Monthly Archive: February 2016

“Waiting to get sick:” In depth research, more info needed

The biggest problem with the exchanges reflects a basic insurance rule: Insurers need healthy, premium-paying customers to balance claims they cover from the sick. Insurers have struggled in many markets because people who couldn’t get coverage previously due to a condition were among the first to sign up when the exchanges opened a few years ago. Healthy customers have been slower to enroll.Insurers say they’ve also been hurt by customers who appear to be waiting until they become sick to buy coverage. The companies blame liberal enforcement of the ACA’s special enrollment exceptions

Source: Insurer warnings cast doubt on ACA exchange future

This is a topic that cries out for in depth research and more information. The critical question that needs answering is how are those who apply for coverage outside of annual open enrollment able to time a serious illness or accident in order to plan when to buy coverage for it as this analysis prepared for America’s Health Insurance Plans and the Blue Cross Blue Shield Association suggests? While the analysis shows significantly higher medical utilization among those who enrolled in individual plans outside of open enrollment periods, it does not definitively demonstrate that these individuals waited until they needed medical care before enrolling. They could well simply be in poorer overall health compared to those enrolling in the open enrollment period and also have difficulty managing their household finances.

The urgency of the issue relative to the individual health insurance market reforms and the viability of the state exchanges as well as simple logic demand an answer. It makes no sense, for example, that an applicant for coverage could know in advance they were going to suffer a costly care event such as a heart attack or stroke, a bout of appendicitis or kidney stone and purchased coverage to take effect shortly before the event.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Arkansas proposes overhauling Medicaid program to emphasize employer-sponsored coverage

Arkansas is asking the U.S. Department of Health and Human Services to sign off on an overhaul of its Medicaid expansion program to make it into more of an employment expansion program based on employer-sponsored coverage rather than a traditional state insurance program for low income earners. The state is proposing federal Medicaid funding go toward defraying the cost of premiums for employees and also subsidizing small employer plans.

Source: 20160215 ArkWorks Summary_JM – 20160215_ArkWorks_Summary_share.pdf

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Hawaii, Vermont seek ACA Section 1332 waiver of small business (SHOP) exchange requirement

Hawaii, which decades ago expanded access to health insurance by requiring employers to offer coverage to most workers, hopes to use its 1332 request to harmonize the ACA’s small business insurance rules with the state’s own, often more stringent standards, including by waiving the requirement to maintain a Small Business Health Options Program (SHOP) exchange. Similarly, Vermont is requesting to waive the ACA’s requirement to establish an online SHOP exchange, seeking instead to allow small employers to continue to purchase qualified health plans directly from insurers.

Source: Innovation Waivers and the ACA: As Federal Officials Flesh Out Key Requirements for Modifying the Health Law, States Tread Slowly – The Commonwealth Fund

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Health insurance, disrupted: Direct cash payment for services

As consumers get savvier about shopping for health care, some are finding a curious trend: More hospitals, imaging centers, outpatient surgery centers and pharmacy chains will give them deep discounts if they pay cash instead of using insurance.

Source: How to Cut Your Health-Care Bill: Pay Cash – WSJ

This Wall Street Journal article discusses a trend worth watching that has the potential to significantly disrupt the payer and provider relationship, particularly for high cost elective procedures. The WSJ item explains the market forces driving it:

  1. Hospitals and other providers seek higher reimbursements from commercial health plans to make up for lower reimbursements for government programs such as Medicare and Medicaid.
  2. Higher reimbursements drive up commercial plan premiums, pushing more consumers into high deductible plans with lower premiums.
  3. High deductible plans make consumers much more price sensitive since they are responsible for paying a large percentage or all of the cost of sub-catastrophic care.
  4. Price sensitive consumers are highly receptive to deep cash discounts offered by providers — undercutting contracted health plan reimbursement rates that they would otherwise pay out of pocket — and willing to forgo credit toward their calendar year deductibles to obtain the discount.
  5. Online price comparison services spring up, reinforcing and expanding the direct cash pay health care market.

In essence, these market forces are combining to partially disintermediate commercial health plans in the current payer-provider scheme. This is a profound trend that may accelerate a shift back to days of “major medical” coverage, reforming insurance to a true insurance product designed to cover very high cost, unexpected and catastrophic events like serious injuries sustained in traffic accidents and heart attacks rather than routine care and elective procedures.

If the trend of direct cash payment for sub-catastrophic care grows, it will run counter to the Affordable Care Act’s requirement that individual and small group health plans include ambulatory (outpatient) services as an essential health benefit. If people covered by high deductible, consumer directed plans are paying directly out of pocket for this level of care, it will naturally raise questions as to the value of including it as a commercial health plan benefit, further disrupting the traditional payer-provider relationship.

Provider discounts for direct patient cash payment for services falling within health plan deductibles could also set off broad price deflation in medical services.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Consumers Enrolling Online with Covered California Say There’s Room for Improvement – CHCF.org

CHCF retained gotoresearch, a division of the San Francisco-based user experience and design agency gotomedia, to conduct this research over each of the last three open enrollment periods. The findings are based on unscripted, real-time observation of people applying for or renewing coverage online, and they capture sources of consumer satisfaction, knowledge, confusion, and frustration.Like Anthony, most other participants in the CHCF-sponsored research were confronted with problems with the online enrollment process. Of 31 people eligible to enroll in or renew a Covered California health plan in the second (2014-15) and third (2015-16) open enrollment periods, only one was able to complete the task during the observed research session. Sessions lasted 45-90 minutes for renewals and 90-120 minutes for new enrollees.Today, CHCF released Room for Improvement: Consumers’ Experience Enrolling Online with Covered California, which describes this user testing in further detail, discusses common problems experienced by participants, and offers recommendations for improving the online enrollment process.

Source: Consumers Enrolling Online with Covered California Say There’s Room for Improvement – CHCF.org

This report shows how a combination of factors can deter online enrollments — this one involving the nation’s largest state-based health benefit exchange. Many consumers have low levels of health insurance literacy, unable to fully take into account premiums, deductibles, co-pays, co-insurance and annual out of pocket maximums when selecting a plan. Even when benefits are standardized as they for California exchange plans.

As the CHCF report and video illustrates, in order to self enroll consumers must also possess a degree of income tax literacy that many — particularly the younger adults the plans hope to attract — may lack. Then there are complex family situations and sporadic, unpredictable incomes of those participating in the “gig” economy that exponentially increase the challenge of online self-enrollment. If an online enrollment portal adds to the burden by being less than user friendly as reported here, it’s no wonder many are flummoxed by the enrollment process and simply throw up their hands and log out.

Shopping online for plans is one thing. But enrolling in an individual health plan offered on a state health benefit exchange can be like filing an income tax return — and a relatively complex one at that for many. Call center support can only go so far. Imagine trying to file an income tax return by phone. That makes the role of insurance agents and in person assisters just as vital as that of tax preparers for many income tax filers during the current tax filing season.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Indication of trouble with ACA’s individual mandate compliance

Stung by losses under the federal health law, major insurers are seeking to sharply limit how policies are sold to individuals in ways that consumer advocates say seem to discriminate against the sickest and could hold down future enrollment.In recent days Anthem, Aetna and Cigna, all among the top five health insurers, told brokers they will stop paying them sales commissions to sign up most customers who qualify for new coverage outside the normal enrollment period, according to the companies and broker documents.The health law allows people who lose other coverage, families with new children and others in certain circumstances to buy insurance after enrollment season ends. In most states the deadline for 2016 coverage was Jan. 31.Last year, these “special enrollment” clients were much more expensive than expected because lax enforcement allowed many who didn’t qualify to sign up, insurers said. Nearly a million special-enrollment customers selected plans in the first half of 2015, half of them after losing previous coverage.In addition, Cigna and Humana, another big health insurer, have ceased paying brokers to sell many higher-benefit “gold” marketplace plans for individuals and families while continuing to pay commissions on more-profitable, lower-benefit “bronze” plans, according to documents and interviews.

Source: Licking Wounds, Insurers Accelerate Moves To Limit Health-Law Enrollment | California Healthline

This is a development that should be followed closely because it hints at fundamental problems with the implementation of the keystone policy bargain of the Affordable Care Act’s individual market reforms. Health plan issuers agreed to forgo medical underwriting and accept all applicants regardless of health status and medical history. Provided everyone not covered by an employer or government-paid health plan have continuous, year round coverage.

This story suggests that at least some consumers aren’t keeping up their end of the policy bargain to be continuously covered and are gaming the rules that allow enrollment outside of three-month-long annual open enrollment period for those who lost employer-sponsored coverage, moved or had a change in family status and other life circumstances. They are effectively using coverage actuarially designed for annual enrollment terms as short term coverage of less than one year since according to some insurers, they’re dropping their coverage soon after signing up under the special enrollment provisions. And since they’re only in for the short term, they’re inclined to select plans that have the lowest out of pocket cost sharing: gold and platinum plans. (Plans sold as short term coverage aren’t covered by the Affordable Care Act’s individual market reforms. Pre-existing conditions can be excluded and they typically offer a much narrower scope of benefits than ACA-compliant plans).

The Obama administration apparently recognizes this issue undermines the individual market reform framework. Andy Slavitt, acting administrator of the Centers for Medicare and Medicaid Services, told a J.P. Morgan health-care conference in San Francisco last month that CMS will tighten up its rules governing special enrollments outside of the annual open enrollment period, according to The Wall Street Journal.

Clearly, more information is needed to better understand this phenom. For example, are peoples’ lives so subject to changing life circumstances that most anyone can qualify for special enrollment, mooting the annual enrollment periods? Does “waiting to get sick” as reported in mainstream media as a driver for special enrollments really mean getting high cost elective procedures given that most people aren’t able to time when they will develop a serious illness or be injured in an accident? If consumers are defrauding the special enrollment rules by falsely claiming a life event, is that part of the “culture of coping” the Affordable Care Act is intended to reduce, with consumers too financially pinched to pay their premiums for the entire year, even with advance premium tax credits?

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Head Of California Exchange Scolds UnitedHealth For Blaming Woes On Obamacare | California Healthline

Amid growing questions over the future of insurance exchanges, the head of California’s marketplace said the nation’s largest health insurer should take responsibility for nearly $1 billion in losses and stop blaming the federal health law.In a blistering critique, Covered California’s executive director, Peter Lee, said UnitedHealth Group Inc. made a series of blunders on rates and networks that led to a $475 million loss last year on individual policies across the country. The company estimates a similar exchange-related loss of $500 million for this year.

Source: Head Of California Exchange Scolds UnitedHealth For Blaming Woes On Obamacare | California Healthline

This story reflects the natural tension that exists in the state health benefit exchange marketplace. Health plan issuers are subject to competitive market forces as well as pressure from active purchaser exchanges like Covered California to keep premium rates down while offering provider networks that adequately serve the needs of plan members. But if they set premiums too low or create provider networks that are too large, plan issuers can suffer losses.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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