Few healthcare changes have been more impacted than the out of control out of network charges billed to patients. The health care reform bill known as PPACA has for the most part been insignificant in the Northeast, in particular, as many state laws have already addressed issues such aspre-existing conditions, contraception, coverage rescissions and maximum loss ratios (MLR).
Instead, the market forces are reshaping the medical field into significant insurance & provider consolidation, larger hospital groups and flattening provider reimbursements. The problem is pointed out in Out of Network Medical Costs Affecting NY State Across investigation report commissioned by Governor Cuomo recognizing the unexpected out-of-network claim problem. Officials say that this is now “an overwhelming amount of consumer complaints.” Some examples cited in the report An Unwelcome Surprise – “a neurosurgeon charged $159,000 for an emergency procedure for which Medicare would have paid only $8,493.” Another example: ” a consumer went to an in-network hospital for gallbladder surgery with a participating surgeon. The consumer was not informed that a non-participating anesthesiologist would be used, and was stuck with a $1,800 bill. Providers are not currently required to disclose before they provide services whether they are in-network.” The average out-of-network radiology bill was 33 times what Medicare pays, officials say.
To make matters worse, Health Insurers have reduced their out of network recognized charges from private industry index UCR (usual customary and reasonable) to the Medicare Index known as RBRVS( Resource Based Relative Value Scale ). Insurers moved away from UCR after then-NYS D.A. Mario Cuomo in 2009 forced Unitedhelatcare Group (owners of Inginex) to settle $50 Million in a conflict of interest allegation. D.A. Cuomo future hopes for UCR were to that it be overseen by a non-profit entity. So much for best laid plans.
Today, 90% of SMB members have in network only benefits but the few remaining consumers are paying for eroding out of network benefits with little transparencies and necessary protection from new out of network billing practices. The NY Dept of Financial services is calling for providers in non-emergency situations to disclose whether or not all services are in-network, what out-of-network charges will be and how much insurers will cover.
In an ominous statement” “Failure to recognize this historical out-of-network avalanche will result in shocking financial disasters, as experienced by so many hospitals in 2003″
Some good news for small businesses owners on Medicare Part B. The IRS is permitting for the 1st time self-employed people to deduct their Medicare Part B healthcare premiums.
What is Part B? Part B helps cover medically-necessary services like doctors’ services, outpatient care, durable medical equipment, home health services, and other medical services. Part B also covers some preventive services. The costs for Medicare part B have substantially risen form a modest $54 to a $99.90 minimum and now indexed for income.
Table 1: Part B Monthly Premium
Beneficiaries who file anindividual tax return with income
Beneficiaries who file a joint tax return with income
Prior to the 2010 tax year, the IRS did not permit the deduction to seniors who paid Medicare Part B health insurance premiums, according to a Bloomberg report. Strangely the IRS did not release of this announcement but the deduction is on line 29 of the new 1040 tax form and applies to people who do not claim a tax deduction.
Anyone who is self-employed, regardless of age, may deduct the premiums paid for health insurance, under certain conditions such as insurance established under the business or in the name of the person who runs the business.
This posting is not necessarily tax advise and it is recommend to check with you accounting professional before filing 2011Tax returns.
Empire’s Small Group “simplification” did indeed cause groups to escape Empire’s rate increases and reduced plan selections. Additional, not mentioned in the article was that groups are facing plan modifications such as Rx changes switch to % from fixed $ copay and loss of Walgreen/Duane Reades chains. By being the largest insurer on the block heavy provider negotiations have been de rigieur as evidenced by loss of Westchester Medical Center for 14 months and counting.
Groups have been fortunate to find comparable alternatives despite these changes but we see little public evidence of concern form NYS legislature. We are not seeing the long term vision to open up markets to strong national insurance competitors. On the contrary we have deep concerns of allowing the past 2 non-profits of GHI and HIP merger and latest talks of going for profit.
Lastly, the article makes mention of possible “Health Exchanges” entering the market and lowering rates. Where is there evidence of this decrease? I’m not seeing why an insurer working in an oligopoly environment with price controls would be motivated to lower rates. Would Con Ed or Blue Bell lower rates in the 70s because now SMB can shop online??
In a pleasant surprise, Empire will delay their April 2012 decision to “simplify” small group plans 1 more year from April 2012 to April 2013 instead. The Nov 4th Empire announcement to leave the NY Small Group Businesswas truly shocking after being in business for 75 years and insuring 35% of the market.
What this means for consumers is that insured members will now breath a sigh of relief and keep their contracted plan at least until their renewal. Evidentially, Empire was allowed to abruptly do a “hard shut down of their plans” for April and not allow a group to complete their 12 month contract. The negative consequence would have affected many unfairly as most members today have some kind of annual deductible and/or coinsurance on Rx plans, hospitalizations and surgeries. Example: a member signs up for a plan Oct 1 and has already met their deductible responsibilities would suddenly have to now change plans on April 2012. and start all over again.
A point needing further explanation is are they or they not exiting? Empire is stating that they are not in fact leaving but merely simplifying their offering to 6 plans but this is actually a red herring as the plans offered are not market friendly and allows Empire to stay within the market without having to really exit. Example: Their HMO monthly rate is $675/single when you can get the same plan from a leading competitor for $465/single.
So why be in the market without actually being in the market? The state’s regulation would not permit an insurer to re-enter for 3 years. With Health Care Reform changes in the subsequent years there are variables that may help NYS such as add’l federal funding. Additionally, it is an election year and with many unknown Health Care Reform variables still evolving such as Supreme Court hearing on individual mandate by June 2012 – WSJ Supreme Test for Health Law.
Either way this is welcome news to our existing clients and for the marketplace at large however short term it is.
Happy Holidays!!
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As per todays Crains article, Empire Blue Cross will be exiting the majority of small group health plans effective April 1, 2012. The news was swirling earlier this week with official Empire communication going out today.
This affects 1/3 of New York Small Businesses as defined by 50 or less FT and eligible employees. Since with large group market the insurer is allowed to rate a group based on true census and make up of a group’s sex, age and family status as well as claims experience of the prior year. In NY State where the small group market is Community rated and independent of census this becomes an important point that I will get back to.
As healthcare has become regulated by MLR(Max Loss ratios) or revenue controls its not surprising that insurers are unhappy but why does it seem that in NYS regulations run deeper than in other states? We are licensed in multiple states and we are not seeing the same pattern this quickly. Numerous companies have already exited such as CIGNA, HealthNet, Horizon, Guardian not to mention M&A of HIP/GHI, Oxford/UnitedHealthcare and Aetna/US Healthcare/NYLCare etc. I can go on.
In NYS the insurance regulations go beyond Health Care Reform (PPACA) with higher MLR than the national one. The Federal level is 80% for small groups and in NYS its 82%
There are new NYS price controls where insurers must anticipate risk a year in advance and ask for larger rate increases to protect on anticipated uncertain risks. With so many unknown variables its almost like asking one to predict who’s going to win the Super Bowl in 2013. Rate increase of 15-20% requests must be higher than usual since after all there are no State protection on the loss side. Furthermore, increases of 10%+ must now require public hearings 60 days prior.
Today, we have so many State mandates that many of the mandates(overage dependents coverage, preventive care, pre-existing for kids) in PPACA didnt even affect NY since they were already in place. Mandates account for approx 17% of the costs of which Small Businesses pay more than fair share. Large corporations and Unions can self insure and avoid some mandates as they are governed by ERISAand not State. To the relief of of our struggling clients on subsidized Healthy NY the State doesn’t play by their own rules and instead opts out of its very own mandates.
So what happened with Empire? The tipping point evidently was rate increase denials of 5 consecutive quarters and that Empire quite frankly got caught with great pricing and products just when healthcare reform came around. Many insurers raised their rates in advance of the law. Emblem (GHI) raised rates 25% on average and even as high as 60% on HSA. Granted they have also removed many plans recently.
Much like in the 70’s its a regulaed oligipoly with insurers too too big to fail. Our clients will have access to only 3 insurer – Aetna, Emblem and Oxford. Just imagine how high your Auto Insurance would cost in the same scenario? This remarkable in a 25 million metropolis like NYC. Insurers do not have to be in NYS, no new carrier is looking to enter the NY market. After 75 years in business and insuring 4 generations of small businesses this should be a shock to the system and a wake up call to every politician.
We ask for greater oversight on Mergers and Acquisition of health insurers,providers and hospitals. Its begining to dawn on everyone that a too big to fail environment is poison and will be the tail that wags the dog. I can only imagine what the other remaining insurers must be thinking whats in store for next year.
Importantly, the community rating ought to be dropped as most states such as NJ, CT are census based. With Health Exchanges coming in 2014 individuals will be able to purchase health insurance on their own which will make Community Rating less relevant. This will be a positive step in allowing great competitors like Humana to enter the market.
If this is not a wake up call for small businesses to have a seat at the table I dont know what is. Anyone in for an Occupy Albany?
Yes! it has begun Medicare Open Enrollment Period which opened Oct 15th – Dec 7th is in full swing. This is year 1 of Baby Boomers Generation applying for Medicare Benefits. This couldn’t come at a better time with all changes in the market place. Many businesses are now sponsoring Individual Medicare Plans for their senior employees and retirees. No other segment in the population can get similar benefits today. This is becoming a no brainer for many businesses as avg. rate increases are below 4% & benefits are superior.The most frequently purchased plans are Medicare Supplemental Plans (medigap). Example, the richest option Plan F + Plan D is only$295/month which allows members to:
Keep Original Medicare indemnity with the freedom to go to any provider
$0 cost for Medicare providers
No referrals
Medicare Advantage Plans can provide lower monthly premiums ranging from $0 – $89. They come in the form of Medicare PPO or HMO and is run by private health insurers.
We represent leading companies such as such as AARP Secure Horizon and Empire’s Mediblue. Both insurers are good options with unique programs such as AARP UnitedHealthcare’s $2 Prescription Drug Program. Importantly check the network of providers and wether or not your Rx is on their formulary.
In order to apply please call us to review first if your Doctor takes the plan and if your medications are on the formulary. The form’s take only 10 minutes to complete.
People with Medicare, their families and other trusted representatives can review and compare current plan coverage with new plan offerings, using many proven resources, including:
Visiting www.medicare.gov, where they can get a personalized comparison of costs and coverage of the plans available in their area. The popular Medicare Plan Finder tool has been enhanced for an efficient review of plan choices. Spanish Open Enrollment information is available.
Calling 1-800-MEDICARE (1-800-633-4227) for around-the-clock assistance to find out more about coverage options. TTY users should call 1-877-486-2048. Multilingual counseling is available.
People with Medicare who have limited incomes and resources may qualify for Extra Help paying for their prescription drug costs. There is no cost to apply for Extra Help, also called the low-income subsidy. Medicare beneficiaries, family members, trusted counselors or caregivers can apply online at www.socialsecurity.gov/prescriptionhelp or call Social Security at 1-800-772-1213 (TTY users should call 1-800-325-0778) to find out more.
