Federal
Support is growing in Congress (over 80 co-sponsors) for Mike Rogers’ (R-MI) and John Barrows’ (D-GA) legislation that would exclude agent commissions from the MLR calculation. Currently, commissions count as administrative expenses in calculating insurers’ MLRs. This support was highlighted in a House hearing last week before the Health Subcommittee of the Energy & Commerce Committee, where the larger issue of the MLR burden was front and center. Witnesses representing agents and brokers, insurers and academia all testified against the unintended, negative consequences of the MLR requirement, with agents and brokers in particular noting the direct financial impact to small business and individual agents and their families. The Rogers/Barrows bill would simply not factor commissions into the MLR calculation. The day before the hearing, Congressman Tom Price ((R-GA) introduced an even more aggressive bill, as his proposal would repeal outright the MLR provision of ACA. While it is unlikely that either bill will get traction in the Senate on its own, bipartisan support for the agents and genuine concern about unintended consequences puts this issue in play as part of any potential mega-deal on the budget/deficit/debt ceiling issue over the next few months. The Senate was not in Session last week; and the House is out this week.
States
COLORADO: Governor John Hickenlooper last week signed into law a bill establishing the Colorado Health Benefit Exchange. The legislation created a fair amount of controversy during the session, particularly among “Tea Party” Republicans. However, the final product represents the culmination of a bipartisan effort that remained inclusive of the business, advocacy and insurance industry constituencies.
CONNECTICUT: Although adjournment is set for June 8, a number of significant bills are still in process. The legislature passed a bill over the weekend that would create a health insurance exchange. The bill is expected to be signed by Governor Dannel Malloy, as the legislation, as passed, is an amended version of a bill proposed by the Malloy administration. It would create an 11-member exchange board and set rules and responsibilities for the exchange, but many policy decisions would be left for resolution at a later time. The exchange must be financially self-supporting by 2015, and the bill would allow the exchange to charge assessments or user fees to health insurance carriers to fund operations. Some lawmakers questioned the cost of the exchange. However, the nonpartisan Office of Fiscal Analysis says the planning process is not expected to require additional state money. The bill calls for exchange board members to have expertise in specific subjects, including small employer health insurance coverage, health care delivery systems, access issues that self-employed people face, barriers to individual health care coverage, health care finance and benefits plan administration.
Additional bills yet to be passed by both Houses include the SustiNet bill, now amended to create a health care reform advisory board and allow municipalities and not-for-profits to join the state employees plan. Also, a prohibition on “most favored nation” clauses in provider contracts and a broad rate review bill that would require public hearings for all rate increases over 10 percent have yet to be acted on.
ILLINOIS: A spring session of the General Assembly dominated by redistricting, workers’ compensation, budget, pensions and gambling adjourned on May 31, 2011. Minimal health care legislation passed by both chambers is awaiting signature by the governor. One important legislative development is that Aetna helped turn back attempts to amend the “non-participating” physician law that was passed last year and went into effect on June 1, 2011. The law protects consumers from being overbilled by certain out-of-network, hospital-based physicians (i.e., anesthesiologists, radiologists) who provide direct services in hospitals and ambulatory surgery treatment centers. Under the law, the patient is taken out of the middle as it ensures patients will pay no more than they would have paid to one of their carrier’s participating providers. In addition, the law allows either the physician or the insurer to use binding arbitration to resolve disputes over the reasonableness of charges or reimbursements.
Other health care bills defeated including taxes/insurance assessments; reporting of extensive premium loss data; and health insurance rate review. Bills currently awaiting the governor’s signature include changes to the mental-health parity and clinical trials mandates, as well as insurer recoupment requirements that the industry ultimately agreed to. Also, a health insurance exchange bill passed both chambers that would establish an exchange and appoint a study commission of legislators to report back to the Assembly by Sept. 30, 2011 regarding parameters for an exchange. Follow-up legislation could potentially be considered in the fall veto session, beginning at the end of October 2011.
MAINE: Gov. Paul LePage and the legislature’s Republican leaders found a way to avoid an override of the Governor’s recent veto of the most-favored nation prohibition bill. The bill would bar insurers from requiring a health care provider to charge an insurance company the lowest rate the provider negotiates with any other insurance carrier. In his veto message on the bill, LePage said he strongly believes that businesses have a right to contract with each other as they deem appropriate. After some Republicans complained, LePage met last week with GOP leaders and co-chairs of the legislature’s Insurance and Financial Services Committee, which unanimously endorsed the bill last month. Republican lawmakers agreed to vote to sustain the governor’s veto when the House acts on it, and the Governor agreed to submit compromise legislation. The new bill would ban most-favored nation clauses but also allow Maine’s superintendent of insurance to issue a waiver. It is unclear what conditions an insurer would have to meet to earn a waiver. The bill’s language is not yet available to the public. With session scheduled to adjourn June 15, the legislature is likely to wait until next year to take up the bill.
Governor LePage announced that Eric Cioppa, Deputy Superintendent of the Bureau of Insurance, Department of Professional and Financial will serve as Acting Superintendent effective immediately. Cioppa replaces former Superintendent Mila Kofman who resigned recently. In his former role as deputy superintendent, Cioppa was responsible for the Examination, Market Conduct, Financial Analysis, Alternative Risk Markets, Producer Licensing, Administrative Support Unit, and Research and Statistics Units of the Bureau.
MICHIGAN: In the next couple of weeks, the state Senate is expected to vote on a $400 million paid-claims tax that would be levied on insurers and third-party administrators as proposed by Governor Snyder. Specifically, the bill would establish an entirely new tax on health insurance claims as a way to match federal Medicaid funding. The 1 percent on tax on all medical claims paid under health, dental, automobile and workers’ compensation coverage would impact fully and self-insured business. Ultimately, the cost of the tax will be borne by the sponsor of that coverage – the employer or the individual who already pays for the coverage. As introduced, the tax would begin on October 1, 2011. While working with lawmakers to help them understand the impact the tax would have on constituents, Aetna has mobilized its grassroots employee network to contact their state legislators regarding the issue. The bill has a strong chance of passing, and Aetna is urging all its constituents in the state to contact the Governor’s office and legislators to express any concerns they may have about the tax.
NEW YORK: Session is scheduled to adjourn June 20, and no official exchange legislation has been advanced. The Senate Republican majority is said to have a bill draft ready that supports a market-based exchange, but it has not been introduced yet. The Administration plans to introduce a more expansive model that reportedly will include giving the governor the majority of the board appointments, the exchange de facto rate-setting authority, and the exchange authority to selectively contract and require plans to participate. The bills are expected by the second week in June. However, with many other significant issues still on the table, compromise on an exchange bill may be swept up into a larger negotiation.
A very broad autism mandate is still in play. A set of amendments was introduced to ensure that an autism coverage mandate not be broader than for any other disease coverage mandate, For example, a pharmacy rider would be required to get pharmacy coverage, and there would be a limitation on visits but no dollar or age limits. The bill is still more expansive than last year’s version, which was vetoed by then-Governor Paterson due to its $70 million fiscal note. Governor Cuomo has not announced his position on the proposal.
NEVADA: The 2011 legislative session is winding down toward adjournment on June 6. Governor Brian Sandoval has on his desk a rate review bill that would implement a prior approval scheme, require greater transparency and public access to rate filings, and allow a Consumer Advocate to request a public hearing. The measure is sponsored by the Democratic Speaker and has the support of the commissioner who says that some aspects of the bill are needed for the state to comply with HHS rate review requirements. The Senate-sponsored bill creating the Silver State Health Exchange continues to move toward passage in the Assembly.
PENNSYLVANIA: State government had another better-than-expected revenue collection month in May and headed into the final month of the fiscal year with a nearly $540 million surplus. The news came last week as the debate in the Capitol intensified over the depth of spending cuts sought by Governor Tom Corbett. Legislative budget analysts said the state’s updated revenue collection figure through the end of May was 2 percent, or about $34 million, over the official estimate. That means the state has collected almost $24.3 billion through 11 months, or 2.3 percent above the official estimate. However, the state continues to face a projected multi-billion-dollar budget deficit in the fiscal year beginning July 1. The disappearing federal stimulus money that temporarily helped buttress the state’s recession-wracked tax collections is one of the largest contributing factors.
TEXAS: A special session of the legislature, called by Gov. Rick Perry to address education and health care issues left pending when the 140-day regular session ended May 30, got off to a slow start last week. But by the end of the week, the Senate Appropriations Committee unanimously voted in support of a massive health care measure that combines three weighty regular-session bills. Now headed for a full Senate vote, the package seeks $1.5 billion in Medicaid savings by expanding managed care to South Texas and restructuring insurance payment systems. It also would charge Medicaid patients for unnecessary emergency room visits and penalize doctors and hospitals for preventable complications.
Late Tuesday, Perry added another issue to the 30-day session: redrawing boundaries for Texas’ 36 congressional districts. School finance remains the main event of the overtime session. Another bill would resurrect the interstate health care compact, favored by Republicans because it would allow member states to opt out of the federal health care reform law. Democrats oppose the effort, saying Texas would save money by cutting more low-income people from Medicaid coverage. A bigger hurdle would be Congress, which must approve the compact. The special session will last a maximum of 30 days but could conclude earlier if the legislature finishes business and adjourns.