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| Health Plan Options |
Legislative & Regulatory updates related to the
Health Care Industry for August, 2019
Report Shows Short-Term Plans Spend Little on Medical Care – The National Association of Insurance Commissioners has released the 2018 Accident and Health Policy Experience Report which shows that insurers who offer short-term, limited duration health plans are spending significantly less on patients' medical claims than they collect in premiums from people enrolled in short-term plans. The average loss ratio of the five health insurers that bring in the most premiums from short-term insurance policies was 39.2% in 2018, meaning that 39 cents of every $1 collected in premiums was spent on medical care, while the rest was spent on administrative expenses or kept as profit. In contrast, the average loss ratio among comprehensive major medical plans purchased by individuals in 2018 was about 73%, according to the NAIC report. Short-term health plans' loss ratios are likely lower because they do not have as comprehensive benefits as ACA compliant plans, are able to deny coverage to people with pre-existing health conditions and charge more based on health status. While ACA-compliant plans must meet a minimum medical-loss ratio of at least 80% or else pay rebates to enrollees, short-term plans are not subject to a minimum MLR requirement. According to the NAIC's report, about 86,600 people enrolled in short-term plans in 2018. Enrollment in short-term plans is expected to grow this year in the wake of the Trump administration's August 2018 final rule that allowed insurers to extend the duration of short-term policies from a maximum of three months to up to a year.
Surprise Billing Remains Hot Topic During August Recess – Although both chambers of Congress are currently enjoying their August recess, the issue of surprise medical billing continues to be active on Capitol Hill. On August 5, more than 30 union and employer groups sent a letter to all Senate offices supporting Senate HELP Committee legislation that would address surprise billing. The legislation would resolve billing disputes between health plans and providers by establishing a benchmark payment to providers tied to the median in-network rates in that area. Providers have largely opposed this approach and have instead pushed for legislation that contains some form of arbitration between payers and providers when there is a dispute over an out-of-network bill. The House Ways and Means Committee is also currently working on drafting their own legislation that would end surprise medical billing. The House Energy and Commerce Committee had previously introduced separate legislation on surprise billing which would establish a federal benchmark payment pegged to local median in-network rates. This legislation also includes an arbitration option for higher-cost services. The Ways and Means Committee plans to mark up its own bill, rather than taking up the Energy and Commerce legislation. Resolving the issue of payment disputes between providers and health plans will likely remain a key issue as the different surprise billing bills move forward.
Study Finds Public Option Could Hurt Rural Hospitals – Navigant, an advisory and consulting firm, has released a study outlining the potential impact of a Medicare public option on rural hospitals and communities. The study was commissioned by The Partnership for America’s Health Care Future, a coalition comprised of trade associations representing payers, providers, hospitals and others who oppose the creation of a public option and single payer universal coverage. The study posits that if a public option is introduced, millions of enrollees would move off their commercial plans and into a public plan that pays hospitals at Medicare rates that are typically lower than private insurance — cutting rural hospitals’ revenues between $4.2 billion and $25.6 billion and putting as many as 55 percent of them at high risk of closure. The study did not examine any actual current legislative proposals that would create a public option, instead it devised three scenarios that estimated enrollee behavior. The expansion of health care coverage has emerged as a major issue leading into the 2020 presidential election, and many Democratic presidential candidates have touted health care plans that include a single-payer option, or single payer universal coverage.
Exchange Plans Required to Display Star Ratings Beginning in 2020 – In a move aimed at boosting transparency, CMS has announced that it will require Affordable Care Act Exchange plans to display their star ratings received for quality beginning with the 2020 Open Enrollment Period. Consumers will be able to compare health coverage choices using a five-star quality rating of each plan on Exchange websites, including HealthCare.gov. Under the five-star Quality Rating System, Exchange health plans are given a rating on a 1 to 5 scale, with 5 stars representing highest quality. Star ratings are based on a number of factors, including how other enrollees rate the doctors in the plan’s network and the care they receive, how well the plan’s network providers coordinate with enrollees and other doctors to give members healthcare that achieves the best results, and the overall administration of the plan including customer service and availability of information. The decision to implement the program nationwide comes after CMS held a pilot program during the 2017 and 2018 ACA open enrollment periods.
CMS Issues Reports on ACA Marketplace Enrollment – On August 12, CMS issued two reports on Affordable Care Act Marketplace enrollment and trends for 2018. The reports showed that Marketplace enrollment largely remained stable and that coverage for 10.6 million individuals effectuated in February 2019. Although overall enrollment largely remained stable, the reports did show a decline in individual market enrollment among consumers who are not eligible for advance premium tax credits (APTC). More than 2.5 million of these unsubsidized consumers exited the individual market—a drop of about 40 percent—from 2016 to 2018. The reports showed that nearly 9.3 million people of the 10.6 million people who effectuated coverage in 2019, received APTCs. Slightly more than half of 2019 effectuated enrollees were also eligible for cost-sharing reduction payments.
AMA Departs Coalition Opposing Medicare Expansion – The American Medical Association has announced that it will be leaving the Partnership for America's Health Care Future, a coalition that opposes Medicare expansion proposals such as Medicare for All or the creation of a public option. The AMA explained their departure by saying that the AMA continues to oppose universal single payer coverage but is open to supporting other coverage expansion proposals. The AMA also recently announced their own proposal to expand coverage. AMA CEO James Madara was quoted as saying "The AMA decided to leave the Partnership for America’s Health Care Future so that we can devote more time to advocating for these policies that will address current coverage gaps and dysfunction in our health care system." The Partnership, which was created about 16 months ago, still has nearly 60 members, including AHIP and the American Hospital Association.
Survey of Large Employers Shows a Focus on Containing Health Care Costs – The National Business Group on Health released its 2020 Large Employers' Health Care Strategy and Plan Design Survey on Tuesday. The survey found that employers project the total cost of health benefits will rise 5% in 2020, taking cost management initiatives into account. Including premiums and out-of-pocket costs for employees and dependents, the total cost of health care is estimated to be $14,642 per employee this year and projected to rise to an average of $15,375 in 2020. Looking for ways to combat rising health care costs, employers have expressed interest in in alternative payment and delivery models including accountable care organizations (ACOs) and high-performance networks. Nearly a third plan to implement either or both strategies in select markets in 2020, either directly or through their health plan. Managing pharmacy benefits and especially the high cost of specialty drugs and therapies also remains a top priority for employers. The survey also found that the number of employers offering full replacement consumer-directed health plans will shrink to 25% in 2020, down from 30% this year and 39% in 2018. Instead, employers will offer more plan choices like a preferred provider organization (PPO) plan. The majority of surveyed employers also expressed reservations about Medicare for All proposals, believing that such a program would increase taxes, lead to higher health care costs and increase employer costs.
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