Wash Business Journal: DC Budget/Medicaid Mess

D.C.’s budget mess

D.C. gets $58M Medicaid bill, refuses to pay

Washington Business Journal – by Michael Neibauer

Date: Thursday, October 28, 2010, 2:49pm EDT

The District, already facing a $200 million-plus shortfall this year and $400 million the next, may have to scrounge up millions of dollars more to reimburse the federal government for bad Medicaid claims.

It’s not supposed to happen this way. The District generally bills Medicaid, not the other way around.

But the Centers for Medicare and Medicaid Services, in an Oct. 18 letter, called for D.C. to pay back $58.75 million it received from Medicaid in fiscal years 2004 and 2005 — for charges the city cannot support. The District’s Department of Health Care Finance, which oversees Medicaid and Medicare, responded days later that it rejects the bill, disagrees with the charges and plans to appeal.

DHCF “disagrees with the Centers for Medicare and Medicaid Services’ findings,” Julie Hudman, DHCF director, wrote Oct. 22 to Ted Gallagher, CMS associate regional administrator in Philadelphia.

“Additionally, because we disagree with your findings, when we receive the official disallowance letter, we will be appealing the disallowance to the Department of Health and Human Services, Department Grant Appeals Board,” Hudman wrote.

LaShon Beamon, DHCF spokeswoman, said the rejection letter was a “formality” to get the matter to the next step — an administrative hearing, where Medicaid may offer some relief.

“Maybe we’ll pay half,” she said. “Maybe none.”

Blame for the billing blunders falls mainly at the feet of the Child and Family Services Agency, which has a history of improperly submitting and poorly documenting its Medicaid claims (as does, to a lesser extent, the D.C. Public Schools). The problem was so pervasive — threatening the city’s financial reputation on Wall Street — that D.C. stopped requesting Medicaid reimbursement for CFSA-related targeted case management and rehabilitation charges as of Jan. 1, 2009.

The city wrote off nearly $100 million in anticipated Medicaid revenue in fiscal 2009 and 2010. Doing so limited the risk of overbilling in the future, but CMS still wants payback for mistaken claims of the past.

“CMS has proposed a repayment schedule, which the District has rejected,” Lorraine Ryan, spokeswoman for CMS Region 3, said in an e-mail. “As a result, CMS will initiate a disallowance in order to resolve the overpayments. The District has the option of appealing the disallowance.”

But there is no denying that the overbilling happened. The issues were revealed by internal audits conducted on behalf of the District’s Medicaid program.

Health Care Finance will not restart CFSA-related Medicaid charges for targeted case management until its private sector Medicaid manager — what’s called an Administrative Services Organization — is on line. That won’t happen until the spring, Beamon said.

Read more: D.C. gets $58M Medicaid bill, refuses to pay | Washington Business Journal

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New Republic: Obama’s Redirect — to the States?

Forget About Boehner. Try Republican Governors

  • Harold Pollack
  • October 29, 2010 | 12:00 am

This is the fifth in an occasional series examining how Republican control of Congress might affect policy debates in the next two years. (Part 1, Part 2, Part 3, Part 4)

Supporters of health reform are asking how President Obama might find common ground with House Republicans should Tuesday’s elections go badly. Count me as a pessimist on this front. House Republicans have perceived little reason to compromise on health reform or much else. For many, ideological principles and political incentives converge on one destination: Implacable opposition to the centerpiece initiative of the Obama presidency. Midterm victories would not soften conservatives’ policy views or this basic strategic judgment.

Republicans won’t have the votes to repeal the new law. They also face three awkward realities. First, the Affordable Care Act’s most unpopular provisions fill budget holes Republicans couldn’t easily fill. Second, specific aspects of ACA–such as those which forbid insurers from discriminating against sick people–are genuinely popular. Third, outright repeal would focus public attention on Republicans’ own proposals, something the Republicans would wisely avoid.

If they cannot repeal ACA, Republicans can greatly damage it. They can hold interminable hearings to rattle the Obama administration, publicize bureaucratic goofs, and perhaps uncover a workable scandal. They can underfund and otherwise undermine ACA’s implementation–and then blame the Obama administration for the resulting snafus.

The farcical “1099 collation calamity” exemplifies the latter strategy. To make a long story short, ACA raised roughly $18 billion by imposing rather cumbersome paperwork requirements to reduce tax evasion by small businesses. Small businesses didn’t like it. Democrats mustered 56 Senate votes for a reasonable fix, but Republicans blocked the vote. Having prevented Democrats from addressing the problem, Republicans have been happily running on this ever since.

House members have no day-to-day responsibility for the instruments of government. They face little political penalty if they damage these instruments, or if they undermine the quality of programs they disdain. Indeed the political incentives often run the other way.

Fortunately, President Obama has one way out. He can reach out to Republican governors who actually have some stake in ACA’s success. Establishing workable partnerships with these officials provides the best hope for productive negotiation with Republicans in Washington. It also happens to be the best pathway to sound policy, in implementing one of the most complex pieces of legislation ever enacted.

Governors are promising partners because they bear actual responsibility for millions of uninsured patients. They must respond to TV news accounts of uninsured cancer patients denied care. They must balance their budgets in the face of recession and rising costs health care. Elected by entire states rather than by narrow gerrymandered districts, they have some reason to present themselves as pragmatic dealmakers who get things done.

Governors need federal help and money to establish working health insurance exchanges on a tight timetable. ACA also expands funding for community health centers. These are essential to address the crush of uninsured people, particularly immigrants. These also provide thousands of jobs. If the House defunds ACA implementation, the first political victim will be the Obama administration. The second will be governors, Democrat and Republican, who will be held accountable for the resulting mess.

Governors also have a stake in ACA’s fine print. Pre-Existing Condition Insurance Plans (PCIPs) are now operational. For the next three years, these arrangements will provide $5 billion to cover the medically uninsured. Republicans sharply criticize PCIP. Senator Enzi and thirty Republican colleagues sent HHS Secretary Kathleen Sebelius a sharply-worded letter, citing expert estimates that PCIP is underfunded. The letter asks pointed questions about what will happen if PCIP is oversubscribed or run out of funds.

These criticisms are disingenuous, since Republicans propose their own similar arrangements which are more seriously under-funded. Still, PCIP obviously requires additional resources. The proper ask from a Republican governor could be very helpful in securing greater resources.

Over the long run, governors have good reasons to support federal policies to reduce states’ heavy fiscal burdens. Republicans complain about “unfunded mandates” embodied in health reform. This is also rather disingenuous. ACA provides states with substantial resources for Medicaid expansion and other challenges. ACA also subsidizes coverage for millions of low- and moderate-income people in red and purple states where the need is most acute. Ironically, in legislative negotiations for both the stimulus and ACA, Senate deficit hawks curbed liberal measures which would have lessened financial burdens on state governments.

Be that as it may, states will require federal financial help for years to come. Liberals have a special stake in providing this help, because state budget crises are killing progressive government. A permanent increase in the federal government’s Medicaid match rate is especially essential. States cannot reliably support continued increases in required Medicaid spending. Scrambling to make budgets work, they under-pay providers. They fail to operate Medicaid with the care, professionalism, or humanity that recipients deserve. There is no way to resolve this without large infusions of federal resources.

Will Republican governors play ball? Who knows. Above the fold, many bitterly oppose the new law. Below the fold, word from the field is that many are reasonably cooperative with federal officials as both sides confront the mammoth implementation challenges of health reform. Many states are publicly or privately seeking more federal resources.

States and the federal government are locked in an uneasy partnership. This arrangement has many downsides. At least it produces Republican partners with a stake in effective government. In this Tea Party era, that’s no small thing.

Harold Pollack is the Helen Ross Professor of Social Service Administration at the University of Chicago.

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POLITICO: Races to Watch Tuesday Re Health Care Reform

http://www.politico.comhttp://www.politico.com
Races we’re watching
By: Jennifer Haberkorn
October 29, 2010 04:37 AM EDT
Six months ago, the midterm elections were expected to hinge on the recently-passed health care reform legislation, which had awoken a contingent of anti-big government conservatives. Since then, the economy and job creation has taken its place as the prime issue in races across the country.

Health took a backseat, but it never went away.

Health reform, along with the stimulus, formed the basis for an anti-government backlash among voters that some Democrats were never able to shake. Republicans based their rally cry around repealing the extensive legislation, even though they won’t have the practical tools to do it for at least two years.

If Republicans win a commanding majority of the House on Tuesday, as expected, Democrats are likely to publicly question whether passing the health reform legislation was worth it.

Health reform has played a more prominent role in some races more than others. The results here could send signals for how lawmakers and 2012 candidates implement and talk about the health care law. Here are five races we’re watching:

Wisconsin Senate: Sen. Russ Feingold (D) vs. businessman Ron Johnson (R) – Feingold has been one of the most aggressive supporters of the health care overhaul on the campaign trail, while some of his Democratic colleagues have been hiding their voting record.

A win by Johnson on Tuesday could convince Democrats that there is no viable way to spin the health reform law.

Feingold went up with several television spots in recent weeks arguing he is taking on the insurance industry to protect Wisconsin residents while Johnson – who entered the race because of health reform and is promising to repeal it – would defend insurers in Congress at the cost of consumers. One of the ads features Wisconsin residents demanding “Hands off my health care,” to Johnson.

“Feingold has used the issue in a very interesting way,” Celinda Lake, a Democratic pollster, told reporters at a forum by industry publication Health Affairs this week. “He used his health care ad to show he’s taking on the health insurance industry.”

But Republicans say that Feingold has shot himself in the foot by making his re-election campaign about health reform.

“Feingold is as good as an example as any of where the health care reform bill has been a point of debate,” said Whit Ayres, a Republican pollster and president of Ayres, McHenry & Associates. “I think that’s the reason Senator Feingold is going to be ex-Senator Feingold.”

North Dakota House (at-large): Rep. Earl Pomeroy (D) and Rick Berg (R) – Pomeroy was once held up as the moderate Democrat who could win in November on health reform.

Late last month, he began running ads saying he voted for the law to stand up to the insurance companies and protect North Dakotans, Medicare and rural hospitals.

Former Senate Majority Leader Tom Daschle, who helped craft the legislation said earlier this month – when Pomeroy’s ads defending the law were up – that a Pomeroy victory could prove to Democrats that reform is a positive for them.

“If he wins and he wins over the basis of his campaign over these least couple weeks for his advocacy for health care, it is just going to destroy all the punditry and conventional wisdom about health care and how to position yourself as you go forward,” Daschle said, as reported by the Huffington Post.

But since then, Pomeroy has changed his tune. In recent days he’s gone up with television ads hinting that he acknowledges voters are frustrated. “I know I’ve disappointed you with a vote here and there. But you can always count on the fact that I do what I do for the right reason, or the people of North Dakota.”

Governors: If Republicans pull off a wave of victories in the nation’s statehouses, a blockade against the reform law could follow in the states. Governors will be in a key position to stall or block enactment of pieces of the law.

Doing so would make reform supporters’ job more difficult. They argue that once Americans can see or feel the benefits of the reform legislation, they’re more likely to support it. Governors will be in a position to make that conversation easier or more difficult.

Beginning next year, governors and state legislators are going to have to start setting up pieces of the law, such as the insurance exchanges, where consumers will buy insurance after 2014. Governors can also encourage or stop their state agencies from applying for grants, reviewing insurance rates or participating in the law.

“Governors are going to have a great deal of control on how things come out,” says Kavita Patel, director of the health policy program at the New America Foundation. “You could have states potentially flipping from a Democrat or moderate Republican to a more conservative Republican who doesn’t want to do anything. It would roadblock the expansion of health insurance reform.”

To be sure, the law has fallback plans, in which the federal government would implement many of the reforms if the states choose not to.

Minnesota Gov. Tim Pawlenty, a Republican with an eye on the 2012 presidential campaign, has been the most outspoken governor against the law until now. Other Republican governors likely to take a lead role in opposing the law if they win on Tuesday are Kansas’s Sam Brownback and Ohio’s John Kasich.

Governors also have to contend with the 2014 expansion of the Medicaid program while dealing with stretched state budgets. The expansion is of Medicaid is going to be particularly important in California and Florida, which, combined, account for 30 percent of the Medicaid population.

New York House (24th District): Rep. Michael Arcuri (D) and Richard Hanna (R) – Rep. Michael Arcuri, a freshman moderate, was one of five Democrats to support the House’s health care bill and later flip to oppose the Senate version when it came back for a vote in the House in March.

Since then, he’s been forced to defend not only the first vote but also the image that he’s a flip-flopper – a charge Hanna threw at him before Arcuri actually cast the second vote. He’s now in a down-to-the-wire race with Hanna. Arcuri’s opposition to the law has been viewed as a plus, but it’s still unclear whether it’s done enough to save him.

California Insurance Commissioner: Mike Villines (R) and Dave Jones (D) – The Golden State’s next insurance commissioner will play a key role in health reform implementation, as well as reviewing insurance industry rates in an important state.

“Insurance commissioners throughout the country are going to have a significant impact on how [insurance] rate review is carried out,” says Dylan H. Roby, a research scientist at the UCLA Center for Health Policy Research. The commissioners will also be responsible for overseeing insurers.

Insurance rate changes are likely to continue to play a key role in the health debate. Outcry over a 39 percent rate increase proposal in California last winter gave Democrats a convincing argument that their health reform legislation was needed to crack down on insurance companies. Future rate increases are likely to be held up by reform opponents as a sign that the law is failing. Supporters of the law have already tried to preempt that claim by arguing that insurers are gaming the system and blaming reform without merit.

Kevin S. Wrege, Esq.

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Exchange Early Innovators Program

http://www.politico.comhttp://www.politico.com

States fear health care portals’ costs
By: Jennifer Haberkorn
October 29, 2010 05:00 AM EDT

The administration is asking the states to help craft one of the most expensive and technologically complex pieces of the health care overhaul.

The legislation requires by 2014 that all states have health insurance exchanges, or portals similar to Travelocity or Orbitz, where consumers can compare insurance plans and purchase coverage. They’re designed to make it easier for small businesses or individuals to buy coverage and figure out if they qualify for the health reform law’s tax credits or other state assistance, such as Medicaid.

But states view the project as an enormous undertaking, requiring them to design a system, develop the information technology and put it into action in just three years amid tight budgets. In response, the Department of Health and Human Services is planning to ask five states to develop systems that can hopefully serve as prototypes for other states to replicate.

“As we’ve been out with the states talking about 2014 and the possibility of as many states as possible doing their own exchange, they’re most concerned about the IT piece, [saying] it’s going to be expensive and it’s going to take some time,” said Joel Ario, director of health insurance exchanges at HHS’s Office of Consumer Information and Insurance Oversight.

HHS is planning to announce the program, dubbed “Early Innovators,” on Friday. States will have to apply for it and will receive grants to fund their work. Ario said the agency hasn’t yet determined how much money will be available.

“We didn’t want to put a constraint on it,” Ario told POLITICO, adding that the agency hopes for creative proposals.

Ario says the program will likely make it easier for other states to establish their own exchanges. The health reform law requires the federal government to set up the programs if the states don’t.

The agency also doesn’t want the states to feel that they have to reinvent the wheel 50 times over.

HHS says states will have to have already started on planning for their exchanges to qualify for the program. Several states, such as Wisconsin, California and Pennsylvania have already formed task forces to start setting up the exchanges and other reform-related programs.

On the other hand, some states have resisted participating in anything related to the health reform law for political reasons or hope that it will get overturned in court.

Kevin S. Wrege, Esq.

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Insurance & Financial Advisor: CareFirst BCBS to Cut Agent Commissions 15%

Updated at 2:03 p.m. ET, Oct. 25, 2010

Insurance brokers, nervously waiting to see how health reform will affect their compensation, have been told by Maryland’s largest health insurer that small-group commissions will drop by 15%, starting next year.

CareFirst BlueCross BlueShield, based in Owings Mills, Md., notified brokers of the change to payments for brokering policies for groups of two to 50 workers in a notice sent out last week, according to a Baltimore Business Journal report. CareFirst officials declined to provide a copy of the letter to IFAwebnews.com.

“As is the case with all insurers, CareFirst must operate in a new environment which requires us to achieve greater efficiency while ensuring that consumers get the most for their health insurance dollar,” said Michael Sullivan, a CareFirst spokesman, in a statement provided to IFAwebnews.com. “The adjustments we have made to our compensation and incentive structure for brokers, administrators and distributors reflect this new reality.”

Days after the passage of the reform law in March, CareFirst’s president and CEO, Chet Burrell, told agents that reform could “atomize” the small-group market nationally.

His statement in part was based on the requirement, starting next year, that insurers comply with a new medical loss ratio. That new ratio will necessitate that at least 80 cents of every dollar of premiums paid must be put toward medical expanses in the small-group market. Maryland law currently requires health insurers to put 75% of small-group premiums paid toward medical costs.

Expenses expected to fall outside the medical cost portion include marketing, broker compensation and administrative fees.

Other broker payments will change as well, depending on the rate brokers negotiate with employer groups, according to the newspaper. For large-group clients, the add-on commission, usually 5%, will shrink to near 3.5%, meaning brokers will need to negotiate to obtain the remainder from the employer group, the Baltimore Business Journal reported.

CareFirst provides health insurance in Maryland, Northern Virginia and Washington, D.C.

Kevin S. Wrege, Esq.

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WSJ: The State of the Health Care Market

Intriguing editorial on the relative role of carriers and providers in the health care market, and the risks of consolidation.

Big Insurance, Big Medicine

ObamaCare is already driving a wave of health-care consolidation—and higher costs.

ObamaCare’s once and future harms have been well chronicled, but the major effects so far are less obvious and arguably more important: A wave of consolidation is washing over the health markets, and the result is going to be higher costs.

The turn toward consolidation among insurance companies is not new, and neither is it among doctors, hospitals and other providers. Yet the health bill has accelerated these trends, as all sides race to anticipate and manage political risk and regulatory uncertainty. This dynamic is leading to much larger hospital systems and physician groups, and fewer insurers dominated by a handful of national conglomerates. ObamaCare was sold using the language of choice and competition, but it is actually reducing both.

The first surge will come among the 1,200 insurers doing business in the U.S., given that a major goal of ObamaCare is to convert these companies into de facto public utilities. Those regulations are now being written—and once they’re up and running some medium-sized carriers will collapse under the new mandates and higher overhead. State insurance commissioners warned the Administration this month that “improper or overly strident application . . . could threaten the solvency of insurers or significantly reduce competition in some insurance markets.” They also implied that bankruptcies are likely.

With these headwinds, investors and Wall Street analysts are now predicting a lost decade for health insurance stocks. But it may be more accurate to say that there will be a lot of losers and some very big winners. Mergers and acquisitions will increase dramatically once companies get a better look at the regulation and figure out the valuation of M&A targets. Larger carriers will swallow smaller ones quietly before they fail.

Both publicly traded and nonprofit insurers have been heading in this direction for years, as in any industry where there are returns to scale. Size is also important in a low-margin business in which capital is costly and political clout vital. But scale is far more central now, because ObamaCare standardizes benefits. Once insurers lose the freedom to design their own products, they’ll essentially be selling commodities, and survival will depend on enrollment volume and market share.

The same thing will happen to stand-alone and community hospitals—always a precarious business. Nearly a third of U.S. hospitals are currently operating in the red and will get steamrolled by ObamaCare, and many of them will be annexed by national chains and larger local systems.

This trend got a preview two weeks ago when Mercy Health Partners announced that it was seeking buyers for three Catholic hospitals in northeast Pennsylvania. CEO Kevin Cook told local media that ObamaCare was “absolutely” a factor in the decision to sell, only to backtrack once his comments were used in campaign ads against House Democrats Paul Kanjorski and Chris Carney, who voted for the bill.

Though it received little attention over a year of debate, ObamaCare actively promotes provider consolidation. Writing this summer in the Annals of Internal Medicine, Nancy-Ann DeParle and other White House health advisers argued that “The economic forces put in motion by the Act are likely to lead to vertical organization of providers and accelerate physician employment by hospitals and aggregation into larger physician groups.”

Ask and ye shall receive. Across the country, providers are building giant hospital systems and much tighter doctor alliances like multispecialty groups to get out ahead of a concept known as “accountable care organizations,” or ACOs. To modernize the delivery of medical services, ACOs would encourage doctors to work in teams to use resources more efficiently, streamline treatment and improve quality. The model is the Mayo Clinic and other large integrated systems.

At the moment ACOs are only a gleam in some bureaucrat’s eye, and no one has a clue how they’ll operate in practice until the government releases a working regulatory definition next year. Yet the percussive effects are already being felt across medicine.

Hospitals are now on a buying spree of private physician practices in the rush to build something that will qualify as an ACO. Some 65% of doctors who changed jobs in 2009 moved into a hospital-owned practice, while 49% of doctors out of residency were hired by hospitals, according to the Medical Group Management Association. In its 2010 census, the American College of Cardiology reports that nearly 40% of private cardiology groups are currently integrating with hospitals or merging with other practices.

Doctors are selling because complying with the ever-growing list of mandates has become more cumbersome; and while staff physicians on salary do gain predictability, they also lose the autonomy of independent practice. The other problem is price controls in Medicare, which are about 20% below private payments for doctors and 30% lower for hospitals. Hospitals are also scooping up practices to lock in referral sources and make up for ObamaCare’s Medicare cuts. As it is, two-thirds of hospitals lose money today on Medicare inpatient services, according to Medicare.

ACOs are also driving consolidation among hospitals. Anecdotally, Marquette General Hospital and Bell Hospital formed a strategic ACO partnership in July that will dominate Michigan’s upper peninsula. In Omaha, Methodist Health System and the Nebraska Medical Center recently followed suit. Similar alliances are underway in Detroit, Baltimore, Chicago, greater Boston, Roanoke and southwest Virginia—even Youngstown, Ohio.

The accountable care movement could do some good if it spreads best practices. But no one should entertain the illusion that it will reduce costs perforce and “bend the curve.” In fact, the most concrete effect of this wave of consolidation may be to increase private health spending significantly.

Unlike Medicare and Medicaid, private reimbursement rates are determined by negotiations, often highly antagonistic. Insurers always attribute premium increases to the underlying cost of care, while doctors and hospitals always argue that there isn’t enough competition among health plans. Both claims are “true,” some of the time—but it depends on which side has more market power.

Insurers extract lower rates by steering patients and revenue to certain providers through their networks. Providers gain bargaining leverage when health plans can’t credibly threaten to exclude them, whether because their share of the market is too large or due to public demand for “must have” hospitals. Consolidation will increasingly feed off itself as providers and insurers vie to get the whip hand in rate negotiations.

Most neutral experts believe the balance of power has tipped toward providers over the last decade, though this isn’t always anticompetitive. Higher rates generally reflect investments in staffing, technology, specialization and sometimes consumer preferences. There is also the cost-shift to private insurance to offset Medicare’s price controls. However, most economic studies on hospital M&A over the last two decades show that consolidation increases unit prices, though there is significant disagreement over the magnitude.

Accountable care organizations may become little more than a pretext for building up market power and fixing prices. The American Medical Association wants the government to stop insurers from individual contracting in favor of “exclusive dealing arrangements” with ACOs. In effect, the AMA wants a mandatory collective bargaining tool that would convert ACOs into unions.

***

“In a lot of states, the problem is just you don’t have competition at all,” President Obama said in February at his health summit. “We want competition.”

Yet the consolidation wave is churning the insurance markets and reshaping clinical medicine with almost no public scrutiny. A rational system would give consumers an incentive to reward those businesses that innovate and deliver higher quality at lower cost, whether they are providers or insurers. ObamaCare is already moving the U.S. even further from the rational world, and this forced retreat will continue the longer it is left in place.

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

Kevin S. Wrege, Esq.

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Wash Examiner: Kwame Brown Weighs in on Budget

Kwame Brown raises his voice on policy

By: Freeman Klopott
Examiner Staff Writer
October 22, 2010

Kwame Brown, the city’s likely next D.C. Council chairman, is exerting his own policy vision in the face of a growing council power void.

Councilman Brown hasn’t always been the most decisive member of the council. He voted present for Attorney General Peter Nickles’ confirmation, a move that put him on the books without having to commit.

But in recent weeks, Brown has started pushing his own policy.

It wasn’t long after D.C.’s current council chairman — and likely next mayor — Vince Gray told The Washington Examiner that he’s looking at slicing revenue before raising taxes to close the city’s $175 million budget gap, that Brown said he wants to make sure those who owe the city money pay up before the budget is cut. Brown has been at the table with Gray and Mayor Adrian Fenty as they prepare the cuts the council will have to consider.

“We have a budget issue and I clearly have been working closely with Chairman Gray,” Brown told The Examiner. “Going after people who owe us money is one step in a three-step process.” First get the cash that’s owed, then the budget cuts, and then consider tax increases, he said.

By playing a slightly different tune from Gray, Brown is starting to push his own vision for the council and the role it will play as the potential foil to a future Gray administration.

“What you have is the chairman-elect and the mayor-elect working together as the two leaders who will need to move this city forward,” Brown told The Examiner. Working on the budget “is an example of how we’ll work together as we move forward and as two equal branches of government.”

Gray is all but running the city now as Fenty fades into the finish of his lame-duck term. Since winning the Democratic primary, Fenty has given Gray the hiring freeze the current council chairman asked for and promoted Gray’s pick of Kaya Henderson to interim schools chancellor when Michelle Rhee announced her resignation.

But that has left the council without a clear a voice of its own. Brown, political observers say, is now becoming that voice.

“The current chairman is moving on to become the mayor and is exercising his authority,” Fenty’s former campaign chairman Bill Lightfoot said. “Brown is taking appropriate action to fill the power and policy vacuum.”

fklopott@washingtonexaminer.com

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Media Report: Exchanges are Key to HC Reform

October 23, 2010
Health Care Overhaul Depends on States’ Insurance Exchanges
By ROBERT PEAR

WASHINGTON – In Massachusetts, which has had a government-run health insurance
marketplace for four years, people typically file paper applications for subsidized coverage offered by one of five state-approved insurers. In Utah, employees of small businesses can go to a state Web site and sign up for insurance over the Internet, almost as easily as they download music from iTunes.
The success of President Obama
‘s health care overhaul, with its promise of affordable coverage for all, depends on the creation of such retail shopping malls, known as health insurance exchanges.
Massachusetts and Utah provide a glimpse of the future, and they offer radically different models for other states. The battle over health care is shifting to the states, and the design of insurance exchanges will be one of the most pressing issues for state legislators when they convene early next year.
“Utah and Massachusetts may well serve as bookends for other states,” said Norman K. Thurston, the policy coordinator at the Utah Health Department. The Congressional Budget Office
predicts that by 2019, about 24 million people will have insurance through exchanges, with four-fifths of them getting federal subsidies that average $6,000 a year per person. People with incomes up to four times the poverty level (about $88,000 a year for a family of four) will be eligible for subsidies. The Utah Health Exchange organizes the market, allowing consumers to compare a wide variety of health plans sold by any insurers that want to participate.
In the Massachusetts exchange, known as the Connector, the state serves as an active purchaser, soliciting bids from insurance companies and negotiating prices and benefits in an effort to secure the best value for state residents. Health plans cannot be sold through the Connector unless they receive its seal of approval.
“Massachusetts has been more selective and aggressive in contracting,” said Jon M. Kingsdale, who was executive director of the Massachusetts exchange from its creation in 2006 until June of this year.
Matthew A. Spencer, manager of the Utah exchange, said: “We are on the other end of the spectrum from Massachusetts. Our exchange is wide open for any carrier that wants to participate. We define the minimum benefits that plans need to offer. But we step back and allow carriers to compete within the exchange, setting their own prices.”
The idea of an insurance exchange has bipartisan appeal.
Liberals and conservatives alike see it as a way to concentrate the purchasing power of individuals and small businesses.
The federal law was shaped, to a large degree, by the experience of Massachusetts. But Senator Orrin G. Hatch
, Republican of Utah, said: “Utah is not Massachusetts. Nor does it want to be.”
Other states will probably fall somewhere along the continuum from Boston to Salt Lake City as they try to figure out the right mix of regulation and competition.
State legislators are asking: Can we get a better deal by limiting competition in the exchange or by accepting all qualified health plans? Should states negotiate premiums or rely on market forces to set rates? David Clark, a Republican who is speaker of the Utah House of Representatives, said: “In our exchange, the government is a market facilitator, not a contracting agent. We believe in the invisible hand of the marketplace rather than the heavy hand of government.”
Utah has no interest in putting its exchange plans out for bid, Mr. Thurston said. “Any attempt to standardize benefit designs tends to discourage competition and entry into the market, and limits choice,” he said. In Massachusetts, State Senator Richard T. Moore, a Democrat who is president of the National Conference of State Legislatures, said: “We took a much more governmental approach. But both models make sense. Small states might find Utah is a good model. Bigger industrialized states might go the route we went.”
Massachusetts officials point to the state’s near-universal coverage as evidence that their approach is working. The Census Bureau
says 95.6 percent of Massachusetts residents were covered by health insurance last year, compared with 83.3 percent for the nation as a whole and 85.2 percent for Utah. “We have the lowest uninsured rate in the nation, and we are immensely proud of that,” said Glen Shor, executive director of the Massachusetts Connector.

The White House has provided $49 million to states to help them set up exchanges, which are envisioned as a kind of bazaar where insurers will offer their products side by side, so consumers and employers can make intelligent comparisons.
Congress assumed that insurance would also be sold outside the exchange. But federal subsidies, to help pay for insurance, will be available only to people who enroll in health plans through an exchange.
Exchanges will also play a crucial role as gateways to Medicaid and other public health programs. If people are found eligible, the exchange will help them enroll. In Massachusetts, the same application form is used for Medicaid and for subsidized private insurance purchased through the Connector. California is another pioneer. On Sept. 30, Gov. Arnold Schwarzenegger , a Republican, signed two bills establishing the California Health Benefit Exchange, with broad powers to “negotiate on behalf of the public” and select qualified health plans. The legislation generated intense lobbying, and the governor’s intentions were unclear until the last minute. Mr. Obama had urged him to sign the bills and was thrilled when he did, aides said.
The fight in Sacramento offers a preview of what other states can expect. In a letter to California lawmakers in August, Natalie Cárdenas, regional director of government relations for Anthem Blue Cross, a unit of WellPoint, complained that the exchange would have the power to pick winners and losers in the insurance market.
“Federal law will already limit the types of products that carriers can offer,” Ms. Cárdenas said. “Beyond that, the marketplace should determine what products consumers and small employers can purchase, not a government bureaucracy.”
The California Chamber of Commerce urged a veto of the bills, saying they “could lead to unnecessary cost increases and limited choice for employers.”

But Betsy M. Imholz, a lobbyist for Consumers Union
, said the California laws struck the right balance.
“At first,” Ms. Imholz said, “the exchange may want to have a large number of health plans participating. But then the state needs to winnow down the number so consumers can see where they will get the best value.” The California law says the exchange should choose health plans that “offer the optimal combination of choice, value, quality and service.” Massachusetts requires people to have insurance. Utah does not. Massachusetts provides more generous subsidies. But, Mr. Kingsdale said, the biggest difference is the magnitude of the two state programs. In Massachusetts, more than 154,000 people receive subsidized coverage through the exchange, and 40,000 receive unsubsidized coverage, which can be bought on the Web. The Utah exchange, created under a 2008 state law, began enrollment this year. About 1,200 people have coverage through the Utah exchange, and the number is expected to grow to 10,000 by July 2011. “We anticipate exponential growth,” Mr. Spencer said.
Under the new federal law, the exchanges must be in operation by January 2014. Federal officials will assess states’ progress as of Jan. 1, 2013, and will run the exchange in any state that is unable or unwilling to do so. The exchanges will have a huge number of duties. They must evaluate health insurance plans and publish “standardized comparative information.” They must set up telephone call centers to answer consumers’ questions. They must determine who is eligible for subsidies and who will be exempt from the penalties imposed on people who go without insurance. They must build new computer systems to exchange data with state Medicaid agencies, insurance companies, employers and federal agencies.
While the exchange cannot explicitly control prices, it can exclude health plans that show a pattern of “excessive or unjustified premium increases.” State officials worry that sick people will gravitate to the exchange, while healthier people who do not need subsidies will buy insurance outside it. However, insurers must agree to charge the same prices inside or outside the exchange.
Moreover, the law stipulates that members of Congress must get their health insurance through an exchange. So lawmakers will presumably be alert to problems.
&&&&& &&&&&

Kevin S. Wrege, Esq.
President
PULSE Issues & Advocacy LLC
4410 Massachusetts Ave., NW, #150
Washington, DC 20016
Office: 202-625-1787
Mobile: 202-253-4929

Wash Post Council Endorsements

Post backs Graham, Wells & Catania, but shuns Cheh, Thomas and Mendelson. Candidates in italics were formally endorsed by the ed board…

Endorsements in the D.C. Council race

Friday, October 22, 2010; A26

WITH VINCENT C. GRAY and Kwame R. Brown facing only token opposition in their bids for the District’s top two jobs, attention in the Nov. 2 election centers on the competitive D.C. Council races. (There will also be elections for school board, which we will turn to on another day.) Six seats on the 13-member council are up for grabs and — thanks to the efforts of the local Republican Party in recruiting candidates — there are real choices for voters in the ward races.

That’s a welcome development, given the challenges facing the District and the unhealthy long-term consequences of unchallenged one-party rule. Looming budget deficits will require hard decisions about spending and taxes. Reform of the schools is a work in process, and the council will play a critical role in determining whether the changes continue or are slowed. And the council has a role to play in healing divisions of race and geography that emerged in this year’s bitter mayoral contest.

In Ward 1, incumbent Jim Graham (D) is facing a spirited challenge from an impressive newcomer. Republican Marc Morgan, an environmental strategist with a rich political and civic background, offers smart ideas on how green technology can create jobs and help businesses; he also has useful insights on education and issues related to HIV/AIDS. But, as much as we admire Mr. Morgan’s fresh approach, we believe that Mr. Graham overall has served his community well and deserves to be reelected. The progress in Ward 1 is, in large measure, due to Mr. Graham’s work over the past decade. His needling and prodding have brought needed development and better city services to his constituents. Also running in Ward 1 is D.C. Statehood Green Party candidate Nancy Shia.

Ward 3 sees a similar match between a Democratic incumbent, Mary M. Cheh, and a promising Republican, Dave Hedgepeth, but here we believe the newcomer is the wiser choice. Ms. Cheh has done some good work in her first term on the council, most notably on the environment and in her efforts to make the government more open to public view. But she’s been heedless in pushing legislation (such as lengthening the school day) that, no matter how well intentioned, is impractical, given the city’s finances. She insisted on overly ambitious election reform and, when the inevitable problems arose, blamed the people who had urged a more cautious approach. On the single most important issue facing the city, school reform, Ms. Cheh failed to provide the principled leadership her constituents should expect.

Ms. Cheh argues that school reform has been central to her work on the council. She did, along with a majority of the council, vote for mayoral control and confirm Michelle A. Rhee as chancellor. She stood by the chancellor’s decision to shutter schools, an easier stance for her than for others since Ward 3 was spared any closings. But as the decisions became increasingly difficult, and when Ms. Rhee most needed support, Ms. Cheh was nowhere to be found, instead joining the choirs of criticism and micromanagement over teacher layoffs and the transfer of a middle school principal. Her graceless criticism of Ms. Rhee when the chancellor tendered her resignation was emblematic.

In short, Ward 3 can do better, and Mr. Hedgepeth offers a grounded approach to the complex issues facing the District. He has expressed strong support for school reform, crossing party lines to endorse Mayor Adrian M. Fenty in an effort to keep Ms. Rhee. He is most impressive when it comes to the fiscal issues the District faces, rightly arguing that the city cannot tax itself out of its hole but needs to reassess exactly what it is providing residents for the estimated $21,000 in taxes per household. He also would relieve burdens that discourage the growth of new business.

Ward 5 is a three-way contest between incumbent Harry Thomas Jr. (D), Republican Tim Day and independent Kathy Henderson. Elected largely on the strength of his family name, Mr. Thomas has stood in the way of school reform, catered unduly to the unions and made a mockery of council oversight. Recent revelations about his involvement with a shadowy nonprofit should only add to the unease of voters in Ward 5. They might also take note that, even as he seeks their votes, he is contemplating a run for an at-large seat in the special election that would be held if, as expected, Mr. Brown is elected council chairman. On the other hand, Mr. Day, an accountant with a record of community service, impresses us with his devotion to the ward and his pragmatic ideas about how to solve some of its more persistent problems. He is particularly interested in issues confronting children who are economically disadvantaged.

Tommy Wells (D), running for a second term in Ward 6, is the clear choice over Republican Jim DeMartino. Mr. DeMartino, a former Marine Corps officer, is a serious-minded candidate with sound approaches to education and city finances. But Mr. Wells has established himself as an able legislator who does his homework and is an important voice on environmental and transportation issues.

In the race for two at-large seats, choice is limited, with incumbents Phil Mendelson (D) and David I. Catania (I) seeking reelection against token opposition from Statehood Green candidate David Schwartzman and Richard Urban, an independent. Mr. Catania gets our enthusiastic endorsement. One of the longest-serving members of the council, Mr. Catania is hardworking, detail-oriented and independent-minded. His oversight of city health issues has helped to give the city one of the lowest rates of uninsured people in the country, and he was a crucial ally for school reform.

Kevin S. Wrege, Esq.

President

PULSE Issues & Advocacy LLC

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Office: 202-625-1787

Mobile: 202-253-4929

MLR Vote — Sec. Sebelius Signals She Approves

http://www.politico.comhttp://www.politico.com

Health officials approve key reform
By: Sarah Kliff and Jennifer Haberkorn
October 21, 2010 09:39 AM EDT

ORLANDO – State insurance commissioners on Thursday approved rules shaping how insurance companies will have to account for their medical spending beginning next year, a key piece of the health care overhaul.

The National Association of Insurance Commissioners voted down final attempts to change the regulation and voted unanimously to move it to the Department of Health and Human Services, which will have to review the policies before they have the force of law.

The health care overhaul required the group to define the very technical details governing the rules, called medical loss ratios. The provision was designed to pressure insurance companies to lower premiums and Democrats have heralded it as one of the most important consumer protections in the law.

Under the law, insurance companies will have to spend 80 to 85 cents of every dollar they collect in premiums on medical care or items that improve quality.

Some cost items, such as doctor’s bills, were clearly identified from the outset as medical spending. Insurers’ advertising and overhead were quickly put in the administrative category. But many other items, such as nurses’ hotlines, some federal taxes, insurance agents’ commissions and programs to improve care coordination, fell into a grey area and were subject to hours of debate.

Under the final regulation, insurers can categorize a number of health-spending activities as “quality improvements.” Spending to reduce hospital re-admissions, improve patient safety, reduce medical errors and certain health information technology investments all made the final cut.

But regulators counted other costs, such as programs to prevent fraud, as administrative costs despite some protest from the insurance industry.

HHS Secretary Kathleen Sebelius, charged with certifying the regulation, praised the insurance commissioners.

“These recommendations are reasonable, achievable for insurers and will help to ensure insurance premiums are, for the most part, supporting health benefits for consumers,” Sebelius said in a statement. “Not only do they ensure consumers receive better value for their health care dollar, they recognize special circumstances in different markets to preserve market stability and employee coverage as we transition to the new marketplace in 2014.”

It’s unclear whether she will tweak the language or has to accept or deny it outright.
“HHS has been very involved,” NAIC president and West Virginia Insurance Commissioner Jane Cline said after the vote. “They have heard all the debate and discussion…as we move forward, they’re clearly aware of what’s in there.”

Liberal consumer groups lauded the movement forward on the regulation.

“We are very proud of the NAIC this morning,” said Tim Jost, an NAIC consumer advocate and law professor at William & Lee University. “Congress asked them to do a job and they did it with openness, integrity, and dignity. Although we did not get everything we wanted in the MLR rule as consumers, we think the rule is fair, workable, and faithful to the law.”

Health insurers warned that the regulation would have the opposite effect.

“The current MLR proposal will reduce competition, disrupt coverage, and threaten patients’ access to health plans’ quality improvement services,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans.

“I think the sky is falling argument is just not accurate,” said Kansas Insurance Commissioner Sandy Praeger, who led the health discussions. “The changes will occur over time and we will adjust and make recommendations to modify it if we see a need. There will be some companies that I think will decide, they have a very small book of business in a state and they’ll decide maybe it’s not worthwhile to stay in the state.”

The regulation’s passage ends nearly seven months of debate, but lobbying intensified in the final days at the group’s convention in Orlando, Fla.

“I have been lobbied more on this subject matter than I have on any other matter in my career,” Cline told POLITICO. “It’s been the provider community, it’s been consumer advocates — not just consumer advocates on a national basis, but consumer advocates in my home state. It’s been the insurance industry.”

Commissioners proposed three amendments to significantly change the regulation, many of which were supported by industry, but all were struck down.

The most contentious issue has been how to deal with insurance agent and broker commissions. The adopted rule categorizes commissions as administrative costs.

Agents and brokers argue that doing so would only encourage insurers to cut their commissions so that it’s easier for them to meet their spending requirements.

Commissioners have raised concerns that if agents go out of business, their state insurance departments will be flooded with consumer inquires such as how to buy coverage or how to deal with complex claims. Agents also have significant political muscle in their states. While some commissioners are elected, many are appointed by governors. And some of them are up for reelection next month.

While agent and broker groups aggressively pursued an amendment removing their fees from the calculation altogether, numerous legal experts have said it would be illegal to do so.

The amendment was ultimately withdrawn when commissioners voted instead to create a group to work with HHS on the issue, a move that frustrated brokers who believed they had enough support to move the amendment forward.

“There’s no reason for the NAIC to adopt the amendment this morning. It had the support of the majority of commissioners,” said Wes Bissett, senior counsel at the Independent Insurance Agents and Brokers Association,.

Some commissioners also expressed concerns that HHS would not be responsive to their concerns.

“HHS cannot be trusted on the issue of MLR and the agents,” Mississippi Insurance Commissioner Mike Chaney said during the Thursday vote. “The problem I see is if they go into regulation mode, we lose all ability to have input on the issue.”

A proposal to give insurers credits, based on their size, to help them reach the spending requirements failed 19-34, with one abstention from Texas.

Another amendment to allow insurers to calculate medical spending at the national level instead of the state level – which some argue would make it easier for large companies to meet the requirement – was introduced but withdrawn.

The NAIC established a group in the spring to work on the regulation. Since then, it’s held more than 27 open conference calls discussing the requirements and details. Many commissioners said they were reluctant to overturn the group’s work in the final days.

Praeger also suggested during the debate Thursday that commissioners are operating in some unchartered territory and are expecting to make adjustments to the requirements next year.

“I know we’re struggling with a lot of unknowns,” she said.

Several states have medical spending requirements in place now, but have different details or quotes and don’t require insurers to issue rebates if they don’t meet them.

Kevin S. Wrege, Esq.

President

PULSE Issues & Advocacy LLC

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Office: 202-625-1787

Mobile: 202-253-4929

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