By CQ Staff

April 29, 2010 -- An analysis released Thursday by a Washington health consulting firm found that many Medicare Advantage enrollees are not enrolled in the plans judged highest in quality on the government's website.

Avalere Health looked at the Centers for Medicare and Medicaid Services Part C Report Card for 2010 and compared it to Medicare Advantage enrollment data. The report card features "star" ratings scores for Medicare private plans, with a five being the highest rating possible.

The analysis found that about 38 percent of Medicare Advantage enrollees are signed up for plans rated with 3.5 stars or above and fewer than 1 percent are in five-star plans. About 47 percent are in plans with ratings of three stars or below. The remainder of enrollees are in plans that are not rated because they are too new or don't have enough data for scoring.

Medicare Advantage funding is set to be reduced under the new health care law (PL 111-148) and Avalere experts noted that beginning in 2012, plans' payments will be tied to their quality scores. That may lead plans to focus on improving their scores — for example, they may pay more attention to complaints or customer service, said Bonnie Washington, an Avalere vice president, in a statement.

By John Reichard, CQ Healthbeat Editor

April 26, 2010 -- The American Hospital Association may be blasting ads urging him to scale back a proposed "meaningful use" standard for Medicare payments for health information technology, but that didn't stop health IT czar David Blumenthal Monday from predicting a partnership between hospitals and the federal government on the issue.

Speaking to the AHA annual meeting, Blumenthal, the national coordinator for health information technology, said "it is of course possible that no one will be completely happy with the outcome of the debate. But we're also confident that when the dust settles that we can go on to work together as partners toward what I think we share as common objectives – which is an understanding that without electronic information we cannot be as good as we all aspire to be. "

AHA has been beaming ads at Congress saying that at least 275 members of Congress have questioned the proposed meaningful use criteria and urging that the Centers for Medicare and Medicaid Services take a more incremental approach. The proposal calls on hospitals to fulfill 23 criteria to qualify for higher federal payments as meaningful users of IT.

There's little reason to expect CMS won't back off at least somewhat. That is often the case when it makes demands on industry that could easily be overridden by lawmakers who often as not are friendly to provider interests.

With the rulemaking process underway, Blumenthal wasn't talking specifics about the meaningful use standard but addressed other issues, such as a change in thinking regarding the creation of a national data network.

He said that in the past his office "has focused on a relatively sophisticated prototype. . .which would realize in a full way our aspirations." The vision has been of a system that would "make it possible in our imagination to find out everything we need to know about a patient who showed up without an electronic health record in one of our emergency department or in our outpatient facilities.

"That level of sophistication is desirable but may not be achievable by everyone and all institutions and practices who participate in the exchange," he said. As a result, "we've begun developing a more straightforward, less demanding form of health information exchange" called National Health Information Network – Direct. NHIN-Direct will try to put in electronic form the kind of exchange that's been common in the paper-based health care system – the physician to physician, hospital to physician, and physician to hospital exchange of data. The goal is to take those communication channels and put them on the Internet.

Blumenthal also said he would announce "very soon" the communities the Department of Health and Human Services will give grants to as part of its "Beacon" program. The program "will fund 15 communities to try to realize very explicit community-wide goals for health improvement and efficiency improvement using health information technology. We hope these communities will in fact be beacons to guide other communities," he said.

But speakers on the panel on which Blumenthal appeared seemed to have the meaningful use standard uppermost on their minds. Health systems far along in using health information technology noted that under the proposal they would not be equipped to be "meaningful users" until late 2011 at the earliest under the definition of the term in the proposed rule.

An official with Intermountain Health Care in Utah, a national pioneer in the adoption of health IT, said the proposal is "a bit concerning."

"I'd like to see more flexibility so we don't have to completely modify our strategy," the official said. In an earlier presentation to the AHA meeting Monday, House Democrat Chris Van Hollen, D-Md., said the Obama administration needs to modify the meaningful use proposal to avoid the adoption of systems that aren't as effective as they could be.

By Jane Norman, CQ HealthBeat Associate Editor

April 30, 2010 -- Democrats kept health insurance companies on the run Friday after insurers under pressure in recent days agreed to early implementation of key changes mandated in the health care law and WellPoint canceled a hugely publicized proposed 39 percent rate increase.

But the law's supporters also sought to answer the nagging question of how the new law will curb future rate hikes for consumers, a development that could prove problematic in selling many still-skeptical Americans on the benefits of the overhaul. Premium increases are not prohibited in the law, but other provisions such as a cap on how much insurers can spend on administrative and marketing expenses — known as the medical loss ratio — will be effective in keeping down rate increases, Democrats said.

Democratic Sen. Al Franken of Minnesota and Rep. Jan Schakowsky of Illinois vowed in a conference call to maintain tough oversight of insurers, warning that hikes in premiums might rekindle interest in Congress in imposing a public option in insurance exchanges.

In addition, Health and Human Services Secretary Kathleen Sebelius said in an HHS webcast that the administration has already succeeded in forcing change by "shining a bright light on insurance company practices that, quite frankly, have been going on for years." Nancy-Ann DeParle, the director of the White House Office of Health Reform, hit on the same themes in a blog post.

The continuing Democratic onslaught came after many insurers said they would end policy cancellations for sick people, known as rescissions, and allow expansion of family coverage to include young adults prior to Sept. 23, when such coverage would become mandatory under the law. Both Sebelius and leading congressional Democrats had strongly urged the moves by the companies.

Anthem Blue Cross of California, a unit of the health insurance company WellPoint, on Thursday also canceled a proposed premium increase of up to 39 percent for some policyholders after state regulators criticized the method in which the rate hike was computed. WellPoint came under heavy fire from Sebelius for that proposed increase as well as recent news reports that it targeted breast cancer victims for policy cancellations.

Franken and Schakowsky spoke on a call organized by liberal-leaning Families USA. Ron Pollack, head of the group, said the nonprofit, which was deeply involved in shaping the new law, will organize a series of calls with reporters aimed at explaining different pieces of the new law. Democrats have said repeatedly that the public doesn't understand the health care law and has been subject to misinformation, a problem that could loom large as the nation heads toward midterm elections in November.

Franken said small-business owners with whom he has had contact in Minnesota and "who tend to get their information from more conservative sources" didn't know about the small-business tax credit provision, for example, that will assist small businesses with their insurance costs and kicks in immediately.

The new law, though, does not bar premium increases because that provision was not included in the original Senate version of the health overhaul and due to procedural issues couldn't be included in the reconciliation bill approved separately. Schakowsky, a member of the House Energy and Commerce Committee, said the new law does set the foundation for a process, and now premium increases will be exposed because they will have to be posted online.

In 2014, companies that have high premium increases can be banned from taking part in the exchanges, she said. "Insurers that want access to the customers that are going to be in the exchange are going to have to have more reasonable premiums," she said.

Schakowsky is a sponsor of legislation pending in Congress that would impose a federal rate authority over insurers (HR 4757, S 3078) by giving the secretary of HHS the ability to moderate or block premium increases. She said that in 24 states the insurance commissioners don't have the authority to address rate increases. "We are going to have to do a lot of work to monitor the insurance companies," she said.

If insurers raise their rates, "it could rekindle a consideration of things like providing a public option that would provide the kind of competition to the insurance companies and could bring costs down," added Schakowsky.

Franken said rate increases won't pose a problem for Democrats with voters who might have expected to see their premiums go down thanks to the new health care law. "The purpose of this was to slow the growth," said Franken.

"We know that premium rates are going to continue to go up; they're not just going to go up at the unsustainable pace that they were going up," he said. "You can't expect things to be going up at the incline that they were and then suddenly just go down. . . . If we did nothing, it was just going to be unsustainable."

Franken also pointed out that under the new law insurance companies will have to adhere to a medical loss ratio of 80 percent in the small-group market and 85 percent in the large-group market. That means that those percentages of the company's premium revenues have to be spent on providing health care. Franken said the National Association of Insurance Commissioners will be called on to write the definitions of the law, which is key. "I encourage health reform supporters to weigh in on the discussion," he said.

In her blog post, DeParle said that the insurance commissioners have agreed to move up their proposal on the definition to June 1 rather than December at the urging of Sebelius. "For too long, insurance companies could spend your premium dollars on things like CEO salaries, advertising and overhead — instead of improving care and improving patient health," said DeParle.

And in the HHS webcast, Jay Angoff, the newly named director of the Office of Consumer Information and Insurance Oversight, said the medical loss ratio provision will "force insurance companies to become more efficient."

By John Reichard, CQ HealthBeat Editor

April 29, 2010 -- For those used to the old world order of insurance regulation, changes now underway at the Department of Health and Human Services might seem surreal — but absent a repeal of the overhaul law a few years down the road, they are very much the way things are now.

While the feds have increasingly played a role in recent years in overseeing health insurers, that oversight by and large has been the province of state regulators. But the creation by the overhaul law (PL 111-148) of a new Office of Consumer Information and Oversight at HHS is the very embodiment of how much bigger the federal role has become.

An organization chart of the new entity (see below) illustrates all of its powers. Headed by Jay Angoff, a former public interest lawyer and consumer advocate in battles with insurance companies, the office reports to HHS Secretary Kathleen Sebelius. Both understand intimately how the current regulatory structure works; Sebelius was the state insurance commissioner in Kansas and Angoff served in that role in Missouri.

Reporting to Angoff are the Office of Oversight, the Office of Insurance Programs, the Office of Consumer Support and the Office of Health Insurance Exchanges. The oversight office will implement and enforce new regulations such as those requiring that large insurers pay out 85 percent of the premium dollar for medical care and that they allow adult children to remain on their parents' health plans until age 26. In states that do not now perform such functions, the office also will review insurance rate increases and flag those that it views as unreasonable.

The Office of Insurance Programs will administer the high-risk pool program and the retiree reinsurance program, which aims to make premiums more affordable for the nearly elderly. The Office of Consumer Support is responsible for a Web site that will allow consumers to compare premiums charged by insurance, and for issuing consumer assistance grants to the states. And the Office of Health Insurance Exchanges will develop and implement policies and rules governing insurance exchanges in the 50 states and oversee exchange operations.

All of these functions are likely to require large numbers of new employees. Sebelius noted after a recent hearing that HHS has $1 billion in fiscal 2010 to implement the overhaul law. However, appropriator Rep. David Obey, D-Wis., who chaired the hearing, offered no assurances regarding funding levels in fiscal 2011.

By Jane Norman, CQ HealthBeat Associate Editor

April 28, 2010 -- UnitedHealthcare officials announced Wednesday they will no longer cancel policies held by sick people. The company is acting in advance of a ban on the practice that's part of the new health care law.

The UnitedHealthcare announcement was followed late Wednesday by an announcement from America's Health Insurance Plans (AHIP) that health insurers in general would commit to dropping the practice of cancelling policies when holders become ill.

UnitedHealthcare's move came a day after Obama administration officials and congressional Democrats urged an end to what's called rescissions, a practice by insurers in which policyholders in the individual market who fall ill and submit expensive claims can find their coverage canceled. As of Sept. 23, rescissions will be barred unless fraud or intentional misrepresentation of a policy holder's health history is involved.

Congressional investigations have found that insurance companies scour the records of policyholders who fall ill, looking for any mistakes or omissions, even when unintentional.

WellPoint, which has been the subject of news reports that it targeted breast cancer victims for policy cancellations, said on Tuesday it would comply with the new law immediately. UnitedHealthcare said in a statement that it, too, will end its "limited" use of rescissions unless there is fraud or intentional misrepresentation of material fact.

The congressional Democrats, all committee and subcommittee chairmen with responsibility for oversight of the health care law (PL 111-148), also had urged insurers to implement an independent, external, third-party review of rescissions. UnitedHealthcare said it is looking for vendors to put in place such a system; WellPoint says it already uses reviews.

"In the spirit of the recently passed health reform legislation, UnitedHealthcare moved quickly to eliminate the practice of rescissions, except in cases of fraud or intentional misrepresentation of material fact," Gail Boudreaux, president of UnitedHealthcare, said in a statement. "We continue to find ways to ensure that the new health care reform law can be implemented effectively for the benefit of all Americans and achieve broader access to quality health."

Health and Human Services Secretary Kathleen Sebelius praised the decision by UnitedHealthcare. "The days when insurers can drop coverage when patients get sick are coming to an end but insurers don't need to wait to do the right thing," said Sebelius.

AHIP's dramatic announcement late in the day came in the form of a letter to the Democratic chairmen. AHIP President Karen Ignagni said in the letter that "our community is committed to implementing the new standard in May 2010 to ensure that individuals and families will have greater peace of mind when purchasing coverage on their own."

"We have been actively reviewing and discussing the rescissions provisions since the law was enacted and are pleased to be able to implement this reform ahead of schedule," Ignagni said.

White House Office of Health Reform Director Nancy-Ann DeParle said "it's heartening to see that the insurance companies who employed these terrible practices — and fought reform — are coming around doing the right thing by instituting the ban right away. We'll be watching closely and holding them to their word."

By Jane Norman, CQ HealthBeat Associate Editor

April 30, 2010 -- The Department of Health and Human Services said that as of Friday afternoon it has heard from 21 states and the District of Columbia that they will take part in a new program to offer insurance to people with pre-existing conditions, and 11 states that are opting out.

The deadline was Friday for states to say whether they want to operate their own high-risk pools for sick people who find it difficult if not impossible to obtain health insurance coverage. The temporary $5 billion program is authorized in the new health care law and will go out of existence in 2014 when insurance companies are forced to accept all comers.

Jenny Backus, acting assistant secretary for public affairs, said in a blog post to be put up on the HHS website that if a state does not participate, the federal government will set up a high-risk pool. There are 35 states that currently run pools though not all are accepting new participants.

As of 12:30 p.m. Friday, these are the states that will operate a program: Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Illinois, Kansas, Kentucky, Maine, Maryland, Michigan, Missouri, Montana, New Jersey, North Carolina, Ohio, Oklahoma, Rhode Island, South Dakota, Vermont and Washington.

States opting out are Georgia, Hawaii, Idaho, Indiana, Louisiana, Minnesota, Mississippi, Nebraska, Nevada, Tennessee and Wyoming.

Some states have said they don't want a potential financial burden on their hands, and some Republican governors have framed their opting-out in terms of their opposition to the new health care law. Others say that if they set up a program it would be redundant with their current programs and add administrative costs.