October 2010 Archives
The National Association of Insurance Commissioners can check a major task off its list after unanimously passing a final model for the new health care law's medical loss ratio last week. But now the Health and Human Services Department must quickly address thorny tax and implementation questions before it issues a final rule.
HHS has to decide which federal taxes insurance companies will be allowed to include as medical costs, and how to adjust the rules for states with individual insurance markets that could be destabilized by the regulations. The insurance industry contends the law allowed plans to include all federal taxes, minus those on investments, as medical costs. But the Democratic chairmen of the House and Senate committees that marked up the health overhaul legislation sent a letter to Sebelius in August saying their intent was only to allow new federal taxes created by the health care law to be included in the medical cost calculation, not the entirety of federal taxes on premiums.
NAIC's model allows companies to include all federal taxes, and did not issue any guidelines on how states could qualify for a slower transition to full MLR provisions if they are faced with market disruptions.
How should HHS handle these issues? Should it change NAIC's tax provisions and exclude federal taxes not created in the health care law? Do states need general guidelines to qualify for slower MLR implementation, or should it be done on a state-by-state basis?
The National Association of Insurance Commissioners will meet this week to finalize work on its recommendations for the all-important medical loss ratio provision. At its crux, the formula -- as spelled out in the health reform law -- directs insurers to spend between 80 percent and 85 percent of the premiums they collect on direct medical care. Discussions among NAIC, HHS and others have focused on trying to define what should and should not count as a medical cost. One area that continues to come up is whether quality improvement measures, developed at the plan level, should be figured in as part of the equation. Insurers say yes, but others are more reserved.
So, with the stakeholders meeting this week and an HHS interim final rule on the matter soon to come, how broadly do you think government officials will go in defining the regulation?
Many of the savings in the new reform law are premised on everyday Americans making changes in their personal behavior. A person who takes advantage of the preventive health measures in the bill is one thing; asking individuals to live a healthier lifestyle -- including making dietary changes -- so they rely less on overly burdensome medical care in the future is another thing altogether. The issue surfaced again last week when New York City officials contemplated a measure that would bar the purchase of sugary soft drinks with government-backed food stamps. While federal efforts to cut tobacco use have worked in the past, is it right to assume that the government-backed programs to inch Americans towards a healthier lifestyle will be effective?
A government agency recently named members to the Patient-Centered Outcomes Research Institute, or PCORI, which is charged by the new reform law with conducting comparative effectiveness studies. While it is restricted in how it can manage costs, the group nevertheless could play a major role in promoting the efficacy of medical devices, procedures and medications. When the reform bill was being shaped on Capitol Hill, the inclusion of comparative effectiveness measures drew charges that it would lead to rationed or restricted care. So the question is: What is the real value in conducting comparative studies? Could it lead to rationing? Can it drive down costs and improve care? How do you see this measure playing out?
