Weekly Health Insurance Industry Highlights
Catch up on healthcare news and gain insights from our own industry gurus.
With the cost of healthcare continuing to rise, employers are weighing their options and looking for innovative methods of keeping costs down. Health plans are working to finalize 2015 rates, as large payors, like Aetna, WellPoint, and Cigna report on their early exchange business and reveal their outlooks on the public exchange marketplace. The private exchange option is looking more promising, especially as many public exchanges have not yet found solutions to fix non-functioning exchange technology. Consumer access to information and care remains in the spotlight as Washington state finalizes plans to move forward with tighter network regulations and ensure consumer access to information.
The Wall Street Journal
As employers try to control rising healthcare premium costs, their employees will continue to pay more for healthcare plans and face higher deductibles and copays, according to a recent survey from Wells Fargo Insurance, part of Wells Fargo & Co (NYSE: WFC). The survey of more than 70 insurance companies nationwide found that overall claim costs will continue to increase in the high single digits next year, a strong indication that employers can expect to pay higher rates.
The survey also indicated that the top three employer product innovations in 2014 are accountable care organizations (ACOs), increased wellness programs, and narrow provider network offerings. Forty seven percent of all participants said they will launch their own proprietary private exchange by 2015.
Kaiser Health News
Health insurers are already preparing to raise rates next year for plans issued under the Affordable Care Act.
But their calculation about how much depends on their ability to predict how newly enrolled customers – for whom little is known regarding health status and medical needs — will affect 2015 costs.
At stake are price increases that buyers on the federal exchange, healthcare.gov, and other online marketplaces will encounter when they get renewal notices later this year. Forecasting success or failure could also affect whether insurers stay on the exchanges, a key pillar of the health overhaul.
And insurers are taking different approaches to their exchange strategies:
Aetna remains wary about expanding its presence in public healthcare exchanges for 2015.
That news came as the insurer reported that it significantly exceeded profit expectations during the first quarter of 2014.
Aetna CEO Mark Bertolini indicated that the company expects to have a similar presence during the 2015 open-enrollment period.
In particular, he expressed concern about changes to the rules under the Patient Protection and Affordable Care Act and the difficulty that creates in offering competitive, profitable products.
“As a result, our conservatism goes up,” Bertolini said on a call with investors Thursday. “We’ll have to go market by market as we move ahead.”
The following article contrasts Aetna’s concern with WellPoint’s bullishness about how their public exchange business has been going.
WellPoint Inc on Wednesday said that its Obamacare exchange business was sustainable so far, echoing comments from another major insurer last week that these new customers have cost as much as expected, not more.
WellPoint’s comments were more positive than Aetna’s, which said that pricing had been in line with customer demographics but that ultimately it continued to see the business as a “headwind” for 2014 results.
ContentU.S. health insurer Cigna Corp (CI.N) on Thursday said that early enrollees in new plans created under President Barack Obama’s healthcare law used medical services more than it expected, confirming early forecasts it would lose money on the business in 2014.
The loss tied to Obamacare, which accounts for 3 percent of Cigna’s revenue, did not prevent Cigna’s first-quarter earnings from beating Wall Street expectations.
Company shares gained 3.5 percent as its much larger employer-based and government Medicare businesses improved, due to stronger cost controls and relatively light use of medical services by customers, partly due to a moderate flu season.
The report by Cigna follows earnings beats by larger competitors WellPoint Inc (WLP.N) and Aetna Inc (AET.N) for the first quarter as well.
Cigna Chief Executive Officer David Cordani said Cigna may expand into several new Obamacare markets in 2015 on the expectation that there is long-term opportunity in the business.
It is not just insurers preparing for next year’s enrollment period, health insurance exchanges faced with ongoing technology problems are also trying to prepare for the next enrollment period:
On Friday [April 25], the Cover Oregon Board of Directors voted unanimously to accept a recommendation by a technology advisory group to shift the private insurance side of the program to the federal exchange. The Medicaid portion will move to the Oregon Health Plan.
However, the Board may not have the authority to make that decision:
Cover Oregon’s board of directors did not have legal authority to scrap the state exchange technology in favor of the federal HealthCare.gov website, according to the attorneys of the Oregon Legislature.
The legal opinion pointed to the bills that created Cover Oregon and the Legislature’s deliberate intention to run a state-based exchange instead of relying on the federal system.
“Therefore, the Cover Oregon board of directors does not have the authority under state law to abandon a state-based exchange and transition to the federal exchange entirely without significant and substantial amendments to existing state statutes,” the document reads.
A resolution in the near term seems to be out of reach, but while Oregon is looking to shift the state-based exchange to the federal exchange, the federal exchange is also looking to find a contractor capable of delivering a functional site.
The New York Times
The Obama administration has begun a wide-ranging search for companies to run the online federal health insurance exchange, seeking new talent to prevent a repeat of problems that immobilized the website last fall.
The administration is now looking for companies to take over the project when Accenture’s contract expires in January 2015.
Analysis by Avalere, looks at the difficulty of accessing information about health plans through the exchanges.
The analysis provides a snapshot view of the consumer experience in selecting a health insurance plan on the healthcare marketplaces (or exchanges) for the 2014 plan year.
At Strenuus, we can take the analysis of provider directory effectiveness to a whole new level since we are the experts in the actual makeup of the exchange networks.
In Washington, part of next year’s exchange implementation will include ensuring consumers have access to information like current provider network directories and that they can access care, ensuring consumers can find providers who are taking new patients within specific distance standards and timeframes.
Washington State Office of the Insurance Commissioner
A new rule designed to give consumers increased information about health insurers’ provider networks was published today by Insurance Commissioner Mike Kreidler.
The new regulation applies to all state-regulated health plans offered both inside and outside of the Exchange,Wahealthplanfinder.
In addition to increasing transparency, the new rule harmonizes existing state regulations with the Affordable Care Act (ACA) and sets clear and uniform standards for how the Office of the Insurance Commissioner evaluates networks when they are initially filed and when changes to them are made.
The 2015 health plans and their proposed rates must be filed with Kreidler’s office by May 1. Insurers also must begin filing provider network reports. The new rule allows issuers time to provide this information to the OIC and to address network contracting issues.
The new rule takes effect on May 26.
Center for Children and Families
Washington is among the first states to significantly revise its network adequacy standards for private plans since the passage of the Affordable Care Act.
Understanding the concerns that have come up in Washington and where the state landed can help stakeholders in other states prepare for this important discussion.
Increased transparency for people shopping for coverage
- Provider directories have to be updated monthly
- Each health plan’s directory has to provide specific information for each provider listed, such as referral requirements and languages and interpreter services.
- Certain primary care practices (primary care, women’s health, pediatrician, chiropractor) also have to indicate whether the practice is closed to new patients.
- New rules require issuers to file geographic maps with provider locations for many types of providers each year.
Fulfilling the promise of the essential health benefits
Issuers must not exclude any category of provider licensed by the state of Washington who provides health care services or care within the scope of their practice for services covered as essential health benefits.
Specific standards for certain types of services
- Distance standards: Plans must show that 80% of the enrollees have providers a specified distance from their home or workplace. The distance varies by type of provider and whether the area is urban or rural.
- Ratios: The ratio of primary care providers to enrollees in an issuer’s service area must meet or exceed the average ratio for the state for the prior plan year.
- Wait time limits: Enrollees must have access to an appointment with their primary care provider within 10 business days of requesting one (other than preventive care) and within 15 days for a non-urgent specialist visit. Urgent appointments must be available within 48 hours (or 96 if prior authorization is required).
Washington state’s focus on the details of the provider network and how those specifics impact the value consumers receive from their healthcare is bringing needed attention to a critical element of the ACA. Strenuus’ focus is on delivering actionable provider network data solutions to all parties involved in this fast-changing world of healthcare reform.