What's behind health insurance rate increases? an examination of what insurers reported to the federal government in 2013-2014

The Affordable Care Act requires health insurers to justify rate increases that are 10 percent or more for nongrandfathered plans in the individual and small-group markets. Analyzing these filings for renewals taking effect from mid-2013 through mid-2014, this brief finds that the average rate increase submitted for review was 13 percent. Insurers attributed the great bulk of these larger rate increases to routine factors such as trends in medical costs. Most insurers did not attribute any portion of these medical cost trends to factors related to the Affordable Care Act. The ACA-related factors mentioned most often were nonmedical: the new federal taxes on insurers, and the fee for the transitional reinsurance program. On average, insurers that quantified any ACA impact attributed about a third of their larger rate increases to these new ACA assessments.

What's behind health insurance rate increases? an examination of what insurers reported to the federal government in 2012-2013

The Affordable Care Act requires health insurers to justify rate increases of 10 percent or more for nongrandfathered plans in the individual and small-group markets. Analyzing these filings for rates taking effect from mid-2012 through mid-2013, insurers attributed the great bulk--three-quarters or more--of these larger rate increases to routine factors such as trends in medical costs. Insurers attributed only a very small portion of these medical cost trends to factors related to the Affordable Care Act. The ACA-related factor mentioned most often, but only in a third of the rate filings in this study, was the requirement to cover women's preventive and contraceptive services without patient cost-sharing. But, the insurers who point to this requirement or other ACA-related costs attributed only about 1 percentage point of their rate increases to the health reform law.

Paying for value: replacing Medicare's sustainable growth rate formula with incentives to improve care

This brief sets forth a set of policy options to improve the way health care providers are paid by Medicare. The authors suggest repealing Medicare's sustain­able growth rate (SGR) formula for physician fees and replacing it with a pay-for-value approach that would: 1) increase payments over time only for physicians and other provid­ers who participate in innovative care arrangements; 2) strengthen primary care and care teams; and 3) implement bundled payments for hospital-related care. These reforms would be adopted by Medicare, Medicaid, and private plans in the new insurance marketplaces, with the goal of accelerating innovation in care delivery throughout the health system. Together, these policies could more than offset the cost of repealing the SGR formula, saving $788 billion for the federal government over 10 years and $1.3 trillion nationwide. Savings also would accrue to state and local governments ($163 billion), private employ­ers ($91 billion), and households ($291 billion).

Key findings from HSC's 2010 site visits: health care markets weather economic downturn, brace for health reform

Lingering fallout--loss of jobs and employer coverage--from the great recession slowed demand for health care services but did little to slow aggressive competition by dominant hospital systems for well-insured patients, according to key findings from the Center for Studying Health System Change's (HSC) 2010 site visits to 12 nationally representative metropolitan communities. Hospitals with significant market clout continued to command high payment rate increases from private insurers, and tighter hospital-physician alignment heightened concerns about growing provider market power. High and rising premiums led to increasing employer adoption of consumer-driven health plans and continued increases in patient cost sharing, but the broader movement to educate and engage consumers in care decisions did not keep pace. State and local budget deficits led to some funding cuts for safety net providers, but an influx of federal stimulus funds increased support to community health centers and shored up Medicaid programs, allowing many people who lost private insurance because of job losses to remain covered. Hospitals, physicians and insurers generally viewed health reform coverage expansions favorably, but all worried about protecting revenues as reform requirements phase in.

State hospital rate-setting revisited

In an attempt to control rapid growth in hospital costs, beginning in the mid-1970s several states implemented rate-setting programs to regulate hospital payments. In seven states, rate-setting was in effect for a substantial period of time (14 years or more). While most of these programs were discontinued by the mid-1990s, two are still active. In five of the seven states, the rates of increase in hospital costs were lower than the corresponding national rates during the periods in which the regulation programs were in place. Four of the states--Maryland, Massachusetts, New York, and New Jersey--had some of the lowest rates of hospital cost increases among all the states. This indicates that hospital rate regulation may be a useful approach in managing a major component of health care spending.

[New forms of remuneration and care delivery: their impact on rehabilitation]

Current health policy reform efforts in Germany include introduction of a DRG (Diagnosis Related Group) based funding system in the hospital sector as well as integrated delivery of health care and disease management programs, developments that will directly affect the medical rehabilitation sector. Decreasing lengths of hospital stay induced by the DRG system will inter alia entail a shifting of cases and costs to subsequent sectors. Moreover, hospitals might not least seek compensation for shorter hospital stays by extending their scope to include rehabilitation and long-term care services. Introduction of the DRG system in acute-hospital care has resulted in major changes in respect of early rehabilitation. Existing specialized early rehabilitation facilities providing high-quality care face serious funding problems on account of the newly introduced early rehabilitation DRGs. For hospitals previously not involved in early rehabilitation on the other hand, incentives arise to set up new early rehabilitation structures although the need for these additional capacities obviously is questionable. Introduction of the DRG-based funding system has reinforced the discussion about applying a flat-rate system also in the rehabilitation sector. This form of remuneration however is inappropriate to medical rehabilitation concepts. On the other hand, a remuneration system incorporating cross-institutional per-diem fees and "treatment time" budgets might enable using essential advantages of flat-rate payment without having to expect repercussions for the quality of care. In the context of integrated care and disease management programs the issue at stake for rehabilitation primarily is to be able to contribute its specific competencies appropriately. Also, integrated health care is bound to result in stronger competition among the various health care sectors. If rehabilitation is set to face this competition, further research efforts will urgently have to be made along with ongoing development of clinical practice guidelines.

Medigap: prevalence, premiums, and opportunities for reform

This issue brief provides an overview of Medicare's coverage gaps and the primary sources of supplemental coverage for Medicare beneficiaries. It focuses particularly on the Medigap market: the effects of standardization, recent premium trends and rating practices, and options for reform. It considers Medigap within the context of Medicare prescription drug proposals and efforts to reform the entire Medicare program.

Reversal of fortune: Medicare+Choice collides with market forces

Private health plans' participation in Medicare was envisioned as a way to save taxpayers money and offer Medicare beneficiaries more choices and benefits. As enrollment grew, there were concerns about overpayments to some private health plans and wide geographic variation in plan payments. The Balanced Budget Act of 1997 (BBA) introduced significant payment changes and regulatory requirements for plans participating in the newly named Medicare+Choice (M+C) program. Since January 1999, scores of plans have reduced or ended their participation, disrupting coverage for more than two million seniors. While the BBA often is blamed for this turnabout, research by the Center for Studying Health System Change (HSC) indicates private market forces also played a key role in M+C's growing instability.

Do pharmaceutical prices respond to potential patient out-of-pocket expenses?

Despite the importance of patient insurance in the market for prescription pharmaceuticals, little is known about the impact of patient reimbursement on the pricing behavior of pharmaceutical firms. I examine the link between potential patient out-of-pocket expenses and pharmaceutical pricing using a unique policy experiment from Germany. Starting in 1989, a maximum reimbursement for a given medicine replaced a flat prescription fee. This change in reimbursement exposes the patient to the price of a prescribed product. Using a product-level panel data set covering several therapeutic categories before and after the policy change, I find that producers significantly decrease prices after the change in potential patient out-of-pocket expenses. Price declines are most pronounced for brand-name products. Moreover, branded products that face more generic competitors reduce prices more.

Explaining state Medicaid nursing home reimbursement

Medicaid nursing home reimbursement methods and per diem rates affect costs, quality, equity, and access. State rate-setting is a laboratory of policymaking, which can inform state and federal Medicaid reform initiatives. This paper explains state Medicaid nursing facility rates in 1979-1994. Findings suggest that prospective facility-specific methods constrained rates in some but not all periods, particularly when older cost-reports were employed in rate-setting. Analysis failed to show that prospective class rate-setting methods constrained rate increases. Findings suggest that the efficacy of reimbursement methodology to control rates depends upon wider health care policy trends and that future facility-level analyses should consider policy contexts as between states.

Implementing Medicaid managed care: the New York City story

Across the nation, public officials are encouraging or requiring Medicaid beneficiaries to enroll in managed care. In this article, we report on a study of the implementation of Medicaid managed care in New York City. Several findings are clear. First, government officials need to treat health plans as partners rather than adversaries; in New York, the relationship between the state and the plans is far too adversarial. Second, effective managed care requires good management information systems; New York officials are collecting an enormous amount of data but not much useful information. Third, effective implementation of Medicaid managed care is slow going; New York's effort to dramatically accelerate the enrollment process did not work.

How much data do you need to predict variability? Maybe less than you think

How much data do you need to predict variability in managing risk? By using run charting and control charting, your cycle time needed to predict utilization and cost may be much shorter than commonly believed necessary.

Small PMPM rate hike may spell doom for benefit-rich, no-cost Medicare risk products

Data File: Are generous--and free--Medicare benefits a thing of the past? Some experts think so, especially in light of low federal payment hikes. This month's column offers an interesting industry perspective on use of Medicare benefits, plan premiums, and trends in payment rates.

Medicaid: states serve up a real turkey

Policymakers promised a season of plenty by shifting Medicaid recipients to managed care--enough to expand coverage to the uninsured. But many states have sliced their rates severely. Big HMOs bolted from some markets and threaten to leave others. That leaves managed care rollout plans in trouble. And hardly anyone is talking about expanded coverage.

Tracking the demise of state hospital rate setting

From its once preeminent position in state health policy, prospective hospital rate setting has declined in use from more than thirty states in 1980 to two today. This essay tracks the trend toward deregulation in various states--especially Massachusetts, New Jersey, and New York-- and examines the continuation of rate setting in Maryland. Principally, the decline reflects the development of managed care and capitation as alternative means to control health spending growth. This trend represents both an evolution in prospective payment methodology and a renewed preference for private over public-sector price controls.

Medicare cost limits ... is there any relief?

Medicare cost limits stem from 20-year-old legislation that determines "reasonable" rates for reimbursement. Although those rates have periodically been adjusted, they often do not represent a reasonable limitation on a provider's reimbursement. How can agencies challenge limits and appeal unfavorable rulings? What are the most successful means of appeal?