By John Reichard, CQ HealthBeat Editor

August 17, 2011 -- Plain English, that’s the ticket. Proposed regulations announced Wednesday by Obama administration officials promise that starting in 2012 consumers will get an “easy-to-understand” summary of benefits and coverage and a glossary demystifying insurance jargon.

“Today, many consumers don’t have easy access to information in plain English to help them understand the differences in the coverage and benefits provided by health plans,’’ said Health and Human Services Secretary Kathleen Sebelius. “Thanks to the Affordable Care Act, that will change.”

The proposed regulations aim to eliminate some major headaches involved in comparing insurance plans. Insurers now may provide only a few selected details describing a plan or policy before a consumer buys it. Or, they may use different terms to describe features of a plan. That makes it difficult for even determined comparison shoppers to feel confident they understand the differences between plans.

“The proposed rules give consumers straightforward, standardized information on their choices up front, helping them understand the key features of the policy,” HHS said in a news release. “The summary will use a uniform glossary to replace the jargon that makes it impossible to compare plans or figure out what is covered.”

Insurers would be required to give consumers the plain English benefits summary and the glossary of terms before they buy coverage. Plans also would have to notify consumers at least 60 days before making any significant change to the plan or its coverage.

A “Coverage Examples” feature would also make it easier to compare benefits. The examples “would illustrate what proportion of care expenses a health insurance policy or plan would cover for three common benefits scenarios: having a baby; treating breast cancer; and managing diabetes,” the news release added. Officials said that additional coverage examples may be required.

They said this feature would be akin to the Nutrition Facts label that helps food shoppers compare products.

Families USA Executive Director Ron Pollack called proposals “a triumph of common sense.”

“In the past, explanations of benefits have often been long, confusing and written in legal gobbledygook that no one could understand. Deciphering basic information about health insurance plan benefits could be as challenging for consumers as learning a new language—without a good translation dictionary,” Pollack said.

He added that “companies who respect their customers and want to encourage competition in the health insurance marketplace should also applaud the rules—clearly describing a product you are offering for sale should not be perceived as a heavy lift.”

But the insurance industry is questioning whether the regulations as proposed are worth the cost and is asked HHS to delay their effective date, noting that release of the proposed rules was delayed.
America’s Health Insurance Plans Press Secretary Robert Zirkelbach said “the benefits of providing a new summary of coverage document must be balanced against the increased administrative burden and higher costs to consumers and employers. For example, since most large employers customize the benefit packages they provide to their employees, some health plans could be required to create tens of thousands of different versions of this new document—which would add administrative costs without meaningfully helping employees.

“Moreover, given that the final regulation is delayed, the implementation date also should be pushed back to give health plans sufficient time to make the operational and administrative changes needed to create these new documents,” Zirkelbach added. “We will be submitting detailed comments and look forward to working with regulators to mitigate potential unintended consequences of this new requirement.”

HHS, the Department of Labor and the Treasury Department jointly drafted the proposed disclosure requirements and template. Essentially, they consist of the disclosure requirements and template recommended by the National Association of Insurance Commissioners and the federal agencies are seeking public comment on the NAIC’s handiwork. The public has 60 days to comment.
An estimated 180 million enrollees in private insurance plans would benefit starting in 2012. The proposed summary requirements apply not only to people buying coverage on their own but also those enrolled in large group plans and in plans provided by self-insured employers.

The three federal agencies said in the proposed regulations that they recognize that changes to the template “may be appropriate to accommodate various types of plan and coverage designs to provide additional information to individuals, or to improve the efficacy of the disclosures recommended by the NAIC.”

Questions About How Rule Will Work
During an afternoon press call Wednesday, federal officials fielded questions about how the rule will work. For example, it’s unclear exactly when consumers will start seeing the simplified explanation.
In many instances it might not be until 2013.

The health law ( PL 111-149 , PL 111-152 ) requires that plans comply by March 23, 2012, But officials said they are asking for comment on the implementation timeline. They added that they want feedback on a potential phase-in of the requirements.

“Normally, a lot of requirements begin at the beginning of a plan year,” one official said. “And many plan years run with the calendar year.” The official added that “if some of these requirements to go in in March of 2012, for many plans if it were on a plan year basis it wouldn’t necessary go into effect until the next calendar year.”

Originally, the regulations were supposed to be released in March, 2011. So Wednesday’s release of the proposed rule was five months late. Asked about insurer comments that the final regulation should be delayed beyond March of 2012 because of the delay in releasing the proposed regs, NAIC officials appeared resistant during another press call Wednesday afternoon.

“The sooner that consumers have this information in their hands the better,” said Teresa D. Miller, chair of the NAIC Consumer Information Subgroup and Oregon Insurance Administrator.

During the earlier briefing, administration officials also were asked about how long the form would be that summarized coverage and benefits. Answer: up to four double-sided pages, which include the coverage examples feature. A sample of the template is three double-sided pages but the proposal allows for four.

Lynn Quincy, a senior policy analyst with Consumers Union, told reporters that when they tested the standardized coverage and benefits summary it was a hit. “Consumers really liked this coverage examples feature,” Quincy added. “There’s no doubt consumers need much better disclosures.”

Centers for Medicare and Medicaid Services (CMS) Administrator Donald M. Berwick said consumers will no longer have to “decipher dozens of pages of dense text” to figure out what a plan offers.
Insurers will have to specifically say if in some respects they are offering sub-par coverage, Berwick noted.

The proposed summary of benefits and coverage form that insurers must fill out asks such questions as: What is the premium? What is the overall deductible? Is there an out-of-pocket limit? Is there an overall annual limit on what the insurer pays?

Insurers also must provide information on what the consumer must pay if using a participating versus a non-participating provider for specific types of services such as urgent care, hospital fees, rehab fees, and mental health care, among others.

Another issue relates to when insurers must provide consumers with the summary of benefits and coverage. Officials said they do not agree with industry suggestions that insurers must only provide the summary after a consumer applies for coverage and pays an application fee. The summary would have to be provided “upon request for information about the health coverage,” one official said. “So it’s before they would actually submit an application, before they would have to put any money down.”

Karen Pollitz, who recently left the Center for Consumer Information and Insurance Oversight at CMS to join the Kaiser Family Foundation as a senior fellow, said the proposed regulation reflected prodigious effort by the NAIC. “They spent a ton of time working on this,” she said. It’s very difficult boiling insurance information down to four pages in a way that is both understandable and meaningful, she added.

John Reichard can be reached at [email protected] .

By Jane Norman, CQ HealthBeat Associate Editor

August 18, 2011 -- While there may be a growing number of children in families that lack health insurance as the economic crisis continues, the good news Thursday was that more kids are getting enrolled in public health insurance programs.

A report by the Robert Wood Johnson Foundation and the Urban Institute released on Thursday says that participation rates among children eligible for Medicaid and the Children’s Health Insurance Program (CHIP) rose from 82.1 percent to 84.8 percent nationally between 2008 and 2009.

In addition, the Department of Health and Human Services announced $40 million in grants Thursday to state agencies, community health groups, school-based groups and non-profits to help enroll more children and teens. Grants ranging from $200,000 to $2.5 million were awarded in 23 states, many intended to boost the use of technology.

The grants were authorized in the 2009 reauthorization of CHIP ( PL 111-3 ).

Cindy Mann, deputy administrator of the Center for Medicare and Medicaid Services, said that “great progress” is being made in signing up eligible children, and efforts to streamline both new enrollees and renewals have paid off.

According to the study, increases in participation in Medicaid and CHIP were seen across racial and income groups, with the exception of children who are not U.S. citizens.

Overall, the number of children who could be in those two public programs went up by 2.5 million between 2008 and 2009, due to the economic downturn and the expansion of Medicaid and CHIP programs in many states, the study says. Total enrollment rose to 42.7 million.

Participation rates in public programs rose in 30 states. In 15 states and the District of Columbia, 90 percent or more of eligible children are signed up. In Colorado, there was an increase of more than 11 percent in just one year. No states had statistically significant declines.

In all, 62 percent of children nationally who are uninsured but eligible for insurance live in one of 10 populous states—Arizona, California, Florida, Georgia, Illinois, Indiana, New York, Ohio, Pennsylvania, and Texas.

In some states, participation rates are below national averages — Florida, Montana, Nevada, North Dakota, Texas, and Utah.

Genevieve Kenney, a senior fellow and economist at the Urban Institute who co-authored the study, said that there’s no precise combination of strategies that researchers have been able to pinpoint that results in an increase in enrollment. However, “a large number of states seem to have figured it out,” she said.

What helps is for states to make enrollment and renewal less time consuming and complicated. For example, not demanding a long list of information such as copies of pay stubs or lists of assets each time an applicant re-applies. Some states still require face to face interviews for enrollment or re-enrollment. And states like Texas or California may be home to large numbers of parents who aren’t legal citizens, even if their children are citizens and are eligible.

Kenney noted that in 2009, states were still receiving an enhanced federal match for Medicaid as a result of the economic stimulus law ( Pl 110-185 ). That match ran out in July, which may affect enrollment numbers down the line.

The researchers based their results on estimates from the American Community Survey, a U.S. Census survey that includes a question about health insurance coverage for each member of a household. Adjustments were made to the survey material out of concerns that the survey under counts CHIP and Medicaid enrollment. In addition, modeling techniques were used.

The grants announced by HHS will be directed at many states with lower participation rates. Georgia, for example, will receive $2.5 million for better technology for Medicaid and PeachCare for Kids. That will include forms for renewal with information already filled in, as well as portable lap tops and scanners for enrollment outside government offices.

HHS officials said that besides technology, the $40 million in grants will target retainment of children in coverage, engaging schools in outreach activities, reaching out to children likely to have gaps in coverage and ensuring eligible teens are signed up.

• Recent Trends in Children’s Participation in Medicaid and CHIP (pdf)

Jane Norman can be reached at [email protected].  

By CQ Staff

When it comes to picking Medicare Advantage plans, less may actually be more, according to a new Health Affairs article. Researchers from the Harvard Medical School's Department of Health Care Policy found that Medicare enrollment decisions would be made easier if the choices were simpler.

Researchers from the Harvard Medical School’s Department of Health Care Policy found that Medicare enrollment decisions would be made easier if the choices were simpler.

“More choice may be detrimental if there are too many or overly complex options, particularly in high-stakes decisions that involve health or money,’’ they wrote.

Especially when it comes to older Medicare beneficiaries with low cognitive skills, selecting among more than 15 plans can be difficult, researchers said.

They equated the difficulty of choosing a Medicare Advantage plan when faced with many options to the same problem some seniors have when picking a Medicare Part D prescription drug plan from among many offerings.

The authors found that when beneficiaries had 15 or fewer plans to choose from, Medicare Advantage enrollment increased. But as the number of plans increased so did the tendency for them to revert back to the traditional fee-for-service plans.

“To make a good choice, elderly Medicare beneficiaries must often sift through dozens of Medicare Advantage options and compare these with traditional Medicare and Medigap alternatives,’’ the article says. “In contrast, most working-age adults rarely choose from more than a handful of plans that have been preselected by their employers. Employers limit options to keep choices simple and to negotiate better benefits and rates for their workers.”

The authors suggested that “reforms that restructure and simplify choice in Medicare Advantage could improve beneficiaries’ enrollment decisions, reduce out-of-pocket costs for beneficiaries with cognitive impairments and help invigorate value-based competition among managed care plans in Medicare.”

By Jane Norman, CQ HealthBeat Associate Editor

August 18, 2011 -- Hospitals are increasingly signing up physicians as employees, but the trend may raise health care costs in the short term, says a study released Thursday by the Center for Studying Health System Change.

The problem is that both hospitals and doctors will continue to practice in a fee-for-service environment that stresses volume, the study says. Hospitals that tie physician compensation to productivity encourage doctors to step up the volume, it says.

Physicians hired by hospitals also told researchers that the hospitals put pressure on them to order additional and more expensive tests. “In one market, at least two cardiologists declined hospital employment offers because they perceived the pressures to drive up volume were stronger than those in their mid-sized, independent cardiology group,” said the study.

Researchers at the center conducted site visits at 12 communities across the nation and found hospital employment of doctors growing rapidly in most places. In markets with high concentrations of hospitals, doctors are pressed to sign up with one system or another, the study says.

The payment vagaries of Medicare also lead to higher reimbursements in some cases for doctors when they are working for hospitals instead of on their own.

For example, the study says, it is possible for a doctors’ practice to be bought by a hospital and not change locations or operations—and yet receive “substantially” higher Medicare reimbursements. That’s because it’s now designated as a “provider-based facility,” even if it is not physically located on hospital grounds.

Most commercial insurers go along with the Medicare fee schedule so the hospitals may get higher reimbursements from private insurance companies as well, the study says.

Another factor pushing up costs may be “bidding wars” for physicians in hot specialties that drive up salaries. “Hospitals are paying cardiologists over $1 million a year,” an Indianapolis physician told researchers. “Hospital costs are going up dramatically in our market. . .You are seeing a number of compensation offers that are multiples of what physicians had made historically.”

The increased integration of hospitals and doctors doesn’t necessarily improve the coordination of care, either, the study says. Communication, especially between inpatient and outpatient doctors continues to be a problem.

Most doctors traditionally have practiced on their own or in small groups, serving on voluntary medical staffs of local hospitals in return for admitting privileges. But there was a wave of hospital hiring in the 1990s and it’s returned as hospitals prepare for changes brought about by the health care law ( PL 111-148 , PL 111-152 ) such as bundled payments and accountable care organizations. In addition, doctors may be seeking more financial security and a better balance between work and life. 

Report on Hospital Employment of Physicians (pdf)

Jane Norman can be reached at [email protected].  

By Jane Norman, CQ HealthBeat Associate Editor

August 15, 2011 -- The nation’s insurance regulators said Monday that they’re worried a “loophole” in the health care law could allow multistate insurance plans to operate under more favorable rules than smaller plans in health insurance exchanges.

The state insurance commissioners said in a letter to the Office of Personnel Management (OPM) that they have “serious concerns about the potential for market disruption and adverse selection, and the resulting negative impact on consumers and health insurance markets.”

All health plans are subject to the same basic regulations under the law but some states choose to go further. While Congress intended a level playing field, the law contains language that could be interpreted to exempt multistate plans from those additional consumer protections that might be imposed by states, said the letter from leaders of the National Association of Insurance Commissioners (NAIC).

“There should be no distinction between a multistate plan and any other carrier offering coverage in an exchange,” said the letter. “This will ensure competition and allow consumers to evaluate offerings on the basis of price, benefits, and networks.”

The issue is yet another complication that’s cropped up as the federal government and the states continue working out the many complex details of how the state health insurance exchanges will function once they’re up and running in 2014.

The exchanges will exist as marketplaces to provide access to health insurance to millions of individuals and small businesses. The Department of Health and Human Services on Friday issued three regulations in connection with exchanges.

In addition to the state-specific insurance plans offered through the exchanges, the law ( PL 111-148 , PL 111-152 ) directs the OPM to contract with health insurance companies to offer at least two multistate health plans that will be sold on every state’s exchange beginning in 2014. At least one has to be a non-profit entity.

OPM also runs the Federal Employee Health Benefits program but these national plans will be sold and administered separately by the agency.

Plans could be offered by a single insurer or by insurers in partnerships with one another across the country, according to the OPM.

The OPM has not yet offered any contracts for multistate plans and is at the stage of making a “request for information” from health insurance providers about how the agency should proceed. The request asks a number of questions about products offered, interest in offering a multistate plan, possible partnerships with other health plans and more.

The worry on the part of the NAIC, which is an influential body made up of state regulators from all 50 states, the District of Columbia and the territories, is that language in the law could allow for the multistate plans to operate under one set of rules and all other plans under another set of rules. Some of the nation’s largest companies could gain “significant market advantages,” the letter to OPM said.

This could happen because multistate plans will be automatically deemed to be certified for sale on the exchanges, and the providers could offer their policies in every state, NAIC leaders said. As a result providers will be able to write a large number of policies and spread their administrative costs over a large number of lives, reducing their risk and costs.

“It is important not to exacerbate this built-in advantage by exempting multistate plans from the regulatory oversight of insurance commissioners and programmatic oversight by state exchanges,” they said.

In addition, all state exchanges must be self-sustaining by 2015 and thus likely will have to levy fees on carriers. If multistate plans are exempt from those fees, it will be tougher for the exchanges to operate and will place additional costs on individuals and small businesses buying coverage, NAIC said.

Exempting multistate plans from state regulations would also result in confusion for consumers, said the NAIC. States don’t have the authority to enforce federal laws or regulations, so state insurance regulators couldn’t enforce provisions in OPM contracts, they said.

By John Reichard, CQ HealthBeat Editor

August 18, 2011 -- A final Centers for Medicare and Medicaid Services (CMS) regulation that determines whether association health plans are subject to rate review under the overhaul law is at the White House Office of Management and Budget for review, according to a notation on its Web site.

Consumer advocates fear that the plans, which pool together individuals or small employers to buy coverage, will not be subject to such reviews, exposing “AHP” enrollees to unnecessarily large rate hikes.

CMS said in its final rule on insurance rate disclosure and rate review issued in May that it wasn’t making a final decision on AHPs at that time. Instead, it sought comment on the issue.

CMS said in issuing the final rule that several of those who commented expressed concern that rate reviews would not apply to association health plan coverage sold to individuals and small employers in some states. They urged that the final rule include such coverage in requirements as planned rate increases be disclosed and reviewed by state or federal officials before they take effect.

But the final rule did not resolve the matter. CMS said in that document that “we are seeking comments and additional data on the definitions of ‘individual market’ and ‘small group market’ in . . . this final rule, in relation to whether to provide that individual and small employer policies sold through associations are to be included in the rate review process, even if the state excludes such coverage from its definitions of individual and small group market coverage.”

CMS added that “given the comments received and our policy goals with regard to rate review, we are inclined to amend the definitions of individual market and small group market . . . to include coverage sold to individuals and small groups through associations in all cases.”
Consumer advocates urged CMS to follow its inclination, and said the stakes are much larger than the issue of rate reviews.

A Texas-based organization called the Center for Public Policy Priorities said that “nearly 13 percent of the individually underwritten health insurance” policies sold in Texas is sold through AHPs.

The group said in a July 13 comment that unless HHS “explicitly ensures that association plans sold to individuals are regulated as part of the individual market and small group association plans are regulated as part of the small group market, loopholes and inconsistencies in regulations will mean that many Texas consumers and consumers across the nation will have coverage that does not have to comply with rate review regulations intended to help bring down costs for consumers.”

The letter added that if AHPs “are not appropriately considered individual or small group coverage under [the health care law], not only would AHP coverage evade rate review protections, it may also escape critical 2014 reforms, such as the requirement to cover the essential benefits package and the elimination of health status underwriting.”

OMB can take anywhere from days to months to complete its review of a final regulation before it is made public.

John Reichard can be reached at [email protected].