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Payer trade groups slam short-term health plan proposal
https://www.healthcaredive.com/news/payer-trade-groups-slam-short-term-health-plan-proposal/521941/
More organizations, including Aetna and the American Medical Association, submitted comments on the proposed rule Monday.
Dive Brief:
- The Alliance of Community Health Plans (ACHP) and America’s Health Insurance Plans (AHIP) both slammed CMS’ proposal to expand short-term, limited duration (STLD) insurance plans, saying the proposed rule would undermine key consumer protections, lead to higher premiums in the individual market and jeopardize market stability.
- The proposed rule, pushed by the Trump administration as a way to increase access to cheaper plan alternatives and sidestep the Affordable Care Act, would allow consumers to purchase plans for up to 12 months that do not adhere to federal rules for individual health insurance. STLD plans can charge those with pre-existing conditions more and may not cover ACA essential health benefits such as prescription drug coverage.
- The insurance lobbies argued that other policy mechanisms would be more effective at improving the individual health insurance market. AHIP pointed to increasing 1332 state waiver flexibility and the adoption of regulations aimed at preventing improper steering of Medicare and Medicaid consumers into the individual market, and ACHP advocated for the creation of a federal reinsurance program as more effective ways to promote affordable coverage.
Dive Insight:
The comments are indicative that many insurers are hesitant to back health plans that lack the consumer protections the ACA put into place due to a fear such plans would destabilize the individual market. Monday is the last day to submit comments on the rule.
A new Kaiser Family Foundation brief notes that many middle-income people not shielded by premium subsidies in the individual market would likely see premium costs increase. Combined with the individual mandate penalty being zeroed out, the effort to increase STLD plans could result in fewer individuals enrolled in the ACA market, adversely impacting its stability.
“Short-term plans were designed for consumers to use as temporary, stop-gap measures when moving between plans – not as long-term replacements for health insurance,” ACHP CEO Ceci Connolly said in a statement. “A broad, stable risk pool is crucial for providing affordable coverage and care. ACHP believes that other policy options, such as reinsurance, would be far more effective at promoting high-quality, affordable coverage and care for all Americans.”
ACHP argued the proposed rule should not be finalized, saying the current status-quo limit of 90 days should be maintained.
AHIP called for any final rule to limit the duration of STLD plans to six months, adding that the plans should be required to have a plain-language disclosure that the plans should not be considered comprehensive health insurance. The group argued that the effective date of any final rule should come no sooner than Jan. 1, 2020.
“As the Departments advance policies to expand access to lower-cost coverage choices for a subgroup of consumers, it is critical to improve the affordability of comprehensive coverage options for all Americans, regardless of health status,” Matthew Eyles, AHIP COO, wrote in the group’s comment.
But major insurer Aetna, which left AHIP in 2016, said in its comment STLD plans “can be a valuable option for many consumers.”
The insurer argued that such plans must be transparent with disclosure language, limit any look-back period for pre-existing conditions to 12 months and define a minimum floor of benefits including inpatient hospital services, physician services, mental health and substance abuse services and one annual physical and annual well-woman visit before the deductible.
A group of Senate Democrats were among those asking for the rule to not be finalized, arguing it “could increase costs and reduce access to quality coverage for millions of Americans, harm people with pre-existing conditions, and force premium increases on older Americans.”
The American Medical Association also echoed the insurance lobby’s concern, saying STLD plans would endanger the coverage gains of the past decade and destabilize the market. AMA argued the administration should withdraw the proposed rule, saying it is “a step in the wrong direction and will lead to a proliferation of inadequate health insurance policies in the market.”
A joint comment of 21 consumer advocates, including March of Dimes and the American Cancer Society Cancer Action Network, also called for withdrawing the proposal.
PhRMA voiced concern in its comment over the lack of prescription drug coverage in STLD plans, citing an analysis that found than 71% of such plans do not cover outpatient prescription drugs. “If consumers can renew these plans for an extended period, it increases the chances that consumers may find themselves diagnosed with a new condition that can be effectively treated by an innovative drug at a time when they are covered by a short-term plan that does not cover prescriptions drugs,” PhRMA wrote.
Court allows class-action CSR payment lawsuit
https://www.healthcaredive.com/news/court-allows-class-action-csr-payment-lawsuit/521866/
Dive Brief:
- In a decision that could ultimately result in billions of dollars in subsidies for insurers, the U.S. Court of Federal Claims gave the OK last week for a class action suit involving Common Ground Healthcare Cooperative. The suit seeks the cost-sharing reduction (CSR) payments that the Trump administration stopped paying in October.
- In the 18-page opinion and order, the court said Common Ground, a Brookfield, WI-based nonprofit payer that offers coverage to small businesses, nonprofits, individuals and families, “satisfied all of the requirements” to maintain a class action suit. The Department of Justice may appeal the ruling.
- The decision to stop CSR payments had an effect on marketplace enrollment in 2018, according to a new report from the Robert Wood Johnson Foundation. The share of enrollees in bronze tier plans increased from 23% to 29%, as customers found those plans gave them a better deal.
Dive Insight:
The ACA provided CSR payments to insurers to cover Americans with household incomes between 100% and 250% of the poverty line. The payments were supposed to keep down out-of-pocket costs for lower-income Americans.
However, Trump ended the CSR payments last October with the administration arguing Congress is responsible for them. Efforts on Capitol Hill to grant those payments have since faltered.
Without those CSR payments, insurance companies in the ACA exchanges charged higher premiums for 2018. Middle class and upper middle class members in ACA plans saw their insurance premiums rise this year.
However, stopping CSR payments actually resulted in lower healthcare costs for the poorest people in the ACA marketplace. An ACA provision kicked in that provides premium-reducing subsidies if the premiums increased too much for lower-income members.
Another piece in the CSR discussion is the payer practice of “silver loading,” in which ACA insurers put all the losses associated with no CSR payments onto their silver plans. CSR discounts were only offered for silver plans and they make up more than half of ACA plans. CMS Administrator Seema Verma recently declined to say whether the administration will limit payers’ use of government subsidies, and a Robert Wood Johnson Foundation paper predicted “silver loading is likely to continue next year and will probably expand to more states.”
As the deadline for payers to set 2019 rates narrows, insurers are threatening even higher premiums without CSRs and other market stabilization efforts, such as a reinsurance program.
Alliance of Community Health Plans CEO Ceci Connolly recently told Healthcare Dive, “Losing the individual mandate, losing the cost-sharing reduction subsidies and losing any hint of reinsurance, not to mention the risk corridors that were already gone, you’re just running out of options to manage the cost of this program.”
In a recent report, the Center on Budget and Policy Priorities warned higher premiums may cause healthy members in ACA plans to flee the market and either drop health coverage or choose a low-cost plan, such as a short-term catastrophic plan.
Adventist Health’s net income nears $230M in FY17
https://www.healthcaredive.com/news/adventist-healths-net-income-nears-230m-in-fy17/522093/
Dive Brief:
- Adventist Health’s net income grew 366% to $229.8 million in fiscal year 2017, up from $169.1 million in 2016.
- Operating income was $203.9 million for the year ended Dec. 31, an 11.6% increase from $812.8 million the previous year, according to recent released financial documents.
- The 90-hospital, Roseville, CA-based nonprofit health system reported $4.1 billion in revenue, a 5.8% gain over 2016’s $3.9 billion.
Dive Insight:
Adventist’s rosy performance gain reflects at least a short-term upward trend in financials as nonprofits show some signs of bouncing back from several years of rough currents fueled by shrinking volumes and reimbursement cuts. Geisinger Health System saw net income jump nearly $200 million to $324.9 million in the first half of fiscal year 2018, compared with the prior year, providing an excess margin of 9%.
Mayo Clinic reported $707 million in operating income and $12 billion in revenue for 2017, an increase of more than $225 million and $1 billion, respectively, from the previous year. Meanwhile, UPMC’s net income rose to $1.3 billion last year, spurred by strong operating and investing results and integration of UPMC Pinnacle into UPMC operations. Operating revenue and operating income also increased.
Adventist is looking to expand its brand footprint. Earlier this month, the system inked a deal to acquire Florida-based 421-bed Munroe Regional Medical Center from Community Health Systems. It has also broadened its reach in northern California through an affiliation agreement with Fremont-Rideout Health Group, which become effective at the first of this month.
Net patient service revenue at Adventist was $3.8 billion, up from $3.6 billion a year earlier. Total expenses rose to $3.9 billion, versus $3.7 billion in 2016. Of that, $1.9 billion was for employee compensation. The system recorded total cash and investments of $1.9 billion for last year.
Occupancy of licensed beds stayed mostly flat at 55.6% across the system. Average length of stay was down slightly and outpatient revenues as a percentage of gross patient revenue was down to 44.7% from 45.1% in 2016.
SEIU health workers set to protest potential Kaiser layoffs
Dive Brief:
- “Thousands of healthcare workers” organized by SEIU-UHW are set to protest from May 1-18 at 33 California hospitals owned by Kaiser Permanente, the union said Friday. At issue are a variety of announced plans to lay off pharmacy warehouse workers and relocate call center jobs.
- Kaiser Permanente wrote to Healthcare Dive in an email that the decision to outsource the pharmacy storage and distribution network came after extensive discussions with SEIU-UHW and other unions. The company pointed to the “many regulatory, technological and efficiency challenges we face now and in the future,” as factors that influenced its decision.
- But Service Employees International Union-United Healthcare Workers West argues that the decision is unbecoming of a nonprofit organization that had its profits rise 22% in 2017 with $28 billion in reserves on hand.
Dive Insight:
The protests appear to be the continuation of similar actions earlier this year when SEIU organized protests at 32 hospitals in February and March.
The company recently issued an official notice to lay off 61 pharmacy warehouse workers in Downey, California. According to SEIU-UHW, the company plans to lay off 175 more pharmacy warehouse employees in Oakland, Livermore and Los Angeles and relocate 700 call center jobs to cheaper areas of the state.
The union noted that 55,000 Kaiser Permanente employees in California are members of SEIU-UHW. The national agreement with Kaiser for a broader group of unions expires Sept. 30.
John Nelson, vice president of communications at Kaiser Permanente, called the claims by SEIU-UHW misleading.
“Kaiser Permanente is growing, and we are adding jobs overall. As one of the largest private employers in California with more than 149,000 employees and 16,000 physicians in the state, since 2015, we have added more than 13,000 jobs in California and continue to add jobs with more than 12,000 open staff positions and hundreds of physician positions,” Nelson said in a statement.
It appears that politics may be coming into play. Several elected officials have sent letters including California Democrat Reps. Tony Cardenas, Grace Napolitano, Adam Schiff, Lucille Roybal-Allard and Brad Sherman urging Kaiser Permanente to reconsider its plans.
“It is imperative that Kaiser Permanente continue to flourish by providing quality healthcare to patients while also being a good partner when it comes to job creation which benefits our community,” former California Senate President Pro Tempore Kevin De León wrote in a letter.
Anthem reports flat operating revenues due to exit from Affordable Care Act market
Net income increased 30 percent driven by premium rate increases, the return of the health insurance tax and the acquisition of MA plans.
Anthem reported a 30 percent increase in net income for the first quarter compared to the same three months of 2017, but operating revenues remained relatively flat primarily due to the insurer’s planned exits from the Affordable Care Act marketplace.
On Wednesday, Anthem reported net income for the first quarter of $1.3 billion, versus 1 billion for the first three months in 2017.
First quarter operating revenues were relatively flat at $22.3 billion year-over-year due to a decrease in its individual market business.
In 2017, Anthem announced it would cut back its ACA footprint by about 70 percent.
Revenues were helped by premium rate increases to cover overall cost trends, the return of the health insurance tax and the acquisitions of HealthSun and America’s 1st Choice.
Anthem’s acquisition of HealthSun, completed at the end of 2017, added a Medicare Advantage health plan and delivery network in Florida.
The acquisition of America’s 1st Choice was finalized in February. The privately-held, for-profit Medicare Advantage organization offers HMO products, including chronic special needs plans and dual-eligible special needs plans under its Freedom Health and Optimum brands in Florida. The deal added 135,000 Medicare Advantage members and included a 5 star plan.
Anthem’s medical enrollment totaled approximately 39.6 million members as of March 31, a decrease of 1 million or 2.5 percent percent, from 40.6 million at March 31, 2017.
The company said it now expects medical enrollment to be between 40.1 – 40.3 million for the full year 2018.
Counteracting the individual market decline, Anthem’s government business grew 10 percent year-over-year through a focus on serving the complex social and medical requirements of the dual special needs population.
Medical enrollment declined by 616,000 during the first quarter reflecting a decrease in the individual and local group fully-insured businesses. Medicare grew by 237,000 members and Medicaid enrollment declined by 120,000 individuals.
“We are pleased with our first quarter 2018 financial performance, which reflects our commitment to strong medical cost performance by effectively leveraging community based innovative and integrated clinical and value based care models across our markets,” said CEO and President Gail Boudreaux. “Throughout 2018, we are prioritizing investments to create a more flexible infrastructure that can quickly respond to the evolving needs of our customers and the changing healthcare environment.”
Adventist Health, St. Joseph Health sign definitive agreement for Northern California joint venture
Details are still being worked out about physical locations or shared access to care services and they hope to finalize the arrangement this year.
Adventist Health and St. Joseph Health will partner on a new joint operating company that will integrate clinical activities and services across clinics and facilities in Northern California.
The joint operation will include a new president and CEO, and a few other positions still to be determined. A governing board of consisting of 5 appointees from each system will also be formed. Adventist and St. Joseph facilities would keep their existing hospital names, licenses, capital assets and employees.
“By establishing a network that combines the parties’ footprints in this six county area, we intend to increase patients’ access to care,” said Kevin Klockenga, President & CEO, St. Joseph Health Northern California. “We intend to improve our ability to deliver better care on a number of fronts, including developing a comprehensive care continuum strategy; collaborating on centers of excellence, health information sharing, and care management; and developing a value based provider network.”
Adventist Health President of the Northern California region Jeff Eller added that “patients will benefit from more access points, better health outcomes and controlled costs by coordinating their care across the spectrum of their health needs.”
The new operation will serve municipalities of Humboldt, Mendocino, Sonoma, Lake, Napa and Solano counties.
A definitive agreement has been signed, which covers a joint venture, not a merger. The proposed operation will be under regulatory review. Officials at Adventist Health and St. Joseph Health are working toward a closing of the proposed transaction sometime later this year.
A St. Joseph Health spokesperson said details are still being worked out and it is not clear whether services at the included facilities will expand or whether the joint venture simply means patients in both systems will have access to the other system’s facilities under the new network.
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