Consumers and small businesses may soon be able to find affordable coverage via the new Affordable Care Act (ACA) program called the Consumer Oriented and Operated Plan (CO-OP). At least that is the hope as the U.S. Department of Health and Human Services (HHS) recently unveiled regulations for the new program.

Established by the ACA, the CO-OPs are defined as member-governed, non-profit organizations that are consumer focused and accountable to their members. In addition, profits must be utilized to reduce premiums or to improve benefits and/or the quality of care provided to members. The ACA has allocated $3.8 billion in funding for repayable loans to help qualifying insurers with start-up and capitalization costs. These interest-bearing loans “will only be made to private, non-profit entities that demonstrate a high probability of becoming financially viable,” stated a recent HHS/CMS press release.

Leading up to the passage of the ACA there were concerns that individuals and small groups lacked sufficient choice in the private insurance market. Proponents pushed for alternative sources of coverage, including the public insurance option, which they felt would provide greater choice and competition.

Instead of the highly controversial “public option” the ACA included the Consumer Operated and Oriented Plan program to develop state or regional health insurance plans that would be run by consumers and be accountable to their members instead of investors. While opponents argued that health plans run by consumers would lack the scope and leverage of the public option, policy makers included the CO-OP program to provide the competition they felt was lacking.

Opinions differ on the viability of the CO-OPs, with critics predicting that most of them will be too small to succeed and will end up defaulting on their loans. Others point out that restricting membership to individuals and small businesses will increase the risk assumed by these small companies, making it more likely they’ll fail. Proponents claim that CO-OPs are a partial antidote to the highly concentrated health insurance market in this country, where two or three for-profit insurance companies account for more than 65% of the market in most states.

To learn more visit:
Kaiser Health News

Visit Extend Health — the nation’s largest private Medicare exchange.

Our CEO Bryce Williams just posted another entry on his Fast Company blog. Mr. Williams compares the recently-released HHS proposed exchange requirements to our experience as a company building the nation’s largest private Medicare exchange, and comes up with four key principles that must be addressed for an exchange to succeed:

1. Build for change.
2. Generate a seamless exchange of data.
3. Be ready to scale.
4. Create a satisfying consumer experience.

For more, read the entire post on the Fast Company web site.




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Medicare News

MedPAC—a Congressional support agency that advises on Medicare payment issues—released (PDF) its annual Medicare Data Book. The publication includes data on various parts of the Medicare program, including beneficiary out-of-pocket costs, quality of care measures, Medicare Advantage and prescription drugs.

 ACA Updates

After an NAIC task force voted to endorse a bill in the House of Representatives that would have removed agent fees from plans’ medical loss ratio (MLR) calculations, the full committee declined to endorse the proposed legislation but could revisit the decision in the future.

Senator Orrin Hatch says that Utah’s health insurance exchange would likely not meet the Federal requirements, according to the proposed exchange regulation published on July 11th.

Kaiser Family Foundation executives post a reminder about the substantial enrollment expected in health plans outside of state exchanges, based on the current size of the individual and small group markets, and CBO’s projection for ACA exchange enrollment.

 On the Hill

Debt ceiling negotiations have reportedly implicated Medigap benefit designs. A longstanding policy option discussed by MedPAC (Congress’ Medicare advisory commission) and the Congressional Budget Office is to eliminate first-dollar coverage of Medicare benefits. CBO projects (PDF, p.49) this will raise $53 billion/10 years.

Another policy potentially in the deficit reduction mix is the extension of Medicaid drug rebates to Medicare Part D. Democrats have long asserted that drugmakers got a windfall when Part D was implemented, and CBO projects (PDF, p.54) savings of $112 billion/10 years. PhRMA has always vigorously opposed (PDF) this policy and a new report from a former CBO director predicts less R&D and higher drug prices if enacted.

Reports/Other News

Express Scripts, one of the largest pharmacy benefit managers (PBMs), announced that it will buy Medco Health Solutions, a rival PBM, for $29.1 billion. The acquisition would give Express Scripts control over about 40% of prescription drugs, a fact that is drawing fire from the pharmacy industry, and concern from investors and analysts.

AARP released another edition of their Rx Price Watch Report series, finding that prices for commonly-used generic drugs by Medicare beneficiaries fell (PDF) by almost 8%, on average. A report (PDF) released earlier in the year reported an 8% increase in the cost of brand-name prescription drugs over the same time period.

Visit Extend Health — the nation’s largest private Medicare exchange.

There is a very interesting study that was released recently that deals with the impact generic drugs are having on costs. According to the report, generic drugs are playing a key role in keeping drug costs down. As patents on brand name drugs expire, the trend toward using cheaper generic drugs is expected to continue through 2015. The study found that average daily prices for eight of the ten most common drug classes covered by Medicare Part D have fallen from $1.50 in January 2006 to $1.00 in December 2010, and are expected to reach 65 cents by the end of 2015. This trend should be good news for those worried about Medicare Part D costs. If you would like to read the entire article, “Medicare Part D sees falling drug costs: study” you can find it here.

Visit Extend Health — the nation’s largest private Medicare exchange.

We are very happy to announce that Extend Health is a finalist for the 2011 ABBY Award from the Adaptive Business Leaders (ABL) organization – you can read the press release here. This award recognizes our patent-pending call center system, which shortens average telephone hold times for customers and maximizes the productivity and effectiveness of our licensed benefit advisors. What makes our system unique is that it directs each caller to a benefit advisor with the credentials and expertise that matches the caller’s location and available plans.

For the past 13 years, ABBY Awards have honored North American companies that have developed ways to lower the cost of providing quality healthcare through their medical or information technologies or innovative approaches to the delivery of healthcare. The ABBYs will be presented at the 13th Annual Innovations in HealthcareSM Awards Event onSeptember 28, 2011 in Long Beach, California. Wish us luck!

In response to the draft requirements for state-run health insurance exchanges released today by HHS Secretary Kathleen Sebelius, Extend Health CEO Bryce Williams talked about “Four Keys to Building An Effective Health Insurance Exchange” in a press release we posted today. We believe these four keys can serve as best practice guidelines for states as they prepare to meet the 2014 deadline for health care insurance exchanges.

Williams says that, “Based on our experience, there are four keys to building an effective exchange that will meet the minimum requirements proposed by the HHS today and meet the goal of extending health insurance to all Americans.” The four keys are:

  1. A dynamic exchange architecture and flexible tools that allow for the inevitable evolution and change that state exchanges will undergo, with minimal re-engineering.
  2. Standardization of processes that make data exchange and communications between all the players in a state exchange seamless and efficient, in addition to the mandated standardization of health plans which makes plan comparisons and purchase decisions easier for consumers.
  3. A scalable platform that can grow to handle the millions of consumers and the tens or hundreds of millions of transactions and interactions expected of a robust exchange.
  4. A great consumer experience that makes it easy for consumers to determine eligibility, make informed choices, purchase and enroll in health plans, pay premiums and manage coverage, including reimbursements.

The Extend Health exchange platform is the only one in the industry that enables end-to-end electronic transmission of enrollment information with interoperability between the exchange and insurance carriers. This interoperability promotes accurate and efficient enrollment, premium administration, claims processing and reimbursements. Extend Health’s licensed benefit advisors work in U.S. call centers where state-of-the-art routing systems direct every caller to an advisor with the appropriate licensure and insurance appointments that match the caller’s geographic area and available plans. Advanced decision support tools help benefit advisors provide clear and concise guidance and support, and make it easy for retirees to select the private Medicare coverage that best suits their needs.

Visit Extend Health — the nation’s largest private Medicare exchange.

Washington update

July 8, 2011

We have a great summer intern here at Extend Health this year, and she’s started creating a “Washington News Update” that rounds up the relevant stories from the past week or so around Medicare, health care reform, and related topics. Here’s the latest:

Medicare News

Medicare spending cuts are reportedly on the table in the debt limit negotiations. Extending Medicaid’s discounted prescription drug prices to Medicare for those individuals eligible for both programs has received significant attention, but faces longstanding opposition from PhRMA.

ACA Updates

An NAIC task force voted to endorse a Federal bill which would remove agent and broker fees from the administrative costs used to calculate an insurer’s minimum medical loss ratio (MLR). The recommendation still needs approval from the full executive committee of the NAIC. Congressional action would be necessary to change the MLR definition in the ACA.

Rhode Island’s exchange bill died in the state legislature after lawmakers couldn’t compromise on abortion language. The state is now exploring an executive order to create an exchange. Connecticut’s governor signed that state’s exchange establishment bill into law, creating a quasi-public agency with a 14-member governing board. Colorado’s exchange board is meeting for the first time to determine staffing needs, a legislative strategy, and work through governance issues.

HHS will conduct reviews of proposed premium increases in seven states and four US territories, and partner with three other states for rate review as required by the ACA. These are states that HHS has deemed to lack effective rate review systems before the September 1, 2011 deadline for review of insurers seeking premium increases of 10% of more.

On the Hill

Next week the House Budget Committee and the House Energy & Commerce Health Subcommittee hold hearings on the Independent Payment Advisory Board, established in the ACA to control growth in Medicare spending. Among those testifying will be HHS Secretary Sebelius, Members of Congress, health care researchers, think-tank leaders and representatives of disease organizations. 

Reports/Other News

Results from the first randomized, controlled trial of Medicaid coverage show that enrollees were more likely to see a doctor or be admitted to the hospital. Compared to non-Medicaid enrollees with similar income, Medicaid enrollees are more likely to use prescription drugs and receive preventive care, and more likely to report good physical and financial health. These findings rebut the argument that poor people don’t need insurance because a sufficient health care safety net exists.

 The Center for American Progress (CAP) released a report suggesting principles for creation of Small Business Health Options Program (SHOP) Exchanges, established in the ACA to cater to employers seeking coverage for employees through an exchange. CAP suggests that successful SHOP Exchanges will know the small business market, maximize participation, and focus primarily on costs. SHOP Exchanges will need to demonstrate value-add as they compete with employers’ other health insurance options.

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