Carter's Benefits

eNewsletter Volume 4, Issue 8 August 2011

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Administration Unveils Rules
For State Health Exchanges

Recent News

  1. Administration Unveils Rules For State Health Exchanges.
  2. CMS Issues Proposed Payment Rates For Healthcare Providers.
  3. IRS To Increase Mileage Rates for business, medical or moving expenses.
  4. More Employers Offering On-Site Healthcare Clinics To Curb Employee Medical Costs.
  5. IRS Fielding Questions From Employers Regarding Health Insurance Mandate.
  6. Bipartisan Group Of Lawmakers Aims To Repeal FSA/HSA Provision.
  7. Report: Medicare Part D Sees Decrease In Drug Costs.
  8. Finance Expert Explains Flexible Savings Accounts.
  9. Texas Governor Signs Measure Allowing Multi-State Public Healthcare "Compact."
  10. "Affordable Coverage" Not Clearly Defined In Federal Healthcare Law.
  11. Report: Urban, Suburban Areas Have More, Better Care Than Rural Areas.
  12. Survey: Consumers Willing To Pay More For Customized Health Insurance Plans.

Administration Unveils Rules For State Health Exchanges.
Print media provided extensive coverage of the Obama Administration's announcement on Monday of new rules for the state health exchanges mandated by the healthcare law. Most sources agree that in crafting the regulations, the Administration sought to provide states with much flexibility. Coverage was generally positive, although some sources said that the rules may lead to more questions.
        The New York Times (7/12, A12, Pear, Subscription Publication) reports, "In a big step to carry out the new health care law, the Obama administration unveiled standards on Monday for insurance marketplaces that will allow individuals, families and small businesses in every state to shop for insurance, compare prices and benefits and buy coverage." HHS Secretary Kathleen Sebelius "said the insurance exchanges, the centerpiece of the new law, 'will offer Americans competition, choice and clout.'" The expectation is that these "exchanges will pool insurance risks and premiums so that individuals and small businesses will have 'the same purchasing power as big businesses,' Ms. Sebelius said."
        The Los Angeles Times (7/12, Levey) reports, "These state-based exchanges are intended to make buying a health plan comparable to shopping the Internet for an airline ticket or a hotel room. And by 2019, they are expected to serve as the main insurance resource for an estimated 24 million Americans who don't get their health insurance from their employer, according to the nonpartisan Congressional Budget Office." Small businesses "with fewer than 100 employees also will be able to use the exchanges, which will have to offer plans with a minimum level of coverage." In addition, "no plans will be able to deny coverage to people with pre-existing conditions."
        The Washington Post (7/12, Aizenman) reports, "In keeping with the Obama administration's determination to keep its message on jobs, Health and Human Services Secretary Kathleen Sebelius broke with the usual practice of unveiling new regulations at her agency's bland -- if pleasantly air-conditioned -- building." Sebelius "and other officials braved 90-plus-degree heat outside Frager's Hardware, a Capitol Hill store whose general manager, Nick Kaplanis, would be among the many small-business proprietors who would benefit from the exchanges, Sebelius said." She added, "This means small companies will spend less time worrying about insurance and more time doing what they do best, which is investing in their businesses and creating jobs."
        The Wall Street Journal (7/12, Mathews, Subscription Publication) reports that health exchanges are crucial to the healthcare law, and the new regulations aim to provide states with flexibility in implementing them. Yet, to date, only 12 states have passed legislation to create them. The Journal says that because states have so much leeway in these new regulations, they could face struggles about how much authority exchange regulators should have.
        The Hill (7/12, Baker) reports in its "Healthwatch" blog, "Obama administration officials emphasized flexibility for the states as they rolled out a highly anticipated regulation on insurance exchanges Monday. The proposed rule leaves most key decisions up to the states, though it sets some minimum standards for every exchange -- including limits on the role of insurance companies and agents." Steve Larsen, the director of the HHS office overseeing implementation of the new law, said, "I think it's normal that you're going to have states moving at different paces, for a whole host of different reasons."
        Politico (7/12, Kliff) reports that the regulations for exchanges "may raise more questions than those it answers." For instance, Alissa Fox, a senior vice president at Blue Cross and Blue Shield Association, "There was some language we didn't quite understand, suggesting the exchange might have some additional responsibilities reviewing premiums." Politico adds, "Eyebrows were also raised at the suggestion that the federal government could have a heavy hand in approving state changes to health exchanges, similar to the current process for any larger revisions to state Medicaid programs."
        The Financial Times (7/12, Rappeport, Subscription Publication) says that, like many states, insurers have expressed doubts about the exchanges. But, the regulations unveiled on Monday suggest that insurance companies could earn about $200 billion more in revenues by participating in exchanges. The Times quotes Sebelius as saying, "Insurance companies will compete for business on a transparent, level playing field, driving down costs. ... And exchanges will give individuals and small businesses the same purchasing power as big businesses and a choice of plans to fit their needs."
        Kaiser Health News (7/12, Appleby, Weaver) piece reports, "America's Health Insurance Plans, a major trade group, appeared to have won some of what it was lobbying for. In a statement issued Monday, AHIP president and CEO Karen Ignagni welcomed the authority states would have, saying they 'have the experience and local-market knowledge to ensure exchanges meet the needs of consumers in their state.'" In recent weeks, "the industry argued that insurer representatives should not be barred from memberships on boards overseeing exchanges, saying their expertise would be valuable."
        Exchange Rules Seek To Minimize Risk Of Covering Certain Patients. CQ (7/12, Adams, Subscription Publication) reports, "Health and Human Services Department officials coupled the health exchange regulation released Monday with another proposed rule designed to minimize the impact of covering sick, expensive patients on insurance companies." The Administration "proposed to give insurers higher payments for patients whose claims cost more than average so insurers don't have an incentive to avoid covering high-cost patients." Notably, the "103-page regulation includes three components that would encourage insurers to cover high-risk policy holders just as they would those who are healthy."
        New Rules Crafted To Withstand Political Criticism. CQ (7/12, Reichard, Subscription Publication) reports, "The 347 pages of proposed regulations federal officials released Monday governing the creation of state health insurance exchanges reflect a strategy by the Obama administration to reduce the direct hits the health law will take going into the next election." CQ says that this strategy may work, at least in terms of exchanges. Notably, "politically powerful players such as insurers, insurance agents, and the 29 state governments run by GOP governors are three obvious sources of hostile fire." These regulations "strive to minimize criticism of insurance exchanges from all of them."

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CMS Issues Proposed Payment Rates For Healthcare Providers.
CQ (7/2, Subscription Publication) reported, "The Centers for Medicare and Medicaid late Friday announced proposed fiscal 2012 Medicare payment rules for hospital outpatient departments, ambulatory surgery centers, dialysis facilities, and physicians." Outpatient payments would receive "a 1.5 percent rate increase; ambulatory surgery centers, 0.9 percent; and dialysis facilities, 1.8 percent. Doctor payments would fall by 29.5 percent on Jan. 1."
        The Hill (7/1, Pecquet, Baker) "Healthwatch" blog reported, "The physician payment rule must reflect current law -- which, under the much-maligned 'sustainable growth rate' formula (SGR), calls for a nearly 30 percent cut in doctors' payments at the end of the year." The agency "accounted for that cut in the rule, as it's required to do, but also took the opportunity to call for a permanent fix to the formula. 'This payment cut would have serious consequences and we cannot and will not allow it to happen,'" CMS Administrator Dr. Donald Berwick said in a statement. "We need a permanent SGR fix to solve this problem once and for all. That's why the President's budget and his fiscal framework call for averting these cuts and why we are determined to pass and implement a permanent and sustainable fix," Dr. Berwick added.

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IRS To Increase Mileage Rates for business, medical or moving expenses.
The Boston Globe (6/30, Boynton) "Managing Your Money" blog reported, "Here's a little relief for business owners. The IRS has increased the standard mileage allowance for business usage by 4.5 cents to 55.5 cents for July through December of this year. The increase comes because of the high cost of gas earlier this year, even though the price of gas has come down recently."

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More Employers Offering On-Site Healthcare Clinics To Curb Employee Medical Costs.
The Los Angeles Times (7/3, Helfand) reported that companies "across the country" -- typically large employers that are "self-insured and pay their own medical claims" -- are opening their own "state-of-the-art health centers where doctors and nurses provide medical care to workers often just steps from their desks." Many of the health centers are "full-service medical offices equipped with exam rooms, X-ray machines and pharmacies," and some even provide on-site appointments with "dentists, dermatologists, psychiatrists and other specialists." Executives say providing such in-house medical care not only "keeps workers healthy and productive," it helps the "bottom line by reducing absenteeism and slashing employers' medical bills for outside doctors and emergency rooms." In contrast, skeptics question the "quality of the care" provided by in-house centers and "worry that workers may be surrendering their medical privacy to employers."

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IRS Fielding Questions From Employers Regarding Health Insurance Mandate.
On the front of its Marketplace section, the Wall Street Journal (7/12, B1, Adamy, Subscription Publication) reports that as a result of the healthcare reform law requirement starting in 2014 that companies with 50 or more full-time employees have to offer affordable insurance coverage or else be monetarily penalized, the Internal Revenue Service is fielding employers' questions requesting clarification of certain issues. For example, companies dependent upon seasonal workers, those who work variable hours, or whose staffs are subject to a high turnover rate, are asking exactly what constitutes a full-time employee and how long must they work before insurance coverage is extended. The IRS itself has proposed a "look-back" period between three months and one year to determine if workers can be considered full-time, an idea cheered by employers, but decried by Sen. Tom Harkin (D-IA) as a way of restricting coverage.

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Bipartisan Group Of Lawmakers Aims To Repeal FSA/HSA Provision.
The Hill (7/15, Pecquet) reports in its "Healthwatch" blog, "Lawmakers in the House and Senate introduced bipartisan legislation Thursday to remove restrictions on tax-exempt health spending accounts, the latest provision of the healthcare reform law to come under attack by Democrats." The measure "would nix a provision that since January has required a prescription for buying over-the-counter medicines with medical savings accounts such as Flexible Spending Arrangements and Health Savings Accounts. The language was added as a way to keep the bill's costs down because it was estimated to save $5 billion over 10 years by cutting down on unnecessary drug purchases." Yet, it seems "to have had the opposite effect of increasing people's use of medical services," because physicians say "they're seeing patients for the sole purpose of writing out prescriptions for over-the-counter medicines." The Administration has not raised any objections to the bill.

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Report: Medicare Part D Sees Decrease In Drug Costs.
Reuters (7/16, Selyukh) reported that, according to a report by Murray Aitken of the IMS Institute for Healthcare Informatics and Ernst Berndt of the Massachusetts Institute of Technology and the National Bureau of Economic Research, cheaper generic medications will continue to hold down costs for the federal government, healthcare insurers and patients enrolled in Medicare Part D.
        The Hill (7/15, Pecquet) "Healthwatch" blog reported the report "concludes that the average costs for medicines in the top 10 therapeutic classes in the Part D program declined from $1.50 to $1 between January 2006 and December 2010. The report also projects that costs will continue to decline, to 65 cents by the end of 2015, a 57 percent decrease since 2006." The study "comes as the pharmaceutical industry has been ramping up opposition to Democratic proposals to require Medicaid rebates for people who are eligible for both Medicare and Medicaid. The government estimates that doing so could save about $50 billion over 10 years, but the IMS authors said their research suggests otherwise."

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Finance Expert Explains Flexible Savings Accounts.
USA Today (7/16, Alterman) reported on flexible savings accounts. USA Today noted, "Contributions made to FSAs are deducted from paychecks before any taxes are calculated and are not reported to the IRS, thus decreasing taxable income and increasing disposable income, which can save consumers hundreds or even thousands of dollars each year. Employees can elect the amount they'd like to contribute during the annual open enrollment period, which typically begins in November for the following year. Employees must reenroll every year and, at that time, may change the amount they'd like to contribute if they wish to do so." However, money in FSAs reverts to the employer if it's not spent by December 31. Finance expert Manisha Thakor says that with some planning, people won't lose anything. USA Today listed many items that are covered, including car expenses, commuting expenses, and dependent care.

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Texas Governor Signs Measure Allowing Multi-State Public Healthcare "Compact."
Reuters (7/19, Brooks) reports that Texas Gov Rick Perry (R) on Monday signed into law a GOP-backed bill that would ultimately allow Texas to enter into what he called a healthcare "compact" with other states that are also seeking more freedom to operate their Medicaid and Medicare programs as they see fit. Reuters quotes Perry, who is considering running for president, as saying that the move is a "significant way for us to minimize the effects of the coming catastrophe that will accompany the full implementation of Obamacare if that is not stopped first." Notably, Georgia and Oklahoma have passed similar legislation in an effort to convert Medicaid and Medicare funding into block grants.

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"Affordable Coverage" Not Clearly Defined In Federal Healthcare Law.
CQ (7/23, Adams, Subscription Publication) noted that although the health reform law says, "large employers who don't offer 'affordable'" healthcare will pay a fine, it does not clarify whether that coverage has to be affordable "for just the individual, or for their families" as well. According to an analysis (pdf) released by the Employment Policies Institute, if employers "must offer their workers' families affordable coverage, more than 13 million people would get coverage through the exchanges and the cost would be about $66 billion." But if the provision means that coverage "only has to be affordable for a single adult," the researchers said only about "4.7 million would get their insurance through the exchanges, and the costs would be less than $19 billion." The Administration will "weigh in with its analysis of which version is correct when the Treasury Department releases regulations."

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Report: Urban, Suburban Areas Have More, Better Care Than Rural Areas.According to CQ (7/27, Adams, Subscription Publication), a report by UnitedHealth Group shows that "in 70 percent of insurance markets, using a set of objective measurements, the quality of care scored lower in rural areas than in cities." The report also showed that "rural areas have fewer than half the number of surgeons and other specialists per capita than are in urban and suburban areas," and "doctors in rural areas were more likely than their urban and suburban counterparts to say diabetes, hypertension, heart problems, cancer, drug abuse and teen pregnancy are major health problems affecting their communities." The investigators suggested using telemedicine to improve access to healthcare in rural areas.

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Survey: Consumers Willing To Pay More For Customized Health Insurance Plans.
The Hill (7/27, Pecquet) "Healthwatch" blog reports that about half of insured beneficiaries "would be willing to pay more for health insurance that caters to their needs," according to a survey by Accenture. The consulting firm polled "1,000 insured people and found that nearly 50 percent were ready to pay more for better customer service"; and nearly 80 percent "said they expected customer service to be easier and more convenient." Among characteristics health plan members rated as most important were "knowledgeable representatives" (85%); "convenient" service hours (80%); short wait times (80%); and dealing with "one contact" to resolve coverage issues (80%). Notably, 60 percent said they were recently "transferred to multiple contacts" to resolve problems.

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How does Carter's Benefits help ?
We continue to stay on top of changes in this industry. In a consultative role, Eddie Carter has begun hosting live seminars to update employers and Human Resource Managers on these changes. If you would like to host a meeting with your local community or civic organization, please contact me for details.

Eddie Carter, Consultant Eddie Carter,
Benefit Consultant
Questions@CartersBenefits.Com
 
 
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