• A Requirement to Inform PPO Members of Upcoming Provider Terminations
• Sutter Seeks to Offer HMOs in CA
• Western Health Expands the Reach of its HMO
• Pharmacy Group Urges Veto of Chemotherapy Bill
• MLR Bill Clears Subcommittee
• Providers Warn That Medicare Cuts Will Threaten Radiation Care
• How Expanding Medicaid Coverage May Affect Private Plans
• Consumers Don’t Have a Firm Grasp on Healthcare Reform
• Consumer-Driven Health Plans Leap Ahead of HMOs
• Health Exchange Lessons From Massachusetts
• How Reform and Industry Trends Are Affecting Employer Healthcare Costs
• Healthcare Conference
• Defend Your Income campaign
• Long-Term Care Insurance Planning Software
A Requirement to Inform PPO Members of Upcoming Provider Terminations
The state legislature passed AB 2152, which would require PPOs to notify policyholders if the contract is set to terminate between their medical provider group or hospital and their insurer. The bill also requires that the Department of Insurance be notified before the contract termination, so that the Department can verify if the health insurer will continue to have an adequate network of medical providers in that geographic region to serve insureds.
The bill, authored by Assembly Member Mike Eng (D-Alhambra), has reached the Governor’s desk after the Legislature passed it during the final week of the 2011-2012 Legislative session. AB 2152 is sponsored by Commissioner Dave Jones and the California Department of Insurance. Jones said, “These important consumer protections will help prevent policyholders from unknowingly seeking medical care from a provider who may no longer be in their network patients should know whether they will be subject to higher, out-of-network costs before receiving medical treatment,” said Jones.
“This legislation erases a double standard in regulation and ensures that consumers are not blindsided by unexpectedly high medical bills because they were not notified of changes in their health insurance policies,” said Assembly Member Mike Eng.
AB 2152 requires health insurers to notify the Department of Insurance at least 30 days before terminating a provider group or hospital contract. The bill also requires health insurers to send a written notice to policyholders at least 10 days before the termination of certain provider group and hospital contracts. This protection is already provided to HMO enrollees, but not to PPO enrollees.
Sutter Seeks to Offer HMOs in CA
Sutter Health has filed an application with the California Department of Managed Care (DMHC) for a Knox-Keene License. If the application is approved, the not-for-profit health care network would offer a Sutter-operated and sponsored health plan.
With DMHC’s approval, Sutter Health will offer a range of HMO products for small and mid-sized employers. If awarded a Knox-Keene License, Sutter Health expects HMO products to first become available in the greater Sacramento and Central Valley regions in early 2014. Sutter Health will also seek the DMHC’s approval to extend its service area to other parts of Sutter’s service area. Sutter Health president and CEO Pat Fry said, “The Knox-Keene License filing represents our first formal step toward delivering the type of high-value health plan products that consumers and employers want and expect. Our proposed Sutter-sponsored health plan will be locally run, and will provide superb service and the great quality we’re known for, along with competitive rates.”
Sutter Health has experience with managing health plans, having operated an HMO during the 1990s. Fry said the timing is right for a Sutter-sponsored plan, noting the growth in Sutter Health’s 5,000-member Sutter Medical Network of doctors, its two-dozen acute care hospitals and robust outpatient and home health network.
“We’re seeing the emergence of new care delivery models, such as accountable care organizations (ACOs) and new care approaches from the Centers for Medicare and Medicaid Services (CMS). A Knox-Keene License gives us greater flexibility to participate,” said Peter Anderson, Sutter Health senior vice president of Strategy and Business Development. Sutter Health will continue to contract with and care for patients covered by other commercial health plans as well as MediCal and Medicare. For more information, visit SutterHealth.org.
Western Health Expands the Reach of its HMO
The North Bay Business Journal reports that Western Health Advantage plans to expand into the North Bay, adding Marin, Sonoma and Napa counties to its roster with hopes of offering a commercial health plan for employers and individuals by Jan. 1. In June, the Sacramento-based HMO (916-563-2250, westernhealth.com) filed expansion plans with the state Department of Managed Health Care. The initial filing only listed Sonoma and Marin counties, but it was later amended to include Napa County. The geographic expansion is still pending approval by the state.
Western Health Advantage operates in Solano, Yolo, Sacramento, Placer and El Dorado counties and serves some 92,000 members. The not-for-profit HMO was founded by the UC Davis Health System, and Fairfield-based NorthBay Healthcare. The initial filing that listed Marin and Sonoma counties conservatively estimated about 3,900 new members in the first year of operation, focused primarily on employer groups. With Napa County in the mix, that number would increase.
Numerous proponents in the North Bay have cited the HMO’s ability to compete with Kaiser Premanante in the Sacramento and Solano regions as an attractive alternative for North Bay providers and employers, particularly Sonoma County’s district hospitals, which have struggled to maintain their share of insured patients because of competition from health care heavyweights Kaiser and Sutter Health.
Rick Heron, a spokesman for Western Health, previously told the Business Journal that the expansion into the North Bay is part of the HMO’s adaptation to health care reform.
The individual market could also be in play, with the California Health Benefit Exchange set to launch in 2014. Small employers and individuals will be able to purchase insurance plans through the exchange.
Western Health Advantage’s expansion could also help fill a void created when Santa Rosa-based Health Plan of the Redwoods shuttered in 2002, a gap Kaiser quickly filled. Kaiser’s San Rafael Medical Center, which includes Petaluma, has 120,258 insured members, while it’s Santa Rosa Medical Center has 141,338 members. The next-largest HMOs serving the North Bay are Blue Shield with 15,000 members, Health Net with 12,000 and United Healthcare with 4,200.
Western Health Advantage’s network includes more than 500 primary care providers, 1,800 specialists and eight hospitals in the Sacramento-Solano region.
Pharmacy Group Urges Veto of Chemotherapy Bill
The Academy of Managed Care Pharmacy (AMCP) sent a letter to California Governor Jerry Brown urging him to veto AB 1000. The bill would require providers of pharmacy benefits to cover oral chemotherapy agents at the same cost-sharing level as intravenous (IV) or injected chemotherapy agents. The legislation would apply to all health care service plan contracts renewed on or after July 1, 2013 that provide coverage of outpatient prescription drugs.
Under the bill, health insurers would not be able to charge policyholders more for covering oral chemotherapy than for intravenous chemotherapy. Health plans would not be able to increase cost-sharing for IV or injected agents in order to meet the requirements of the legislation.
“Cost-sharing parity mandates remove tools from health plans that enable them to retain the flexibility to adjust benefit design in response to the latest medical evidence for the benefit of patients,” AMCP said.
Currently, if one treatment is shown to be more effective or to have a higher clinical value, a plan can offer more favorable cost-sharing requirements for that treatment compared to other treatments. ACMP says that this flexibility offers patients coverage of more effective treatments at the most affordable rate. It also helps payers maximize the value of dollars spent on treatment.
Another consideration is the risks and benefits associated with oral and IV chemotherapy treatments. With the relatively recent increase in availability of oral chemotherapy agents, best practices about their administration are rapidly evolving.
While oral chemotherapy agents are more convenient for patients, especially those who live far away from an infusion center or physician’s office, they also place the burden of correct administration of the drug entirely on the patient or their caregiver.
There are also questions about the appropriate management of any side effects that a patient receiving oral chemotherapy may experience and how that may affect patient adherence. IV chemotherapy treatments can be less convenient for patients and can introduce the increased risk of infection, but patients are under the supervision of a health care professional who can ensure proper administration and help to manage any side effects at the time of treatment.
Finally, AMCP said, this legislation does not address the root cause of the problem: the high costs of these treatments. “Because many of the treatments that would be subject to this requirement have no generic or therapeutic alternative, it is difficult for health plans to negotiate more favorable prices from manufacturers. Reduced cost-sharing does not lower the cost of the prescription drug. Instead, it simply shifts those costs back to the health plan. This could have the unintended consequence of actually increasing costs, not only for patients receiving treatment for cancer, but for all of the patients covered by the pharmacy benefit.” For more information, visit www.amcp.org.
MLR Bill Clears Subcommittee
The House Energy and Commerce Subcommittee on Health approved a bipartisan proposal that preserves the role of health insurance agents and brokers. Under the independent Health Insurance Advisors Act of 2012, commissions paid to health insurance agents and brokers would be excluded from the medical loss ratio calculation. The full committee will consider the measure sometime this month. Janet Trautwein, CEO of NAHU said, “This ensures that health insurance agents and brokers will continue to be able to help consumers find appropriate health insurance coverage, as well as use that coverage most effectively once it is purchased. Recognizing the negative impact the MLR provision is having on agent and brokers, subcommittee members voted via voice vote to help these small business people preserve jobs.”
Millions of individuals and small businesses depend on licensed agents and brokers to help them navigate the healthcare marketplace and find health plans that suit their needs and budgets.
The bipartisan measure already has 218 co-sponsors in the House and a companion bill in the Senate (S. 2288).
Providers Warn That Medicare Cuts Will Threaten Radiation Care
Provider organizations submitted commentary to the Centers for Medicare & Medicaid Services (CMS) addressing the drastic effect that reimbursement cuts would have on a variety of radiation services. Dr. Deepak A. Kapoor, president of The Large Urology Group Practice Association (LUGPA) said, “Patients with cancer depend on this state-of-the-art treatment The cuts proposed by CMS will limit patients’ access to advanced radiation services, including intensity-modulated radiation therapy and stereotactic body radiation therapy, which are the preferred modalities for radiation treatments for patients with prostate and head and neck tumors.”
Dr. Michael J. Katin President of the Association of Freestanding Radiation Oncology Centers (AFROC) said, “A cut in reimbursement to freestanding radiation therapy centers and community-based cancer practices this massive would put financial strain on community radiation oncology practices, negatively impacting patient access. These cuts may force community treatment centers to limit services and potentially close, denying Medicare beneficiaries and other patients with cancer access to life-saving cancer treatment – especially underserved and rural populations.”
How Expanding Medicaid Coverage May Affect Private Plans
A paper by the American Academy of Actuaries highlights how states’ decisions to expand
Medicaid coverage could affect private health-care plans. The U.S. Supreme Court’s June 28 decision on the Affordable Care Act (ACA) makes the implementation of the ACA’s Medicaid expansion optional for states. Many states are considering whether and to what extent to implement the expansion, which would increase Medicaid eligibility to 133% of the federal poverty level. “States need to consider the impact on private plan premiums and on employer penalties as they make their decisions on implementing the Medicaid expansion provisions in the ACA,” said Mita Lodh, member of the Academy’s Health Practice Council.
The Academy makes the following observations:
• Individual market premiums could increase in states that opt out of the Medicaid expansion, due to health status differences of new enrollees.
• Exchange premiums may also increase because fixed reinsurance subsidies would be spread over larger enrollee populations.
• Basic Health Program decisions by states, pending clarifications from the Department of Health and Human Services, could affect the risk profile of enrollees in an exchange.
• Employers may be at greater risk of penalties in states that don’t expand Medicaid eligibility.
For more information, visit www.actuary.org
Consumers Don’t Have a Firm Grasp on Healthcare Reform
Consumer awareness of and interest in healthcare reform has reached new high with the U.S. Supreme Court’s historic decision to uphold the Patient Protection and Affordable Care Act (PPACA). Yet, despite the higher awareness level (92%), only 11% have a high level of understanding of most elements of the reform Act, according to research by TNS. Consumers appear to gain their perceptions of PPACA from generalities conveyed from key political leaders and media coverage. The lack of understanding of PPACA results in sharply divided opinions on how the law will affect healthcare and insurance issues, according to William Bruno, vice president of TNS.
Americans generally agree on the goals for health reform to increase access to appropriate and effective patient care and to lower costs. However, views on how we get to there are sharply divided according to political party affiliation. Half of Republicans and just over two thirds of Democrats say reform will address the ability to get coverage with pre-existing conditions. Fifteen percent of Republicans and nearly 50% Democrats say the reform Act will mitigate rising costs. For more information, visit www.tnsglobal.com.
Consumer-Driven Health Plans Leap Ahead of HMOs
Consumer-driven health plans (CDHPs) have surpassed HMOs to become the second most common plan design offered by U.S. employers, according to a survey from Aon Hewitt.
The 2011 survey of nearly 2,000 U.S. employers reveals that 58% offered a CDHP and 38% offered HMO plans. PPOs continue to be the most widely offered plans, with 79% of employers offering them in 2011.
Among employers that offer CDHPs, health savings accounts (HSAs) outpace health reimbursement arrangements (HRAs) (34% versus 18%). But, 43% of employees enroll in HRAs compared to 28% who enroll in HSAs. This reflects the fact that HRA plan designs are popular among large employers embarking on full replacement CDHP strategies. HRAs offer more design flexibility to the employer compared to HSAs. HSAs typically they generate lower enrollment because they are offered to employees as one of several plan options.
Maureen Fay, senior vice president and head of Aon Hewitt’s CDHP working group said that, despite an increase in prevalence, CDHP enrollment lags behind enrollment in PPO and POS plans. The average enrollment in a PPO plan was 69% in 2011 followed by POS plans (49%). Forty-three percent enrolled in a high-deductible CDHP with an HRA and 28% enrolled in a high-deductible CDHP with an HSA.
Employers are using a variety of tactics to encourage employees to enroll in these plans including subsidizing premiums at a higher level than other plan options (36%), covering preventive medications before the deductible (34%), and contributing employer funds to the HSA (30%) and HRA (22%).
More employers are also considering voluntary/elective benefits to supplement these plans, such as critical illness, hospital indemnity, and accident insurance policies. Twenty-six percent of those using this tactic report a moderate to significant increase in CDHP enrollment because of the availability of voluntary or supplemental medical benefits. While just 6% of employers use voluntary/elective benefits to complement the CDHP and encourage enrollment, 42% report they are considering this approach in the next few years.
A separate survey of 3,000 employees reveals that employees are willing to try CDHPs and their associated accounts. Employees will continue to choose them because they often come with a lower premium. However, employees find them challenging to understand and use.
Joann Hall Swenson of Aon Hewitt said, “Employees want the most cost-effective plan with the least hassle, but they often are not all that interested in digging into the details of CDHPs, HSAs, and HRAs. Our research and experience tells us that simply giving employees lots of educational information about these plans and accounts is only helpful to the small minority of people who like all the details.” To address this challenge, Aon suggests the following:
• Get the right people into the right plan. Employers need to identify the segments of their population that are most likely to sign up for a CDHP and then tailor the marketing campaign to them. They also need to monitor employees’ experience with the plan to ensure it re-sells itself and encourages consumers to have appropriate health and financial behaviors.
• Explain how employees can benefit from the plan’s key features. They also need to tell employees what very specific about the actions consumers need to take.
• Make it easy for employees and their families to use the plan. This includes removing barriers to care through initiatives like value-based plan designs or full funding of employer contributions to HSA/HRA accounts at the beginning of the year.
• Navigate new tools to help employees select appropriate treatments and providers based on available cost and quality information.
• Offer activities, such as biometric screenings and health risk assessments, to help employees assess their health opportunities and risks.
• Use resources, like health coaches and disease management nurses, to help employees meet their goals of health improvement and maintenance.
• Follow preventive care guidelines.
• Manage chronic conditions by working closely with the employee’s physician and adhering to evidence-based treatment protocols.
For more information, visit www.aonhewitt.com.
Health Exchange Lessons From Massachusetts
A report by the University of Massachusetts Medical School (UMMS) and the National Academy of Social Insurance (NASI) examines the work and lessons learned from “Early Innovator” and other advanced states as they gear up for the changes brought on by health care reform.
“There are huge opportunities but also technological challenges for states as they implement the requirements of health care reform, including many that take effect in 2014,” said Michael Tutty, director of the Office of Health Policy and Technology at UMMS, and co-author of the report. “We hope that by sharing the experiences of other states, particularly those that have been working on implementation the longest, we can bend the learning curve for policymakers and promote collaboration among those looking to prepare for and advance health care reform in their states.”
Five themes emerged from interviews with policy and technology leaders:
1) Agreeing on a common vision, strategy, and plan for IT development is essential for meeting fast-approaching ACA deadlines.
2) A careful assessment of a state’s internal and external IT resources is needed.
3) A complicated and pressing challenge is to integrate policy and technology between an Exchange and a state’s Medicaid program.
4) Leveraging federal resources, reusing technologies developed by other states and federal agencies, and participating in multi-state collaboratives may accelerate development and help minimize operational costs.
5) Despite federal and state policy, technology, and political uncertainties, proceeding with development is necessary in order to meet aggressive federal implementation deadlines.
For more information, visit www.nasi.org.
How Reform and Industry Trends Are Affecting Employer Healthcare Costs
With key provisions of the Patient Protection and Affordable Care Act (PPACA) now in effect for over a year, Truven Health Analytics has assembled data tracking how reform and other industry trends have affected employer healthcare costs. Researchers used claims data from 340 large U.S. employers representing 18.3 million covered lives. They tracked healthcare costs over the past five years and project costs for 2012 and 2013.
Medical and pharmacy costs for employees and their dependents increased 4.6% from 2010 to 2011, which is the smallest increase in annual employer healthcare costs over the past five years. The research also projects that allowed amounts will continue to grow at a moderate rate of 4% to 5% in 2012 and 2013. The relatively modest 2011 cost trend of 4.6% reflects the impact of PPACA and Mental Health Parity regulations that became effective in 2011. The following is an overview of the findings:
• Extension of Dependent Coverage: The extension of dependent coverage through age 26 for unmarried children accounted for 1.4% of the overall increase in health care costs and 4.6% of the employers’ increase in health care costs. The lower-than-average health care costs for individuals 19 to 26 beginning coverage in 2011 reduced average per member costs by 0.2%.
• Preventive Services Coverage: The PPACA requirement to cover more preventive services has resulted in a 3.8% increase in physician’s office visits for preventive care. This modest increase may reflect the generous preventive coverage offered by many large employers prior to PPACA.
• Mental Health Parity Regulations:†Roughly 0.4% of the 4.6% 2011 healthcare cost trend was driven by a 13.7% increase in Mental Health and Substance Abuse services due to the Mental Health Parity and Addiction Equity Act of 2008.
For information, visit http://www.truvenhealth.com.
The American Association of Preferred Provider Organizations (AAPPO) is holding its Pacific Regional Conference October 9th in San Francisco from 1:00 p.m. to 4:30 p.m. It will focus on health reform as well as workers comp reform legislation that is expected to be signed by the governor. For more information, visit www.aappo.org.
Defend Your Income Campaign
The Council for Disability Awareness (CDA) launched the Defend Your Income campaign and a website designed to educate consumers on the biggest threat to their income – long-term disability. This educational program seeks to unite consumers, advisors, employers, and insurers to protect the incomes of working Americans from the financial risks caused by illness or injury. For more information, visit http://defendyourincome.org.
Long-Term Care Insurance Planning Software
LTCI Partners introduced the latest version of its Blueprint software. It enables financial and insurance advisors to see the benefits of long-term care insurance versus being self-insured. Based on feedback from advisors, this newest version of LTCI Partner’s Blueprint includes enhanced graphics that more effectively illustrate the importance of purchasing long-term care insurance and more customization to include the client’s name and age. For more information, visit https://www.ltcipartners.com/about/Blueprint.cfm.
Mobile App for Employee Benefit Claims
Colonial Life policyholders can now access claims information and policy details from their Apple devices with the help of a new mobile app. The free download enables policyholders with iPhone, iPad, and iPod Touch devices to quickly check on the status of their claims, view policy information, and access information available through the company’s policyholder website. Policyholders can download the My Colonial Life app by visiting the Apple iTunes store. Users must have Apple’s iOS 5 software to run the app and must register on the company’s policyholder website before using it.