing previous and proposed legislation by key
Republicans in an effort to salvage some semblance of bipartisanship.
Though the speech was successful in demonstrating the President's
unwavering dedication to getting reform passed this year, many watching
came away feeling that costs and affordability still seem to be taking
a back seat to access issues.

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Federal

Congress
returned to town amid a flurry of activity designed to inspire Congress
to move quickly on passage of health care reform. The mere announcement
of a prime-time Presidential speech on reform was enough to force the
hand of Senator Baucus (Chair of the Senate Finance Committee and a
member of the "Gang of Six") in two ways. First, over the weekend he
cobbled together an 18-page outline of a bill and offered it up (as his
vision of reform) to the other five members of the Gang of Six and to
the rest of the Finance Committee. Second, Baucus announced that the
Committee would indeed "mark-up" a bill next week and that the Gang of
Six was still forging ahead. The President's speech itself actually did
not really expand on any policy specifics; it was more a rallying cry
to the troops (the Congress and to the American public) to pass health
care reform despite the Town Hall backlash or the absence of some of
the details. The key takeaway from the speech is probably that the
President has officially stamped the bills moving through Congress as
"my plan," which certainly puts him much more in the driver's seat for
the Fall debate.

States

ARIZONA: The Arizona Health
Care Cost Containment System (AHCCCS) is abolishing KidsCare Parents,
effective October 1, due to funding cuts mandated by the recently
enacted budget bill. KidsCare Parents, an extension of the state's
Children's Health Insurance Program (CHIP), provides health coverage to
nearly 10,000 parents earning up to 200 percent of the federal poverty
level. Children covered by the state's CHIP, known as KidsCare, will
keep their coverage. Other health-related provisions include: freezing
hospital inpatient and outpatient reimbursement rates; rolling over one
month's capitation payment to AHCCCS health plans to the next fiscal
year; requiring AHCCCS to comply with the Federal False Claims Act;
requiring AHCCCS to prepare a report on provider assessment to increase
federal matching funds; maintaining a 5 percent reduction in
reimbursement rates to noninstitutional providers; and implementing
total cuts of $29.4 million to AHCCCS, $26.1 million to the Department
of Health Services, and $737,000 to the Department of Insurance.

CALIFORNIA:
As expected, the legislature approved a measure designed to restrict an
insurer's ability to rescind an individual’s health insurance policy
unless the insurer can demonstrate that the member intentionally
misrepresented facts on the original medical questionnaire. The
legislation would also require development of regulations to
standardize applications and use of health questions, require extensive
medical background checks and create an independent third-party review
of any potential policy rescission. Governor Schwarzenegger vetoed a
similar bill last year but has not indicated his stance on this year’s
legislation.

CONNECTICUT: The General Assembly passed a new,
two-year state budget that relies heavily on one-time revenue sources
including the Rainy Day Fund, federal stimulus dollars, tax changes and
many state fee increases. Governor Rell let the bill become law without
her signature. Premium taxes on health insurance were not increased;
however, the new budget contains a very significant reduction of 6
percent in Medicaid Managed Care Organization reimbursements. This cut
will negatively impact the ability of Connecticut to maintain a
competitive, sustainable Medicaid Managed Care market. Retaliatory
taxes are also a possibility as state licensing, certification and
registration fees to most agencies are increased to at least $15;
doubled if under $150; hiked by 25 percent if between $150 and $1,000;
and increased by $250 if over $1,000. Legislators plan to return on
Sept 23 and 24 to pass the necessary budget implementer bills.

GEORGIA Health Insurance:
The hearing took place on September 9th to finalize regulations that
would allow health plans to include health status as a factor in the
rating of small groups on their renewal date. Previously, this was only
permitted for new business and is very important to the small group
segment. The Georgia Association of Health Plans and AHIP have been
working with the Georgia Department of Insurance on this issue for some
time and appeared at the hearing along with many carriers. No
opposition was stated at the hearing so we expect the regulations to be
promulgated permanently very shortly.

KANSAS: Efforts to get
more uninsured Kansans enrolled in Medicaid and the State Children’s
Health Insurance Program (SCHIP) got a big boost this week with the
announcement of a five-year, $40.3 million grant from the U.S.
Department of Health and Human Services. The grant from HHS’s Health
Resources and Services Administration (HRSA) will be used to fund a new
technology for the state’s enrollment system, replacing a computer
system that’s more than 20 years old, as well as outreach efforts aimed
at getting more people who are eligible for Medicaid and SCHIP to sign
up for benefits. The timing is beneficial since the state is gearing up
to implement an expansion of SCHIP that the legislature authorized this
year. Beginning in January, the income limit for SCHIP eligibility in
Kansas will increase from 200 percent to 250 percent of the 2008
federal poverty level, or $44,000 per year for a family of three. The
grant and the enrollment efforts it will fund were made possible
through the support of the Kansas Health Foundation, the Kansas
Association for the Medically Underserved, Kansas Action for Children,
the Kansas Health Institute and the Department of Social and
Rehabilitation Services.

OHIO Health Insurance
: Implementation of Open Enrollment Health Care Reform Provisions in
HB1. Insurers recently met with the Ohio Department of Insurance (ODI)
regarding the health care reform provisions of HB1 that made
significant changes to laws affecting insurance. As a result of the
meeting and questions with respect to implementation, ODI put out
further guidance last week to insurers and health insuring corporations
(HICs) as well as the variable effective dates of different portions of
the bill. The new guidance document is intended to answer questions
about open enrollment changes, rate filing questions, data reporting
and miscellaneous topics from the budget bill. Recall, Ohio law
requires carriers to accept applicants for individual coverage during
an annual open enrollment period. Ohio HB1 amended the existing
individual open enrollment requirements. In addition to the new
guidance document, the ODI published draft regulations last week
regarding open enrollment, advertisement and data collection rules
under the new law. Aetna is evaluating and commenting upon the draft
regulations and expects that a number of other guidance materials and
rules will be put forth as other sections of the law are implemented.

TEXAS Health Insurance
: The Department of Insurance held a stakeholder meeting last week to
discuss proposed rules implementing a mediation process for balance
billing disputes. The new law putting this option in place went into
effect September 1 and has not yet been tested. Once triggered by the
member for any balance bill over $1,000, the process would require the
health plan and facility-based providers to attend mediation in an
attempt to resolve the disputed amount. A physician may avoid the terms
of the bill by disclosing in advance that he is an out-of-network
provider, providing an estimated amount the patient may owe for
services, and the circumstances under which the enrollee would be
responsible for those amounts. No mediation can be required as long as
the actual costs of the services are less than the estimated amount in
the disclosure. Stakeholders also discussed a section of the
legislation requiring Texas Department of Insurance to adopt network
adequacy standards. Those standards must adapt to local markets in
which a health plan operates, ensure availability of, and accessibility
to, a full range of health care practitioners to provide health care
services to patients, and consider situations in which no provider in a
field of practice in a local market agree to contract with a plan at a
reasonable rate of reimbursement. Aetna is participating in these
stakeholder discussions and will continue to do so as the rulemaking
process continues.

UTAH: Industry comments have been submitted
to the Office of Health Care Statistics and the Department of Health
regarding a proposed regulation requiring all carriers in Utah,
including third-party administrators, dental plans and self-insured
plans, to submit data on enrollment and medical and pharmacy claims.
The initial submission covers claims from January 1, 2007, through
December 31, 2008, which are paid through September 30, 2009.
Subsequent submissions are to be done monthly. Among the problems
identified are the need for uniformity in data collection criteria
across states; privacy concerns arising from the member specific data
requested; the need for additional time to implement the collection and
reporting process; the value of a pilot period to determine the need
for any adjustments; the financial burden of monthly reporting and an
excessive penalty of $10,000 per day for failure to timely submit a
report.