The repeal of the Independent Payment Advisory Board will get a full House hearing on Wednesday after the House Committee on Rules voted late Tuesday afternoon to pass HR 5 (the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011).
By a 7-4 vote, the committee agreed to bring HR 5 and six amendments to the House floor for six hours of general debate. A vote could come as early as Wednesday.
Created as part of the Patient Protection and Affordable Care Act, the 15-member IPAB board is empowered to analyze the drivers of Medicare cost growth and then to recommend to Congress policies to control those costs, if spending exceeds a targeted growth rate. IPAB recommendations are to be put in place unless Congress votes to block them and comes up with equivalent cost-cutting measures.
HR 5 links the IPAB repeal to medical malpractice caps. The two were originally in separate bills, but last week House Republicans decided to combine them into a single bill. Although the IPAB repeal has enjoyed bipartisan support as it has moved through the House committee system, the decision to attach the IPAB repeal to med-mal has placed Democrats, who typically oppose tort reform, in the awkward position of having to choose between two large stakeholder groups—the American Medical Association, which wants IPAB repealed or the American Bar Association, which opposes medical malpractice caps.
Democrats held out some hope that the Rules Committee would agree to separate IPAB and med-mal reform. Instead, the committee kept the bill intact and approved the six amendments for consideration by the full House.
Rep. Allyson Schwartz (D-PA), an early advocate of IPAB repeal, issued a statement to the committee asking Republicans to "set aside political showmanship and bring a clean bill to repeal IPAB to the floor for a vote. Linking this bill to tort reform—an unrelated, divisive, and partisan issue—is bringing what was once a bipartisan effort to a screeching halt. I urge the Rules Committee to reject this offset."
Even a Republican, Rep. Paul Broun, MD, (R-GA) challenged the committee to separate the two bills. "We need to get rid of IPAB. If you marry the two bills you’re going to lose people on both sides and we’ll be less like to get rid of IPAB," he told the committee.
The six proposed amendments include one that would strike the IPAB repeal from the bill and another that would strike medical malpractice caps. Other amendments support efforts to delay implementation of the bill until the Secretary of Health and Human Services submits to Congress a report on the potential side effects of the bill on health care premiums; to extend liability coverage to on-call and emergency room physicians; grant limited civil liability protection to health professionals that volunteer at federally declared disaster sites; and restore the application of antitrust laws to the business of health insurance by amending the McCarran-Ferguson Act.
The White House issued a statement of administrative policy and formally threatened to veto the bill. "HR 5 would repeal and dismantle the IPAB even before it has a chance to work. The bill would eliminate an important safeguard that, under current law, will help reduce the rate of Medicare cost growth responsibly while protecting Medicare beneficiaries and the traditional program."
The statement added that "the administration opposes placing artificial caps on malpractice awards which will prevent patients and other claimants who have been wrongfully harmed from receiving just compensation. The administration is committed to strengthening Medicare, protecting patients, and supporting the physicians who care for them. We believe that this legislation fails to accomplish these goals. If the President is presented with HR 5, his senior advisors would recommend that he veto the bill."
The Department of Health and Human Services released Friday its final rules for the expansion of the Medicaid program under the Patient Protection and Affordable Care Act.
The final rule, which becomes effective Jan. 1, 2014, expands access to the Medicaid and the Children's Health Insurance Program (CHIP), establishes eligibility and enrollment provisions for health insurance exchanges, simplifies the application and renewal processes for the program, eliminates obsolete eligibility categories, and establishes a single income standard for determining eligibility.
"The Medicaid improvements in the Affordable Care Act will help simplify the system and ensure all Americans have the affordable high-quality coverage they need," said Department of Health and Human Services Secretary Kathleen Sebelius in a press statement.
The final rule comes just as the federal Department of Justice prepares to defend later this month the ACA in a Supreme Court case. The Medicaid expansion, which could add as many as 17 million people to its rolls, is among the challenges to the ACA. The state of Florida has formally challenged the authority of Congress to expand the Medicaid program.
Highlights of the final rule include:
The creation of four major eligibility groups: children, pregnant women, parents and caretaker relatives, and a new adult group comprising individuals aged 19 to 64 years old who aren't eligble for Medicare or Medicaid and whose household income is at or below 133% of the federal poverty level ($14,856 for an individual and $30,656 for a family of four).
Establishment of the modified adjusted gross income (MAGI) standard for determining financial eligibility for most Medicaid and CHIP enrollees.
Creation of a federal data services hub to link states with federal data sources such as the Social Security Administration and the Department of Homeland Security.
Design of a single, online application to allow families to enroll in a coverage program.
Provision of two ways for health insurance exchanges to perform Medicaid-eligibility evaluations. The HIX can conduct complete eligibility determinations for Medicaid, or make a preliminary assessment and then rely on the state Medicaid agency for a final decision.
A guarantee that the federal government will pay 100% of the cost of the Medicaid expansion for the first three years and at least 90% after that.
A portion of the 268-page final rule is issued on an interim basis. HHS will consider additional public comments for 45 days for several provisions, including certain data reporting requirements and timeliness standards for making eligibility determinations.
The Department of Health and Human Services released Friday its final rules for the expansion of the Medicaid program under the Patient Protection and Affordable Care Act.
The final rule will make it easier for eligible individuals and families to enroll in Medicaid and the Children’s Health Insurance Program (CHIP) by cutting back on red tape and coordinating enrollment with health insurance exchanges. Families will be able to enroll in the appropriate coverage program through a single, online application. States will have the benefit of reduced administrative costs.
The ACA makes Medicaid available to individuals between the ages of 19 and 64 with incomes up to 133% of the federal poverty level. Currently the range is from $14,856 for an individual and $30,656 for a family of four. These changes will become effective in 2014 when HIX begin operation. The federal government will pay 100% of the cost of the Medicaid expansion for the first three years and at least 90% after that.
“The Medicaid improvements in the Affordable Care Act will help simplify the system and ensure all Americans have the affordable high-quality coverage they need,” said Department of Health and Human Services Secretary Kathleen Sebelius in a press statement.
Insurance coverage requirements enacted by state legislatures across the country have always been a sore point among insurers in the individual and small group market. Now it's understood that under healthcare reform, they may carry new costs.
Insurers contend that mandates for treatments such as chiropractic care or autism services accomplish very little and actually make health insurance more expensive. Supporters assert that coverage mandates ensure access to important care.
There are in total, 2,262 state health mandates, according to the Council for Affordable Health Insurance. Idaho has the fewest—13, while Rhode Island and Virginia boast the most—70 each. The most popular include mammography screening, maternity minimum stay, breast reconstruction, mental health parity, and alcohol and substance abuse. The least popular mandates include breast implant removal, cardiovascular disease screening, circumcision, gastric electrical stimulation and organ transplant donor coverage.
Until now, legislators have usually been happy to appease constituents and risk the anger of insurers by approving mandates. But healthcare reform, especially essential health benefits and health insurance exchanges, adds a wrinkle that has some states rethinking that approach.
The Department of Health and Human Services struggled for months to define what essential benefits should be covered under the Patient Protection and Affordable Care Act before announcing that it would let the states decide—sort of. (The Institute of Medicine weighed in with a 300-page report last fall.)
Now states still have a bunch of hoops to jump through, including figuring out what to do with their own mandates.
Under essential health benefits, each state can select a health plan to benchmark coverage for the 10 broad categories of coverage. The options include the largest HMO in the state as well the smallest group plan. But here's the catch: HHS will require states to defray the costs of any state-mandated benefits not covered by the selected benchmark plan.
Legislatures are picking up on this potential mandate problem. Some are advocating the repeal of every healthcare benefit mandate on the state books while others are a taking a more measured approach and endorsing studies of the costs associated with their mandates.
A timely study released by the National Institute for Health Care Reform may put some of the legislative concerns to rest. It concludes that few benefit mandates are likely to exceed a state's essential health benefit package. And even if they do, a state's financial liability to pay for the additional mandated health benefits probably will not amount to much of a cost burden.
Still, there's some reason for concern because nongroup (individual) plans aren't a benchmark option for essential benefits. According to the report, in some states, benefit mandates for individual plans often exceed mandates for small-group plans. In this age of tight budgets states may want to take a hard look at those individual plan mandates to avoid needing to offset those costs.
Chapin White, PhD, a senior health researcher at the Center for Studying Health System Change, and one of the NIH report's authors, cautions that states need to look beyond merely avoiding a mandate liability in selecting its benchmark plan.
"If all a state wants to do is avoid that liability," he says, "then it shouldn't select a small group plan as its benchmark." He adds that the benchmark decision needs to be based on much more, including why the mandate was put in place.
According to the study, some state mandates aren't always covered by other benchmark plans. In vitro fertilization services and applied behavioral analysis therapy for autism, for example, are covered by some small-group plans but are not typically included in the other benchmark plan options.
The NIH study looks at Maryland and its 67 mandates to develop an example of what a state mandate liability might be. One analysis shows that Maryland's liability for mandates in 2016 would range from $10 million to $80 million depending on the benchmark plan selected. That may sound like a lot of money, but it's a drop in the bucket for most state budgets.
Looking ahead to 2014 when health insurance coverage will begin through state exchanges, the study suggests that the exchanges will provide states with new and more effective ways to regulate benefits in the individual and small group markets.
"Since states will be selecting a benchmark plan to regulate the benefits covered, the regulatory focus can shift from service-specific benefit mandates to a broader focus on the overall scope of benefits that are covered."
The study further notes that states may use their authority to certify qualified health plans as a way to exclude plans that offer inadequate benefits. "This authority can be used in addition to—or instead of—benefit mandates."
The final rule released Monday by the Department of Health and Human Services to guide the development by states of health insurance exchanges (HIX) can be summed up in a single word: flexibility.
States had argued that HHS was taking on too much of a role in HIX development. The final rule provides states with more options in terms of the operation of the HIX, health plan participation, and member eligibility.
States will be able to:
Decide if the HIX will be operated by a non-profit organization established by the state, as an independent public agency, or as part of an existing state agency. A state can also choose to partner with other states on a regional HIX or it can operate multiple HIX that cover distinct geographic distinct areas within the state.
Set additional standards for health plans offered in an exchange to make sure consumers have access to a variety of providers
Decide how a HIX interact with Medicaid agencies when making eligibility determinations—the HIX can conduct complete eligibility determinations for Medicaid or it can make a preliminary assessment and then rely on the state Medicaid agency for a final decision
Decide if brokers or agents can sell insurance through the HIX
Gain conditional approval of its HIX by Jan. 1, 2013 if the state demonstrates that it has made sufficient progress in the development of the HIX and it will be operationally ready by Oct. 1, 2013. HHS will provide additional details in future guidance.
The 644-page final rule also provides states with new options in terms of operating their own Small Business Health Options Program (SHOP). States can set the size of the small group market at either one to 50 or one to 100 employees until 2016 when employers with up to 100 employees can participate in a SHOP.
Starting in 2017, states will have the option to let businesses with more than 100 employees buy large group coverage through the SHOP.
Through the SHOP, states may allow employers to select a single plan to cover their employees or offer multiple levels of coverage.
"These policies give states the flexibility they need to design an Exchange that works for them," said HHS Secretary Kathleen Sebelius in a press statement announcing the final rules. "These new marketplaces will offer Americans one-stop shopping for health insurance, where insurers will compete for your business. More competition will drive down costs and Exchanges will give individuals and small businesses the same purchasing power big businesses have today."
HIX, which were created by the Patient Protection and Affordable Care Act, are expected to provide health insurance coverage for an estimated 11.5 million people, including members of Congress, in 2014.
A portion of the rule is issued on an interim final basis. HHS will consider additional public comments for 45 days for several provisions including:
The ability of a state to permit agents and brokers to assist qualified individuals in applying for advance payments of the premium tax credit and cost-sharing reductions for qualified health plans.
Certain Medicaid and CHIP regulations
Options for conducting eligibility determinations
Eligibility standards for cost-sharing reductions
Timeliness standards for HIX eligibility determinations
Verification for applicants with special circumstances
Timeliness standards for the transmission of information for the administration of advance payments of the premium tax credit and cost-sharing reductions
Agreements between agencies administering insurance affordability programs.
The major national health plans are each gravitating toward many of the same projects according to information revealed by executives during fourth-quarter earnings calls.
Look for accountable care organizations to play a growing role as health plans try to rein in costs and direct quality and clinical goals. Buoyed by new federal initiatives, health plans also see opportunities in managing care for Medicare and Medicaid dual eligibles. And technology investments will set the stage for more individualized care programs.
Here are some of the highlights gleaned from the latest round of earnings calls:
Aetna
Look for more expansion in the health plan's accountable care solutions business, which has nine contracts, including Carilion Clinic (Roanoke, VA), Sharp Community Medical Group (San Diego), and Cleveland Clinic (Cleveland), and six letters of intent in place. The relationships range from a collaboration that involves only Medicare patients, to co-branded health plans and new payment models with shared savings for meeting quality and clinical targets.
Effective July 1, Aetna has been awarded the administrative services contract for Maine's 33,000 employees and their dependents. It plans to develop a statewide accountable care network to service this membership.
The insurer is also developing managed care programs for high-acuity aged, blind and disabled, long-term care and/or dual eligible beneficiaries in many states.
CIGNA
CIGNA acquired HealthSpring, a Medicare plan, in 2011 and is incorporating the HealthSpring model, including physician partnering, targeted data exchanges, integrated care coordination and aligned incentives to help patients be healthier and lower their overall healthcare costs.
The insurer sees the dual-eligibles market as an opportunity and expects to pursue that market on a targeted basis. HealthSpring will play a role in positioning CIGNA to deliver the clinical quality and cost outcomes for that population.
Plans may include bidding with existing Medicaid contractors on a partnership basis. CIGNA also plans to pursue business on its own. The insurer just signed a contract to provide services to about 30,000 dual eligibles in Rio Grande Valley of Texas.
CIGNA is expanding its participation in accountable care organizations. It has 17 of these initiatives underway in 15 states.
Humana
In 2011 Human created a partnership and completed an acquisition that positions the insurer to use technology to develop rewards and incentives to foster behavior changes in its members. HumanaVitality, a partnership with Discovery Holdings Ltd. in South Africa, is an actuary-driven wellness and loyalty program that can be customized to individual needs.
The acquisition of Anvita Health will enable Humana to analyze data to develop clinical programs that improve care and lower costs for the Medicare population.
Humana wants to develop more partnerships to reach new consumers and advance its brand. In 2011 it developed a partnership with Reader's Digest that has produced a co-branded Medicare supplement product, as well as a guide for seniors on Medicare decision-making.
Humana has focused on developing a nationwide footprint for its Medicare Advantage and, according to company officials, faces little competition in many of its markets. The Medicare Advantage market is large enough that increasing membership doesn't involve taking members from other plans.
In some areas such as South Florida, however, the market is very competitive business and company officials expect that the time will come when membership growth will rely on taking somebody else's customer.
Like CIGNA, Humana intends to be a major player in the dual-eligibles market. Its strategy is to take a state-by-state approach to opportunities. In 13 states Humana is looking at procurement opportunities that would be individual duals or duals in combination with long-term care.
Humana sees partnering opportunities—not mergers or acquisitions—in eight states and is in the process of working through the relationships and contractual obligations.
UnitedHealth Group
UnitedHealth experienced increased utilization in the second half of 2011, especially outpatient and physician office settings. The insurer expects that trend to continue through 2012.
Company officials say employers are focused on value-based benefit design for employees and UnitedHealth has seen growing interest in its narrow-network value-based offerings. Its consumer-based health plans have done well in that marketplace, with about 15% of its membership in value-based products
The company has several pilots in place around bundled payments in its commercial and Medicare business. The focus is on aligning the bundles with the right clinical programs and the right incentives. The company declined to talk specifics, but says that it is seeing some interesting results around oncology bundles.
UnitedHealth expects unit costs on the hospital side to be stable in terms of year-over-year percentage increases. The dual-eligibles market is seen as a major opportunity.
WellPoint
In 2011 WellPoint launched it a value-based contracting initiative that links hospital payment increases to customer value. It introduced a similar program for physicians in 2012.
It has several ACO pilot and medical home programs that involve more than 100,000 members and more than $240 million in shared savings. The medical home program in Colorado posted an 18% decrease in acute inpatient admissions over the first 2 years and a 15% reduction in emergency room visits. In the first year of its ACO partnership with the Dartmouth-Hitchcock Medical Center in New Hampshire, inpatient admissions and avoidable ER visits declined.
WellPoint operates 29 CareMore care centers and expects to open several more this year to serve the acutely ill population.
The insurer's 2012 plan includes about $700 million of business investments, including medical management programs, payment reform models, and the IBM Watson initiative. Implementing ICD-10 will cost almost $100 million by itself. By the end of the year, WellPoint expects to have 96% of its membership on the platforms that will be ICD-10-compliant.
The end may be near for the Independent Payment and Advisory Board.
In a voice vote the full House Energy and Commerce Committee voted Tuesday morning to approve the Medicare Decisions Accountability Act (HR 452). The bill's passage sets the stage for a potential House vote to repeal the IPAB.
The committee wasted no time, with the vote coming within 10 minutes of the start of the hearing. Rep. Fred Upton (R-MI) presented an amendment to the two-page bill to clarify a procedural issue. Rep. Henry Waxman (D-CA) entered statements in support of IPAB from the AFL-CIO and Department of Health and Human Services Secretary Kathleen Sebelius, among others, into the public record.
Democrats seemed resigned to the vote's outcome. There were no objections to the voice vote and no opposition votes were noted. HR 452 has 232 co-sponsors, including 17 Democrats.
Created as part of the Patient Protection and Affordable Care Act, the 15-member IPAB board is empowered to analyze the drivers of Medicare cost growth and then to recommend to Congress policies to control those costs, if spending exceeds a targeted growth rate. IPAB recommendations are to be put in place unless Congress votes to block them and comes up with equivalent cost-cutting measures.
IPAB has been the subject of numerous House committee meetings as Republicans and some Democrats have challenged the board's standing. At the bill's mark up session held late Monday afternoon, objections touched on familiar themes: the power of the unelected board, rationing, and access to care.
Rep. Steve Scalise (R-LA) stated that the board, which would be appointed by the president and approved by the Senate, would put "15 unelected bureaucrats…literally in the middle of decisions between doctors and patients."
Rep. Gregg Harper (R-MS) cautioned that IPAB would "rob Congress of its governing authority. It is an unprecedented power grab." Rep. Michael Burgess (R-TX), who is a physician, noted that since hospitals are exempt from cuts until 2018, IPAB would have little flexibility but to reduce physician payments, which would "result in fewer physicians participating in the Medicare program. That sounds like rationing."
Rep. John Dingell (D-MI) questioned why with all the talk of cutting costs Republicans were determined to eliminate an important board that held the promise of reducing healthcare spending. "This strikes me as particularly curious and dubious," he said.
Rep. Frank Pallone Jr. (D-NJ) said he supports IPAB's repeal because Congress shouldn't cede its governing power to regulatory boards. However, he said he supports healthcare reform and cautioned that Republicans shouldn't interpret his support of HR 452 as anything more than a simple objection to IPAB.
The committee vote was heralded by Republicans in tweets and formal statements. "IPAB was created by the health care law and has drawn widespread bipartisan opposition because it threatens to reduce seniors' access to treatments and services in Medicare," said Rep. Upton in a press statement announcing the vote.
Rep. Phil Gingrey (R-GA), who supports the repeal touched on a common objection in his tweet: "unelected bureaucrats shouldn't come between patients and their doctors."
Rep. Marsha Blackburn's (R-TN) tweet seemed to confirm a common concern of Democrats that Republicans still hope to repeal the healthcare reform. "Happy to report the repeal of the IPAB passed out of House Commerce," tweeted Blackburn. "We're closer to repealing President Obama's flawed healthcare law."
While the House Energy and Commerce vote was taking place, the House Ways & Means Committee held a hearing on to discuss IPAB's potential influence on Medicare. The committee is scheduled to mark up HR 452 on Thursday. The full House may consider the bill next week.
Support for an IPAB repeal remains iffy on the Senate side. Sen. John Cornyn (R-TX) introduced in February the Healthcare Bureaucrats Elimination Act (S 2118). The bill has 22 Republican co-sponsors and no Democratic co-sponsors.
Unless that changes, the bill will probably go nowhere.
The Dallas office of the Centers for Medicare & Medicaid Services on Wednesday approved the most recent corrective action plan submitted by the consultants for Parkland Health and Hospital System. The CAP is in response to the 300-page gap analysis report prepared by Alvarez & Marsal Healthcare Industry Group, which details serious, ongoing deficiencies at Parkland.
The CAP will not be publically released by CMS until it has been reviewed by the CMS Freedom of Information Group (FIG) office in Baltimore. There is no timeline for the release. The FIG office is still reviewing the gap analysis report, which it received in early February.
Parkland is unlikely to release the CAP on its own accord. Hospital officials cited legal concerns in declining to make the gap analysis document available. A press statement released Wednesday night by Parkland refers to the CAP and accompanying documents as "privileged documents."
In that statement, Thomas Royer, MD, Parkland's interim CEO notes that hospital officials have been working closely with A&M and many improvements are already underway. Key changes include improvements to nursing reorganization, the use of a mock survey team to monitor the implementation of all improvement plans, and enhanced leadership oversight to assure the sustainability of the plans.
"The Corrective Action Plan is comprehensive and designed to prepare us for a successful resurvey by CMS. It identifies areas of change that still lie ahead and we must fully implement the recommendations outlined in the plan," said Dr. Royer. "These are not temporary changes, but rather will be permanently incorporated into our operations to help assure positive, sustainable change that will improve our safety, quality of care and the patient experience at Parkland."
He added that the safety-net hospital will "provide monthly monitoring reports to the public that will track its progress toward full compliance" of state and federal requirements. "We will keep the public informed of our progress toward complete and sustainable compliance."
Board chair resigns
The approval of the CAP plan comes on the heels of news that Lauren McDonald, MD, the high-profile chair of Parkland's governing board, resigned on Tuesday at the end of a lengthy board of managers meeting.
McDonald has served 13 years on the board, including six as the board chair. Her resignation is effective March 6. Her replacement is expected to be appointed next week by the Dallas County Commissioners Court, which oversees Parkland's board.
In a statement released to Parkland employees McDonald said her decision to leave "is rooted in my personal life, with an aging parent who needs me and patients to whom I would like to dedicate more time to through my medical practice."
She made only a passing reference to Parkland's ongoing problems saying, "We have faced tremendous challenges in the past few years, but I know of no other community of people better able to face down serious challenges and overcome them."
Although McDonald is widely credited with increasing Parkland's status within the Dallas community and building support for its $1 billion replacement hospital, she leaves the board as the safety-net facility struggles to correct serious deficiencies that have endangered patients and put its Medicare and Medicaid funding at risk.
Since September 2011, Parkland has operated under a rare systems improvement agreement with the Dallas office of the Centers for Medicare & Medicaid Services. The 19-month SIA requires the hospital to work with Alvarez & Marsal to correct deficiencies and improve patient care.
McDonald's resignation follows a string of departures that have left much of Parkland's leadership in disarray. COO John Haupert left to head Grady Hospital in Atlanta and the head of human resources resigned. The contract with longtime CEO Ron Anderson, MD, was not renewed when it expired on Dec. 31.
At that time, McDonald told HealthLeaders Media that there was no internal heir apparent to succeed Anderson. In November the board of managers signed a six-month contract with Thomas Royer, MD, the retired CEO of Christus Health, to serve as Parkland's interim CEO. He has replaced the chief nursing officer and appointed an interim director of infection prevention following the director's resignation.
Royer appeared to have free rein. In arecent interview he detailed for HealthLeaders Media some of the changes he had recently implemented, including the hiring of an implementation officer, John Beall, to make sure the SIA stays on track.
However, Beall's tenure was short lived. Within days Royer announced Beall's departure saying "after further deliberation with the board of managers and our consultants at Alvarez & Marsal, we collectively came to the conclusion that Parkland would be better served by engaging a consulting expert in project management. Mr. Beall informed me that this was not the position he desired and some members of the board simultaneously expressed the view that, given this change, we should examine other applicants."
In a statement, Royer downplayed the episode as "a regrettable distraction," but the misstep was noted.
County commissioners contacted by HealthLeaders Media declined to directly comment on Dr. Royer's performance or the Beall situation. In an e-mail statement Dallas County Judge Clay Jenkins would say only "I am committed to working with all Parkland leaders to help Parkland Hospital successfully complete its action plan and come out of the system improvement agreement as a safe, compliant hospital and stronger institution."
In mid-February the Centers for Medicaid & Medicare Services wrapped up its work on the 2011 medical loss ratio waiver requests by denying Wisconsin's waiver request and partially granting North Carolina's.
The MLR, mandated by the Patient Protection and Affordable Care Act, requires that health insurers spend no more than 20% of their annual premium dollars for individual and small group policies on administrative expenses beginning in 2011. Large groups are restricted to 15%. Plans that don't meet the MLR standard must provide a rebate to their customers.
There's big money involved—about $323 million in the first year alone—according to federal officials. Insurers are expected to pay the first round of rebates by due to be paid by August 1st.
At the behest of health insurers, several states took a stab at getting the MLR requirement delayed or reduced to give payers time to adjust to the new MLR reality. In case you're keeping track, here's the scorecard:
Only 17 states and Guam filed MLR waiver requests in 2011
CMS granted waiver requests for Georgia, Iowa, Kentucky, Maine, Nevada, New Hampshire and North Carolina.
It denied waivers for Guam and Delaware, Florida, Indiana, Kansas, Louisiana, Michigan, Oklahoma, North Dakota, Texas and Wisconsin.
Over the course of writing several news stories about the MLR I've had the chance to review all of the waiver applications. With the 2012 waiver application season beginning April 1, I thought now would be a good time to offer some advice to state and health plan officials on how to develop a strong case for an MLR waiver:
1. Make sure insurers want/need an MLR adjustment. When CMS turned down North Dakota's waiver application, it quoted a letter from the state's dominant insurer, Blue Cross Blue Shield of North Dakota, asking the insurance department to withdraw its waiver request.
2. Provide real proof that the MLR will destabilize the individual market.
CMS hears this one a lot. In denying Florida's waiver CMS officials noted that with more than 20 carriers, the state had a very competitive individual health insurance market that would be just fine. Here's the kicker: Most of the insurers in the state already meet the new MLR standards.
3. Don't exaggerate the effects of the MLR.
Lots of states have fretted that the new MLR requirements would force insurers to leave their state. Some even named names. But if you plan to use this reason to win a waiver, make sure your case is solid. The problem is the information can be easily checked.
Wisconsin officials contended that two carriers left the market because of the MLR standards. CMS reviewed the withdrawal letters and noted that the carriers had fewer than 1,000 lives and wouldn't come even be subject to the new requirements.
4. Concerns about brokers and agents are legitimate, but there is more to consider.
Most states contend that the MLR is squeezing broker commissions and jobs, and then they submit some supporting comments from brokerage firms. That's not the way to go.
In denying Delaware's waiver application, CMS noted that eight out of nine Delaware issuers that reported data to the National Association of Health Insurance Underwriters didn't reduce broker commissions between 2010 and 2011.
And keep in mind that the CMS standard is that consumers must simply have adequate access to brokers and agents. Just because commissions fall and jobs disappear doesn't mean access changes.
By the way, broker commissions may not be an issue much longer. In Congress the MLR is about as popular as the Independent Payment Advisory Board. House members have held a series of hearings about the MLR's negative effect on broker jobs and commissions. At issue is the inclusion of the fees in the 15% to 20% non-claims or administrative costs category. Brokers have lobbied hard to get Congress to step in and make the change and two bills, HR 1206 and S 2068 will do just that.
So now it's on to the 2012 requests, which should begin arriving at CMS sometime after April 1. Most states contacted by HealthLeaders Media said it was too early to release any information on a potential waiver request, but I'll be keeping an eye on all those states during the next round.
In a press conference at the annual conference for the Healthcare Information and Management Systems Society, (HIMSS) Farzad Mostashari, head of the Office of the National Coordinator for Health IT, characterized the proposed rules as "reducing the regulatory burden" for providers. He noted that the proposed rules are consistent with recommendations by the Health IT Policy and Health IT Standards committees.
"It's our expectation that the vast majority of providers and nearly every hospital will become meaningful users."
Mostashari highlighted these aspects of the proposed rule:
It continues the core and menu objectives. He said the Department of Health and Human Services considered eliminating the menu objectives but decided it was important to provide that flexibility of meeting both core and menu objectives.
Regardless of when they start, everyone would have two years in Stage 1, two years in Stage 2, and two years in Stage 3
A 90-day reporting period would be retained for the first year
It allows medical groups to report quality measures as a group instead of on an individual basis. In a practice with 20 doctors, for example, there would be no need to individually slice out which provider had which quality measure. Mostashari said that's more in line with the principle of team and accountable group care.
HHS is seeking comments on whether group reporting should be extended to functional measures such as prescribing measures.
By default, vendors would enable encryption on end user devices
When asked how future events such as a Supreme Court ruling and the results of upcoming elections might put elements of health IT at risk, Mostashari said at HIMSS that he has heard no discussions that suggest problems.
He noted that health IT has broad bipartisan support. "I think that everyone recognizes that…we need to have better information to move toward whatever model reform takes."
When asked to put meaningful use in perspective with regard to healthcare reform efforts, Mostashari noted that providers now care about how they do on quality and patient satisfaction measures, and how well they coordinate care.
"There are such a number of payment changes happening. It's almost as if Medicare unplugged a dam and there's just an explosion of new initiatives. It's really, really good because it provides, finally, a business case for the coordination of care that we need and frankly which health IT enables."
He added that making meaningful use of meaningful use "is absolutely where to start."
The 455-page document released by HHS also includes these points:
Stage 1 of meaningful would be extended to fiscal year 2014 and eligible providers would have two full years to participate in Stage 2
There would be two new menu objectives: Electronic reporting to registries and viewing images through electronic health records
Eligible providers must meet 17 core objectives and three of five menu objectives
Hospitals must meet 16 core objectives and two of four menu objectives
Hospitals and physicians would have to use CPOE for more than 60% of medication, laboratory and radiology orders
Providers would be required to enable patients to view, download, and transmit their medical records online
Specialists could qualify for meaningful use by using EHRs that are certified to meet the needs of their specialties
Stage 2 regulations would require the alignment of clinical quality measures and reporting across accountable care organizations and patient-centered medical homes
The HHS fact sheet may be viewed here. Comments will be accepted for 60 days after the proposed rules are in published in the Federal Register. The final rule is scheduled for release this summer.
Senior editor Cheryl Clark provided additional reporting.
