Health Payer News

Towers Watson buys private exchange for $435M

Dina Overland — Wed, 16 May 2012 12:54:31 -0400

Professional services company Towers Watson is acquiring Extend Health, the largest private Medicare exchange, for $435 million, reported Insurance & Financial Advisor. "We believe that this combination of two market leaders will provide innovative, best-in-class healthcare solutions that combine specialized retiree medical transition consulting with the choice and cost advantages of individual Medicare plans purchased on a private exchange," Towers Watson said in a statement. The Extend Health exchange allows retirees to select from thousands of private Medicare plans and more than 75 national and regional insurance companies. Article

Are Medicare Advantage star rankings counterproductive?

Dina Overland — Wed, 16 May 2012 12:53:10 -0400

The Medicare Advantage star rankings system doesn't serve its intended goal of rewarding quality and may even be counterproductive, the American Action Forum (AAF), a policy institute, said in a Tuesday report.

"Rewarding quality health plans is an admirable goal for the Medicare Advantage program," AAF said in the report. "Unfortunately, the current system of linking star ratings to bonus payments and rebate adjustments, which was established under the health reform law, fails to achieve that goal."

The problem, says the conservative think tank, is that evaluation criteria aren't published until after the period for which performance is evaluated. For example, the Centers for Medicare & Medicaid Services measured Medicare Advantage plans in late 2010 and early 2011, published the star ratings in 2012 and will award bonuses to five-star plans in 2013. The delays in rewarding bonuses, however, make it difficult for Medicare Advantage plans to adjust to the CMS criteria, reported The Hill's Healthwatch.

AAF further argues that changes made to the star ranking program could actually reduce plan choice and direct Medicare resources away from low-income areas, according to Investor's Business Daily. "Medicare Advantage is a program that is used disproportionately by low-income and minority seniors," AAF President Douglas Holtz-Eakin said in a statement. "It turns out the plans that low-income seniors choose are not the ones likely to be rewarded by CMS. Over time, we could expect those plans to disappear and, in effect, harm low-income seniors."

AAF isn't the only organization that thinks the star rankings system isn't viable. The Government Accountability Office in March called on CMS to cancel the program, alleging that the "ineffective" program has wasted more than $8 billion, FierceHealthcare previously reported.

To learn more:
- read the American Action Forum report
- read The Hill's Healthwatch article
- see the Investor's Business Daily article

HHS requires insurers cite reform law in rebate letter

Dina Overland — Wed, 16 May 2012 12:03:27 -0400

Insurers have a few additional steps they must take when providing rebates to members for not meeting the health reform law's medical loss ratio (MLR) requirement.

In a new final rule issued Friday, the Department of Health & Human Services is requiring that insurers inform their members that the rebate checks are a result of the Obama administration's health reform law, reported The Wall Street Journal.

Insurers already are mandated to notify members about the provision--regardless of whether they meet the 80 percent to 85 percent threshold--and explain how their premium dollars were spent. HHS clarified that if insurers do meet the MLR requirement, they must explain why their members aren't receiving rebates in the first communication they have with members after July 1, according to a Health Affairs blog.

Along with the rule, HHS included a sample rebate letter that insurers can use as a template to notify members. The first paragraph of that letter must state: "This letter is to inform you that you will receive a rebate of a portion of your health insurance premiums. This rebate is required by the Affordable Care Act--the health reform law."

America's Health Insurance Plans (AHIP) criticized the new requirement. "We remain concerned that sending these notices is unnecessary and could increase administrative costs," AHIP spokesman Robert Zirkelbach told the WSJ.

A recent Kaiser Family Foundation report concluded that insurers will pay roughly $1.3 billion in rebates this year if the U.S. Supreme Court upholds the reform law next month, FierceHealthPayer previously reported.

To learn more:
- see the HHS MLR rule (.pdf) and sample rebate letter (.pdf)
- read the Wall Street Journal article (subscription required)
- see the Health Affairs blog

No fines, penalties for payers' summary of benefits

Dina Overland — Wed, 16 May 2012 11:39:00 -0400

Insurers won't be seeing fines or penalties if they don't comply with the health reform law's summary of benefits and coverage (SBC) requirements within the first year, federal officials said in a frequently asked questions document published Friday.

The FAQs, which the Departments of Health & Human Services, Labor and Treasury jointly released, acknowledged that insurers face administrative difficulties to provide the summaries, reported Bloomberg BNA. "During this first year of applicability, the departments will not impose penalties on plans and issuers that are working diligently and in good faith to comply," officials said.

The agencies also clarified that they won't take any enforcement actions related to expatriate plans and that insurers have until Sept. 23, 2013, to provide SBCs for products they don't actively market, reported LifeHealthPro.

In addition, the FAQs said insurers can provide an electronic SBC if enrollment or application is otherwise handled online, but they still must offer a paper copy as an alternative, according to the Health Affairs blog.

Other issues the agencies addressed in the FAQs include: Insurers must provide an SBC when members apply for coverage, but if negotiations occur, they don't have to issue another SBC until coverage actually begins. If insurers provide an SBC before members apply and the terms don't change upon application or enrollment, they don't have to issue another SBC. Insurers must provide an SBC when potential members request information related to coverage but not when members only inquire generally about coverage.

To learn more:
- see the summary of benefits and coverage FAQs
- read the LifeHealthPro article
- see the Health Affairs blog
- check out the Bloomberg BNA article

Insurers launch more anti-obesity programs

Dina Overland — Wed, 16 May 2012 11:20:36 -0400

As the obesity epidemic increasingly garners nationwide attention and calls for action, insurers have been responding by changing coverage options, as well as establishing new anti-obesity programs and incentives.

The latest attempt to motivate insurers came from the Institute of Medicine, which recently published a report, highlighting that more than 90 million children, teens and adults are obese. The report discusses how obesity-related medical conditions, such as diabetes, hypertension, heart disease and arthritis, exceed $190 billion in healthcare costs, according to a Kaiser Health News/Washington Post article.

Although insurers historically haven't covered obesity screening and counseling, the reform law requires that they provide free preventive care, including for obesity-related services. Now, insurers must determine the best evidence-based programs to be applied on a broader, nationwide scale.

"Is there coverage [for obesity] is yesterday's conversation," Karen Ignagni, president of America's Health Insurance Plans, told KHN. "Today's conversation is how to design coverage to encourage people to use it and continue using it."

UnitedHealth, for example, is considering offering a version of the Diabetes Prevention Program, which is an intensive weight-loss intervention, for overweight and obese adults. "Doctors are in short supply," so the insurer wants to introduce intensive behavioral change programs through the community rather than doctor offices, Deneen Vojta, senior vice president of UnitedHealth's Center for Health Reform & Modernization, told KHN.

Meanwhile, WellPoint has begun working with doctors and the Alliance for a Healthier Generation, which lobbies insurers to offer more obesity-related coverage. It also launched a pilot study of obesity coverage in California, hoping to determine doctors' and members' preferences related to its services before rolling out coverage more broadly.

Other insurers are considering using financial incentives, including cash payments, reduced premiums or deductibles, to motivate members to maintain a healthy weight. Blue Cross Blue Shield of North Carolina recently began offering $20,000 when state residents suggest anti-obesity program ideas, FierceHealthPayer previously reported. And Kaiser Permanente of Colorado's "Weigh and Win" program awards members between $15 and $150 every three months for losing and maintaining weight, according to a prior FierceHealthPayer article.

To learn more:
- see the IOM obesity report
- read the Kaiser Health News/Washington Post article

Insurers could earn $1 trillion in revenue from reform law

Dina Overland — Wed, 16 May 2012 11:10:11 -0400

If the U.S. Supreme Court upholds the health reform law when it issues a decision next month, insurers stand to make $1 trillion in new revenue during the next eight years, according to a Bloomberg Government study released Monday.

Of that $1 trillion, which comes from insurance subsidies and Medicaid expansion, insurers would get about $174 billion, or about $22 billion a year, for profit and administrative costs, Bloomberg reported.

The total figure amounts to roughly one-tenth of the health insurance industry's total revenue and about one-half percent of the projected U.S. gross domestic product through 2020, reported The Hill's Healthwatch.

"It's a confirmation of, one, how much money we're spending as a nation on healthcare; and two, how much is riding on this court case and the Supreme Court's decision," Matt Barry, a Bloomberg Government health analyst and the study's author, told Bloomberg. "You're talking an amount of money here that can affect the economy, not just an industry."

The study estimated that the reform law's expansion of Medicaid will cost the federal government $669 billion, while subsidizing private insurance premiums will cost taxpayers $557 billion. Those two provisions account for about 98 percent of all new spending under the law. Insurers would see about 58 percent of that spending, as well as another $322 million from consumers' share of premiums, The Washington Post Wonkblog noted.

To learn more:
- read the Bloomberg article
- see The Hill's Healthwatch article
- check out the Washington Post Wonkblog article

Coventry violates state contract by not covering drug

Dina Overland — Fri, 11 May 2012 14:33:07 -0400

Coventry Care, a Medicaid managed care insurer in Kentucky, said it will stop covering an expensive medication that helps treat drug addictions. The state, however, condemned the decision as a contract violation.

Coventry will begin denying coverage for the narcotic drug buprenorphine, which eases patients' addictions to common painkillers, for patients being treated in a network of addiction clinics called SelfRind. The Medicaid insurer said it will continue covering the drug for existing patients and will allow 15-day extensions for patients with authorizations expiring in the next week, reported the Courier-Journal.

However, Kentucky's Cabinet for Health and Family Services said Thursday that Coventry's decision violates its contract with the state, the Lexington Herald-Leader reported. "The cabinet believes that Coventry cannot take this unilateral action without the cabinet's approval and, in doing so, is in violation of its contract," Cabinet spokeswoman Jill Midkiff said in the article. "The cabinet will be sending a letter to Coventry to that effect."

Coventry said it's decision is based on cabinet policy, which only requires Kentucky's Medicaid program to cover buprenorphine for pregnant women, women who recently gave birth and those under age 21, noted the Herald-Leader.

"Until very recently, Coventry has been covering substance abuse replacement therapy for all members," said Coventry spokesman Matt Eyles. "What we've done is align our coverage with the cabinet's Medicaid policy." He added that Coventry has developed a care transition policy.

SelfRind asked the cabinet to intervene and said it might file suit to seek a court injunction against Coventry. Midkiff said the cabinet will send a formal letter of rebuke and will look into further action if Coventry doesn't respond, according to the Associated Press.

To learn more:
- read the Lexington Herald-Leader article
- see the Associated Press article
- check out the Courier-Journal article

Insurers shift marketing budgets toward individual consumers

Dina Overland — Fri, 11 May 2012 13:37:57 -0400

With an eye toward the burgeoning individual market, payers have been expanding their advertising budgets and shifting their messages.

Five of the nation's largest health insurers spent a combined $366.8 million on advertising in 2011, an almost 52 percent increase from the year before, according to marketing firm Kantar Media.

The analysis on AIS Health showed that payers have begun shifting their spending on online and television ads instead of the traditional outdoor and radio ads. Except for WellPoint, the five big insurers boosted their Internet advertising budgets, with Cigna's online spending jumping almost six-fold from $679,000 in 2010 to $4.2 million in 2011. The insurer allocated $25 million last year to rebranding itself and focusing more on selling health plans to individuals instead of employers, FierceHealthPayer previously reported.

In television advertising, Humana and UnitedHealth Group spent the most in 2011 with $57.5 million and $59 million, respectively. Cigna's television spending more than doubled from $5.4 million to $12.2 million.

Another change in payer advertising is the attention placed on individual consumers, with Kaiser Permanente serving as a key success story. "Fifteen million dollar ad campaigns are great, but they also have to be consistent with the everyday experiences members are undergoing," Kathleen Ellmore, vice president of consumer health behaviors at Silverlink Communications, told AIS Health. "Kaiser has had more of a consumer feel" with services like tips from a chef and help in finding local farmers' markets.

To successfully market to individuals, Ellmore says payers should focus on four key themes in their advertising--consumer empowerment, new health messages, tools and member satisfaction. Blue Cross Blue Shield of Florida, for example, recently rebranded itself as Florida Blue and began using bold colors and aspirational messages, "setting a tone of the next generation of advertising," she said. Ellmore added that payers should determine which messages truly resonate with consumers and then adapt and target that message toward specific populations.

"Everyday experiences are the difference between what makes people happy or unhappy with their insurer," Ellmore said. Payers should make consumers "feel you are working for them and working for your brand. It's really about those touches they're having with you and how it enhances your brand."

To learn more:
- read the AIS Health article

BCBSNC teams with SAS to create personalized plans

Dina Overland — Fri, 11 May 2012 13:36:14 -0400

Blue Cross and Blue Shield of North Carolina (BCBSNC) has partnered with software company SAS to develop more personalized and better targeted health plans for members.

The partnership, which the companies announced Thursday, aims to use SAS analytics to identify customers who could most benefit from improving their health, determine how best to engage those customers and then develop new products, services and programs accordingly, reported Insurance & Technology.

"Our work with SAS addresses an issue that's at the crux of the healthcare challenges we face today: improving health in order to reduce costs for our customers," BCBSNC Chief Medical Officer Don Bradley said in a statement.

BCBSNC might, for example, use the analytics to learn how to best encourage members to undergo colonoscopies or receive flu shots, the Triangle Business Journal reported.

"Traditionally, we've based health plan designs and care management programs on conventional research," Bradley said in the BCBSNC announcement. "Now we can look through a new lens at readily available data to create health plans better targeted to consumers' needs. And, more importantly, we can offer more personalized care management programs, which individuals are more likely to respond to--making it more likely that these efforts will improve their health."

Although BCBSNC already uses internal data to conduct "predictive modeling," it hopes that collaborating with SAS to add new data from third-party sources will provide more insight on customers' needs and habits, according to the News & Observer.

"By better engaging customers, health plans can provide top-notch customer service and support," said SAS Chief Medical Officer David Hughes. "This will allow the health system to deliver consumer-focused patient care. Better care often means reduced costs - the health plan wins, the provider wins. Most importantly, the customer wins."

To learn more:
- read the News & Observer article
- see the Insurance & Technology article
- check out the Triangle Business Journal article
- here's the BCBSNC announcement

UnitedHealth pursues low-cost products, CEO says

Dina Overland — Thu, 10 May 2012 23:02:45 -0400

UnitedHealth CEO Stephen Hemsley said the insurer will continue to pursue and offer new, less expensive products marketed toward cost-conscious consumers like the line of low-cost hearing aids it introduced in October, reported the Minneapolis/St. Paul Business Journal. "We'll very much be educating consumers about what products services work, why they work, and what they should be paying for them, and what they can expect about buying goods and services," Hemsley said Wednesday at the MedTech Investing conference in Minneapolis. The CEO hinted at more offerings down the road. "That's what they're asking. We're facilitating that, and I think hearing aids is just one example of that. Will there be more? That's our plan." The new product should drive about a 20 percent change. Article

Aetna reimburses transgender member for mammogram

Dina Overland — Thu, 10 May 2012 23:01:53 -0400

Aetna has reimbursed a transgender female for a doctor-recommended mammogram she underwent two years ago, reversing a previous decision to deny coverage.

Beth Scott had a mammogram in 2010, and aetna refused to pay for the service, claiming that the mammogram fell under an exclusion treatment policy "related to changing sex," reported ABC News.

Such exclusionary clauses are common among insurers and often are used to deny people coverage for medical procedures needed to change genders, as well as ordinary care, such as gynecological visits and medically necessary surgeries, if they can be linked to their transgender status, New York Daily News reported.

However, the Transgender Legal Defense and Education Fund, which intervened on Scott's behalf, argued aetna's interpretation of its own exclusion policy was "overbroad" and should apply only to medical treatments that change sex characteristics.

"Transgender people should have their healthcare needs covered by insurance just like everyone else," TLDEF staff attorney Noah Lewis said in the article, adding that insurers denying coverage for transgender members is a "widespread problem and not an isolated incident."

Scott appealed the claims denial, a process that took almost two years, but aetna again refused coverage for the mammogram. When Scott threatened to file a lawsuit, aetna agreed to reimburse her for mammogram cost, the Star-Ledger reported.

"If transgender people are being singled out for denial of care that is provided to other individuals, this makes it clear transgender people have to be treated equally under the plan," Lewis said. "Hopefully this will send a message to other insurance companies they can't keep making these kinds of denials."

Aetna's spokeswoman Cynthia Michener said the insurer erred in denying Scott's claim and has covered previous mammograms for transgender patients. "Any denial would have been an error corrected by aetna in administering the claims in the appeals process," she told the Star-Ledger.

To learn more:
- read the ABC News article
- see the New York Daily News article
- check out the Star-Ledger article

Cigna buys supplemental insurance company for $295M

Dina Overland — Thu, 10 May 2012 22:57:24 -0400

Cigna has reached an agreement to acquire the supplemental health insurance unit of American Financial Group for $295 million.

By acquiring Great American Supplemental Benefits Group, one of the largest manufacturers, distributors and marketers of supplemental health insurance products in the country, Cigna can significantly expand the Medicare and individual supplemental offerings it provides members, Reuters reported.

The deal also will extend Cigna's direct-to-consumer retail channel, a direction in which the company already has dedicated $25 million, and provide it with a wider distribution network of agents and brokers.

"Great American Supplemental Benefits is an ideal strategic fit with Cigna's growth plans to expand our presence in the U.S. individual and seniors segments through a broad range of supplemental health solutions," Thomas Richards, president of Cigna's individual and family plans, said.

Last year, Great American reported $400 million in assets, $325 million in revenues and $34 million in pre-tax operating, according to the Hartford Courant. The sale is expected to close later this year.

Cigna spokeswoman Diana Sousa said that although Great American is based in Texas and employs about 300 people, Cigna doesn't plan to move those workers, reported the Hartford Business Journal.

To learn more:
- see the Hartford Business Journal article
- check out the Reuters article
- read the Hartford Courant article

BCBS requires pre-approval to curb painkiller abuse

Dina Overland — Thu, 10 May 2012 09:11:28 -0400

In an effort to curb drug abuse, Blue Cross Blue Shield of Massachusetts has implemented a strict, new policy requiring its members to receive pre-approval to take certain pain medications.

Under the program, Blue Cross members can fill two 15-day prescriptions for common short-acting painkillers, including Percocet and Vicodin, but any additional refills will require members to obtain approval from the insurer. The additional refills also will require the member's doctor confirm that certain conditions have been met, such as counseling the member about the risk for addiction, and agreeing that only he or she will write all subsequent prescriptions to be filled at the same pharmacy or chain, reported The Boston Globe.

The new Blue Cross program also states that long-acting painkillers, such as fentanyl and OxyContin, can't be prescribed at all without members first obtaining authorization, according to American News Report.

Such a program is necessary, Blue Cross said, because an internal review revealed that more than 30,000 of the insurer's 2.8 million members received prescriptions in 2010 for opioid painkillers lasting longer than 30 days--a practice believed to lead to drug misuse and dependency.

Indeed, a national study of almost 76,000 urine screens conducted by Quest Diagnostics showed high rates of prescription misuse among people across all ages, income levels and government and commercial health plan coverage. In the survey, 44 percent were using pain medications, reported FiercePracticeManagement.

Blue Cross Chief Physician Executive John Fallon said the insurer worked with pain care and addiction specialists for 18 months to ensure their plan balances patients' needs with the goal of limiting drug abuse. "The alternative is to just continue the way we have been doing this, and we will have more people addicted,'' Fallon told the Globe.

Reducing prescription abuse also could lead to future savings for Blue Cross. Blue Cross Medical Director Jan Cook said the insurer probably only would save a modest $200,000 a year with members filling fewer prescriptions; however, successfully curbing addictions could mean avoiding expensive substance abuse treatments down the road.

To learn more:
- read the Boston Globe article
- see the American News Report article

Payer-provider data transparency key to ACO success

Dina Overland — Thu, 10 May 2012 08:56:29 -0400

In order for accountable care organizations (ACO) to successfully reduce costs and increase collaboration, insurers and providers must both develop more transparent policies and procedures for analyzing business and clinical data.

Cynthia Burghard, research director at IDC Health Insight, reached that conclusion in a blog post, explaining how data analytics are the key to ACO success. "One of the key contributors of previous reimbursement and business model failures in healthcare was due to the lack of transparency and tools," she wrote. "Transparency and consensus particularly on reimbursement and performance measurement will be critical to success."

She noted, however, that transparency must go both ways, meaning insurers and providers should collaborate rather than fight over data analysis. Burghard said the ACO participants should avoid discussing the accuracy of data, for example, by agreeing up front to use the same methodologies and terminologies, which also could help establish trust within the ACO relationship.

Insurers and providers also must be able to understand each other's data analysis. "Typically it will be a provider organization asking for health plan data so, from an IT perspective, the provider has to be able to accept the data from the health plan, understand how it's mapped, understand what the data means and determine how you're going to integrate that data with [the provider's] information," Burghard told InformationWeek Healthcare.

Additionally, insurers and providers involved in ACOs must have the knowledge and ability to use the data to meet accountable care quality measures. "Health plans and provider organizations will have to hire analysts that know both payer and provider data, so if I'm a provider and I'm bringing in all this payer data, I need to understand all the nuances of that data," Burghard told InformationWeek. "For example, they need to know what a member benefit means. There is just all of the domain knowledge about insurance processes and data that's really important to understand."

To learn more:
- read the Information Week Healthcare article
- see the IDC Insights blog

15 insurers fail to make mental health notifications, fined $2.7M

Dina Overland — Wed, 09 May 2012 16:15:13 -0400

New York has fined 15 insurers a total of $2.7 million because they failed to notify small businesses about special mental health coverage available for purchase.

Under Timothy's Law, which is named for a 12-year old who committed suicide after his parents couldn't afford mental health treatment, insurers must tell small businesses that they can buy special mental health insurance for serious emotional disturbances when they sign up for or renew their coverage, reported the New York Daily News.

The Department of Financial Services, which levied the first-ever fines, became aware of the violations after receiving complaints from several small businesses that said they would have purchased the special mental health coverage if given the opportunity, LifeHealthPro reported.

Some of the insurers receiving fines include:

Oxford/United: $1,313,980
Empire HealthChoice: $480,440
HealthNet: $260,680
MVP: $215,630
HIP: $187,570
Independent Health: $112,350
HealthNow: $101,640

Although the insurers said the violations were unintentional, they all agreed to take steps to prevent recurrences, according to the Associated Press.

To learn more:
- read the New York Daily News article
- see the Associated Press article
- check out the LifeHealthPro article