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Health Law and Policy Update: Broker fees counted as administrative cost under new rule

This week's updates



Headlines of the week

Broker fees counted as administrative cost under new rule
A rule the federal government issued Friday dealt a victory to health care consumers by including insurance broker fees in the calculation of administrative costs under a key provision of the Patient Protection and Affordable Care Act.

The health reform law says insurance companies must spend at least 80 percent of premium dollars on medical care and quality improvement in the small-group market, and 85 percent in the large-group market. The remainder can go to administrative costs, which also include profits and expenses such as advertising. Including broker fees in the calculation of administrative costs is important because it ensures a larger share of premium dollars will go to activities that help patients.

Health plans that don't meet the law's requirement for medical spending (known as the medical loss ratio) are required to provide rebates to consumers. Find details on the rule from Kaiser Health News.

Exchange board selects executive director, elects officers
The Colorado Health Benefit Exchange Board of Directors on Monday announced the selection of Patty Fontneau as its executive director. Fontneau is a former chief operating officer of the law firm Holme Roberts & Owen. Her appointment is subject to confirmation by the Colorado General Assembly's Legislative Health Benefit Exchange Implementation Review Committee, a requirement of legislation that created the governing structure for the exchange. A confirmation vote is expected at the committee's Dec. 7 meeting.

People close to the process see no barriers to Fontneau's confirmation, the Denver Business Journal reported.

The board also elected officers including Gretchen Hammer as chairwoman, Richard Betts as vice-chairman and Arnold Salazar as secretary. Find a complete board list on the exchange website.

Access to reproductive health care could be at risk in Colorado Springs hospital deal
Colorado Springs officials should consider access to reproductive health care as they examine proposals for a long-term lease of city-owned Memorial Health System, the Colorado Center on Law and Policy and other groups said in a Nov. 21 letter to the City Council.

A task force in Colorado Springs is considering proposals for a long-term lease of Memorial Health System. Bidders in the deal include Centura Health, which runs the other major hospital in the Colorado Springs area, Penrose-St. Francis Health Services, a Catholic hospital system.

"It is vital to examine how health care access in Colorado Springs would change if all the local hospitals restricted access to certain services based on their religious affiliation," CCLP told the Colorado Springs City Council in a letter also signed by representatives of the National Women's Law Center and MergerWatch Project. "In addition, the Establishment Clause of the United States Constitution may prohibit the imposition of religious restrictions on land or in a facility that is owned by a government entity or, at a minimum, require the parties to mitigate the effect of the religious imposition."

Hospitals in the Centura system adhere to the Ethical and Religious Directives of Catholic Health Care Services, which restrict access to a range of reproductive health care services.

Other bidders include HCA-HealthONE, Memorial Health System's current leadership, and a consortium including University of Colorado Hospital, Fort Collins-based Poudre Valley Health System and Children's Hospital Colorado. City officials posted the bids online Thursday, the Colorado Springs Gazette reported.

Essential benefits package should be uniform across states
Health insurance companies that participate in insurance exchanges across the country should be subject to the same rules defining "essential health benefits" regardless of where their policies are sold, the Colorado Center on Law and Policy told federal officials at a Nov. 18 meeting.

CCLP was among those that testified at a Denver meeting organized by the federal Department of Health and Human Services (HHS) to gather perspectives on how the essential health benefits rules should be structured. The rules are part of implementing the Patient Protection and Affordable Care Act. More than 100 people attended in person, and more than 100 participated by phone.

In addition to urging a uniform definition of essential health benefits across states, CCLP urged against allowing states to limit the scope of benefits once the federal government sets a basic plan. Flexibility on limiting benefits could create a race to the bottom where health plans offer the least they can get away with in each state.

Many participants, including CCLP, discussed the need for comprehensive health benefits. CCLP also argued consumers should have meaningful choices among health plans that are easy to compare. A contrasting example is Medicare Part D, the prescription drug benefit, where many seniors received stacks of benefit plans that were overwhelming and impossible to compare. Too many choices can be no choice.

CCLP also urged HHS to use oversight mechanisms to ensure people with high health needs are not penalized by being segregated into high-cost plans.

What's new

640 participate in forums about Colorado Health Benefit Exchange
Coloradans from across the state participated in forums last month designed to raise the voice of state residents about the design and implementation of the Colorado Health Benefit Exchange. More than 40 forums were held and attracted 640 participants. The Colorado Public Interest Research Group, Colorado Consumer Health Initiative and the Colorado Center on Law and Policy coordinated the effort along with local sponsors at many of the forums.

Creating the Colorado Health Benefit Exchange is a key part of implementing the Patient Protection and Affordable Care Act. The exchange will be a competitive marketplace where individuals and small businesses can purchase insurance and make meaningful comparisons among plans.

Participants at the forums filled out a questionnaire designed to understand how the exchange could best work for them. Coalition members are compiling the information and will produce a report that will be given to Colorado Health Benefit Exchange board members.

The project is funded by Community Catalyst through the ACA Implementation Fund, the Caring for Colorado Foundation and the Rose Community Foundation.

Number of uninsured children drops in Colorado and across the United States
The number of uninsured children in Colorado fell by an estimated 41,784 from 2008 to 2010, according to research released this week by the Georgetown University Health Policy Institute's Center for Children and Families. Statewide, the share of children lacking health insurance dropped from 13.8 percent to 10.1 percent, the second-largest decrease of any state.

Nationwide, the share of uninsured children went from 9.3 percent to 8 percent.

The report highlights the importance of safety-net programs such as Medicaid and Child Health Plan Plus (CHP+), which filled the gap caused by lost employer coverage during the recession. Despite state and federal budget constraints, maintained funding for those programs is important to continued reductions in the number of children who lack health insurance in Colorado.

Health Law and Policy Update is issued weekly by the health staff of the Colorado Center on Law and Policy. Subscribe by e-mail or read previous editions.

Health Care Director
Elisabeth Arenales

Health Care Attorney
Adela Flores-Brennan

Special Counsel
Ed Kahn

Rice Fellow
Danny Rheiner

Communications Director
Perry Swanson

Released Dec. 2, 2011