State Regulators Criticize Blues’ Provider Networks

California’s Department of Managed Care released a highly critical report last week saying Anthem Blue Cross and Blue Shield of California haven’t been upfront with current and prospective members concerning doctors participating in the state’s public health insurance exchange, Covered California.

According to the state, neither of the two health plans has corrected three of four problems identified by regulators. Among the issues is that one-fourth of the physicians listed by Anthem and Blue Shield were not taking Covered California patients or were not found at the address listed by the health plans.

“We found the provider directories made available to the public had significant errors,” said Shelley Rouillard, director of the California Department of Managed Care. “When you have a quarter or more of physicians that aren’t available, that is significant.”

The state’s report is based on a survey of doctors listed in the provider directories for the two insurers. Doctors were asked about their contracting with the plans for members enrolled in the state exchange – and whether they were accepting new patients.

Anthem and Blue Shield, which account for nearly 60 percent of Covered California enrollment, criticized the report saying the state’s survey was flawed and the report exaggerates a problem they are currently working to correct.

Consumer advocates are pushing the state to impose substantial fines on the two insurers, although it’s not known what penalties could be levied. 

New Small Business Private Exchange in Texas

Blue Cross and Blue Shield of Texas (BCBSTX) announced this month the launch of its “Blue Directions for Small Business” private exchange solution for companies with one to 50 employees. The new program offers employers health and dental benefit plans and customized contribution strategies on a convenient, user-friendly platform that also allows employees to choose group plans or individual marketplace plans.

Available to new and existing BCBSTX small business clients and their employees, Blue Directions accommodates a defined contribution or defined benefit strategy to help employers control their employee benefit costs. The online exchange system helps employees navigate their health insurance coverage options in a new and user-friendly way. Employees can determine if they are eligible for financial assistance through the federal health insurance marketplace using the Blue Directions subsidy eligibility estimator.

“Our new private health care exchange for small business takes the complexity out of designing and administering employee benefit programs by helping business owners make informed decisions, anticipate expenditures, and simplify year-round benefits administration,” said Bert Marshall, President, Blue Cross and Blue Shield of Texas. “As the only health insurance carrier today that can offer both group and individual plans in every rating area of the state, BCBSTX is uniquely positioned to serve small businesses in need of increased choice and flexibility.”

Blue Cross and Blue Shield of Texas is the largest provider of health benefits in Texas, with a network of nearly 80,000 physicians and 500 hospitals saving five million members statewide. BCBSTX is a division of Health Care Service Corporation, which operates Blue Cross and Blue Shield plans in five states.

Kaiser Permanente Adds 422,000 Enrollees

Enrollment and profits at Kaiser Permanente are both up for the first three quarters of 2014, according to information released this month.

The Northern California-based non-profit health plan added 422,000 new enrollees through September, due in large part to Kaiser’s participation in Covered California and other exchanges established as part of the Affordable Care Act (ACA). The plan also experienced an increase in its commercial and Medicare business.

Kaiser Permanente now has 9.5 million enrollees in eight states and the District of Columbia. More than three-quarters of the health care provider’s members live in California – roughly 7.4 million.

Operating revenue during the third quarter was up more than eight percent from 2013. For the year, operating income jumped 48 percent to $766 million. Profits ballooned to $997 million as compared to $635 million a year earlier. Non-operating income, from investments, increased 49 percent to $900 million.

Kaiser Permanente CFO Kathy Lancaster said in a statement last week the organization’s “efforts to increase efficiencies and effectiveness, while maintaining our focus on meeting the needs of our members and customers, are gaining momentum.”

Last month, Aetna reported strong third-quarter earnings that beat analysts’ expectations; total revenue for the quarter was up 14 percent to $14.73 billion. WellPoint, which will soon change its corporate name to Anthem, reported a national membership boost of approximately two million members for its third quarter and an operating revenue boost of 4.3 percent as compared to Q3 2013.

Covered California Predicting 1.7 Million Enrollees

Officials at Covered California, the public health insurance exchange created as part of the Affordable Care Act (ACA), are forecasting a significant increase in enrollment during the exchange’s second year. After enrolling about 1.2 million for the 2014 plan year, state officials predict enrollment will reach 1.7 million in year two.

The half-million enrollee bump amounts to a 43 percent increase over 2014. Open enrollment for 2015 began over the weekend, on November 15, and it continues through February 15, 2015.

To increase awareness of the open enrollment period, Covered California began its “I’m in” marketing campaign in October. It also kicked off a nine-day, 21-city bus tour that started at the State Capitol last week and included stops in communities across the state. Led by Covered California Executive Director Peter Lee, the tour was part of a $95 million community outreach effort funded in part by the U.S. Department of Health & Human Services (HHS).

Nationally, HHS is forecasting enrollment of nine to 10 million Americans in the federal and state health insurance exchanges by the end of 2015. That figure is lower than the Congressional Budget Office forecast from earlier this year that predicted 13 million people would have health coverage through the exchanges in 2015.

Supreme Court to Hear Health Subsidy Challenge

The U.S. Supreme Court has agreed to hear a challenge to the health insurance premium subsidies that are a core component of the Affordable Care Act (ACA) and the federal health insurance exchange. The Court made the announcement concerning King v. Burwell, a case from the U.S. Court of Appeals for the Fourth Circuit that focuses on tax credits for health insurance purchased through exchanges created under the ACA.

The plaintiffs in the case argue the wording in the ACA statute extends premium subsidies/tax credits only to those persons in states that establish own health insurance exchanges. They also argue that eliminating the subsidies for coverage purchased through the federal exchange undermines the entire ACA because just 14 states and the District of Columbia have established their own exchanges. (Sixteen states and DC will operate exchanges for 2015.)

Since the ACA was enacted in 2010 and exchange enrollment began a year ago, more than eight million individuals have purchased health insurance via the federal and state exchanges. About 4.6 million received credits to purchase their health coverage.

Court rulings on the tax credits and premium subsidies are split, which is why the Supreme Court is looking at the issue. If the Supreme Court rejects the idea of premium subsidies for those purchasing coverage through the federal exchange, the outcome is uncertain. It could push states without exchanges to set up their own marketplaces. Alternatively, some analysts say it could unravel the ACA and destabilize insurance markets. The Rand Corporation recently reported that eliminating tax credits could drive up premiums by as much as 43 percent, while reducing enrollment by 68 percent. A court ruling will come by June 2015.  

Sam’s Club Launches Member Health Exchange

Wholesale retailer Sam’s Club, the membership arm of Walmart, has introduced a new suite of services for entrepreneurs and small business owners that includes a private health insurance exchange for its members.

The Aetna Marketplace for Sam’s Club is the nation’s first big box retailer-supported health insurance exchange program. In about two dozen states primarily in the central,  northeastern, and southern U.S., Sam’s Club business members with two or more employees have the exclusive opportunity to access health care benefits and personalized plan tools and resources from Aetna.

“Whether they lead startups or seasoned firms, America’s small business owners are constantly strapped for time,” said Rosalind Brewer, President and CEO of Sam’s Club. “To help, we’ve enhanced our suite of business member benefits to bring big business benefits to small business owners at a value they deserve. Our service providers share our commitment to simplifying our members’ lives, offering affordable, innovative solutions and convenience to critical business operations.”

Like other exchange programs, the Aetna Marketplace offers employers enhanced cost control and budget predictability, simplified administration, and easy-to-use tools to help employees choose a plan that best meets their needs. In addition to health insurance, the Sam’s Club business suite includes payroll and legal services. 

Voters Support Open Health Networks

South Dakota voters last week approved by a wide margin a ballot initiative that requires health plans and the state’s Medicaid program to accept all health care providers who want to take part in a health insurance network. Nearly 62 percent of voters supported the measure.

The ballot initiative, sponsored by three South Dakota doctors, is designed to end restrictions put in place by insurers to limit what health care providers members could visit. The measure followed a failed attempt in the legislature to address medical group objections to existing provider network limitations.

Leading up to the election, advocates said the proposal would make it possible for patients “to maintain an ongoing relationship with their physician, which is key to successful management of one’s health.” Opponents argued that Initiated Measure 17 would be more government interference in health care and that it amounted to businesses being told who they had to hire.

In supporting the ballot initiative, physicians and members of the South Dakota Medical Association were up against insurance industry groups like the Independent Insurance Agents of South Dakota (IIASD), the national trade group America’s Health Insurance Plans, and the South Dakota Association of Healthcare Organizations. Opponents argued that requiring insurance networks to include any and all willing providers could increase costs for clients by 20 percent.

Election Results Could Impact ACA

Republicans won a majority of seats in the U.S. Senate in the November 5th election. They will now control both the U.S. Senate and the U.S. House of Representatives beginning in 2015. Kentucky Sen. Mitch McConnell is likely to become the new Senate majority leader, and he has vowed to roll back some of the provisions of the Affordable Care Act (ACA) enacted in 2010. Nevertheless, questions remain about how much change employers and employees should expect.

As noted by Allison Bell in a piece for BenefitsPro, an insurance industry and employee benefits newsletter, Republicans who seek to repeal the ACA – or to change it in major ways – will continue to face challenges from within Congress. The advocates for change will have to win over some Democrats to get a bill to the Senate floor, and they’ll need even more Democratic support to get past a presidential veto.

While the GOP picked up 14 seats in the House of Representatives and won seven races in the Senate, Republicans won’t have the 60 votes necessary to break a Democratic filibuster in the Senate, nor will they have the two-thirds majority to override President Obama.

What is likely according to analysts and many in Congress is some “tinkering with the law,” which could include a negotiated repeal of the medical device tax, reconsideration of whether the Medical Loss Ratio formula should include broker compensation, and a review of the “Cadillac tax” that is set to begin in 2018 on high-value health plans. 

Cadillac Tax Could Impact One in Five Businesses

Nearly 20 percent of benefit plans could trigger the “Cadillac tax” provision of the Affordable Care Act (ACA) by 2020 according to a new study from Truven Health Analytics. That forecast is based on an analysis of more than 13 million active employees and early retirees insured under nearly 2,600 self-funded plans.

Under the ACA, beginning in 2018, employers are required to pay a 40 percent tax on the net cost of high-cost health plans – those with a total cost of more than $10,200 for employee-only coverage and $27,500 for family coverage.

“It’s critical to effective planning for budgeting, collective bargaining, and benefit strategy that employers begin now to gain a solid understanding of which plans are likely to incur the tax and when each plan’s costs may be likely to cross the excise thresholds,” said Chris Justice, senior director of practice leadership at Truven. “By implementing a combination of benefit plan changes, premium contributions, and health risk interventions, you can mitigate the impact of this new tax is 2018 and beyond.”

Truven projects 15 percent of active employees will incur the tax when it goes into effect in 2018; that rate is expected to increase to 19 percent by 2020. The impact to businesses could be up to $480 per employee per year. Retiree health plans could be hit even harder – with 81 percent likely to incur the Cadillac tax in 2018 and 84 percent in 2020. The annual cost per retired employee is expected to be $1,069.

Private Exchanges Lowering Employer Costs

A new analysis finds GlidePath, the Blue Cross Blue Shield of Michigan private health exchange, benefits both employers and their staff by empowering employees to be better-informed health care consumers. The study shows the private exchange increased employee awareness of costs, encouraged employees to make more cost-effective choices to meet their needs, and strengthened employee knowledge and adoption of Health Savings Accounts (HSAs).

While 38 percent of employees in general are aware of what employers pay for health benefits on their behalf, 94 percent of employees using the GlidePath private exchange were aware of their employer’s contribution to their health benefits.  Employees also have a greater tendency to select a plan with a lower premium and high deductible. After reviewing their options on the private exchange, 79 percent of employees self-selected plans with deductibles of at least $1,000 – two times the national average.

The findings, published in a White Paper from GlidePath, are significant when viewed in light of a recent estimate by consulting firm Accenture that shows private exchange growth will increase dramatically in the next few years – from three million currently to an estimated 40 million by 2018.

In other exchange news, Health Care Service Corporation (HCSC), the Chicago-based operator of Blue Cross and Blue Shield plans in Illinois, Montana, New Mexico, Oklahoma, and Texas, launched a new private exchange this month targeting groups of one to 50 employees. It is part of the company’s expanding portfolio of exchange products for small business.

Rick Allegretti, HCSC’s vice president for market strategy and business development, told Employee Benefit News “Eighty percent of small employers with 2-9 employees don’t currently offer coverage. So, the [new] exchange presents a way for companies to provide access to coverage for employees using pre-tax dollars, even if the employer continues to make no contribution.”