Senate Finance Committee Chairman Max Baucus (D-MT) and committee ranking minority member Chuck Grassley (R-IA) last week released a 48-page set of policy options for reforming the nation's health care delivery system (see below), signaling the start of a committee process that will transform a year's worth of input and testimony into actual legislation. The Committee leaders said in a press release that they intend to mark up comprehensive health care reform legislation as early as June. The deadline for public comments on delivery system reform policy options is May 15.

Federal

Senators Baucus and Grassley last week unveiled their 48-page set of policy options for reforming the nation's health care delivery system, much of which could be included in a final health care reform bill. It demonstrates the committee is strongly considering some sweeping changes in the way Medicare operates to reward or penalize doctors, hospitals and nursing homes based on the quality of care provided. The policy options also would create incentives for doctors and hospitals to coordinate the care they now provide in a fragmented way. According to Baucus and Grassley, the policy options would use current measures to pay health plans for quality improvement, provide a bonus payment to Medicare Advantage plans that use evidence-based programs to manage care for the chronically ill, and allow plans to continue to offer extra benefits while reducing the variation among plans. The document also includes options to dramatically change the payment system for Medicare Advantage to reduce payments to private Medicare plans. The release of the policy options is just the start of the intensive work. The Finance Committee will hammer away at this expansive set of options over the next couple of months before releasing legislation.

Congress last week passed (233 to 193 in the House and 53 to 43 in the Senate) the budget for fiscal year 2010, which sets the parameters for government spending. As expected, the budget gives the Senate the ability to pass health care legislation with only 51 votes (including Vice President Biden) through a maneuver called "reconciliation." With reconciliation in their back pockets, Democrats don't have to worry about a Republican filibuster of health care reform legislation. But the opportunity to use reconciliation does not fully ripen until October 15, which means that attempts to adopt health care prior to October must be pursued through regular Congressional procedures. And, Republicans clearly are soured by the reconciliation maneuver. The budget document also includes a "deficit-neutral" reserve fund to pay for health care reform, to be offset by funding from Medicare, Medicaid and the tax code.

STATES

COLORADO:
The Colorado Healthcare Affordability Act was signed into law by Governor Ritter last week. The legislation will result in a provider fee totaling $600 million to be levied annually on Colorado hospitals. The funds would then be matched by the federal government in the form of grants. By expanding eligibility for Medicaid from 60 percent of the federal poverty level to 100 percent and expanding the state's SCHIP program from 205 percent to 250 percent of FPL, the new law is expected to reduce the number of uninsured Coloradans by 100,000 or more. The Act also will increase the reimbursement rate paid to hospitals for services on Medicaid patients from the current 55 percent to 100 percent, in an effort to reduce cost shifting to patients with private insurance.

KANSAS:
A legislative motion to resurrect a dead autism mandate bill out of committee for consideration during the legislature's veto-override session failed by just one vote. This motion would have allowed the bill to be debated by the full House even though it had not passed out of the committee. Aetna assisted in drafting a letter to legislative leadership explaining stakeholder concerns about the potentially high cost of the mandate and the questionable effectiveness of many autism treatments. The issue will be revisited by the Autism Taskforce created last year.

MONTANA:
The legislature adjourned its regular legislative session on April 28, giving Governor Brian Schweitzer 10 days in which to sign or veto various bills before they become law without his signature. A Medicaid buy-in program permitting the Department of Public Health and Human Services to provide Medicaid coverage to disabled workers (as defined by federal law) was passed and is awaiting the Governor's signature. The Governor has already signed an autism mandate and transparency bills requiring providers to give patients, when requested, an estimate for the cost of health care services expected to exceed $500, and requiring health plans to provide enrollees with an estimate of out-of-pocket charges, a coverage description and notice of prior approval requirements.

NEVADA:
This month, Nevada is poised to become the eleventh state to pass a broad autism coverage mandate. The measure would require all group policies to cover autism-related services and therapies starting on January 1, 2011. Individual policies would be required to offer a benefit rider to cover those same services. The health care industry was successful in reducing the scope of the mandate to include a $36,000 annual benefit cap, gaining recognition that treatment must be consistent with evidence-based guidelines, requiring the use of treatment plans authorized by the patient's primary care physician and requiring that all autism providers be licensed by the state.

NEW JERSEY:
Legislative budget hearings last week revealed a far more bleak picture of the state's economic landscape than originally thought. New Jersey now anticipates state revenue collection will be $1.5 to $2 billion dollars short of projections for the current fiscal year. This is more than double the $600 million figure the governor and Treasury were expecting earlier in April. In the coming weeks, the legislature and administration will develop and propose a comprehensive plan to generate new revenue. To date both branches have been hesitant to impose new corporate taxes, but that could change.

NEW YORK:
The Governor and Insurance Department plan to introduce a prior approval "program bill" authorizing the Superintendent of Insurance to modify or approve all premium rate adjustments and increasing the state's minimum loss ratio from 75 percent to 85 percent. Plans meeting the 85 percent MLR would be able to "file and use" premium adjustments. Plans that do not meet the 85 percent MLR would be required to issue dividend or credit to policyholders and subscribers, including former policyholders and subscribers, and may face unspecified corrective action by the superintendent. Aetna will be meeting with legislative leadership to vigorously oppose this legislation.

OREGON:
The Insurance Division adopted new rules governing the federal subsidy for state continuation of health benefit plans, allowing Oregonians to take full advantage of the benefits provided under the federal stimulus law. The state's COBRA authority applies only to companies with fewer than 20 employees, and changes were sought to allow state regulations to match the broader stimulus benefits. The federal economic stimulus package extends a 65 percent subsidy for up to nine months of coverage. The legislature passed a law that extends the period of eligibility for state continuation coverage from six to nine months and allows the Director of the Department of Consumer and Business Services to adopt rules necessary to allow residents to take full advantage of the benefits provided by the federal law.

TENNESSEE:
Health plan representatives met with the Tennessee Medical Association last week regarding the Silent PPO proposal and were successful in amending the bill to include important exemptions for ERISA plans. Health plans also met with representatives of the Governor's office to discuss delaying the effective date for the proposed increase in the premium tax on HMO plans. These bills would increase the HMO premium tax from 2 percent to 5.5 percent.

TEXAS:
A bill requiring four-year public colleges to sponsor a student health insurance plan for their attendees was passed by the full Senate last week and now moves to the House for action. The bill would require colleges to provide information about the college-sponsored plan to each student upon enrollment and to track health plan enrollment to help get an accurate count of the uninsured rate among students. The House has until June 1 to act on the measure. Aetna was instrumental in securing the bill's passage in the Senate and will provide testimony in favor of the bill in the House. The Texas Medical Association's "Code of Conduct" legislation was passed out of a Senate Committee last week. The very lengthy original bill was negotiated down significantly to include the following: a new cause of action for deceptive trade practices based on a health plan setting rescission goals or quotas; an external independent review process to determine the appropriateness of rescission decisions based on misrepresentation or preexisting conditions; annual disclosure of medical loss ratios by health plans; creation of a rate-contest procedure for small groups facing premium increases higher than 15 percent; and physician ranking regulations including guarantee of an external review process. The bill now moves to the Senate floor for debate. Aetna will continue to be actively engaged in negotiations on the bill.

Resources:
Transforming Health Care in America
America's Health Insurance Plans
Coalition to Advance Healthcare Reform