MUST READ: The Wall Street Journal Examines How Health Plans Are Helping Patients Stay Out of the Hospital
Posted by The Campaign on July 28, 2010 at 1:18 PM
With the debate about MLR definitions still ongoing, we thought this story from The Wall Street Journal offered a great example of the types of programs health plans use to help keep patients healthy and safe and ultimately save them money. These are the types of programs that all health plans use to improve quality and value and are at the core of health plans' role in the system.
Here is a key excerpt from the story:
"It is more important than ever for health plans and patients to combat medical costs, growing at a clip of between 6% and 9% a year, according to various estimates. Heart failure-which can be triggered by simple mistakes such as consuming too much salt-is a leading cause of hospital readmissions, with about 25% of patients returning to the hospital within 30 days. It's also one of the biggest single claims expenses at insurance companies. Aetna estimates that 40% of readmissions are avoidable.
"For patients, the extra surveillance could cut down on trips to the hospital and provide peace of mind. That's what Carolyn Brown, a 63-year-old retired teacher's aide from Bronx, N.Y., found when she started using a new monitoring system covered by her insurer, MetroPlus Health Plan Inc., after she suffered two heart attacks."
For the full story, click here.
AHIP Statement on Coverage for Children
Posted by The Campaign on July 28, 2010 at 8:05 AM
AHIP Statement on Coverage for Children
Washington, D.C. – America’s Health Insurance Plans (AHIP) President and CEO Karen Ignagni today released the following statement on the announcement by the Department of Health and Human Services to clarify that health plans may use a structured open enrollment period implementing health reform’s provision eliminating pre-existing condition exclusions for children under age 19:
“Today’s announcement will help ensure millions of children have access to affordable health care coverage. For years, structured enrollment periods have been used in the Federal Employees Health Benefits Program, Medicare, and in employer based coverage to minimize disruption for families, seniors, and small businesses. Health plans are committed to working with federal and state officials to ensure consumers are aware of all of their coverage options, including how and when they are able to sign up for coverage.”
Health plans will engage in a multi-faceted consumer education effort by posting information on their web sites, coordinating with agents and brokers to educate consumers, and reaching out to insurance commissioners and community-based organizations that focus on children’s interests.
FACT CHECK: What You Need to Know about MLR
Posted by The Campaign on July 22, 2010 at 6:15 AM
Medical Loss Ratio – What You Need to Know
A new AHIP document outlines four key goals the MLR requirement should address to help minimize disruption and preserve patients access to high-quality health care services:
· Ensure that existing efforts to improve quality are allowed to continue and new initiatives to support the goals of PPACA are not discouraged;
· Recognize that quality improvement efforts will be advanced by ICD-10 implementation;
· Include fraud prevention and detection activities in the definition of activities that improve health care quality; and
· Implement a plan for transitioning from the existing state system to the new federal standards to maximize consumer choice.
What They Are Saying - Medical Loss Ratio
(includes comments from health care quality groups, the American Academy of Actuaries, and national employer organizations)
What They Are Saying – State Employer Groups on the Medical Loss Ratio Definition
(includes comments from state-based business groups)
Letter from the Maine insurance commissioner requesting a waiver from the new MLR requirement. According to the letter: "Absent a waiver, I believe that the federal MLR standard may disrupt our individual health insurance market."
The FACTS About Health Plan Administrative Costs
MUST READ: Maine An Unlikely Voice in the MLR Debate
Posted by The Campaign on July 12, 2010 at 8:07 PM
While the NAIC and HHS continue deliberating on the finer points of the MLR, other groups are continuing to weigh in. The most recent, and some would say unlikely voice, in the MLR debate is that of the Maine Insurance Commissioner. According to an article posted late tonight on CQ.com, the Maine insurance commissioner "holds the distinction of being the first commissioner in the nation to request that Department of Health and Human Services officials exempt her state from the rules governing the so-called medical loss ratio, or MLR..."
Why?
According to a letter from the Maine Insurance Commissioner to HHS: "Absent a waiver, I believe that the federal MLR standard may disrupt our individual health insurance market."
The CQ article also notes that many experts in other states do not think Maine's situation is unique. In fact the article has a quote from Matt Salo, the NGA's health policy director, who says "Insurance markets are very different in each of the states. Since there are a lot of unknowns with respect to how health care reform will impact these markets, if there were a relatively simple waiver authority available, I imagine a lot of states might be interested in that."
To read the full article (which requires a CQ subscription) click here and to read the Maine Insurance Commissioner's letter click here.
MUST READ: The New Health Dialogue Outlines Why Just Attacking Health Plans Doesn't Solve the Cost Conundrum
Posted by The Campaign on June 22, 2010 at 12:20 PM
This is a great piece that ran as a blog entry on The New America Foundation’s blog “The New Health Dialogue.” It smartly makes the point that just focusing on health insurers does not solve the problem of ever increasing costs. Here are some key excerpts and the full piece is below:
“But it's important to remember that to the extent that the focus remains on health insurers' rate increases we may miss the point on overall rising health care costs, and maybe even accelerate their growth.”
"This is because the amount that we pay for private health insurance is primarily determined by the prices that insurers negotiate on our behalf with doctors and hospitals."
"But the logic of rising health care costs is inexorable. Until the people who negotiate with doctors’ offices and hospitals are in a position to get a better deal on our behalf, they will not get a better deal."
"Standing in the middle of this road, it is largely the same group of insurers who have to keep fighting to keep health care costs down for businesses and families. And it’s not at all clear that they will be successful in this fight on our behalf if we focus the majority of our own attention on beating up on them."
FACT CHECK: What is Driving Premium Increases
Posted by The Campaign on June 22, 2010 at 11:19 AM
Fact Check: What Is Driving Premium Increases
“Insurance is still going to be expensive because healthcare is expensive.”
-- Gary Claxton, VP, Kaiser Family Foundation
(Reuters, 06/21/2010)
Underlying Medical Costs Drive Premium Increases
· Federal government data confirms that rising health care costs are driven by increased spending on hospital care, physician services, and prescription drugs. The government data[i] show:
o “Hospital spending growth is projected to have accelerated from 4.5 percent in 2008 to 5.9 percent in 2009, as spending reached $760.6 billion.”
o “Spending growth for physician and clinical services is expected to have accelerated to 6.3 percent in 2009, up from 5.0 percent in 2008, with expenditures having reached $527.6 billion.”
o “Prescription drug spending is expected to have grown 5.2 percent in 2009, an acceleration of 2.0 percentage points from 2008, and to have reached $246.3 billion.”
· Between 2000-2008, the growth in premiums tracked directly with the growth in benefits.
|
|
2000 |
2008 |
2000-2008 Growth |
|
PHI* Premiums |
454,784 |
783,157 |
72% |
|
PHI* Benefits |
402,802 |
691,179 |
72% |
Source: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf
(see table 12)
Note: PHI = Private Health Insurance as defined by CMS
http://www.cms.hhs.gov/NationalHealthExpendData/downloads/quickref.pdf
*****
Health Plan Administrative Costs are Not the Cause of Premium Increases
· Health plan administrative costs increased at a slower rate than spending on prescription drugs, physicians and clinical services, hospitals, and total national health expenditures from 2000-2009.
· In 2009, the percentage of premiums that went towards administrative costs and profits declined for the sixth year in a row.
· The average yearly increase in health plan administrative costs from 2000-2009 was lower than the increase in spending on hospitals, physicians and clinical services, prescription drugs, and total national health expenditures.
Health Plan Profits Average Between 3-5 percent
“Insurance company profits in the large picture have very little to do with the overall rising cost of health care.”
-- Henry Aaron, Brookings Institution
(ABC News, 11/10/09)
· According to Yahoo! Finance’s latest analysis of quarterly financial data, the net profit margin for the entire health care sector is 15.48%. Using the same index, health plans have a 4.7% net profit margin.
o This ranks the health insurance plan industry 12th out of the 16 industries that make up Yahoo! Finance’s health care sector.
· Analyzing 13 health insurance plan companies on the Fortune 500 list, the profit margin for these 13 companies averaged 3.19 percent for 2009 -- for 2008 it was 2.3 percent for these same 13 companies.
o Six of the 13 companies actually saw a decline in their profit margin - averaging a decline of 48.7% in profit margin from 2008 to 2009.
· What experts say about health insurance plan profits:
o According to Kaiser Health News, “With the nation’s health care spending estimated at $2.5 trillion this year, even the elimination of insurers’ profits and executive compensation would lower health care spending by just 0.5 percent.”
o According to Ezra Klein of The Washington Post “The insurance industry is not a particularly profitable industry…That’s not to pretend that 3.3 percent is nothing, but it’s hard to see how that’s a primary driver of health-care spending, much less the growth in health-care spending.”
o Alwyn Cassil, Center for Studying Health System Change: “‘…this idea that (taking) this $12 billion that they have in profits … would fix our health-care spending problems is just a pipe dream.’”
For a printable version click here.
[i] Truffer, et al, Health Affairs, “Health Spending Projections Through 2019: The Recession’s Impact Continues”, Published online February 4, 2010.)
ICYMI: State Employer Groups on MLR Definitions
Posted by The Campaign on June 16, 2010 at 1:23 PM
What They Are Saying – State Employer Groups:
Medical Loss Ratio Definitions
(Excerpts taken from comment letters submitted to NAIC or State Insurance Commissioners)
o “We ask that you carefully construct your MLR recommendations so that these rules do not result in premium increases, which would be detrimental to employer-sponsored health plans.”
o “The Chamber appreciates your efforts on minimum loss ratio and urges you to approach the issue in a way that will minimize disruption and maximize the kind of activities that improve the quality and affordability of health care.”
The Business Council of New York State, Inc.
o “It is essential that MLR recommendations not be narrowly constrained limiting New York employers’ flexibility in plan design and their ability [to] continue to offer affordable, quality coverage.
o “The Business Council urges you to ensure that MLR recommendations recognize the value of health plans in driving quality and ensuring that consumers continue to have access to critical activities that improve the quality and the value of their care. This is very important in New York State – often recognized as a state with among the highest costs in the country – because employers have moved more aggressively into areas which have proven effective in managing employee wellness, allowing employers to better control plan costs without compromising quality.”
o “The Business Council asks that those quality measures which are valuable to employers and their employees be included in the MLR calculation, including: wellness programs, disease management programs, fraud, waste and abuse activities, and certain health information technology tools. These measures provide valuable services to employees improving their health and the value of the care they receive. Failure to include these measures would increase costs for employers, and could jeopardize programs that are valuable to employees and beneficial to their health.”
o “Many activities undertaken already, and many that will be required as a result of PPACA, include the developing, gathering, aggregation, and analysis of data in order to measure and incentivize quality, credentialing of providers, etc. We support such activities, and believe that both quality and transparency must be paramount in order to make health care more efficient, affordable, and to improve patient care.”
o “Our objective is to ensure that New York employers are not burdened with regulations which so narrowly define an MLR as to cause plan design changes which will drive up costs even further.”
o “The MLR definitions could have a considerable impact on our member’s ability to provide coverage and result in additional premium increases that would be detrimental to employer-sponsored health plans in Ohio. Therefore, the Ohio Chamber urges you, and the other NAIC members, to carefully consider your recommendations regarding these rules.”
o “Wellness and prevention initiatives have demonstrated that they lead to lower costs for consumers by improving health and wellbeing.”
o “There are several types of programs that employers and insurers implement that are crucial to keeping the cost of insurance premiums as low as possible. We believe capturing these programs in the MLR definition of quality activities will provide an incentive for these programs to be maintained.”
o “[We are] writing because the MLR definitions could have a considerable impact on our members’ ability to provide coverage. We ask that you carefully construct your MLR recommendations so that these rules do not result in premium increases which would be detrimental to employer-sponsored health plans.”
o “…we urge you to recommend the following:
· “Wellness and prevention be included under the umbrella of quality initiatives…[w]ellness and prevention initiatives have been demonstrated to lead to overall lower costs for consumers by improving their health and wellbeing, and none of them should be considered ‘administrative.’”
· “Include all quality, fraud and abuse, and cost control initiatives that clearly improve quality and patient safety in the definition of ‘activities that improve health care quality.’
· “We are concerned that not capturing these programs in the MLR definition of quality activities means that insurers will have a strong disincentive to spend on these activities as they well increase administrative costs and reduce medical expenses.”
o “We appreciate your efforts on minimum loss ratio and urge you to approach the issue in a way that will minimize disruption and maximize the kind of activities that improve the quality and affordability of health care.”
Association of Washington Business: Washington State’s Chamber of Commerce
o “This issue is of great concern to the members of the Association of Washington Business as the final rules could significantly impact our member’s ability to continue providing health care coverage to their employees.”
o “…[we] ask that you carefully construct the MLR recommendations so that the rules do not result in premium increases, as such would be highly detrimental to employer-sponsored health plans.”
Additionally, the Connecticut Business & Industry Association, Maine State Chamber of Commerce, Missouri Chamber of Commerce and Industry, and the Wisconsin Manufacturers & Commerce all have sent letters on the MLR issue.
ICYMI: AHIP Statement on AMA "Report Card"
Posted by The Campaign on June 14, 2010 at 1:54 PM
Statement from AHIP Press Secretary Robert Zirkelbach on the AMA report card:
"Health plans and providers share the responsibility of making the innovations and investments needed to improve efficiency in our health care system. A recent AHIP survey found that nearly one-fifth of all provider claims are not submitted to health plans electronically, and more than 1 in 5 claims are submitted by providers at least 30 days after the delivery of care.
"Health plans are investing in cutting-edge technologies to make it easier for providers to submit claims electronically and receive payment quickly. For example, health plans are working with providers in New Jersey and Ohio to implement portals that would simplify administrative processes and enable doctors in these states to spend more time with their patients.
"Government data show that soaring medical costs - not health plan administrative costs - are the key drivers of rising health care costs. In fact, the percentage of premiums going toward health plans' administrative costs has declined for six straight years."
Of Note:
According to AHIP's most recent health care claims receipt and processing time survey:
- Nearly one-fifth of all provider claims are not submitted to health plans electronically.
- There is often a notable lag before health insurance plans receive claims from health care providers. In 2009, 22 percent of claims were received from health care providers more than 30 days after the date of patient service, and 12 percent of claims were received more than 60 days after the date of service.
- Health insurance plans processed nearly 99 percent of "clean" claims within 60 days, and 97 percent within 30days.
- In 2009, approximately 75 percent of claims were adjudicated automatically -- that is, using automated verification and validation processes that do not require manual intervention -- up from 68 percent in 2006 and 37 percent in 2002.
According to AHIP's survey on out-of-network charges:
- "Some out‐of‐network providers are charging exorbitant prices - several hundred or even over a thousand percent of the Medicare reimbursement for the same service in the same area. Recent examples: $4,500 for an office visit when Medicare would have paid $134; $14,400 for removal of a gallbladder when Medicare would have paid $656; and $40,000 for a total hip replacement when Medicare would have paid $1,558."
POLL VAULT: New Deloitte Survey -- Majority Think New Reform Law Will Lead to Higher Medical Prices and Higher Taxes
Posted by The Campaign on June 11, 2010 at 7:42 AM
With reform now the law of the land more and more surveys are being released about people's expectations of the impact of the new law on the health care system and on their personal health care. The latest survey comes from The Deloitte Center for Health Solutions (DCHS), part of Deloitte LLP, in which they survey 1,019 adults aged 18 and older.
The results are very interesting with questions ranging from impact of the reform law on access and costs, to the effectiveness of certain provisions to people's view of their own insurance coverage.
Here are some key highlights from the survey:
43% of all adults surveyed think they will be "worse off" under the new law vs. 36% that think they will be better off
- Among those with employer-provided coverage, 46% think they will be worse off
76% think the cost of the reform bill will be higher than expected
- Among those with employer-provided coverage, 82% think the cost of the reform bill will be higher than expected
53% DISAGREE with the statement "The reform will reduce health care costs in the long term"
- 66% think that hospitals and physicians will increase prices
- 54% think the price of medication will increase as a result of the new law
- Only 30% think cuts in the rate of growth of Medicare costs will be effective
76% think taxes will increase
- 78% of people with employer-provided coverage think taxes will increase
- 80% of individually insured adults think taxes will increase
One stat probably won't hear but it is really telling: "Of the 82 percent of consumers surveyed who consider themselves 'well' or 'adequately' insured, 96 percent are 'very satisfied' or 'satisfied' with their insurance company's performance in serving their needs."
ICYMI: Expert Highlights Lessons to Be Learned From MassCare
Posted by The Campaign on June 09, 2010 at 1:42 PM
This OpEd from a employee benefits expert in Massachusetts is a little delayed in being posted, but is still incredibly relevant. It is written by Mark Gaunya who has over 20 years experience in the employee benefits field.
Gaunya argues that Massachusetts is a perfect test case of what to expect from the new health care reform law. He writes:
"Almost four years after implementing the Massachusetts health care reform law (MassCare), the private market is 'wrestling' with state government to address rising health insurance costs. What was lost in the national debate and threatening the sustainability of MassCare is the fact that health insurance is expensive because health care is expensive."
While this observation is not new, it certainly carries a lot of weight coming from someone who is living the experience of expanded access without controlling costs.
In fact, Gaunya argues that a lot of the rhetoric used against health plans is off the mark, writing "Pointing the finger at health insurers is politically convenient, but significantly misguided."
He also offers a series of five lessons that can be learned from Massachusetts' health care reform law, concluding with this: "MassCare created an unsustainable 'access' model, because it didn't address cost at the same time as access."
Sound familiar? That's because it was the same argument made by hundreds of experts about what will happen at the national level if costs are not addressed.
And it leads to Gaunya's conclusion:
"One thing is clear - health insurance is expensive because health care is expensive."
The fortunate thing the nation has going for it is we can see firsthand what happens if we do address costs at the same time as expanding access. It's not too late, but the question is will policymakers heed the warning and learn the lessons of recent history?
