States Prepare to Launch New Health Law Part 1

With the Affordable Care Act set to debut in January, state legislators debated dozens of measures related to the historic health care law—from overhauling insurance laws and designing health “exchanges,” to shoring up anti-fraud protections and increasing the ranks of doctors and nurses.

On top of that, the politically volatile question of Medicaid expansion grabbed headlines, especially in the five states that still haven’t decided whether to expand the program.

“It’s been an IT undertaking of Manhattan Project proportions,” says Matt Salo, director of the National Association of Medicaid Directors.

Salo was referring to the need to mesh Medicaid enrollment with the new health insurance exchanges, but he could have been talking about any of the dozens of technical and administrative changes state officials must make to prepare for the Affordable Care Act (ACA). 

For example, state insurance regulators in nearly every state have been racing to approve hundreds of new insurance policies that will be offered on the exchanges starting Oct. 1. Meanwhile, the Medicaid expansion debate has highlighted longstanding problems with the federal-state health program for the poor, prompting many states to make changes.

Alabama Republican Rep. Greg Wren said the ACA “provided a real jolt to our governor and our legislative leadership to look at systemic reforms of our Medicaid program.” The result, Wren said, was the state’s first major Medicaid overhaul, designed to better coordinate patient care and reduce costs.

Beyond “Yes or No” on Expansion

A Downsized Medicaid Expansion (Infographic): Medicaid expansion is up to states. Six are still on the fence: Arizona, Maine, New Hampshire, Ohio, Michigan, and Florida.

As of today, 21 states and the District of Columbia have decided to expand Medicaid. In at least five more states – Arizona, Florida, Michigan, New Hampshire and Ohio – governors support expansion but Republican-dominated legislatures continue to debate the issue. In Maine, Republican Gov. Paul LePage is threatening to veto an expansion passed by the majority Democratic legislature.

Under the current eligibility rules, Medicaid mostly covers pregnant women and young children, disabled adults and the elderly. Under the expansion envisioned in the ACA,  it also will cover adults, many of them childless, between the ages of 18 and 65 with incomes up to 138 percent of the federal poverty line—about $15,900 for an individual and $32,500 for a family of four.

Many states plan to extend their use of managed care to cover these new adults, aiming to add more primary care providers to their existing networks of obstetricians, pediatricians and other specialists.

To boost the ranks of primary care providers, more than a dozen states enacted laws this year expanding the so-called “scope of practice” for nurse practitioners. These nurses with advanced degrees are trained to provide the same care as primary care doctors, but are prevented from doing so by state medical licensing restrictions. The new laws put nurse practitioners on an even footing with primary care doctors.

States also expanded licensing of retail health clinics, which typically see patients in drug stores or big-box retail stores, and enacted reciprocal licensing laws that allow doctors in neighboring states to care for out-of-state patients in rural areas through the use of telemedicine technology.

Even in states that choose not to broaden Medicaid under ACA, 2014 is likely to bring a substantial increase in state Medicaid rolls: The Congressional Budget Office predicts that millions of Americans who already qualify for Medicaid will enroll for the first time once national ad campaigns publicize the new health law’s individual insurance requirement.

Texas, for example, has firmly opposed Medicaid expansion under the ACA, but the state is expecting 555,000 people to sign up for Medicaid in the next nine years, growth that may cost the state nearly $4 billion.

Nationwide, the total cost of covering a projected 5.7 million people who are already eligible for the program but have never enrolled is estimated at $68 billion for states and $152 billion for the federal government, according to a study by the Kaiser Family Foundation and the Urban Institute.

Meanwhile, some GOP governors and lawmakers who are reluctant to expand Medicaid under the ACA are mulling alternative ways to expand coverage. One plan, referred to as “the Arkansas model,” would cover newly eligible adults through private insurance policies available on the health insurance exchanges. But the federal government has yet to approve that approach.

States Prepare to Launch New Health Law Part 2

Crafting Exchanges

The health insurance exchanges will be online marketplaces where uninsured people can compare insurance policies, find out whether they qualify for either Medicaid or federal tax subsidies, and purchase insurance. The ACA allows states to either run their own health insurance exchanges, partner with the federal government, or let Washington run an exchange for them.

Insurance regulators in nearly every state began qualifying participating insurance companies and the policies they plan to offer starting in April. The process must be completed by July 31.

So far, California, Colorado, Maryland, Oregon, Rhode Island, Vermont and Washington have made public the names of the companies that have applied and their proposed policy prices. In every state, the new rates for individual and family policies on the exchange are expected to be higher than existing individual insurance policies. But because of new insurance company requirements in the ACA, the benefits for exchange plans in 2014 will be broader and there will be no caps on claims, making it difficult to compare them to today’s policies.

Fraud and Abuse

Stateline’s Legislative Review looks at policy and politics in the states since legislatures began their work in January. The five-part series will include analytical articles, infographics and interactives.

Every year, unscrupulous health care providers squander billions of state dollars by overbilling, filing claims for services that were never provided, or otherwise cheating the system. With millions of newly eligible beneficiaries and billions of federal dollars coming into state Medicaid programs next year, the authors of the ACA reasoned that opportunities for criminal activity would surge unless states increased fraud prevention efforts.

In addition to federal requirements, lawmakers in several states voted for additional anti-fraud measures this year. “Fraud fighters have to keep investing in new tactics and technology to stay one step ahead of the bad guys,” said Megan Comlossy, health expert with the NCSL.

Under the ACA, states are required to ramp up background checks on new health care providers and immediately suspend claims payments when there is a “credible allegation” of fraud. Arkansas, Florida, Iowa and Texas enacted laws defining what type of evidence is needed to make such a credible allegation.

The federal health law also calls on states to report doctors and other providers they have kicked out of their Medicaid programs. The list will be kept in a national database that includes the names of providers who have been terminated from Medicare. The database is intended to prevent crooked health care providers from simply moving from state to state or from Medicare to Medicaid.

In addition, the law provides federal money to states that invest in new technology designed to spot criminal activity before claims are paid. Arkansas, Colorado, Massachusetts and Texas this year approved new laws calling for investment in so-called “predictive modeling” software similar to what credit companies use to reveal patterns of illegal activity, according to NCSL.

Whether states can stop more criminals from siphoning money from Medicaid remains to be seen. The same goes for state efforts to attract more primary care providers to serve the newly insured and educational campaigns aimed at convincing low-income adults to sign up for tax credits.

One thing is certain: Though most state legislative sessions will be over by July, the work of implementing the ACA will go on for years. 

Health Care costs to slow in 2014

The slowdown in health care spending as previously reported by researchers just may be here to stay.

A report Tuesday from consulting firm PricewaterhouseCoopers projected lower overall growth in medical costs in 2014, even as millions more newly-insured Americans join the health system under the Patient Protection and Affordable Care Act.

PwC’s Health Research Institute projected that health care inflation in the U.S. is projected to dip to 6.5 percent in 2014 but that when other factors are put into the mix, that figure could end up around 4.5 percent.

Though costs are still rising faster than inflation, it's still a nice reprieve from previous double-digit increases. It's also slightly less than the 7.5 percent increase PwC estimated for 2013.

“Health care cost increases continue to exceed overall growth in wages, but the gap appears to be shrinking,” said Michael Thompson, principal with PwC’s human resource services practice. “The long-term trends suggest that as the economy improves, the cycle of runaway cost increases will be broken.” 

That’s a critical revelation as employers re-evaluate the role of health care benefits to their organizations, and step up efforts to engage employees more directly in value-based health care decision making, Thompson said.

Still, the report notes that uncertainty about the impact of PPACA implementation and what to expect from a largely unknown, newly-insured population are manifested in seemingly contradicting themes: a declining medical cost trend and rising insurance premiums, particularly in the individual market.

Rising premiums are mostly due to new requirements as part of PPACA. Essential health benefits and the pre-existing provision cost more to cover. Industry experts have long warned that individual premiums will rise due to PPACA, especially for younger and healthier adult males.

Though a slowdown in health care spending may be good news for the Obama administration, who have been defending their landmark health reform law, some argue that it’s in part due to the weak economy and consumers putting off care.

PwC researchers said that the slowdown is in part due to consumers making spending adjustments. Many are delaying care, using fewer services and choosing less expensive options such as retail clinics, urgent care centers and mobile health devices.

An analysis earlier this year from Kaiser Family Foundation found that health spending grew by 4.2 percent per year from 2008 to 2012, down from a peak of 8.8 percent from 2001 to 2003 – and that most of the slowdown (77 percent) was due to years of a weak economy “which causes people to put off health services when they can and prompts employers and states to reduce health spending." The rest is explained by changes in the health system, including increased consumer cost-sharing, tighter managed care and modifications in payments and delivery, that analysis said.

“The problem of health costs is not solved, and we need to be realistic that health spending increases will return to more typical levels as the economy improves,” Drew Altman, president and CEO of the Kaiser Family Foundation, said in April.

Additionally, more employers continue to shift costs to their employees through higher deductibles.

On the plus side, PwC researchers said, some active approaches are contributing to the slowdown in health spending. Major employers are beginning to contract directly with big-name health systems to tackle expensive and complex procedures for employees, such as heart surgery and spinal fusion. According to PwC’s Touchstone Survey, 33 percent of businesses are considering high-performance networks over the next year. Early data suggests this could mean as much as a 25 percent reduction in costs, researchers said.

And the government is ramping up penalties on hospitals that have too many patients coming back with problems soon after being discharged, which also is pushing down overall health care costs.

Regardless, PwC researchers said in their report that the health care industry needs to be proactive and aware in navigating the "rapidly-changing environment."

“The health industry is at an inflection point as it rebalances, realigns and prepares for full-scale transformation from fee-for-service medicine to consumer-centered, accountable care,” said Kelly Barnes, PwC’s U.S. Health Industries leader. 

“Change of this magnitude takes time and will come in stages. Health organizations should learn to adapt to a market in which growth may be lower in the near term, and pursue new sources of growth often in unlikely places.”

by. Kathryn Mayer

HOW CUTTING EMPLOYEE HOURS DUE TO HEALTH REFORM MAY INFRINGE FEDERAL LAW

Countless employers and their advisers are considering a health care reform strategy of cutting employees' weekly hours to less than 30 hours to try to avoid dealing with coverage requirements under the Affordable Care Act. At first blush, this approach seems to provide cover from a variety of costs associated with the ACA by getting employees off the health plan eligibility list.

However, a potential problem exists with this strategy and it is found in the backwaters of ERISA Section 510 which refers back to ERISA Section 502. This could be fodder for attorneys depending on the motive of the employer in taking employees part time.

The poignant part of ERISA Section 510 states: "It shall be unlawful for any person to discharge, fine, suspend, expel, discipline or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan ... "

A plan participant in an ERISA plan (health plans are ERISA plans) has a legal right to participate in the plan without undo interference.

For sure, employers can - and do - cut employees' hours for reasons of legitimate business necessity. Sometimes a cut in hours relegates a benefit plan participant to ineligibility to participate in the plan under the terms of the plan's eligibility requirements.

Now, let us look at the single motive that some employers are considering to avoid offering health benefits under the terms of the ACA. This is key to a potential ERISA Section 510 claim against an employer.

If the single motive for cutting employees hours is to avoid the purposes of the ACA, to me, that sounds like a subterfuge that interferes with a plan participant's rights to their health plan. That is one of the very prohibitions that ERISA Section 510 was written to prevent.

The bottom line is that you may be on shaky ground using the cut-in-hours strategy to knock plan participants off the health plan eligibility list and avoid further provision of health benefits to otherwise qualified plan participants.

Penalties

Penalties always get attention. A violation of the employee's rights to participate in their plan or retaliation of the sort that results in a loss of group health plan coverage for reasons already discussed can be prohibitively expensive for the employer.

First, a plan participant may start a civil action to address loss of ERISA rights or retaliation for seeking to exercise rights under the plan. Second, the DOL can assess fines for each violation against the fiduciaries of the plan.

When all is said and done, messing with employees' rights to a health plan is tricky and potentially an expensive proposition. Make sure you understand the sleepy 510 and 502 sections of ERISA before you consider cutting your employees hours to avoid the full force of the ACA.

(Source: Employee Benefit Adviser by Craig Davidson)