Nowhere in the thousands of pages of the Affordable Care Act does it give the federal government the power to stop insurance companies from charging excessive premiums. But the controversial health reform law does grant the Department of the Health and Human Services the right review some large rate increases and to tell consumers when they think health plans are charging too much.
HHS did just that today when it held a press conference to protest what it said were “unreasonable” rate hikes by Trustmark Life Insurance Company in five states. The company recently proposed premiums hikes of 13% or more for its plan members inAlabama, Arizona, Pennsylvania, Virginia, and Wyoming.
Courtesy Wikimedia Commons/FBI Buffalo Field Office/Public Domain
Gary Cohen, the Acting Director of Oversight at the HHS Center for Consumer Information and Insurance Oversight, said it wasn’t just that the increases were so high. HHS officials, after consulting with a team of outside analysts, concluded the rates were unreasonably high because the health insurance company was spending only a small percentage of its premium dollars on medical care and quality improvements. Trustmark also based its increases on “unreasonable assumptions,” HHS said. You can read more about HHS rate review authority here.
In its challenge to Trustmark, HHS called on the company to immediately rescind the rates, issue refunds to consumers, or publicly explain why they are standing by such a large rate hike.
It looks like Trustmark is going to stand by its rate increase. Following the HHS press conference, Trustmark issued its own statement saying that they disagreed with the federal government’s assumptions and conclusions. “Our premiums are driven by the rising cost and increased utilization of medical services,” the company wrote. “As a smaller carrier, our loss ratios can vary significantly from year to year, and we take that volatility into consideration.” As for spending too little of its premium dollars on medical care, the company said it has been in compliance with the federal Medical Loss Ratio requirements in that area. However, if they should fail to meet the federal standards, they will offer rebates to consumers.
So is this an effective strategy for bringing down health insurance rates? Share your thoughts on whether rate review by HHS and public disclosure will be powerful enough to force companies to keep premiums low or if you think insurers will be willing to ride out some bad press.
Recently, officials at Hoag Memorial Hospital Presbyterian, a regional health care system in Orange County, Calif., decided to rebrand their 60-year-old institution. The not-for-profit health care system is now known simply as Hoag. They weren’t just going for brevity. They specifically wanted to drop the word “hospital.”
Dr. Richard Afable, Hoag’s president and CEO, recently spoke to a small meeting of hospitalists in Las Vegas and explained that the name change reflects a shift toward providing more services outside of the hospital. Hoag’s hospitals do a great job treating the acutely ill, he said, but the leadership wanted to reach out to people in the community before they got sick enough to make it to the hospital.
Dr. Richard Afable. Photo by Mary Ellen Schneider/ Elsevier Global Medical News.
So officials at Hoag have been working to offer more services related to conditions that either slightly touch the hospital or don’t touch it at all, Dr. Afable said. For example, the system has beefed up its offerings around diabetes care and now provides counseling on how to manage the disease and prevent complications. In the old days, they would have waited for someone to have a heart attack or lose a limb before taking care of them, Dr. Afable said. They also are developing community-based programs for breast cancer, a condition that today is treated primarily outside of the hospital.
And Dr. Afable advised hospitalists to consider following Hoag’s lead and look how they can be involved in care outside of the hospital. He noted the example of CareMore, a medical group and health plan based in California, which is being acquired by the health insurer Wellpoint, Inc. Under CareMore’s model, hospitalists not only care for patients while they are in the hospital, but also after they leave. Once a patient is stable, they are sent back to receive the rest of their care from their primary care physician. Since CareMore uses a capitation payment model, there aren’t concerns about which physician gets the payment for the post-discharge care. The model is food for thought for hospitalists as care becomes increasingly less hospital centric, Dr. Afable said.
After weeks of contentious debate, lawmakers have finally reached an agreement to raise the nation’s borrowing limit. The plan includes cuts to lower the deficit by about $1 trillion over 10 years and creation of a committee to determine future cuts. The plan did not address the Sustainable Growth Rate formula and the committee could potentially reduce physician pay under Medicare and Medicaid. Congress is expected to vote on the plan today or tomorrow.
Photo courtesy of iStock
While the details of further cuts remains unclear, federal economists released their predictions on the growth of U.S. health care spending. Not surprisingly, health spending growth was low last year, due to the impact of the recession. And even in 2014, when many Affordable Care Act provisions kick in, the rate of spending growth is predicted to be just 2% over the average annual growth rate for the rest of the decade.
In related news, a repeal to the unpopular Independent Payment Advisory board has gained bipartisan support. For details on that and more, listen to this week’s Policy & Practice podcast.
Check back next week for more on the fallout from the debt agreement and health reform implementation.
The Independent Payment Advisory Board, the new panel that will be charged with reducing the growth in Medicare spending, was the focus of intense debate on Capitol Hill last week. In the July 18 edition of the Policy & Practice podcast, we have all the details on the two House hearings held on the panel and why physicians are worried about its impact.
The Independent Payment Advisory Board (IPAB) was created under the Affordable Care Act to help keep Medicare spending under control. But most physician groups are calling on Congress to scrap the board or substantially change how it operates. Opponents, who include the American Medical Association, say that if the IPAB goes forward, physicians would be subject to two levels of cuts: one from the IPAB and one from Medicare’s Sustainable Growth Rate (SGR) formula. Physicians are already facing a nearly 30% Medicare fee cut next year from the SGR unless Congress steps in.
HHS Secretary Kathleen Sebelius tours Frager’s Hardware Store in Washington, D.C., before an event to announce new rules on health insurance exchanges. HHS photo by Chris Smith.
This week’s Policy & Practice podcast also has news on the new federal regulations for how states can set up health insurance exchanges. Those exchanges, which aim to make it easier for Americans to buy insurance, are slated to be up and running by 2014. And check out the podcast for the latest on the debt ceiling negotiations and how Medicare could be affected.
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Check back with us next week for more on the debt ceiling legislation and the Institute of Medicine’s recommendations on what preventive services health plans should cover for women.
There’s a lot at stake in the negotiations over raising the nation’s debt limit, from the impact on the global economy to the potential elimination of Medicare’s Sustainable Growth Rate (SGR) formula. That’s right, the much-despised SGR, which is used in determining physician payments under Medicare, has even made its way into the talks about increasing the debt ceiling.
House Speaker John Boehner (left) and Senate Majority Leader Harry Reid (right) met with the President on July 10 to discuss the debt limit. Official White House Photo by Samantha Appleton.
As the president and congressional leaders go into overdrive, holding daily meetings on ways to trim the deficit, the medical establishment is pushing hard for lawmakers to stop the cycle of threatened physician pay cuts followed by last-minute legislative Band-Aids. The American Medical Association, along with more than 100 state and medical specialty societies, recently sent a letter to lawmakers warning that the cost of an SGR fix will only go up. Right now, they estimate the 10-year cost of replacing the SGR is nearly $300 billion, but that figure could rise to more than $500 billion in just a few years, they wrote. The debt ceiling legislation provides “the best—and perhaps only—opportunity to ensure stability in Medicare payments, ensure continued beneficiary access to care, and address the SGR deficit in a fiscally responsible manner,” the organizations wrote in their letter.
Get the full scoop on the SGR in this week’s Policy and Practice Podcast.
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And stayed tuned next week for all the details on new regulations on state-based health insurance exchanges.
Many of the hallmarks of the Affordable Care Act, such as state-based health exchanges to purchase insurance, won’t go into effect until 2014. But, in the meantime, officials at the Department of Health and Human Services are plenty busy rolling out other provisions of the law, making adjustments to some of the law’s programs, and just promoting what they’ve done so far.
Recently, HHS officials announced that they would stop granting exemptions that allow limited-benefit health plans to keep in place low annual coverage limits that are at odds with the Affordable Care Act. HHS has been granting waivers to these so-called “mini-med” plans in an effort to keep the products affordable for consumers. But no more. Starting on Sept. 23, HHS will no longer accept waiver applications or extension requests from these plans. And, in 2014, all health plans will be barred from placing annual limits on coverage under the health reform law.
HHS has also been busy promoting the availability of free preventive services for Medicare beneficiaries. Starting at the beginning of this year, Medicare beneficiaries were eligible to receive recommended preventives services ranging from mammograms to smoking cessation counseling with no copays or deductibles under Medicare Part B.
Photo courtesy National Cancer Institute.
But seniors haven’t flocked to take advantage of the services. Only about one in six Medicare beneficiaries has accessed the free services, according to a government report. So HHS is launching a public outreach campaign that includes radio and TV ads. The government is also reaching out to physicians, asking them to discuss the preventive services with patients.
For more on the implementation of the Affordable Care Act, plus a recap of the American Medical Association’s House of Delegates meeting, check out this week’s edition of the Policy & Practice podcast.
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The Policy & Practice podcast is taking a break next week, but check back on July 11for all the latest developments in health reform.
A new report from the U.S. Government Accountability Office (GAO), the auditing arm of Congress, found that the Food and Drug Administration isn’t doing everything it can to learn from medical device recalls. That’s despite the fact that on average more than 700 medical devices are recalled each year. The report was requested by Sen. Chuck Grassley (R-Iowa), the chairman of the Finance Committee and Sen. Herb Kohl (D-Wisc.), the chairman of the Committee on Aging.
The GAO investigators didn’t take issue with what the FDA does in initiating and classifying the mostly voluntary recalls of medical devices. Instead, they wrote that the agency took a haphazard approach to assessing the effectiveness of recalls and analyzing information after a recall. Those gaps represent a missed opportunity to learn went wrong and keep it from happening again, the GAO warned.
An open and charged AED. Image via Wikimedia Commons user Owain.davies.
Specifically, because of the FDA’s lack of analysis on medical device recalls, they couldn’t give definitive answers to questions from the GAO about the common causes of recalls, the trends in the number of recalls over time, the variation in recalls by risk level, the types of devices and medical specialties that account for the most recalls, and the length of time it takes for companies and the FDA to complete recall activities.
But the FDA told the GAO investigators that it does use recall information help target their inspections. And the GAO gave FDA a gold star from use of recall information to detect and address safety issues with automated external defibrillators. Late last year, the FDA held a conference on AEDs where in presented historical recall data to make the case for safety improvements in the device, the GAO wrote.
For its part, the FDA says it’s getting better. In statement in response to the GAO report, FDA officials said that last year launched the Recall Process Improvement Project, which is aimed at better educating the industry about the recall process. And about a year ago, the FDA began using recall data to aid in the review of devices. The agency has also developed initiatives that use recall data to help improve the safety of infusion pumps, external defibrillators, and radiation from medical procedures.