Health Care Technology Update: As required by the HITECH Act, the Secretary of the Department of Health and Human Services (HHS) has published an initial set of standards, implementation specifications, and certification criteria to enhance the interoperability, functionality, utility, and security of health information technology. These criteria are outlined in the interim final rule (IFR) on Standards & Certification Criteria issued today by the Office of the National Coordinator for Health Information Technology (ONC).
Federal Developments: In the past week, the Senate’s health care reform legislation has run the political gauntlet, with Republicans trying to filibuster other legislation to create a roadblock, liberal Democrats complaining loudly about the loss of some favorite provisions, and independent-minded Democrats forcing some significant changes. But the holiday break and the President’s stated goals have given Senate Democrats powerful motivation to get health care reform to a vote this week. Regardless of what happens in the Senate this week, the House has adjourned, which means that the health reform debate will certainly carry over into 2010. Conference committee deliberations between House and Senate leaders are expected to be difficult.
- The Democratic Party’s decades-long push to remake the U.S. health care system cleared a major hurdle early Monday morning, with the Senate voting to move ahead on a massive $871 billion bill (according to the Congressional Budget Office’s analysis of the cost of the bill).
- Despite the 60 vote milestone in the Senate, deep divisions over abortion are the Democratic Party’s biggest obstacle to combining the Senate and House bills, which also differ on a public plan and how to pay to expand insurance coverage.
- Continuing debate as to whether the Senate bill would do anything significant to slow rising health care costs. A Bloomberg story points out that a number of economists and analysts are doubtful that it will.
- Less than two days after releasing a bill with 383 pages of changes, Senate Majority Leader Harry Reid (D-Nev.) corralled his politically diverse caucus and delivered the 60 votes necessary for the most crucial test vote in the legislative process so far — effectively ensuring the reform package will clear the Senate later this week.
- The final tally was a straight party-line vote, 60-40. All Democrats and two independents voted yes and all Republicans voted no — and each side bitterly accused the other of trying to thwart true reform through petty gamesmanship. The senators voted just after 1 a.m. while seated at their desks, a rarely used practice implemented only for historic votes.
- Roughly 31 million people would receive new coverage under the legislation.
Key new items in the bill include:
- the 10-year $6.7 billion-a-year insurance tax set to start in 2010 would now start in 2011, and it has been dramatically reduced in the early years;
- both the public plan option and the Medicare buy-in have been dropped and replaced with a multi-state plan option authority;
- some insurance rules (medical cost ratio and lifetime/annual limits) have been tightened;
- The so-called repeal of McCarran-Ferguson provision has been dropped.
If this bill passes the Senate as expected, there will have to be a conference with the House to resolve major differences between the two bills. Whether this conference amounts to much depends on many variables, but the chances are probably better than even that the President will get a bill to sign in the next month or two.
Similarities Between House, Senate Health Care Bills
The House and Senate bills agree on a number of measures. Both mandate that all Americans buy insurance or face fines, both call for subsidies for low-income families to buy insurance, and both would limit out-of-pocket expenses and prevent insurance companies from denying coverage due to pre-existing conditions.
Both bills would expand Medicaid coverage to include more poverty-levelAmericans and create health insurance exchanges where uninsured Americans and small companies could buy health insurance at competitive prices.
But there remain significant hurdles to passage. The bills hold several obstacles that may be difficult to resolve in conference, including the use of federal funding for abortion, a public health option and the price tag. Senate leaders have been criticized for watering down their bill to gain votes, including eliminating a public healthcare option. House leaders have said they will not compromise on issues such as the public option.
White House officials have indicated that the president hopes to have the bill on his desk before his State of the Union speech in late January, but others on Capitol Hill have speculated it will be difficult for Congress to meet that deadline.
Nonetheless, in remarks Thursday morning following the Senate vote, the President was optimistic.
“Ever since Teddy Roosevelt first called for reform in 1912, seven Presidents — Democrats and Republicans alike — have taken up the cause of reform,” President Obama said. “Time and time again, such efforts have been blocked by special interest lobbyists who’ve perpetuated a status quo that works better for the insurance industry than it does for the American people. But with passage of reform bills in both the House and the Senate, we are now finally poised to deliver on the promise of real, meaningful health insurance reform that will bring additional security and stability to the American people.”
Related Federal Legislation
- The Senate agreed (88 to 10) with the House to pass the Defense Appropriations funding bill. It contains two health measures of some importance.
- First, the bill extends until February 28 the federal subsidy of 65 percent to pay for COBRA coverage for certain individuals who have lost their jobs.
- A longer extension of the subsidy (until June 30) will be debated in January. Second, the bill staves off (until February 28) the 21 percent reimbursement cut that doctors in Medicare would have faced on January 1. Doctors continue to bargain for a permanent fix to eliminate the year-to-year game of dropping scheduled cuts at the last minute.
Cost Savings Prospects
From Blooberg: “As the lawmakers struggle to reach consensus on the nation’s most far-reaching health legislation in four decades, some economists and analysts don’t share that confidence in either the Senate or the House bills.
“None of the bills so far would reduce total health-care costs as a percentage of the economy,” said David Walker, U.S. comptroller general from 1998 to 2008. “If there’s one thing that can bankrupt the country, it’s health-care costs.”
The White House defends the bill’s ability to slow costs, but some analysts predict that Congress will need to make many more tough decisions to have a real impact. According to Bloomberg, a group of Senators that includes Joe Lieberman (I-CT) and Susan Collins (R-ME) is taking aim at rising costs with an amendment that would include new requirements on providers to try to wring more costs out of the system. Anyone concerned about the rising cost of health care should be engaged in the process by reaching out to their Senators to urge a greater focus on bending the cost curve.
Technology Efficiencies from Electronic Health Records
Near the close of 2009, Medicare officials detailed plans to distribute billions of dollars in stimulus to upgrade the nation’s paper medical records to electronic files, however at the same time reductions in the incentives the Federal Government plans to pay are envisioned. Under the proposal, doctors and hospitals that keep updated electronic medical records of their patients could receive bonus payments for using the software. Officials for the Centers for Medicare and Medicaid Services stressed to reporters on a conference call that the proposal is preliminary and won’t be finalized until next spring. The proposal was posted to the agency’s Web site. Using electronic records could reduce costly medical errors and duplicative testing, according to Obama administration officials.
“Widespread adoption of electronic health records holds great promise for improving health care quality, efficiency, and patient safety,” said David Blumenthal, National Coordinator for Health Information Technology. However, Health care providers have been waiting for clarity on who will be eligible for stimulus payments because the law, signed early this year, says only that health care providers must show “meaningful use” of health information technology.
The Workgroup for Electronic Data Interchange (WEDI) has sent letters to Dr. Blumenthal which provide good insight as to the challenges of adopting electronic health records (EHR). One of WEDI’s key comments regarding adoption: for consumers, the “…population of Personal Health Records (PHRs) by 2015 may not be feasible as all patients may not have PHR’s by 2015. It may not be technically feasible to populate PHR’s from (EHRs/EMRs), and the Security and Privacy concerns related to populating PHRs from EHR/PHRs may not be resolved by 2015.
Fewer than one in five American doctors and hospitals now use digital record systems. Many health policy experts say that computerizing health records could not only cut costs by reducing dangerous medical mistakes and wasteful spending but also improve the quality of care. Federal officials hope that among other things patients would be able to take custody of their medical histories and send them to doctors and hospitals as they choose.
Under the proposed Meaningful Use rule, health care professionals who use electronic records for 80 percent of their medical instructions could receive bonus payments. They also would have to provide patients with printouts of their medical history and use computers to check for potential drug interactions. Hospitals would have to complete 10 percent of their orders electronically.
Ben Nelson’s “Cornhusker Kickback,” as the GOP is calling it, received a great deal of attention because he provided a swing vote for approval. But other senators lined up for deals as Majority Leader Harry Reid corralled the last few votes for a health reform package. Nelson’s might be the most blatant – a deal carved out for a single state, a permanent exemption from the state share of Medicaid expansion for Nebraska, meaning federal taxpayers have to kick in an additional $45 million in the first decade.
But another Democratic holdout, Sen. Bernie Sanders (I-Vt.), took credit for $10 billion in new funding for community health centers, while denying it was a “sweetheart deal.” He was clearly more enthusiastic about a bill he said he couldn’t support just three days ago.
The Senate slowly made making its way through a number of amendments.
- Key votes so far include: approved an amendment that would require first-dollar coverage (no cost sharing) for certain preventive services; approved an amendment stating that nothing in the bill reduce guaranteed benefits under Medicare;
- defeated a motion that would have sent the bill back to the Finance Committee for the purpose of removing proposed cuts to Medicare;
- defeated an amendment that would have removed the CLASS Act provisions from the bill; defeated a motion that would have sent the bill back to the Finance Committee to eliminate the proposed Medicare Advantage funding cuts;
- approved an amendment requiring that nothing in the bill shall eliminate benefits “guaranteed by law” to Medicare Advantage enrollees (protects only benefits also covered by traditional Medicare and does not protect extra benefits and services provided by MA plans);
- Defeated an amendment that would have placed limits on how much attorneys can earn from medical malpractice lawsuits.
ALL STATES: The National Governors Association (NGA) has announced an initiative outlining preparations for federal health care reform.
- Titled “Rx for Health Reform – Affordable, Accessible, Accountable,” the 2009-2010 initiative is led by Vermont Governor and NGA Chair James Douglas. It will focus on: providing governors with the information needed to transition to a new health care system; developing state-based system improvements and cost containment measures, including tools necessary to develop delivery system enhancements, looking at what is required under federal legislation, and highlighting other reforms the states could undertake to create a more efficient and effective health care system; and preparing states for implementing insurance market reforms, state-based exchanges, new mechanisms to support delivery system reform, and other national health reforms.
- · The NGA’s Health Care Task Force includes Governor Douglas and West Virginia Governor Joe Manchin, both serving as co-chairs, as well as Indiana Governor Mitch Daniels, Mississippi Governor Haley Barbour, New Hampshire Governor John Lynch, and Oregon Governor Ted Kulongoski.
ARIZONA: Governor Jan Brewer called a fifth special session of the legislature in her quest to address the state’s $1.65 billion budget deficit through the generation of additional revenue rather than continuing to cut services and government staffing. She has revived the idea that increasing taxes is the best option, although legislative support is weak. The focus remains on the state sales tax as the most viable vehicle. The proposed one-cent increase would have to be approved by voters in a statewide referendum.
CALIFORNIA: California Medical Association (CMA), second largest in the nation announced opposition to the “Patient Protection and Affordable Care Act,” bill being debated in the Senate. The CMA opposed Governor Schwarzenegger’s health care reform proposal in 2007.
- CMS have suggested the plan may fail to meet certain regulatory requirements and are questioning the taxing of insurers that administer benefits for Medi-Cal, California’s Medicaid program. Rejection of this Medicaid tax could cause the legislature to seek a broader insurance-based tax to fund Healthy Families. However, CMS informed the state last week that it will not be formally reviewing the gross premiums tax.
- Instead, the tax arrangement can stay in place until the federal government promulgates regulations on the issue, which won’t occur until June 2011 at the earliest. With this news, the gross premiums tax on Medicaid plans can continue to draw down federal funding and support the Healthy Families Program through the next year.
COLORADO: The Colorado Medical Society (CMS) seeks support for a bill that would define the practice of medicine as including medical necessity determinations and utilization reviews performed by health plan medical directors.
- As currently drafted, the proposal would potentially expose medical directors to disciplinary action by the state Board of Medicine when medical necessity or utilization review decisions are challenged. Several discussions have been held with the executive director of CMS to ascertain the nature of the problem the association is trying to address, particularly since the organization as a whole may not be supporting the bill.
- The Division of Insurance is backing a “plain language” bill applicable to health, dental, long-term care and auto insurance policies that would become part of the unfair competition or deceptive acts statute. The bill would require carriers to report the readability scores prior to the issuance or renewal of a policy. The requirements would include a readability score not to exceed a 10th-grade level, as measured by the Flesch-Kincaid scale; a minimum font size of 12-point type for written policies; and an index or table of contents if the policy is more than three pages in length or greater than 3,000 words.
ILLINOIS: The Illinois’ fiscal situation was described as “grim and getting worse.” Illinois has a $12 billion structural budget deficit. Comptroller Hynes said Illinois had nearly $4.6 billion in unpaid bills at the end of September, a record for the first quarter of a fiscal year. This, despite the state having borrowed $2.25 billion in short-term loans, which must be repaid before the end of FY 2010.
Hynes identified two factors that have had a major impact on the deteriorating fiscal position: the large decline in personal and corporate income tax and sales taxes receipts, and record spending. Hynes predicted fiscal pressures would continue for most of FY2011 and warned of payment delays for most state programs and operations, including health care and social services. There will be more pressure on health care programs as economic stimulus funds expire. There are already delays in State employee health plan payments. The budgets will the leading topic in the General Assembly when it reconvenes in January.
MARYLAND: Maryland Insurance Commissioner Ralph S. Tyler has announced that he will be resigning effective January 8, 2010, to accept an appointment as Chief Counsel to the Food and Drug Administration. It is not yet known who will replace Tyler, who has served as the Commissioner since 2007.
OHIO: Governor Ted Strickland last week unveiled his strategic growth plan for Ohio’s insurance industry. The plan was developed under the direction of the Ohio Department of Development’s Office of Insurance and Financial Development. Key initiatives include strengthening collaboration between the state, insurance businesses, and the university system; and creating a one-stop shop approach for workforce development issues, site selection as well as a link to state resources.
The plan notes that Ohio is home to more than 250 insurance companies and 81,000 agents, and ranks seventh in the nation in insurance industry employment with 15,000 health insurance industry jobs and an additional 35,888 supporting jobs. In addition, Ohio’s health insurance plans also pay more than $200 million in taxes.
The legislature’s State Employee Health Insurance Review Working Group has unanimously adopted recommendations from Milliman, Inc. that call for combining two state agencies into one. The recently published study recommends: combining the two current agencies (Employee Benefits Council and Oklahoma State and Education Employees Group Insurance Board) into one agency with common oversight, confidential rate information, lower overhead, and an expanded wellness program with medical management; maximizing the benefits of competitive bidding by HMOs by using a “winner takes all” approach, limiting the number of HMOs being offered (currently four), expanding coverage, requiring actuarial certifications of premiums, DOI review of all plan premiums, and a definition/clarification of “excessive” HMO pricing; modifying the current benefit allowance to match the expected impact of HMO bidding process changes; and establishing a minimum benefit allowance of HealthChoice premium plus other core benefit premiums for state employees. This approach represents a significant change over the two-agency system, in which one agency offers a choice of multiple HMO plans that compete against the other agency’s home-grown state plan. Legislation is expected to be filed to implement these recommendations, some of which insurers support and some of which it does not.
FLORIDA: A final draft of the voluntary compact regarding coverage for cancer clinical trials was circulated to interested parties late last week by legislative leadership. Insurers have been working with leadership, both directly and through the Florida Association of Health Plans, to assure the language follows current coverage guidelines. Insurers anticipate being a signatory to the compact.
KANSAS: At the request of Kansas Congresswoman Lynn Jenkins, Kansas Health Policy Authority announced that it estimates the health reform bill passed by the U.S. House would provide health insurance for 240,000 Kansans without coverage and possibly save the state treasury up to $25 million a year. It estimated the U.S. Senate Finance Committee bill would insure an estimated 190,000 Kansans and reduce state costs by $25 million to $50 million a year. The KHPA concluded that the House bill would provide more federal matching dollars for Medicaid and likely would allow a reduced package of benefits for Medicaid beneficiaries added to the state rolls as a result of health reform.
Current Kansas Medicaid eligibility is among the strictest in the nation, with benefits generally available only to the oldest and youngest of the state’s poor. Childless adults of working age are not eligible and parents are enrolled only if they earn less than about 27 percent of poverty guidelines. Exceptions are made for pregnant women.
MASSACHUSETTS: The Massachusetts Joint Health Care Financing Committee held a hearing on legislation requiring every full-and part-time college student in Massachusetts to have at least the basic level of health insurance required under the state’s 2006 health reform law. If enacted, the new law would require students to carry the minimum credible coverage to be considered insured. Universities and colleges that fail to carry out their “responsibilities” to ensure student compliance would be fined a penalty of $1 per student for every day their “failure” continues. The bill also would require the Division of Insurance to issue regulations establishing procedures for implementation and monitoring of compliance. Massachusetts’ existing individual mandate applies to students age 18 or older who pay in-state tuition rates for themselves at a Massachusetts community college, state college, or university.
MICHIGAN: State House Democrats announced cuts in auto insurance through tighter restrictions on insurance companies and the medical portion of claims, affecting subrogation and coordination of benefits for some. The proposal requires auto insurance companies to offer low-cost insurance to low income drivers with good driving records, limits rate increases in many cases without state approval, and requires insurers in the state to offer lower levels of medical coverage. Michigan is the only state that had previously required insurers to provide unlimited medical coverage.
MISSOURI: The state Department of Insurance released a 2008 Annual Report of the HMO market showing that managed care is declining. The report shows enrollment in either an HMO or medical health insurance plan decreased 15 percent in the last two years since 2006. PPO plans are gaining more share, POS plans remain more popular in some areas than HMO plans. Total premiums for managed increased 7.5 percent from 2004 to 2008. HMOs Missouri, covering only Missouri business, had a slightly lower cost ratio of 82 percent in 2008, compared to the national average of 83.6 percent.
Several pre-filed bills that failed to pass in the first regular session included an autism spectrum disorder mandate as well as a bill to amend the current prompt-pay statute. Both are expected to continue to be debated again in 2010. New to the Assembly are bills to pursue a constitutional amendment to prohibit compelling a patient, employer or health care provider to participate in any government- or privately run health system and to prohibit banning a person or employer from paying directly for legal health care services. Another new bill would pursue a constitutional amendment to penalize a political subdivision for participating in a health insurance option sponsored by the federal government. New also is a bill to provide premium refunds for consumers with cancelled long-term care and/or Medicare supplement policies and to make it an unfair trade practice to engage in certain practices when selling Medicare products. Insurers will continue to monitor the pre-filing of bills through the start of the next legislative session in January 2010.
NEW JERSEY: The legislature returned from its extended recess and took action on legislation to establish a medical home demonstration project for the Medicaid population. Upon federal approval, the state Medicaid program would set out a three-year demonstration project with an annual evaluation and reporting requirement by the Division of Medicaid Assistance Services to the Governor and legislature. On the Senate side, payors offered support for legislation requiring chain restaurants to provide nutritional information for food and beverages on their menus. Similar legislation is currently making its way through the Assembly and will likely receive a full vote in both chambers prior to the end of the session.
NEW YORK: The state legislature passed an additional deficit reduction plan, reducing spending and using remaining funds to cover a $2.7 billion deficit. A large portion of the revenue used to fill the gap came from federal stimulus funds that were initially designated for the 2010 budget, and reductions to Medicaid. The legislature did not pass the Governor’s proposed 0.25 percent increase to the patient services assessment or “sick tax”. In addition, the Senate did not pass the Marriage Equality Act, defeating the bill for the year. The legislature will return to face a multi-billion dollar deficit again in January, and it is likely that increases to health insurance taxes will be back on the table.
The Governor introduced a bill during 2009 that would have given the Superintendent of Insurance sole authority to approve rates at his or her discretion, but that bill failed to pass. Given this latest press statement, it is expected that the Governor will ask the legislature to re-introduce his program bill for 2010. The Governor tied his support for the prior approval of rates to plans’ dividend requests. The dividend requests were $800 million from Oxford (18.7 percent of 2008 New York premiums), $200 million from Empire (2.5 percent) and $134 million from Aetna (16 percent). The state’s insurance lobby, the HPA, responded that the dividends reflect multiple years’ earnings, and the plans’ margins are in the 2 percent to 3 percent range.
UTAH: The Department of Insurance remains is working on legislation to expand the Utah Health Exchange Network Portal to include master patient indices that providers may access to view coverage eligibility information. The bill entails a provision to troubleshoot monthly health plan batch reporting. Also included is a July 1, 2010 effective date which would allow no time to update and test affected internal systems.
WISCONSIN: Proposed legislation is pending that would create statutory authority for the Wisconsin Office of the Commissioner of Insurance (OCI) to oversee of self-funded plans serving public-sector employees, resolve consumer complaints, and monitor reserve and reinsurance levels. Additionally, the bill would apply state minimum coverage requirements, such as mammograms, chiropractic care, diabetes education and care, and require a governmental body that provides a self-funded health plan to provide reports and replies to requests for information to the OCI as they relate to the plan. This bill is aimed at self-funded plans offered by cities, towns, villages, counties and school districts.