Category News

The Medical Loss Ratio is very critical to the health insurance industry. This MLR is going to have a huge effect on carriers profits and how they operate. In fact we could see some carriers drop out of certain markets reducing the already limited choices of carriers. The HHS has to clarify the laws on  the MLR. These laws going into effect as of Jan1st 2010 so we are getting down to the wire on explantions.

The National Association of Insurance and Financial Advisors (NAIFA) has again partnered with The Council of Insurance Agents & Brokers (CIAB), the Independent Insurance Agents & Brokers of America (IIABA), and the National Association of Health Underwriters to provide comments to the Department of Health and Human Services regarding the development of Medical Loss Ratios (MLRs) in section 2718 of the Public Health Service Act.

The groups are concerned that the narrow MLR definitions would adversely impact spending on such important health plan activities as case management, wellness, disease management, and fraud and abuse prevention programs, among others.

The group asserts, “It is important to spend time clearly defining clinical series and administrative costs to allow insurance carriers to provide an array of services that will improve the health of Americans and provide them the health care they deserve – effectively and efficiently – including the important services provided by licensed health insurance agents, brokers, and benefits consultants.”

Read the group’s full comment letter on the development of Medical Loss Ratios at

About NAIFA: The National Association of Insurance and Financial Advisors comprises more than 700 state and local associations representing the interests of approximately 200,000 agents and their associates nationwide. NAIFA members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. The Association’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members

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Insurance Affects ICU Survival Rate In U.S.: Study
Intensive care patients who did not have health insurance were 21 percent more likely to die than insured patients, U.S. researchers reported on Monday.Their study of intensive care units or ICUs in Pennsylvania adds to arguments that a lack of health insurance can be deadly. Health insurance reform legislation signed into law last March aims to sharply reduce the numbers of Americans — currently around 15 percent of the population — who do not have health insurance.

“Our findings suggest that ICU patients without insurance have a higher risk of death and receive less intense treatment in the ICU,” Dr. Sarah Lyon of the University of Pennsylvania, who led the study, said in a statement.

“Expanding and standardizing health care coverage through health care reform may improve outcomes in critically ill patients,” she added.

Her team looked at data from all 166,995 adult patients under age 65 admitted to Pennsylvania ICUs from 2005 to 2006.

About two-thirds had private insurance, 28 percent had Medicaid, the state-federal health insurance plan for the poor, and 3.8 percent had no insurance.

The uninsured patients were 21 percent more likely to die within 30 days than patients with private insurance, the researchers told a meeting in New Orleans of the American Thoracic Society.

“We still do not understand all the reasons for differences in survival between the insured and uninsured,” Lyon said.

“Critically ill patients without insurance may arrive to the hospital in more advanced stages of illness, perhaps in ways we could not control for in our study. Patients without insurance may also have different preferences for intensity of care at the end of life, and may not wish to be kept alive on life support as long as patients with insurance.”

But there could be another reason, she said.

“Another, more concerning explanation is that physicians and hospitals treat patients without insurance differently than those with insurance. More work is needed before we can say with certainty that treatment biases caused these results.”

The uninsured patients did not go to poorer-quality hospitals, she said. The disparities persisted across even the same hospitals.

About 46.3 million people in the United States lacked coverage in 2008, the U.S. Census Bureau reports, up from 45.7 million in 2007. About 30 to 32 million people are expected to gain health insurance under the new legislation.

In September, Harvard Medical School researchers reported that nearly 45,000 people die in the United States each year because they lack health insurance.

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The Early Retiree Reinsurance Program helps employers provide coverage to retirees

The recently passed Patient Protection and Affordable Care Act includes an early retiree reinsurance program available to groups that provide medical coverage to early retirees and their spouses, surviving spouses and dependents. This temporary program will provide $5 billion to help employers to continue to provide coverage to retirees ages 55 to 64.

The program provides for reimbursement of an early retiree’s (and covered dependents’) health care claims in an amount equal to 80% of the costs between $15,000 and $90,000. The employer is then expected to use the reimbursement to help lower health care costs (such as premium contributions, copays and deductibles) for participating enrollees.

This program is expected to be effective from June 1, 2010, to January 1, 2014. After January 1, 2014, retirees will have additional coverage options through the health insurance exchanges and federal subsidies for coverage.

Both self-insured and fully insured employer groups that offer early retiree coverage can apply, including plans sponsored by private entities, state and local governments, nonprofits, religious entities, unions, and other employers. To participate in the program, employers must first submit applications to the Department of Health and Human Services, which is expected to make the application available in the coming weeks. We’ll share a link to the application when it becomes available.

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New Cost Estimate Tops $1 Trillion: U.S. Health and Human Services Secretary Kathleen Sebelius issued a letter to congressional leaders this week, touting the administration’s early success in implementing certain provisions of health care reform. Meanwhile, officials from the Congressional Budget Office (CBO) reported on Tuesday that the health care reform legislation will cost about $115 billion more in discretionary spending over the next 10 years than the original cost projections. The CBO representative pointed out that if lawmakers approve this additional spending, the total cost of the health care reform law will exceed $1 trillion over the next 10 years. A Republican spokeswoman for the House Appropriations Committee responded saying, “If Congress were to approve all of this new discretionary funding authorized in the health care bill, almost all of the administration’s highly touted savings would be made null and void.”

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The Mental Health Parity and Addiction Equity Act (MHP) is one of several federal health care reform laws that are creating a significant and immediate impact on employers. The new legislation prohibits group health plans that provide mental health and/or substance use disorder benefits from applying ”

Regulations issued by the federal government

on February 2, 2010, interpret and provide additional guidance on MHP and may result in changes to your health plans. The guidance issued, considered as “interim final rules,” suggests that MHP may result in additional regulations and legislative direction still to come. We will continue to provide you updates as additional information is available. financial requirements” or “treatment limits” that are more restrictive than the “predominant” financial requirement or treatment limit that applies to “substantially all” medical/surgical benefits. We are working to ensure the health plans we offer fully comply with the provisions contained in MHP.

Mental Health Parity Basics

Whom does MHP apply to?

MHP applies to all employer groups with more than 50 total employees. This includes all fully insured and self-funded employer plans, governmental plans, union plans and church plans. Self-funded governmental plans may opt out and should contact their legal counsel if they are interested in investigating this further.

When does MHP take effect?

The new regulations apply to group plan years beginning on or after July 1, 2010. As you may remember from our earlier communications of the statute, we do not track a group’s plan year. Accordingly, we will use the group’s renewal date as the effective date for a group unless we are told otherwise. Employers who renew between November 2009 and June 2010 comply with the regulations based on the original interpretation of the law but may need to make additional changes at their next renewal (or plan year).

What is required for compliance?

MHP specifically requires the following to be in parity between medical and mental health and/or substance abuse disorder services: deductibles, copayments, coinsurance, out-of-pocket expenses and limits on frequency of treatment, number of visits and number of days of coverage.

Key Changes

Benefit Design and Parity Testing

To ensure financial parity between mental health and/or substance abuse disorder, and medical and surgical benefits, we are currently evaluating plan designs using prescribed formulas. Plans are evaluated under a “substantially all” and “predominant” three-step evaluation to determine the availability and level of cost sharing (types of cost sharing include copays, coinsurance, or deductibles).

Step 1

: Benefits are classified into one of six benefit categories: inpatient, in network; inpatient out of network; outpatient in network; outpatient, out of network; emergency care and prescription drugs.

Step 2:

Within each benefit category as specified in Step 1, a two-thirds (“substantially all”) rule is applied for each type of cost share feature employed:

A cost share feature can be applied to mental health and/or substance abuse disorder services

if it applies to at least two-thirds of all medical benefits within that benefit category.

A cost share feature cannot be applied to mental health and/or substance abuse disorder services

if it does not apply to at least two-thirds of all medical benefits. : The evaluation criteria for the tiering of prescription drug benefits differs and is based on reasonableness factors including cost, efficacy, generic versus brand name, and mail order versus pharmacy pick-up. Our current pharmacy practices comply with the new regulations.

Step 3

Following evaluation of our standard plans using the above methodology we can offer the following guidance:

All HSA/HRA plans comply and will not require plan changes.

Non-HSA/HRA plans will likely be modified, and will include features such as 100% coverage of outpatient mental health and/or substance abuse disorder services.

The outpatient benefit category will be impacted most by the rules.

Non-standard plans will be evaluated during the renewal process. Please contact your broker or sales representative for additional information.

: If cost sharing can be applied, the cost sharing amount is determined using the 50% (“predominate”) rule. The cost share is the amount that applies to more than half of the benefits in that category.

Administration of mental health and/or substance abuse disorder benefits through a third-party vendor

Definition of Mental Health and Substance Abuse Conditions

Under the regulations, whether a condition is considered a mental health and/or substance abuse disorder condition is to be determined “consistent with generally recognized independent standards of current medical practice.” Examples of such standards in the regulations include the Diagnostic & Statistic Manual of Mental Disorders, the International Classification of Diseases, and state guidelines. (Note: Standards listed as examples may include conditions not covered by a plan.) Our review indicates no changes are needed due to this provision.

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President Barack Obama’s new health care law could potentially add at least $115 billion more to government health care spending over the next 10 years, congressional budget referees said Tuesday.

If Congress approves all the additional spending called for in the legislation, it would push the ten-year cost of the overhaul above $1 trillion.

 The Congressional Budget Office said the added spending includes $10 billion to $20 billion in administrative costs to federal agencies carrying out the law, as well as $34 billion for community health centers and $39 billion for Indian health care.

The costs were not reflected in earlier estimates by the budget office, although Republican lawmakers strenuously argued that they should have been. Part of the reason is technical: the additional spending is not mandatory, leaving Congress with discretion to provide the funds in follow-on legislation — or not.

Congressional estimators also said they simply had not had enough time to run the numbers. Costs could go higher, because the legislation authorizes several programs without setting specific funding levels.

The health care law provides coverage to some more than 30 million now uninsured, offering tax credits to help purchase health insurance through new competitive markets that open for business in 2014. When Congress passed the bill in March, the CBO estimated the coverage expansion would cost $938 billion over 10 years, while reducing the federal deficit by $143 billion.

“If Congress were to approve all of this new discretionary funding authorized in the health care bill, almost all of the administration’s highly touted savings would be made null and void,” said Jennifer Hing, spokeswoman for Republicans on the House Appropriations Committee.

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The U.S. healthcare overhaul bill will provide insurance coverage for millions of Americans and possibly lower healthcare cost inflation, but it poses an increased credit risk for nonprofit providers, Standard & Poor’s said on Thursday.

 The outlook for 2010 remains one of stable credit quality after a period of deterioration from 2007 to 2009. But risk will increase in the next three to five years as many of the key provisions of the bill go into effect, S&P said. The bill can be viewed as having two halves, insurance reform and delivery system and payment reform, said the report. The former will mostly be covered by higher taxes and cuts in existing provider reimbursement formulas. But it remains unclear how the second part of the bill will be implemented, creating uncertainty for providers. “Given that the objectives of delivery system reform in the bill include lowering costs and minimizing inappropriate admissions and services, we believe the impact on the sector’s revenue could be significant,” according to the report. Still, the impact of delivery system and payment reform will likely be only gradual as many reforms will start with pilot or testing programs and could be changed after the testing period, the report said.

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As of September 23rd of 2010 dependent children can not be declined or pre-x from a health insurance policy.

This is creating some interesting situations. Right now we have seem some carriers stop selling stand alone children’s policies which is concerning. I can only speculate why they have stopped. One reason is the carriers are getting ready to increase the cost of these plans. If every child is guaranteed issue this mean the carriers are going to be absorbing much higher claims.

An example of this is we insurance children that suffer from a certain condition that  has a mandate of coverage. This mandate states the condition must be covered as any other illness and the child can not be declined from. So we have about 30 stand alone children’s policies at an avg annual premium for $2,400 x 30 policies= $72,000. For this particular condition to be treated ave about $34,000 year per patient x 30= $1,020,000 in claims.  So with this situation the insurance company is paying out much more than they are taking in.

So if we expand this on a state level of Guaranteed Issue for all children we should see an increase in premium to cover the claims.  This is the reason some carriers are not selling stand alone children’s policies as of right now.

What to do if you are in the market for a policy for your child.

If your child can get through underwriting take out a policy a.s.a.p. The reason for this is that policy will be a grandfathered policy which mean you could lock in a much lower rate than what the market has to offer after Sept. 23rd 2010. This could be the difference of paying $83 a month to paying $250 for the same policy after Sept. 23rd.

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Under the new health care reform children/adults can stay on their parents health plan until 26.  Here is the issue that will arise with this. Can the parents afford to cover the adult child on the plan. With most group health plans today employees pay for their dependents. On the other side if the parent is already covering other children on plan the addition of the adult child might not have any impact on premium. So every parent should quote out the adult child on an individual plan to see if that is a better option from a price point. Now from an underwriting stand point being able to put the adult child on a group health plan who has ongoing health conditions could be a major relief.

Adult Child Coverage:

The Departments of Health and Human Services. Labor and Treasury issued new regulations to extend coverage to young adults by allowing them to stay on their parents’ health care plan until age 26. Before  the Affordable Care Act, many health plans  did  remove young adults from their parents’ policies because of their age, leaving many college graduates and others with no insurance.

Today, about 30 percent of young adults are uninsured, representing more than one in five of the uninsured Americans. This rate is higher than for any other age group. The Affordable Care Act and the regulations announced today will help close the coverage gap for young Americans. While the new provision takes effect for policies and plan years beginning on or after September 23, 2010, more than 65 insurance companies have voluntarily agreed to provide coverage to young adults before the deadline. On April 27, the Internal Revenue Service released new guidance specifically stating that children can be covered tax-free on their parents’ health insurance policies. According to analysis by the Department of Health and Human Services of this provision, adding young adult coverage would increase average family premiums by an average of 0.7 percent, while allowing 1.2 million young Americans coverage under their parents’ plans through employers or the individual market.

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Under the new health care reform tax credits will become available for small business  health plans. The first issue to address does my company quality? With premiums increases every year a tax credit could help a small business keep a health plan in place.

Effective January 1, 2010, tax credits are available to qualifying small businesses that offer health insurance to their employees. So if your business qualifies for a tax credit, you are eligible right now.

About 4 million small businesses will be eligible to receive tax credits if they provide insurance.

The tax credit is worth up to 35 percent of the premiums your business pays to cover its workers – 25 percent for nonprofit firms.  In 2014, the value of the credit will increase to 50 percent – 35 percent for nonprofits.

Your business qualifies for the credit if you cover at least 50 percent of the cost of health care coverage for your workers, pay average annual wages below $50,000, and have less than the equivalent of 25 full-time workers (for example, a firm with fewer than 50 half-time workers would be eligible).

The size of the credit depends on your average wages and the number of employees you have.  The full credit is available to firms with average wages below $25,000 and less than 10 full-time equivalent workers.  It phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers

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