Kathleen Sebelius

Consumer Watchdog, which bills itself as a nonpartisan group, said investigations into California rate increases sought by WellPoint and Aetna suggest that health insurers are looking for loopholes. Both rate requests were withdrawn after state officials uncovered mathematical errors.

“The insurance industry is lobbying now for loopholes in regulatory language that would make it unnecessary for insurers to make mathematical ‘errors’ in order to meet the law’s requirement that they spend 80% to 85% of premium dollars on health care,” the letter to Sebelius suggests.

Judy Dugan, research director from Consumer Watchdog, went further, saying, “The California rate scandal shows that insurers cannot be trusted with a hand calculator, much less the language of health regulation.”

The group is arguing what should be considered within the medical loss ratio, the amount health insurers have to spend on health care versus administrative costs. Under the federal health reform law, passed in March, insurers have to meet the requirement of either 80% or 85% spent on medical costs, depending on the group’s size.

As regulations are written to enforce the new patient care ratio law, the industry seeks to reclassify administrative functions as “health quality improvements,” and to exempt many health policies sold to individuals from the spending limits, Consumer Watchdog said in the letter to Sebelius.

“The administration has to push back hard on these early regulations, or risk losing control of the whole health reform process,” said Carmen Balber, Washington director for Consumer Watchdog, in a statement. “If the insurers win these early battles, they will bulldoze every attempt in the new law to cut health costs and provide better health, even as all Americans are required to show proof that they are insured.”

The group said the MLR is “at serious risk. If insurers get away with bully tactics on this early implementation, the rest of the health reform law will be increasingly difficult to implement in ways that curb costs and protect consumers,” the letter states.

“The insurance industry’s proposed redefinitions of ‘patient care,’ ‘administrative costs’ and allowable tax exclusions from the calculation would pad the amount they appear to be spending on patient care by amounts that would not require any changes in their business model. They seek to remove any demand that would make the industry more efficient,” Consumer Watchdog said in the letter.

The National Association of Insurance Commissioners (NAIC) was tasked in the federal reform law with helping Sebelius determine appropriate MLR numbers, an effort it was supposed to complete by June 1. However, the NAIC said its work on MLRs would be delayed until later this summer.

Consumer Watchdog fears the role the NAIC will play.

“The NAIC has detailed knowledge of insurance but it is also closely tied to the insurance industry,” said Dugan. “Its president and board are drawn from state insurance commissioners, who often come from the insurance industry and whose common ‘next job’ is in the executive suites of the insurance industry. It is not a recipe for tough regulation of the industry.”

Consumer group warns Sebelius on health insurers’ ‘bully tactics’ via IFAwebnews.

Joel Ario

“The Obama Administration has approved our plan to provide health insurance to thousands of Pennsylvanians who have been unable to obtain affordable coverage because of pre-existing conditions,” Joel Ario, Pennsylvania’s insurance commissioner, said in a statement.

The program is funded through by the U.S. Department of Health and Human Services through a $5 billion award included in the federal health reform legislation approved in March.

Ario said the state funds “will provide critical bridge coverage to uninsured individuals between now and 2014, when the full implementation of federal reform will prohibit discrimination against individuals because of their health status.”

Up to 5,600 uninsured state residents may be enrolled in health plans through the program, Ario said.

The plan’s benefit package will include preventive care, physician services, diagnostic testing, hospitalization, mental health services, prescription medications and much more, with subsidized premiums of $283 a month.

Ario said his department is moving as quickly as possible to start the program. The next step is to select the plan’s administrators, which is being done through a competitive bid process it started.

Once selected, the contractor or contractors will work with the Insurance Department to launch the program, including offering information on how to apply and eligibility requirements. The contractor(s) will manage the program and its benefits, as well as staff toll-free help lines to answer queries and assist with applications, Ario said.

Feds approve Pa.’s request for high-risk health insurance pool funds via IFAwebnews.

Steve Poizner

California Insurance Commissioner Steve Poizner announced the withdrawal, the second in three months. In April, Anthem Blue Cross, part of WellPoint, withdrew its request for rate increases of up to 39%, a request that President Barack Obama and Democrats used to highlight the need for insurance reform.

The errors in calculations for the Aetna request, which would increase rates for 65,000 of its policyholders, were discovered during an actuarial review.

“First, we found major problems with the Anthem Blue Cross rate filing,” Poizner said in a statement. “Now, additional scrutiny has revealed that Aetna’s filing has significant mathematical errors.”

In announcing the withdrawal, Poizner also suggested additional evaluation of rate increases is necessary.

“Given that two of the four major health insurers have provided rate filings containing math errors, I believe an additional level of transparency is warranted,” he said.

Poizner will post future individual health insurance filings on the state’s website, where people can review them. He called it an “exceptional step.”

“I’m hopeful this public disclosure will add additional pressure on insurers to avoid errors. It will also allow any member of the public to scrutinize these rate filings and will, in the end, minimize rate increases by keeping markets as competitive as possible,” he said.

Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services and a critic of Anthem’s large rate request earlier this year, endorsed Poizner’s move toward more accountability.

“I applaud California for its decision to shine more light on skyrocketing insurance rates and demand more accountability after uncovering that a second insurer used faulty math to try to justify exorbitant health insurance premium increases,” Sebelius said in a statement.

“As President Obama has said, Americans across the country have been at the mercy of insurers for far too long when it comes to premiums and prices. Finally, the power is shifting back to consumers thanks to the strong actions on the part of the states, and new protections and accountability under the Affordable Care Act. As we work to turn this new law into reality for families everywhere, we will continue working closely with the states, providing them with more resources to hold insurers accountable and get the American people the quality, affordable health insurance they deserve,” Sebelius said.

Poizner said the errors were found independently by Aetna and actuaries working for the California Department of Insurance (CDI). Aetna continued to review its rate filing after submitting it to CDI and self-reported the error.

Last week, Poizner announced that the rate filings of Aetna, Anthem Blue Cross, Blue Shield and Health Net – the four largest insurers in the individual health insurance market in California – will be given an additional level of scrutiny by having them analyzed by an outside actuary. Unlike auto and homeowners insurance rates, health insurance rates do not require prior approval by the California Department of Insurance.

Aetna withdraws 25% rate hike plan in Calif. after review finds errors via IFAwebnews.

M. Jodi Rell

“We applaud Connecticut’s speedy action to expand coverage for its lowest-income residents who will now have reliable access to affordable, quality care as a result of the incentives contained in the Affordable Care Act,” said Kathleen Sebelius, secretary of the U..S. Department of Health and Human Services, in a statement. “Today’s action will bring substantial new federal support to the state and help improve the health of its citizens.”

Connecticut Gov. M. Jodi Rell called the program expansion “tremendous news” for the state, which estimates about 45,000 residents will become eligible under the new program, approved by HHS June 21.

“For many years, Connecticut has provided state assistance to ensure that our most vulnerable single adults have access to health care,” Rell said. “Now with this federal help, we will be able to provide increased medical benefits for them through Medicaid while relieving the burden on state taxpayers.”

States can obtain federal funding for providing Medicaid coverage to adults with incomes up to 133% of the federal poverty level (FPL), or $14,400 for an individual in 2010, under the new health reform law, signed by President Barack Obama in March.

Previously, states could only cover childless adults by applying for a waiver of Medicaid rules.  These waivers were temporary and states had to meet strict criteria for approval and renewal.

The Affordable Care Act requires states to cover all low-income individuals in Medicaid starting in 2014, but it also allows states to obtain federal funding to enroll them sooner.

Prior to passage of the new health care law, many uninsured adults in Connecticut received coverage through a state-funded program, known as State-Administered General Assistance (SAGA). Connecticut will enroll individuals whose annual income is up to 56% of the federal poverty level, or $6,650 per year for an individual in 2010.

Medicaid enrollees under this coverage expansion will receive the standard Medicaid benefit package for adults, including inpatient and outpatient hospital services, physician services, laboratory services, prescription drugs, mental health services, immunizations and emergency services, officials said.

Federal officials said they are working with several other states that are considering similar coverage changes under the new law.

Connecticut first state to use federal funds to expand Medicaid rolls via IFAwebnews.

Kathleen Sebelius

The rule on grandfathering of policies also affirms one of President Barack Obama’s promises with health care reform: that people who like their health plan may keep it.

The U.S. Departments of Health and Human Services, Labor and Treasury issued the new regulation on grandfathering to “protect the ability of individuals and businesses to keep their current plan while providing important consumer protections that give Americans – rather than insurance companies – control over their own health care,” according to a statement.

“The new regulation also provides stability and flexibility to insurers and businesses that offer health insurance coverage as the nation transitions to a more competitive marketplace in 2014 when businesses and consumers will have more affordable choices through exchanges,” according to the government statement.

Grandfathered health plans will be able to make routine changes to their policies and maintain their status. These routine changes include cost adjustments to keep pace with medical inflation, adding new benefits, making modest adjustments to existing benefits, voluntarily adopting new consumer protections under the new law, or making changes to comply with State or other Federal laws. Premium changes are not taken into account when determining whether or not a plan is grandfathered, according to federal authorities.

Plans will lose their grandfathered status if they choose to make significant changes that reduce benefits or increase costs to consumers. If a plan loses its grandfathered status, then consumers in these plans will gain additional new benefits, including coverage of recommended prevention services with no cost sharing and patient protections such as access to OB/GYNs and pediatricians without a referral by a separate primary care provider, according to the statement.

“The Affordable Care Act gives American families more control over their health care by providing greater benefits, cost savings and protections,” said Secretary of Health and Human Services Kathleen Sebelius. “Today, with the announcement of the new ‘grandfather’ rule, we’re providing the market stability and flexibility to ensure that families and businesses can make the choices that work best for them.”

While the Affordable Care Act requires all health plans to provide new benefits to consumers, under the law, plans that existed March 23, are exempt from some new requirements.

Federal officials said the grandfather rule makes it clear that these plans can continue to innovate and contain costs by allowing insurers and employers to make routine changes without losing grandfather status. Plans will lose their grandfather status if they choose to significantly cut benefits or increase out-of-pocket spending for consumers – and consumers in plans that make such changes will gain new consumer protections, government officials said.

“The rule we are announcing today will allow employers to make routine and modest adjustments to co-payments, deductibles and employer contributions to their employees’ premiums without forfeiting grandfather status. This flexibility will encourage employers to continue offering health coverage to their employees and help to ensure coverage for all Americans,” said Secretary of Labor Hilda Solis.

Starting Sept. 23, all health plans – whether or not they are grandfathered plans – must provide no lifetime limits on coverage for all plans; no rescissions of coverage when people get sick and have previously made an unintentional mistake on their application; and the extension of parents’ coverage to young adults under 26 years old.

Details about what routine changes insurers and employers can make without losing their grandfathered status, and the projected impact on large and small employer plans and the individual plan market can be found at http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html.

Feds issue rules for ‘grandfathering’ of health plans amid reform via IFAwebnews.

Jay Sekulow

The American Center for Law and Justice (ACLJ), a nonprofit group that focuses on constitutional law, filed the suit in the U.S. District Court in the District of Columbia, alleging that the health reform law passed in March also violates the U.S. Constitution.

“This is an unprecedented assault on the constitutional freedoms of Americans,” said Jay Sekulow, chief counsel of the ACLJ, in a statement. “The Constitution specifically grants the federal government, including Congress, limited powers. It’s clear that this individual insurance mandate goes well beyond those enumerated powers and represents the ultimate power play – Congress and the federal government acting as if they possess a police power to pass and enforce any law that they deem advisable.”

Sekulow added, “This flawed provision is not only unconstitutional but unenforceable as well.”

The suit asks the court to declare the individual mandate provision unconstitutional, rule that the rights of three of the plaintiffs under the Religious Freedom Restoration Act were violated and issue a permanent injunction prohibiting enforcement of the individual mandate provision.

The complaint argues that the Patient Protection and Affordable Care Act’s individual mandate, along with the imposition of shared responsibility payments for failing to buy and maintain qualifying health insurance, “exceeds the power of Congress” and is “unconstitutional and cannot be enforced.”

The suit was filed on behalf of Susan Seven-Sky from New York, Peggy Lee Mead of North Carolina, and three Texas residents: Charles “Eddie” Lee, Kenneth Ruffo and Gina Rodriguez.

Individual mandate ‘substantially burdens’ religion

For Seven-Sky, Mead and Lee, the suit alleges the mandate violates their religious rights under the Religious Freedom Restoration Act of 1993. The suit argues that the requirement to purchase health insurance, under the threat of significant financial penalties, “substantially burdens the exercise of their religion.”

The suit argues: “They are forced to either join a health insurance system that contradicts the tenets of their faith or pay substantial penalties for following the tenets of their faith.”

While the religious argument is a new one, several other claims mirror those filed in a separate suit by Virginia’s attorney general, Ken Cuccinelli.

“Mandating that individuals purchase health insurance is an unprecedented and unconstitutional expansion of congressional power, as Congress has never before required individuals to involuntarily buy a good or service under the guise of its Commerce Clause authority,” the ACLJ complaint states.

The ACLJ suit makes another argument similar to Cuccinelli’s case.

“If Congress succeeds in asserting this unprecedented claim of authority, it would set a sweepingly broad standard unsupported by the Constitution that would allow Congress to dictate to individuals that they must, or must not, buy countless other goods or services in the marketplace,” the ACLJ suit states. “To interpret the Commerce Clause to afford Congress such vast, all-encompassing authority over the daily lives of Americans would eviscerate the idea of a federal government of limited powers.”

Defendants named in the ACLJ suit are U.S. Attorney General Eric Holder, the U.S. Department of Health and Human Services, along with HHS Secretary Kathleen Sebelius, as well as the U.S. Department of the Treasury and its secretary, Timothy Geithner.

Latest health reform mandate suit says religious rights are violated via IFAwebnews.

David Paterson

On June 9, Paterson signed Governor’s Program Bill No. 278, reinstating the authority of the New York State Insurance Department to review and approve health insurance premium increases prior to the rates taking effect. For the last decade, the state has operated under a “file and use” law, seen as limiting regulators’ ability to disapprove insurer premium increases.

In a statement, Paterson said that deregulation of health insurance premiums “is a failed experiment leading to unjustified premium increases and more people losing their health insurance coverage.

“Health care is a right, not a privilege, and requires sound, balanced regulation to make sure insurance premiums are fair and justified,” he said. “I am pleased to sign into law my program bill, which will help make coverage more affordable and allow more small businesses and individuals to keep their coverage.”

Under the new law, set to take effect Oct. 1, health insurers and HMOs must apply to the NYSID to implement rate increases, with regulators reviewing the justification of the proposed rates and the ability to approve, modify or disapprove the rate regulation.

Policyholders and the public will also be allowed to weigh in on the proposed rate hike.

The new legislation also immediately requires both groups of providers to spend more premium dollars on medical claims, by setting new requirements on medical loss ratios – the percentage of money spend on actual medical care. The new law moves the medical loss ratio from 75% to 82% for small businesses and from 80% to 82% for individuals, in what the governor’s office said is a move to ensure a greater percentage of premiums are returned to consumers in the form of benefits.

Link to federal reform

“Not only will stronger oversight of rate increases benefit New York’s individuals and small businesses, but prior approval will also provide us with the tools necessary to make sure federal health care reform is implemented in a fair and efficient manner,” Paterson said.

New federal reform sets the medical loss ratio at 85% for the large group market and 80% for the small group and individual markets, beginning next year through the Patient Protection and Affordable Care Act.

U.S. Health and Human Services Secretary Kathleen Sebelius applauded New York “on its bold move” to hold insurers accountable, “and prevent the kind of unreasonable rate increases that have made health insurance unaffordable for many American families.

“This is the kind of action that, together with the Affordable Care Act, is shifting power back to consumers,” she said in a statement.

Calling the signing of the law, “the culmination of years of battling for more affordable quality health care, James J. Wrynn, the state’s insurance superintendent, also applauded Paterson’s action.

“Prior approval will work in tandem with President Obama’s health care reform to make sure insurers’ premium rates are transparent and their reporting is correct,” he said. “Prior approval will also ensure that insurers comply with the requirements of the health insurance exchanges that will be developed under federal reform.”

New law gives N.Y. regulators power to approve health rate hikes via IFAwebnews.

Kathleen Sebelius

The U.S. Department of Health and Human Services announced the initial availability of $51 million in Health Insurance Premium Review Grants, made possible by the Patient Protection and Affordable Care Act. The distribution is the first round of grants in what will be a $250 million grant program the HHS says will create and strengthen insurance rate review.

In a statement, HHS Secretary Kathleen Sebelius called the grants “an important step in putting consumers back in control of their health care.

“These new grants will help states protect consumers and small employers by holding insurers accountable for unreasonable insurance rate increases that have made coverage unaffordable for many American families,” she said. “By strengthening oversight of insurance premiums, these grants will help put affordable coverage back within the reach for Americans who have been hit hard by skyrocketing costs.”

Whether or not states currently have the authority to review health insurance rates, all states and Washington, D.C., are eligible for the first round of grants. The HHS is requiring participating states to submit a plan detailing how they will use the federal funds to develop or enhance its process of reviewing, approving, disapproving or modifying health premium requests. Those states with successful applications will be awarded $1 million through the first round of funding.

Jay Angoff, director of the Office of Consumer Information and Insurance Oversight, said the funds not only help states “strengthen” their oversight abilities but give states without rate review authority the means to establish their own programs.

“By subjecting rates to new public scrutiny, the oversight of premium increases will ultimately help ensure that consumers receive substantial value for their insurance dollars,” said Angoff, who also served as Missouri’s insurance commissioner.

The grants come after a letter last month by Sebelius to state governors and insurance regulators urging them to review their authority regarding rates and determine if they have the proper tools to approve insurance rates prior to them taking effect.

The HHS also noted that several provisions of the new health reform law strengthen its oversight of insurance premiums and rate hikes, as well as states’ oversight. Included in these provisions are the medical loss ratio cap of 80% in the small group and individual markets and 85% in the large group market and a requirement for insurers to justify “unreasonable” premium increases to both their state regulators and HHS

HHS giving states funds to probe health insurers’ rate hike requests via IFAwebnews.

Ed Rendell

Gov. Ed Rendell announced today (June 9) that the Pennsylvania Insurance Department will investigate its biggest health providers “to determine the reasons behind a pattern of controversial rate increases, and especially the extent to which those increases are driven by the use of questionable health profiling tools,” according to a statement.

The companies in the review are: Highmark (controlling 27% of the market by premiums); Independence Blue Cross (25%); Aetna (6%); Coventry (6%); University of Pittsburgh Medical Center (5%); Capital Blue Cross (5%); UnitedHealthcare (5%); Geisinger Insurance Group (3%); and Blue Cross of Northeastern Pennsylvania (2%).

Rendell said that federal health reform is providing many opportunities for private insurers, beginning with 32 million new customers.

“So I am disappointed to see these companies hiking premiums for those most in need of health care, especially when they know that all discrimination against sick people will be prohibited in 2014 under the federal reform law,” he said.

The announcement comes as the U.S. Department of Health and Human Services announced $51 million in grants to aid oversight of insurance premiums and rate hikes to states demonstrating a need for the assistance. Rendell’s office said the state will apply for such a grant by the July 7 deadline.

Officials said Pennsylvania “has some of the weakest protections” nationwide against rate increases for small businesses, with no cap on rate increases due to someone in the group suffering from a serious health condition. Under federal reform, in 2014, health insurance exchanges will allow individuals and small businesses to purchase coverage prohibiting any premium differences based on health status.

“We need a smooth transition into 2014, but instead, we are seeing some truly exorbitant rate increases – with some small businesses seeing annual increases in excess of 50 percent,” Rendell said. “This level of increase is not about passing on increases in health spending, which average in the 5 percent to 10 percent range; this is about companies trying to get the highest possible rates before the federal reforms take effect.”

Joel Ario, the state’s insurance commissioner, said recent market surveillance work, including a PID survey and broker reports, “suggest that some companies are expanding the use of individualized medical questionnaires and drug profiling in the small group market.”

Ario noted that the state’s two largest health insurers – Highmark and Independence Blue Cross – do not use the tools, but the other companies do. He noted that the state “expected to see some improvement” upon securing a commitment from Highmark on its previously announced intent to introduce medical questionnaires in the small-group market.

“Instead, we’ve seen increased competition to identify and drive premiums up for the most vulnerable groups,” the commissioner noted.

Rendell added that stories from disadvantaged residents of Pennsylvania are “heartbreaking,” and is urging the General Assembly to give the PID authority to stop unnecessary rate increases, “or we’ll likely see a lot more disruption between now and 2014.”

Independence Blue Cross responded to news of the investigation. “We do not know the details of the investigation, which was just announced Wednesday. However, we are pleased that the governor’s announcement pointed out that we do not engage in medical underwriting in the small-group market.”

Other health insurers contacted by IFAwebnews.com had no immediate comment on the state’s investigation.

Pa. investigating ‘truly exorbitant’ rate hikes of health insurers via IFAwebnews.

The nationally televised public relations ploy is timed to happen the day after health insurers are required to submit their Medicare Advantage bids to Health and Human Services (HHS). According to reports, the health plans will likely seek to increase premiums because the new health reform law is going to cut payments to Medicare Advantage by more than $130 billion over 10 years.

The president and Congress have ordered payments cut, yet the fed wants the health insurers to suck it up and take a loss to be “nice guys.”

HHS Secretary Kathleen Sebelius sent a letter to health insurers asking them to “focus on price and quality rather than asking seniors who need health care the most to pay more for it.”

Huh?

Where, exactly, is the money supposed to come from? The fed is taking money away from the insurers, and in the same breath asking them to not charge clients more but provide the same – if not better – services.

I just can’t see how that can happen.

“Washington can’t slash…Medicare Advantage and then try to shift the blame to the health plans that administer the program when those cuts inevitably result in higher premiums and benefit reductions for seniors,” wrote AHIP spokesman Robert Zirkelbach in response to the push to tighten the noose around health insurers.

Meanwhile, the AMA is saying that the 21% cut in payments to doctors will force them to take fewer Medicare patients, meaning seniors will find it increasingly difficult to find physicians who will accept the payment. One cannot blame the doctors; they have to pay the bills in order to keep their doors open, and the fed is making it increasingly difficult for them to do that.

But Max Baucus, chairman of the Senate Finance Committee, thinks that the fed should not allow insurance companies to raise rates just because the funding for Medicare Advantage is being slashed. He said in a letter to Sebelius that she should force insurers to provide good and valid reasons for the rate increases.

Excuse me? What about having enough money to keep the program running?

Oh, I forgot…this is a government bureaucrat talking. He does not understand business or basic economics. In his eyes, and the eyes of the fed in general, if he wants something that will cost money, he simply takes that money from someone else or goes into debt to the tune of hundreds of billions of dollars. No problem there, right?

But the president, Congressional Democrats and their supporters will pull no punches to try to convince Americans that this is the moral and responsible thing to do.

In fact, two big Obama supporters and operatives, are orchestrating a campaign that will bring together unions, foundations and Democratic donors to create a $25 million, Washington-based organization whose sole purpose over the next three years will be to communicate to the American people the wonderful things that the new health reform law will do for them.

And just like the $600 individual taxpayer rebate that President Bush authorized in 2008 to prevent a recession, President Obama will unveil his $250 rebate to help seniors offset rising costs for prescriptions. It is nothing more than a public relations/feel good/do nothing public relations ploy that is destined to fail.

Argument is illogical in Obama’s health reform, Medicare PR blitz via IFAwebnews.