August 11, 2014 -- Supporters of the health law got some good news on two fronts in recent days, with a consulting firm reporting that 2015 insurance premiums in many states will remain in the single digits and Massachusetts announcing it will operate its own exchange next year.

The average rate increase across states reporting data is 7.5 percent, according to PricewaterhouseCoopers, which based its estimate on preliminary information from 27 states and the District of Columbia. The consulting firm said 2015 also would bring more major commercial insurers into exchange markets.

But the firm also found that bellwether Blue Cross Blue Shield plans have submitted increase requests across the country typically above 9 percent. Rates aren't final at this point in many states.

Overall, the picture emerging for next year's exchange market lacks the kind of turmoil seen this year due to marketplace malfunctions. Still hanging over the future of the exchanges is a challenge to the legality of subsidies in states lacking their own marketplaces that could be taken up by the U.S. Supreme Court.

One possible but long shot scenario would see the justices take up and invalidate an Internal Revenue Service rule authorizing the subsidies for people in 34 states served by the federal exchange, healthcare.gov. Almost 5 million people got such subsidies last year and could lose them if challenges succeed in the cases Halbig v Burwell and King v Burwell.

Meanwhile, Massachusetts announced that it plans to operate its own health insurance exchange next year, which would keep any adverse Halbig ruling from wiping out subsidies in the Bay State. Although it operated its own exchange this year, the Massachusetts online marketplace was so badly hampered by malfunctions that officials in May weighed a possible switch to healthcare.gov while at the same time pursuing plans to remain independent.

In an announcement late last week, officials said they would drop contingency planning for a switch to healthcare.gov. Spokeswoman Claire Cooper said however that as part of the plan, Massachusetts is seeking approval for federal funding for the project. She had no immediate comment on whether plans could proceed without the money.

By Kerry Young, CQ HealthBeat Associate Editor

August 15, 2014 -- The technical and administrative woes associated with some of the new health insurance exchanges aren't discouraging state legislators from pressing for the creation of more of the marketplaces, according to a survey.

Bills were introduced in at least 14 states proposing to shift administration of the health law marketplaces from federal to local control, according to the National Conference of State Legislatures.

These measures were brought forward amid reports of significant technical problems in states including Oregon and Maryland that designed their own exchanges but then had to seek outside help. While none of the health exchange bills cited became law, the New Jersey Senate passed a resolution in June to create a six-member task force to study the implementation of its health exchange and recommend whether state government should have a greater role.

The health exchanges are a critical part of coverage expansion under the 2010 health law (PL 111-148, PL 111-152) and most of the bills cited were offered by Democrats.

More than 8 million people in the United States selected a health insurance plan through state and federal marketplaces during an open enrollment period than ended this spring. The process was often by marked by chaos, with would-be purchasers facing long wait times and confusion. Several Republican-led congressional committees have delved into the mistakes made in setting up state websites and the federal counterpart, healthcare.gov. While there has been bipartisan interest in examining missteps, a sharp partisan split remains over the basic worthiness of the government-assisted insurance purchases.

"Obamacare exchanges have been a miserable failure across the country, reducing consumers' access to quality healthcare and increasing costs," said New Jersey state Sen. Michael Doherty, explaining his opposition to the June resolution creating a new task force. "New Jersey has been wise so far in rejecting the establishment of Obamacare exchanges."

Oregon and Nevada have moved away from operating their own exchanges and plan to use healthcare.gov, noted the legislatures group report said. Yet Massachusetts on Aug. 8 announced that it had dropped a contingency plan to join the federal exchange and would instead work with software contractor hCentive to prepare for the next enrollment season, which begins in November.

Some states may revisit the idea of operating their own exchanges due to political shifts, especially if the existing systems over time prove to be more stable. In New Jersey, Republican Gov. Chris Christie in 2012 vetoed Democratic legislation meant to create a state exchange.

The Montreal-based contractor CGI Inc. has been cited in connection with flaws with healthcare.gov and also is being transitioned out of work on the Massachusetts exchange. But the firm continues to do work for what it calls "fully-functioning" state exchanges in Colorado, California, Kentucky and Hawaii.

Beyond New Jersey, lawmakers in Arizona, Georgia, Illinois, Iowa, Indiana, Maine, New Hampshire, North Carolina, Ohio, Oklahoma, Pennsylvania, Virginia, and Wisconsin have introduced measures this year exploring a move toward state-based exchanges, according to the report. These bills were all brought forward before a court challenge raised concern that people living in states that don't run their own exchanges possibly could lose access to federal subsidies for insurance.

Until there is more clarity on the legality of the subsidies, there may be little change in the divide over the exchanges, said Sara Rosenbaum, a professor of health policy at George Washington University.

"We are not seeing any states, at least in advance of the Halbig decision, moving from a federal to a state-based exchange," she said. "You may be seeing states that actually have established their own exchanges use the federal platform."

The legal status of such hybrid arrangement will need to be clarified if some exchange subsidies are struck down, she said.

By Kerry Young, CQ HealthBeat Associate Editor

August 13, 2014 -- Many companies are changing their health benefits to try to avoid a tax slated to hit in 2018 on more generous insurance coverage, a survey found.

Last week The National Business Group on Health released results from a survey of 136 companies, most of which have more than 10,000 employees.

The survey found that almost a third, 32 percent of those surveyed, plan to offer high-deductible, or consumer driven, health plans. Only 22 percent have done so this year.

The companies polled expected to keep their cost increases to about 5 percent for 2015 by increasing the portion of costs paid directly by consumers, such as using high-deductible plans. That's less than the 6.5 percent expected increase that the companies would expect if they made no such changes.

Companies are already looking at steps to avoid a 40 percent excise tax that starts in 2018. The so-called "Cadillac tax" was included in the health law (PL 111-148, PL 111-152) to raise revenue for its coverage expansion and is to be imposed in cases where the value of medical benefits crosses certain limits, in most cases $10,200 for individual coverage and $27,500 for family coverage.

The limits are indexed to inflation as measured by a form of the Consumer Price Index. Medical costs tend to rise much faster, which make it a challenge for many companies to avoid the tax, said Brian J. Marcotte, president and chief executive of the National Business Group on Health. In time, many large companies will reach the limits.

"There are companies that are worried about hitting it immediately in 2018 and they are aggressively trying to work with their benefits," he said.

By Kerry Young, CQ Health Beat Associate Editor

August 12, 2014 -- The Centers for Medicare and Medicaid Services (CMS) said last week that it asked about 310,000 consumers in letters to swiftly respond to questions about their citizenship or immigration status or risk losing health insurance provided through the health law's federal marketplace.

"These notices remind them that in order to keep their coverage they have to submit the outstanding documents by Sept. 5," said CMS Administrator Marilyn Tavenner in a statement, adding that the coverage could expire by Sept. 30 for those who fail to meet the deadline.

CMS said that it has made some progress in whittling down the number of applications that triggered questions about applicants' citizenship and immigration status. The agency said that it has closed about 450,000 of these cases, and another 210,000 are moving toward completion. The cases often stem from a glitch with an application, such as incomplete or inaccurate information about a Social Security number or permanent resident card. Such inconsistencies don't necessarily mean that an applicant doesn't qualify for aid, CMS said.

The agency said two more attempts will be made to call people whose applications have unresolved questions, and one more e-mail will be sent. CMS also is counting on help from community health centers in getting people to send in needed paperwork.

"Since this is an urgent matter, we are activating our networks on the ground to reach people directly in the communities where they live. Whether it is online, via our call center, or with one of our local partners, consumers will have a number of ways to find the help they need to continue their coverage," Tavenner said.

August 12, 2014 -- Medicare recipients in theory don't have to worry about obtaining coverage on health law insurance exchanges and, moreover, can't. Except that is not always the reality.

The notion that the worlds of Medicare and exchange coverage never overlap is a fallacy, a new federal document shows.

Most Americans 65 or older need not be concerned about exchange coverage, according to the 15-page document entitled "Frequently Asked Questions Regarding Medicare and the Marketplace."

Typically, seniors who have Medicare Part A and Part B are in compliance with the mandate in the health law (PL 111-148, PL 111-152) that people have health insurance. And it's against the law for someone who knows that to sell or issue such a person a marketplace policy.

But there are a few instances when an individual can choose a marketplace plan instead of Medicare.

For example, individuals who didn't pay Medicare taxes while they worked have to pay a premium of up to $426 a month for Part A of Medicare, which covers hospital and skilled nursing stays, hospice care and some home care. They now have the option of dropping Part A and Part B, which covers doctors office visits and other outpatient treatment, and buying an exchange plan.

Exchange plans also are an option for people who are eligible for Medicare but haven't enrolled in the program.

But before choosing an exchange plan over Medicare there are two important points to consider, the Centers for Medicare and Medicare Services (CMS) says in the document. Those who decide to enroll in Medicare after their initial exchange coverage period ends may have to pay a late enrollment penalty for as long they have Medicare. And in general, they can only enroll in Medicare from January 1 to March 31 with coverage not taking effect until July.

Individuals who only have Part B of Medicare aren't considered in compliance with the health law and may face a penalty unless they buy more comprehensive coverage.

Medicare recipients are considered covered if they have Part A only, however.

The CMS document also states that people with exchange coverage don't have to drop their existing arrangements when they become eligible for Medicare. But if they are entitled to Part A without paying premiums, as most Americans are, they won't be able to get any tax credits from the exchange once Part A coverage begins.

Those in exchange plans who become eligible for Medicare Part A and who must pay premiums for it can keep getting exchange tax credits if they enroll only in Part B, because it isn't considered minimum essential coverage under the law.

The CMS document addresses numerous other questions, including ones relating to the interaction between Medicare prescription drug coverage and exchanges. One takeaway: people who sign up fully for Medicare benefits need not be concerned about the sometimes blurry line between Medicare and exchange coverage.

By Kerry Young, CQ HealthBeat Associate Editor

August 13, 2014 -- The network of contractors intended to prevent Medicare from paying needlessly for services sometimes overlap in these efforts and need to better coordinate their work to be more effective, said a report from the investigative arm of Congress.

That step would spare doctors, hospitals and other providers of health services from duplicate reviews, it noted.

A dozen lawmakers, including the top members of the Senate Finance and House Energy and Commerce committees, recently issued a press release making public the findings of the July Government Accountability Office (GAO) report.

Medicare, which pays for health services for more than 50 million elderly and disabled Americans, is one of the largest expenses of the federal government, with an expected outlay of $595 billion for the current budget year, GAO said. As much as $36 billion of Medicare spending may go to improper payments. To combat this kind of loss, the Centers for Medicare and Medicaid Services (CMS) relies on four different kinds of services. Providers of health services have told lawmakers that they have concerns about the consistency and accuracy of this complex audit process.

"The information in this report can now be used by Congress and CMS to help make improvements and ensure more consistent oversight of both the contractors and audit process," the lawmakers said in a joint statement about GAO's findings.

Among the requesters were Ron Wyden, D-Ore., the chairman of the Senate Finance Committee; that panel's ranking Republican, Orrin G. Hatch of Utah; Fred Upton, R-Mich., the chairman of the Energy and Commerce Committee; and that panel's ranking Democrat, Henry A. Waxman of California.

Also among the requesters were Charles Boustany, R-La., the chairman of the Ways and Means subcommittee on oversight and that panel's ranking Democrat, John Lewis of Georgia.

GAO found that there has not been enough guidance from the Centers for Medicare and Medicaid Services to prevent overlap in the work of the four kinds of businesses used to check for improper payments. These groups are:

• Medicare administrative contractors (MACs), which process and pay claims;
• zone program integrity contractors (ZPICs), which investigate potential fraud cases;
• recovery audit contractors (RACs), which examine payments not previously reviewed by other contractors;
• comprehensive error rate testing (CERT) contractors, which review claims to estimate annually what Medicare's improper payment rate is.

One of the recovery audit contractors told CMS that in 2011, for example, it had to halt reviews on 2,000 claims because a zone program integrity contractor (ZPIC) had not informed it of an ongoing investigation, GAO said. It also found that CMS has not developed full guidance for MACs and ZPICs about whether they can duplicate other contractors' reviews.

"Without complete guidance for all postpayment claims review contractors about when duplicative reviews are permitted, CMS does not have assurance that MACs and ZPICs understand when and how to avoid duplicative reviews," GAO said in the report. "Absence of such guidance can also leave providers confused about whether a duplicative review is appropriate."

In a statement, Hatch said that CMS's efforts to coordinate its contractors "are simply inadequate."

"By establishing clear guidance and communication with its contractors, as recommended by this report, CMS can strengthen the postpayment audit review process to better serve contractors and taxpayers alike," Hatch said.

Other requesters of the GAO report included Dianna DeGette of Colorado, who serves on Energy and Commerce; Sen. Tom Carper,D-Del., chairman of the Homeland Security and Governmental Affairs Committee and that panel's ranking Republican, Tom Coburn of Oklahoma, as well as Sens. Charles E. Grassley, R-Iowa, Bob Corker, R-Tenn., and Claire McCaskill, D-Mo.