Major Health Insurance Changes for the New Year

January 6, 2016 California Broker Magazine

IN CALIFORNIA

Major Health Insurance Changes For The New Year

Covered CA 2016 ChangesCovered California is reminding consumers and small businesses about important changes in 2016. Starting January 1, Covered California increased access to plans and providers and offered more health plans, and increased the number of benefits that are not subject to a deductible. Here is a run-down of the changes:

Most California Consumers Get New Forms for the 2015 Tax Year
This year, consumers who are insured through their employer or a government program, like Medi-Cal, will get Form 1095-B or Form 1095-C. The forms show who maintained minimum essential coverage and is not liable for the tax penalty. Consumers under Covered California will continue to get a Form 1095-A. For more information, visit https://www.irs.gov/Affordable-Care-Act/Questions-and-Answers-about-Health-Care-Information-Forms-for-Individuals.

The Penalty for Not Buying Affordable Insurance Is Going Up — A Lot
The IRS penalty applies to people who go without insurance when they can afford to buy it. It will increase for 2016 to at least $695 per adult and $347.50 per child under 18 or 2.5% of household income, whichever is greater. A recent study by the Henry J. Kaiser Family Foundation estimates that the average household penalty in 2016 will be $969, which is a 47% increase from 2015. For more information, visit www.taxpayeradvocate.irs.gov/estimator/isrp.

New Requirements and New Options for Many of California’s Small Businesses
Employers with more than 50 full-time-equivalent (FTE) employees must offer health insurance to employees or pay a penalty. Through 2015, this requirement applied only to businesses with more than 100 employees. Any of these employers with an employee who does not take their offer of coverage will have to pay a penalty if the employee goes on to get financial assistance to purchase coverage through Covered California. For more information, visit https://www.irs.gov/Affordable-Care-Act/Employers/ACA-Information-Center-for-Applicable-Large-Employers-ALEs.

Covered California for Small Business will expand beyond the ceiling of 50 employees to serve companies employing 100 or fewer FTE employees. For more information, visit www.CoveredCA.com/ForSmallBusiness.

Major Improvements in Choice, Access and Benefits
Covered California used its power as an active purchaser to hold down rate changes for a second year. Before the Affordable Care Act, consumers regularly experienced double-digit premium increases. For 2016, Covered California negotiated a weighted average change of 4%, which is lower than last year’s change of 4.2%. In addition, nearly 90% of Covered California enrollees get some financial assistance to help pay premiums. On average, those subsidies resulted in more than $5,200 for each household in 2014.

Benefit Changes for the 2016 coverage year:

  • The majority of Bronze plan consumers now get three office visits a year to a primary care provider or specialist with no deductible. Other needed services, such as lab tests and rehabilitation, will not be subject to a deductible.
  • Covered California’s Silver plan will combine copay and coinsurance into a single product. Every doctor visit, lab test, and prescription will not be subject to a deductible in this single product. Consumers with chronic conditions will be protected by a cap on specialty drugs. The vast majority of consumers will see their specialty drugs capped at $250 per month, per prescription. Plus, because of Covered California’s standard benefit design, the caps must be offered by every health insurance plan in the individual market and by all plans offered by the exchange. For more information, visit http://news.CoveredCA.com/2015/05/covered-california-board-protects.html.
  • Adult dental coverage is now offered as an add-on.
  • 6% of Covered California consumers will be able to choose from at least three health insurance companies thanks to the addition of two new health insurance companies — UnitedHealthcare Benefits Plan of California and Oscar Health Plan of California as well as the expansion of Blue Shield of California and Health Net.
  • More than 90% of hospitals (general acute centers as designated by the California Office of Statewide Health Planning and Development) in California will be available through at least one health insurance company, and 74% will be available through three or more companies.

 Medi-Cal Coverage for Undocumented Children

  • Medi-Cal will be expanded to all children regardless of their immigration status. The new law goes into effect in May 2016.

Health Care Improvements for All Californians
Starting July 1, health plans must publish and maintain printed and online provider directories. Health plans must maintain accurate provider directories, including routine updates. For more information, visit http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB137.

A new state law will require health plans and insurers to implement formula-tier requirements and cost-sharing caps similar to products offered through Covered California. Assembly Bill 339 requires plans and insurers to have formularies that do not discourage the enrollment of people with certain health conditions. It also sets requirements regarding access to in-network retail pharmacies, standardized formularies, and coverage for certain single-tablet HIV and AIDS treatments. For more information, visit http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB339.

The Dept. of Insurance Year in Review
The California Dept. of Insurance lists the following actions it took last year related to life insurance, health insurance, and workers comp:

  • Issued emergency regulations on the adequacy of health insurance medical provider networks.
  • Created a healthcare price and quality ratings comparison tool (California Healthcare Compare at consumerreports.org).
  • Issued emergency regulations strengthening requirements for health insurers to have enough doctors, hospitals, and clinics in their networks to ensure that consumers have timely access to health care. The regulations were approved on February 2, 2015.
  • In a major fraud case, pharmaceutical company Warner Chilcott agreed to pay $23.2 million for defrauding California insurers through drug marketing fraud. Jones insisted that Warner Chilcott agree to discontinue the unlawful promotion of pharmaceutical products identified in the whistle blower complaint and sold in California. Additionally, the Commissioner settled another insurer fraud case brought against Daiichi-Sanyo for $950,000 for making illegal kickbacks to healthcare providers.
  • Concluded a 15-year-old case involving Executive Life Insurance Company, which was placed into liquidation over 25 years ago by the department. French company Artemis S.A. agreed to pay $200 million for allegedly defrauding Executive Life in addition to $110 million it paid previously bringing the total recovery against all defendants to over $930 million.
  • In 2015, there were five national settlements with insurers as a result of investigations of their failure to use the Death Master File database to pay life insurance benefits. Insurers representing over 73% of the life insurance market have agreed to reform their practices and use the Death Master File database to identify deceased policyholders in order to pay benefits to their beneficiaries. Combined settlements have resulted in life insurers returning more than $1 billion in life insurance benefits to beneficiaries nationwide.
  • For fiscal year 2015/2016, the Department awarded $34.95 million in grants to district attorneys to combat workers compensation fraud and more than $21.95 million in grant funding to fight auto and organized auto fraud. As of November 30, Dept. of Insurance detectives arrested 745 people for insurance fraud this year.

Advocates Say that Medi-Cal Violates Latinos’ Civil Rights
Medi-Cal’s low provider reimbursements violate the civil rights of millions of Latinos, according to a complaint filed with the federal government. “California has created a separate and unequal system of healthcare: one for all other insurance plans and an inferior one for the insurance program with the largest proportion of Latinos,” said attorney Bill Lann Lee, senior counsel for the Civil Rights Education and Enforcement Center. California’s Medicaid (Medi-Cal) reimbursement rates to health providers are 48th in the nation. The reimbursement is often lower than a physician’s cost of providing care. From 2001 to 2014, Medi-Cal payments to health providers fell 20% as a percentage of what Medicare pays for the same services. The state’s Medi-Cal reimbursements are so much lower than Medicare and private insurance rates that many providers routinely decline to treat Medi-Cal enrollees, two-thirds of whom are Latino. In a complaint filed with HHS, advocates say this denies health care access to Latinos and other Medi-Cal recipients.

Analilia Jimenez Perea and her son Saul are two of the complainants in the civil rights charge. Saul is a semi-paraplegic Medi-Cal patient with cerebral palsy. His severe seizures require frequent hospitalizations, but he has had an extremely difficult time finding doctors who will see him, including a year-and-half wait to see a neurologist.

Lee says that the state is violating Title VI of the Civil Rights Act as well as HHS regulations, and Section 1557 of the Affordable Care Act.

More is at stake than the human suffering caused by inferior access, Lee added. A recent cancer study shows that Medi-Cal cancer patients get not only less and later treatment, but die sooner than cancer patients covered by other insurance programs. “Medi-Cal should raise its reimbursement rates so doctors will treat Medi-Cal patients and monitor and [ensure] that access to medical care is not just an empty promise,” said Abbi Coursolle of the National Health Law Program (NHeLP). The SEIU-United Healthcare Workers West (SEIU-UHW) has been working to improve Medi-Cal reimbursements for several years. For more information, visit www.MediCalCivilRights.com.

 Blue Shield Offers City of Hope Providers
The City of Hope has announced an agreement with Blue Shield of California to participate in the insurer’s individual and family plan products. Combined with an existing agreement with Anthem Blue Cross, the new agreement ensures that a majority of the health exchange’s eligible participants will have access to City of Hope’s cancer care. Patients who are enrolled in a Blue Shield of California individual and family plan through Covered California or directly through Blue Shield were eligible as of November 1 to access City of Hope or its doctors, as an in-network provider. Future Covered California enrollees will be eligible for coverage, which includes access to City of Hope, as follows:

  • Enrolling in a Blue Shield or Anthem Blue Cross plan for coverage beginning January 1, 2016.
  • Enrolling from Dec. 16, 2015 to January 15, 2016, for coverage beginning February 1, 2016.
  • Enrolling from January 16, 2016 to January 31, 2016, for coverage beginning March 1, 2016.

City of Hope also recently renewed agreements for commercial patients who purchase Blue Shield insurance directly through the insurer for five years. An Anthem Blue Cross agreement to provide services at the institution’s medical center to its commercial patients also was renewed.

For more information, visit www.cityofhope.org.

Broker Steals Workers Comp Premiums
Mia Chang, 51, owner of Lotte Insurance Services, returned $19,218 in stolen premiums with interest to the owner of a large construction company. Chang collected full payment for an annual workers’ compensation insurance policy and pocketed a majority of the victim’s premium, forwarding only a small amount to the insurer and leaving the business owner without coverage and at considerable financial risk.

The victim contacted Chang after getting a letter from a collection agency for nonpayment of premium. She assured him that there had been an error and that he was still insured. She even gave him a bogus insurance certificate. The victim, who remained suspicious, contacted the insurance company and discovered that he had been uninsured for several months. The victim contacted Chang and asked her to return the money, but she ignored his request, closed her business, and disappeared.

Unaware of the resources available to help him, the victim did not file a complaint with the California Dept. of Insurance until two years after he discovered the premium theft. By the time he asked for help, the department had revoked Chang’s license, and she was convicted of grand theft for stealing premiums from five businesses and one individual. The department launched a new investigation and issued a warrant for Chang’s arrest, which she evaded for over three years until investigators arrested her in La Quinta in June 2015. Consumers and businesses should always contact the insurance company directly to verify their coverage and report suspected fraud immediately to the department. Consumers can file a request for assistance online at insurance or by calling 800-927-HELP.

Many Insured Patients Still Face Crushing Medical Debt
A recent Kaiser Family Foundation/New York Times study reveals that one-in-five working-age Americans have run into serious financial difficulties trying to pay medical bills despite being insured. In the survey, 62% of those with medical bill problems say the bills were incurred by someone who was insured, with 75% saying that the amount they had to pay for their insurance copays, deductibles, or coinsurance was more than they could afford. They reported skipping or putting off other health care in the past year because of the cost, such as postponing dental care, skipping doctor-recommended tests or treatments, or not filling a prescription. For out-of-network charges, 69% said they were unaware that the provider was not in their plan’s network when they received the care.

Consumer Watchdog says that PPO health insurance policies with very narrow provider networks and extremely limited out-of-network coverage are a new form of “junk insurance.” The group says that many patients cannot find competent in-network doctors, and then face huge medical bills due to extraordinarily limited coverage for out-of-network services.

Jamie Court, president of Consumer Watchdog said, “New PPO policies with very limited providers in-network and extraordinarily low benefits out-of-network are creating new express lanes to bankruptcy for families. Until insurance companies are forced to justify that their premiums, co-pays, and policy benefits are reasonable, too many families will be forced to choose between medical bills and other necessities of life, like paying their mortgage. These findings should shake up the statehouse and revive the regulation debate.”

In 2014, Consumer Watchdog sponsored Proposition 45, which would have allowed the insurance commissioner to make health insurance companies justify their rate hikes under penalty of perjury, and to reject excessive rate increases.

Other findings in the Kaiser/New York Times survey include the following:

  • 26% of insureds with problems paying medical bills say they received unexpected claim denials; and 32% say they received care from an out-of-network provider that their insurance wouldn’t cover.
  • Those in higher deductible private plans are more likely to report medical bill problems than those in private plans with lower deductibles (26% versus 15%).
  • Sixty-one percent of those with medical bill problems say they’ve had difficulty paying other bills as a result of their medical debt, and 35% say they were unable to pay for basic necessities like food, heat, or housing.

Read the Kaiser Family Foundation/New York Times survey here: http://kff.org/health-costs/press-release/new-kaisernew-york-times-survey-finds-one-in-five-working-age-americans-with-health-insurance-report-problems-paying-medical-bills/

Covered California Urges Federal Officials to Consider Standard Benefit Design and Robust Marketing
Covered California executive director, Peter Lee, gave HHS some suggestions on running a successful Marketplace. Covered California submitted written comments in response to proposed federal regulations. Covered California weighed in on three key elements, related to establishing a standard benefit design, ensuring that federal and state exchanges have resources to do effective marketing, and defining the role of Web-based entities in enrollment.

Standard Benefit Design
Proposed regulations related to the federal marketplace in 2017 contemplate the standardization of benefits under the Affordable Care Act. Covered California offers standardized benefits so that consumers can easily compare health insurance plans knowing that every plan within the same metal tier has the same cost-sharing amounts and benefits. With standardized benefits, consumers know that some services will always be affordable and accessible. For example, every health plan available through Covered California has primary care visits that are not subject to the deductible, which means that primary care is affordable and accessible.

Federal Assessment on Plans to Ensure Ongoing Enrollment
Recent reports from HHS, California, and other states’ exchanges show that enrollment for the upcoming third coverage year of the Affordable Care Act is strong, which bodes well for continued improvement of the risk mix and long-term affordability. The proposed federal regulations, which would not take effect until 2017, present the assessment on health plans to support all marketplace functions, including a small portion for marketing and outreach costs. While California has no plans to use the federal enrollment platform, Covered California says that marketing and outreach is vital to promoting larger enrollment and retention by encouraging healthier consumers to buy health insurance. This fosters a better risk mix that keeps premiums low for the entire market.

Web-Based Entities
Covered California says that having clear standards and expectations of Web-based entities’ is critical. Without clear standards, consumers may experience confusing displays of health plan options, make less optimal plan and product choices, be routed to off-exchange products, or not get appropriate in-person support when it is needed. Having poor or confusing plan choice display runs the risk of smaller enrollment and a worse risk pool. Covered California says that Web-based entities and other direct enrollment vendors should have to support consumers in all aspects of the application, display available health plans with additional consumer tools such as filtering and sorting options, and meet other requirements. 

Covered California Experiences Record-Breaking Enrollment
Covered California announced that more than 197,000 consumers had enrolled in health care coverage by the end of Tuesday, Dec. 15, including more than 22,000 on Monday and more than 32,000 on Tuesday. The two-day total of more than 55,000 surpassed the enrollment figures seen last year during the same two-day period when more than 35,000 people signed up for coverage on December 14 to15, 2014.

HEALTHCARE

WellCare to Transition Pharmacy Benefit Management to CVS
WellCare Health Plans, a provider of managed care services for government-sponsored health care programs, transitioned its pharmacy benefit management (PBM) to CVS Health, the nation’s second largest PBM company. WellCare members will have access to national pharmacy chain stores and local pharmacies. For more information, visit www.wellcare.com.

Advocates Say Consumers Should Be Notified of Medicare Eligibility
More than 40 consumer groups and health insurers sent a letter urging the Centers for Medicare & Medicaid Services (CMS) to develop a system to notify people in Marketplace plans about nearing Medicare eligibility. Joe Baker, president of the Medicare Rights Center said, “Adequate notice for older adults and people with disabilities in the Marketplace who are approaching eligibility for Medicare is altogether lacking. These notice gaps put Marketplace enrollees at risk for higher health care costs, gaps in health coverage, disrupted access to needed care, and tax penalties.”

The letter, signed by the Medicare Rights Center, AARP, America’s Health Insurance Plans, Blue Cross Blue Shield Assn., and other leading voices, urges CMS to screen, notify, and educate people about how and when to transition from their Marketplace coverage to Medicare. The letter emphasizes the need for advance notice on Medicare enrollment rules and the potential consequences of delayed enrollment. The letter was sent in response to CMS’ request for comment on unmet notification needs for Marketplace enrollees nearing Medicare eligibility in the proposed Notice of Benefit and Payment Parameters for 2017. 

Online Medicare Drug Dashboard
CMS is releasing an online dashboard of Medicare prescription drugs for Part B and Part D.

The tool displays spending, utilization, and trend data. It also includes descriptions of drugs, manufacturers, and uses. CMS is prohibited from publicly disclosing information on manufacturer rebates so the data used to select Part D drugs does not reflect manufacturers’ rebates or other price concessions. For more information, visit https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Dashboard/Medicare-Drug-Spending/Drug_Spending_Dashboard.html.

The Latest 2014 Medical Loss Ratio & Rebates Results
In 2014, California led the country with $98 million in medical-loss ratio (MLR) rebates, followed by Florida’s $60 million, according to a report by Mark Farrah Associates. In 2013, health plans reimbursed customers $335 million, equating to about $80 per family receiving a refund. In 2014, health plans reimbursed customers $478 million equating to about $129 per benefiting family.

The 2014 MLR rebates paid for the individual segment were $238 million (.5% of the $51.5 billion collected in premiums). MLR rebates for the small-group segment were $142 million (.2% of the $70.2 billion). Rebates for the $203 billion large-group segment were $90.5 million. The rebates paid to consumers were a relatively small portion of industry premiums. For more information, visit http://www.markfarrah.com.

2015 Study Reveals Gaps in Wellness Programs
Fifty-three percent of about 6,000 consumers who were enrolled in health plans in 2015 say it’s not easy to understand their health information or how to maintain or improve their health, according to HealthMine’s research. Forty-six percent of consumers with a chronic condition discovered their illness through a wellness program. The study also revealed the following about consumers:

  • Less than one third know their key health metrics including their blood pressure, cholesterol, BMI, and blood sugar.
  • 53% can’t access all of their clinical health data from a computer. Another 39% can’t access all of their clinical and behavioral (collected by apps/trackers) health data from a single source.
  • 53% say it’s not easy to understand their health information or how to maintain or improve their health.
  • 55% want help from their healthcare plan in setting personal health goals. Another 65% want reminders about critical health actions, such as prescription refills and annual health exams.
  • 44% stay engaged in their wellness program throughout the year while 27% say that lack of time keeps them from engaging.
  • 55% say that wellness incentives have not been not meaningful, and little more than half actually earn all of their available incentives each year.
  • 38% say their wellness program helps them manage their costs.
  • 81% of wellness programs do not include a price comparison tool.

For more information, visit www.healthmine.com.

NEW PRODUCTS

Great American Launches Accident and Health Insurance Programs
Great American Insurance Group launched its special risk accident and health insurance programs. The company is offering an array of coverages designed to meet the needs of a variety of organizations, such as schools, day care centers, churches, civic groups, boys and girls clubs, camps, recreational organizations, and volunteer groups, among others. The coverage helps offset the cost of accidental injuries that occur during an organization’s sponsored activities and events and supplements general liability coverage. For more information, visit GAIG.com/AccidentandHealth.com.

EVENTS

Webinar on 2016 Health Cost Trends and Predictions
Benefitfocus is presenting its 2016 employer health cost trends and predictions at a webinar January 21 at 9:00 PST. The Webinar will cover the following:

  • The latest industry research on health care costs and what it means for future employer health plan designs as well as cost control strategies.
  • How third-party administrators and employers can benchmark plan performance, assess plan design options, and evaluate wellness and other cost-control programs.
  • Examples of how some companies have applied data to inspire creative plan designs to address chronic conditions.
  • Popular industry topics including: why many employer health plans could exceed Cadillac Tax thresholds, why health cost inflation rates will remain in the single digits, and how to contain costs despite double-digit prescription cost increases.

Visit HCAA.org to register for the Webinar.