Tuesday, March 30, 2010

COBRA subsidy extension not passed before Congressional recess

The Senate adjourned Friday for a two-week recess without taking action on a second temporary extension of the federal COBRA health insurance premium subsidy.

The Temporary Extension Act of 2010, passed by Congress on March 2, extended the eligibility period for the 15-month 65% premium subsidy to those involuntarily terminated from March 1 through March 31, 2010. This short-term extension was intended to give Congress time to develop broader legislation that would extend these programs through the end of the year, but with the month of March being consumed by the push for health reform, this legislation has yet to be developed.

The House approved a second temporary extension that would extend subsidy eligibility through April 30; however, the Senate was unable to vote on the bill before the Easter recess due to debate across party lines on how the subsidy extension would be funded.

The Senate is expected to take up the measure soon after lawmakers return to Capitol Hill on April 12. According to recent reports, the premium subsidies would be retroactive to April 1 if the bill is approved.

Friday, March 26, 2010

Congress passes final legislation on health reform

Following the Senate’s passage of the reconciliation bill Thursday afternoon, it was kicked back to the House due to minor language changes to a student loan provision. The House passed the measure just hours later by a margin of 220 to 207.

The reconciliation bill includes many changes intended to bridge differences between the original House and Senate bills and to incorporate additional provisions sought by President Obama, including a broad restructuring of federal student loan programs.

Most notably the reconciliation package will delay the 40% excise tax on Cadillac plans until 2018; increase the fees on employers failing to provide qualified health coverage; restructure the penalty for non-compliance with the individual mandate; increase subsidies for lower income individuals to purchase coverage; and increase Medicare payroll taxes to help pay for the legislation.

While the more significant components do not take effect until 2014, there are several provisions effective within the next year. For a detailed summary of the current legislation and how it is impacted by the reconciliation changes, please view the National Association of Health Underwriters' Health Reform Timeline.

Provisions effective immediately:
• Allows review of health plan premiums by state departments of insurance and HHS
• Allows individuals and employer group plans to keep their current policy on a grandfathered basis if the only plan changes made are to add or delete new employees/dependents; however, the reconciliation bill eliminates grandfathering of several provisions
• Provides small employers with no more than 25 employees and average annual wages of less than $50,000 with a tax credit of up to 50% (35% in the case of tax-exempt eligible small businesses) of the employer’s contribution for employee health coverage if the employer contributes at least 50% of the total premium cost

Provisions effective within 90 days:
• Creates a temporary reinsurance program for employers that provide retiree health coverage for employees over age 55
• Establishes a high-risk pool program for individuals who cannot obtain coverage due to a medical condition

Provisions effective within 6 months:
• Prohibits pre-existing condition exclusions for children under 19; though this provision is ambiguous in the bill, HHS is preparing regulations to clarify the term 'pre-existing exclusion' so that insurers cannot refuse new coverage because of a pre-existing medical problem
• Prohibits lifetime benefit limits and restricted annual limits
• Allows children to be covered as dependents up to age 26; allows dependents to be married and eligible for the group health insurance income tax exclusion
• Prohibits coverage cancellation or rescission except in cases of fraud or intentional misrepresentation
• Requires individual and group plans to cover preventive services without cost sharing
• Requires that plans cover emergency services at the in-network level, allow enrollees to designate any in-network doctor as their primary care physician and have a coverage appeal process
• Requires group health plans to comply with Internal Revenue Section 105(h) rules that prohibit discrimination in favor of highly compensated individuals (currently applies only to self-funded plans)

Provisions effective in 2010:
• Appropriates $200 million in grant funding for small employer-based wellness programs
• Imposes $2.3 billion in annual fees on brand-name prescription drug manufacturers and importers

Provisions effective in 2011:
• Requires 80% medical loss ratio (MLR) for individual and small group plans and 85% MLR for large group plans
• Requires carriers to issue a premium rebate for plans that fail to meet the minimum MLR threshold
• Requires employers to include the aggregate cost of employer-sponsored health benefits on W-2s
• Increases the penalty for using HSA funds on non-qualified medical expenses from 10% to 20%
• Prohibits the use of FSA/HSA funds for over-the-counter drugs not prescribed by a doctor
• Allows employers with 100 employees or less to adopt new “simple cafeteria plans”
• Requires employers to enroll employees in a new national public long-term care program, unless the employee opts out
• Requires the Department of Labor to begin annual studies on self-insured plans using data collected from Form 5500
• Imposes $2 billion in annual fees on medical device manufacturers and importers

Thursday, March 25, 2010

Cornerstone Health Care, PA to remain in-network for UHC

Cornerstone Health Care, PA announced today that the provider will remain in-network for United Healthcare members after reaching an agreement on their recent contract negotiations. Cornerstone had previously announced pending out-of-network status effective May 31 due to unresolved contract issues with the insurance carrier.

Cornerstone offers access to more than 290 physicians and mid-level health professionals in over 60 locations throughout the Triad and surrounding areas.

Senate passes reconciliation bill with minor changes

Following nine hours of voting on 29 GOP amendments, the Senate passed the reconciliation package by a final vote of 56 to 43. While Democrats successfully defeated each Republican-proposed amendment, the bill must still be sent back to the House for final consideration due to the removal of two minor provisions that violated budget reconciliation rules. The provisions dealt with Pell grants for low-income college students and do not significantly affect the student loan program or the overall health reform bill. Even though the House passed the reconciliation bill on Sunday, they have to pass it again now that the language has been altered.

According to House Majority Leader Steny Hoyer, the House may take the bill up as soon as Thursday evening. While the reconciliation package does not drastically change the original reform act signed into law on Tuesday, it does alter the funding mechanisms and extends the implementation dates for several key provisions.

Stay tuned as we follow this process and determine how the final legislation will impact you and your business.

Wednesday, March 24, 2010

BCBSNC introduces new call program for groups with pharmacy benefits

Effective March 31, BCBSNC is implementing a new outbound call program for group members with BCBSNC pharmacy benefits. The program aims to improve medical adherence and reduce plan costs by encouraging generic and mail order utilization and providing expertise and advice on prescription drugs.

Members meeting the criteria outlined below will receive calls from the Therapeutic Resource Center, a group of pharmacists and benefit specialists employed by Medco, beginning March 31.

Phone call criteria
• Members taking 3 or more maintenance medications AND
• Have been diagnosed with Cardiovascular Disease, Pulmonary Disease, Neuro-Psych Disorder, or Diabetes or are taking a Specialty drug
• Members with adherence issues or omissions of therapy issues
• Members who are new to a therapy

Outbound call process
• Pharmacists/benefit specialists will identify themselves as “Medco calling on behalf of BCBSNC,” will address members’ questions/concerns regarding their medication and will remind members of the advantages of using mail order to purchase a 90-day supply
• If a benefit specialist is making the call, they will ask if the member would like to speak to a pharmacist at the beginning of the call
• Pharmacists can address side effects and safety concerns, in addition to general questions about the medication

Specialty drugs
Specialty drugs are those that generally have unique uses, require special dosing or administration, are typically prescribed by a specialist provider and are significantly more expensive than alternative drugs or therapies. They are generally considered high-cost injectable, infused, oral, or inhaled drugs that require close supervision and monitoring.

Tuesday, March 23, 2010

Obama to sign health reform bill, provisions effective within six months

Once the President signs the health reform bill into law today, the clock begins ticking on several provisions that are effective shortly after enactment, though most major changes do not go into effect until 2014. Below is a summary of the key provisions for employers and the insurance industry that take place within the next year.

This summary is based on the Senate’s original legislation. If the Senate passes the reconciliation package, it may alter some of the provisions outlined below. For a detailed comparison of the reconciliation and Senate bills, please view The Kaiser Family Foundation Side-by-Side Comparison.

Provisions effective within six months:
• Allows review of health plan premiums by state departments of insurance and HHS
• Prohibits lifetime benefit limits and restricted annual limits
• Allows children to be covered as dependents up to age 26
• Requires individual and group plans to cover preventive services without cost sharing
• Prohibits pre-existing condition exclusions for children under 19
• Prohibits coverage cancellation or rescission except in cases of fraud
• Establishes high risk pool provisions for individuals who cannot obtain coverage due to health status
• Creates a reinsurance program for employer coverage of early retirees
• Provides small employers with no more than 25 employees and average annual wages of less than $50,000 with a tax credit of up to 50% (35% in the case of tax-exempt eligible small businesses) of the employer’s contribution for employee health coverage if the employer contributes at least 50% of the total premium cost

Provisions effective in 2011:
• 80% medical loss ratio (MLR) for individual and small group plans
• 85% MLR for large group plans
• Eliminates tax deductions for employers receiving Medicare Part D retiree drug subsidy payments
• Limits FSA contributions to $2,500 per year
• Prohibits the use of FSA/HSA funds for over-the-counter drugs not prescribed by a doctor
• Increases the penalty for using HSA funds on non-qualified medical expenses from 10% to 20%

Monday, March 22, 2010

House passes Senate health care bill, 219-212

After securing the votes of a handful of pro-life Democrats, the House passed the Senate’s health insurance overhaul Sunday night by a margin of 219-212. Obama’s pledge to issue an executive order ensuring that federal dollars would not be used to fund abortion was enough to clench key votes from Rep. Bart Stupak (D-Mich.) and other anti-abortion Democrats.

Immediately following passage of the original legislation, the House voted 220-211 in support of a reconciliation package which would fix particular provisions of the Senate bill opposed by many House Democrats. The newly passed bill is expected to be signed into law by the President as early as Tuesday, the same day the Senate is scheduled to begin debate on the reconciliation fixes.

While Senate Democrats hope to pass the reconciliation package in its current form to avoid it being sent back to the House, members of the Senate must first review the bill with the parliamentarian to determine if all the provisions meet the constraint of relating to the budget—the intended purpose of reconciliation.

The health care debate will also continue in the courts, as attorney generals in Virginia, Florida and South Carolina have indicated they will bring litigation on the premise that the individual mandate in the new legislation violates the Constitution.

Stay tuned in the coming weeks and months as we distill the details of this legislation to find out exactly what it means for you and your business.

Wednesday, March 17, 2010

Democrats suggest controversial “deem and pass” rule to pass health care reform

In an effort to vote on health care reform before Obama heads overseas on Sunday, a new “deem and pass” strategy dominated press conference discussions on Tuesday. This process allows the Rules Committee to deem that the Senate bill is passed without actually holding an up-or-down House vote on the bill. According to The Hill, Majority Leader Steny Hoyer (D-Md.) stated Tuesday that “deeming the Senate bill passed is consistent with procedures and practices used by Republicans and Democrats, and that it’s appropriate for a bill that will be moments away from being amended.”

While largely unfamiliar to the public, a “deem and pass” rule would allow House Democrats to only vote on the reconciliation fix—the amendments to the Senate bill—and then deem that by passing the amendments, the Senate bill itself has also passed. Democratic leaders are considering this option as a way to shield members from having to vote for the Senate bill, which contains unpopular provisions like the state-specific “Cornhusker Kickback.”

The timeline for these events hinges on how soon the Congressional Budget Office (CBO) releases its report on the reconciliation package, which is expected at any time. The Rules Committee would then move the deeming process forward on Wednesday or Thursday, allowing House members 72 hours to read the bill before a floor vote on Saturday.

Questions remain as to whether deeming such a landmark piece of partisan legislation into law is constitutional and whether the House will have the necessary 216 votes to pass the reconciliation bill. This number is down from the 217 needed last week due to Rep. Nathan Deal’s retirement, leaving only 431 members in the House.

Friday, March 12, 2010

Raleigh Neurosurgical prepares for April 1 termination with UHC

Raleigh Neurosurgical Clinic, Inc is in the process of sending out letters to inform patients of termination with UnitedHealth Care, effective April 1. While both parties are working towards a favorable agreement, Raleigh Neurosurgical is preparing for out-of-network status due to the limited time remaining to resolve current issues.

If an April 1 termination stands, alternate in-network facilities in the area include Capital Neurosurgery, Duke University Health System, Neurosurgical Associates, Raleigh Center for Neurosurgery, and UNC Health Care.

We will continue to keep you updated on any changes in network status. As always, please feel free to contact us with any questions or concerns that arise.

Thursday, March 11, 2010

Will House Democrats stomach Senate health care bill?

In response to President Obama’s call for substantial progress on health care reform by March 18, Democratic leaders are scrambling to determine the best way to move legislation forward.

House Democrats would like to pass a reconciliation bill before passing the Senate reform bill to ensure their changes are made, but doing so would go against the definition of reconciliation—a process intended to amend existing law. The alternative requires the House to pass the Senate bill first and hope that the Senate follows through with reconciliation to make the final bill amenable to House Democrats.

Regardless of whether reconciliation takes place before or after the Senate bill is signed into law, it will be difficult to alter the Senate’s legislation drastically using this method. Reconciliation is intended to be a budgetary process, requiring that the bill pertain to provisions that affect spending, taxes and deficits. While measures such as delaying the tax on Cadillac health plans meets these constraints, other sticking points such as abortion and tort reform may not.

To review, the Senate bill was passed back in December and is proposed to cover 31 of 54 million uninsured with an estimated cost of $871 billion over 10 years. The funding mechanisms and key provisions of the Senate bill are highlighted below.

Funding mechanisms of the Senate bill
• 40% excise tax on any employer-based health plans valued at over $8,500 for individuals and $23,000 for families
• Annual fees on drug companies, medical device manufacturers, and health insurers (excluding some non-profit plans)
• 0.9% increase to Medicare FICA tax for joint filers making $250,000/single filers making $200,000
• Increased threshold for medical expense tax deductibility to 10% (for individuals)
• 10% tax on tanning bed services
• Decreased Medicare Advantage program spending
• Decreased Medicare provider reimbursement
• Discounts for Medicaid and Medicare Part D from drug companies

Key provisions of the Senate bill
• No public option; federal government to oversee state/region-based exchanges and insurance premiums
• No denial of coverage based on pre-existing conditions
• Individual mandate and insurance subsidies for low-income Americans
• 60% minimum actuarial value for benefits
• No employer mandate but employer pays a fine to cover government subsidies if not providing group coverage
• Limit on premium differential criteria to tobacco use, age (3:1), geography, and family composition for small groups and individuals
• 2 year subsidy for low-wage small employers providing group coverage

Friday, March 5, 2010

Obama pushes for up-or-down vote on health care reform

Following on the heels of the televised health care summit, President Obama has met with several House Democrats this week and called for an “up-or-down vote” on health care reform in his speech on Wednesday. This is code for suggesting a reconciliation bill, which cannot be filibustered and requires only a simple majority of 51 votes to pass in the Senate.

Reports indicate that Obama has urged the House to vote on the Senate’s bill by March 18, but House Democratic leaders have expressed that the end of March may be more realistic. Additional legislation—including lower penalties on the individual mandate, higher subsidies for low-income Americans, increased benefits for Medicare prescription drug beneficiaries, and the removal of special Medicaid funding for Nebraska—is already being sent to the Congressional Budget Office to be scored for inclusion during the reconciliation process.

While House Speaker Nancy Pelosi believes that House Democrats will be reassured by these measures, the inclusion of federal funding for abortion in the Senate bill is still a sticking point for nearly a dozen pro-life Democrats. Stricter abortion language will be difficult to adopt through reconciliation as the process is intended for budget-related issues only.

Click on the diagram below to enlarge.

Thursday, March 4, 2010

Temporary COBRA subsidy extension signed into law

The Senate passed the Temporary Extension Act of 2010 on March 2 by a vote of 78-19, originally passed by the House on February 25. President Obama immediately signed the bill into law.

Provisions include:
• Extending the eligibility period for the 15-month 65% premium subsidy to those involuntarily terminated from March 1 through March 31, 2010;
• Allowing employees to receive the subsidy if they lost group coverage due to a reduction in hours and were terminated after the bill’s enactment; and
• Extending unemployment benefits through April 5, 2010.

This short-term extension is intended to give Congress time to develop broader legislation that will extend these programs through the end of the year.

Wednesday, March 3, 2010

BCBSNC releases year-end financial results

BCBSNC’s March 1 press release summarized 2009 as a stable year in both customer retention and financial performance for the Triangle-based company.

Despite the recent criticism from Washington of insurance companies, BCBSNC reports a profit margin of only 2.1% in 2009, down from 3.6% in 2008 and below their target range of 3.5-4.5%. BCBSNC attributes this decrease to higher medical costs and stunted membership growth due to current economic conditions. The company’s overall membership held steady from 2008 to 2009 at over 3.7 million members.

BCBSNC also reports spending more on customer medical care in 2009, with nearly 87 cents of every premium dollar going directly to medical costs compared to 85 cents in 2008. Costs associated with H1N1 and the seasonal flu and the company’s six month waiver of generic drug copayments both contributed to the increase in medical care spending.

In 2009, the company paid over $11.3 billion in claims for insured and self-funded customers and nearly $134 million in local, state and federal taxes.

Monday, March 1, 2010

DOL releases notice for employer CHIPRA compliance

In response to the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA), the Department of Labor (DOL) announced the release of a model employer notice on February 4, 2010. Click to access the DOL Announcement and Employer CHIP Notice. The specific provisions of this act, applicable to both fully-insured and self-funded group health plans, are outlined below.

1. Allows states to subsidize premiums for employer-provided group coverage from the state’s Medicaid or CHIP funds. Individuals eligible for Medicaid and the Children's Health Insurance Program (CHIP) can receive a premium assistance subsidy to purchase qualified employer coverage instead of enrolling in Medicaid or CHIP.

For Medicaid, the amount of the subsidy is equal to the employee contribution for group coverage. For CHIP, it is equal to the difference between the employee contribution for employee-only coverage and the employee contribution for employee and child coverage, less any premium cost-sharing under the State child health plan. States that provide the subsidy can choose to pay it as a reimbursement to either the employee or the employer. Employers have the right to opt out of being directly paid the subsidy on behalf of an employee.

2. Gives employees new special enrollment rights. Effective April 1, 2009, employers must permit individuals to enroll in the group health plan if the employee requests coverage within 60 days of the following events:
• Employee or dependent loses eligibility for Medicaid or CHIP coverage
• Employee or dependent becomes eligible for State premium assistance (under Medicaid or CHIP)

3. Mandates that employers send CHIP notices to employees. Employers providing benefits for medical care in states offering premium assistance to purchase group coverage must provide an Employer CHIP Notice to employees to inform them of the available subsidy. An Employer CHIP Notice must inform each employee, regardless of enrollment status, of potential opportunities for premium assistance in the state in which the employee resides.

Currently 40 states meet this criteria, including North Carolina. For a complete listing of these states, access the DOL Announcement and the model Employer CHIP Notice. Disclosure requirements include:
• The initial notice must be distributed by the later of (1) the first day of the plan year after February 4, 2010, or (2) May 1, 2010.
• Employers with calendar year plans must provide the notice by January 1, 2011.
• Disclosures must continue to be provided annually.

4. Mandates that employers disclose plan details to states upon request. Group health plans are required to disclose benefit information to states through a model coverage coordination disclosure. The DOL will develop a model disclosure form by August 4, 2010. States may begin requesting this information from plans beginning with the first plan year after the model disclosure form is issued.