10/5/09 – Weekly Health Care Reform Update at the Federal and State Level


The Senate Finance Committee essentially wrapped up its work on a health care reform bill last week, though additional changes are still possible as the bill is put to a vote of the full Committee later this week. A number of changes made to the bill at the 11th hour last week already are generating concerns about the direction of the legislation.

For example, one amendment approved by the Committee would result in a significant weakening of the individual coverage requirement (see below). This requirement is the cornerstone on which a host of insurance market reforms are supported.

The bill also would levy significant new fees and taxes on different sectors of the health care system, such as health insurance, without adequately tackling the true drivers of health care costs. As health care reform moves toward floor debate in the House and Senate, the industry will monitor events closely and weigh in on issues of substance. While this summer’s town hall meetings were an important part of the process, there will be no more important time for all Americans to stay informed and be involved than in the weeks ahead.

The Senate Finance Committee last week finished moving through dozens of amendments, paving the way for a vote on the finished bill sometime this week after the Congressional Budget Office provides a cost estimate. While many amendments were rejected, the panel did approve at the last minute some significant changes to the bill introduced by Chairman Max Baucus (D-MT) in mid-September.

One amendment adopted would weaken the individual coverage requirement by delaying and reducing penalties attached to the requirement. The maximum penalty for a family of four would start at $200 in 2014 and rise to $750 in 2017.

Significantly, an estimated 2 million people who would face financial difficulties would be exempt from buying even the cheapest insurance available — those who would have to pay more than 8 percent (a change from 10 percent) of their adjusted gross income for the cheapest plan would be exempt.

The Committee rejected amendments for a public plan option, but it did include a mini-public plan option for those under 200 percent of the federal poverty level. To help pay for the legislation, new fees and taxes would be levied on insurance companies, drug makers, medical device manufacturers, and some families. Senate leaders already have begun looking at ways to blend together the Senate Finance Committee bill and a competing Senate HELP Committee bill so that floor debate can begin later in October.


INDIANA:  Hearings resumed last week on the Health Provider Patient Limit Study supported by the Indiana Medical Association. The Health Finance Commission is required to study:

  1. health plan provider contract provisions that would require a contracted provider to mandatorily accept more than a certain number of patients (open access clause); and
  2. whether an insurer should be required to directly reimburse an out-of- network health care provider (assignment of benefits)

Arguments were presented on both sides of these issues.  In addition, HEA 1300 requires the Indiana Department of Insurance (DOI) to collect information regarding the costs of initiation and operation for recognizing assignment of benefits and report to the Health Finance Commission on its actuarial findings.

The data has been collected by DOI, which will present its final findings on assignment at the October 19 Health Finance Commission meeting.  A final report from the Health Finance Commission is due to the Legislative Council by November 1.

TEXAS: The Department of Insurance has prepared a working draft of rules concerning physician ranking requirements and notice requirements that would limit health plans’ ability to publish physician rankings. These draft rules would implement the provisions of legislation recently passed establishing standards for the use of physician ranking systems by health plans. The legislation outlines a process to be used by the TDI in determining nationally accepted standards for provider rankings.

The standards used must be disclosed to each affected provider, as well as the details of a process that may be used to dispute the rankings. The measure also prohibits physicians from taking action that would prevent a patient from participating in an evaluation of the physician’s performance. Insurers / payors worked throughout the session with the bill’s authors to ensure that the final version tracked the patient charter and national best practices. Insurers / payors will continue to work with TDI in the crafting of its final rules.

WASHINGTON: Insurers / payors are working with the state and other industry stakeholders to determine the feasibility of maintaining the state’s Universal Vaccine Program for children. Due to budget cuts, the state is scaling back the vaccine program next spring to cover only low-income children.

Currently, the program is available for all vaccinations for any child residing in the state, even those with private insurance. Due to the state’s purchasing power and its ability to distribute vaccine effectively, there are multiple benefits to the state continuing the program.

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Michael F. Arrigo

Michael is Managing Partner & CEO of No World Borders, a leading healthcare management and IT consulting firm. He serves as an expert witness in Federal and State Court and was recently ruled as an expert by a 9th Circuit Federal Judge. He serves as a patent expert witness on intellectual property disputes, both as a Technical Expert and a Damages expert. His vision for the firm is to continue acquisition of skills and technology that support the intersection of clinical data and administrative health data where the eligibility for medically necessary care is determined. He leads a team that provides litigation consulting as well as advisory regarding medical coding, medical billing, medical bill review and HIPAA Privacy and Security best practices for healthcare clients, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, physician compensation, Insurance bad faith, payor-provider disputes, ERISA plan-third-party administrator disputes, third-party liability, and the Medicare Secondary Payer Act (MSPA) MMSEA Section 111 reporting. He uses these skills in disputes regarding the valuation of pharmaceuticals and drug costs and in the review and audit of pain management and opioid prescribers under state Standards and the Controlled Substances Act. He consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises ERISA self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $8 billion in healthcare mergers and acquisitions. Education: UC Irvine - Economics and Computer Science, University of Southern California - Business, studies at Stanford Medical School - Biomedical Informatics, studies at Harvard Medical School - Bioethics. Trained in over 10 medical specialties in medical billing and coding. Trained by U.S. Patent and Trademark Office (USPTO) and PTAB Judges on patent statutes, rules and case law (as a non-attorney to better advise clients on Technical and Damages aspects of patent construction and claims). Mr. Arrigo has been interviewed quoted in the Wall Street Journal, New York Times, and National Public Radio, Fortune, KNX 1070 Radio, Kaiser Health News, NBC Television News, The Capitol Forum and other media outlets. See https://www.noworldborders.com/news/ and https://www.noworldborders.com/clients/ for more about the company.

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