Top health care issue shifts from coverage in 2014 to provider access in 2015

February 26, 2015 Leave a comment

For implementation of the Patient Protection and Affordable Care Act, 2014 was the year of increasing medical coverage. The rate of those lacking coverage in 2014 fell to its lowest level in seven years, driven in large part by states that have fully implemented the law, California Heathline reported this week. States that fully implemented the ACA saw their uninsured rates decline by almost twice the rate as states that did not do so, according to the story.

For 2015, the focus is shifting to how well expanded coverage ensures access to and payment for care. In California – a state that has fully implemented the Affordable Care Act by establishing its own state health benefit exchange and expanding Medicaid eligibility – these issues are coming into full play.

Underlying them are economic tensions in both commercial individual coverage and Medicaid. In the former, they arise from the tradeoff of narrow provider networks in commercial individual health plans in order to keep premium rates down, particularly in exchange qualified health plans that must offer standardized benefits. (Narrow networks have also increased patients’ risk of medical bankruptcy due to “balance billing” when they receive care and particularly emergency care from providers outside of their plan’s network as Kaiser Health News reports). Provider resistance to the high volume/lower reimbursement model of these networks is manifesting in complaints from those enrolled in exchange plans that their coverage is being declined when they seek care amid provider network volatility and churn. That has drawn attention in all three branches of government as California Healthline reported earlier this month:

California has addressed the issue on all fronts, from consumer groups launching suits against insurers over allegedly inadequate provider networks, lawmakers taking legislative action and state regulators implementing immediate policy changes.

In October 2014, Gov. Jerry Brown (D) signed a bill (SB 964) that increased oversight of insurers’ provider networks by authorizing the state Department of Managed Health Care to review insurers’ annual report on timeliness compliance. More recently, state Sen. Ed Hernandez (D-West Covina) has proposed a bill (SB 137) that would require insurers to update their provider directories on a weekly basis, among other requirements.

Meanwhile, Insurance Commissioner Dave Jones (D) released regulations on Jan. 5 that his office said were designed “to address the deficiencies in the market we have been seeing.”

Department of Insurance officials noted that they have received complaints from consumers about difficulty getting doctor appointments, traveling long distances to access in-network care and encountering erroneous provider directories. Relatedly, multiple suits have been launched against Anthem Blue Cross and Blue Shield of California over the issue.

In the Medicaid segment that covers about 1 in 3 California residents, burgeoning enrollments are outstripping available providers. As with commercial individual coverage, provider dissatisfaction with reimbursement rates is widely considered a key contributing factor. A California Healthcare Foundation study issued in August 2014 found the ratio of primary care physicians to Medi-Cal enrollees in 2011 and 2013 (35 to 49 per 100,000 enrollees) fell well short of the federal Health Services and Resource Administration’s guidelines of 60 to 80 per 100,000 enrollees. “Without a large increase in the number of primary care physicians participating in Medi-Cal or another means of increasing efficiency in primary care, such as greater use of nonphysician clinicians or phone and electronic visits, Medi-Cal beneficiaries are likely to have difficulty accessing primary care,” the study concludes.

While low Medi-Cal reimbursement rates are linked to the lack of access to PCPs, the study notes it did not find an association with unmet health care needs or preventative services. It also suggested a greater role for community health centers since they receive higher Medi-Cal reimbursement rates than private practice physicians.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Health insurance returning to traditional role of covering unexpected, high cost care

February 19, 2015 1 comment

A basic insurance principle is returning to health coverage: mitigating the financial risk of a major, unexpected or accidental need for medical care. That’s how it worked in the period immediately following World War II, when health insurance was termed “major medical” and designed to cover high cost care such as injuries resulting from accidents or a medical crisis such as a heart attack or stroke.

The big driver of the change: sharply rising premium rates over the past decade. Costly premiums are driving people to choose plans with more cost sharing and the lower premiums that come with greater cost sharing such as deductibles, co-pays and co-insurance. Even when premium rates are subsidized, 85 percent of those purchasing individual plans sold on state health benefit exchanges in 2014 chose bronze and silver rated plans over higher priced gold and platinum rated plans that have less cost sharing. Bronze and silver rated plans cover 60 and 70 percent, respectively, of expected annual health care costs while gold and platinum, 80 and 90 percent.

The upshot of these less generous plans is people will become less inclined to view health plans as pre-paid medical care and more as insurance for medical financial emergencies. It’s back to the future of major medical plans of the 1950s and 1960s – a reversal of the all-inclusive managed care plan trend that began in the 1970s and 1980s.

A consequence is likely to be less wasteful utilization of primary care for issues that typically clear up on their own such seeking an antibiotic prescription for a minor cough. That’s a highly beneficial development amid widespread concern of a looming shortfall of primary care physicians at the same time more people gain medical coverage under the Affordable Care Act.

Related trends are the rise of cash paid primary care options including prepaid direct primary care physicians and clinics, retail and drugstore clinics and companies offering quickly accessible online telehealth consultations. These services provide consumers convenient care within and outside of normal business hours without the need for an appointment plus reduce the uncertainly of whether a particular primary care visit will be covered by their health plan. Also, tax advantaged health savings accounts that allow money to be set aside to pay for minor care.

All of this fits nicely into the growing ethos that wellness is a personal responsibility that for the vast majority of people is secured with healthful lifestyles rather than frequent engagement with medical providers.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

IRS updates individual health insurance mandate exemption filing instructions

January 22, 2015 Leave a comment

Just in time for tax season, the Internal Revenue Service recently updated information on how to file for an exemption from the Individual Shared Responsibility requirement to maintain qualifying health insurance coverage for tax year 2014. The update (linked below) lists 19 types of exemptions and how to file for them using IRS Form 8965. Most can be claimed directly on the form while six types of exemptions require a certificate of exemption be obtained or requested from the taxpayer’s state health benefit exchange. Three exemption categories can be claimed either with an exchange certificate of exemption or directly on Form 8965.

Individual Shared Responsibility Provision – Exemptions: Claiming or Reporting.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Workplace wellness program controversy could have major influence on future of employer-sponsored health coverage

January 13, 2015 1 comment

In the United States, the majority of working age adults receives health coverage through employer-sponsored health plans. As the cost of those plans has risen in recent years, employers are looking for ways to hold the line. Dropping those plans and telling employees to buy their own coverage has multiple downsides for large employers. They would lose a major income tax deduction and large employers would face penalties under the Patient Protection and Affordable Care Act for failing to offer coverage to full time employees and their child dependents. Plus they worry doing so would run the risk of making it harder to recruit and retain staff.

Looking for options to shed health benefit costs, some large employers are turning to “workplace wellness” programs that monitor employee health status and enforce health maintenance with rewards and penalties applied to employee premiums and cost sharing.

“Employers are carrying a major burden of healthcare in this country and are trying to do the right thing,” said Stephanie Pronk, a vice president at benefits consultant Aon Hewitt told Reuters in this article on wellness programs. “They need to improve employees’ health so they can lead productive lives at home and at work, but also to control their healthcare costs.” As the Reuters piece reports, critics see wellness programs as a thinly veiled effort to shift health plan costs to employees, pointing to studies that indicate wellness programs don’t produce meaningful reductions in health care utilization. And the Obama administration is taking some large employers to court, alleging they are violating the wellness program rules of the Affordable Care Act that allow employers to offer voluntary programs by mandating all employees participate.

Princeton University health care economist Uwe E. Reinhardt and other critics view wellness programs as the medicalization of the workplace, arguing employers shouldn’t be in the business of monitoring the health of their employees. However as Pronk suggests, since employers are paying the bill when they need medical care, they have a natural stake in employee health. The outcome of this debate could well determine the future of employer-sponsored health coverage in the U.S.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Two new CO-OP plans face dreaded adverse selection death spiral

Before individual health insurers were prohibited from medically underwriting applicants for coverage one year ago this month, many faced the dreaded adverse selection death spiral and may have gone under without the intervention of the Patient Protection and Affordable Care Act. That’s when a health insurer ends up with less healthy people in its risk pool and must raise premium rates and cost sharing to cover their higher medical utilization costs. Those higher premiums in turn make the plan less able to attract new members and premium dollars to cover those rising costs. Once the adverse selection death spiral becomes established, it’s very difficult to reverse course. It’s the health insurance equivalent of a cosmic black hole.

The Patient Protection and Affordable Care Act sought to mitigate the death spiral by outlawing medical underwriting in individual health insurance, subsidizing premiums for low and moderate income households, creating single state risk pools and establishing reinsurance and risk adjustment programs to mitigate adverse selection risk.

But for some new health plans in the post-ACA world, adverse selection can occur right out of the gate if they can’t coordinate premium rates and cost sharing with medical utilization. Exhibit A is a couple of CO-OP (Consumer Operated and Oriented Plan) health insurers established under Section 1322 of the Affordable Care Act. Since CO-OP plans are new players in those states in which they operate, they face the temptation to set premiums at low levels in order to gain market share against the established health plan issuers.

Two days before Christmas, Iowa insurance regulators went to court to place Iowa and Nebraska-licensed CoOportunity Health in rehabilitation, citing “extremely high healthcare utilization.” The week before, the federal government declined CoOportunity Health additional loan funding, resulting in CoOportunity being deemed in hazardous financial condition and placed under the supervision of the Iowa Insurance Division. (Links related to the rehabilitation order here.) (Update 1/24/15: Iowa insurance commissioner initiates insolvency proceedings against CoOportunity.)

Meanwhile in Minnesota, another CO-OP plan, PreferredOne, sharply increased premium rates and pulled out of that state’s health benefit exchange marketplace for plan year 2015 despite a bang up 2014 in which it captured a majority of the 55,000 new exchange enrollees, according to this Bloomberg Businessweek story. Same problem as in Iowa with CoOportunity Health: premiums set too low relative to medical utilization.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Rulemaking would allow employers to offer part timers ancillary benefits to supplement individual plans

December 23, 2014 1 comment

The federal government has issued proposed rules apparently intended to help put health benefits offered to low wage, part time employees more on a par with those offered full time employees in terms of coverage and affordability. The proposed rulemaking recognizes that part time employees may find their premium share for group coverage offered full time workers unaffordable and will thus turn to subsidized individual coverage sold in the state health benefit exchange marketplace in order to meet the Patient Protection and Affordable Care Act mandate to have health coverage.

The proposed rules would allow employers to offer ancillary, non-group health benefits to part time employees (those expected to work on average of 30 hours a week or less) and their dependents. The ancillary benefits would supplement or “wrap” individual health plans but could not cover out of pocket cost sharing or work in a coordinated manner with individual health plans. Examples include expanded in-network medical clinics or providers; benefits for long-term, nursing home, home and community-based care or any combination thereof; coverage for specific diseases or illnesses and hospital indemnity or other fixed indemnity plans. These are “excepted benefits” that don’t fall within the definition of group health plans under the Employee Retirement Income Security Act of 1974.

The proposed rules would limit the annual amount of the wraparound ancillary benefit coverage to the maximum for flexible spending accounts (FSAs) — $2,500 for 2014. In addition, the cost of the coverage cannot exceed 15 percent of the cost of coverage for an employer’s primary health plan offered to employees eligible for the ancillary benefit wrap coverage.

Comment on the proposed rules is due by January 22, 2015.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Doubts over wellness programs could unravel employer health coverage

December 18, 2014 Leave a comment

Questions over the effectiveness of employer wellness programs intensified this month and could mark the beginning of the end of employer-sponsored health benefits that have already been eroding from the bottom up in the small group market segment. Wellness programs seek to improve the health status of large employer risk pools in order to reduce the utilization of high cost medical services and to hold down premiums for large insured employers. Now that their efficacy has been called into question, it also begs the larger question of the degree of control large employers have over health care costs. The experience with wellness programs suggests little if any. As Bill Leonard writes for the Society For Human Resource Management:

Even with the modest rise in health care costs over the past several years, sources familiar with the issue believe businesses have reached a tipping point and that the expense of providing medical benefits to workers has become unsustainable. Cost-containment efforts therefore are putting more pressure on wellness programs to deliver on the promise of reducing health care expenses. However, as the CHRO survey and other recent studies have shown, wellness plans may not be producing the return on investment (ROI) that employers expect and need.

The sense of no control over rising costs could prompt large employers to increasingly throw up their hands and cease offering health benefits. The money saved could then be redirected to higher earnings and compensation that couldn’t be done when the U.S. government established wage and price controls during World War II and employers first began offering employee health benefits in lieu of higher compensation. That in turn would create pressure to repeal the Patient Protection and Affordable Care Act’s mandate that employers with 50 or more employees offer health coverage.

There would also be a philosophical motive. Employers and employees alike could rightly declare health is an individual responsibility. Accordingly, the role of employing organizations would shift from a medicalized view of wellness – one that wellness program critics equate to nannying — to one that promotes a culture of wellness that supports healthy lifestyle choices and affords their members sufficient schedule control to engage in health promoting behaviors such as adequate sleep and exercise. Those behaviors require time and commitment in order to become healthy lifestyle habits. For office-based knowledge workers where the greatest occupational hazard is sedentary lifestyles that lead to preventable chronic health conditions, giving them greater control over when and where they work would provide a mutually beneficial tradeoff for taking responsibility for their health. That could pay bonuses in the form of increased engagement and staff attraction and retention.
 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

California readies strategies to address rising unfunded health care costs of retired state workers

December 17, 2014 Leave a comment

The Los Angeles Times reports California Gov. Jerry Brown plans to address the growing unfunded liability of health care for retired state workers when he releases his 2015-16 fiscal year budget in January. That comes on the heels of a report by California State Controller John Chiang showing the unfunded liability of providing health and dental benefits for retired state workers is $71.8 billion, up $7.2 billion from $64.6 billion as of June 30, 2013. An actuarial study accompanying the report found retirees are living longer than expected, thereby imposing higher than expected liability on the state, which pays these costs as they are incurred.

State and local governments are concerned over burgeoning retiree health costs as they work to regain their financial footing following the sharp economic downturn of the previous decade. Two articles last year by Bloomberg and Governing magazine discuss a cost control strategy of directing retirees who don’t yet qualify for Medicare to state health benefit exchanges where many public pensioners would qualify for federal tax subsidies. This could represent a sizable portion of retirees since many public sector workers retire well before they turn 65 and become eligible for Medicare, often in their early 50s.

There is no indication that the strategy has widely caught on or that it is under consideration by Brown, a fiscal conservative who has been a strong supporter of California’s state-run exchange. If Brown were to propose the idea in his 2015 draft budget, it would likely generate strong resistance from California’s politically powerful state employee unions.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Blue Shield pares individual market presence in California localities

December 17, 2014 Leave a comment

From Fremont, Monterey, Nevada City and Point Reyes Station, wealthy and poor areas alike can no longer buy an individual insurance policy from Blue Shield. The gaps are particularly felt in Northern California, in areas where there is only one choice of insurer in the exchange.

“I have had clients from other areas of California, and they live in the bay area or here or there, and I do it for them and, wow, there’s six insurance companies or seven insurance companies,” says Lomas. “I think that was when I first realized how truly we were getting the shaft up here.”

Blue Shield of California declined an interview, but said it’s not selling in certain areas because it couldn’t find enough providers willing to accept payments that would keep premiums low. The company also said it is not selling in areas where there is no contracted hospital within 15 miles.

via After Blue Shield Pulls Out of Zip Codes, Consumers See Limited Insurance Options – capradio.org.

When networks narrow, it can be hard to find enough providers in a given local market willing to work for lower narrow network reimbursement rates employed to hold down premium rates. This development shows how difficult it is for health plans to achieve both affordable premiums and access to providers and what happens when that balance can’t be struck and the network begins to fray.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Utah: Medicaid expansion would save large employer penalties, use SHOP exchange for individual plans

December 11, 2014 Leave a comment

Approval of its proposed Healthy Utah Medicaid expansion program would allow large employers of low wage workers avoid penalties when those workers enroll in subsidized individual health plans though the state’s health benefit exchange, according to a document describing the program. The proposed 3-year pilot program is pending approval of a Section 1115 waiver of Medicaid rules from the U.S Department of Health and Human Services.

Utah is served by a federally facilitated exchange (FFE) in the individual market and operates a state-based exchange (SBE) serving small employers of 1 to 50 employees under the Small Business Health Options Program (SHOP) of the federal Patient Protection and Affordable Care Act. A notable component of Utah’s proposed Medicaid expansion program is those in the expansion population would receive federal Medicaid share funding to purchase commercial plans sold via the state’s small business exchange, Avenue H, and not the FFE, healthcare.gov. Those earning more than 100 percent of federal poverty levels (FPL) are eligible to purchase coverage in the FFE.

“Beginning in 2016, large businesses in Utah will likely face $11 to $17 million less in tax penalties each year if their employees making between 101 percent and 133 percent FPL are enrolled in a state-sponsored program rather than a Health Insurance Marketplace plan with a tax credit,” the document states. Employers of 50 or more full-time employees must offer health insurance to 95 percent of their workforces starting in 2016.

In addition, children who currently receive Medicaid would have the option to enroll in the same commercial plan their parents select through Avenue H. “Medicaid would continue to provide cost sharing and wrap-around coverage for these children to ensure they continue to receive the same level of coverage they do today,” the Healthy Utah plan states. “It is hoped that having a single primary health plan for the family will simplify coverage for the family. The federal government has previously denied Utah’s requests to use Medicaid funding to purchase these private plans. However, through the Healthy Utah negotiations, Utah was able to obtain approval for this type of assistance.”

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

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