Health Care Reform and Physician Availability

Increasingly, health care experts and the media are looking closely at the full range of implications built into the new health care reform law. As a result, the 32 million additional Americans expected to have health care coverage under the new law is raising concerns in states from Connecticut to Oklahoma that there are not enough available primary care physicians to accommodate them.

It’s clear from the process of implementing universal coverage in Massachusetts several years ago that increased coverage can mean a worsening of primary care physician shortages and longer wait times for patients. The new health reform law does contain some incentives for more young medical students to go into primary care, but the problem underscores the need for all parties to work collaboratively on serious issues that go well beyond insurance reform.

 No World Borders believes that the time to stop tracking legislation and act on implementing electronic claims standards HIPAA 5010 and ICD-10 is now.  Please see for more information.   Analytics which will help the health care system improve capacity planning are one of the many benefits of moving to the new medical standards. In our experence, many of the ‘leaders’ in the health insurance market are missing key dates.


Congress returned last week from recess to the same impasse over extending COBRA and fixing Medicare physician reimbursements that has plagued it through all of 2010 so far.  Both Republicans and Democrats profess strong support for extending the 65 percent subsidy for COBRA coverage and extending the suspension of the 2010 cuts in Medicare reimbursements. The impasse is over whether Congress should actually pay for it (Republicans favor) or merely dump it into the deficit for a future Congress to address (Democrats favor). There was just enough agreement along the way last week for Congress to pass a law, which the President has signed, to extend both items through May 31 on a retroactive basis to cover the fact that the last temporary extension for both items ran out March 31. Whether Congress continues with temporary extensions for the rest of 2010 or resolves the matter once and for all remains unclear.
Under the Medicare drug law of 2003, employers maintaining drug coverage for retirees receive a non-taxable 28 percent subsidy for drug expenses. But the new health care reform law makes the once deductible subsidy taxable income to corporate America. Immediately after the passage of reform, several major employers (e.g., John Deere, Caterpillar) announced that they would be adjusting their books to recognize the taxability of the subsidy. In response, Democratic members announced a hearing for last week at which members planned to haul several CEOs to Washington and grill them over this issue. Congress clearly looked past the fact that such a charge “to the books” and the attendant disclosure were required by accounting practices and laws surrounding corporate governance. House members’ outrage dramatically declined once House lawyers researched the issue and informed the House members that the CEOs were just following the law of the land; consequently, and with little fanfare, the hearing has been cancelled.


ARIZONA:  The oral chemotherapy parity bill has been revived with a floor amendment that limits cost-sharing to no more than 400 percent of the applicable prescription benefit’s tier III co-payment. The mandate would only apply when coverage is provided for both orally administered and intravenous chemotherapy. In other matters, budget issues continue to consume both the governor and the legislature. Last week the Senate Finance Committee voted along party lines to approve a package of tax cuts, including the corporate income tax, that would decrease state revenue by $60 million. Democrats responded by calling the measure corporate welfare, a veiled reference to the recent elimination of the KidsCare program (SCHIP) affecting 37,000 children.

CALIFORNIA: The Assembly Health Committee last week passed a bill that would require health care plans and health insurers to obtain regulator approval prior to implementing any network modification affecting more than 2,000 enrollees. The committee also passed, on a partisan vote, a bill that would prohibit any adjustments to individual market rates more than once in a calendar year. This would impact premiums, co-pays and any other out of pocket costs. These bills are likely to mean increased costs to state departments and may not survive scrutiny by the Appropriations Committee, given the state’s fiscal climate.  Health insurance firms are opposed to these bills, which were sponsored by the California Medical Association.

COLORADO: Initial discussions were held recently with the sponsors of several health reform bills to point out their overlap with provisions in the federal health reform law. Governor Ritter, a strong supporter of health care reform, has proposed standardized policy forms and EOBs, “plain language” content for contracts, uniform individual application, wellness incentives, a maternity coverage mandate in individual policies and the creation of a task force to develop standard coding and edits for claims. A major concern is that these state bills have earlier effective dates than the federal law and might result in unnecessary duplication of efforts and expense.

DELAWARE: Last week Insurance Commissioner Karin Weldin Stewart held a meeting to review the pre-authorization procedures used by health plans in response to provider claims that medically necessary diagnostic tests were being denied. During a separate joint Senate-House committee hearing on the subject, legislators determined this was not a widespread problem. Their conclusion was based on the fact that only 20 complaints of claim denials were submitted last year to the Department of Insurance, and only seven have been recently received. 
ILLINOIS: The Illinois Comprehensive Health Insurance Plan (CHIP) Board has opted not to participate in the federal government’s temporary high-risk pool program but to establish a new state pool for designated individuals, as specified under the new federal health care reform law. The board’s action comes in response to Secretary Kathleen Sebelius’ inquiry to all states on how each intends to cover those persons who have not previously had insurance coverage for six months and have a pre-existing condition. This new risk pool will complement two other pools already operating in Illinois: 1) the current Section 7 high-risk pool for individuals with specified conditions that is funded by premiums paid by enrollees and deficit covered by the state; and 2) the current Section 15 HIPAA-CHIP eligible pool that is funded by premiums paid by enrollees and the deficit covered by an assessment on health insurers. To this end, the CHIP Board is discussing lowering the percentage that would be charged to currently eligible Section 7 high-risk enrollees to align with the premium for the new federal pool, where the standard rate is not to exceed 100 percent of the standard non-group rate. According to federal law, the pool must be operational 90 days from the signing of the federal health care reform law. Illinois’ share of $5 billion to cover designated individuals in the temporary risk pool is expected to total $210 million for three and a half years until the guaranteed issue requirements in the individual market begin. 

MAINE: The legislature adjourned on April 12, 2010 after passing a number of health care-related bills that have been signed by the governor. The general effective date for laws enacted during the Second Regular Session is July 12, 2010. These bills include: mandated coverage of prosthetics containing a microprocessor; mandated coverage for children’s early intervention services, though coverage may be limited to $3,200 per year for each child not to exceed $9,600 by the child’s 3rd birthday; a mandate requiring individual and group health insurers to cover autism spectrum disorders for those five years of age or under in accordance with certain guidelines and limitations; creation of the Universal Childhood Immunization Program, administered by a board, to provide immunizations and cover the costs of recommended vaccines for children in the State not covered by the federal Vaccines for Children Program; a requirement that carriers offer mail order benefits to qualified retail pharmacy providers willing to meet the terms and conditions for mail order, and a requirement that carriers pay all clean pharmacy electronic claims within 21 days of receipt and all clean pharmacy paper claims 30 days after receipt; a prohibition on policy maximums and lifetime limits, subject to certain exceptions; an expansion of eligibility under Maine’s mini-COBRA law to include individuals who were permanently laid off on or after the effective date of this law and are eligible for premium assistance; a notice requirement for continuation of coverage; and a requirement that dental policies and contracts that offer dependent coverage to offer the opportunity to enroll a dependent child at appropriate rates from birth to 30 days of age.

Legislation that did not pass includes a health reform bill that would have established the Maine Health Care Plan to provide affordable health care for Maine residents. It also would have required health plans not to exceed administrative costs of 10 percent, and it would have established a 7.5 percent tax on wages and earnings to finance the Maine Health Care Plan.

MARYLAND: The Legislature passed an assignment of benefits/balance billing bill that is applicable to PPOs. It adds hospital-based physicians to the assignment of benefits provisions for on-call physicians, as applicable to PPO policies. The bill prohibits on-call and hospital-based physicians from collecting from an insured money owed by the insurer or maintaining any action against an insured to collect money for covered services rendered. Non-preferred on-call physicians with an AOB agreement are to be paid for covered services within 30 days of the receipt of claims, and paid the greater of 140 percent of the average rate paid for the previous calendar year in the same geographic area for similarly licensed contracted providers, or the average rate paid for the insurers in the previous calendar year in the same geographic area for similarly licensed, non-contracted provider, inflated by changes in the Medicare Economic Index from 2010 to current year. Non-preferred hospital-based physicians with an AOB agreement are required to be paid similarly. The bill is on the Governor’s desk and is expected to be signed into law.

MASSACHUSETTS: Insurance Commissioner Joseph Murphy has sent a letter to six insurance companies demanding that they submit revised April 1 premium rates for individuals and small businesses by April 15 or face fines. The fines could run as much as $5,000 a day per carrier, plus $1,000 for each consumer who is unable to buy coverage. This letter was sent to insurers a day after a Massachusetts court denied the insurers’ request for a temporary injunction to allow already established April rates to be collected because the plaintiffs have not exhausted their administrative remedies.

Senate President Therese Murray plans to propose legislation containing an efficiency guarantee that would restrict the amount of premium dollars health insurers can use for administrative operations and would end the state’s current health care financing model, under which care providers are reimbursed regardless of service quality. This proposal would also require insurers to prove they have a 90 percent medical cost ratio (MCR) or provide rebates to small businesses to cover the difference. Carriers who opt out of the efficiency guarantee would be subject to Division of Insurance reviews with approval authority for premium increases that exceed medical inflation rates. This bill would also require small group carriers to provide at least one product within a reduced-provider network featuring premiums at least 10 percent lower than those for the full-network plan. 
MINNESOTA: In response to passage of federal health care reform, the state legislature wasted no time in developing a “conformity” bill to enable the state to, among other things, take advantage of the early Medicaid expansion. The bill amends Minnesota statutes to reflect federal reforms relating to premium subsidies, accountable care organizations, medical assistance, an insurance exchange, sale of insurance across state lines, a mandate to purchase insurance, guaranteed issue with no pre-existing condition exclusions, and others. It also departs from federal reform in that it would establish a public option to be offered through the state insurance exchange and would, on January 1, 2012, automatically shift enrollees in the state’s high-risk pool into individual coverage offered through the exchange. The bill would also require community rating for all coverage offered, issued, sold, or renewed in the state. No hearings have been scheduled.

In a related development, Governor Tim Pawlenty announced that he plans to join or file a lawsuit objecting to the new federal individual health insurance requirement. Recently, Attorney General Lori Swanson opined that a lawsuit against the federal government is “not warranted” but that she would leave it to Pawlenty’s discretion as to whether he should file his own brief opposing the law. Swanson also stated that she intends to file an amicus brief in support of the federal government’s case.  
OKLAHOMA: Legislation directing the Oklahoma attorney general to file suit against the federal government over health care reform was unanimously approved Wednesday by members of the House Rules Committee. The Speaker of the House is strongly supporting the bill after Attorney General Edmondson decided not to join the other 19 states that have filed lawsuits against the federal government. In response, House Speaker Chris Benge stated that “Today we have taken a giant step backwards. By filing this lawsuit, we could thwart the liberal left’s push to encroach on the liberties of all Oklahomans.” 
PENNSYLVANIA: The Senate will hold a hearing this week on a bill that would create a high-risk pool as an affordable health insurance alternative for individuals with severe health conditions. The bill would establish a governing board to be appointed by the Governor and General Assembly and would include insurers, health care experts, the business community, and members of the public. It would require the Pennsylvania Health Insurance Pool (PHIP) Board to hire an administering insurer to manage the pool; it would allow an individual (and their dependents) who are not otherwise eligible for Medicaid or other government programs to participate in the PHIP if they have been refused coverage from at least two health insurers or have been offered coverage from at least two health insurers at rates higher than that offered by PHIP; it would direct the Insurance Department to annually determine an individual standard rate for health insurance premiums in the Commonwealth; and it would cap individual premiums at a maximum of 150 percent of the individual standard rate.

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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