09/24/09 Weekly compilation of health care reform developments in Washington, D.C. and state legislatures 9/24/09

While the proposals being considered by Congress to help reform the health care system could make significant strides in addressing health care access problems, many remain concerned that the proposals made to date do not do enough to take on the overarching problem of rapidly rising health care costs.

To help draw more attention to this daunting problem, some large insurance firms recently were sponsors of the September/October edition of the journal Health Affairs, which is devoted to “bending the cost curve.” The current issue and the launch event highlighted innovative solutions that could have a significant impact on the future cost of health care. Bending the cost curve is the key — if we don’t make health care more affordable, other reforms will have little value.


Medicare Policy Might Discourage Proper Care for Hospital-Acquired Infections

Medicare’s recent policy of refusing to pay hospitals’ additional costs to treat hospital-acquired infections fails to adequately incentivize prevention and proper treatment of these complications, associated with 99,000 deaths annually. Read more from the healthcare blog

Senate Finance Committee Chairman Max Baucus released his “mark,” which is the Senator’s offering to the full Committee of the legislative pathway he thinks the Committee should follow to pass health care reform. While those on both the left (Senator Rockefeller) and on the right (Senator Grassley) expressed negative views on the mark, all the headline posturing ceases when the committee officially begins to review and amend the mark this week. The key for Chairman Baucus is to garner sufficient support to pass the bill out of committee in a fashion that bodes well for floor passage. Right now the prospects are far from certain.


ARIZONA: The Department of Insurance has issued a bulletin summarizing several insurance-related bills enacted during the 2009 legislative session. The bulletin expressly notes: the revision of the acceptable medical references an insurer may use in its determination of whether a drug has been found to be safe and effective for treatment of a specific type of cancer and the amended definition of “network plan” to include a plan under which the financing and delivery of health care services are provided through a defined set of providers under contract with a hospital, medical, dental or optometric service corporation; the ability of service corporations to issue subscription contracts free of many state-mandated benefits and also reduce the allowable uninsured period for small groups to qualify for state vouchers for free coverage; and the permissibility of issuing coverage to uninsured individuals without being subjected to many of the state’s mandated benefits.

CALIFORNIA: Proponents of a new statewide initiative to return the legislature back to a part-time status are attempting to collect the 700,000 signatures necessary to qualify for the ballot in 2010. The measure would cut the current legislative calendar to 90 days. Supporters of the initiative say that the full-time legislature, authorized by voters in 1966, has failed to produce the results promised. After another rocky legislative year marked by a soaring budget deficit and a failure to address education spending and health reform issues, broad support for the measure seems likely. However, a bipartisan group of three former state lawmakers have formed an alliance to fight the effort, arguing that it would not allow the legislature sufficient time to address the state’s serious problems.

CONNECTICUT: The General Assembly is holding September 23 and 24 to take up several bills needed to implement the new, two-year budget that took effect September 8. The “implementer bills” are required to put in statute the policy changes necessitated by passage of the budget. The session bears watching because of a trend of late to attempt to include non-budget-related proposals in these implementer bills. In the past, ideas that died in the regular session came back to life during an implementer session, only to expire again once they were publicized.

FLORIDA: The Agency for Healthcare Administration has asked carriers to participate in a workgroup regarding Explanation of Benefits (EOB) sent to members. The goal of the workgroup is to develop best practices for information contained on an EOB and assure the EOB is clear to consumers.

ILLINOIS The Department of Insurance’s (DOI) proposed rules for preferred provider programs and networks were heard last week by a legislative panel. These rules would affect both insurers and network administrators that offer incentives to insureds to utilize the services of contracted providers. At the hearing DOI agreed to remove objectionable language to business and insurance groups that would have limited a consumer’s exposure to 50 percent of out-of-network billed costs by a provider. The DOI Director was given discretion on the rest of the proposed rule and agreed to hold it for 30 days and meet with the industry to discuss other objections. The two major issues that remain for business and insurance groups are: a provision stating that a provider’s written approval must be obtained whenever an insurer or administrator buys another network, if it represents a material change to the contract; and the effect of language that would require insurers and administrators to hold beneficiaries harmless for out-of-network physician costs. The industry is preparing for meetings with DOI.

MASSACHUSETTS: The Division of Health Care Finance and Policy (DHFP) has introduced amendments to the Employer Fair Share Contribution regulation. The proposed amendments clarify that to be considered a contributing employer, an employer must maintain a written plan document for its group health plan. In addition, the employer must be able to document in writing its offer to employees to make a percentage premium contribution and the minimum number of hours that the employees are required to work to be eligible for full-time benefits. The amendments also clarify that a Premium Reimbursement Arrangement (in which an employee enrolls in an individual plan and is reimbursed by the employer for a portion of the premium expense) may qualify as a group health plan, provided there is written plan documentation that designates a particular plan for use by employees.

NEW JERSEY: Legislation requiring disclosure of certain serious reportable events was recently enacted by Governor Jon Corzine. Under the new law, the Department of Health and Senior Services will annually issue a report of specific hospital Patient Safety Indicators (PSI) as enumerated under federal guidelines by CMS. Additionally the law prohibits hospitals from charging for certain “never events.” These events, for which reimbursement cannot be sought, include: transfusion reaction; air embolism; foreign body left in during a procedure; surgery on wrong side, body part, or person; and performing the wrong procedure on a patient. Also, the Department of Banking & Insurance adopted regulations establishing minimum benefits standards for health benefits plans, dental plans, and prescription drug plans. The regulations, among other things, set maximum cost-sharing and network copayment limits.

SOUTH DAKOTA: The Division of Insurance has issued a three-sentence, proposed regulation addressing the relationship between Centers of Excellence and access plans. The proposed regulation currently states that each contracted Center of Excellence and each contracted network of a Center of Excellence must be included in a health carrier’s access plan. For purposes of network adequacy, the health carrier’s entire Center of Excellence network, including both direct–contracted Centers of Excellence and contracted networks, shall be considered. A health carrier may not contract with a Center of Excellence network or any other network that is not registered pursuant to South Dakota law. When originally circulated, this regulation also contained a definition of Centers of Excellence, placed restrictions on carriers with Centers of Excellence for transplant services, and required “closed plans” to have certificates of authority to operate as HMOs. The new language is strongly preferable. A hearing regarding these proposed regulations is scheduled for October 21, 2009.

UTAH: The Utah Insurance Department (UID) has issued amendments to the state’s requirements for the Basic Health Care Plan to bring the rules into compliance with new statutory requirements that were enacted in 2008 and 2009. Individual and small group health insurers are required to offer the Plan until January 1, 2010. The Plan includes the following maximum benefit limitations: 1) a lifetime maximum of no less than $1 million per person, 2) a minimum $250,000 annual maximum per person, and 3) out-of-pocket maximums on various cost-sharing obligations. After January 1, 2010, the Plan will be replaced with a new basic health care plan that is defined as: 1) a federally qualified, high-deductible health plan (HDHP), 2) has the lowest deductible that qualifies as an HDHP, and 3) has an out-of-pocket maximum no greater than three times the annual deductible.

If your company is a medical provider, health care insurance payor, or you need to gather insights on the coming changes in electronic health care, HIPAA, and ARRA related health care developments, contact us to schedule a discussion with one of our industry experts.

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Michael F. Arrigo

Michael Arrigo, an expert witness, and healthcare executive, brings four decades of experience in the software, financial services, and healthcare industries. In 2000, Mr. Arrigo founded No World Borders, a healthcare data, regulations, and economics firm with clients in the pharmaceutical, medical device, hospital, surgical center, physician group, diagnostic imaging, genetic testing, health I.T., and health insurance markets. His expertise spans the federal health programs Medicare and Medicaid and private insurance. He advises Medicare Advantage Organizations that provide health insurance under Part C of the Medicare Act. Mr. Arrigo serves as an expert witness regarding medical coding and billing, fraud damages, and electronic health record software for the U.S. Department of Justice. He has valued well over $1 billion in medical billings in personal injury liens, malpractice, and insurance fraud cases. The U.S. Court of Appeals considered Mr. Arrigo's opinion regarding loss amounts, vacating, and remanding sentencing in a fraud case. Mr. Arrigo provides expertise in the Medicare Secondary Payer Act, Medicare LCDs, anti-trust litigation, medical intellectual property and trade secrets, HIPAA privacy, health care electronic claim data Standards, physician compensation, Anti-Kickback Statute, Stark law, the Affordable Care Act, False Claims Act, and the ARRA HITECH Act. Arrigo advises investors on merger and acquisition (M&A) diligence in the healthcare industry on transactions cumulatively valued at over $1 billion. Mr. Arrigo spent over ten years in Silicon Valley software firms in roles from Product Manager to CEO. He was product manager for a leading-edge database technology joint venture that became commercialized as Microsoft SQL Server, Vice President of Marketing for a software company when it grew from under $2 million in revenue to a $50 million acquisition by a company now merged into Cincom Systems, hired by private equity investors to serve as Vice President of Marketing for a secure email software company until its acquisition and multi $million investor exit by a company now merged into Axway Software S.A. (Euronext: AXW.PA), and CEO of one of the first cloud-based billing software companies, licensing its technology to Citrix Systems (NASDAQ: CTXS). Later, before entering the healthcare industry, he joined Fortune 500 company Fidelity National Financial (NYSE: FNF) as a Vice President, overseeing eCommerce solutions for the mortgage banking industry. While serving as a Vice President at Fortune 500 company First American Financial (NYSE: FAF), he oversaw eCommerce and regulatory compliance technology initiatives for the top ten mortgage banks and led the Sarbanes Oxley Act Section 302 internal controls I.T. audit for the company, supporting Section 404 of the Sarbanes Oxley Act. Mr. Arrigo earned his Bachelor of Science in Business Administration from the University of Southern California. Before that, he studied computer science, statistics, and economics at the University of California, Irvine. His post-graduate studies include biomedical ethics at Harvard Medical School, biomedical informatics at Stanford Medical School, blockchain and crypto-economics at the Massachusetts Institute of Technology, and training as a Certified Professional Medical Auditor (CPMA). Mr. Arrigo is qualified to serve as a director due to his experience in healthcare data, regulations, and economics, his leadership roles in software and financial services public companies, and his healthcare M&A diligence and public company regulatory experience. Mr. Arrigo is quoted in The Wall Street Journal, Fortune Magazine, Kaiser Health News, Consumer Affairs, National Public Radio (NPR), NBC News Houston, USA Today / Milwaukee Journal Sentinel, Medical Economics, Capitol ForumThe Daily Beast, the Lund Report, Inside Higher Ed, New England Psychologist, and other press and media outlets. He authored a peer-reviewed article regarding clinical documentation quality to support accurate medical coding, billing, and good patient care, published by Healthcare Financial Management Association (HFMA) and published in Healthcare I.T. News. Mr. Arrigo serves as a member of the board of directors of a publicly traded company in the healthcare and data analytics industry, where his duties include: member, audit committee; chair, compensation committee; member, special committee.

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