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CCH® BENEFITS — 06/23/10

State Health Care Reform Update

from Spencer’s Benefits Reports: For the last few years, states have been leading the way toward more comprehensive health care coverage to ensure that more people have or can obtain health insurance. With the passage of federal health care reform, states will have increasing responsibilities in regard to employer-provided health insurance benefits. Spencer’s Benefits Reports continues to provide regular updates about state health care reform.

High-risk pool. Twenty states so far have rejected federal funds to administer a high-risk insurance pool, as designed by the Patient Protection and Affordable Care Act. The high-risk pool would extend coverage to state residents unable to purchase insurance because of preexisting medical conditions. In these states, the federal government will be responsible for creating and running a high-risk pool on behalf of the state, as mandated by the Affordable Care Act. The 20 states are: Alabama, Arizona, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Louisiana, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wyoming. Two states, Oregon and Utah, have not indicated whether they will be running their own high-risk pool or if they will let the HHS run it for them. The remaining 28 states have decided they will run their own temporary high-risk pool. For more information, visit http://www.hhs.gov/ociio/initiative/hi_risk_pool_facts.html.

Arizona. A new law conditionally appropriates $400 million to prevent the June 15 repeal of the state’s KidsCare health care program for children. The legislation would allow the program to continue to provide health care to thousands of children and 310,000 low income people for at least six more months to December 31. For more information, visit http://www.azahcccs.gov/applicants/categories/KidsCare.aspx.

Colorado. Gov. Bill Ritter recently signed eight health care bills into law. The bills included one to mandate that individual and small group health insurance policies cover contraception and pregnancy. Other bills included the establishment of a reward system for Coloradans who report Medicaid fraud, and the establishment of an advisory committee to make recommendations to start an all-payer claims database. For more information, visit http://www.colorado.gov/GOVERNOR.

Florida. The state legislature is ready to cut Medicaid funding for nursing homes and is considering cuts to numerous other health programs to balance the budget. The proposed 7% cut to Medicaid payments rates for nursing homes totals approximately $200 million. Nursing homes likely would be able to offset at least part of the $200 million in cuts during the 2010-11 fiscal year, which starts July 1. Among other things, nursing homes expect to receive additional money because of an increase in a nursing-home tax that draws down more federal matching money. For more information, visit http://www.dcf.state.fl.us/programs/access/medicaid.shtml.

Maine. The Maine Superior Court upheld a Maine official’s decision to deny a profit margin for a Wellpoint, Inc. unit in a health insurance rate request. Anthem Blue Cross and Blue Shield proposed a rate increase of 18.1%, but the state only allowed a 10.9% increase, which was the same increase allowed in 2009. The court noted that the approved 2009 rate for Anthem Blue Cross and Blue Shield’s individual health insurance line met the state’s legal standard and wasn’t inadequate. The 10.9% increase became effective on July 1, 2009. The ruling may resonate in other states where regulators are battling premium hikes. For more information, visit http://www.maine.gov/pfr/insurance/.

Massachusetts. The state senate has approved a bill that would require wealthy hospitals to pay $100 million in a one-time contribution to help small businesses pay for health insurance premiums. The bill would let businesses with 50 or fewer workers form cooperatives to purchase insurance at a lower cost. The money paid by wealthier hospitals is estimated to save small businesses 2.5% in premium costs. Another provision of the bill requires that insurers spend 90% of premium dollars on care and 10% or less on administrative costs. For more information, visit http://www.mass.gov/legis/.

Missouri. Gov. Jay Nixon recently signed a bill that requires health insurance companies in the state to speed up claims payments to doctors, hospitals, and other health care providers. The legislation was prompted by a 2009 report from the Missouri Department of Insurance that showed health care providers across the state were dealing with significant payment delays in the claims filed with insurance companies for treatment of patients. The report showed more than 26% of claims at Missouri hospitals are past due by 90 days or more. In addition, the state legislature has sent the governor a bill requiring Missouri health insurers to cover therapies and treatments for autism. When Mr. Nixon signs the bill, the autism provisions will go into effect on January 1. For more information, visit http://insurance.mo.gov/.

New York. Governor David Patterson recently signed a bill into law that reinstates the New York State Insurance Department’s authority to review and approve health insurance premium increases before they take effect. The law will apply to all rate increases taking effect on or after Oct. 1, 2010. Since 2000, New York had regulated health insurance premiums under a law that limited the state’s ability to disapprove health insurance premium increases and allowed the insurance industry to self-regulate. The new law also requires health insurers to spend more of every premium dollar on medical costs and not administrative expenses. Under the federal Patient Protection and Affordable Care Act, health insurers will be required to report justifications for “unreasonable” rates increases, as well as the percentage of premiums spent on claims, quality of care, taxes, and administrative costs. In addition, the Department of Health and Human Services recently announced the availability of $51 million in Health Insurance Premium Review grants under the Affordable Care Act. For more information, visit http://www.ins.state.ny.us/.

North Carolina. Gov. Bev Purdue’s budget recommends restoring $40 million for community mental health programs that was eliminated in last year’s budget. The proposal also includes $12 million for the state to buy more local private hospital beds for mental health patients who require short term care. Eliminating the $40 million last year drew widespread criticism from behavioral health officials and advocates. For more information, visit http://www.dhhs.state.nc.us/MHDDSAS/.

Oregon. The state will add approximately 35,000 adults to the Oregon Health Plan, due to increased funding from legislation passed in 2009. The Oregon Department of Human Service’s Division of Medical Assistance Programs administers the plan, and estimates that about 140,000 adult state residents qualify based on their income. For more information, visit http://www.oregon.gov/DHS/healthplan/.

Pennsylvania. Governor Edward Rendell has announced that the state’s insurance department is investigating Pennsylvania’s nine largest health insurance companies to determine the reasons behind controversial rate increases. Mr. Rendell is especially concerned with the extent to which the premium increases are driven by the use of “questionable health profiling tools.” These include the use of individualized medical questionnaires and drug profiling in the small group market, according to the state’s insurance commissioner. For more information, visit http://www.governor.state.pa.us.

South Carolina. The state house has cut $50 million from it $5 billion budget, and the cuts center primarily around health care. The cuts limit health care access for low-income children, end a drug program for AIDS patients as well as two programs that help patients purchase prescriptions, limit those on the state-run Medicaid program to three prescriptions a month, and eliminate state-funded cancer screenings. For more information, visit http://www.doi.sc.gov/.

Tennessee. The state senate has approved a bill that will allow hospitals in the state to pay a fee to avoid $659 million in TennCare cuts. Gov. Phil Bredesen had proposed cutting $201 million from TennCare, the state’s Medicaid program, to help balance the state’s budget. The cuts would be averted through the hospital assessment. For more information, visit http://www.state.tn.us/tenncare/.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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