August 2010 Archives
What is a good way to determine if insurance rates are reasonable?
Last week, HHS official Jay Angoff, who heads the department's insurance oversight office, said the agency was working on the regulation that would define a "reasonable" increase in health insurance premiums. Angoff said HHS was focused on medical trends, or the rate at which medical expenses generally increase.
"If you [increase premiums] by two or three or four times more than the medical trend," said Angoff, "we wonder how it is justified."
But an August decision from the Massachusetts state insurance division determined that a strict interpretation of medical inflation alone was not enough to deny an increase in one insurance company's rates, because it did not consider future costs or those comparable to the company's prospective claims.
If medical inflation is not a sound calculation on its own, what else should be used to determine reasonable rates? Will a more general picture of rising costs in the health industry produce a sufficient threshold for what is "reasonable"?
Democrats and the Obama administration celebrated last week's release of the Medicare trustees' report as proof that the health care law helps to shore up the program's finances, extending the solvency of the Medicare trust fund 12 years longer than last year's estimate and reducing the fund's long-term deficit by more than 3 percent of taxable payroll.
But like he did in April, Centers for Medicare and Medicaid Services actuary Richard Foster expressed concern over a major cost-saving provision in the law that would tie payment rates for certain Medicare services to overall economic productivity. "The annual price updates for most categories of nonphysician health services will be adjusted downward each year by the growth in the economywide productivity. The best available evidence indicates that most health care providers cannot improve their productivity to this degree -- or even approach such a level," said Foster, who concludes that the financial projections in the report are not a "reasonable expectation" for actual program operations.
Adding to the complications is the question of doctors' reimbursement, which faces a 23 percent cut under the SGR formula at the end of this year. Given the unknowns of the "doc fix" and the question if Congress will ever allow the productivity cuts to occur, CMS actuaries issued an alternative financial estimate of the program, finding that "neither of these update reductions is sustainable in the long range."
Do you think the productivity payment rate adjustments in the health care law will ever take effect? Or will they become the next SGR, with Congress maneuvering to avoid reductions in payments to Medicare goods and services? If they do take effect, how much of an impact will they have?
5 responses: Ralph G. Neas, John C. Goodman, Larry C. McNeely II, Michael F. Cannon, John Sheils
Updated at 10:16 a.m.
House Democrats last week tried to pass legislation to repeal a tax provision in the health care overhaul law that required businesses to file 1099 tax returns any time they receive $600 or more in exchange for a good or service. Small business groups had decried the provision, saying it would become a hindrance.
Republicans in the House initially supported a similar proposal from Ways and Means ranking member Dave Camp, R-Mich., but ultimately voted against the Democrats' bill, opposing how the legislation was paid for.
The House vote comes after HHS announced new regulations last week on high-risk pools, banning all abortion coverage in the insurance plans, even if states use their own funds to pay for the procedure. Activists on both sides of the abortion debate believe this goes beyond the president's March executive order, which only explicitly bans using federal dollars for abortions in the 2014 exchanges and community health centers.
Do you think Congress will repeal the 1099 filing requirements this session? Will the House or the Senate eventually act to clarify abortion coverage in the law? What other provisions are next to be "fixed" or repealed?
