Eliminating discrimination on the basis of preexisting conditions is one of the central features of the Affordable Care Act (ACA). But there is evidence that insurers are resorting to other tactics to dissuade high-cost patients from enrolling, according to a study by Harvard’s School of Public Health. The findings suggest that many insurers may be using benefit design to dissuade sicker people from choosing their plans. A recent analysis of insurance coverage for several other high-cost chronic conditions, such as mental illness, cancer, diabetes, and rheumatoid arthritis showed similar evidence of adverse tiering, with 52% of marketplace plans requiring at least 30% coinsurance for all covered drugs in at least one class. Thus, this phenomenon is apparently not limited to just a few plans or conditions.
A formal complaint submitted to the Dept. of Health and Human Services (HHS) in May 2014 contends that Florida insurers offering plans through the new federal exchange had structured their drug formularies to discourage people with HIV from selecting their plans. These insurers categorized all HIV drugs, including generics, in the tier with the highest cost sharing.
Insurers have used tiered formularies to encourage enrollees to select generic or preferred brand-name drugs instead of higher-cost alternatives. But if plans place all HIV drugs in the highest cost-sharing tier, enrollees with HIV will incur high costs regardless of which drugs they take. This effect suggests that the goal of adverse tiering is not to influence enrollees’ drug utilization, but to deter certain people from enrolling in the first place.
Researchers analyzed adverse tiering in 12 states using the federal marketplace: six states with insurers mentioned in the HHS complaint (Delaware, Florida, Louisiana, Michigan, South Carolina, and Utah) and the six most populous states without any of those insurers (Illinois, New Jersey, Ohio, Pennsylvania, Texas, and Virginia).
Researchers found adverse tiering in 12 of the 48 plans — seven of the 24 plans in the states with insurers listed in the HHS complaint and five of the 24 plans in the other six states. There were stark differences in out-of-pocket HIV drug costs between adverse-tiering plans and other plans. Adverse tiering plan enrollees had an average annual cost per drug of more than triple that of enrollees in regular tiering plans ($4,892 vs. $1,615), with a nearly $2,000 difference even for generic drugs. Fifty percent of adverse tiering plans had a drug-specific deductible, compared to only 19% of other plans.
Enrollees may select an adverse tiering plan for its lower premium, only to end up paying extremely high out-of-pocket drug costs. These costs may be difficult to anticipate, since calculating them would require knowledge of an insurer’s negotiated drug prices — information that is not publicly available for most plans.
Second, these tiering practices are likely to lead to adverse selection, with sicker people clustering in plans without adverse tiering. Over time, plans offering generous prescription-drug benefits may see a large influx of sick enrollees, which would reduce profits and lead to a race to the bottom in drug-plan design. The ACA’s risk-adjustment, reinsurance, and risk-corridor programs provide some financial protection to insurers whose enrollees are sicker than average. But the existence of adverse tiering in 2014 suggests that selection opportunities remain. Furthermore, the reinsurance and risk-corridor programs will be phased out after 2016, which will only increase insurers’ incentives to avoid sick enrollees.
Price transparency is one approach to address unexpectedly high out-of-pocket costs for people with chronic conditions. Insurers could be required to list on their formulary each drug’s estimated price to the enrollee, based on the negotiated price and the copayment or coinsurance. However, price transparency would probably accelerate the adverse-selection process if adopted in isolation.
One would be to establish protected conditions in drug formularies. Medicare Part D has designated several protected classes of drugs, including those used for HIV, seizures, and cancer. A similar approach in the exchanges could set an upper limit on cost sharing for medications for protected conditions. Such a policy would reduce financial exposure for people with these conditions even if they chose sub-optimal plans. Other safeguards for protected conditions could also be implemented, such as limits on prior-authorization requirements.
An important additional step would be to require marketplace plans to offer drug benefits that meet a given actuarial value, meaning that the percentage of drug costs paid by the plan (rather than the consumer) would have to exceed a particular threshold. This level could be set at the actuarial value for a given plan (i.e., 70% for silver plans) or above it. In order to significantly increase cost sharing for one drug, an insurer would have to reduce cost sharing for another drug. This step is crucial because it encompasses treatment of all health conditions, not just protected conditions and addresses non–formulary-based methods of passing costs on to consumers that may induce adverse selection (e.g., drug-specific deductibles), according to the report.
Stopping adverse drug tiering will not completely eliminate discrimination in the insurance marketplace. Some insurers will think of new ways to dissuade sick enrollees from joining their plans. Eliminating premium discrimination on the basis of health status was one of the ACA’s chief accomplishments in the non-group insurance market and one of the law’s most popular features. Preventing other forms of financial discrimination on the basis of health status — with the attendant risks of adverse selection in the marketplace — will require ongoing oversight, according to the report. The ACA has already made major inroads in designing a more equitable health care system for people with chronic conditions, but the struggle is far from over. For more information, visit www.hsph.harvard.
Shopping for Care Can Lower Out-of-Pocket Costs
Out-of-pocket spending for common health care procedures can vary from $10 to nearly $1,000 depending on the procedure. With out-of-pocket spending rising, there are real opportunities for consumers to save on health care if they have price information to make better decisions, according to a study by the Health Care Cost Institute (HCCI).
The HCCI report is based on data from actual amounts paid for health care services. The report looks at per capita out-of-pocket spending for five common medical procedures. It looks at average differences in consumer payments nationally and in nine states: Ariz., Colo., Fla., Ga., Md., N.J., Ohio, Texas, and Wisconsin.
In 2013, consumer payments for a new doctor visit varied by $19 nationally, $10 in Arizona, $12 in Colorado, and $35 in Wisconsin. However, variations were much higher for surgical procedures. Consumer out-of-pocket payments for cataract removal varied by $444 nationally. Variations were larger within states. Consumer payments varied by $989 in Wisconsin and $490 in Georgia. The variation in consumer out-of-pocket payments for a lower leg MRI was $342 nationally. Payments varied by more than $410 in several states including Ohio, Texas, and Wisconsin.
In 2013, an adult consumer with employer-sponsored insurance paid more than 15% of their medical bills out-of-pocket for about $700 a year. That’s up 6.9% from $662 in 2012.
HCCI executive director David Newman said, “The lack of transparency of medical prices is a growing problem since consumers are financing a larger and larger proportion of their care. Although the savings for a physician visit may be minimal, for other procedures like cataract removal or an MRI, the potential savings could be a substantial benefit to many households.” HCCI is launching a transparency tool that will provide national, state, and local information to help consumers shop. The first version of that tool is slated to go live in early 2015. For more information, visit www.healthcostinstitute.org.
Small Businesses Must Gather Data Now for Obamacare 2016 Deadline
Companies with 50 to 99 employees will fall under the federal healthcare mandate starting January 2016, but they should prepare now. Small companies should begin tracking data to help them determine compliance and which employees are entitled to an offer of coverage in 2016. “Unfortunately, no magic bullet exists in the form of affordable software that gathers data in one tidy place; nor is the government ready with a form. The required reporting is detailed. Leaving the record keeping to the 11th hour will be too cumbersome for smaller companies…Planning facilitates developing the best ACA strategy,” says Finny Varghese, an expert on the ACA
Here’s what companies need to do according to Lexus/Nexus:
• Classify workers. Coverage is required for full-time employees, those working 30 or more hours weekly, and full time equivalents. FTEs are calculated as the number of part-time workers multiplied by the number of hours worked per month divided by 120. Companies may discover their total full-time count falls below the range.
• Define standard measurement periods for determining employee classifications. There will be one look-back period for ongoing employees and measurement periods for each new hire. Tracking this year provides a beta test for 2016 data and could guide classifications.
• Detail each employee who gets coverage under current healthcare policy. This information includes the duration of any waiting period, months of eligibility and coverage, premium for the lowest cost option for employee-only coverage, and whether coverage meets the government standard.
For more information, visit www.nexusstaff.com.
FY 2016 Budget to Extend Medicare Mental Health Benefits
The fiscal year 2016 budget, released by President Barack Obama calls for elimination of a provision that limits Medicare beneficiaries to just 190 days of inpatient psychiatric hospital care during their lifetime. Mark Covall, National Association of Psychiatric
NAPHS also called on the Administration and Congress to address another discriminatory barrier in the Medicaid program. Adults (ages 21 to 64) with Medicaid don’t have coverage for short-term, acute care in psychiatric hospitals because of the “Institutions for Mental Disease (IMD)” exclusion. “The IMD exclusion is penalizing the disabled and poor. This policy adds to system inefficiencies and adds to the cost of care,” Covall said. Congress has taken bipartisan action to address this issue. Rep. Tim Murphy (R-physician assistant) has developed an NAPHS-backed comprehensive mental health reform plan, the Helping Families in Mental Health Crisis Act. It would create a pathway under Medicaid for people to get access to short-term acute psychiatric care. The measure, which has had bipartisan support, is slated to be reintroduced in the 114th Congress.
The Medicaid Emergency Psychiatric Care Demonstration is also underway in 11 states and the District of Columbia to show the value of giving adult Medicaid beneficiaries this type of access. Preliminary demonstration statistics show that the length of stay in psychiatric hospitals is very short (about eight days). Readmission rates are low (with 84% not returning to the hospital). People are able to go home or to self-care with hospitals’ community partners.
Medical Homes Improve Care and Reduce Costs
Primary care patient centered medical homes are delivering results, according to a report by the Patient-Centered Primary Care Collaborative. This team-based health care delivery model is led by a primary-care physician. Researchers looked at peer-reviewed studies, state government program evaluations, and industry reports. Sixty percent of the studies report cost reductions, and 92% report improvements in utilization. All seven state government reports reveal reduced costs, and six show improved utilization. Four of seven industry studies show cost reductions, and six show improvements in utilization.
Christopher Koller, president of the Milbank Memorial Fund said, “In order for the patient centered medical home to be sustainable, we need greater investment in primary care and less reliance on the fee-for-service payment system.” Justine Handelman, vice president, legislative and regulatory policy at Blue Cross Blue Shield Association said, “Spending more than one in five medical claims dollars in value-based care programs located in virtually every state, the Blues are creating innovative models that align incentives, support care coordination, and put patients first.” For more information, visit www.pcpcc.org/initiatives.
IN CALIFORNIA
Agent Nabbed in Premium Financing Scheme
Derek Richard Brewart, 53 pleaded guilty to two charges of committing bank fraud and filing a false tax return. Brewart is a former licensed insurance agent and owner of Hamilton Brewart Insurance Agency in Upland, Calif. From at least 2008 through 2012, Brewart submitted fraudulent loan applications to Universal Bank to secure premium-financing loans, which he used to pay the agency’s expenses. He secured loans from Universal Bank in his clients’ names without their knowledge. The insureds had gotten insurance premium financing from other lenders or paid their insurance premiums in full. Brewart used a post office box to route correspondence from Universal Bank about the loan applications, rather than his clients’ actual mailing addresses. Brewart also filed false tax returns for tax years 2010 and 2011. He failed to report about $785,922 in income for the two years. Brewart is scheduled to be sentenced by Judge Bernal on July 13. The maximum sentence is 30 years in federal prison for the bank fraud charge and three years in prison for the tax charge.
Covered California Is Attracting More Latino And African-American Consumers
Very high numbers of Latinos and African-Americans applied for coverage in the first part of this year’s open enrollment for Covered California, signaling great promise that the February 15 end of open enrollment will show much higher numbers than the first year. Covered California executive director Peter Lee said, “It appears our marketing and outreach are working to get people in the door. The job is to get them across the finish line.” DHCS Director Toby Douglas said, “The new data show that the efforts to focus more outreach in these communities are finding many Californians who still want and need coverage. We’re very pleased with the success so far.”
Through January 12, 311,741 consumers were determined eligible for coverage in Covered California, and an additional 228,766 selected a plan. The following is a breakdown of consumers who provided information about their race/ethnicity and were eligible for private coverage:
• 50% Latino.
• 23% white.
• 11% Asian.
• 6% Black or African-American.
• 4% unknown race/non-Latino (where a response was given).
• 2% mixed race.
• 4% other
• Less than 1% American Indian or Alaska Native.
• Less than 1% Native Hawaiian and other Pacific Islander.
In addition, the following percentages went on to select a plan through Covered California:
• 38% White.
• 28% Latino.
• 19% Asian.
• 5% Unknown race/non-Latino (where a response was given).
• 3% Black or African-American.
• 3% Mixed race.
• 3% Other.
• Less than 1% American Indian or Alaska Native.
• Less than 1% Native Hawaiian and other Pacific Islander.
In the second year, Covered California made the following changes to open enrollment:
• Increased its English- and Spanish-language advertising aimed at Latinos by 18%, including significantly more Spanish-language advertising. Spanish-language advertising increased from 27% of the total advertising buy in 2013-2014 to more than 36% of the total advertising buy in 2014-2015.
• Added a comprehensive Spanish-language enrollment website.
• Added bilingual service center representatives including 155 who speak Spanish. Another 61 bilingual Service Center representatives will begin on January 26 compared to 55 during open enrollment last year.
• Stepped up immigration messaging in partnership with national immigrant rights groups to reassure consumers that they can apply even if a family member is undocumented.
• Joined with the California Latino Medical Association and the National Hispanic Medical Association to encourage physician members to spread the word about open enrollment.
• Increased the share of paid advertising aimed at African-Americans from 7% in 2013 to 2014 to 9.9% in 2015, including television, radio and print advertising in black newspapers. In addition, Covered California has worked with African-American churches and other community groups to promote enrollment.
Lee said, “We are going to be directing our Service Center representatives, especially our bilingual representatives, to begin outbound calls to those who have been determined eligible, but may have stalled after completing part of the application,” Lee said. For more information, visit www.CoveredCA.com.
Covered California Reports Strong Renewal Numbers
About 1.1 million Covered California enrollees were eligible for renewal as of December. Covered California Executive Director Peter Lee said, “Looking at the data on those who switched plans during the renewal process, for all plans they are retaining more than 90% of their consumers, which tells us that consumers seem to be happy with the coverage they have in most cases. In this first renewal period, while we saw some movement from plan to plan. Covered California’s consumers mostly decided to stay where they were, with many consumers continuing in their same plans — even if they shopped among other options.”
Covered California forwarded the names of 92% of eligible consumers to health plans. Also, the exchange is working to renew an additional 80,000 enrollees who could not be auto-renewed or have not selected another plan. About 85,000 enrollees were determined eligible for Medi-Cal during the renewal process, leaving more than 1 million enrollees eligible for renewal in private coverage for 2015.
Covered California began offering coverage for the first time in October 2013 for insurance taking effect in 2014. More than 1.4 million consumers picked a plan as of May 2014, and about 1.2 million of those consumers effectuated their coverage by paying at least one month’s premium. Not everyone who did not renew lost coverage. An estimated 85,000 consumers were determined eligible for Medi-Cal during the renewal process due to income or other changes. Others gained job-based coverage.
Blue Shield of California and Sutter Health Sign Two-Year Contract
Blue Shield of California signed a two-year contract with Sutter Health. Blue Shield will offer members access to Sutter Health providers and facilities as participating providers effective February 1, 2015 through December 31, 2016. For more information, visit visit www.blueshieldca.com.
Network Regs Go Into Effect Immediately
Emergency regulations go into effect immediately to establish stronger requirements for health insurers to create and maintain medical provider networks. In 2014, many health insurers reduced or narrowed their medical provider networks and/or shifted to offering exclusive provider organization health insurance products with no out-of-network benefits. Consumers said they had trouble getting appointments with doctors; they had to go long distances to get in-network medical care; or they went to doctors who appeared in their health insurer’s provider directory, but were not in the health insurer’s medical provider network.
California Insurance Commissioner Dave Jones said, “Some consumers have been forced to pay huge out-of-network charges when their health insurer fails to provide adequate medical providers in their network or when care is provided by out-of-network providers without even informing or asking the consent of the patient. This emergency regulation is necessary to make sure that health insurers establish and maintain adequate medical provider networks to meet the health care needs of their policyholders, to make sure medical provider directories are accurate, and to stop the practice of surprising consumers with huge charges for out-of-network providers who provide care without first informing the patient and getting their consent.”
The emergency regulations require health insurers to do the following:
• Include enough primary care physicians who accept new patients in order to accommodate enrollment growth.
• Include enough primary care providers and specialists with admitting and practice privileges at network hospitals.
• Consider the frequency and type of treatment that’s needed to provide mental health and substance use disorder care when creating the provider network.
• Adhere to and monitor new appointment wait time standards.
• Prevent surprise bills by requiring medical facilities to inform patients that an out-of-network medical provider will participate in the non-emergency procedure or care, before the care is provided, so that the patient can decline the participation of the out-of-network provider if they so choose.
• Report information about the networks and changes to the networks to the Dept. of Insurance on an ongoing basis.
• Provide accurate provider network directories to the Department and make them available to policyholders and the public.
• Make arrangements to provide out-of-network care at in-network prices when there are insufficient in-network care providers.
SCAN Health Plan Brings “Independence at Home” to Ventura County
SCAN Health Plan has expanded Independence at Home program. The community service program that has been serving the greater Long Beach community for more than 30 years. It offers a range of programs focused on keeping seniors healthy in their homes. As part of the expansion, in 2014 SCAN hired Karen Markle to serve as volunteer coordinator overseeing the launch of its Volunteer Action for Aging (VAA) program in Ventura County. VAA is a volunteer service program designed to reduce loneliness and isolation among seniors and disabled adults so they experience increased safety, security and well-being. In its first year in Ventura, VAA held 31 volunteer events that addressed a range of interests and needs, including a chronic disease self-management program, basic cell phone instruction course, guided autobiography class, ice cream socials, and the delivery of warm turkey dinners to homebound seniors on Thanksgiving Day. More than 200 local volunteers contributed to these events, held at various locations throughout the county.
The expansion of the Thanksgiving Meal Delivery Event into Ventura was a significant milestone for IAH’s VAA program. For 22 years IAH has gathered hundreds of volunteers to deliver holiday meals to seniors who may otherwise go without. In its first year volunteers delivered 200 meals in Long Beach, California. Last year volunteers delivered 2,300 meals in neighborhoods across Southern California. It was the first time the program extended beyond the greater Long Beach area and into Orange and Ventura counties.
Also as part of the IAH expansion, the SCAN Health Education Center in Ventura will be renamed the SCAN Health & Wellness Center. The center, which opened in 2006, has become a social hub for SCAN members and non-members alike. In addition to hosting virtual bowling, movie screenings and lifestyle lectures, the center offers free health education and exercise programs. More than 40 classes are held on-site each month, including a diabetes self-help program, a Parkinson’s exercise and support group, senior yoga, memory training, and tai chi. In 2015 the center will double its library of health and wellness presentation topics to reach even more of the senior population across Ventura County. Other programs managed include community giving, which includes grants and scholarship contributions to community-based organizations, and Trading Ages, SCAN’s aging-sensitivity program. For more information, visit scanhealthplan.com.
LIFE INSURANCE
Applicants Sought for the 2015 Life Lessons Scholarship
Life Happens is accepting applications for its annual Life Lessons Scholarship Program. The scholarship provides financial assistance to students who are pursuing a higher education following the death of a parent or legal guardian who did not have life insurance. For the first time in the program’s history, Life Happens will award over $200,000 in scholarship money, ranging from $5,000 to $15,000. To be considered for a scholarship, applicants must submit a 500-word essay or three-minute video that describes how their lives have been affected by the death of a parent or guardian. For more information, visit http://www.lifehappens.org.
NEW PRODUCTS
Worksite Disability Coverage
MassMutual is making its individual worksite disability insurance product more attractive to older workers. MassMutual’s MaxElect13 disability income policy includes an increased maximum issue age to 80 and decreased rates for workers ages 65 to 75. The policy is conditionally renewable for life as long as the insured is actively at work and non-disabled. A simplified, no-application process allows insureds to increase coverage as their incomes rise. The new policy also offers a larger discount for employer-paid coverage and is available on a guaranteed standard issue basis. The policy is sold primarily at the worksite to executives whose compensation is variable and who therefore need more flexible coverage than typically offered by group disability policies. The policy is portable. For more information, visit Facebook.com/RetireSmart.
New Disability Options for Nurse Practitioners and Physician Assistants
Certified first-year nurse practitioners and physician assistants are now eligible for up to $10,000 in individual disability insurance coverage from the Guardian without proof of income. Final year students can get up to $6,000 in coverage. Among the fastest growing occupations in the medical arena, these professions are expected to grow nearly 38% over the next eight years, compared to an 11% expected growth rate for all occupations. For more information, visit http://find.guardianlife.com.
EMPLOYEE BENEFITS
The Top Voluntary Products
Short-term disability was the most frequently offered voluntary product in 2014 followed by term life, critical illness, and accident among the carriers participating in a survey by Eastbridge Consulting. The percentage of carriers offering long-term disability and AD&D increased while those offering universal/whole life, dental and long-term care remained about the same compared to a similar study conducted in 2012. Fewer carriers have been offering hospital indemnity, limited benefit, and supplemental medical plans, most likely due to how healthcare reform has affected these plans.
Slightly over one-third of the carriers offer or plan to offer non-insurance or discount products in addition to their traditional voluntary offering. These include health discount cards, hybrid dental insurance and discount products, financial/legal discount cards, beneficiary support services, health advocacy/nurse advisors, and/or other value-added services such as EAP, ID theft recovery, travel assistance or leave management. Most carriers classify their voluntary products as having average profitability. The products rated most often as very profitable include accident, hospital indemnity, and vision. Products receiving lower profitability ratings include cancer, critical illness, dental, and universal/whole life. For more information, visit www.eastbridge.com.
Consumers Want Wellness Rewards
Seventy-five percent of consumers with company-sponsored health plans say that incentives would motivate them to meet health goals, according to a survey by HealthMine. Also, Seventy one percent want access to programs and guidelines for health management; 67% say that employees who are in a healthy weight range should get a discount on their health insurance; and 52% say that employees should be rewarded for adhering to medication for a chronic disease. They also say that co-workers who engage in unhealthy behaviors or don’t manage their health should be penalized. For example, 63% say that employees who smoke tobacco should pay more for their healthcare. For more information, visit www.healthmine.com.
