Stakeholders move on PPACA initiatives

WASHINGTON-While the politicians campaign and the Supreme Court Justices ponder, the federal government will continue to roll out the multiple policies and programs created by the Patient Protection and Affordable Care Act (PPACA). States are actively tackling the law's intricacies.

Many states are involved in establishing insurance exchanges, expanding health IT systems and improving insurance rate review processes. The working assumption is that PPACA-or much of it-will remain in place after all the political dust settles.

STATES DECIDE BENEFIT PACKAGES

The move deflected charges from critics that Washington was going to formulate a one-size-fits-all national healthcare system, however, it also disappointed consumer advocates who want to see clear coverage requirements. Employers and insurers fear that some states will require plans that are too rich and costly. The policy may make self-insurance more attractive.

It is unknown how employers will respond to ongoing developments. Recent surveys indicate that about 60% of employers continue to offer health plans to workers, down from about 70% 10 years ago. Most large companies are retaining health benefits, despite rising costs, but many small companies are dropping out.

More early retirees are slated to lose employer-backed coverage with the early demise of a temporary program designed to help cover their costs. CMS reported last month that the $5 billion Early Retiree Reinsurance Program was nearly out of money and would stop paying claims in 2012, instead of operating through 2013. CMS is surveying employers to see how many will continue early retiree benefits without the federal largesse-and it's auditing claims and payments made by the program to make sure all expenditures are legit.

FINAL MLR RULE

Another landmark is the release of a final policy for calculating new medical loss ratio (MLR) rebates. HHS issued an interim final rule in December that requires large-group plans to spend at least 85% of premium revenue on clinical services and quality (80% for small-group and individual plans), or provide rebates to enrollees.

In a rebuff to agents and brokers, HHS rejected a late recommendation from the National Association of Insurance Commissioners (NAIC) to count agent fees as medical care, instead of administrative costs-a contentious move expected to cut broker commissions and reduce their services. The final rule, which was announced by Marilyn Tavenner, now the acting administrator of the Centers for Medicare and Medicaid Services (CMS), permits insurers to include some ICD-10 conversion costs under the "quality improvement" heading, and it phases out special allowances for low-cost "mini-med" plans.

A report from the Government Accountability Office estimates that 64% of insurers covering large and small groups will meet the MLR requirements, though insurers in the individual market will have a harder time. HHS also recently denied requests for adjustments to the MLR requirement from Florida and Michigan. Six states had been granted adjustments as of last month, but five more are still under review.

MLR calculations will help the regulators determine if insurers are raising premiums "excessively." In November, the Feds targeted Everence Insurance for a 12% increase for small-group plans in Pennsylvania. Secretary Sebelius cited it as an example of how the agency will "hold health insurers accountable like never before." Everence was urged to rescind the increase.

The plan responded saying HHS based its calculation on a one-year experience period, instead of the two years the company considers more suitable for small-group plans and uses in all its state rate filings. The company posted a detailed accounting of its rising costs, noting that the plan has been unprofitable in recent years, and also complained that HHS announced its findings without any prior consultation with the insurer.

CAMPAIGN TRAILS

Election-year politicking will dominate Washington in the coming months, as the outcome of the presidential and Congressional races promises to shape the nation's healthcare system, as well as vital economic and social issues. Democrats will attack GOP candidates for proposals to dismantle Medicare, while Republicans will hammer the costs and controls imposed by "Obamacare," particularly on the Medicare Advantage program.

The pundits expect Republicans to take control of the Senate and to hang on to a slim majority in the House. If the GOP also wins the race for the White House, certain provisions of PPACA could be dismantled.

Insurers backed the Obama health reform plan two years ago as a way to expand coverage and enrollment in health plans. The worst-case scenario for insurers now would be if policymakers repeal the individual mandate and subsidies that support increased enrollment, while retaining requirements for broader benefits, onerous oversight and new payments.