Friday, November 16, 2012
Following provisions in federal health reform Connecticut’s General Assembly passed legislation to establish the Connecticut Health Insurance Exchange. It is now working to begin operations on the date defined in the law - - Jan. 1, 2014 and plans to allow people to look at plan options and begin the enrollment process in October 2013.
Some points about the medical insurance plans, which will be available:
● There will be four levels of coverage Platinum, Gold, Silver, and Bronze with considerable regulations being placed on how these plans are designed.
● The Exchange Board considered four benchmark (common) plans, defined by the federal Health and Human Services department to be the basis of coverage within the four metal levels and selected a plan based on a ConnectiCare HMO. Federal health reform law provisions require these plans to cover 10 Essential Benefits (EB). Two of the required EBs are not now covered in medical insurance plans in Connecticut. They are pediatric dental coverage and Habilitative coverage, which is an expansion of what is now included in Rehab coverage. This means more cost.
● These 10 EBs are also required to be in all plans in the Individual market and the Small group market whether a plan is purchased inside or outside the Exchange.
● Current plans in Connecticut’s individual market are quite comprehensive and because applicants are subject to a review of their medical history they are less expensive than similar plans in the small group market. Adding the EB coverage to individual plans, including maternity, and eliminating the medical history review means the premium will go up a significant amount! ! !
● The Actuarial Value (AV) of the plans must also be determined. When a person enrolls in a Platinum plan the insurance company must pay for 90% of the AV of all the treatments, tests, etc. Thus, if a person encounters a major medical expense situation they would only have to pay, in the way of co-pays, etc., up to 10% of the AV. Of course the premium for any plan in the Platinum level will be very high. Gold level plans will have a 80% AV. Silver will have 70% AV and Bronze will have a 60% AV.
● Additional regulations with the steps to calculate the AV are expected to be issued by the end of November.
● Premiums will also be based on an adjusted community rate. Connecticut currently uses an adjusted community rate system and the premium in the small group market is about five times more expensive for someone in their 60s than for a 20 year old. Companies today can also use male and female rates. Health reform says premiums cannot vary more than 3 to 1 from age 20 up to the 60s. My sense is the premium for someone in their 60s will drop some but there will be a big increase for younger ages. Premiums for a male and a female of the same age are to be the same and there will continue to be variation in cost around the state based on a person’s zipcode.
Some additional information on costs resulting from federal health reform provisions is available in this summary.
It highlights some points from an article written by Americas Health Insurance Plans an association of medical insurance companies.
● Smokers can be charged 50% more!
● The health reform law says the premium a medical insurance company charges, for a certain plan, must be the same whether its offered in or out of the Exchange. Thus, since an Exchange has to be self-supporting after one year of federal funding and the Connecticut Exchange is anticipated to have a budget of about 30 million the Board is developing plans to raise the needed income by adding a FEE on top of the premium for all plans purchased through the Exchange!
More information about the impact of federal health reform on individuals and small employers will be provided as it becomes available.
Contact if anyone in Connecticut has questions - (860) 662-3000
John C Parker, RHU, LTCP
Tuesday, October 09, 2012
The annual open enrollment period for individuals enrolled in Medicare, who want to make a change in their Medicare health plan, starts October 15, 2012. This period lasts until December 7, 2012 and any changes made will be effective January 1, 2013.
MediCARE only pays a physician or other outpatient provider 80% of your treatment expenses! Unlike employer benefit plans there is no limit on your 20% cost sharing! Thus, a great way to protect yourself from the big risk of unpaid expenses is to buy one of two types of Medicare health plans:
Every private company offering a Medicare Supplement in Connecticut provides the same coverage for each plan. Supplement A has the least amount of coverage, Plan B includes more, etc. There can however be considerable variation in the monthly premium. The Connecticut Department of Insurance has a chart, which shows the monthly premiums for each each companies plans. The cost of Plan F, which has full coverage, can vary from $214 a month up to $452.
Medicare Supplement plans, often called MediGap plans are very popular for individuals who need the flexibility to receive medical treatment in different states. A recent survey found 9 out of 10 individuals, who were enrolled, reported they were happy with their coverage.
MediCARE's Part A or Part B, nor a Supplement, does not pay for normal outpatient prescription medications. Thus, to have coverage for part of the medication costs you may have, its important to add a Medicare Prescription Drug Plan (Part D). Enrolling when you first sign up for Medicare is important since a penalty will be applied if a person does not have what is called credible prescription coverage.
Medicare Advantage in Connecticut plans are the second type of Medicare Health plan and they are considered MediCARE Part C. Private medical insurance companies offering Medicare Advantage (MA) plans have a yearly contract with MediCARE; receive a fixed monthly payment for each person who enrolls; provide at least the same benefits as in original MediCARE, but often add additional coverage such as more extensive preventive care; have co-pays for physician visits, emergency room visit, or for a certain number of days when in the hospital; and, depending on the plan, usually charge a monthly premium.
Individuals enrolled in a MA plan receive their medical treatment through the companies network of providers and most include coverage for Part D prescription expenses. The cost sharing a person has on their treatment expenses, such as for co-pays, is limited by the plan's annual maximum out of pocket (MOP.
MA plans are usually more economical than buying a MediGap plan plus a Part D plan. Thus, they are of interest to many individuals.
Another way to lower the monthly cost of a Medicare Health plan is to select the Supplement, which includes an option to add a deductible of about $2,000. This plan together with a Part D plan would result in a monthly cost, which is lower than some MA plans and also have a lower MOP.
Surveys of people close to 65 tell us more than 50% are confused about Medicare and only about 10% understand Medicare's Part C!
Interested in eliminating the confusion and increasing your understanding? Call (860) 739-0005 - today. We can meet for a no cost conversation about MediCARE. We can also discuss the value Medicare Supplements in Connecticut or Medicare Advantage Plans in Connecticut can provide.
John C Parker, RHU, LTCP
Wednesday, October 03, 2012
I posted in recent months some points on the impact Federal Health Reform is or will be having on medical insurance here in Connecticut.
In addition, to medical insurance Federal Health Reform is also having quite an impact on medical treatment providers. One thing, not often mentioned in the media, is a reduction, over the next few years, in the reimbursement rate providers such as hospitals, outpatient services, and MDs will receive when medical treatment is provided to individuals on Medicare. The result – the reimbursement Medicare providers receive will become lower than what providers receive from Medicaid (welfare). Think about that! If this does happen it will be very difficult for individuals to find a medical provider who will accept Medicare.
Wanted to share today some details on the affect Federal Health Reform is having on Hospitals. I received the following article this week from the National Association of Health Underwriters (NAHU) as part of their weekly Washington Update. NAHU is a professional association I am actively involved in here in Connecticut and on the national level. It reports on some changes on October 1, 2012, which affect Hospitals.
Pile on the Penalties
On October 1, two major programs from the 2010 health care law that affect hospitals went in to effect. The first, the Hospital Value-Based Purchasing Program, will pay hospitals according to how they perform based on a set of standard clinical quality measures and on surveys of patients’ experience. The payments are provided by Medicare which will withhold 1% of its regular hospital reimbursements, and over the course of the year funds will be returned to some hospitals based on their performance. By 2016 the percentage withheld will go up to 2%. Medicare estimates that about $850 million will be reallocated under the hospital pay for performance program this year. In effect, hospitals that do not meet the criteria will be penalized by not receiving a return of the withheld funds.
The criteria for receiving funds are divided into two categories. “Process” measures will account for 70% of the ratings, and the remaining 30% are based on patient surveys. The “process” measures include:
● Percent of heart attack patients given medication to avert blood clots within 30 minutes of arrival at the hospital
● Percent of heart attack patients given percutaneous coronary interventions within 90 minutes of arrival
● Percent of heart failure patients given instructions on discharge about how to take care of themselves
● Percent of pneumonia patients who had a blood culture taken before they were given antibiotics
● Percent of pneumonia patients that received the correct kind of antibiotics
● Percent of patients that received an antibiotic within an hour of surgery
● Percent of surgical patients that received the correct kind of antibiotic
● Percent of patients who had their antibiotics stopped within 24 hours after surgery ended
● Percent of heart surgery patients who had their blood sugar kept under control after an operation
● Percent of heart surgery patients already taking beta blockers who were given a beta blocker just before and after surgery
● Percent of surgery patients who received treatment to prevent blood clots within 24 hours before to 24 hours after the operation
Patient surveys will evaluate:
● How well nurses communicated with patients
● How well doctors communicated with patients
● How responsive hospital staff were to patients’ needs
● How well caregivers managed patients’ pain
● How well caregivers explained medication to patients before giving it to them
● How clean and quiet the hospital room and hall were
● How often caregivers explained to patients how to take care of themselves after discharge
● How the hospital stay rated overall
The other program that went into effect on October 1, the Readmissions Reduction Program, creates a Medicare penalty for hospitals with higher than expected readmission rates. Hospital readmissions are a costly problem – it is estimated that 1 in 5 Medicare patients return to the hospital within a month of discharge, the majority of which are readmissions costing $12 billion a year. These readmissions are considered preventable if better care been taken in transitioning the patient to the next phase in the patient’s recovery outside of the hospital.
The penalties were calculated between July 2008 and June 2011 and are based on the frequency that Medicare heart failure, heart attack, and pneumonia patients were readmitted to any hospital within 30 days of discharge - regardless of whether the patient was readmitted at the same hospital or for the same condition.
If a hospital is penalized for their readmission rate, the hospital will incur a 1% penalty. This penalty will be deducted from the Medicare reimbursement received from the hospital’s claim for a patient stay. This penalty may increase to a maximum of 2% in October 2012 and 3% in 2014. It is expected that about 2/3 of the hospitals serving Medicare patients, roughly 2,200 facilities, will be penalized. This averages to about $125,000 per facility in the next year. In total hospitals are expected to lose about $300 million out of $140 billion in Medicare inpatient payments over the next year.
The goal of the Hospital Value-Based Purchasing Program and the readmission penalties is to lower costs and improve care. To check on how your hospital is performing, Medicare will be posting details online using the agency’s “Hospital Compare” website.
John C Parker, RHU. LTCP
Friday, August 17, 2012
One of the main parts of federal level health reform is the creation of a medical insurance Exchange in each state. It will be a place for a person to view online coverage options from various medical insurance companies. They will be able to review plan details, premiums, and then enroll through the system with the company offering the plan they selected. People will be able to look at options beginning in October 2013 and the first date of coverage will be Jan. 1, 2014.
The Exchange being develop here is called – Connecticut Health Insurance Exchange.
Exchanges will serve two market areas - Individual and Small Group. The reform law defines small group as firms with 100 employees or fewer but each state can elect, as Conn has, to stay at 50 employees and below for a couple years.
Lets look at the Individual market Exchange:
● When a person goes to the individual part of the Exchange they will have to bring lots of info. in addition to what is normally required to enroll in medical insurance. For example, specifics about their financial situation and info. about their employer.
● The enrollment system will check, as a person’s information is put in, in real time with various federal agencies such as Homeland Security to confirm citizenship and the IRS to check income. Income is needed to determine eligibility for the expanded MedicAID coverage or the premium subsidies. Those eligible for MedicAID will be enrolled through the Exchange system and receive the coverage Connecticut’s Husky A program offers. They will not be eligible to select an Exchange plan or receive premium support.
● Currently the Connecticut MedicAID system covers adults up to about 70% of the federal poverty level (FPL). Health reform provides funding for a couple years, if the state approves, to cover what is called newly eligible adults, which are individuals up to 138% of FPL.
● Premium support will be available, in declining amounts, for individuals whose income is between 138% and 400% of FPL. If a person is determined to be eligible and selects a plan say from the ABC Health Insurance Co. their premium support money will go from the federal government to ABC.
● ABC will bill the person for their share of the plans total premium. They will not be connected in any way to any programs their employer may offer such as a payroll based IRS Section 125, before tax deduction plan. Thus, their payment will be with after tax dollars.
Lets look at the small group market part of the Exchange:
● Some employers may use a defined contribution approach and tell employees the firm will pay $xxx for medical insurance. Their employees can then select any plan and pay the difference through the firms payroll system. Others firms may select the plans, which are going to be available for their employees. The monthly bill will come from the health insurance co. to the employer.
● Enrolling in plans through the small group Exchange will be the only way, after Jan 1. 2014, a firm can apply for the small business medical insurance tax credit.
Note: This tax credit, which is a part of health reform is currently up to 35% but the full amount is only available to firms with 10 or fewer employees whose average salary (not counting the owner) is 25 k or under. The available credit falls off rapidly when a firm has more than 10 employees. It stops at 25 or if the employees average salary is 50 k or more.
Some other points about Exchange operations:
● The Exchange system will offer various plan choices but a lot of bureaucratic control regulations are being placed over the available options. Plans will be offered in four levels, Platinum, Gold, Silver, and Bronze.
● Each state will select one of four benchmark (common) plans in the state e.g the HMO with the most enrolled. The focus in selecting a plan is the treatments and services, which it covers. The 10 Essential Benefits (EB) outlined in the law must be included.
Note: These EBs apply to any plan whether it is in the Individual Market or the Small group market and whether the plan is purchased inside or outside the Exchange.
The EB treatment and services, which are listed below, include Pediatric dental coverage and Habilitative coverage, which is an expansion of what is now included in Rehab coverage. These are not now covered in Conn medical insurance plans, which means more cost:
+ Ambulatory patient services
+ Emergency services
+ Maternity and newborn care
+ Mental health and substance use disorder services, including behavioral health treatment
+ Prescription drugs
+ Rehabilitative and habilitative services and devices
+ Laboratory services
+ Preventive services and wellness services and chronic disease management
+ Pediatric services including oral and vision care
Requiring all this coverage e.g. maternity, more common in the small group market, on individual market plans means the premium will go up quite a bit! ! !
Once a state selects a plan on which the EB are based then what is called Actuarial Value (AV) has to be determined. When a person enrolls in a Platinum plan the insurance company must pay for 90% of all the treatments, tests, etc. included in the EB plan. Thus, a person who selects a plan in the Platinum level will, if they were to encounter a major medical expense situation, only have to pay, up to 10% of the AV in various co-pays, deductible, etc. Of course the premium for any plan in the Platinum level will be higher. Gold level plans will have a 80% AV. Silver will have 70% AV and Bronze will have a 60% AV.
In addition to the all the requirements on what and how medical insurance plans will pay a person’s treatment expenses the premiums will be based on an adjusted community rate system. Today in various small group plans the premium for someone in their 60s is about five times more than the premium for a 20 year old. The Health reform law says premiums can not vary more than 3 to 1 from age 20 up to the 60s. Specific rates certainly are not known at this time but my sense is the premium for someone in their 60s will drop some but the biggest change will be a big increase in the premium for younger ages. Premiums will also continue to have some location variation based on zipcodes as we have now. BTW - smokers will be charged more!
The health reform law says the premium ABC charges for the same plan whether its offered in or out of the Exchange must be the same. Thus, since an Exchange has to be self supporting after one year, some states, including Conn, are talking about adding a FEE on top of the premium for Exchange based plans!
Some information on Connecticut’s Exchange is on this web site.
Monday, July 02, 2012
The way health care is delivered and how medical treatment expenses are financed has been in need of reform for a long time. However, the federal level reform (PPACA) signed into law in March 2010 focused mainly on ideas to get more people covered instead of taking steps to deal with the primary problem, which is the ever increasing medical treatment costs.
Now that we know the Supreme Court’s decision I want to share a couple points on the Judges thinking from an advisory written by the National Association of Health Underwriters’ retained counsel, Ernst & Young: I added the bold.
In a 5-4 decision, Chief Justice Roberts, joined by Justices Ginsberg, Breyer, Sotomayor and Kagan, concluded, “The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”
In their dissent, Justices Kennedy, Scalia, Thomas and Alito wrote that the law should have been struck down in its entirety.
These points on the Court’s thinking were not emphasized, if even covered, in most media reports.
OK - now that we know PPACA is continuing lets review some things it does:
• Expands welfare (MedicAID) coverage for adults, which is about 60% of the federal poverty level (FDL) here in Connecticut, up to 138%.
• Creates the option, which may happen here in Conn, for a new special kind of MedicAID program called the Basic Health plan. It’s for people between 138% and 200% of FPL
• Provides individuals whose income is from 138% or 200%, which ever Connecticut selects, up to 400% of FPL financial assistance to pay part of their premium if they buy a plan through what will called the Connecticut Health Insurance Exchange. The premium credit amount will be higher for someone just above 200% of FPL and fall off quickly as their income goes up to 400% of FPL.
• There will be no “pooling of claims” for all the individuals enrolled in the Conn Exchange. PPACA indicates each company must pool claims between their Exchange and outside plans. Thus, the idea of many and often mention in media reports that costs will be lower since there will be a large group of people does not apply!
• The premium for medical insurance purchased through the Conn Exchange, according to PPACA, must be the same as the premium for that plan purchased outside the Exchange. Thus, to cover the cost of running the Exchange, after federal start up funds stop 12/31/2014, an additional Exchange fee will be added. Based on the assumption over 100,000 individuals will enroll through the Conn Exchange the fee will be about 4%.
I believe it is very unrealistic to think 100k individuals in Connecticut will enroll through the Conn Exchange? Why? The cost, even considering the financial assistance, will be to high for many people. Individuals will also have to buy coverage with after tax dollars.
Note: The amount of the tax on people who do not enroll will be quite small. Some may pay it but most likely many will just ignore it!
Some points on factors driving medical insurance rates to be so high:
• The rates we have today for medical insurance in Conn are some of the highest in the US.
• Plans in Connecticut will be priced based on a standard called Essential Benefits. It looks like (based on recommendations of the group reviewing this) the Essential Benefits, which will be defined for Connecticut, will be based on the state employee benefit plan coverage. It has a much higher cost benefit design than most plans in Connecticut.
• PPACA requires the Essential Benefits a state selects to also include certain pediatric dental treatment plus additional rehabilitation related coverage not available in most plans.
• The Conn Exchange will offer four levels of coverage based on the Essential Benefits. A person who enrolls in the Platinum plan will have 90% of the Essential Benefits paid. They will thus be responsible for the other 10% through co-pays and deductibles. Those enrolled in the Gold plan will have 80% paid, the Silver plan will pay 70%, and the Bronze plan 60%. Within the four “metal” levels there will be different plan design options.
Want to also highlight, from the Ernst & Young report, some additional requirements and costs built into PPACA. These will be impacting individuals and employers here in Connecticut over the next year and one half and thus increases costs:
• Medicare hospital value-based purchasing program
• Increase in physician quality reporting requirements in Medicare
• Additional Medicare pilot programs on alternative payment methodologies, e.g., accountable care organizations
• Increased requirements for hospitals to maintain not-for-profit status
• Fees from insured (including self-insured) plans transferred to the Patient-Centered Outcomes Research Trust Fund
• Increase Medicare payroll tax by 0.9% on high-income earners
• Impose a 3.8% tax on net investment income of high-income individuals
• $500,000 cap on health insurers’ deduction for executive compensation
• Eliminate employer deduction for Medicare Part D subsidy
• FSA limitations
• Excise tax on medical device manufacturers and importers
• Medical expense deduction floor increases to 10%
• Nationwide bundled payment pilot begins in Medicare
• Increased Medicaid reimbursement for primary care
• Medicare physician comparison data available to the public
• Reductions in Medicare payments for select hospital readmissions
• Expanded coverage of preventive services by Medicaid
• Employer mandate and individual mandate
<b>• Employer and insurer reporting requirements
• New health insurance market reforms take effect
• State health insurance Exchanges established
• Premium tax credits and cost-sharing subsidies available to certain individuals in Exchange insurance products
• Medicaid expansion to new populations (100% federal match to states for newly-eligible populations through 2016)
• Annual fee on health insurers
• Medicare/Medicaid DSH payment cuts begin
• Independent Payment Advisory Board (IPAB) issues first report to Congress if Medicare spending exceeds growth target
• Excise tax on high-cost employer-sponsored coverage (2018)
Most likely the above requirements have not been brought out by media reports:
Medicare payment cuts are mentioned above. What does this mean for individuals on MediCARE? Lots of Washington DC based PR indicates MediCARE benefits have not changed. Yes PPACA did not change the benefit design but the funding for MediCARE will be cut by over 500 billion over the next few years. Thus, the question becomes – where will people be able to receive these benefits? Some MDs are not now taking new MediCARE patients because the reimbursement they currently receive for the treatment provided is to low. The projections are the 500 billion reduction means MediCARE’s reimbursement will be lower than MedicAID.
Think about this. In Conn today about 70% of primary care MDs are not taking new MedicAID patients. Thus, what will happen to the many many people on MediCARE. Where will they find a doctor?
© John C Parker, RHU, LTCP
Saturday, June 02, 2012
The effect of “too much weight” on employers
This post shares some information about the impact the ever increasing trend of people weighing too much is having on employers. In looking into this we find the trend has been building over the last 50 years and the result is the percent of our population, which is overweight, has increased from 13% back then to 34% today!
What does this mean to employers?
● A person who is considered “just overweight” has an additional $1,850 in medical treatment expenses.
● A person whose body mass index (BMI) is between 35 to 40 creates $3,086 in additional expenses.
● When the BMI is above 40 the additional cost is $5,530!
Bottom line – putting all this together results in 20% of the health care spending in the US is now connected to obesity.
BTW individuals who are not obese end up having to pay more because of these overweight employees.
In comparison to the “too much weight” issue the additional cost when a person smokes is $1,274!
There are some other costs to employers because of the problem our society now faces:
● Employees whose BMI is above 40 have higher absenteeism costs - $1,262 for females and $1,026 for males. This may be better understood in term of sick days. Obese females take 9.4 more days and males 5.9 more than employees who have an ideal weight.
● The obesity problem also results in lower productivity!
What to do?
There is no magic quick fix solution but employers can work on steps such as:
● Create an on-going program with information to increase understanding on how a person who achieves a normal weight lives a better life.
● Introducing a wellness program. This requires a commitment and personal involvement from management and is not a one size fits all approach. Instead it’s a one to one program.
John C Parker, RHU, LTCP
Tuesday, May 29, 2012
A May 21, 2012 post/article by Avik Roy on Forbes.com has, for a health insurance professional like me, an interesting title. The article is called - "Putting the 'Insurance' Back in Health Insurance"
The first three sentences state - "We understand that it would make no sense to buy auto insurance after we’ve already crashed our car. We appreciate that it would be strange to buy homeowner’s insurance after our house has already burned down. And yet, when it comes to health coverage, many of us think that it makes perfect sense to wait until we’re sick to buy health insurance."
These words provides some insights on the point Roy wants to make in his informative and educational article. It can be seen here.
If a pop up ad appears click the link in the top right corner to stop it.
I recommend this link be shared as widely as possible.
Contact if any questions.
Sunday, February 26, 2012
This topic has created, over the years, much talking and writing by lots of knowledgeable people. Guess what? They have not come up with one answer on what really should be done.
When one looks at how to fix a problem the normal approach is to look into the situation and seek out/investigate what is causing it. When the primary problem is identified the approach is to then work on this issue.
One interesting and important fact which comes out when looking into the problems in health care is that around 85% of each dollar an employer pays in premium for their medical insurance benefit plan goes to medical treatment expenses. When you look further you also find these expenses have been growing much faster than general inflation for some time. Ok – now we know the primary problem what is being about it. The answer – not a lot. The normal reaction when learning this is – Why not? The answer to that from many – it’s to complex!
What are some of the common comments about what to do?
+ Some advocates think the answer is to get everyone covered.
+ Some suggest spending a lot of money on technology to eliminate paper, which hopefully will also reduce unnecessary or ineffective treatment.
These two suggestion and many others however do not get at the ever increasing cost of medical treatment.
Five individuals Bloomberg Business Week identified as experts where recently interviewed about “fixing health care” for an article in the February 27 to March 4, 2012 issue. The points they bring out are not specific to Connecticut but guess what – they also apply to us. Take a look!
A medical insurance professional I work with, through the National Association of Health Underwriters, who lives in Mass. had a commentary in the February issue of Employee Benefit Advisor about efforts to “fix health care”. He reports on some things being done up there and comments on their effectiveness.
Want to share some ideas on this challenging and very important topic? Send a comment.
John C Parker, RHU. LTCP
Wednesday, February 08, 2012
One of the things which has a very big affect on the cost of medical insurance is the ever increasing cost of medical treatment. More importantly within the medical treatment "pot" over 70% of these expenses are connected to lifestyle choices. One of the biggest is the fact - we all eat to much. Of course food tastes good, we enjoy it, thus it is hard to change our ways.
Sometimes having a system to help is useful. A system which allows you to to enter things you are doing and makes suggestions on thinks to do. Take a look.
Guess what - its from the US government and not bad.