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Health Care Reform Developments Health Insurance Info

A compilation of health care-related developments in Washington, D.C. and state legislatures across the country for the week of July 26, 2010

There was good news last week for those who are concerned that the medical loss ratio provision (MLR) of the new federal health care reform law could seriously harm quality improvement programs and member counseling programs. The law requires health insurers to spend at least 80 percent of premium revenue on medical claims in the individual and small group markets and 85 percent in the large group markets. But exactly what qualifies as medical costs is still an open question. Representatives of the National Association of Insurance Commissioners, which is developing a recommendation for the federal government on what should be counted, indicated last week that they are inclined to allow some quality-improvement programs to be considered medical costs. This comes as good news for employers and consumers. Aetna has actively argued that narrow MLR definitions could lead to the elimination or reduction of valuable care review programs, increase health care costs overall and employer premiums, and threaten the solvency of some insurers or force them to leave certain markets.

Federal

Members of Congress are trying to pass time until the August break, which could start the last week of July and end the second week of September, without doing anything to harm their reelection chances. What happened on the health care front bears this out. Although Congress passed (and the President signed) a six-month unemployment insurance extension bill, none of the health-related additions made the final cut. The signed bill does not include any extension of the 65 percent COBRA subsidy nor does it include any Medicaid relief for the states (the FMAP formula). These items will be in limbo until the Fall -- more likely in the lame duck session after the elections. Additional work on the 2010 Medicare physician reimbursement rate fix, which runs out November 30, and the 2011 “doc fix” are in the same boat.

States

MARYLAND: The Health Care Reform Coordinating Council met recently and announced the formation of workgroups to focus on various implementation provisions of the Patient Protection and Affordable Care Act (PPACA). The workgroups are open to both industry stakeholders and the public. Insurance Commissioner Elizabeth Sammis and Executive Director of the Maryland Health Care Commission, Rex Cowdry, will co-chair the workgroup on Insurance and the Exchange. The council also issued a draft interim plan that outlines steps needed to prepare the state for health care reform. The plan sets goals such as cost containment, quality improvement, expanding the health care work force to meet the new demands, and ensuring that reform leads to healthier residents.

MISSOURI: Missouri Circuit Court Judge Paul Wilson recently dismissed a legal challenge that sought to block a referendum vote on whether the state should prohibit implementation of key provisions of the PPACA. This decision will allow a PPACA-based ballot initiative to be placed on the August 3 ballot. The plaintiffs have announced that they will not appeal the decision. The measure, officially titled Proposition C, would amend current law to prohibit the state from: 1) requiring individuals to purchase health insurance, 2) penalizing people for privately paying for their own health care, or 3) prohibiting the purchase or sale of health insurance in private health care systems. The measure would also permit health insurance carriers to dissolve voluntarily. The vote on Proposition C will be the first statewide vote in the country on whether to challenge national health care reform. Similar ballot initiatives are scheduled to go forward in Oklahoma, Florida, and Arizona.

NEW MEXICO: The leadership team established by executive order to develop recommendations for the implementation of the PPACA has submitted its report to Governor Bill Richardson. The Governor made the report public last week when he announced which recommendations would be acted upon. They include the development of a state-run exchange; creation of an Office of Health Care Reform; determining if existing laws must be amended or new laws enacted to comply with federal reform; and consulting with Native American tribes regarding the impact of reform initiatives on tribal populations.

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NEW YORK: Not unexpectedly, Governor Paterson has called the State Senate and Assembly back to the Capitol on July 28 at 6 p.m. to address what he terms as unfinished business on the budget, including a Medicaid contingency plan needed in the event that the state's Medicaid federal reimbursement is cut. In his release announcing the special session, Governor Paterson said that, “We have yet to close our $9.2 billion current-year deficit or reduce our out-year gaps, and have no plan to address an additional billion-dollar problem that may arise if the Federal government does not provide FMAP contingency funds." The Governor is also planning layoffs beginning in August to help realize $250 million in workforce savings counted on in the budget.The state has also been delaying millions in payments due to counties as reimbursement for state-mandated programs -- causing the Oneida County Executive, Anthony Picente, to order the county to suspend Medicaid. The State Comptroller also continues to refuse to certify the budget as "complete" and, therefore, is withholding lawmakers' pay. No state legislator has been paid since April 1, the beginning of the state's fiscal year

NORTH CAROLINA: The state legislature has adjourned with few health care-related bills passing. A bill that would have mandated coverage for autism and childhood vaccines was defeated. The 2011-2012 biennium of the General Assembly will convene on January 26, 2011.

OKLAHOMA: Insurance Commissioner Kim Holland filed a petition with the Oklahoma Supreme Court last week seeking to prevent the application of a new tax on health plans enacted earlier this year. The petition challenges the new law's constitutionality. The legislation creates the Health Carrier Access Payment Revolving Fund and imposes a tax of 1 percent on all paid claims for individual and employment-based health plans, to be collected by the Insurance Department beginning August 27. The Oklahoma Health Care Authority will disperse an estimated $240 million in additional funds to pay for the state’s Medicaid program. The petition argues that the state constitution requires that any revenue measures must pass at least three-quarters of the legislature or be submitted to a vote of the people. The new health plan tax did not. Additionally, the petition argues that the bill violates the state law that prohibits the passage of any revenue bill within five days of adjournment. Commissioner Holland also questioned the transparency and accountability of the legislation as well as the state’s authority to tax self-insured plans that are fully funded by employers and subject to federal ERISA law. Other large self-funded plan entities are expected to join her lawsuit and challenge the law on ERISA grounds as well. Aetna will be closely monitoring the litigation going forward.

PENNSYLVANIA: The House Insurance Committee held a hearing on small group rating in Pittsburgh, spurred by complaints in western Pennsylvania about rate increases coming from Highmark as it moves its small group business from non-profit to for-profit operations. Insurance Commissioner Joel Ario used the occasion as another forum to call for a prohibition on medical underwriting in advance of the 2014 effective date of federal rating restrictions, Highmark also testified in favor of a blanket prohibition on medical underwriting now rather than waiting until 2014.

WISCONSIN: The Office of Health Care Reform has outlined its approach and guiding principles for the development of the state's Health Insurance Exchange. Specifically, Wisconsin is turning to BadgerChoice; a concept designed as an exchange for small business on the web that connects small employers, their employees, and participating health plans. The state's guiding principles are, keeping the exchange simple, fully integrate the exchange with Medicaid, and make the exchange truly "transformative" in providing four plan options (bronze, silver, gold and platinum) and a catastrophic plan for individuals under age 30 who cannot afford coverage. The state also is looking at the exchange as an opportunity to advance payment reform and align quality improvement efforts statewide. The Office of the Commissioner of Insurance (OCI) had previously looked at the state's legal authority to establish administrative standards and require insurers to offer coverage through an exchange prior to January 1, 2014 and found it had limited authority, and then only if OCI’s efforts are supported by federal subsidies and incentives for small employers to offer coverage and purchase through the exchange. As a result, a pilot program will be implemented if funding for subsidies are available early and insurers and other key stakeholders are willing to pilot the exchange. It is expected that funding will initially begin with federal grants and be self-sustaining beginning January 1, 2015.

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