Volume I, Issue 10 – September 14

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

"What Unites Us is Greater Than What Divides Us" in the Health Reform Debate

With Congress returning from the August recess, UnitedHealth Group recently began an effort to highlight our position on health care reform and modernization through an ad in national news publications. The ad states that while there are some issues in the debate that not everyone agrees on, there are many more issues that we as a nation collectively agree on and we should not lose sight of these important areas where we can agree and move forward. UnitedHealth Group believes that comprehensive health care reform is needed and that is why we have proposed new market reforms for our industry, consumer protections, and responsibilities that would guarantee coverage for all Americans, regardless of gender, health status, or pre-existing conditions. We are also working with physicians, hospitals, and other health care providers on innovative technologies and initiatives to bring down cost and improve quality across our health care system. As a nation, we have a great opportunity to improve the way we consume, deliver, and administer health care. UnitedHealth Group remains committed to constructively participating in the process to make health care more effective, accessible, and affordable for all Americans.

National Spotlight

President Obama Speaks to Joint Session of Congress on Health Reform

On September 9th, President Obama addressed members of Congress returning after the August recess regarding his priorities for health reform legislation and the importance of continuing efforts to pass legislation this year. The President stated that his plan would cost roughly $900 billion over ten years, would not add to the deficit, and would be paid for by reducing waste and inefficiency in Medicare and Medicaid, reducing payments to private Medicare Advantage plans, and imposing a fee on higher cost health plans. Additional details include:

• "More Stability and Security" – The plan would prohibit the denial of coverage based on pre-existing conditions or health status, differential premiums based on gender, annual and lifetime benefit limits, cost-sharing for preventive services, and rescission of individual coverage. It would also limit out-of-pocket expenses and premium variation based on age. President Obama's plan would also eliminate the "donut hole" or prescription drug coverage gap in Medicare Part D.
• "Quality, Affordable Choices for All Americans" – A new insurance marketplace or "Exchange" would be created to allow individuals without health insurance and small businesses to compare and purchase health insurance coverage negotiated by the Exchange. Tax credits would be provided to eligible individuals and small businesses to purchase coverage offered through the Exchange. A public health insurance option would be created, but the President stated that he would consider alternative proposals that would either limit a public option to markets without affordable insurance policies or create non-profit cooperatives that compete with private insurers. The President has allotted four years for the Exchange and market changes to be implemented; during that four year period he proposes that a national high risk pool provide coverage for people who are unable to obtain coverage due to pre-existing conditions.
• "Reining in the Cost of Health Care for Our Families, Our Businesses, and Our Government" – The President's plan would create incentives to reduce hospital readmissions, establish new provider payment pilot programs in Medicare, and support coordinated care delivery models such as "medical homes" and "accountable care organizations." A new independent commission of doctors and medical experts would be created to identify waste, fraud, and abuse in the health care system. Medical malpractice grants would be awarded to states for pilot programs aimed at reducing the practice of defensive medicine. The President's plan would also require individuals to have health insurance coverage and employers with 50 or more workers to offer health insurance coverage.

Chairman of Senate Finance Committee Releases Health Reform Framework

Prior to President Obama's address to Congress on health reform, Senator Max Baucus, Chairman of the Senate Finance Committee, released an outline that provides some direction of what will likely be included in health reform legislation that the committee intends to introduce this week. A group of six members from the Finance Committee including Senators Baucus (D-MT), Bingaman (D-NM), Conrad (D-ND), Grassley (R-IA), Enzi (R-WY) and Snowe (R-ME) has been negotiating health reform legislation throughout the summer to try to reach agreement on a bipartisan bill, but it is unclear if the Republicans involved in these negotiations will support the final Finance bill. It is likely that some of the framework components described below will be changed to garner support, but Chairman Baucus has stated that the time has come to act on a bill with or without Republican support. Details of the health reform framework released by Chairman Baucus include:

• "Immediate Relief for Families and Small Businesses" – Many of the health reforms contained in the framework become effective in 2013, but there are some components that become effective immediately and others that are temporary until other reforms become effective in 2013. Some components that would become effective in 2010 include a 50% brand drug discount provided by prescription drug manufacturers for beneficiaries in the Part D "donut hole" or coverage gap and a requirement that hospitals list standard charges for all services. Some of the temporary provisions include a 35% premium credit for employers with less than 25 employees and average wages below $40,000 (increasing to a 50% premium credit in 2013) and federal funding for state high risk pools until insurance market reforms become effective in 2013.
• "Ensuring Affordable Coverage for Individuals and Employers" – Insurance market reforms including guarantee issue, the elimination of pre-existing condition exclusions and premium variations based on health status, and limited premium variation for tobacco use, age, family composition, and geography would apply to the individual and small group market (defined as groups of 1 to 50 employees and extended to 100 employees by 2022). Individuals and small groups would be allowed a choice of five federally defined standard plans with different benefit levels including a "young invincible" catastrophic plan for young adults. These plans would be prohibited from establishing annual or lifetime benefit limits or cost-sharing for preventive services. Federal funding would be available for the establishment of new non-profit, member governed health insurance cooperatives in each state to compete with private insurers in the individual and small group markets. State-based Health Insurance Exchanges would be established to help individuals and small groups compare plans and purchase coverage. Individuals would be required to have health insurance coverage and premium assistance would be available to individuals with incomes up to 300% of the federal poverty level. Employers would not be required to offer coverage, but employers with more than 50 employees not offering coverage would have to pay a $400 fee for employees receiving premium assistance for coverage purchased through an Exchange.
• "Ensuring Affordable Coverage for the Lowest Income Populations" – By 2014, Medicaid eligibility would be expanded for all individuals, including childless adults, up to 133% of the federal poverty level. States would be required to maintain current Medicaid and Children's Health Insurance Program (CHIP) eligibility levels until 2013. In 2013, CHIP eligibility would be set at 250% of the federal poverty level and CHIP beneficiaries would enroll in private plans through an Exchange with states providing supplementary CHIP benefits not covered under the standard benefit options required for private plans. Newly eligible Medicaid adult beneficiaries between 100% and 133% of the federal poverty level could choose to purchase coverage through an Exchange and receive premium subsidies.
• "Promoting Disease Prevention and Wellness" – In Medicare, a wellness visit would be covered every two years and cost-sharing would be prohibited for preventive services. The framework also instructs the federal Department of Health and Human Services to explore the provision of incentives to Medicare and Medicaid beneficiaries to encourage healthy lifestyles and improve health status.
• "Improving the Quality and Efficiency of Health Care" – To increase quality, improve efficiency, and reduce costs in the Medicare program, the framework would link provider payments to quality outcomes, encourage the delivery of coordinated care, test and implement new provider payment methods, evaluate the accuracy and adequacy of provider payment levels and make appropriate adjustments, establish penalties to reduce hospital acquired infections and preventable readmissions, and increase payments for primary care physicians. The framework would reform the payment structure for Medicare Advantage by reducing payments, creating a competitive bidding process, and providing financial incentives for care coordination programs and quality achievement. Annual provider payment updates would be reduced for Medicare Part A and Part B and an independent Medicare Commission would be established to make recommendations to extend the solvency and improve the quality of the Medicare program.
• "Revenue Provisions" – The framework includes an excise tax of 35% on insurers and self-funded administrators for any "high value" health plan (defined as exceeding $8,000 for individuals and $21,000 for families). The exclusion from gross income for the subsidy for employers who maintain prescription drug plans for Medicare Part D eligible retirees would be eliminated. The framework also establishes annual fees to be paid by pharmaceutical manufacturers ($2.3 billion), medical device manufacturers ($4 billion), clinical laboratories ($750 million), and health insurers ($6 billion).

State Spotlight

California: Legislature Passes Bill to Address Healthy Families Funding Cuts Through Tax on Medi-Cal Managed Care Plans

The California Legislature has passed a bill to subject Medi-Cal (Medicaid) managed care plans to an existing 2.35% gross premium tax on health insurers until 2011. The tax is estimated to raise $157 million and will be used to restore funding cuts for the state Children's Health Insurance Program, Healthy Families, approved in July by the Governor to help close the $26 billion state budget gap. Without the additional funds, the state may start disenrolling children from the Healthy Families program. The bill now heads to the Governor for consideration.

New Jersey: Governor Signs Legislation Prohibiting Payment for Medical Errors

Governor Corzine has signed legislation prohibiting hospitals and physicians from charging any patient or third-party payer for reimbursement of costs associated with certain medical errors or hospital acquired conditions ineligible for reimbursement from the Centers for Medicare and Medicaid Services (CMS). The law also requires annual reporting of each hospital's patient safety performance and rates of serious medical errors by the Department of Health and Senior Services. Hospital specific results will be reported on 14 measures researched by the federal Agency for Healthcare Research and Quality (AHRQ) and CMS, including so called "never events" such as objects left inside patients during surgery, accidental cuts and punctures to patients, hip fractures suffered in a post-surgery fall, and surgery on the wrong side, wrong body part, or wrong person.

See our Center for Health Care Modernization and Reform site for more information and for copies of newsletters.

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