Individual Health Insurance Reform Weekly: EasyToInsureME : 08/31/09

Week of August 31, 2009

With
the death of Senator Edward Kennedy last week, many are bemoaning the
lack of compromise in the legislative process these days -- a tough
hurdle for any health care reform bill to overcome. The Senate Finance
Committee pledged to continue seeking a bipartisan compromise on health
care reform, but it appears no new agreements on major issues have been
reached. In the House, much work remains to be done as the three
committees that passed health care reform bills in July still have to
merge these bills into one. And, the Energy and Commerce Committee
first is planning to consider several dozen amendments not addressed
during the committee's mark-up. As a result, the timing of
real progress on health care reform legislation this fall is very hard
to predict.
 

Federal 
With Congress in recess, there is no federal report this week.

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States
CALIFORNIA: Two new health care taxes are under consideration in the legislature. The
first proposal would impose a tax on all general acute care hospitals,
but these hospitals would receive new funds to supplement current
reimbursement under the state's Medi-Cal program. The amount of the tax
has not been determined yet. The second tax proposal would impose the
state's gross premium tax on all Medi-Cal managed care plans. This tax
is expected to raise $150 million annually. Medi-Cal managed care plans
previously have been assessed a Quality Assurance Fee by the state.
Federal law prohibits this fee from being collected after Oct. 1, 2009,
though there is a bill in Congress to extend the fee for another year. 
Both tax proposals have broad support and neither is expected to impact
Aetna's current lines of business.

GEORGIA Health Insurance : 
A hearing has been scheduled for September 9 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. The Georgia
Association of Health Plans and America's Health Insurance Plans (AHIP)
have been working on this issue for some time with the Georgia
Department of Insurance.
ILLINOIS: Senate President Cullerton
indicated that he expects an external review bill to pass during the
fall veto session.  Agreed to by the insurance industry and
provider/consumer groups, the bill would create external review
requirements for all commercial insurance products, rather than just
HMOs, effective July 1, 2010.  The bill also establishes committees to
create a uniform small employer group health status questionnaire and
an individual health statement for use on January 1, 2011. Lastly, the
bill would require insurers to semi-annually prepare and provide the
Department of Insurance a statement on aggregate administrative expense
and other information. This last point was agreed to as an alternative
to a medical loss ratio requirement.   
 
KENTUCKY: The
legislature held hearings last week on an autism mandate that broadly
defines the condition without coverage limits,  except co-payments and
deductibles. In addition, the bill would allow an "autism
services provider", meaning any person or entity that
provides treatment of autism spectrum disorders, to treat. Aetna and
the Kentucky Association of Health Plans are working with the bill
sponsor to include age limits and licensure of providers provisions,
particularly for applied behavioral analysis.
 
MARYLAND:
The Maryland Health Care Commission (MHCC) has invited Aetna to
participate in a workgroup consisting of payer representatives and
other health care stakeholders, which will draft proposed regulations
for the monetary incentives/disincentives in response to Electronic
Health Records – Regulation and Reimbursement.  This
legislation lists many essential activities; one of the requirements
calls for state-regulated private payers to provide monetary incentives
to health care providers to promote the adoption and meaningful use of
electronic health records (EHRs).  Included in the statute is a
requirement for establishing disincentives after 2015 for providers
seeking payment from a state-regulated payer who uses an EHR that is
neither certified nor capable of connecting to a health information
exchange.  
 
MICHIGAN: House leadership and an appointed
committee continue to move forward with fleshing out Speaker Andy
Dillon's health insurance pooling proposal. The Dillon
proposal would consolidate public sector active and retiree health care
benefits for up to 400,000 individuals in order to help the state
address its budget deficit. Several large unions have come out
in opposition to the pooling option, saying it strips collective
bargaining rights. On Friday, the Speaker released draft legislation on
the proposal. 
 
OHIO Health Insurance :  The legislature is considering a
joint resolution calling for a constitutional amendment to exempt Ohio
from a potential  mandate requiring individuals to have insurance. It
is similar to an issue that was taken up in Arizona in
2008. Arizona's legislature passed a resolution this year that will put
the question on the ballot for 2010. If federal reform passes with an
individual mandate, such a constitutional amendment would likely be
challenged in court. In other business,  Representative Boyd indicated
that her legislation  regarding regulation of "physician designation
programs" will be moving forward in the House. Physician designation
programs are those programs that provide a grade or any other rating to
characterize an insurer's assessment or measurement of a physician's
cost efficiency, quality of care or clinical performance.  The medical
society wants state standards for physician designation programs
operating in the state. Aetna has actively been reviewing this bill and
how it  would affect Aexcel, and is providing comment.  
 
OKLAHOMA: 
The "Insure Oklahoma" program has grown at such a significant rate it
is expected to reach funding capacity before year's end, potentially
leading to a freeze in enrollment and a loss of momentum in providing
health insurance coverage for all Oklahomans. The program
subsidizes health insurance premiums for small businesses and
individuals who qualify. Under the program, employers contribute 25
percent of premiums, employees 15 percent, and the state pays the
remainder. Its current funding stream has capacity for up to 35,000
people. With a projected growth rate of 9.8 percent, enrollment could
top 40,000 by January 2010.  To avoid freezing enrollment in the
program, the authority is looking for additional funding streams. It
has embraced a recommendation by the State Coverage Initiative that
would assess a fee on all insurance companies that are part of the
program. Those fees would be placed in a dedicated account and would
generate federal matching dollars to fund Insure Oklahoma. The problem
is the fee assessment would need to be approved by the state
legislature, which will not reconvene until February, 2010. A special
session would be needed to consider the fee assessment. A half-percent
fee would double Insure Oklahoma's capacity to 80,000 lives and reduce
cost shifting by $39 million.  
 
PENNSYLVANIA Health Insurance : The
Department of Insurance has been relatively silent since its July 17
press release announcing separate examinations of the Blues plans on
possible anti-competitive and unfair trade practices. The
Department has retained the same law firm and economist that
coordinated the review of the Highmark/IBC merger.  It is set on
concluding the examination in early 2010, if only to give it time to
implement any recommendations in the last months of this
administration. Aetna has again raised its recommendations for
improving competition as submitted in the merger review:  Review the
territorial restrictions in the Blues’ licensing agreements as well as
any other agreements among the Blues that impede competition; the
Blues’ use of market power in provider contracting and product tying;
and any practices that impede transparency.
 
VIRGINIA: 
An escalating conflict of interest scandal involving delegate Phillip
Hamilton (R), vice chairman of the House Appropriations Committee,
could have a significant impact on the governance of the state over the
next four years, particularly if front runner Republican Robert
McDonnell wins in November. Currently, the House has a
Republican majority and the Senate a Democratic majority; resulting in
divided control of the General Assembly for the first time in modern
history. This split has hampered Democratic Governor Timothy Kaine's
ability to move much of his agenda since coming to office. Delegate
Hamilton's situation and his refusal to step down have invigorated
Democrats who only need to win six seats in the House to gain control
of the legislature. Such a result would present increased challenges
for the business community, including health plans.