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.