Monday, April 22, 2013

Feds Say Health Exchanges to Open on Time, but SHOP Program Hits a Snag

Last week, U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius assured yet another congressional panel that the Patient Protection and Affordable Care Act (PPACA) exchanges will be opening on schedule.
"We are moving ahead," Sebelius stated April 18th at a House Energy & Commerce health subcommittee hearing on the HHS fiscal year 2014 budget request.  "We are definitely going to be open for open enrollment starting Oct. 1 of 2013."

State Health Insurance Exchange (HIX) programs are mandated under PPACA to provide competitive marketplaces in which individuals and small businesses can choose among private insurance plans; it is meant to be a “one-stop shopping” experience.  The HIX programs also are designed to assess individual financial need and determine federal compensation.  Health insurance plans offered in the insurance exchanges must reach certain levels of coverage and include PPACA-mandated options that other private, grandfathered health plans may be exempt from.

HIX programs can be set up in a few different ways.  First, states can run their own HIX programs; if so, they are eligible to receive federal grants.  States had until December 14, 2012 to submit plans for state-run HIX programs to HHS for approval.  Second, states can run HIX programs in conjunction with the federal government; plans for such programs had to be submitted to HHS by February 15, 2013.  Third, all states who either chose not to submit plans for health insurance exchanges or whose plans were not approved will have programs set up and run by HHS.  All HIX programs are meant to be fully operational by January 1, 2014; states that have declined responsibility or partnership can still choose to implement state HIX programs past that date.

While implementation of the HIX programs may still be on schedule, exchanges will not be giving small businesses a full choice of plans in 2014.  At the April 18th subcommittee hearing, Sebelius explained that HHS has decided to let the Small Business Health Options Program (SHOP) small-group exchanges put off giving employers a chance to offer employees a multi-carrier coverage option.

Each SHOP exchange will still offer the employers themselves a chance to choose from a menu that includes plans from all of the carriers that have agreed to sell plans through that exchange, Sebelius said.

Will the new health exchanges open on time, as Ms. Sebelius assured us last week?  We’ll all know for sure later this year; and by this time next year we’ll have a better idea whether these exchanges ultimately will be a success or a failure.
Until next time,

Andrew Herman, President

AH Insurance Services, Inc.

Saturday, April 13, 2013

What Are the Obamacare "Essential Health Benefits"?

Essential Health Benefits

Section 1032 of the Affordable Care Act (ACA), also known as the "Obamacare" legislation, defines the following categories of benefits that individual and small business insurance plans must cover by January 1, 2014:
1.      Ambulatory patient services (these include outpatient services such as doctor office visits).
2.      Emergency services (these include care received in an Emergency Room).
3.      Hospitalization (these include medically-necessary surgeries and other inpatient procedures).
4.      Maternity and newborn care.
5.      Mental health services.
6.      Substance use disorder substances (these include behavioral health treatment).
7.      Prescription drugs.
8.      Rehabilitative and habilitative services and devices (rehabilitation covers services such as relearning how to walk after a stroke, while habilitative services involve learning a new skill such as speaking without a speech impediment).
9.      Laboratory tests and services.
10.  Preventive and wellness services and chronic disease management.
11.  Pediatric services, including oral and vision care.
Health plans are allowed to impose cost sharing obligations on plan members for most essential benefits, but those that qualify under a category of preventative health services will be provided without any cost sharing.
States are given the authority under ACA to specify details around these essential benefits.  Cost sharing for plan members will be limited by each plan’s need to cover sufficient benefit costs to qualify under the following four plan types:  Bronze plan, Silver plan, Gold plan and Platinum plan.  Surely, the writers of ACA like precious metals!
It is important to note that while these are categories of benefits that must be provided, health plans are not required to have unlimited coverage of all categories.  Rather, health plans must offer benefits that are “substantially equal” to the ten essential health benefits.  Plans will be able to adjust specific benefits, provided that all ten categories of essential benefits are still sufficiently covered.
More specific definition of the ten essential health benefits will be determined on a state-by-state basis. Each state may choose a benchmark from the following options:
·         One of the three largest small group plans in the state
·         One of the three largest state employee plans by enrolment
·         One of the three largest federal employee health plan options by enrolment
·         The largest HMO plan offered in the state’s commercial market by enrolment
If a state chooses not to make a selection, it will be held to the benchmark of the small group plan with the highest enrolment in the state.
The essential health benefits only apply to individual plans and small businesses.  Large group plans will be expected to provide hospitalization and emergency services, physician and midlevel practitioner care, pharmacy benefits, and laboratory and imaging services.
What do these essential health benefits mean for us?  First: a high probability of having more comprehensive coverage.  One study made by shows that less than 2% of existing plans meet the new ACA Essential Health Benefit Standards.  On average, existing health plans in the study provided 76% of the Essential Health Benefits, with the missing 24% generally concentrated around several categories:  pediatric dental and vision coverage, maternity, prenatal, delivery, postnatal, substance abuse and mental health coverage.
Of course, insurance premiums will likely increase due to the expansion of plan benefits.  A major factor even more likely to increase premiums starting next January 1st is the ACA's guaranteed issue requirement mandating that people with pre-existing health conditions can sign up for a health plan at any time.  Add to that the ACA's actuarial value requirements on the maximum out-of-pocket costs that can be charged, and we may be looking at some hefty premium increases for those who buy their insurance without a government subsidy!  That will be the subject of another post.
Until next time,
Andrew Herman, President
AH Insurance Services, Inc.

Tuesday, April 2, 2013

4/1 News Flash - CMS Reverses Course and Increases Medicare Advantage Payment Rate

4/1/13 - CMS Releases Final 2014 Medicare Advantage Payment Rates (Source - Reuters)

In a reversal that followed intense lobbying by the insurance industry and members of Congress, the U.S. government said it will increase the payment rate for health insurers that offer coverage through the Medicare Advantage (Part C) program that covers approximately 14 million Medicare beneficiaries.

The Centers for Medicare and Medicaid Services (CMS) announced yesterday that it will increase the payment rate by 3.3 percent in 2014, reversing a 2.3 percent cut announced in February.  CMS declared that the changes came "after careful consideration of public comments."

"The policies announced today further the agency's goal of improving payment accuracy in all our programs, while at the same time ensuring program stability and preserving beneficiary choice," Jonathan Blum, acting principal deputy administrator for the CMS, said in a statement.

Some insurers had hinted they would drop their Medicare Advantage plan offerings if CMS followed through with its initial proposal; which would, combined with other aspects of the new health care reform legislation, increase MA plan premiums between $50 and $90 per month according to actuaries at Oliver Wyman.

Lawmakers on both sides of the aisle took those concerns on board.  More than 160 of them joined an effort to reverse the previously announced rate cut, according to America's Health Insurance Plans (AHIP).

"We have concerns that if CMS does not make this adjustment, many Medicare Advantage enrollees in Massachusetts, and across the country, will face higher premiums and fewer benefits," said the Massachusetts delegation's letter, which was addressed to Marilyn Tavenner, acting CMS administrator, and dated March 27.

Earlier in March, a large bipartisan group of senators highlighted the threat of plans potentially exiting the Medicare Advantage market altogether.  And in recent months, "The Coalition for Medicare Choice," which is funded by AHIP and other private insurers, lobbied hard against the proposed Medicare Advantage cuts through television advertising and social media.  The Coalition posted on its website the Oliver Wyman study warning of a "significant amount of upheaval" if the original 2014 rate plan went through.

For further information, click on these links:

4/1/2013 Reuters Article

The Coalition for Medicare Choices Website

Until next time,

Andrew Herman
AH Insurance Services, Inc.