For the past six months insurance regulators in California have been working through negotiations with Anthem, a BC insurer whose initial premium rate hikes became a cause célèbre for healthcare consumers in that state and the Obama administration, alike. The previously proposed 39% increases created a firestorm in healthcare policy circles and provided Obama and HHS a temporary PR headache as a solution to lower premium increases was sought. The end result after scrutiny of state ledgers is a “smaller” increase —  of approx. 14 percent. | MP3 LINK

Medical loss ratios (MLRs), those metrics used by insurance companies to gauge medical costs as a percentage revenues from premiums, will be attracting some attention this week thanks to a provision in the recently passed reform bill that will allow a third party to be instrumental in determining how much insurers can ultimately spend on those admin costs — influencing profits in the process. That third party — the National Assn. of Insurance Commissioners (NAIC) — could have far-reaching authority in determining Insurance’s role in final implementation of the healthcare reform law come 2014.

HHS Sec’y Kathleen Sebelius could be at the mercy of the NAIC with respect to these new rules, creating disquietude among top Dems who favored reform with as little corporate influence as possible. Although the federal government has final say over where MLRs begin and end, states’ insurance commissioners actions will give lobbyists and insurers alike time to affect ultimate MLR regulations under reform law. Expect a mildly bumpy road at the hands of Insurance — which desires as little distance as possible between administrative quotas and earnings. | LINK

As President Obama’s vision of healthcare reform begins to gel in the minds of physicians, health systems, insurers, and policymakers alike; the phased rollout of coverage mechanisms by Big Insurance will provide a timeline of sorts into the character of reform from a third-party perspective.

Via mandates, deadlines, and tax breaks; insurance coverage will be moving forward in the first half of the 2010s at a deliberate and measured pace — eventually covering some 30 M Americans without coverage and adequate access, as promised by Obama. One of the care delivery mechanisms is in the coordination of care of those with chronic diseases (such as diabetes, obstructive lung disease, and asthma) and the incentivization of primary care providers in those systems who choose to embrace such a plan.

Coordination of care reduces the fragmentation of delivery to those with chronic illness. Improving referral systems, rewarding primary care providers’ participation in innovative models such as the medical home, and emphasizing the importance of preventive care services in reimbursement schemes are important first steps to increasing access, decreasing acute care costs, and increasing quality in healthcare delivery. | LINK

HIT alert: The HHS is proposing  new privacy guidelines designed to protect consumers’ (patients) health information when that health information is handled by third parties. The proposed rules come as part of the Health Information Technology for Economic and Clinical Health (HITECH) Act — enacted as part of the American Recovery and Reinvestment Act of 2009 under Obama. The ubiquitous HIPPA legislation signed into law in 1996 is essentially strengthened, and hopefully clarified, as finer points in patients’ health records in the past have been exploited and mismanaged under perverse interpretations of that law by third party entities — many of which are payers.

Among the expansion of HIPPA parameters expanded by these proposals by HHS:

• setting new limitations on the use and disclosure of protected health information for marketing and fundraising
• prohibiting the sale of protected health information without patient authorization
• expanding individuals’ rights to access their information and to restrict certain types of disclosures of protected health information to health plans

It only follows that if consumers have and expect access to their personal health information in whatever form desired, then they have to be encouraged to expect safety mechanisms are in place to protect the delivery of and accessibility to that information. These proposals are to go into effect later this year. | LINK to HHS’ privacy site | LINK to 60-day public comment site

Those who expected the state with the first-in-the-nation initiative to cover the health care of all of its citizenry will have to hold their collective breaths a little longer. The plans for an overhaul on how physicians and hospitals are paid for quality delivery are on hold as major parties cannot come to an agreement on how this metric should be implemented. Perhaps the thought of examining Massachusetts’ negotiated payment system as a relatively straightforward exercise in healthcare economics was a bit shortsighted.

Combine the complexities of fee-for-service government reimbursements with the intricacies of funding for coordinated care systems; the possibilities of funding an accountable care commission of sorts as a payment governing body; and the simple inertia that current levels of healthcare spending have created in a wasteful state system — and you’ve got a recipe for an overwhelming stalemate. There is a glimmer of hope that one faction’s action will get the legislative ball rolling on this issue: some hospital systems in the state plan to release details on the creation of governance to oversee spending in their ranks. | LINK

Some headlines prior to the Independence Day holiday. Normal posting resumes here at Doctor Pundit on July 6. Have a happy and safe holiday weekend!

• Veterans Admin admits to the debacle surrounding dirty dental instruments placing hundreds of patients at risk of HIV transmission. [LINK]
• Minnesota nursing strike may be averted, but time will tell if threat to strike was more of a bluff. Hospitals and nurses pledged to work within the constraints of internal governance. [LINK]
• How’s healthcare reform going? Just fine, according to some. [LINK]
• How influential will states’ insurance commissions be when regulating insurers’ medical loss ratios in the age of reform?
  

  The medical-loss ratio measures how much of premiums insurers pay out for medical care versus administrative costs. The new law requires that insurers use at least 80% of the premiums from individuals and small businesses to pay for medical care and profit-taking, and 85% of premiums from larger employers. Health insurers are waiting for regulators to clarify how companies must account for the numbers—whether they can average the MLRs of their subsidiaries, for instance.

  [LINK]

• Study: Genes key to longevity. [LINK]

Have you been rejected for insurance coverage because of a pre-existing condition? Have you been without coverage for at least 6 months? Finally, are you a legal U.S. resident? If you hit the trifecta, you qualify for the HHS’s Pre-existing Condition Insurance Plan. Kathleen Sebelius makes the announcement today.

Today, the Pre-Existing Condition Insurance Plan gives them a new option — the same insurance coverage as a healthy individual if they’ve been uninsured for at least six months because of a medical condition. This program will provide people the help they need as the nation transitions to a more competitive and fair marketplace in 2014.

The plan covers primary and specialty care and begins today in states where HHS implements the program. States with their own programs will roll out the initiative later in the summer.^[1] One’s income is not a consideration. | LINK

1. In 21 states, the federal government will run the program. Twenty-nine states plus the District of Columbia will run their own plans. Premiums can run anywhere from $100 – $1000/month and vary by region. [↩]

Kathleen Sebelius is nicely settling into her role as the reform effort’s PR point gal. She wasted no time in blasting a second California insurer of unfairly hiking premiums — on the basis of “fuzzy math”.

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. 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.

LINK

UPDATE: Although the insurance companies say that simple “human error” may have accounted for lapses in coverage and premium mechanisms among Aetna (the insurer to which Sebelius refers), the bigger issue afoot is the pressure the federal government is placing on third parties to comply strongly with reform as it relates to the individual policyholder and the small business. Could rate regulations on a larger scale be far behind in the offing? | LINK

• It’s on. The mega union only needed 66%. They got over 80% ‘yea’. [LINK]
• At ninety days into the new reform law, Obama makes public safeguards inherent within. [LINK]
• FDA approves new diagnostic test that more rapidly detects antibodies and antigens. Excellent. [LINK]
• More controversy than there needs to be? The president’s pick to be new CMS chief engenders strong feelings on both sides [LINK]

Hospital executives who have worked with Dr. Berwick describe him as a visionary, inspiring leader. [..] Republicans are using the nomination to revive their arguments against the new health care law, which they see as a potent issue in this fall’s elections, and Dr. Berwick has given them plenty of ammunition. In two decades as a professor of health policy and as a prolific writer, he has spoken of the need to ration health care and cap spending and has confessed to a love affair with the British health care system.

If you can’t beat ‘em, join ‘em? The AMA just released its annual report card on insurers this week, and in the organization’s sights this time is the lack of accuracy in claims processing. Over $200B is spent annually on this mechanism, and the AMA says that 80% of the time, insurers matched payments to providers.

But can this benchmark be increased with greater physician input and cooperation? According to the AHIP, it must. The insurance lobby says the path to complete compliance in this area could go a long way in reducing overhead for Insurance, collectively. They contend that providers and insurers must share in the innovation invested on both sides to make this happen. | LINK

Former HHS Secretary from the Clinton Administration, Donna Shalala told a standing room only crowd at the AHIP convention in Las Vegas over the weekend that the recently passed healthcare reform bill’s ultimate utility will depend more on the influence of insurers and not of the government.

“The American people voted not for a government takeover of healthcare, but they committed themselves to the employer-based system and private delivery,” she told the insurance industry crowd during a session titled, “A Way Forward: Next Steps for America’s Health Care System.”

While “a great deal of money” will be spent on public insurance programs, including Medicaid and Medicare, the “basic core” of reform will involve private insurers, she said.

Kudos to Shalala for being honest in this assessment. Although many insurers have begun taking steps to work within the framework of changes that will begin within the next two to four years, the reality is that private insurers will always have a stake in healthcare delivery. The development of exchanges, private-public contracts, and other mechanisms will be the result of the necessity to create innovation to maintain a robust healthcare marketplace. | LINK

It continues to be a rather interesting and fun exercise watching how Massachusetts handles being the example of state-sanctioned guaranteed healthcare coverage. Over the past couple of months the escalating heat brought on by some of the state’s major insurers to test the state government’s reach on the regulation of premiums crescendoed recently, with a judicial ruling that expressed that the state was able to cap premium rate increases coverage for small businesses. Although the insurer in this case (Neighborhood Health Plan) agreed to only a 7.7 percent increase (down from an original 11 percent increase), other insurers are still pursuing the courts via the appeal process.

In a statement, Governor Deval Patrick applauded the settlement. “I appreciate the willingness of Neighborhood Health Plan to work with us to provide immediate relief from skyrocketing premiums,’’ he said, “and hope they will be an example to other health plans as well.’’

Time will tell; but for now, the first test over challenges to the state government’s insurance commission to regulate rates by its insurers guaranteeing small group and individual coverage seems to be in favor of the state. For Neighborhood Health, I wonder if they consider this episode one of “leading by example”. | LINK

Preauthorization as a requirement by insurance companies to continue providing coverage for treatments that end up outside of a policyholder’s terms is nothing new; it is a necessary evil providers must deal with on a daily basis to make sure their patients get the care they need if current covered treatments are no longer adequate. Pharmacologic therapies make up the bulk of treatment reviews Insurance requires as part of preauthorization. But adult mental health services (particularly within the discipline of psychology) in the state of Massachusetts are playing an increasingly controversial role in these administrative matters that place employers, providers, and patients in a protracted battle against insurance companies to continue these types of treatments.

“We are seeing what seem to be excessive preauthorization and other reviews that we don’t typically see for other medical services,’’ said Matt Selig, executive director of Health Law Advocates, a public interest law firm based in Boston.

The advocacy legal firm will probably join other groups in filing legal challenges on behalf of therapists and patients. The largest insurer of workers’ mental health services in Massachusetts says it tries to contain costs by making sure patients continue to receive the covered care they need. It seems as though patients in dire need of those services requiring preauthorization feel otherwise. | LINK