Author Archives: Reeve Conover

Breakdown in NY State oversight caused HealthRepublic Failure

The collapse of Health Republic Insurance of New York, a non-profit insurance co-op established under Obamacare, can be blamed largely on “an apparent breakdown in state oversight,” concludes a report released today by the Empire Center. The report says the state Department of Financial Services (DFS) should loosen its regulatory control of insurance premiums and refocus on the financial soundness of insurance companies.

Written by longtime Capitol journalist Bill Hammond, the reportmarks the first independent post-mortem on Health Republic’s failure—which disrupted coverage for 215,000 customers, stuck hospitals and other health providers with hundreds of millions in unpaid claims, and left federal taxpayers with a quarter-billion dollars of uncollectible debt.

The necessity for Health Republic’s state-ordered shutdown “should have been no surprise” to the state Department of Financial Services, the report says, citing the company’s “steep operating losses, mounting debt, unanticipated costs and heavy reliance on a federal risk-management subsidy that failed to materialize.”

“Yet the department did not intervene to order an increase in Health Republic’s premiums, as other states did in similar situations,” the report adds. “To the contrary, DFS repeatedly cut the company’s premiums below what the insurer had requested, aggravating the co-op’s losses.”

The report questions whether the department’s regulatory judgment was “clouded by the political desirability of keeping health insurance prices artificially low in the short term.” There was, it says, “an inherent conflict between the department’s longstanding regulatory role—which is to assure that health plans are financially sound—and rate-setting authority granted by the Legislature in 2010.”

The law reinstituting the agency’s power of “prior approval” over premiums for individual and small-group health insurance policies “is having no clear impact on New York’s health insurance costs versus national averages,” the report says. “This suggests that consumers might be better off if DFS kept its entire regulatory focus on the financial health of insurance companies while leaving price-setting to market forces.”

The Empire Center is a non-partisan, non-profit independent think tank based in Albany.

CIGNA & ANTHEM merger update

From InsuranceBusinessAmerica.com:

 

Shareholders with Anthem Inc. and Cigna Corporation overwhelmingly approved the planned merger between the two health insurance giants late last week, though likely battles with the US Justice Department over antitrust issues still remain.

Anthem’s planned $54 billion purchase of Cigna would create an insurer with 53 million policyholders under the company’s umbrella. Anthem operates Blue Cross and Blue Shield in 14 states, and would add membership from Cigna in those states.

Altogether, the combined company would knock UnitedHealth Group into second place among health insurers to become the largest carrier in the country.

With the promise of this expanded footprint, 99% of shareholders with both companies approved the deal and the transaction is expected to close in the second half of 2016, pending the receipt of approval from state and federal bodies.

The transaction comes amid unprecedented consolidation in the sector, including plans from Aetna to buy rival Humana. If all deals go through, the US health insurance industry will no longer be dominated by five leading insurers, but three.

The planned consolidation has elicited concern from federal regulators and trade groups representing medical care providers. The American Medical Association and the American Hospital Association have both urged the Justice Department to consider the proposals with close scrutiny, and presidential candidate Hillary Clinton has made closer review of health insurance mergers a central piece of her campaign.

“These mergers should be scrutinized very closely with an eye to preventing the undue concentration that they appear to create,” Clinton said in a statement. “I am very skeptical of the claim that consumers will benefit from them because the evidence from careful studies shows that too often the companies end up pocketing profits rather than passing savings to consumers.”

The chief executives of Aetna and Anthem have fought against these claims, telling a Senate committee that they are “not at all concerned about a lack of competition in local markets,” and “there are many new players that have entered the market and continue to enter the market.”

Analysts believe the approval of this merger will pave the way for other health insurance deals, including the Aetna-Humana merger.

Medicare Copays announced for 2016

2016 MEDICARE PART A

 

Part A is Hospital Insurance and covers costs associated with confinement in a hospital or skilled nursing facility.

 

WHEN YOU ARE HOSPITALIZED FOR: MEDICARE COVERS  

YOU PAY

 

1-60 DAYS

 

Most confinement costs after the required Medicare deductible

$1,288

DEDUCTIBLE

 

 

61-90 DAYS

 

All eligible expenses after patient pays a

per-day copayment

$322 A DAY

COPAYMENT as much as:

$9,660

 

 

91-150 DAYS

All eligible expenses after patient pays a

per-day copayment (These are Lifetime Reserve Days that may never be used again)

$644 A DAY

COPAYMENT as much as:

$38,640

151 DAYS OR MORE  

NOTHING

YOU PAY ALL COSTS
SKILLED NURSING CONFINEMENT:

Following an inpatient hospital stay of at least 3 days and enter a Medicare-approved skilled nursing facility within 30 days after hospital discharge and receive

skilled nursing care

 

 

All eligible expenses for the first 20 days; then all eligible expenses for days 21-100 after patient pays a per-day copayment

 

 

After 20 days

$161 A DAY

COPAYMENT as much as:

$12,880

 

2016 MEDICARE PART B

 

Part B is Medical Insurance and covers physician services, outpatient care, tests, and supplies.

 

ON EXPENSES INCURRED FOR:  

MEDICARE COVERS

 

YOU PAY

ANNUAL DEDUCTIBLE Incurred Expenses after the required Medicare deductible  

$166 Annual Deductible

MEDICAL EXPENSES

Physicians’ services for inpatient and outpatient medical/surgical services; physical/speech therapy; and diagnostic tests

 

 

80% of approved amount

 

 

20% of approved amount*

CLINICAL LABORATORY SERVICES

Blood tests; urinalysis

 

Generally100%

of approved amount

 

Nothing for services

HOME HEALTHCARE

Part-time or intermittent skilled care; home health aide services; durable medical supplies; and other services

 

100% of approved amount; 80% of approved amount for durable medical equipment

 

Nothing for services; 20% of approved amount* for durable medical equipment

OUTPATIENT HOSPITAL TREATMENT

Hospital services for the diagnosis or treatment of an illness or injury

 

Medicare payment to hospital, based on outpatient procedure payment rates

 

Coinsurance based on outpatient payment rates

 

BLOOD

 

80% of approved amount after first 3 pints of blood.

First 3 pints plus 20% of approved amount* for additional pints
EXCESS DOCTOR CHARGES

(Above Medicare-approved amount)

 

0% above approved amount

 

All costs

 

*On all Medicare-covered expenses, a doctor or other healthcare provider may agree to accept Medicare assignment. This means the patient will not be required to pay any expense in excess of Medicare’s approved charge. The patient pays only 20% of the approved charge not paid by Medicare.

Physicians who do not accept assignment of a Medicare claim are limited as to the amount they can charge for covered services. In 2016, the most a physician can charge for services covered by Medicare is 115% of the approved amount for nonparticipating physicians. Note: In New York, the most a physician can charge for services covered by Medicare is 105%

of the approved amount for nonparticipating physicians. For routine office visits covered by Medicare, a nonparticipating physician can charge up to 115% of the fee schedule amount.

Things you should know in SC

It has been a very difficult and challenging enrollment period for many of my clients – for several reasons:

  • The failure of Consumers Choice Health Plan has forced clients to change plans – all more expensive then their current plans
  • MUSC is still not available on Blue Cross and Blue Choice.
  • United Healthcare is not available in the low country on the exchange.
  • Coventry/Aetna – which does include MUSC – had an average 30% increase

Many Brokers are suddenly backing away from doing individual sales. Why? Broker commissions have been cut more than in half the last few years, meaning revenue on individual plans is not enough to cover the time and expense of enrolling and servicing clients.

And with more than 7.5 million uninsured, I would have expected more demand from those previously uninsured – but we are not really seeing a big rush this year, probably because of the large rate increases again this year.

Meanwhile, even the authors of the PPACA now have the Cadillac Tax in their sites for elimination. Both Reid and Pelosi now look to repeal the tax – mostly because of the enormous objections of unions around the country – their negotiated benefits would be in danger beginning in 2018.

The Supreme Court of the United States has agreed to hear another challenge to the Affordable Care Act’s birth control mandate. It’s the fourth time a provision of the ACA will be considered by the Supreme Court and follows the controversial ruling in last year’s closely watched Hobby Lobby case.

With 3 weeks left in the open enrollment season for 2016 coverage, we continue to guide as many people as we can, and can only wonder what the future brings.

Information you should know in NY

It has been a very difficult and challenging enrollment period for many of my clients – for several reasons:

  • The failure of Health Republic has forced clients to change plans twice – once for December 1, and then look at all new plans for January 1.
  • OSCAR Healthplans no longer covers New York Presbyterian, Weill-Cornell Medical Centers, and NY Methodist Hospital centers.
  • Oxford has introduced their new Network- Oxford Metro – a smaller network, required on individual plans beginning January 1.

The Oxford Metro Plan seems to have been ignored by physicians initially, and so now many are scrambling to join after hearing from their patients that they will have to leave.

Brokers are suddenly backing away from doing individual sales. Why? Health Republic has also not paid commissions to brokers. OSCAR just reduced the monthly commissions to brokers to $6/month – not enough to cover the time and work to enroll you, nevermind providing service during the year.   Broker commissions have been cut more than in half the last few years.

And with more than 7.5 million uninsured, I would have expected more demand from those previously uninsured – but we are not really seeing a big rush this year, possibly because of the large rate increases.

Meanwhile, even the authors of the PPACA now have the Cadillac Tax in their sites for elimination. Both Reid and Pelosi now look to repeal the tax – mostly because of the enormous objections of unions around the country – their negotiated benefits would be in danger beginning in 2018.

The Supreme Court of the United States has agreed to hear another challenge to the Affordable Care Act’s birth control mandate. It’s the fourth time a provision of the ACA will be considered by the Supreme Court and follows the controversial ruling in last year’s closely watched Hobby Lobby case.

With 3 weeks left in the open enrollment season for 2016 coverage, we continue to guide as many people as we can, and can only wonder what the future brings.

September 2018
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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
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