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Health Law and Policy Update

This week's updates

Headlines of the week

Rep. Jim Riesberg appointed Colorado insurance commissioner
Gov. John Hickenlooper announced Monday the appointment of Rep. Jim Riesberg as Colorado insurance commissioner, setting Riesberg in a key role for protecting the interests of health care consumers.

Riesberg represents House District 50 in Greeley. He was scheduled to step down from that seat on Thursday and begin as insurance commissioner today.

"I've seen a lot of bills on insurance and I have a strong background in insurance myself," Riesberg told the Greeley Tribune. "We're moving toward the creation of the health insurance exchange. I would have been on some committees for that (in the Legislature). This will put me right in the middle of that as well. The insurance division monitors rate increases, and that is something I've been doing a lot of legislation around - access and affordability." 

Health Benefit Exchange Board appointments industry heavy
Gov. John Hickenlooper this week announced the nine appointed members of Colorado's Health Benefit Exchange governing board. The following members were appointed by the governor, Senate and House majority and minority leadership.

  • Richard T. Betts of Telluride, with a term to expire 2013. Betts is the owner, ASAP Accounting & Payroll, Inc.
  • Eric Grossman of Englewood, with a term to expire 2013. Grossman is a vice president of TriZetto.
  • Robert S. Ruiz-Moss of Lone Tree, with a term to expire 2013. Ruiz-Moss is the chief executive officer of Anthem Blue Cross.
  • Elizabeth Soberg of Centennial, with a term to expire 2013. Soberg is the chief executive officer of UnitedHealthcare of Colorado.
  • Gretchen Hammer of Denver, with a term to expire 2015. Hammer is the executive director for the Colorado Coalition for the Medically Underserved.
  • Stephen ErkenBrack of Grand Junction, with a term to expire 2015. ErkenBrack is the president of Rocky Mountain Health Plan.
  • Arnold Salazar of Alamosa, with a term to expire 2015. Salazar is the executive director of Colorado Health Partnerships, LLC.
  • Nathan Wilkes of Arapahoe, with a term to expire 2015. Wilkes is the founder and principal consultant, Headstorms, Inc.
  • Dr. Michael Fallon of Denver, with a term to expire 2015. Fallon is an emergency room physician.

Only three appointees, Wilkes, Betts and Hammer, are representatives of the individuals and small businesses likely to be customers of the exchange. Four health plans are represented, UnitedHealthcare, Anthem Blue Cross, Colorado Health Partnerships and Rocky Mountain Health Plans. TriZetto describes itself as "the leading privately held healthcare information technology company to the healthcare payer industry, with its technology touching half of the U.S. insured population."

Many consumers had hoped the board would not include any insurance industry representatives given the significant conflicts of interest that will almost certainly arise in the process of designing a health insurance marketplace for Colorado. The conflict of interest provision in the enabling statute (Senate Bill 11-200) is as follows: 

A MEMBER OF THE BOARD SHALL NOT PERFORM AN OFFICIAL ACT THAT MAY HAVE A DIRECT ECONOMIC BENEFIT ON A BUSINESS OR OTHER UNDERTAKING IN WHICH THE MEMBER HAS A DIRECT OR SUBSTANTIAL FINANCIAL INTEREST. C.R.S. 10-22-105(3)(b) 

It's troubling there is an industry bloc which might have a substantial effect on the board's deliberations. It's troubling as well that so many members of the board are likely to be unable to vote on many issues because of conflicts. If decisions about this new competitive marketplace are disproportionately influenced by the health insurance industry, it's hard to understand how the process will result in the strict oversight and high standards necessary to design a market that provides high quality, affordable insurance choices.

The composition of the board raises a host of questions about who the exchange will be designed to serve in the end - the insurance industry, or small businesses and individuals in need of health insurance. 

CCLP files request to Colorado Attorney General to hold a public hearing on Colorado Health Foundation's proposed sale of its interest in HCA -Health One LLC
CCLP Thursday filed with the Colorado Attorney General its comments on the proposed transaction by which the Colorado Health Foundation would sell its interest in the HCA-HealthONE LLC to HCA or affiliates. (The LLC has seven licensed hospitals and additional health care facilities in the Denver metropolitan area. The reported purchase price is $1.45 billion. HCA has been managing all the hospitals under a long-term contract.

CCLP analyzed the current transaction to see whether it is covered by the 1998 Colorado Hospital Conversion statute, and if not, the standards and process for Attorney General review under the AG's common law powers regarding charitable assets. CCLP concluded the proposed transaction is not within the scope of the statute, but that the statute does provide important criteria to be used in the common law review, including continuation of community benefits, no private inurement to selling officers and directors, obtaining of fair market value by the foundation and others. CCLP also recommended to the Attorney General that the public be given access to key documents involved in the transaction and that a public hearing be held to allow the public to state their views on whether the transaction is in the public interest, or not, and whether it safeguards the historic mission of the hospitals and the assets, or not.

Insurance brokers win on Medical Loss Ratio vote
A National Association of Insurance Commissioners (NAIC) task force voted Thursday to endorse a bill pending before Congress, the Rogers Bill, that would exempt broker fees and commissions from Medical Loss Ratio calculations. The question has been pending before the NAIC for several months. At issue is the requirement in the Patient Protection and Affordable Care Act for insurers to spend at least 80 percent or 85 percent of every premium dollar on health care claims and quality improvement, meaning the remainder may be spent on administrative expenses, profits and broker fees, and other nonmedical expenses. Brokers fear their fees and commissions will be reduced as a result and are seeking protection of their compensation.

Consumer representatives to NAIC released a statement about the vote. In addition to pointing out there is no evidence consumers are being harmed by the MLR requirement, they note customer rebates would be cut significantly if the Rogers Bill passes. Further, the letter points out: "the NAIC's study estimated this change would cost consumers $1.27 billion in rebates. It would also take the pressure off of insurers to reduce premiums. As the purchase of insurance is heavily subsidized by federal tax expenditures, this legislation will also increase the federal budget deficit."

The letter concludes: "[t]he decision made by the Task Force today is not supported by the evidence and not in the interest of consumers." The consumer representatives urge the full NAIC to reject the recommendation of the task force. While there is "no guarantee that the Rogers bill will help agents and brokers. It is clear, however, that it will hurt consumers and taxpayers."

Appeals court upholds individual mandate
The 6th U.S. Circuit Court of Appeals in Cincinnati upheld the Patient Protection and Affordable Care Act on Wednesday, agreeing the government can require people to buy insurance.

"Congress had a rational basis for concluding that the minimum coverage provision is essential to the Affordable Care Act's larger reforms to the national markets in health care delivery and health insurance," Judge Boyce F. Martin wrote in the majority opinion of the three-judge panel.

Kaiser Health News compiled a roundup of news coverage of the decision. Kaiser Health News also maintains a scoreboard of the cases challenging the health reform law. The U.S. Supreme Court is likely to make the final decision.

Advancing the debate

Medicaid blended rate and restrictions on fees threaten state programs
Several threats to Medicaid have arisen as negotiations continue in Washington over deficit reduction strategies. While the White House has stated it will not agree to turning Medicaid into a block grant program, as proposed by Congressman Paul Ryan in April, the Obama Administration's proposals also present a significant risk to state Medicaid programs. Information released late last week describes the threat to state budgets posed by the administration's proposal to create a blended federal matching rate for Medicaid and the Child Health Insurance Program (Child Health Plan Plus or CHP+ in Colorado).

To achieve the targeted $4 trillion in deficit reduction, the President in April announced a plan to seek $100 billion in cuts to Medicaid through things like pharmacy pricing, new restrictions on Medicaid provider fees as a financing mechanism and a blended Medicaid matching rate.

Under a blended rate, the federal government would combine the various matching rates for each state. For example, in Colorado the federal government generally matches state Medicaid expenditures at 50 percent, CHP+ at 65 percent, and in 2014 the federal government will pay 100 percent for newly eligible Medicaid enrollees. Under a blended rate, all those matching rates would be combined to arrive at one rate. To achieve budget savings, the rate would have to be scaled down to achieve the targeted amount of budget savings. Thus, Colorado would receive less federal matching dollars to support people who need Medicaid and CHP+. Fewer federal dollars would force Colorado to absorb the cost in its state budget or make further cuts to provider reimbursements or benefits.

Further, the Obama proposal would restrict states' ability to use Medicaid provider fees for financing starting in 2015, which could save as much as $26 billion. Full elimination of that financing mechanism has also been proposed by the National Commission on Fiscal Responsibility and Reform and is estimated to save as much as $44 billion.

Colorado passed a provider fee in 2009 (House Bill 09-1293). Using that financing mechanism, in 2009-10 the state was able to fund $642 million to support better payments to hospitals caring for indigent patients, and to expand coverage to low-income parents, and more children and pregnant women in the CHP+ program. In the future, the revenue source will be used to also expand Medicaid coverage to people with disabilities whose incomes are up to 450 percent of the federal poverty level, and adults without dependent children. Those expansions are an important source of coverage for uninsured and underinsured Coloradans. The combination of less federal support and less flexibility, or the elimination of a key source of revenue, would be hugely problematic for Colorado Medicaid enrollees, the state budget and the state economy.

Seniors save $260 million on drugs thanks to health reform
The number of Medicare beneficiaries receiving a half-off discount on prescription drugs thanks to the Patient Protection and Affordable Care Act climbed 76 percent in May, reaching 478,272 people, the Centers for Medicare and Medicaid Services said in a blog post.

The discount was among several provisions designed to ease the financial burden for seniors whose prescription drug costs fall into the "donut hole" in coverage. The drug discounts have saved more than $260 million this year, wrote Donald Berwick, Centers for Medicare and Medicaid Services administrator.

The discount benefitted 5,489 Coloradans so far this year, the federal government reports. The average discount per beneficiary in Colorado was $619.54.

What you can do

Schedule a presentation on health reform
The experts on our health team are ready to help community associations and other groups sort out the complexities of health reform. A key issue right now is creating the Colorado Health Benefit Exchange, and structuring it in a way that benefits consumers. To schedule a presentation, contact Health Care Program Director Elisabeth Arenales.

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

Communications Director
Perry Swanson

Released July 1, 2011