Illinois Government Consultants Incorporated

In a big step to carry out the new health care law, the Obama administration unveiled standards on Monday for insurance marketplaces that will allow individuals, families and small businesses in every state to shop for insurance, compare prices and benefits and buy coverage.

Kathleen Sebelius, the secretary of health and human services, said the insurance exchanges, the centerpiece of the new law, “will offer Americans competition, choice and clout.”

In theory, the exchanges will pool insurance risks and premiums so that individuals and small businesses will have “the same purchasing power as big businesses,” Ms. Sebelius said.

Issuance of the proposed rules shows how President Obama is moving inexorably to carry out his health care overhaul, despite attacks on the new law in Congress and the courts, where more than two dozen states are challenging the constitutionality of a requirement for most Americans to carry insurance.

In principle, liberals and conservatives support the exchanges, which they see as a way to increase the purchasing power of individuals and small businesses, but they disagree on how the exchanges should be configured. The regulations issued Monday, which provide a fair amount of latitude to states, were welcomed by consumer groups, patient advocates and some business lobbyists.

But they may not satisfy liberals who argue that the exchanges should tightly regulate insurance and contract with selected health plans that offer the best deals. And they may not satisfy conservatives who want the exchanges to be wide open to any insurers that want to participate and meet minimum federal standards.

Every state will have an exchange by Jan. 1, 2014. Federal officials will assess states’ “operational readiness” as of Jan. 1, 2013, and will run the exchange in any state that is unable or unwilling to do so.

Many states have been pondering how to proceed, and the regulations will provide guidance. The National Conference of State Legislatures says 12 states have enacted laws to establish exchanges. Bills failed in nine states and are pending in 11 others, the organization said.

The Congressional Budget Office predicts that by 2019, about 24 million people will have insurance through exchanges, with four-fifths of them getting federal subsidies that average $6,400 a year per person. People with incomes up to four times the poverty level (about $89,000 a year for a family of four) will be eligible for subsidies to make insurance more affordable.

Each state exchange will certify “qualified health plans,” provide the public with “standardized comparative information” on costs and benefits, and rate each plan based on the quality and price of care. In addition, the exchange will help people determine if they are eligible for Medicaid or the Children’s Health Insurance Program, or for federal tax credits to subsidize the purchase of private insurance.

Federal officials said they would issue a separate rule later this year specifying the “essential health benefits” that must be offered by all health plans.

Trumpeting the advent of the exchanges, the administration said Monday that they would “give Americans the same insurance choices as members of Congress.” However, in response to questions after a news conference on Monday, health officials acknowledged that this claim was not necessarily correct.

A small employer will be able to pick “a level of coverage” for its employees. A higher level will pay more of the consumer’s medical costs. Under the law, members of Congress must generally get their coverage through an exchange. But a small business could legally choose a level of coverage lower than those offered to federal employees, including members of Congress.

Under the rules, an employer may allow employees to choose any health plan at a given level of coverage. But an exchange may also allow an employer to limit its workers to one or two health plans — far fewer than the number available to members of Congress and other federal workers.

With some states like Florida balking at the new law, federal officials went out of their way Monday to strike a conciliatory note, promising to be flexible. If a state is not ready by January 2013, Ms. Sebelius said, it still might qualify for “conditional approval” if it was on track to operate an exchange by January 2014. In addition, federal officials said, a state could set up and operate its own exchange in 2015 or later years if it is not ready in 2104.

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Source:  The New York Times

Faced with a deepening recession two years ago, the Obama administration injected billions of dollars into Medicaid, the nation’s low-income health program. The money runs out at the end of this month, and benefits are being cut for millions of people, even though unemployment has increased.

From New Jersey to California, state officials are bracing for the end to more than $90 billion in federal largess specifically designated for Medicaid. To hold down costs, states are cutting Medicaid payments to doctors and hospitals, limiting benefits for Medicaid recipients, reducing the scope of covered services, requiring beneficiaries to pay larger co-payments and expanding the use of managed care.

As a result, costs can be expected to rise in other parts of the health care system. Cuts in Medicaid payments to doctors, for example, make it less likely that they will accept Medicaid patients and more likely that people will turn to hospital emergency rooms for care. Hospitals and other health care providers often try to make up for the loss of Medicaid revenue by increasing charges to other patients, including those with private insurance, experts say.

Neither the White House nor Congress has tried to extend the extra federal financing for Medicaid, even though the number of beneficiaries is higher now than when Congress approved the aid as part of an economic recovery package in February 2009.

The Congressional Budget Office estimates that federal Medicaid spending will decline in 2012 for only the second time in the 46-year history of the program. But states say they will have to have to spend more on Medicaid as they struggle to make up for the loss of federal money.

State officials say they are resigned to the loss of the extra federal matching payments, given the climate in Congress, where deficit reduction is a paramount goal.

“We all see the reality of what’s going on in Congress,” said Mark W. Rupp, director of the Washington office of Gov. Christine Gregoire of Washington State, a Democrat who is chairwoman of the National Governors Association. “It’s more about cutting than spending. Why put a lot of effort into something that did not seem likely to have a positive outcome? It would have been fairly futile.”

Although Medicaid provides health insurance to one in five Americans at some point in a year, it is more vulnerable to cuts than Medicare and Social Security, which have broader political support.

“Medicaid is very much on the chopping block,” said Senator John D. Rockefeller IV, Democrat of West Virginia and chairman of the Senate Finance Subcommittee on Health Care. “Seniors vote. But if you are poor and disabled, you might not vote, and if you are a child, you do not vote — that’s a lot of Medicaid’s population. They don’t have money to do lobbying.”

Medicaid is financed jointly by the federal government and the states, with the federal government paying a larger share in poorer states like Mississippi and West Virginia and a smaller share in higher-income states like New York and Connecticut.

The aid ending next month increased the federal share of Medicaid spending in all states, with additional help for states where unemployment rates had risen sharply. The extra aid was scheduled to expire last December, but Congress extended it for six months at the urging of the White House and state officials.

The additional money pushed the average federal share of Medicaid spending nationwide to 67 percent. It will revert to 57 percent next month. The cutback in federal Medicaid money has put pressure on states to cut the budget for other programs, including education and social services.

Toby J. Douglas, director of the California Department of Health Care Services, said the federal Medicaid cut was causing “very consequential reductions in health care and other public programs.”

California is cutting Medicaid payments to doctors and many other providers by 10 percent; has established new co-payments for drugs, doctors’ services and hospital care; and will limit beneficiaries to seven doctor’s office visits a year unless a doctor certifies a need for more.

With 7.6 million Medicaid beneficiaries — 50 percent more than any other state — California faces bigger problems, but its response has been typical. A survey issued this month by the National Association of State Budget Officers found that 24 states were reducing Medicaid payments to providers, while 20 were limiting benefits in some way.

R. Andrew Allison, who is executive director of the Kansas Health Policy Authority and president of the National Association of Medicaid Directors, said Medicaid was gobbling up new revenues as states recovered slowly from the recession.

Kansas illustrates the predicament most states are facing. Federal Medicaid payments in Kansas are expected to decline by more than $250 million, or 13 percent, in the state’s new fiscal year, which starts July 1, Mr. Allison said. But the amount of state revenue spent on Medicaid is expected to increase by more than $300 million, or 39 percent.

New York has just imposed a cap on state Medicaid spending, with a separate limit for each sector like hospitals, nursing homes and managed care plans. Under a new state law, if it appears that the state share of Medicaid spending will exceed the cap, New York officials must devise and carry out a plan to reduce spending, by modifying benefits, provider payment rates or other features of the program.

“This is an enormous sea change for Medicaid,” said Jeffrey Gordon, a spokesman for the New York State Health Department.

In New Jersey, Gov. Chris Christie, a Republican, said, “Medicaid’s growth is out of control,” and he has proposed numerous changes “to fill in the hole created by the loss of over a billion dollars of federal stimulus money” for the program. He would tighten eligibility, reduce Medicaid payment rates for nursing homes, move older and disabled Medicaid recipients into managed care, and charge co-payments for medical day care services.

The New Jersey Legislature appears likely to accept some of the changes in a budget to be adopted this month.

Connecticut has avoided major cuts in Medicaid, but the State Legislature has set new limits on vision and dental coverage for adults.
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Source: Th New York Times

COGFA meeting

Today’s meeting of the Commission on Government Forecasting and Accountability, held in room C-600 of the state’s Michael Bilandic Building, 160 N. LaSalle St., Chicago, will be streamed live through the COGFA website, according to COGFA deputy director Trevor Clatfelter. The meeting begins at noon. The State Journal-Register plans to have a reporter at the meeting.

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A legislative panel Tuesday could allow “open-access” health plans and the Health Alliance and Humana HMOs to serve state employees, retirees and dependents after June 30 — if only temporarily.

The General Assembly’s bipartisan Commission on Government Forecasting and Accountability will meet at noon Tuesday in Chicago to hear options for “ensuring that health–insurance coverage for thousands of people goes uninterrupted,” Sen. Jeffrey Schoenberg, D-Evanston, told The State Journal-Register Monday.

If COGFA reverses a vote it took May 25, new open-access contracts with Personal Care and HealthLink can take effect for fiscal 2012, Schoenberg said Monday.

COGFA also will consider allowing the state to enter into 90-day emergency contracts with the state’s current insurers: Health Alliance, Humana, Personal Care and HealthLink.

Schoenberg, a co-chairman of COGFA, said the meeting was called in the wake of Sangamon County Associate Judge Brian Otwell’s order Friday that bars the state from proceeding with new self-insured OAP contracts with Personal Care and HealthLink.

COGFA voted 8-3 May 25 to prohibit the state from expanding self-insured health plans for state workers. Otwell said Friday that vote essentially nullified the new OAP contracts.

The state took the first steps Monday to appeal Otwell’s order.

Sen. Michael Frerichs, D-Champaign, a COGFA member, said COGFA is unlikely to reverse its May 25 decision. Frerichs was one of the eight lawmakers who voted against expanding self-insured plans.

However, COGFA members probably will give Julie Hamos, director of the Illinois Department of Healthcare and Family Services, the authority to negotiate new short-term contracts with the current vendors, Frerichs said.

It’s unclear whether Personal Care’s short-term contract would involve its HMO or an OAP, he said.

Frerichs said he favors 90-day contracts for the vendors to give the courts more time to weigh in on Otwell’s ruling and for Otwell to take more action on Health Alliance and Humana’s court challenges of the state contract awards.

If court action isn’t complete in 90 days, he said, COGFA could grant more extensions.

Health Alliance and Humana recently lost their bids to continue offering fully insured HMOs to people in the state plan after June 30. Blue Cross and Blue Shield of Illinois received the sole contract for HMO coverage.

The state of Illinois is proceeding with its self-imposed deadline this Friday for state workers and retirees to sign up for a health plan in the new fiscal year. Otwell’s order, however, limits the health plan options to three and removed Personal Care and HealthLink’s OAPs.

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State posts updated information

State officials on Monday posted new health insurance option information online Monday.

The information also is being sent to individuals via email, according to Mike Claffey, spokesman for Healthcare and Family Services.

The online update says people who already have selected Personal Care or HealthLink OAP plans must contact the state and change their choice to either HMO Illinois or Blue Advantage — both Blue Cross plans — by the close of business Friday. If not, they will be automatically enrolled in Cigna’s Quality Care program.

If people who had enrolled in one of the OAPs opt to enroll in one of the Blue Cross HMOs or Quality Care, it’s uncertain whether they will be able to switch to another plan — if any more are offered — later this week or later in the fiscal year.

It’s also unclear whether the state will offer another benefits-choice period in coming months.

The Quality Care plan has significantly higher premiums and out-of-pocket costs compared with the OAP plans and the HMOs. On the other hand, Quality Care includes most doctors and hospitals in the state, including doctors at Springfield Clinic and Southern Illinois University School of Medicine.

If Otwell’s ruling isn’t overturned and the state doesn’t extend current health-insurance contracts or award new ones, Quality Care will be the only option for employees, retirees and dependents in some parts of the state.

The Blue Cross HMOs are available only in 38 counties.

Those counties include Sangamon, Cass, Christian, Greene, Logan, Macoupin, Menard, Montgomery, Morgan and Scott. However, only a limited number of doctors are available, and the list doesn’t include doctors at Springfield Clinic.

Champaign County, where a large number of University of Illinois employees live and work, doesn’t have any Blue Cross HMO doctors.

More than 200,000 people in the state health insurance program are currently enrolled in either HealthLink OAP, Health Alliance HMO or Humana HMO.

The state had expected 140,000 or more people to enroll in the Personal Care and HealthLink OAPs under the new contracts.

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No answers for employees, retirees

Associate Circuit Judge Brian Otwell’s ruling last Friday adds more confusion for people covered by state health-insurance plans, who hadn’t seen major changes in the plans for a decade.

“People are very upset because they don’t know what’s going to happen,” said Dave Urbanek, spokesman for the Teachers’ Retirement System.

TRS canceled a health-insurance benefit fair that had been scheduled for today at the TRS office at 2815 W. Washington St. in Springfield.

In a news release, TRS said the court ruling “has created many open issues for state officials regarding the future of the state’s health insurance programs, and those questions and concerns will not be answered soon with any certainty.”

Urbanek said phone lines to the system have been jammed, but TRS officials don’t know what to tell callers who want to know what to do if they’ve already signed up for an OAP, Urbanek said.

Springfield resident Wanda Collins, a retired teacher in the Springfield school system, said she learned Saturday that Personal Care HMO won’t continue after June 30.

She said she had hoped to sign up for Personal Care’s open-access plan, which includes her regular doctor, but Otwell’s ruling appeared to make the OAP unavailable.

“I’m frustrated about the whole thing,” she said.

Retired Secretary of State manager John Cox, 60, of Springfield, said he and his wife want to remain in HealthLink’s OAP to make sure they can continue to be treated by all of their doctors.

For the benefit of state workers and retirees, state officials should continue to contract with current health plans until the legal disputes are resolved, Cox said.

“It wasn’t the state employees who made the mess,” Cox said.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

Health Alliance Medical Plans asked a judge Monday to block new state health-insurance contracts and continue Health Alliance HMO as an option for state employees, retirees and dependents.

A lawsuit filed by the Urbana-based health insurer says Julie Hamos, director of the Illinois Department of Healthcare and Family Services, is illegally expanding the state’s use of self-insured “open-access” health plans by disregarding a May 25 vote of a bipartisan legislative panel.

The open-access plans, operated by Personal Care and HealthLink, are expected to serve most of the 100,000 people statewide who are scheduled to lose Health Alliance HMO coverage July 1.

Contracts recently awarded by the state dropped Health Alliance HMO, a fully insured health plan, and expanded the state’s use of self-insured plans. The state assumes most of the risk of paying health-care claims in self-insured plans, rather than paying a fixed amount for fully insured plans such as Health Alliance HMO.

Health Alliance asked Circuit Judge John Schmidt for a temporary restraining order to block the new OAP contracts until Health Alliance’s case can receive a full review in court.

If successful, the temporary restraining order could result in Health Alliance HMO and Humana’s HMO being extended for months or years.

Schmidt is expected to rule on the TRO within a few days.

A spokesman said the state will fight the suit.

“We are absolutely confident in the process of awarding and contracting with these vendors as well as their ability to offer quality health care at a price that will save the state money,” said Mike Claffey, spokesman for Healthcare and Family Services.

The state says the new contracts will save state government more than $1 billion over the next decade.

Several lawmakers on the Commission on Government Forecasting and Accountability have said they doubt those estimates. COGFA voted 8-2 to stop the state from continuing to contract with self-insured open-access plans.

Gov Pat Quinn’s office responded by saying COGFA lacks the power to thwart the OAP contracts.

Health Alliance claims in the lawsuit that the state’s decision to award HMO contracts to Blue Cross and Blue Shield of Illinois — and turn down Health Alliance’s bid — was “arbitrary and unreasonable.”

The lawsuit creates more uncertainty for state workers and others who depend on the state’s health plans.

A bill recently passed by the General Assembly would extend the current health-plan contracts for another two years. Quinn hasn’t said whether he will sign or veto the measure.

And the American Federation of State, County and Municipal Employees has filed a grievance seeking to extend the benefit-choice period. AFSCME has advised its members to wait until closer to June 17 to make their health-plan choices.

Meanwhile, Springfield Clinic and Memorial Health System doctors have changed from Tier 2 of HealthLink’s OAP to Tier 1, which provides HMO-like benefits and carries fewer out-of-pocket charges for state-insured patients.

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Health Alliance: No savings

Health Alliance disagrees with state officials and consultants who say new health-insurance contracts will save state government $102 million a year and more than $1 billion over the next decade.

Health Alliance’s calculations show the state’s health-care costs will rise by more than $50 million a year as a result of the state’s decision to drop Health Alliance HMO from the options.

Chief executive officer Jeff Ingrum points to a March report from the state that says the self-insured, “open-access” plan operated by HealthLink costs the state 22 percent more than the HMOs serving state employees, retirees and dependents.

The estimated average cost per participant in Health Alliance HMO and in HMOs operated by Humana, Personal Care and Blue Cross/Blue Shield of Illinois was $5,341 in the current fiscal year, according to the General Assembly’s Commission on Government Forecasting & Accountability.

The average cost was $6,534 for participants in the open-access plan operated by HealthLink, according to the COGFA report.

“Moving to the OAPs — moving away from the HMO — is just a bad deal,” said Jane Hayes, Health Alliance’s vice president of corporate communications.

But Todd Swim, a partner at Mercer Health & Benefits, the state’s consultant, said open-access plans aren’t inherently more expensive. The current OAP plan is more expensive for the state because it tends to attract older and sicker patients, Swim said.

Under the new contracts, healthier people will join the OAPs, Swim said.

Ingrum said his analysis indicates Health Alliance HMO and HealthLink OAP have about the same percentage of members who are early retirees and people 65 or older — groups that tend to incur more health-care costs.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

As many legislatures around the country have finished their work for the year, fewer than one-fourth of states have taken concrete steps to create health insurance marketplaces, a central feature of the federal law to overhaul the U.S. health-care system.

A total of 43 states, meanwhile, have made fresh cuts to Medicaid, even as lingering unemployment and diminishing access to private coverage continue to drive up the number of Americans turning to the public insurance program for the poor.

Taken together, these trends highlight the ground-level challenges that health care poses to states. A year after Congress passed the biggest revisions to the health-care system since the 1960s, states are grappling with their own versions of the fiscal and ideological battles that still are roiling Washington.

States that have moved gingerly so far on health exchanges have not necessarily rejected the idea outright. Only one, Louisiana, has told the federal government it does not intend to build an insurance marketplace for its residents. In states that refuse, the law allows the federal government to step in.

An exchange must be available in each state by 2014. The idea is to help a slice of the public for whom insurance traditionally has been especially expensive: Americans who buy coverage on their own or as part of small companies. The exchanges are supposed to make it easier for them to compare health plans while creating pools of customers large enough to slow rising prices.

States have a deadline of January 2013 to prove to federal health officials that they are on a path to be ready.

The furthest along are seven states that have adopted laws establishing their exchanges. California did so last year, followed this year by Colorado, Hawaii, Maryland, Vermont, Washington and West Virginia. Two others, Virginia and North Dakota, passed laws expressing their intent to form an exchange, without spelling out details of how it should be run. Both states have Republican governors who oppose the federal law but maintain it would be worse to entrust an exchange to the federal government.

Seven other states, including some with GOP leadership, have not passed any relevant legislation but have accepted federal grants to prepare key components of the exchanges, including systems to determine which residents are eligible.

Elsewhere in the country, there has been less progress. Nearly a dozen legislatures have defeated or allowed to expire bills that would have created an exchange, according to analyses by the National Conference of State Legislatures and the Center on Budget and Policy Priorities. At least 13 other states have not even considered such proposals.

In many such cases, lawmakers oppose the federal law. But in Kentucky, where Democrats control the governor’s office and the House of Representatives, Rep. Tom Burch (D), who heads the Health and Welfare Committee, said his party was simply waiting for the Obama administration to issue regulations spelling out federal requirements in more detail. “So much of this stuff is still speculation,” he said.

Paul Dioguardi, the Health and Human Services Department’s director of inter-governmental affairs, said he was confident states that have been slow so far will be able to catch up, in part by borrowing the models of states that move more quickly.

Also starting in 2014, the federal law will expand Medicaid to Americans with incomes higher than most states have allowed until now. For now, the number of people on Medicaid under states’ existing eligibility rules is straining the ability to pay for them.

Medicaid is a shared financial responsibility of federal and state governments. During the past few years, the nation’s economic crisis has simultaneously depressed states’ revenues and increased Medicaid caseloads. In 2009, to help stimulate the economy, the federal government began giving states extra money for Medicaid. That temporary help runs out this month.

A new report by the National Governors Association and the National Association of State Budget Officers makes clear that the burden of Medicaid on states remains heavy. For the current fiscal year, 43 states have taken action to contain their Medicaid costs. Two dozen have reduced payments to doctors, hospitals or other providers of care; 23 have sought to lower spending on prescription drugs; and 20 have restricted certain services that the program covers.

For the coming year, 45 governors proposed further cuts, the report says, without specifying which reductions were adopted by legislatures. Thirty-three governors proposed to reduce provider payments, 25 to restrict benefits and 21 to require Medicaid patients to pay more for their care.

For instance, in Maryland, where Medicaid enrollment has grown by 11 percent in about the past year to nearly 920,000, the General Assembly has just ordered cuts to the program’s $7 billion budget totaling about 1 percent, according to the state’s Medicaid director, Charles Milligan. The state will reduce by 2 percent its payments to managed-care organizations — the way most of Maryland’s Medicaid patients get care. It will cut by 1 percent the program’s pay to doctors, private-duty nurses and home care aides. And hospitals and nursing homes will be charged a new fee of 2 percent to 3 percent to take part in the program.

Donald Berwick, administrator of the federal Centers for Medicare and Medicaid Services, noted that his agency has been trying to help states find ways to cope with their Medicaid budgets. But, he said, “I think they will be under pressure for some time.”
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Source: The Washington Post

Almost 30,000 state employees, retirees and dependents in the Springfield area who are losing Health Alliance HMO coverage will be able to retain HMO-like benefits and continue to use Springfield Clinic doctors through HealthLink’s “open-access plan” starting July 1.

Springfield Clinic announced Thursday that its doctors will become “Tier 1” providers through HealthLink’s OAP. Until now, the clinic’s doctors were in HealthLink’s Tier 2 in the state health-insurance plan.

The Tier 2 benefit requires patients to pay more out-of-pocket costs than Tier 1.

A state official said the Springfield Clinic announcement is great news for state workers, but a lawsuit that Health Alliance plans to file to temporarily block the new health-insurance contracts could create more uncertainty for workers.

Health Alliance to sue

Jeff Ingrum, chief executive officer of Health Alliance, said the company will ask a Sangamon County judge to decide within a few days whether to suspend the state’s health-plan selection period, scheduled to end June 17.

Ingrum said the lawsuit will ask that existing contracts between the state and insurors, including Health Alliance HMO, be continued until a judge can rule on Health Alliance’s claim that it was treated unfairly when state officials dropped Health Alliance from the state’s managed-care options.

“Somebody needs to get at the truth somehow,” Ingrum said. “I don’t know how you arrive at the result they arrived at when their underlying documents clearly indicate they should have come to a different result than they did.”

Brie Callahan, a spokeswoman for Gov. Pat Quinn, said Health Alliance officials were treated fairly.

“They knew exactly what their bid would be judged on,” she said. “Their bid was ultimately too high.”

State officials took pains to adhere to the contract procurement process approved by the Illinois General Assembly, Callahan said.

Despite a potential lawsuit by Health Alliance and a grievance filed this week by the American Federation of State, County and Municipal Employees, Callahan said, “We’re going to keep moving forward.”

Callahan wouldn’t say whether Quinn plans to sign or veto Senate Bill 178, which would extend the state’s current health-plan contracts for another two years.

The AFSCME grievance says state officials failed to show that employees would have “continued access, on substantially similar terms and conditions” to their health-care providers, AFSCME Council 31 spokesman Anders Lindall said.

The grievance seeks to extend the benefit-choice period or extend the Health Alliance contract into the new fiscal year, Lindall said.

However, he called Springfield Clinic’s announcement a step in the right direction to ensure state workers have continued access to their doctors.

Continuity of care

A news release from the clinic said its move to Tier 1 status for state workers “comes in response to recent changes to the health-insurance plans available to State of Illinois employees, which has affected more than 100,000 downstate workers and dependents.”

Springfield Clinic was the largest group of local physicians in the state’s Health Alliance HMO plan. Employees would have faced the choice of losing their Springfield Clinic doctors or paying higher out-of-pocket costs to keep them under Tier 2 of HealthLink OAP.

If state employees now enroll in HealthLink OAP, they can “expect full continuity of coverage and continuity of care from their current plan,” the Springfield Clinic news release says.

“The transition to the Tier 1 Open Access Plan should be absolutely seamless,” said Mark Kuhn, the clinic’s chief administrative officer.

The monthly premium for HealthLink OAP is the same as state workers have paid for Health Alliance HMO coverage. Monthly premiums for dependents under HealthLink OAP are a few dollars higher than the dependent premiums under Health Alliance.

“We are incredibly grateful for the outpouring of support we’ve received from our state of Illinois patients,” Kuhn said. “It was evident that they did not want to change doctors, and we certainly didn’t want to lose them as patients, so we looked for a solution that would preserve those important patient-provider relationships.”

In addition to the current benefit-choice period, state officials have pledged to offer an additional enrollment period sometime before the end of December.

Memorial Physician Services also added to Tier 1

Memorial Physician Services doctors will be Tier 1 providers for state employees who join the HealthLink open-access plan, Memorial Health System officials said Thursday.

Memorial doctors previously served state employees, retirees and dependents in Tiers 2 and 3 of the OAP, Memorial spokesman Michael Leathers said.

Memorial doctors also are considered “in-network” for Blue Advantage HMO, HMO Illinois and the Quality Care Health Plan.

Memorial Physician Services has 57 doctors in 14 locations in Springfield, Chatham, Jacksonville, Petersburg and Lincoln.

“We want state employees who have trusted us for care to be able to choose their new health-insurance plan with confidence,” said Travis Dowell, vice president of Memorial Physician Services.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

For the first time in its history, Medicare will soon track spending on millions of individual beneficiaries, reward hospitals that hold down costs and penalize those whose patients prove most expensive.

The administration plans to establish “Medicare spending per beneficiary” as a new measure of hospital performance, just like the mortality rate for heart attack patients and the infection rate for surgery patients.

Hospitals could be held accountable not only for the cost of the care they provide, but also for the cost of services performed by doctors and other health care providers in the 90 days after a Medicare patient leaves the hospital.

This plan has drawn fire from hospitals, which say they have little control over services provided after a patient’s discharge — and, in many cases, do not even know about them. More generally, they are apprehensive about Medicare’s plans to reward and penalize hospitals based on untested measures of efficiency that include spending per beneficiary.

A major goal of the new health care law, often overlooked, is to improve “the quality and efficiency of health care” by linking payments to the performance of health care providers. The new Medicare initiative, known as value-based purchasing, will redistribute money among more than 3,100 hospitals.

Medicare will begin computing performance scores in July, for monetary rewards and penalties that start in October 2012.

The desire to reward hospitals for high-quality care is not new or controversial. The idea can be traced back to a bipartisan bill introduced in Congress in 2005, when Democrats and Republicans were still working together on health care. However, adding in “efficiency” is entirely new and controversial, as no consensus exists on how to define or measure the efficiency of health care providers.

The new health care law directs the secretary of health and human services to develop “efficiency measures, including measures of Medicare spending per beneficiary.” Obama administration officials will decide how to calculate spending per beneficiary and how to use it in paying hospitals.

Administration officials hope such efforts will slow the growth of Medicare without risking the political firestorm that burned Republicans who tried to remake the program this year.

In calculating Medicare spending per beneficiary, the administration said, it wants to count costs generated during a hospital stay, the three days before it and the 90 days afterward. This, it said, will encourage hospitals to coordinate care “in an efficient manner over an extended time period.”

If, for example, an 83-year-old woman is admitted to a hospital with a broken hip, she might have hip replacement surgery and then be released to a nursing home or a rehabilitation hospital. When she recovers, she might return to her own home, but still visit doctors and physical therapists or receive care from a home health agency. If she develops a serious infection, she might go back to the hospital within 90 days.

The new measure of Medicare spending per beneficiary would include all these costs, which — federal officials say — could be reduced by better coordination of care and communication among providers.

Here, in simplified form, is an example offered by federal officials to show how the rewards might work. If Medicare spends an average of $9,125 per beneficiary at a particular hospital and if the comparable figure for all hospitals nationwide is $12,467, the hospital would receive high marks — 9 points out of a possible 10 awarded for efficiency. This measure, combined with measures of quality, would be used to compute an overall performance score for the hospital. Based on this score, Medicare would pay a higher or lower percentage of each claim filed by the hospital.

Federal officials are still working out details, including how to distribute the money.

Charles N. Kahn III, president of the Federation of American Hospitals, which represents investor-owned companies, said he supported efforts to pay hospitals according to their performance. But he said the administration was “off track” in trying to hold hospitals accountable for what Medicare spends on patients two or three months after they leave the hospital.

“That’s unrealistic, beyond the pale,” Mr. Kahn said.

Since 2004, Medicare has provided financial incentives to hospitals to report on the quality of care, using widely accepted clinical measures.

Much of the information is posted on a government Web site (hospitalcompare.hhs.gov), but it has not been used as a basis for paying hospitals.

For years, federal health officials have emphasized the importance of higher-quality care, mentioning efficiency as an afterthought. Now, alarmed at the trajectory of Medicare costs, they emphasize efficiency as an equally important goal.

Under the new health law, Medicare will reduce payments to hospitals if too many patients are readmitted after treatment for heart attacks, heart failure or pneumonia. In addition, Medicare will cut payments to hospitals if they do not replace paper files with electronic health records, and it will further reduce payments to hospitals with high rates of preventable errors, injuries and infections.

Hospital payments account for the largest share of Medicare spending, and Medicare is the single largest payer for hospital services.

Senators Max Baucus, Democrat of Montana and chairman of the Finance Committee, and Charles E. Grassley, Republican of Iowa, have led efforts to pay health care providers for their performance — for the quality of services, rather than the quantity. House members from Iowa, Minnesota, Washington and Wisconsin have pushed for measures of efficiency, saying Medicare should reward low-cost, high-quality care of the type they say is provided in their states.

Without opposing the change, lawmakers from higher-cost states like Massachusetts and New York say the payment formula needs more work.

Teaching hospitals worry that the new policy will penalize them because they treat sicker, more expensive patients. Medicare officials tried to allay this concern, saying they would adjust the data to take account of patients’ age and the severity of their illnesses, as well as geographic differences in hospital wages.

Still, Kenneth E. Raske, president of the Greater New York Hospital Association, said the formula “tends to discriminate against inner-city hospitals with large numbers of immigrant, poor and uninsured patients.”

By contrast, J. Kirk Norris, president of the Iowa Hospital Association, welcomed the new plan. “Medicare ought to pay for value,” he said.

Administration officials said they were aware of concerns that some hospitals might try to increase their performance scores by avoiding high-risk patients. The officials said they would watch closely for signs of such a problem.
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Source: The Nerw York Times

One day after Republicans lost a special election that was dominated by debate over their 2012 budget proposal, the Senate on Wednesday rejected the House Republican budget blueprint, a mostly symbolic vote that nonetheless underscores the political peril entailed in the GOP proposal to turn Medicare into a voucher program.

The budget plan, which was drafted by House Budget Committee Chairman Paul Ryan (R-Wis.) and which passed the House in April with the support of all but four Republicans, was rejected by the Senate Wednesday on a 40-to-57 vote.

As was the case in the House vote, all Democrats present in the Senate voted against the measure; they were joined by five Republicans, a sign of the wariness with which some Republicans have come to view the budget plan, particularly members who may face tough reelection bids in 2012.

The Republicans voting against the plan Wednesday were moderate Sens. Scott Brown (Mass.), Susan Collins (Maine), Olympia Snowe (Maine) and Lisa Murkowski (Alaska), as well as conservative freshman Sen. Rand Paul (Ky.), who argued that the plan did not go far enough in cutting spending.

Immediately after the vote on the Ryan budget, the Senate unanimously rejected President Obama’s 2012 budget proposal. The Obama budget did not secure the support of a single lawmaker, with all 97 senators present voting “no.”

The Senate also rejected two other conservative Republican budget plans Wednesday evening. A budget proposed by Sen. Pat Toomey (R-Pa.) that would have balanced the budget within nine years failed on a 42-to-55 vote. All Democrats present and three Republicans voted “no.” Another, even more aggressive plan put forth by Paul was overwhelmingly rejected, with only seven Republicans (including Paul) voting “yes.”

The votes come as lawmakers and the Obama administration are sparring over how to address the country’s record $14.3 trillion debt. The Treasury Department has set a deadline of Aug. 2 for Congress to vote to raise the debt limit or else put the country at risk of default. The debate on Capitol Hill has been dominated in recent weeks by the issue.

The House-passed Republican budget plan would address the debt problem by making sweeping cuts to the federal budget, but it is a provision that would overhaul Medicare and other federal entitlement programs for future seniors that has drawn the greatest political controversy — a point underscored by the fact that Wednesday’s vote was called not by Senate Republicans, but by Democratic leaders.

Public polling shows that while voters are deeply concerned about the debt, they strongly oppose cuts to Medicare and other federal entitlement programs, even as they favor the broader notion of federal budget cuts.

That opposition to Medicare changes was on display in Tuesday’s special election in a conservative House district in upstate New York, which Democrats had sought to turn into a referendum on the House Republican budget plan. Senate Democrats on Wednesday argued that the vote demonstrated that voters across the country were turning against the plan.

“I mention New York not because this was a win for Democrats or a loss for Republicans, but because this was a win for our seniors and because the stakes are too high,” Sen. Mark Begich (D-Alaska) said on the Senate floor ahead of Wednesday’s vote. “Americans all across the country are saying ‘no’ to the current Republican plan that could fail to automatically enroll our seniors in Medicare and instead force them to buy health care from a private insurance company.”

Republicans have countered that Democrats are resorting to “scare tactics” and that their proposed budget would not affect current seniors, a point that Democrats have disputed.

In a speech on the Senate floor Wednesday, Toomey, who voted for the House Republican budget, argued that Senate Democrats have not only failed to produce a budget of their own but have also offered no ideas on how to save Medicare.

“This is an extraordinary abandonment of a very fundamental responsibility,” Toomey said. “And I have to say, I have a hard time listening to the criticism of the House budget by people who have offered no budget as an alternative.”

“Is it the perfect plan? Is it the only plan?” he continued. “I’m sure it’s not, but it would work.”

While Wednesday’s vote has clear political implications — it gives Democrats on the campaign trail the opportunity to hammer the 40 Republicans who voted for the plan — it’s unclear whether the plan will have any further policy implications, particularly in the ongoing deficit-reduction talks between congressional leaders and Vice President Biden.

Republicans have thus far called for Medicare and other entitlement programs to be on the table in those talks, an idea to which Democrats have objected.
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Source: The Washington Post

A legislative oversight panel does not have the authority to block individual health insurance contracts for state employees, Attorney General Lisa Madigan’s office determined.

The decision appears to make it more difficult for lawmakers who want to reverse state government’s controversial decision to drop two popular health maintenance organizations offered to state employees and replace them with new health plans.

The General Assembly’s bipartisan Commission on Government Forecasting and Accountability sought the opinion because it was unclear if the commission could simply vote to reject the new health contracts negotiated by the Department of Healthcare and Family Services.

Madigan said COGFA can review the health plans, but state law “does not authorize the commission to approve or disapprove individual health benefit provider or administrator contracts.”

DHFS sparked an outbreak of controversy last month when it announced that it was dropping HMOs offered by Health Alliance and Humana, which together insure more than 100,000 state employees and dependents.

The state will instead offer an HMO from Blue Cross Blue Shield and an open access plan – a sort of hybrid HMO – from Personal Care. The Blue Cross HMO will be offered only in 38 counties, and critics contend it does not have the physician network to absorb all of the people now in Health Alliance and Humana.

DHFS said the switch will save the state $102 million next year and $1 billion over the 10 years by making the switch.

But state employees say the change will force them either to switch doctors or move to a more expensive insurance option if they want to keep their current doctors and other health care providers.

State lawmakers with large numbers of state workers in their districts said they’ve gotten complaints by the thousands and said they dispute the savings figures touted by DHFS.

“The administration’s numbers are a bunch of bunk,” said Rep. Chapin Rose, R-Mahomet. “There’s no way their numbers are accurate.”

Rose was one of a dozen lawmakers at a Statehouse news conference held Thursday to again question the administration’s claim the switch will save money. The group wants the bids scrapped that led to the decision to switch and start the process over.

“I’m not convinced they will be able to show the savings that are implied,” said Sen. Michael Frerichs, D-Champaign. “We hope to have a new bid process.”

Health Alliance hired a consultant to analyze the state’s projected savings. It determined the savings from employees in Sangamon County were based on doctors offering their services at far lower fees than now.

Health Alliance CEO Jeff Ingrum also contended the state’s consultant didn’t have access to all of the rate information needed to conclude the state would save money.

“We know the (state’s) study is false,” Ingrum said. “It’s clear that these numbers won’t add up, because they have not taken into consideration all of the facts.”

DHFS said it stands by its savings estimates.

“We are absolutely confident not only in the integrity of the procurement process, but in the decision that was made based on the evaluation of the bids and in any resulting cost savings,” said spokeswoman Stacey Solano.

Solano said DHFS will be able to document the savings in detail once the state resolves protests filed by Health Alliance and Humana over the bidding process. She said purchasing laws prevent the department from talking in detail about the numbers while the protests are pending.

Rep. Raymond Poe, R-Springfield, said COGFA may still be able to block the changes despite Madigan’s opinion. State law allows COGFA weigh in on self-insurance programs. One of the alternatives to the HMOs being dropped is a self-insurance plan.

Rose said all of the lawmakers at Thursday’s news conference want to stop the state from going ahead with the switch. He said they are still discussing the best course of action.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

Alarmed at soaring premiums and profits in the health insurance industry, the Obama administration demanded on Thursday that insurers justify proposed rate increases of more than 10 percent, starting in September.

Kathleen Sebelius, the secretary of health and human services, issued a final rule establishing procedures for federal and state insurance experts to scrutinize premiums. Insurers, she said, will have to justify rate increases in an environment in which they are doing well financially, with profits exceeding the expectations of many Wall Street analysts.

“Health insurance companies have recently reported some of their highest profits in years and are holding record reserves,” Ms. Sebelius said. “Insurers are seeing lower medical costs as people put off care and treatment in a recovering economy, but many insurance companies continue to raise their rates. Often, these increases come without any explanation or justification.”

Federal health officials proposed the 10 percent threshold in December. The insurance industry criticized it as an arbitrary test that could brand a majority of rate increases as presumptively unreasonable. But the administration rejected the criticism and insisted on the 10 percent standard in the final rule, issued Thursday.

Starting in September 2012, the federal government will set a separate threshold for each state, reflecting trends in insurance and health care costs.

In some states like New Hampshire, groups of more than 20 workers have experienced premium increases of around 20 percent this year, while smaller groups have seen increases of 40 percent or more. At the same time, insurance agents say, coverage is shrinking as deductibles have increased and insurers limit the choice of hospitals.

To ensure that “consumers get value for their dollars,” the new health care law required annual reviews of “unreasonable increases in premiums.”

Under the new rule, federal and state officials will review rates in the individual and small-group insurance markets. In effect, the administration said, large employers can take care of themselves, as they are more sophisticated purchasers and have more leverage in negotiating with insurers.

Federal officials acknowledged that they did not have the authority to block rates that were found to be unjustified. But they said many states had such authority, and the federal government is providing $250 million to states to strengthen their capacity. A small number of states, opposed to the federal health care law, have turned down the money.

The new rule says a rate increase is unreasonable if it is excessive, unjustified or “unfairly discriminatory.” An increase is deemed excessive if it is “unreasonably high in relation to the benefits provided.”

Consumer advocates generally welcomed the rule. “The days of insurance companies running roughshod over consumers and jacking up rates whenever they want are over,” said Ethan S. Rome, executive director of Health Care for America Now, a coalition that includes labor unions and civil rights groups.

Insurers said the rule did nothing to address the underlying costs of health care, which they described as the main factor driving up premiums.

“If we believe health care costs are crushing the economy, we ought to have a debate about how to bring costs under control,” said Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group. “Focusing on premiums diverts attention from that debate.”

In many cases, Ms. Ignagni said, rate increases of more than 10 percent may be justified by rising health costs and the tendency of younger, healthier people to drop coverage, forcing up costs for other policyholders.

States will have the primary responsibility for reviewing rate increases. “But if a state does not have the authority or the resources to conduct a review, our department will step in,” said Ms. Sebelius, a former state insurance commissioner in Kansas.

Under the rule, as part of an effective rate review program, states must have “a mechanism for receiving public comments” on proposed rate increases.

Elizabeth P. Sammis, the acting insurance commissioner in Maryland, said this would be a big change. In many cases, she said, consumers learn of premium increases when they receive notices in the mail, and then they call the commissioner’s office to ask, “Why are rates going up?”
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Source: The New York Times