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Some Year-End Cheer

Wednesday, December 28th, 2011

Many of us in the advocacy world have been quick to point out examples of things we’d rather re-gift this season. But, as the days start to get longer, it’s worth acknowledging a big win for consumers in 2011 – the preservation of the medical loss ratio (MLR).

The MLR, or the proportion of a premium spent on medical claims vs. profit and administration, was a topic that previously interested only the wonkiest of health wonks. But this year it became a hot issue that moved thousands of consumers across the country to contact their insurance commissioners and demand greater transparency and understanding of how our premium dollars are spent. And in a surprising turn in early December, the U.S. Department of Health and Human Services released regulations on the MLR that kept one of the more controversial parts of the MLR, broker fees, as part of the calculation.

More recently, there were some significant state wins on retaining a strong MLR standard. Both Florida and Michigan insurance commissioners applied to “adjust” (read: reduce) the amount that insurers must spend on medical claims. After strong advocacy by state partners in FL and MI, the Center for Consumer Information and Insurance Oversight (CCIIO), the federal agency charged with deciding the MLR rule, denied both states’ requests to ease the MLR for insurers. The headline: consumer protections won out over insurers’ financial interests.

So what does this mean? One reason the MLR is a big deal is that if insurers do not actually meet the MLR standards, they must provide consumers with rebates, starting in 2012. This very tangible benefit of the ACA was improved by CCIIO’s recent decision to make these rebates tax-free, and to require notices to consumers detailing the amount of the rebate and health plan’s MLR along with an explanation of what it means. Stay tuned for more details from CCIIO on how those rebates will roll out. And for now, be thankful that the Affordable Care Act provided this valuable tool to help protect consumers.

– Christine Barber, Senior Policy Analyst

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The Essential Health Benefits Bulletin: Happy Holidays?

Wednesday, December 21st, 2011

Last Friday, the United States Department of Health and Human Services (HHS) released a bulletin, sub-regulatory guidance, on the essential health benefits (EHB) package. This highly anticipated guidance was a bit of a letdown—kind of like the ugly reindeer sweater that your mother knits you for Christmas (you appreciate the thought, but it’s not really what you needed or wanted).

The EHB is the floor, created in the Affordable Care Act (ACA), for what benefits many health plans will have to cover. It applies to all new health plans in the individual and small group markets beginning in 2014 (both those sold inside and outside Exchanges) as well as to Medicaid benchmark coverage.

The bulletin is relatively short but jam-packed with consequence. Instead of creating one national standard or even a national minimum benefit package, the bulletin allows each state, within certain parameters, to adopt their own definition of the EHB. States must benchmark their EHB to one of four existing health plan options. Let’s do the math—I believe that’s potentially 50 different EHBs nationwide (not exactly the national floor we hoped for)! But, in the holiday spirit, let’s shelve the sarcasm for a moment and review what the bulletin is, and what it’s not.

Laying Out the Benchmark Options
HHS will allow states to choose: (1) any of the three largest Federal Employees Health Benefits Program (FEHBP) plans by enrollment, (2) any of the three largest state employee health benefit plans by enrollment, (3) the largest plan by enrollment in any of the three largest small group insurance products offered in the state, or (4) the largest commercial non-Medicaid Health Maintenance Organization (HMO) plan in the state. The bulletin argues that the scope of benefits in small group plans tend to be in line with the federal and state employee plans and the largest non-Medicaid HMO plan, noting that these plans “do not differ significantly in the range of services they cover.”

Additionally, HHS also notes that the “largest plan by enrollment in the largest product in the State’s small group market” is the “default benchmark plan for the State” in event a state does not elect to choose an EHB benchmark. A reasonable assumption is that what this really means is that a federal Exchange operating in a state would use the default benchmark plan as the EHB. However, because the EHB applies not only to individual and small group plans sold through Exchanges but those sold in the outside market as well, this raises the question of whether HHS is really willing (or able) to impose the default benchmark plan on the outside market (as seems to be required by the ACA).

  • • What it is: A benchmark plan approach to setting benefits.
  • • What it’s not: A premium target approach, as recommended by the Institute of Medicine. HHS specifically states that the goal of the bulletin is to instruct states on how to model their scope of benefits — it does not address cost sharing or actuarial value in any way.

States Keep Their Mandates, for Now
State benefit mandates are a concern for state advocates and state officials from both a comprehensiveness of coverage and a cost perspective; the bulletin gives mandates a grace period. The ACA requires the states to defray the costs of any state mandates beyond the EHB package—a potentially significant problem for mandates that advocates want to preserve. Under the bulletin, however, if a state chooses a benchmark plan as the EHB that includes their state mandates (e.g., one of the small group plan options), they do not have to cover the cost of the mandates. However, if they choose an option not required to offer state mandates (e.g., one of the FEHBP plan options), a state does have to cover the cost of those mandates.

Essentially, this is a powerful incentive for states to choose one of the small group plan options for at least 2014 and 2015 as well as an incentive for states to eliminate their mandates during those two years. This is because the bulletin notes that in 2016 this issue will be revisited and states may not continue to be given an option to include their states as part of the EHB without bearing the cost for these benefits.

  • • What it is: A delaying tactic on the mandate problem. Advocates will need to work hard over the next two years to secure the future of key mandates at both the federal and state levels.
  • • What it’s not: Any kind of resolution on mandates. The guidance punts any final decision on this by HHS to 2016.

What About Those 10 Categories?
The statute demands that the EHB provide benefits across ten categories: (1) ambulatory patient services, (2) emergency services, (3) hospitalization, (4) maternity and newborn care, (5) mental health and substance use disorder services, including behavioral health treatment, (6) prescription drugs, (7) rehabilitative and habilitative services and devices, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care. Of note, the statute also demands that the EHB be balanced across these ten categories, reflecting coverage found in a “typical employer plan.”

If you peg benefit scope to one of the small group plan options, are all 10 categories covered? HHS says, essentially, “yes . . . well mostly . . . well . . . we hope so.” The bulletin makes clear that HHS struggled to define what is “typical,” noting that if categories are missing from the benchmark they nevertheless must be included, using benefits from any other benchmark option. However, HHS remains uncertain as to how to supplement missing categories that are not traditionally covered, citing habilitative care and pediatric oral and vision care as particular issues.

  • • What it is: A balancing act. Categories are filled by services offered in existing plans, leaving potential gaps in some benefits. The bulletin signals that any additional services will be based on other plans that cover those additional categories.
  • • What it’s not: A clear method to fill in and balance the benefit categories. The specificity that consumer advocates hoped for is absent from the bulletin.

HHS Gives the Gift of Flexibility Not Just to States but to Insurers
As explained above, the bulletin will allow states to modify plans to reflect the 10 categories. But, in addition, the bulletin gives insurers a lot of wiggle room, saying that insurer flexibility promotes innovation. HHS notes in the bulletin that it is considering whether or not substitution may occur by insurers within and across EHB benefit categories and whether substitution across categories requires a “higher level of scrutiny.” Indeed, it does.

Due to the ability of states to choose their own benchmark plan, there will be inevitably be EHB variation across states. By also allowing modifications of plans by insurers within states, there will likely be additional variation among plans with respect to numerical limits, when a type of treatment would be approved, and the availability of particular drugs.

This is troubling on two fronts. First, it undermines the ability for consumers to make apples to apples comparisons across plans. Second, it can lead to discrimination against consumers with some health conditions. In other words, insurers may substitute some services that are needed by someone with a more costly health condition with services that woo healthier consumers.

  • • What it is: Potentially, a high level of health plan variation.
  • • What it’s not: A way to empower consumers to compare plans. The potential substitution allowance by HHS is risky—and without a clear monitoring plan, may put at risk necessary covered benefits for vulnerable consumers.

Is There Anything Else Under the Tree?
It doesn’t seem there’s a secret gift waiting for consumers in the bulletin that hasn’t been noticed yet, but the good news is that some of the more troubling aspects of the bulletin are “under consideration.” However, the general approach is unlikely to change. How this turns out now depends on getting HHS to at least modify its approach in a more positive direction as well as on how robust existing state plans are and which plans states choose. And all of this ultimately means that advocates need to voice their concerns at both federal and state levels as we move forward. The short-term opportunity for this is to submit comments to HHS on the bulletin by January 31, 2012 to essentialhealthbenefits@cms.hhs.gov.

—Eva Marie Stahl, Policy Analyst

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NAIC Commissioner’s Fall Back on Medical Loss Ratio

Wednesday, November 9th, 2011

You know that expression, “Fool me once, shame on you. Fool me twice, shame on me”? Well, it came to mind this past week at the National Association of Insurance Commissioner’s (NAIC) fall meeting in Washington, DC. Just as in March, during the NAIC’s spring meeting in Austin, the NAIC consumer representatives were lulled into a false sense of complacency. “This will be a quiet meeting,” everyone said. “No votes on health care issues.” And that Task Force that had taken up the cause of insurance agents and brokers last summer to push for removing agent compensation from the medical loss ratio (MLR)? “They’re not even meeting,” we were told. “NAIC is done with that issue,” they said.

Imagine our disappointment and surprise when rumors started to swirl Thursday afternoon—the first day of the conference—that the commissioner from Florida planned to introduce a resolution at the NAIC’s final plenary meeting, urging Congress to consider and adopt legislation to “preserve consumer access to agents and brokers.”

When we finally saw a draft, the resolution was alarming. It ignored the considerable data collected by the NAIC’s actuarial task force over the summer, as well as the thoughtful recommendations they had developed. If it passed, it could have given momentum to H.R. 1206, which renders the medical loss ratio (MLR) requirements in the Affordable Care Act (ACA) effectively useless as a tool to help consumers get greater value for their health care dollar.

Once again, the consumer representatives swung into action, alerting the media and networks of advocates in the states. Alerts went out, urging consumer groups to contact their state insurance commissioners and let them know they opposed the resolution. The good news: the advocacy worked. NAIC’s membership agreed to delay a vote on the resolution. The bad news? The issue could come back up on a call scheduled for November 22, which consumer representatives will closely monitor. However, a number of commissioners raised sufficient concerns about the lack of notice that NAIC is likely to revisit their rules for bringing up last-minute resolutions.

MLR wasn’t the only thing on the Commissioners’ minds last week. The subgroup on Exchanges, chaired by Commissioner Sandy Praeger (of Kansas), also met. They heard testimony from one of our own consumer representatives, Sarah Lueck from the Center on Budget and Policy Priorities. She did a great job outlining the importance of a seamless experience for consumers as they seek eligibility determinations and make decisions about enrolling in health plans. The subgroup appears poised to take up model regulations for Exchanges, based on the rulemaking coming out of the United States Department of Health and Human Services (HHS).

In another important development, the regulatory framework task force has begun work on a model state law to implement some of the Affordable Care Act’s 2014 insurance reforms (i.e., guaranteed issue, modified community rating, and elimination of pre-existing condition exclusions). The draft currently applies only to the group insurance market, but members discussed adding individual market reforms as well. Getting this right is really important, because this model law is likely to be the framework many states use to adopt the central reforms of the ACA. The NAIC is taking comments on the first draft, and we would encourage consumer groups to submit comments, particularly those of you from states with protections that are stronger than the minimum standards set by the ACA.

In addition, the NAIC’s health actuarial task force is taking up some challenging topics that will have direct bearing on the success of the ACA:

  • – They will be working with HHS to develop “state-specific” thresholds for reasonable health insurance rate increases. Under the rate review rule, HHS is currently using a national standard of 10 percent (if a rate increase is 10 percent or greater, it triggers an automatic review). Starting in 2012 they will transition to state-based thresholds to better reflect local market conditions.
  • – They will work on recommendations to HHS and states for the ACA’s “3 Rs”—risk adjustment, reinsurance, and risk corridors. Their most immediate task is to finalize comments on a white paper HHS released in September.
  • – They will review data on the use of self-insurance by employers, particularly smaller employers and assess whether it is increasing as a result of the ACA’s insurance reforms. This will be an important study. A number of insurance companies are becoming more aggressive in marketing self-insurance to small businesses, because it allows them to escape key insurance reforms (such as the essential health benefits package and the modified community rating).

Last but not least, I was surprised to hear a couple of broker groups take time out of their Industry Liaison meeting agenda to complain about the NAIC’s consumer representative program. They argued that the consumer reps weren’t “diverse” enough in terms of our perspective on the ACA, complained the media mistakenly report that we speak on behalf of the NAIC, and even suggested many of us have a conflict of interest because some day we might – gasp – take grants to serve as Navigators. For myself, I take their whining as a badge of honor. The fact that they would take the time to complain about our small band of consumer reps suggests that we’re actually having an impact at NAIC.

—Sabrina Corlette, Research Professor
Georgetown Health Policy Institute

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Rate Review Round Two

Tuesday, October 4th, 2011

Last month, we blogged about the start of the Affordable Care Act’s (ACA) rate review rules that oblige insurers asking for premium increases of 10 percent or more (for plans in the individual and small group markets) to publicly disclose and justify such requests. As we noted in the earlier post, this means that insurers now need to be more accountable and transparent than ever when they ask for large premium rate increases. Good news for consumers to be sure!

On September 20, we had more good news in the world of rate review. On that day, the federal government announced a second round of ACA rate review grant awards to states that will provide a total of $109 million in funding to 28 states and the District of Columbia to assist states in further strengthening and improving their rate review processes. This most recent round of grant awards builds on the $48 million in funds previously provided to states for rate review.

A couple of states (Maine and Oregon) have chosen in the past to use a portion of their rate review funding to contract with consumer advocacy groups (Consumers for Affordable Health Care in Maine and Oregon State Public Interest Research Group in Oregon) for activities such as obtaining an independent actuary to examine rate increase requests or helping to solicit consumer input into the rate review process. For this second round of grants, California has decided to contract with consumer advocacy organizations to also look at rate filings and submit comments to help improve public input in the rate evaluation process.

Perhaps all too predictably, a recent Politico article saw America’s Health Insurance Plans (AHIP) alleging that using part of the rate review funding in this way was somehow inappropriate. Their complaining about small portions of grant funds being legitimately contracted to organizations dedicated to giving consumers a robust voice in the rate review process seems a bit like, as one Community Catalyst ally put it, Goliath complaining that David was allowed to have a sling and some stones.

For a short fact sheet on this second round of rate review grants, you can click here. If you’d like to dig deeper and see a detailed report that outlines both the successes states have had with the first round of rate review grants and what each state proposes to do with funds in the second round, you can click here. Rate review is not a panacea for controlling health care costs, but it is a very useful tool that the ACA gives us to move in the right direction.

—Patrick M. Tigue, Senior Policy Analyst

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Health Exchanges: Federal, State, or a Partnership

Monday, October 3rd, 2011

Federal or state Exchange? The question of who should run the marketplace for individuals and small businesses to shop for and buy affordable, high quality insurance has been an ongoing debate in health reform circles for a number of years. And a main decision point under the ACA is whether a state will create and run its own Exchange or have the federal government run the Exchange. To date, 12 states have passed laws to create their own Exchanges. Advocates in other states face a difficult calculation about what will be best for consumers – a federal or state Exchange – because so much is unknown about what a federal Exchange would look like. So far, HHS has provided few details.

Recent proposed regulations from HHS rejuvenated the discussion about federal Exchanges. HHS announced a “partnership model,” where states could split certain Exchange duties with the feds. With little detail in the regulations, states spent a few weeks dreaming about only working on parts of the Exchange that appealed to them, and leaving the rest for HHS to deal with. This lack of information about the partnership models made advocates, who are concerned with the seamlessness of enrollment for consumers, rightfully nervous.

Last week, the Center for Consumer Information and Insurance Oversight (CCIIO) unveiled further information on Exchange partnerships through this PowerPoint at a meeting of state officials. And the good news is that CCIIO is providing striking clarity on the Exchange: either a state creates an HHS-compliant Exchange by 2013 or the federal government will run the Exchange.

Under the federally-run Exchange, a state has a few options for partnerships. For each of these, HHS would run the enrollment and eligibility functions for the Exchange, and therefore the coordination with Medicaid.

  1. State Consumer Assistance Partnership: A state would maintain control and oversight of the Navigator program and other direct assistance to help people enroll in health insurance, including outreach and education. But HHS would oversee the website and call center for the Exchange.
  2. Plan Management Partnership: States will oversee the health insurance plans in an Exchange, including information and monitoring about the health plan options. HHS would coordinate on oversight of health plans and consumer complaints.
  3. States could choose both the Consumer Assistance and Plan Management Partnerships.

HHS was clear that, at this point, a state does not have an option to run only a Small Business Health Options (SHOP) Exchange, and have HHS run the individual Exchange, an idea explored by some states. A few things remain unclear about the federal partnership models, including how financing these Exchanges will work. More information from HHS can be found here.

We think these models could work for states, but Community Catalyst is interested to hear what you think: are the new partnership models going to be good for consumers?

– Christine Barber, Senior Policy Analyst

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Sunlight is the Best Disinfectant: Bringing Transparency to Premium Increases

Thursday, September 1st, 2011

Going forward, health insurers will need to be more transparent and accountable than ever before when they seek large premium rate increases. This is because, as of today, the Affordable Care Act (ACA) requires that insurers asking for premium increases of 10 percent or more for plans in the individual and small group markets (excluding grandfathered plans) must publicly disclose and justify their requests.

These requests will then be reviewed by either state insurance departments or the United States Department of Health and Human Services (if no effective state rate review program is in place) to determine whether they are unreasonable. If regulators find this to be the case, the request will be publicly labeled as unreasonable and, in some states, denied. To help make this new regulatory authority as useful as possible to consumers, HealthCare.gov will post disclosure information in an accessible and consumer-friendly format beginning in mid-September. You can see a preview of how this disclosure information will look here.

To coincide with the start of the ACA’s rate review process, an amendment to the final rule related to this provision was also published that incorporates an important change from the original final rule that was published back in May of this year. Thanks to efforts by advocates across the country, the amendment to the final rule makes clear that coverage sold through association plans (these can be a way for a self-employed person to access insurance and are often sold to individuals or small groups) is subject to the ACA’s rate review process as of November 1, 2011. While there is some question about whether or not a limited number of association plans may still be able to avoid being subject to this provision, this is still a tremendous victory for consumers. These advocacy efforts have ensured that a significant loophole in the original final rule was largely closed. Congratulations to all!

—Patrick M. Tigue, Senior Policy Analyst

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Cross-Post: A Disappointing Rollback of Consumer Protections on Appeals

Friday, June 24th, 2011

June 23, 2011

The Affordable Care Act (ACA) established many consumer protections, but it was only the first step.  As decisions are made about implementation and regulations, the need for consumer engagement is critical. As an example of where protections could have been stronger, the Department of Health and Human Services just released regulations that relax a number of requirements on health plans and insurers, making it more difficult for consumers to successfully pursue appeals against them.

This is just a reminder that there will be many opportunities in the coming months and years to weigh in on federal regulations as the ACA is implemented – and it’s important for consumers to respond.  Community Catalyst will continue to provide updates about these opportunities and to work with consumer advocates to ensure consumer voices are heard, and state experiences inform the federal debate.

This blog was originally posted on Georgetown Center for Children and Families’ Say Ahh!

Imagine you’re a parent and your child has been diagnosed with cancer and is going through painful, debilitating treatment. You can imagine the sleepless nights, the worry, the exhaustion, the fear. Now imagine that your insurance company denies some of the claims for your child’s treatment – treatment that the doctors assure you are essential to saving your child’s life. If not paid by the insurer, the bills amount to tens of thousands of dollars – putting you at risk of bankruptcy. At a time when your sole focus should be – has to be – your child’s health, you are forced to spend hours on the phone, fighting with health plan bureaucrats.

For President Obama, it was exactly this type of situation that sparked his passion for health care reform. He watched his mother, dying of ovarian and uterine cancer, battle the insurance company from her hospital bed to get insurance coverage for which she’d faithfully been paying premiums. As he said in a 2009 speech to AARP: “That happens all across the country. We are going to put a stop to that.”

And he did. With passage of the Affordable Care Act, for the first time consumers across the country, no matter what plan they’re in, are empowered to appeal their health plans’ decisions to an independent, external review panel. This critical consumer protection is designed to stop the worst of insurance company abuses and was a great win for consumers. In fact, a recent study by the General Accounting Office found that when consumers appeal denied claims, the health plan has to reverse its decision as much as 50% of the time.

Yet, as with everything health reform related, the devil is in the details. And how the appeals provision is implemented matters just as much – if not more – than having the right in the first place. Unfortunately, in a regulation quietly released late yesterday, the Administration relaxed a number of requirements on health plans and insurers, making it more difficult for consumers to successfully pursue appeals. Here are a few specifics:

• Scope of Review. The Administration has significantly narrowed the range of issues consumers can appeal. Originally the rules allowed consumers to seek external review of any adverse benefit decision (except eligibility for the plan). In the new version, consumers can only seek review for claims that involve “medical judgment” or a rescission of coverage. This means that any decision that’s considered “contractual” cannot be appealed to the external reviewer. For example, a plan’s determination that a particular service, drug, or supply is not covered would probably be considered contractual. Unfortunately, according to a recent AMA study, that’s one of the top reason patients’ claims are denied.
•Urgent Care Claims. Originally insurers were required to make a decision on an emergency care claim within in 24 hours of receiving it. In this latest rule, in response to complaints from industry that the time frame was too “burdensome,” the Administration is giving plans up to 72 hours to make a decision. This, in spite of many comments from consumer groups and providers highlighting the need for fast turnaround in emergency situations.
•Translations for Patients with Limited English. The law is clear: plans must provide enrollees with information about their appeal rights in a “culturally and linguistically appropriate manner.” Yet the Administration has significantly weakened this requirement. First, in only 6 counties in the country will plans be required to translate materials into any language other than Spanish. Second, plans only need to provide translations orally. If an enrollee wants translated materials in writing (kind of important if you’re going through the legalistic process of pursuing an appeal), they must proactively request them. Third, the Administration eliminated a requirement that plans keep a record of an enrollee’s language preference. That was, you guessed it, deemed too “burdensome” for the plans.
•Allowing Plans to Forum Shop. Perhaps the craziest part of the new rules is that they allow plans to choose their own judge and jury. Thankfully, this won’t be true in all states. State laws that already have strong laws that ensure an independent, impartial review will not be preempted by the federal rules However, a significant number of states do not have adequate external review laws, and will be preempted by a federal process. The problem is, under the new rules, plans in states subject to the federal process will be allowed to choose their own external reviewer. This is at odds with the recommendations of the National Association of Insurance Commissioners (NAIC), whose model state law on external review requires that external reviewers be randomly assigned (not handpicked by plans) to ensure and independent, impartial process.
•Giving Patients Less Time to File an Appeal. The earlier rule allowed consumers to have 120 days before filing the appeal. In response to complaints from insurance companies that this was too long, the new rule gives consumers only 60 days. Yet for someone struggling with pain, a recent surgery, rehabilitation, or other after-effects of an injury or illness, this time can pass in the blink of an eye. Many patients are likely to miss the deadline, and thereby miss their opportunity to correct an insurer’s bad decision.
•Delaying Implementation. Finally, many of the new appeals protections were to have gone into effect next week.  But in March new rules gave plans until January 1, 2012 (some even later), to comply. For consumers, these delays effectively deny them access to an impartial, fair review of their claim.

Sadly, all of these changes add up to some unfortunate administrative hurdles that will prove challenging for those parents fighting with their health plan to pay for the care essential to cure their child’s illness. Or for sons who must watch their mother battle cancer and her insurance company at the same time. On the other hand, the health reform law provides many of these same families with rights they didn’t have before. I hope that as we transition to 2014, and people gain more experience with their new appeal rights, we can convince policymakers to enact the necessary rules to make them real.

- Sabrina Corlette, Research Professor
Health Policy Institute, Georgetown University

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A Loophole in the ACA on Association Health Plans: It’s Time to Pay Attention

Monday, June 13th, 2011

No one ever said the ACA was perfect – any time you try to reform a system that’s as fractured, opaque and confused as our current insurance system – you’re going to stumble across some crazy stuff, like association health plans (AHPs). These odd creatures of our insurance system are often totally unregulated by state insurance departments. Luckily, for the most part the ACA treats health insurance sold through associations just like other health plans – they have to implement the September 23 reforms just like everyone else. But last month, for the first time, the Obama Administration raised the possibility that health insurance sold through associations might be exempted from one of the ACA’s most important consumer protections – rate review that examines premiums on insurance. And, if AHPs are exempted from rate review, it raises some scary questions, such as whether they’ll be subject to the 2014 reforms, like the essential benefit package and adjusted community rating. Regardless, you can be sure that if they get any breaks at all, we’ll see a rush of insurance companies trying to get into the AHP business.

What’s an AHP, and why would it be exempted from rate review?
Millions of people buy insurance through associations – and they can be a way for a self-employed person (i.e., freelancers, real estate agents, independent contractors) to access insurance. AHPs are often sold to individuals or small groups, and some are formed by professional organizations. But some AHPs are created by insurance companies and exist solely to sell insurance. And in many states, AHPs exist in a gray area of regulation – even though individuals and small businesses are buying the coverage (and are often individually underwritten), they’re considered “large group” coverage, and subject to less regulation. And some aren’t subject to any regulation at all – according to a 2006 study by my colleagues at Georgetown, approximately 24 states don’t claim any jurisdiction over “out-of-state” AHPs, even if the policies are sold to their own citizens.

Of the states that conduct premium rate review in the individual and small group markets, the study also found that a significant number of states don’t require AHPs to submit their rates for review. So, unless HHS explicitly extends the rate review regulation to AHPs there will be a loophole in the law that insurance companies will rush to take advantage of. AHPs are highly concentrated in states that exempt them from rate regulation. This will only accelerate if insurers can use an AHP structure to escape the new federal requirements in the ACA. In addition, if AHPs are allowed to be considered “large group” coverage for purposes of the ACA, they’ll not only get a pass from rate review, but there’s a risk they could also escape critical 2014 reforms like the requirement to cover the essential benefits package, and the elimination of health status rating.

What can we do about it?
HHS has asked for comments on whether AHPs should be subject to rate review. Those comments are due July 18th. It’s important that HHS hear about why ALL consumers deserve rate review protections, whether they’re in a traditional health plan or a plan sold through an association.

Note from Community Catalyst: Stay tuned for more resources to help state advocates comment on AHPs and rate review. Or contact Christine Barber (cbarber@communitycatalyst.org) if you are interested in commenting to HHS.

– Sabrina Corlette, Research Professor
Health Policy Institute, Georgetown University

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States and State Advocates Strengthen Rate Review Laws

Wednesday, May 18th, 2011

States Take Steps to Improve Oversight and Consumer Engagement
In the past few months, several states have taken dramatic steps to strengthen their rate review authority, protect consumers, and call out insurers on excessive rate increases. For example, earlier this year, California health insurers announced planned rate increases that would have driven premium costs up as much as 87 percent for some individuals. But in the face of increasing insurer profits, Insurance Commissioner Dave Jones elicited promises from California’s major health insurers that they would decrease and delay implementing proposed rate increases until the state had a chance to evaluate the accuracy of the insurers’ filing. This week, Consumer Watchdog released a report indicating state reviews of insurer rate increases found erroneous math and unsupported actuarial assumptions in rate filings submitted by health insurers. California legislators are moving legislation to give the insurance commissioner explicit authority to disapprove of or reduce proposed premium increases through the state Assembly.

And in New Mexico, the state’s Republican Governor recently signed into law a bill that enhances the state’s rate review authority. The new law includes strong provisions encouraging public participation by establishing a thirty day public comment period on proposed rate increases and requiring insurers to notify policyholders of any possible increase in their premium rate before the increase can be implemented. The statute further gives policyholders the right to request a public hearing on rate increases that the Insurance Superintendent has approved.

Affordable Care Act Mandates Rate Review
The Affordable Care Act requires an annual review of unreasonable health insurance premium increases. Federal regulations, soon to be finalized, outline the process through which the U.S. Department of Health and Human Services (HHS), together with state regulators, will review and evaluate health insurance premium rate increases.

While several states currently have review processes requiring a comprehensive evaluation of proposed rate increases before insurers may charge consumers and businesses more for their premiums, other states are using the new federal rate review requirement to expand consumer protections. In February, HHS announced $200 million worth of federal grant money available to states to help them strengthen their rate review processes and states will finalize their application for this money this summer.

Together with their Insurance Departments, and independently, state consumer health advocates are making tremendous progress toward protecting consumers from unreasonably high insurance premium increase. At the end of this blog post you will find new resources Community Catalyst has developed to assist states in advocating for stronger rate review laws.

State Advocates are Helping to Improve Rate Review Processes
State consumer health advocates all over the country are taking the lead to guide their states toward revising and implementing stronger rate review laws. For example, in Pennsylvania, the PA Health Access Network is developing an online petition that they intend to use to encourage their insurance commissioner to hold public hearings on proposed rate increases, giving consumers and policyholders the opportunity to provide input on rate increases.

Advocates with Illinois’ Campaign for Better Health Care are supporting legislation that would give their insurance commissioner authority to disapprove or reduce proposed premium rate increases. Recent data released by the Illinois Department of Insurance shows that while insurance premium rates have increased 181 percent since 2005 for individuals and families in Illinois, the top five insurers brought in more than $28 billion in profits in 2010 alone.

And in Ohio, advocates at UHCAN Ohio are in the research phase of their campaign to improve the state’s rate review process, enhance transparency and consumer involvement as a means to protect individuals, families, and small businesses from rising health insurance costs. These advocates are in communication with officials at the Ohio Department of Insurance to better understand the current rate review process and gather data about increasing premium rates.

While we provide three examples here of state advocates working to strengthen their states’ rate review laws and two states where reform is on the horizon, many other states are progressing toward stronger, consumer protective rate review processes or currently have robust laws on the books.

Tools for States to Engage in Rate Review Reform
Because most states will continue to oversee health insurance premium rate increases in their markets, Community Catalyst has designed a toolkit to assist state advocates in evaluating their state’s current rate review process and to develop advocacy resources supporting stronger rate review laws. Use the general fact sheet to explain rate review to policymakers and community organizers. The state-specific template is a guide to asking the right questions and gathering the right information and data to demonstrate the critical need for enhanced rate review authority in your state.

– Sarah Blumenthal,  blog contributor

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Wellness Programs: Boon or Bust?

Tuesday, April 5th, 2011

We want Americans to live healthy lives and take good care of themselves. So does John Berry, the director of the U.S. Office of Personnel Management (OPM). As matter of fact, recently, Berry told health insurance companies that participate in the Federal Employees Health Benefits Program (FEHBP) to encourage healthy lifestyles by offering employees “concrete incentives to participate in wellness and prevention activities.” The next day, the OPM published its annual call letter, which outlines the benefits that participating insurance companies are expected to cover. In the letter, the OPM clearly states it expects the insurers wanting to participate in FEHBP to offer programs that promote health and wellness, which improve employee productivity, enhance healthy lifestyles, and lower long-term healthcare costs.”

Wellness programs are not new. For the past two decades, large employers have been experimenting with wellness pilot programs for their employees. Gym discounts and smoking cessation classes are classic wellness incentives. Now, a growing number of employers are offering wellness or health promotion programs. The Affordable Care Act (ACA) allows employers to “reward” employees with lower premiums, up to 30 percent of the cost of employee-only coverage under the plan, with room to up this to 50 percent with the approval of the Secretaries of Health and Human Services, Labor and the Treasury.

Wellness programs work as employee benefits, but also as a cost saving mechanism for employers. How? The theory behind wellness programs is that by maintaining a healthy workforce, the employer enjoys higher productivity and, down the long-run, reduced health care spending.

The cost-savings theory is well-intentioned, and there has been some limited evidence among large employers, such as Pitney Bowes and Johnson & Johnson, that wellness programs do promote some improved health outcomes and lower health care spending.

But most wellness programs are run by large employers with hundreds of employees and low employee turnover rates. In these organizations, employers have the resources to be innovative and can afford to undertake a wellness program, where they may reap benefits in the long run.

Moreover, wellness programs vary widely between employers, and as more are implemented, potential risks are being identified that need to be addressed before programs are expanded.

The most pressing issue is the potential employee discrimination based on data collected through a health risk assessment (HRA). Such data include an individual’s health information, which may be sensitive and which the employee most likely doesn’t want to share with the employer. Recognizing this problem, various federal laws, including the Health Insurance Portability and Accountability Act (HIPAA), the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), ban employers from discriminating against employees based on health factors, which would include information gathered through HRAs.

But how far can an employer go without triggering any of the discrimination laws? Can an employer discriminate against an employee because he has high cholesterol level? Because she smokes? Because he is overweight? The smaller the employer, the more serious the issue. At a smaller business, everyone knows each other, which may cause the employee to worry about revealing one’s health status to the employer.

The second issue is penalties. There are two types of incentives in a wellness program: One that provides rewards, and one that allows avoiding penalties. The latter only works if those who don’t receive the incentives receive penalties. If a program allows premium discounts for those who lose weight or reduce their cholesterol levels to a certain point but increases premiums for those who were unable to do so, that cost-shifting acts as a penalty. Sure, it can be seen that it is the individual’s responsibility to become healthier. However, a person’s health is highly complex and simply judging someone based on a single factor, such as weight or personal habits, is insufficient to impose mechanisms such as cost-shifting and penalties.

Such penalties can also lead to adverse selection, where less healthy employees are forced out of employment due to unaffordable premiums. Also of concern is wellness program participants getting penalized due to inadequate support to ensure their success in getting healthier.

What we do know: ingredients for wellness success
There are a few ingredients that are necessary for a wellness program to succeed. Programs must:

  • – collect baseline health information from the participating employees through completing an HRA.
  • – provide some incentive for the employees to continuously participate in the program. The incentive can be anything from gym discounts and free smoking cessation classes to actual premium discounts. Discounts can be based on simple participation in wellness programs, or on actual health changes, such as losing weight or reducing the cholesterol level compared to the HRA record.
  • – receive strong buy-in and commitment from the employer to sustain programs, because it takes time for positive results to surface while the employer invests money into implementing and maintaining wellness programs.

What is a sufficient wellness program?
Some larger employers who have had wellness programs for decades have some data showing positive results, such as increased employee health status and reduced overall health care costs. But because no wellness program is alike and employers run multiple programs at the same time, there really isn’t enough evidence showing which programs really work and which don’t. Furthermore, there is almost no qualitative or quantitative study that analyzes wellness programs in smaller employer settings. This is a huge issue for employees at smaller businesses who have limited resources. Unlike larger employers, they don’t have the luxury of trying the everything-but-the-kitchen-sink approach.

Promoting the wellbeing of individuals is a wonderful idea, but it must be done correctly so that employees are not discriminated against or penalized for health factors that are sometimes beyond their control. Wellness programs must also be continuously measured both quantitatively and qualitatively so that the participants can learn about the true benefits of the programs, not only for the employers, but for the individual employees.

– Jekkie Kim, Guest Blogger
Legal and Policy Analyst, Health Care for All Massachusetts

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