• Obama names Berwick as new CMS Administrator
• New privacy rules issued
• Council begins developing national health strategy

• New York launches website on health care reform

• Report gauges impact of health reform on small group plans
• Employees in small businesses more likely to have high-premium plans
• Employers weighing whether to keep coverage after health reform

Obama names Berwick as new CMS Administrator

President Obama on July 7 used his “recess appointment” authority to name Dr. Donald Berwick as the new CMS Administrator. The president nominated Berwick for the position in April, but Congress had not yet scheduled confirmation hearings. CMS has not had a permanent administrator since 2006.

Under Article II, section 2 of the U.S. Constitution, the president has the authority to fill “all vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.” As a result, Berwick will serve as Administrator at least until the end of 2011.

Dan Pfeiffer, White House communications director, justified the use of the recess appointment on his blog, noting that “Many Republicans in Congress have made it clear in recent weeks that they were going to stall the nomination as long as they could, solely to score political points.”

Berwick is president and chief executive officer of the Institute for Healthcare Improvement, Clinical Professor of Pediatrics and Health Care Policy at the Harvard Medical School and Professor of Health Policy and Management at the Harvard School of Public Health. He is also a pediatrician, adjunct staff in the Department of Medicine at Boston’s Children’s Hospital and a consultant in pediatrics at Massachusetts General Hospital. He has served as Chair of the National Advisory Council of the Agency for Healthcare Research and Quality, and as an elected member of the Institute of Medicine (IOM). He served on the IOM’s governing Council from 2002 to 2007. In 1997 and 1998, he was appointed by President Clinton to serve on the Advisory Commission on Consumer Protection and Quality in the Healthcare Industry.

In the wake of the enactment of the Patient Protection and Affordable Care Act (P.L. 111-148), the Obama administration wanted this position filled because so many new provisions of the law affect the Medicare and Medicaid programs. Dr. Mark McClellan, who was the last permanent CMS administrator, serving under President George W. Bush, said “What happens at CMS in the next few years will determine whether the new legislation actually improves quality and lowers costs. Don [Berwick] has a unique background in both improving care on the ground and thinking about how our nation’s health care policies need to be reformed to help make that happen.”

CCH Chicago Bureau, July 8, 2010.

New privacy rules issued

On July 8, the Department of Health and Human Service’s (HHS) Secretary Kathleen Sebelius announced proposed regulations and resources regarding the privacy of health information.

The proposed rules would strengthen and expand enforcement of privacy, security, and enforcement rules in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) by implementing the following measures:

• expand individuals’ rights to access their information and to restrict certain types of disclosures of protected health information to health plans.
• require business associates of HIPAA-covered entities to follow most of the same rules as the covered entities;
• set new limitations on the use and disclosure of protected health information for marketing and fundraising;
• prohibit the sale of protected health information without patient authorization.

The rules are scheduled to be published in the July 14 Federal Register.

“The benefits of health information technology can only be fully realized if patients and providers are confident that electronic health information is kept private and secure at all times,” said Georgina Verdugo, director of the HHS’s Office of Civil Rights. “This proposed rule strengthens the privacy and security of health information, and is an integral piece of the administration’s efforts to broaden the use of health information technology in health care today.”

On July 8, the HHS also launched a privacy Web site at http://www.hhs.gov/healthprivacy to help visitors access information about existing HHS privacy efforts and the policies supporting them, including HIPAA and the 1974 Privacy Act.

Council begins developing national health strategy

The 2010 Annual Status Report of the National Prevention, Health Promotion and Public Health Council establishes guiding principles, member responsibilities, data on leading causes of death, and possible interventions. The council was created by the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). The strategy is to establish actions within and across federal departments and agencies relating to prevention, health promotion, and public health. PPACA required the submission of this report to the president and Congress by July 1, 2010.

The strategy will prioritize evidence-based policy and program interventions intended to meet measurable goals related to the leading causes of death and disability and the factors that underlie these causes, including tobacco use, obesity, poor nutrition, physical inactivity, and excessive alcohol use. Both new and existing prevention, health promotion, and wellness activities will be examined including existing initiatives like Healthy People 2020, The First Lady’s “Let’s Move!_ initiative, The Surgeon General’s Vision for a Healthy and Fit Nation 2010, and Ending the Tobacco Epidemic: A Tobacco Control Strategic Action Plan for the United States.

The report identified five leading causes of death that contribute to reduced quality of life and account for nearly two-thirds of all deaths in the United States. Preventing these causes will result in significant cost savings to the U.S. health care system and public budgets. The five leading causes of death are (1) heart disease which kills more than 616,000 people per year, (2) cancers which kill 560,000 people a year, (3) stroke which kills more than 130,000 individual per year, (4) chronic lower respiratory disease which is responsible for 127,000 deaths per year, and (5) unintentional injuries which result in 123,000 deaths per year.

CCH Chicago Bureau, July 9, 2010.

New York launches website on health care reform

New York Governor David A. Paterson has announced the launch of a new state website on federal health care reform. The website, http://www.HealthCareReform.ny.gov, includes descriptions of health care reform, how it will benefit New Yorkers, and the progress of implementation in the state. It also includes information on how residents can obtain health insurance coverage and the public programs already in place in New York.

"Federal health care reform includes many benefits that will protect the health of our residents, including increased protections for health insurance enrollees, the expansion of eligibility for public insurance programs, a focus on quality and efficiency in the delivery of health care services, and development of programs that emphasize preventive care," Governor Paterson said. "I encourage all New Yorkers to use this website to learn about the provisions included within federal health care reform and the progress of implementing them in our state."

The website also includes a timeline of when specific provisions of health care reform go into effect. Several reforms take effect this summer, including a temporary high risk pool for people with medical conditions that are expensive to treat, an early retiree reinsurance program that will help offset the cost of providing health insurance to retirees age 55 and over who are not eligible for Medicare, and the mailing of rebate checks to Medicare Part D enrollees who reach the "donut hole" coverage gap.

Source: NY Governor's Press Release, July 8, 2010.

Report gauges impact of health reform on small group plans

The impact of the Patient Protection and Affordable Care Act on small group and individually purchased health insurance will depend upon many factors, according to a the Urban Institute’s recently issued paper, entitled How Will the PPACA Impact Individual and Small Group Premiums in the Short and Long Term?

According to the paper’s author, Linda J. Blumberg, some of the factors impacting small group and individually purchased health insurance are the characteristics of the health insurance markets prior to reform, whether plans are grandfathered or are newly created under reform, the health status and claims experience of the covered group or individual, individual coverage decisions, policy decisions that will be made at the state level, and success of cost containment efforts.

Changes to be implemented in 2010. While the most significant changes to private health insurance markets under the Affordable Care Act will not occur until Jan. 1, 2014, several provisions take effect in 2010. These changes affect both group and non-group plans and include prohibitions on lifetime benefit limits and unreasonable annual limits, extension of dependent coverage to adult children up to age 26, prohibitions on rescissions, elimination of preexisting condition exclusions for children, and elimination of waiting periods of more than 90 days.

The impact of these provisions on the premiums of current policy holders is a function of the type of coverage currently held, according to Ms. Blumberg.

Those policies that did not include lifetime or annual limits prior to reform should not see higher premiums because of these provisions. For plans with lifetime maximums of $2 million or higher, removing the limits entirely will tend to increase premiums by less than 1% (with the small group impact being smaller than non-group). And according to America’s Health Insurance Plans, the vast majority of individual market plans have limits of $5 million and above, making it highly unlikely that this change will cause a noticeable impact on non-group premiums. Because small group plans tend to be more comprehensive than non-group plans, a measurable impact in that sector of the market is even less likely, according to Ms. Blumberg.

Federal agencies estimate that the provisions related to annual and lifetime limits will increase group premiums by about 1/2 of 1% and will increase non-group premiums by less than 1%. While premiums could increase modestly in such a way, out-of-pocket costs for those using care will fall as a result, potentially leading to substantial savings for those with serious health care needs, according to Ms. Blumberg.

The prohibitions against preexisting condition exclusion periods for children, including denials of coverage due to such conditions, should have little to no impact in the small group market, which already is required to guarantee issue policies. The federal agencies estimate the effect to be negligible in the group market. Again, the provision will decrease out-of-pocket costs for those who would have had care excluded from reimbursement without the reform.

Ms. Blumberg notes in the paper that if the insurer charges a significantly higher premium for the family newly enrolling in coverage with a sick child, then the premium impact will fall on those families specifically and will not affect the premiums of others. This is the most likely scenario, as it is typical of rating practices in most non-group markets today. Federal agencies estimate the average effect of the prohibition on preexisting condition exclusions for children will be 1% or less in the non-group market.

As a percentage of policies sold, the number of rescissions is actually very small. Consequently, the prohibition under the Affordable Care Act should not have a significant effect on premiums in either market, according to Ms. Blumberg. Some insurers are concerned that the language of the law will increase the number of applicants misrepresenting their health status, which, if true, could have larger effects. The federal agencies estimate the rescission provisions will increase premiums by no more than a few tenths of 1%, while acknowledging that this is the roughest of the estimates provided.

Estimates of the group premium effect of extending coverage for young adults on parents’ policies are provided in another of the Obama administration’s interim final. The effect of this provision can be expected to be small in the group market as well, with estimates ranging from .5 to 1.2% of premiums, depending upon the participation assumptions made, according to Ms. Blumberg. With regard to non-group coverage, similar issues arise as detailed for the pre-existing condition exclusion period for children. Carriers are expected to charge the specific families enrolling high-cost young adults in non-group plans significantly higher premiums than similar families with healthier adult children, then there will be little to no impact on the general population of insureds.

For more information, visit http://www.urban.org/publications/412128.html.

Employees in small businesses more likely to have high-premium plans

Nearly 13% of workers with employer-sponsored health plans who worked in firms with ten or fewer employees had premiums of $7,200 or more a year for single-coverage plans in 2008, according to a recent issue of News and Numbers, from the Agency for Healthcare Research and Quality. This amount is significantly higher than the $4,704 average, national premium for employer-sponsored single-coverage health plans in 2008.

The federal agency’s analysis also found the following developments:

• About 4% of workers enrolled in plans sponsored by large businesses with 1,000 workers or more had premiums of $7,200 or more for employer-sponsored, single-coverage health plans. The national average premium in large business for this type of coverage was $4,340.
• For family coverage, about 7% of enrolled workers in small businesses had premiums of at least $19,000 in 2008, but only about 4.5% of employees in large companies had premiums that high. The national average premium for a family-coverage health plan in 2008 was $11,650 (fewer than ten employees) and $12,595 (1,000+ employees), respectively.
• Across all businesses, 5% of employees with single coverage had premiums of $7,200 or more, while 5% of employees with family coverage had premiums of $19,000 or more.

The data was taken from the Medical Expenditure Panel Survey (MEPS), a detailed source of information on the health services used by Americans, the frequency with which health services are used, the cost of those services, and how they are paid. For more information, visit http://www.ahrq.gov/news/newsnumix.htm.

Employers weighing whether to keep coverage after health reform

Almost one-half of organizations have decided not to drop health care coverage for employees as a result of the new health care reform law, the Society for Human Resource Management (SHRM) found in a new poll released on June 28. Less than 2% of organizations surveyed said they have decided to drop coverage in light of passage of the Patient Protection and Affordable Care Act.

In its poll, Organizations’ Response to Heath Care Reform, SHRM found that 46% of organizations surveyed this month would not be ending health care coverage for employees because such a move would lower employee morale and job satisfaction. Organizations also cited competitiveness in recruiting and retaining employees and the fact that they value the health of their employees as reasons.

“Early indications are that employers are taking a prudent and thoughtful review of the implications of the health care reform law on their plans,” said Michael Aitken, SHRM’s director of governmental affairs, “and that’s good news.”

Added Mark Schmit, SHRM’s director of research: “HR professionals and business leaders are taking an analytical approach to the decisions that they are making as a result of the new legislation. This is a strategic issue in which organizations are clearly recognizing the need to consider the costs in both monetary and human capital terms.”

Cost savings is the primary reason organizations would be likely to drop health care coverage and pay resulting opt-out fines. But for half of the respondents, it’s too early to know whether they will take such action.

Of the organizations that have decided not to drop health care coverage, 34% made the decision without conducting a formal analysis to determine the impact that reform will have on their health care plans. Twelve percent did an analysis before concluding that they would not end coverage, while 22% are currently conducting an analysis.

Overall, 41% of organizations are likely and 23% are highly likely to pass along any increased costs of health care coverage to employees next year, regardless of whether the increases are related to reform or not, the survey showed. And 34% of organizations are considering alternative health care plans for employees—health savings accounts, for example—as a result of health care reform.

The health care reform poll surveyed 819 randomly selected human resource managers and compensation and benefits professionals at private, public and government organizations with 50 or more employees. It was conducted June 16-23.

For more information visit http://shrm.org.