Archive for April, 2010

Swetnam/Carter Trial Begins

Thursday, April 29th, 2010

Insurance agents Swetnam and Carter are facing their day in federal court in Houston on charges they sold boggus insurance policies to Valley Baptist Medical Center (Harlingen, Texas) and profited by over $1 million.

The prosecution  rested their case  yesterday. The defense begins. Court documents show that defendent Carter is apparently distancing himself from co-defendent Swetnam.

In reviewing court documents, it seems the prosecution has an open and shut case. But, inside sources say the defense will have some surprises for the court this week.

As always, denfendents are innocent until a jury decides otherwise.

Thursday, April 29th, 2010

Merger talk riles Weslaco doctors

April 28, 2010 9:32 PM
By JARED JANES, The Monitor

WESLACO — Larry Cardenas found medical aid at the hospital just down the street when he accidentally crushed his foot with a mallet.

After a few trips to Knapp Medical Center for treatment of his wounds, Cardenas said, he wouldn’t be satisfied going anyplace else.

“I have quality care here in my own backyard,” he said during a rally outside the medical center, 1401 E. Eighth St., as he and other attendees wore T-shirts that read, “Our hospital is not for sale.”

“I want to stay here,” Cardenas said. “I don’t want to be forced to go to Harlingen or McAllen or Brownsville.”

Discussions over a possible consolidation of Knapp Medical Center in Weslaco and Valley Baptist Health System hospitals in Harlingen and Brownsville are in serious jeopardy after complaints from doctors, residents and community leaders in this city.

The two nonprofit health care organizations signed a memorandum of understanding earlier this month that allowed them to begin formal discussions to consolidate their operations into one health care system. Hospital administrators said at the time that consolidation would avoid duplication of costs, provide patients access to a broader range of services and streamline business operations.

But about three dozen Weslaco residents and doctors who protested the talks before Knapp’s board of directors met Wednesday said the consolidation could mean layoffs, a smaller tax base and loss of local control over the hospital.

Forty-three Knapp doctors included their names in an advertisement in The Monitor stating they were opposed to an alliance with Valley Baptist Health System. Those doctors are the most vocal opponents of the consolidation, but some 95 percent of the doctors who regularly practice at the hospital have indicated they were also opposed, said Beto Alanis, the hospital chief of staff who represents the doctors as an ex-officio member of the board of directors.

Doctors were alarmed by credit rating agency Standard & Poor’s bond rating for Valley Baptist, which was lower than Knapp’s, Alanis said. Doctors were also concerned that consolidation could cause Knapp employees to lose their jobs as some services shifted to Cameron County.

But Alanis said the doctors who actively petitioned against the consolidation are worried that it could affect the future of a hospital that has served area residents for nearly 50 years.

“We’re worried about having the citizens of Weslaco and the Mid-Valley lose control of their say in the future of Knapp,” said Alanis, an Hidalgo County native who was born at the hospital and always wanted to work there. “We don’t want to lose control of our hospital.”

The memorandum of understanding signed earlier this month is the first step in the consolidation. Before it’s completed, the hospitals must reach an agreement, obtain regulatory and government approvals and finalize the deal with bankers and others with financial interests in the deal.

Knapp spokeswoman Maggie Halaby said the memorandum only indicated that the boards of both hospitals would discuss the consolidation. Other hurdles also need to be cleared.

One would be gathering support from the city of Weslaco.

Mayor Buddy de la Rosa sent a letter to Knapp CEO James Summersett this week to question how a consolidation would affect investments the city has made in hospital facilities through the issuance of bonds. Relinquishing control or ownership of hospital facilities that were constructed with $60 million in bonds could violate agreements between the city and hospital, the letter states.

De la Rosa, who visited with Cardenas and other residents who protested outside the hospital Wednesday, said the city wants to ensure its interests are considered.

“We don’t want decisions to be transferred to other areas,” the mayor said. “We want to keep decisions here at our community hospital.”

Costa Rica Draws Americans Seeking First Class Medical Care

Saturday, April 24th, 2010

We have just returned from a two week visit to Costa Rica, or seventh in as many years. This trip was devoted to exploring the Costa Rican medical community in San Jose, visiting facilities, interviewing physicians, patients, and ancillary health care providers. 

Travel to San Jose, Costa Rica is a short 3 hour non-stop flight from Houston, or a 2.5 hour flight from Miami.

It is one thing to read about medical tourism on the internet, or visit with a health care intermediary in the United States who specializes in setting up medical care in Costa Rica for American citizens who wish to seek care there.  However, there is no substitute to seeing the Costa Rican health care delivery system up close and first hand.

At CIMA Hospital, we found a modern facility equal to or better than any hospital in the United States. This JCI accredited hospital is located in an area of San Jose that sports one of the worlds most modern shopping malls, Office Depot, Outback Restuarant, Sams, Marriot Hotel and Holiday Inn.

The insurance office at the CIMA Hospital is staffed with english speaking clerks, who assist with filing of medical claims with insurance companies from all over the world.

The patient waiting rooms are comfortable. We were stunned at the number of foreign patients seeking care there and spoke to many of them. A couple from Alaska was down to get a complete hip replacement. A 30 year old soccer player from Chicago was down for extensive knee surgery. A couple from North Carolina with their brain damaged son was down seeking stem cell treatment which is unavailble to them in the United States. An Austrailian was seeking dental implants. Several California ladies were down for cosmetic surgery; gastric bypass and face lifts. A Minnosota couple were down with their 18 year old daughter for nose surgery before she goes off to college in August.

All of these patients had one thing in common; they could not get, or could not afford, medical care in the United States.

Every patient we talked to said they were pleased with the medical care in Costa Rica and would recommend it to others. And, of course, cost was a major factor in their decision to travel to Costa Rica. The 30 year old soccer play for example, who has no insurance, was quoted a price in Chicago of $40,000. Instead, with air travel, lodging, surgery and hospital expenses, his medical bill was $7,000.

We talked to a physician who practices at CIMI Hospital and is also on the hospital’s Board of Directors. He received his medical training in the United States, as have most of the physician practicing there. He said his patient load was over 50% foreign nationals who pay him cash up front for surgery. He receives his patients primarily through referrals in the United States.

On the other hand, we discovered some disturbing practices of certain entities whose business is to facilitate medical tourism in Costa Rica. As is the danger of a one-time customer, these business people have little to fear from repeat customers complaining to management. Special care should be given to selecting any medical tourism facilitator.

Self-funded group medical plans in the United States could benefit from the high quality of medical care and lower costs in Costa Rica. Savings of 70 to 80% or more is common.

It is our prediction that with the changes in the health care delivery system upcoming in the United States, medical tourism in Costa Rica will become a multi-billion dollar business.

Even with a 21% Medicare Cut, Will 85% of Hospitals Continue to Profit?

Saturday, April 24th, 2010

Fuzzy Math Is Never Wrong

Medicare cuts could drive about 15 percent of hospitals and other providers into the red

Date: 2010-04-23, 3:37PM EDT
Reply to: see below


Associated Press – Fri Apr 23, 5:58 am ET

WASHINGTON – President Barack Obama’s health care overhaul law is getting a mixed verdict in the first comprehensive look by neutral experts:
More Americans will be covered, but costs are also going up.

Economic experts at the Health and Human Services Department concluded in a report issued Thursday that the health care remake will achieve Obama’s aim of expanding health insurance — adding 34 million to the coverage rolls.

But the analysis also found that the law falls short of the president’s twin goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years. That increase could get bigger, since Medicare cuts in the law may be unrealistic and unsustainable, the report warned.

It’s a worrisome assessment for Democrats.

In particular, concerns about Medicare could become a major political liability in the midterm elections. The report projected that Medicare cuts could drive about 15 percent of hospitals and other institutional providers into the red, “possibly jeopardizing access” to care for seniors.

The report from Medicare’s Office of the Actuary carried a disclaimer saying it does not represent the official position of the Obama
administration. White House officials have repeatedly complained that such analyses have been too pessimistic and lowball the law’s potential to achieve savings.

— Medicare cuts, a tax on high-cost insurance and a commission to seek ongoing Medicare savings — could help reduce the rate of cost increases beyond 2020. But it held out little hope for progress in the first decade.

“During 2010-2019, however, these effects would be outweighed by the increased costs associated with the expansions of health insurance coverage,” wrote Richard S. Foster, Medicare’s chief actuary. “Also, the longer-term viability of the Medicare … reductions is doubtful.” Foster’s office is responsible for long-range costs estimates.

Republicans said the findings validate their concerns about Obama’s 10-year, nearly $1 trillion plan to remake the nation’s health care system.

“A trillion dollars gets spent, and it’s no surprise — health care costs are going to go up,” said Rep. Dave Camp, R-Mich., a leading Republican on health care issues. Camp added that he’s concerned the Medicare cuts will “undermine care for seniors”..

Americans would be required to carry health insurance except in cases of financial hardship. Tax credits would help many middle-class households pay their premiums.

Medicaid would pick up more low-income people. Insurers would be required to accept all applicants, regardless of their health. >
(Amnesty will pass this year and that means 18 million illegals will get free health insurance because they will claim to be low-icome)

The report found that the president’s law missed the mark. The overhaul will increase national health care spending by $311 billion from 2010-2019
To put that in perspective, total health care spending during the decade is estimated to surpass $35 trillion.

The report’s most sober assessments concerned Medicare.

In addition to flagging provider cuts as potentially unsustainable, the report projected that reductions in payments to private Medicare Advantage plans would trigger an exodus from the popular alternative. Enrollment would plummet by about 50 percent. Seniors leaving the private plans would still have health insurance under traditional Medicare, but many might face higher out-of-pocket costs.

In another flashing yellow light, the report warned that a new voluntary long-term care insurance program created under the law faces “a very serious risk” of insolvency.

Editor’s Note: If the proposed 21% cut in Medicare reimbursement rates will indeed drive 15% of American hospitals into the red, does that mean that 85% of American hospitals will continue to profit from Medicare reimbursement rates?

Monday, April 19th, 2010
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The latest on health reform for Humana brokers
April 19, 2010

Now available: Health reform high-level overviews
Humana has developed high-level overviews of the new health reform law, with three versions tailored to specific audiences: brokers, small employers and large employers. Below are links to those summaries so you can download them and use them with your clients.

Humana remains committed to keeping you informed about health reform. Keep in mind that a great deal of uncertainty still surrounds the new health reform law. Over the next few months and years, federal and state governments must develop rules, regulations and guidance on how the law is to be interpreted and implemented. As we learn more, we’ll share it with you.

Broker summary PDF | Small employer summary PDF | Large employer summary PDF

Starting where they left off
Members of Congress returned to Washington last week. The Senate started in right where it had left off before leaving for spring break: dealing with health care and health insurance issues. This time, they were issues that had been kept separate from the health reform bills: extensions of both the temporary Medicare physician payment fix, and premium assistance for unemployed workers with COBRA and state continuation coverage.

The last round of extensions expired on March 31. Members of the House passed another one-month extension before they left for spring break, in order to continue the fixes through April. So the Senate’s plan last week was to quickly pass the House bill and make it apply retroactively – then work with the House later on a permanent fix.

But while Senate Democrats and Republicans agreed that these extensions must be made, they didn’t agree on how to pay for them. Democrats wanted to add the $9 billion cost of the one-month fix to the deficit. Republicans said they didn’t. As Sen. John Kyl of Arizona put it, “It’s a question of whether we pay for it or we simply say, put it on the tab for our kids and grandkids to pay for it.” But on Thursday, the temporary fix passed. Deficit spending promises to be a major theme in the elections this fall.

Of course, the other big issue heading into fall continues to be health care reform. Rep. Bart Stupak, a conservative Democrat from Michigan, announced two weeks ago that he would be retiring. Although he says his decision had nothing to do with his “yes” vote on health reform, it’s hard to imagine that the realization he will have a tough campaign didn’t have something to do with his late decision.

The phrase “Repeal and replace” was repeated by Republicans frequently during the break, and last week House Minority Leader John Boehner picked up right where he had left off, talking about the unpopularity of health reform. “I’ve never seen a bill pass the House of Representatives that the American people knew about, that the American people had discussed, debated, and had decided ‘no,'” Boehner said during a radio interview. “This is why the anger that’s out there, frustration that’s out there, and frankly, I think, a lot of this is now turning to resolve – resolving that the American people are going to do something about this.”

Democratic Congressional Campaign Committee chairman Chris Van Hollen of Maryland quickly released a response: “It is stunning that House Republicans will make their No. 1 priority repealing benefits and rights for Americans, raising taxes, and turning our health care system back over to insurance companies…The House Republican leadership should start saying no to the special interests of the health insurance industry, and starting saying yes to American families…”

Meanwhile, a new Associated Press/ GfK poll said that opposition to reform has jumped since President Obama signed the bill: 50 percent oppose it, with only 39 percent favoring it and 10 percent feeling neutral. Opposition to how the President handled the issue also jumped from 46 percent in early March to 52 percent currently.

A USA Today/Gallup poll shows that there’s also a great difference in intensity of feelings between those who oppose and those who favor the reforms that passed. Most supporters said they are “pleased” rather than “enthusiastic” (66 percent vs. 29 percent). But reform opponents are nearly as likely to be “angry” as “disappointed” (46 percent vs. 52 percent).

Meanwhile, in the states…
Five more states have joined the lawsuit challenging the constitutionality of the health reform law. Indiana, North Dakota, Mississippi, Nevada and Arizona have joined Florida, South Carolina, Nebraska, Texas, Utah, Alabama, Colorado, Michigan, Pennsylvania, Washington, Idaho, South Dakota and Louisiana. Virginia has filed a separate suit.

Florida Attorney General Bill McCollum, a Republican running for governor, filed the initial suit. He said he welcomes the additional support “as we continue fighting to protect the constitutional rights of American citizens and the sovereignty of our states.”

While the lawsuit contains many complaints, the main one is the constitutionality of the mandate for everyone to buy health insurance. “The individual mandate in the health care law is unprecedented,” said North Dakota Attorney General Wayne Stenehjem – “a direct federal requirement for an individual to purchase insurance from a private company…Never before has Congress, under the commerce clause, required Americans to purchase any good or service.”

To read a debate on the issue, go to the New York Times Roomfordebate feature by clicking here.

Meanwhile, at the recent National Conference of State Legislatures meeting in Washington, state officials talked about health reform. They expressed surprise at the lack of clarity in the new law’s requirements.
The law still exists in three pieces – the Senate bill, the Manager’s Amendment to the Senate bill, and the House’s Reconciliation bill. Each version modifies the one before it, and all of them modify underlying laws, so it’s difficult to decipher what’s there.

Learning from Massachusetts
Massachusetts is of special interest to those involved in health reform: Three years ago, Massachusetts enacted insurance reforms similar to those now being enacted nationally. As expected, access to insurance has increased – almost every state resident now has coverage. But the expense has been much higher than anticipated. Premium costs have continued to soar, and now, as a result, there’s a battle between state regulators and insurers over controlling costs for small businesses and consumers.

On April 1, regulators rejected 235 proposed rate increases, which ranged from 8 to 32 percent. Gov. Deval Patrick said rate increases should link to the medical consumer price index, which is rising at about 4.8 percent. “Unless insurers can give us a good reason why, when everything else is flat, they deserve 20 percent, 30 percent, and in some cases 40 percent increases, they’re going to be denied,” Patrick told the Boston Globe. Health insurers took the case to court, calling the rejection of rate increases “arbitrary and capricious” and calling the medical consumer price index “a meaningless standard” that has no actuarial value in predicting the future cost of medical care.

Last week, the judge announced his decision to let the state’s rejection of the rate increases stand. He agreed with the state attorney general, who had argued that the insurance companies needed to appeal administratively through the state Insurance Division before taking their case to court.

State regulators directed health plans to remove higher rates that had been posted on the Health Connector Web site and post new ones based on 2009 base rates. Consequently, no companies had rates posted for a few days, which meant Massachusetts residents couldn’t buy insurance or change their plans. That led to the state insurance commissioner sending six major insurance companies, including Harvard Pilgrim, Blue Cross and Blue Shield of Massachusetts, and Tufts Health Plan, letters telling them to post their rates by 3 p.m. Thursday or face fines of up to $5,000 per day plus $1,000 per person who is unable to buy insurance. The commissioner wrote, “Refusing to offer or issue policies to eligible individuals and eligible small businesses is disruptive to the small group market and a violation of applicable laws and regulations.” Two of the companies submitted rates that didn’t comply with what the state had ordered. The insurance commissioner said they would be penalized.

Earlier in the week, the Massachusetts Association of Health Plans issued a statement about the situation. “Making health care affordable needs to start with addressing the market clout of certain hospitals and physician groups,” the group said. The case is seen as a test of the role of government in controlling costs.

New Medicare numbers

  • Number of Medicare Advantage members after 2010 enrollment: 11.5 million (up 621,000 from last year), according from data from the Centers for Medicare and Medicaid Services
  • 2011 federal payment rates for Medicare Advantage will be the same as 2010 rates, as a result of health reform provisions requiring a freeze on Medicare Advantage rates
  • Significant cuts in Medicare Advantage payment rates are expected to start in 2012, because of the health reform law’s requirement to bring them more in line with original Medicare
  • The two companies with the most Medicare Advantage members are UnitedHealth and Humana

Humana’s view: Humana’s strategy for continuing to offer attractive, competitive products even with lower federal payment rates involves a combination of effective claims cost management, smart use of clinical integration, prevention and wellness programs, and efficient provider contracting.
Get involved. Contact Congress about health reform at

Learn more. Explore Humana’s position on health reform and other issues.
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Insurance Agent to Be Arraigned Tomorrow – Allegedly Sold Non-Existant Insurance Policies

Monday, April 19th, 2010

Michael Swetnam, a San Benito, Texas insurance agent, is to be arraigned on April 20, 2010,  by way of a superseding indictment – Swetman Superseding Indictment.

The Alan Katz Health Care Reform Blog

Monday, April 19th, 2010

PPACA (Patient Protection and Affordable Care Act)

Monday, April 19th, 2010

This is the best explanation we have seen so far as regards the implications of the PPACA:

“The regulation writers will interpret the language and clarify the effective dates; their opinion matters the most. We will need to wait until this (PPACA) is defined by regulatory bodys to know what is in this 2,900 page bill.”

As Bill Clinton once pondered, “It depends on what the definition of “is” is.

Costa Rica – 250,000 American Seek Medical Care Annually

Saturday, April 3rd, 2010

More and more Americans are seeking medical care in Costa Rica these days. Only a 2.5 hour flight from Houston, San Jose sports some of the best medical care in the world. JCI Acredited hospitals and world class trained physicians offer modern health care technology at over half the price for treatment in the United States.

With tha advaent of ObamaCare, with the expectent long waits for “approved” surgical procedures and life saving treatments, many Americans may seek medical care abroad for quick and effective treatment at a reasonable cost.

Saturday, April 3rd, 2010

 Volume II, Issue 4 – April 1

 UnitedHealth Group is pleased to bring you this issue of the Health Care Modernization News Flash to update you on health care issues under discussion in Washington, D.C. and in the states, and to share our perspectives on modernization of the health care system.  

 Our Perspective

 UnitedHealth Group Comments on Enactment of Health Care Reform Bills

Following the enactment of the “Patient Protection and Affordable Care Act” and the “ Health Care and Education Affordability Reconciliation Act” , UnitedHealth Group President and CEO Stephen Hemsley stated, “UnitedHealth Group is committed to ensuring that expanded access to quality care for millions of Americans is achieved and sustained over time. We remain concerned that any advances under the new law will be eroded by the unchecked rise of health care costs that were not adequately addressed in the legislation. We will continue to work with all stakeholders to tackle this complex but critical issue.”   For years, UnitedHealth Group has focused on practical, proven and effective solutions to ensure accessible, affordable and quality coverage for all Americans. Throughout the federal health care reform debate, we engaged with government officials, policymakers and the health care community to improve health care from a whole-system perspective, offered constructive reform proposals, and provided data, insights and best practices from across our enterprise. We support many of the elements included in the new law, from the coverage expansions to the anti-fraud and abuse initiatives to the incentives for the promotion of prevention and wellness efforts. However, many of the reforms will only be sustainable if there’s an effective individual responsibility requirement and the accelerating cost burden on families and businesses is relieved. We know that the modernization of health care is just beginning. Controlling cost growth across the system is fundamental to creating a modern health system.

 National Spotlight – President Signs Health Reform Bills

On March 30th, the President signed the “Health Care and Education Affordability Reconciliation Act” that passed both the House and Senate on March 25th.  T he “Health Care and Education Affordability Reconciliation Act” makes changes to the “Patient Protection and Affordable Care Act,” which was signed into law by the President on March 23rd.  The CBO estimates that these two laws combined will cost $940 billion over ten years and cover 32 million of the 54 million uninsured. Details of the newly enacted health reform bills include:

 Financing of Health Reform: A 40% excise tax is placed on “high value” employer-based plans (insured and self funded) valued at over $10,200 for individuals and $27,500 for families starting in 2018 , with higher levels and adjustments for the age and gender of workers and for high risk occupations. Beginning in 2013, there is an increase in the Medicare FICA tax of 0.9% on income over $200,000 for singles and $250,000 for couples and a new 3.8% assessment is placed on unearned income for these income earners. Annual fees are placed on health insurers (a total of $60 billion from 2014 to 2020 with exemptions for certain non-profit Medicaid and Medicare plans) and pharmaceutical companies (a total of $28 billion from 2011 to 2020). Starting in 2013, a 2.9% sales tax is applied to medical devices, excluding eyeglasses, hearing aids, and other “general goods” purchased over-the-counter. The legislation also makes changes to HSA and FSA rules, increases the threshold for individual tax deductibility of medical expenses to 10%, sets a 10% tax on tanning bed services, reduces spending for the Medicare Advantage program, reduces provider payment rates under Medicare, and secures rebates for Medicaid and discounts for Medicare Part D from pharmaceutical companies.

 Insurance Market Rules Effective Within Six Months of Enactment:  Several insurance market rules take effect for plan years starting on or after six months post enactment, including review of health plan premiums by state departments of insurance and HHS, prohibition of lifetime benefit limits and “restricted” annual limits, a requirement that plans cover dependents to the age of 26, prohibition of waiting periods exceeding 90 days, a requirement that plans cover preventive services without cost-sharing, prohibition of pre-existing condition exclusions for children under 19, and prohibition of coverage cancellation or rescission except in cases of fraud. Prior to the implementation of new market rules in 2014, the legislation also establishes high risk pool provisions for individuals who can not obtain coverage due to health status and creates a reinsurance program for employer coverage of early retirees. Provisions related to lifetime and annual limits, dependent coverage, waiting periods, preventive services, and retiree reinsurance apply to insured and self funded plans.  

 Insurance Market Rules Effective in 2011:  The legislation sets up an 80% medical loss ratio (MLR) for individual and small group plans and an 85% MLR for large group plans. The definition of small group follows current state law until 2014, when small group is defined as 100 employees unless a state limits the definition to 50 employees before 2017. These requirements apply to insured health plans inside and outside of Exchanges, including “grandfathered” plans.

 Insurance Market Rules Effective Starting in 2014:  Reforms that require guarantee issue and renewal during an open enrollment period, establish risk sharing mechanisms (partly funded by insured and self funded health plans), prohibit premium variations based on health status, and limit premium variation to tobacco use, age (3:1 band), geography, and family composition apply to individuals and small groups to size 100 (states may limit small groups to 50 and may increase beyond 100 with expanded Exchange eligibility starting in 2017). Annual limits and pre-existing condition exclusions are prohibited for insured and self funded plans. States can pass legislation to form “Health Care Choice Compacts” to allow the purchase of individual insurance across state lines.

 Multi-State Plans and CO-OPs:  “Multi-State Plans” are created in 2014 to compete with private insurers in state Exchanges. The Office of Personnel Management (OPM) will enter into contracts and negotiate premiums and other conditions with at least two private health plans (health plans may voluntarily participate and at least one must be non-profit) to create Multi-State individual and small group plans to be offered in every state by 2017. Start-up funding is also provided to establish non-profit member-governed health plans (CO-OPs) in 2014 not currently in existence to compete with private insurers and Multi-State Plans in Exchanges. CO-OPs and Multi-State Plans must comply with the same rules as other plans in Exchanges. States are not required to establish CO-OPs.

 State Exchanges:  State-based “Exchanges” are established in 2014 for individuals without access to affordable group coverage (and not eligible for Medicare or Medicaid), small groups to size 100 (states may limit small groups to 50 and may increase beyond 100 starting in 2017), and CHIP eligibles (beginning in 2015) if benefit and cost-sharing under a plan is certified as appropriate for the population. State Exchanges are designed to facilitate comparison shopping, enrollment, and subsidy administration and certify plans for participation that meet established standards and rules, including reasonable rate increases. Participation is voluntary.

 Benefit Plans:  Beginning in 2014, individuals and small groups to size 100 (states may limit small groups to 50 and may increase beyond 100 with expanded Exchange eligibility starting in 2017) have a choice of up to five plan types including “Bronze” (60% actuarial value), “Silver” (70% actuarial value), “Gold” (80% actuarial value), “Platinum” (90% actuarial value) and “Young Invincible” (catastrophic plan available for adults under 30 and for those whom a Bronze premium would exceed 8% of income). Individuals between 133% and 200% of the federal poverty level without access to employer coverage would be enrolled in a state-negotiated “Basic Plan” where available. HHS establishes and updates benefit plan definitions through a public process, but states may establish additional benefit rules as long as additional subsidy costs are state paid. Out-of-pocket spending is limited to HSA limits for individual and group plans (insured and self funded). Wellness incentives up to 30-50% of the cost of coverage are allowed for group plans (insured and self funded).

 Coverage Mandates, Penalties, and Subsidies:  Starting in 2014, individuals are required to have coverage through a “grandfathered” plan, a large group plan, a government program (Medicaid, Medicare, and the like), or through an individual or small group plan that meets minimum requirements (“Bronze” plan or “Young Invincible” plan for those under age 30), or pay a penalty. The penalty is the greater of a flat dollar amount ($95 in 2014 phased-in to $695 by 2016) or a percent of income (1.0% in 2014 phased-in to 2.5% by 2016). Waivers of the penalty are allowed for Native Americans, those with religious objections, and individuals with a financial hardship defined as premiums exceeding 8% of income. Individuals up to 400% of the federal poverty level ($88,000 for a family of four) are eligible for premium and cost-sharing subsidies for plans purchased through an Exchange. Employers are not required to offer coverage, but those with 50 or more full-time employees not offering coverage are required to pay a $2,000 fee per employee obtaining a subsidized plan through an Exchange starting in 2014. Employers offering coverage must pay up to a $3,000 fee per employee obtaining subsidized coverage through an Exchange. Employers may exempt 30 full-time employees from the penalty calculation. Those employers offering coverage must also provide tax-exempt “free choice vouchers” to qualifying employees (whose premium contribution would be between 8% and 9.5% of their income) to purchase coverage through an Exchange that is equal to the contribution the employer would have made to its own plan. Starting in 2010, low wage employers (average salary less than $50,000) with 25 or less employees are eligible for up to a 50% premium credit for two years if they pay for at least 50% of the premium.

 State Waivers:  States can seek a waiver from HHS starting in 2017 to adopt their own rules in lieu of the new federal standards related to benefit requirements, Exchanges, and coverage mandates as long as the state standards would result in similar outcomes and not increase the federal deficit.

 Medicaid and the Children’s Health Insurance Program (CHIP): Medicaid eligibility is expanded to 133% of the federal poverty level for all individuals in 2014 with full federal funding of the expansion until 2017 (95% in 2017 phased-down to 90% by 2020 and thereafter). For states that have already implemented a Medicaid expansion for childless adults and parents, state spending on this population is reduced by 50% in 2014 and over time state spending is reduced further to equal that of non-expansion states by 2020. Upon enactment, states are required to maintain existing Medicaid and CHIP eligibility. CHIP is extended to 2015.  If a state exhausts its federal CHIP funding in any given year, CHIP eligibles may be moved into an Exchange. Beginning in 2015, states can enroll CHIP eligible children into private coverage through an Exchange if the benefits and cost-sharing are certified by HHS as similar to those under CHIP. 

 Medicare:  The payment structure for Medicare Advantage is changed by setting the 2011 Medicare Advantage payments at 2010 levels and phasing-in new payment levels ranging from 95% of fee-for-service Medicare payments in high-cost areas and 115% of fee-for-service Medicare payments in low-cost areas starting in 2012. Beginning in 2012, Medicare Advantage plans with high quality or an improvement in quality are eligible for payment bonuses. By 2014, Medicare Advantage plans are required have an 85% medical loss ratio. The Part D “donut hole” or coverage gap is closed by 2020 by reducing the gap by $250 in 2010 and reducing coinsurance to 25% for brand and generic drugs. Starting 2011, pharmaceutical manufacturers provide a 50% discount for brand name drugs and a 7% discount for generic drugs purchased in the “donut hole” or coverage gap under Part D. The income subsidy exclusion for employers offering “qualified prescription drug plans” is eliminated in 2013. The legislation also links provider payments to quality outcomes, creates pilot programs for coordinated care delivery models, establishes a new “Innovation Center” to test and implement new provider payment methods , and changes payment incentives to reduce hospital acquired infections and preventable readmissions. Annual provider payment updates are reduced for Medicare Part A and B and an independent “Payment Advisory Board” is established to report on system-wide health care costs, access, and quality and recommend policy changes to slow the rate of national health care spending growth and limit the rate of growth in Medicare spending.

  • Watch for more information from UnitedHealth Group over the next few weeks and months on the provisions and implementation of the “Patient Protection and Affordable Care Act” and “Health Care and Education Affordability Reconciliation Act.”

 For more information on health reform and modernization, state updates and copies of newsletters and reports visit: .

Saturday, April 3rd, 2010
The spectacle of President Obama, Speaker Nancy Pelosi, and their fellow Democrats taking the American health care system over the “precipice of health care reform” (to use the President’s phrase) has been something to behold.  I am sure watching the RMS Titanic clip the iceberg from the ship’s bow was a similar sort of “spectacle.”
Now we are all discovering just how much damage the iceberg did.
Many folks are rightly concerned about the cost of the bill.  There is also the fact that this bill will put health insurers on the road to financial insolvency.  Those are big problems and there are more to boot.
But, there is an aspect of the plan not receiving much attention.  Contrary to the stated goal of the architects of this monstrosity, this bill will not increase the number of Americans purchasing health insurance.  In fact, we believe it will actually INCREASE the number of Americans without health insurance.
How can this be?  Frankly, we find it hard to believe ourselves, but facts are stubborn things.  
Hear us out:
Point #1:
Starting in 2014, health insurance companies will no longer be able to deny coverage to anyone with a pre-existing condition.
Point #2:
Starting in 2014, everyone must purchase health insurance or face an annual fine of $695 per individual not covered up to a maximum of $2,085.
Point #3:
The government is going to help you pay for health insurance if you make up to 400% of the federal poverty level by capping your premium expense at 9.8% of your income.  So, a family of four making $88,200 a year (i.e., 400% of the federal poverty level for a family of four) will not have to spend more than $8,643  ($720.00 a month) for health insurance.  People making more than 400% of the federal poverty level will not have the benefit of the cap.
Point #4:
Employers with more than 50 employees must provide health insurance or pay a fine of $2,000 per worker each year if any worker receives federal subsidies to purchase health insurance. 
Examine the incentives these four points create.  As of 2014, you have a choice between purchasing health insurance or paying a maximum annual fine of $2,085.   
Let’s say you have a family of four that makes $88,200 and gets the benefit of the annual cap, 9.8%.  Your health premiums cannot exceed $8,643 a year for your family.  Let’s say you find a great deal on health insurance in the “exchange” that will cover your entire family for $5,000 a year.  Will you buy it?
That is a great deal.  In fact, I know of no market that will offer you that deal today, but let’s assume you find it.  Will you buy it?
“Of course, my family needs health insurance!”  You say. 
Are you going to use that health insurance right away?  What if you and your family do not have any large health expenses this year?  What if you don’t have any large expenses next year?  You could have saved that $5000, right?  Sure, you might have to pay the $2,085 as a fine, but you would still be $2,915 ahead.  Over two years, that’s $5,830!
Why not wait until you have to buy health insurance?  Why not wait until you or someone in your family has a health problem that will require a large expenditure?  After all, the insurance carriers can no longer deny coverage based on pre-existing conditions!  Now there is no incentive to purchase insurance before you really need it!
Thus, large numbers of individuals and families will now choose to forgo insurance and save their money (or spend it, who cares?) until they HAVE to buy insurance.  As long as the cost of health insurance exceeds the penalty or fine they may or may not pay there will be a huge incentive to forgo insurance coverage.
Consider Point #4 again.  We insure many companies who pay 100% of their employees’ premiums.  The costs of these annual premiums far exceed $2000 per year.  Employers provide health benefits for two reasons: (1) many consider it the “right thing” to do for their employees; and (2) all of them believe providing benefits helps them recruit and retain quality employees.  Both of those incentives have now been eliminated if their employees are now federally mandated to buy insurance and cannot be denied coverage.  Thousands of employers will choose to pay the fines rather than continue offering health insurance coverage.
Combine these two incentives and the result will be a swelling of the uninsured.
How could a health care reform bill with the stated goal of offering more Americans health insurance actually end up doing the opposite?  Let’s rephrase that.  How could a government program actually cause the opposite of its intended consequence?  How could we believe otherwise?  Remember, we have not even begun discussing how to pay for this. 
These perverse incentives will not go into effect until 2014.  There is still time for action . . . or you could just get in line for a lifeboat.  Remember, women and children first!
Andy Adams

Blue Cross Announces Merger

Thursday, April 1st, 2010

Details to be published soon.

Thursday, April 1st, 2010
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The latest on health reform for Humana brokers
March 31, 2010

The yearlong health reform fight comes to an end
In a way, the fight over health care reform ended with a whimper, not a bang. The main reform bill had already been signed into law by the President. So the passage and signing of the fix-it piece – the reconciliation bill – felt like an afterthought.

But still, for those who thrive on the subtleties of Washington politics, the passage of the reconciliation bill was remarkable. After all:

  • The House and Senate managed to agree on something big – quickly
  • The Senate, which the House considers an untrustworthy partner, did what its members had promised: passed the House’s reconciliation bill without changing it
  • Senate Democrats passed up the chance to vote for amendments like one that would have kept sex offenders from getting Viagra with federal subsidies, or that would have required Medicare savings to be returned to Medicare to shore up the program

Through the whole 13-hour Senate “vote-a-rama,” as it was called, Democrats managed to stick together. Then, when it came time to vote on the reconciliation bill itself, they stuck together again – or almost: three moderate Democrats, Ben Nelson of Nebraska and Blanche Lincoln and Mark Pryor of Arkansas – voted “no,” which they could afford to do. After all, the reconciliation process doesn’t call for 60 votes, just a majority. The bill passed easily, 56 to 43.

It did have to go back to the House, however. The Republicans had scored one small victory: They found two small parts of the bill that the Senate parliamentarian agreed were not appropriate for the reconciliation process. So the bill had to go back to the House one more time for one last vote.

The final piece
On Tuesday, President Obama signed the reconciliation bill. And he used the occasion to try to move past health reform and on to other topics. At the bill signing ceremony, he surrounded himself not with doctors, nurses, and people in need of health care, as he had with the first reform bill, but with Northern Virginia Community College students. In his remarks, he talked a little about health reform, but his emphasis was on the part of the bill that revamps the student loan system.

He did say, however, that the health-care reform legislation and the revisions represent “two major victories…in one week that will improve the lives of people for generations to come.”

“Today, we mark an important milestone on the road to health insurance reform and higher education reform,” he said. “But more broadly, this day affirms our ability to overcome the challenges of our politics and meet the challenges of our time.” Read his remarks here.

President Obama is now in the hard-sell phase of his campaign for heath care reform. Polls vary, but all show the country remains divided on the issue. A CNN poll released Tuesday found a majority of Americans disapproved of the new law, 56 percent to 42 percent. A Washington Post poll found that 50 percent opposed the legislation, while 46 percent supported it. A USA Today/Gallup found 50 percent supporting and 47 percent opposing.

In an interview with the Louisville Courier-Journal this week, Senate Minority Leader Mitch McConnell of Kentucky said the notion that the issue of health reform “would just somehow go quietly into the night between now and November in an election year is pretty naïve. I think it will be front and center.” He said Republican candidates will campaign against the health-care law on a “repeal and replace” slogan. Read the interview here.

Early Tuesday, House Minority Leader John Boehner said, “Today the President will sign not one, but two job-killing government takeovers that are already hurting our economy.” Sen. Lamar Alexander, R-Tenn. and a former education secretary, said. “The Obama administration’s motto is turning out to be: ‘If we can find it in the Yellow Pages, the government ought to try to do it.'”

What the second bill does
The reconciliation bill includes these adjustments to the first reform bill:

  • It repeals the Cornhusker kickback and some other special deals for individual states
  • It delays the implementation of the tax on high-cost “Cadillac” health plans from 2013 to 2018 and raises the threshold for when the tax kicks in
  • It closes the Part D prescription drug “donut hole” coverage gap by 2020
  • It speeds along some insurance reforms
  • It gives moderate-income Americans more generous subsidies to buy insurance on the exchange
  • It increases the Medicare payroll tax for people who make $200,000 and couples that make $250,000, and applies a 3.8 percent tax to income from dividends, rents, annuities, royalties and interest for those at that same income threshold

After the bill passed, Senate Majority Leader Harry Reid, D-Nev., said, “The American people have waited for this moment for a century.”

Sen. John McCain, R-Ariz., called the process that had been used “unsavory sausage-making, Chicago-style.” Minority Leader Boehner predicted, “We’re going to be back here fixing the flaws in this very flawed bill.”
Get involved. Contact Congress about health reform at

Learn more. Explore Humana’s position on health reform and other issues.
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