Archive | Health Care Bill – Washington

Little hope seen for millions priced out of health overhaul

Millions of Americans will be priced out of health insurance under President Barack Obama’s healthcare overhaul because of a glitch in the law that adversely affects people with modest incomes who cannot afford family coverage offered by their employers, a leading healthcare advocacy group said on Tuesday.

  • In its rule making, or final interpretation of the law, the IRS said affordability should be based strictly on individual coverage costs.
  • Tax credits are a key component of the law and the White House has said the credits, averaging about $4,000 apiece, will help about 18 million individuals and families pay for health insurance once the Affordable Care Act takes full effect, beginning in January 2014.
  • The tax credits are geared toward low and middle-income Americans who do not have access to affordable health insurance coverage through an employer. The law specifies that employer-sponsored insurance is affordable so long as a worker’s share of the premium does not exceed 9.5 percent of the worker’s household income.
  • That means that, even if family coverage through an employer-based plan far exceeds the 9.5 percent cutoff, workers would not be eligible for the tax credits to help buy insurance for children or non-working dependents.
  • “It could mean the difference between being able to move in to purchasing private insurance and not purchasing private insurance.

“It’s an issue. It needs to be fixed,” Ron Pollack, executive director of Families USA, an influential healthcare advocacy group said on Tuesday, referring to what he called “the family glitch problem.”

“The tax credit subsidies are a game changer. They will help make health coverage affordable for huge numbers of uninsured families who would have been priced out of the health coverage and care they need,” Pollack said.

Speaking after the call, Families USA health policy director Kathleen Stoll told Reuters recent studies showed that anywhere between 2 million and 4 million people across the United States would be adversely affected by the federal rule limiting aid and the IRS interpretation of whether an employer’s health plan is affordable.

 

*Modified from a Reuters article

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Health Insurers Warn on Premiums

  • Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation’s biggest firm projecting that rates could more than double for some consumers buying their own plans.
  • In a private presentation to brokers late last month, UnitedHealth Group Inc., the nation’s largest carrier, said premiums for some consumers buying their own plans could go up as much as 116%, and small-business rates as much as 25% to 50%
  • Other carriers have also projected steep rate increases during private meetings and conversations with brokers. Brokers say they are being told to prepare the marketplace for small-business and individual rate increases as carriers get ready to file specific rate proposals and plan designs with regulators.
  • An official with Blue Cross & Blue Shield of North Carolina told a gathering of brokers last week that individual premiums could go up by as much as 40% to 50%, according to brokers who were present.
  • Aetna Inc., in a presentation last fall to its national broker advisory council, suggested rates on individual plans not being grandfathered under the law could go up 55%, on average, and gave a figure of 29% for small business rates.

The projections, made in sessions with brokers and agents, provide some of the most concrete evidence yet of how much insurance companies might increase prices when major provisions of the law kick in next year—a subject of rigorous debate.

Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law.

The projected increases are at odds with what the Obama Administration says consumers should be expecting overall in terms of cost. The Department of Health and Human Services says that the law will “make health-care coverage more affordable and accessible,” pointing to a 2009 analysis by the Congressional Budget Office that says average individual premiums, on an apples-to-apples basis, would be lower.

The gulf between the pricing talk from some insurers and the government projections suggests how complicated the law’s effects will be. Carriers will be filing proposed prices with regulators over the next few months.

Part of the murkiness stems from the role of government subsidies. Federal subsidies under the health law will help lower-income consumers defray costs, but they are generally not included in insurers’ premium projections. Many consumers will be getting more generous plans because of new requirements in the law. The effects of the law will vary widely, and insurers and other analysts agree that some consumers and small businesses will likely see premiums go down.

Starting next year, the law will block insurers from refusing to sell coverage or setting premiums based on people’s health histories, and will reduce their ability to set rates based on age. That can raise coverage prices for younger, healthier consumers, while reining them in for older, sicker ones. The rules can also affect small businesses, which sometimes pay premiums tied to employees’ health status and claims history.

The law’s 2014 effect on larger companies is likely to be more limited. Many of the big changes coming next year won’t touch them as directly as individual consumers and small businesses, though some will have to grapple with the cost of covering more workers or paying a penalty.

The possibility of higher premiums has become the latest focal point of the political tussle over the health law, which marks its third anniversary Saturday. Republican lawmakers have held hearings on the issue, and six GOP members of the House Energy and Commerce committee wrote last week to more than a dozen insurers asking them to turn over internal analyses on the law’s impact on premiums and costs.

The insurance industry has also been talking publicly about big potential premium increases in lobbying for tweaks to the law.

The individual market includes about 15 million people, and around 18% of the roughly 149 million with employer coverage were at small companies, according to 2011 figures from the Kaiser Family Foundation. The individual market is expected to grow to around 35 million people by 2016 as a result of the law.

. The company said the estimates were driven in part by growing medical costs not directly tied to the law. It also cited the law’s requirements that health status not affect rates and that plans include certain minimum benefits and limits to out-of-pocket charges, among other things.

Jeff Alter, who leads UnitedHealth’s employer and individual insurance business, said the numbers represented a “high-end scenario,” not an average. “There are some scenarios in which a member could see as much as a 116% increase or over,” he said, though others, such as some older consumers, could see decreases. He said the company dwelled on the possible increases because it was trying to prepare brokers to speak with clients facing big jumps.

Insurers are “not being shy that premiums are going to increase in 2014,” and are urging brokers to “brace our clients,” said John Lacy, vice president of group benefits at Bouchard Insurance, a brokerage in Clearwater, Fla. His firm has been hearing from carrier representatives that individual premiums in Florida could go up 35% to 50%, on average, and small-business rates around 30%, though it hopes to find strategies to blunt the impact.

There has long been debate, even among insurance experts, over how the law will affect premiums. Because the effect is likely to vary, different measurements can arrive at different conclusions. The CBO analysis cited by the administration determined that average premiums for consumers who buy their own coverage would be 14% to 20% lower because of the law—if the law didn’t change the types of plans they purchased.

But the CBO also suggested the law would lead to consumers buying more expensive plans, largely because it requires coverage to include certain benefits and limit charges such as deductibles. When this effect was taken into account, the average premiums would go up 10% to 13%, the agency said, though subsidies would ease the bite for most people. The agency also said small-business policies were likely to cost within a few percentage points of the amount they would have without the law.

Health and Human Services officials say competition among insurers, as well as provisions to limit their financial risk from attracting high-cost consumers, will exert downward pressure on premiums, and point to the tax subsidies that will limit many consumers’ costs.

Subsidies will be available on a sliding scale for people with incomes of up to four times the federal poverty level—currently $45,960 for a single person and $94,200 a year for a family of four. More than half of the 35 million people expected to be in the individual market by 2016 are likely to qualify for credits. People whose incomes are around the poverty level could see almost all of the cost of their insurance subsidized, while people at the upper end will get only a small discount toward their premiums.

*Modified from a WSJ article

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More Docs Plan to Retire Early

Six in 10 physicians said it is likely many of their colleagues will retire earlier than planned in the next 1 to 3 years.

Most physicians have a pessimistic outlook on the future of medicine, citing eroding autonomy and falling income, a survey of more than 600 doctors found.

  • Six in 10 physicians (62 percent) said it is likely many of their colleagues will retire earlier than planned in the next 1 to 3 years, a survey from Deloitte Center for Health Solutions found. That perception is uniform across age, gender, and specialty, it said.
  • Another 55 percent of surveyed doctors believe others will scale back hours because of the way medicine is changing, but the survey didn’t elaborate greatly on how it was changing. Three-quarters think the best and brightest may not consider a career in medicine, although that is an increase from the 2011 survey result of 69 percent.
  • A quarter of physicians would place new or additional limits on accepting Medicare patients if there were payment changes.

“Physicians recognize ‘the new normal’ will necessitate major changes in the profession that require them to practice in different settings as part of a larger organization that uses technologies and team-based models for consumer (patient) care,” the survey’s findings stated.

About two-thirds of the survey responders said they believe physicians and hospitals will become more integrated in coming years. In the last 2 years, 31 percent moved into a larger practice, results found. Nearly eight in 10 believe midlevel providers will play a larger role in directing primary care.

Four in 10 doctors reported their take-home pay decreased from 2011 to 2012, and more than half said the pay cut was 10 percent or less, according to Deloitte. Among physicians reporting a pay cut, four in 10 blame the Affordable Care Act (ACA), and 48 percent of all doctors believed their income would drop again in 2012 as a result of the health reform law.

Other findings:

26 percent believe Medicare’s sustainable growth rate formula will be repealed in the next 1 to 3 years
One in 10 believe medical liability reform will pass Congress in the next 1 to 3 years
55 percent of physicians believe the hospital-doctor relationship will suffer as admitting privileges are put at risk to comply with hospital standards of meaningful use
31 percent gave the U.S. healthcare system a favorable grade of “A or B” compared with 35 percent in 2011

Despite those pessimistic views, seven of 10 said they were satisfied about practicing medicine, although that number was lower for primary care providers and higher for younger age groups, the survey found. Dissatisfaction was attributed toward less time with patients, long hours, and dealing with Medicare, Medicaid, and government regulations.

Speaking of the ACA, fewer physicians (38 percent in 2012) believe the ACA is a step in the wrong direction compared with 44 percent in 2011. The number who think the law is a good place to start remained the same.

Two-thirds of physicians in the Deloitte survey say they use an electronic health record (EHR) that meets meaningful use stage 1 requirements, but that number has been lower in other surveys. Three in 5 respondents were satisfied with their EHR.

Deloitte mailed the survey to more than 20,000 physicians selected from the American Medical Association’s master file. Just 613 returned completed surveys, giving a margin of error of 3.9 percent at the 0.95 confidence level.

*Modified from an EveryDay.com article

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Obama Administration Plans to Cut Medicare Advantage Reimbursements

The Obama administration is planning new cuts to Medicare, a federal regulatory filing reveals, cuts that could mean higher premiums or seniors losing their coverage altogether.

  • In a Feb. 15 regulatory filing, the Centers for Medicare and Medicaid Services (CMS) announced the surprised rate cuts of 2.3 percent – meaning it would pay health care providers 2.3 percent less for providing services to patients.
  • The Obama administration already plans to cut the Medicare Advantage program by $200 billion as part of Obamacare. However, the proposed reductions it announced in February are new, and will cut the program in addition to the planned $200 billion in Obamacare cuts, most of which are delayed in 2014.
  • The new cuts are also scheduled to go into effect in 2014, but as a function of the normal rate-setting process for that year, not a political effort to delay financial pain for seniors past an important election, as apparently was the case with the original Medicare cuts that Obama signed.
  • If the Obama administration continues with its proposed new Medicare cuts, some or all of the 14 million seniors who get health care through the MA program could be negatively affected, that is, paying higher premiums or possibly losing coverage.
  • One health insurance provider told its shareholders that the proposed rate cuts could mean the end of Medicare Advantage all together.

The new cuts come in the form of a planned reduction in the reimbursement rates the government pays to insurance companies that operate Medicare Advantage plans, which are services administered by private for-profit or non-profit providers that offer additional services than can be found in traditional Medicare.

CMS said it was cutting payments because it foresaw the overall costs of the Medicare Advantage program shrinking by 3.2 percent, despite the fact that health care costs – the driver of all federal health care program costs – are only rising.

Medicare Advantage is like traditional Medicare except that its plans are administered by insurance companies, who are paid a per-enrollee reimbursement fee by the government. If insurance companies can provide care to seniors at less than what the government pays them for it, they make a profit.

Medicare Advantage provides coverage for approximately 28 percent of all Medicare beneficiaries, offering them higher-quality services and additional benefits, such as vision and dental care, than the traditional government program at slightly higher cost.

In its regulatory announcement, the CMS said it was assuming that reimbursement payments in traditional, government-run Medicare will be cut, and cited that as justification for cutting Medicare Advantage.

However, while those cuts to traditional Medicare have been set into law for more than a decade, Congress has never allowed them to happen, instituting what is known as the Doc Fix every year, to keep reimbursement payments the same.

Senator Marco Rubio (R-Fla.) wrote to the CMS urging them to consider political reality and reverse their planned Medicare Advantage cuts.

“This assumption is highly problematic because – even though it almost certainly will turn out to be wrong – it translates into lower funding to support the health benefits of the 14 million Medicare beneficiaries who are currently enrolled in MA [Medicare Advantage] plans,” Rubio wrote on March 8.

This is because the proposed cut could make the program unprofitable for insurers, who would be forced to either stop offering MA plans or pass the increased costs on to seniors in the form of higher premiums.

“There are going to be some markets that at these rates, if they go the way they’re going, it’s going to be very hard for Medicare Advantage to survive,” Universal American Corp CEO Richard Barasch said in a February 19 conference call with shareholders, the industry publication Health Plan Week reported.

“I think it’s going to be sort of a market-by-market, company-by-company exercise,” Barasch said.

*Modified from a CNSNews.com article

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California Suspends the Pre-Existing Condition Plan Enrollment Due To Lack Of Federal Funding

Following federal direction, received on February 15, 2013 California PCIP will suspend new enrollments.

PCIP helps uninsured individuals with pre-existing conditions get affordable health insurance. The program has a limited amount of funding from Congress. Based on national experience and trends since the program began, PCIP enrollees have serious and expensive illnesses with significant and immediate health care needs. This enrollment suspension will help ensure that funds are available for existing PCIP subscribers through 2013.

  • Applications received after March 2, 2013, will be screened for eligibility for the Major Risk Medical Insurance Plan (MRMIP). MRMIP, the state high risk pool is still open for new enrollment and available for individuals with a pre-existing condition. The application is for both programs.
  • PCIP subscribers moving to California from another state, can still enroll in California PCIP.

Current PCIP subscribers are not affected by this change. However, subscribers need to pay their monthly PCIP premiums by the due date and continue to meet all eligibility requirements. Members who are disenrolled cannot be re-enrolled.

This program is administered by the Managed Risk Medical Insurance Board (MRMIB) as a contractor to the federal Department of Health and Human Services.

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Obamacare Insurance Plans Will Be Bare Bones — And Expensive

There’s mounting evidence that come fall, the health plans sold through the Obamacare exchanges will be bare bones affairs – with narrow networks of providers to select from, and heavy co-insurance once patients go “out of network.”

In many ways these plans will be a throwback to insurance schemes of the late 1990s, when managed care was dominant and restrictive networks standard fare. With one difference: The Obamacare plans won’t be cheap.

Quality of coverage is just one issue. Price is the other. There’s mounting evidence that even though the new health coverage will be austere, it’ll still be pricey.

Health plans have ample incentives to price the Obamacare coverage high, which is precisely what they’re likely to do.

  • For one thing, insurers will want to protect against the risk that individuals entering the exchanges are those who most need health insurance because of pre-existing illness. If this sort of “adverse selection” occurs, it will raise costs to insurers. To guard against this, insurers are likely to price the coverage at a premium.
  • Second, health plans want to reduce uncertainty around how all the risk-sharing provisions in Obamacare will eventually play out. The legislation puts in place mechanisms that forces Washington to share with health plans some of the cost of the covering the sickest beneficiaries. But the regulations outlining these parameters were only released last Friday. Nobody yet trusts how they’ll work.
  • Third, health insurers will want to reduce the incentive for employers to drop coverage and dump employees into the exchanges. This is especially true when it comes to insurers’ lucrative small group and large group segments. If insurers price the exchange products too low, they’ll give employers another inducement to do this sort of dropping. By pricing exchange products higher relative to the insurance offered in the private market, they reduce this incentive.
  • Finally, the providers that Obamacare plans must contract with are unlikely to offer significant price cuts to attract this volume. Since the Obamacare plans are likely to pay providers less than rates offered by standard private coverage (and maybe even less than Medicare rates) many doctors could also refuse to accept Obamacare, just like they refuse Medicaid. Or refuse to offer insurers discounts for these patients.

To mitigate uncertainty, plans will price their products high. Insurers know that any excess profits they earn will have to be paid back to the government, anyway (owing to caps that Obamacare places on how much profit health plans can earn). Health plans are better off aiming high, and owing money back, then getting underwater. After all, Washington takes away “excess” profits, but it doesn’t share in losses.

The architects of Obamacare designed the scheme without much thought to how its overlapping incentives would discourage competition on the price of the new coverage. Health plans will try to drive down costs by offering very narrow networks of providers that they can more easily control. It will be a race to the bottom to see which plan can offer the cheapest benefit, while still meeting minimum standards. But it won’t be a race to the bottom on price.

Plans have too many reasons to price their products cautiously, and not automatically pass along any cost savings to consumers.

If the Obamacare plans are priced higher than initial assumptions made by the Congressional Budget Office, it will burst the estimates placed on Obamacare’s total costs. It could also make these plans unappealing to consumers.

 
* Modified from a RealClearMarkets.com article by Scott Gottlieb

 

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Another Big Step in Reshaping Health Care

Hospitals and health insurers are locking horns over how much health-care providers will get paid under new insurance plans that will be sold as the federal health law is rolled out.

The results will play a major role in determining how much insurers will ultimately charge consumers for these policies, which will be offered to individuals through so-called exchanges in each state.

  • The upshot: Many plans sold on the exchanges will include smaller choices of health-care providers in an effort to bring down premiums.
  • Exchange plans will take effect in 2014. In that first year, health plans sold on the exchanges could have 11 million to 13 million enrollees and generate $50 billion to $60 billion in premium revenue, according to an estimate from PwC’s Health Research Institute, an arm of PricewaterhouseCoopers LLP.
  • Plans with smaller choices of health-care providers are a big focus for insurers, partly because many other aspects of exchange plans, including benefits and out-of-pocket charges that consumers pay, are largely prescribed by the law, giving them few levers to push to reduce premiums.
  • “The need for a smaller network with lower pricing was critical,” said Juan Davila, an executive vice president at Blue Shield of California, which said it hopes to offer a preferred-provider-organization plan for individuals on the exchange. It would be built around a provider network around 40%-45% of its traditional PPO scope.

To keep costs low, the insurers are pressing for hospitals to grant discounts from the rates hospitals usually get in commercial plans. In return, participating hospitals would be part of smaller networks of providers. Hospitals will be paid less by the insurer, but will likely get more patients because those people will have fewer choices. The bet is that many consumers will be willing to accept these narrower networks because it will help keep premiums down.

  • Tenet Healthcare Corp., one of the biggest U.S. hospital operators with 49 hospitals, Tuesday said it had signed three contracts for exchange plans that would involve either narrow or “tiered” networks, in which people pay more to go to health-care providers that aren’t in the top tier.

Tenet said that in exchange for favorable status in these plans, it granted discounts of less than 10% to the three insurers, which it said were Blue Cross & Blue Shield plans covering 15 of its hospitals, or around 30%.

Analysts said Tenet’s disclosures, which came during an earnings call with analysts, are the most explicit from any hospital chain so far about how the negotiations are shaping up. “It’s the clearest statement they’ve gotten about exchange products, pricing and impact,” said Sheryl Skolnick, an analyst with CRT Capital Group LLC.

Stonegate Advisors LLC, a research firm that works for health insurers, has been testing clients’ plans with consumers in a mock-up version of an exchange, which is an online insurance marketplace.

  • The tests have found that premiums are the most important factor in consumers’ choices, he said, with more than half typically opting for a narrow-network product if it cost them at least 10% less than an equivalent with broader choice.

So far, insurers and hospitals have sent differing signals on what kinds of discounts the hospitals might grant for the exchange plans, which would vary by market. Publicly traded hospital chains have said they are pressing to get paid approximately what they receive for traditional commercial health insurance.

Some insurers talk about steeper discounts from hospitals. WellPoint Inc. has said it is aiming to pay providers somewhere between Medicaid and Medicare rates, and sees talks trending toward rates close to Medicare. Medicare rates are often substantially lower than commercial prices. An Aetna Inc. official at an investor conference Monday suggested the rates might settle somewhere between Medicare and commercial.

For their part, hospitals have to weigh whether discounts they grant for exchange products pose a risk to the richer pricing they get for traditional commercial health plans, which include those now offered by employers.

*Modified from a WSJ article by Anna Wilde Mathews and Jon Kamp

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Key Facts About The Medical Insurance Premium Tax Credit

Starting in 2014, individuals and families can take a new medical premium tax credit to help them afford health insurance coverage purchased through a state-based Health Insurance Marketplace.

How much is the tax credit?

The credit amount is generally equal to the difference between the premium for the benchmark plan and the taxpayer’s expected contribution.

•The expected contribution is a specified percentage of the taxpayer’s household income. The percentage increases as income increases, from 2% of income for families at 100% of the FPL to 9.5% of income for families at 400% of FPL.

•The benchmark plan is the second-lowest-cost plan that would cover the family at the “silver” level of coverage.

Are there any special rules?

Yes – the credit is advanceable (i.e. advance payments are made directly to the insurance company on the family’s behalf). The advance payments are then reconciled against the amount of the family’s actual premium tax credit, as calculated on the family’s federal income tax return.

4 Key Facts About The Medical Premium Tax Credit

Broad Middle-Class Eligibility

The premium tax credit is generally available to individuals and families with incomes between 100% and 400% of the federal poverty level. The Congressional Budget Office estimates that, when the Affordable Care Act is fully phased in, the premium tax credit will help 20 million Americans afford health insurance.

Larger Tax Credits for Older Americans who Face Higher Premiums

The amount of the premium tax credit is tied to the amount of the premium, so that older Americans who face higher premiums will receive a greater credit.

The Tax Credit Controls Health Care Costs by Incentivizing Families to Choose More Cost-Effective Coverage

The amount of the premium tax credit is generally fixed based on a benchmark plan (which may be age adjusted within Affordable Care Act limitations), so families that choose to purchase coverage that is less expensive than the benchmark plan will pay less towards the cost of that coverage.

The Credit Is Refundable So Even Families with Modest Incomes Can Benefit

The premium tax credit is fully refundable, so even moderate-income families who may have little federal income tax liability (but who may pay a higher share of their income towards payroll taxes and other taxes) can receive the full benefit of the credit.

*Modified from ZaneBenefits.com article

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Medicare Advantage enrollees could take hit in 2014

The new proposed payment cuts are in addition to the Medicare Advantage cuts and the new health insurance tax included in PPACA.

  • AHIP says that only 4 percent of PPACA’s $200 billion in Medicare Advantage cuts have gone into effect thus far, and the Congressional Budget Office (CBO) projects that, when fully phased in, these cuts alone will result in three million fewer people enrolled in the program. 
  • PPACA’s new health insurance tax starts in 2014; Oliver Wyman had previously estimated that this tax alone will result in seniors facing $220 in higher out-of-pocket costs, reduced benefits next year and $3,500 in additional costs over the next 10 years.

The cuts were proposed last week by Centers for Medicare & Medicaid Services (CMS) to take effect next year. The analysis is by actuaries at Oliver Wyman, prepared for AHIP.

According to the Oliver Wyman report, “Virtually all of the 14.1 million Medicare beneficiaries are likely to be affected by these changes, either through increased premiums, reduced benefits, or plan exits from local markets.”

The potential 2.3 percent reduction in Medicare Advantage payments proposed by an arm of the Department of Health and Human Services (HHS) combined with PPACA’s payment cuts will result in benefit reductions and premium increases of an average $50 to $90 per month for a typical Medicare Advantage beneficiary next year, warned America’s Health Insurance Plans (AHIP).

The cuts would affect 14 million seniors, or roughly 28 percent of all Medicare beneficiaries, the lobbyist group says.

The new analysis prepared for AHIP states that the combined effect of the changes included in PPACA and the new payment cuts will result in an estimated 6.9 percent to 7.8 percent cut to Medicare Advantage plans in 2014, causing the net out of pocket for seniors and those with disabilities to rise, according to AHIP.

The cumulative impact of these changes will reduce Medicare Advantage payments next year by more than eight percent, or approximately $11 billion.  These cuts will result in seniors facing higher out-of-pocket costs, reduced benefits, and fewer health care choices, AHIP stated.

“President Obama is sticking it to seniors yet again by cutting Medicare Advantage funding,” according to Dan Weber, president of the Association of Mature American Citizens (AMAC).

It was announced last week that the CMS will publish new rules for Medicare Advantage programs on April 1. Subsidies will be slashed and access will be severely restricted, according to insurance industry analysts, AMAC stated in a press release Friday.

Medicare Advantage is the part of Medicare through which private health plans provide comprehensive medical coverage to seniors and other Medicare beneficiaries.

Health insurance stocks reacted to the news negatively, according to a report by the Associated Press. The costs per person for Medicare Advantage plans are a bigger drop than many analysts who cover the industry anticipated, the AP report stated.

Conservative bloggers and the health insurance industry are not happy, arguing the payment cuts are funding entitlement programs and leaving seniors happy with their plans strapped.

AHIP contrasted the cuts against the projections for medical cost increases of 3 percent.

“This is the lowest growth rate in the history of the Medicare Advantage program, and it is far below the 2.8 percent increase in payment rates for 2013,” AHIP stated.

“The proposed changes to Medicare Advantage payments are a crushing blow to the millions of seniors and people with disabilities who count on this critically important part of Medicare,” said Karen Ignagni, AHIP president and CEO.

However, CMS is expecting per-capita plan medical costs to fall 3.2 percent, CMS officials said in a 199-page description of the 2014 Medicare plan bidding methods.

Oliver Wyman also projects that individuals with lower incomes and those more likely to need medical services will be particularly adversely impacted by these cuts.

The new report follows a previous analysis by AHIP which found that low-income and minority Medicare beneficiaries continue to rely on the high-quality health care coverage provided by Medicare Advantage plans.

CMS stated recently that since the Affordable Care Act was passed in 2010, Medicare Advantage premiums have fallen by 10 percent and enrollment is expected to increase by an estimated 28 percent through this year. In addition, costs of the defined standard Part D plan will be lower in 2014 than they are in 2013.

“The Affordable Care Act helps us strengthen Medicare Advantage and Part D,” said Jonathan Blum, CMS acting principal deputy administrator and director of the CMS’ Center for Medicare in a statement last week. “We are working to ensure that people with Medicare have affordable access to health and drug plans, while making certain that plans are providing value to Medicare and taxpayers.”

*Modified from a LifeHealthPro.com article

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White House Issues Final Rule on ACA’s Essential Health Benefits

On Wednesday, the Obama administration issued a final rule outlining 10 broad categories of essential health benefits that most health insurance plans must offer in 2014 under the Affordable Care Act.

About the Final Rule

Under the ACA, health plans in state health insurance exchanges must provide coverage for 10 broad categories of benefits, such as maternity care, prescription drugs and preventive care. HHS in November 2012 released a proposed rule on the minimum benefits (California Healthline, 11/21/12).

The final rule goes beyond what regulators initially proposed and applies to non-grandfathered plans for individual and small group markets inside and outside of the health insurance exchanges.

Most of the rules include benefits that commonly are covered by plans, including:

Ambulatory patient services;
Chronic disease management;
Emergency care;
Hospital services;
Laboratory services;
Maternity and newborn care;
Prescription drugs; and
Preventive wellness services.

However, some changes represent an expansion of coverage to include rehabilitative care, pediatric dental care and pediatric vision care. Further, the rule expanded coverage and federal parity protections for mental health and substance use disorder services, including behavioral health treatment, to both the individual and the small group market.

HHS Secretary Kathleen Sebelius described the rule as a major expansion of mental health coverage, noting that millions of individuals will gain access to mental health care and an additional 30 million individuals who already have some mental health coverage will see their benefits become more generous.

  • The final rule also prohibits insurers from discriminating based on an “individual’s age, expected length of life, present or predicted disability, degree of medical dependency, quality of life or other health conditions”. In addition, the rule sets four levels of coverage that new health policies offered on health insurance exchanges must offer.

Consumers choosing bronze plans — the least generous policy — will pay an average of 40% of the costs of covered benefits, while insurers will pay the remainder. Those choosing platinum plans — the most generous policy — will pay 10% of the costs, and the insurer will pick up the rest.

However, the administration did not set a national standard and allowed states to set specific requirements for the minimum benefits to be covered in each essential health benefit category. Under the rule, each state could select a benchmark plan reflecting coverage typically offered by the largest plan by enrollment for employers.

In addition, insurers in each state typically will be required to cover all benefits required under state laws adopted prior to Dec. 31, 2011. States can require insurers to cover additional benefits, but they will have to cover the extra costs themselves.

Although states will be responsible for ensuring that insurers comply with the rule, the federal government said it will step in if a state is not adequately protecting consumers.

Cost of Coverage

Insurers and some business groups had lobbied the federal government to scale back the scope of mandated coverage categories because of concerns that such coverage would make policies too costly, the Wall Street Journal reports. However, rather than scale back benefits, the rule includes several ways to limit the costs to consumers, such as capping total out-of-pocket costs and limiting the deductible amount for plans offered in the small-group market to about $2,000 for an individual and $4,000 for a family. Consumers could face extra costs if the seek care outside of their plan’s network of physicians and hospitals.

Health insurers have been waiting for the final rule and other pending regulations before finalizing plans and pricing them. Further, state insurance regulators must also approve the plans before they can be marketed.
*Modified from a California Healthline article

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