SENATE COMMITTEE ACTS ON TWO INSURANCE BILLS
On May 7 the Senate Banking & Insurance Committee reported two bills of interest to the insurance industry. First was House Bill 818 (Oberlander-R-Clarion), a measure that would prohibit monies from the federally-facilitated exchanges from being used to pay for abortion services. The vote was nine to five for movement of the bill. There were two crossovers. Senator Pat Vance (R-Cumberland) voted with Democrats against HB 818 while Democrat James Brewster (Allegheny) voted for. The other bill doing the same thing is Senate Bill 3 (White-R-Indiana). It was voted out of the Senate Banking & Insurance Committee April 10 but will likely not see further legislative action versus HB 818.
The second bill that moved through the Senate Banking & Insurance Committee was Senate Bill 914 (White-R-Indiana) reflecting the Corbett Administration’s desire to replace General Fund resources for the PA Insurance Department with use of a dedicated fund akin to how the Department of Banking & Securities receives its funding. The bill uses moneys from fees and fines collected by the Insurance Department subject to an annual appropriation by the General Assembly. Fifty percent of fees such as licensing fees and all money collected through fines and settlements shall be deposited into this new fund. Having a dedicated fund has long been a goal of the PA Association of Health Underwriters (PAHU) which feels that the Insurance Department has been under-resourced given its limited staff and mounting work loads aggravated by the Patient Protection Affordable Care Act (PPACA). As of May 10, there was no House counterpart to SB 914.
TRANSPORTATION BILL GETS COMMITTEE NOD
Senate Bill 1 (Rafferty-R-Montgomery) sailed through the Senate Transportation Committee May 7 by a vote of 13 to one with Senator Richard Kasunic (D-Fayette) voting in the negative. Seen as an answer to Pennsylvania’s crumbling infrastructure, SB 1 raises revenue several ways with the one attracting most public attention is a lifting of the cap on state gasoline taxes. There are other fee changes, one of which may have a bearing on the costs of auto insurance. This is a proposed increase in the MVR fee from $5.00 to $14.00. In addition to fee increases for various functions such as drivers’ licenses, beginners’ permits, registrations, etc. SB 1 also extends the vehicle registration period from one to two years and drivers’ licenses from four to six years. According to Senator Rafferty, SB1 will account for 50,000 new jobs, $1.2 billion in new FY 2013-14 revenues and $2.1 billion in new revenues for FY 2014-15. The bill now goes to the Senate Appropriations Committee. Link: http://www.senatorrafferty.com/PDF/2013/Chart-042313.pdf
NFIP ISSUES MANUAL UPDATES
On May 3, the National Flood Insurance Program issued Bulletin W-13026 reflecting Program Changes effective October 1, 2013. Many of these are designed to fully implement parts of the 2012 Flood Insurance Reform Law. Included are premium rate changes, declaration page requirements, changes in the Flood Insurance Application, General Change Endorsement Preferred Risk Policy Application and Cancellation forms. There is also a 14-page Q&A document about the October 1 changes. Link: http://www.nfipiservice.com/Stakeholder/FEMA1/W-13026.html
FEDERAL PPACA UPDATES
EMPLOYER NOTICES. On May 8, the US Department of Labor issued employer notices regarding the Health Insurance Exchanges (Marketplaces). There are two forms, one for employers offering coverage and those which do not. The notice text must be used and there are penalties for not distributing them by October 1, 2013, the date open enrollment in the exchanges is set to begin. Notices were also released regarding COBRA. DOL links follow:
HHS ADDS NEW QUASI-NAVIGATOR LAYER
On May 9, HHS announced that it was providing $150 million in grants to community health centers, which, among other things, will “provide unbiased information to consumers about health insurance, the new Health Insurance Marketplace (exchanges), qualified health plans, and Medicaid and CHIP”. According to HHS, this “complements and aligns with other federal efforts, such as the CMS-funded Navigator program”.
TREASURY ISSUES PLAN VALUE PROPOSED RULE
On May 3, the IRS issued a proposed regulation regarding the calculation of actuarial value also known as minimum value. PPACA requires employer groups of over 50 full-time employees to have a 60% actuarial value, meaning that 60% of an enrollee’s medical expenses must be covered (Bronze plan). Not complying results in a $3,000 fine for each employee who qualifies for tax subsidies in the Exchange. In order to calculate whether or not a plan is compliant, an employer should work with their broker. In addition, an employer may:
- Use the Minimum Value Calculator offered by HHS and IRS
- Obtain an actuarial value certification of minimum vale if the plan is non-standard
- NOTE: According to analysis by the law firm of Ballard Spahr, if an employer’s plan is offered together with a health savings account, the employer may include as part of the plan’s minimum value percentage the value of the employer’s contribution to the H S A. Similarly, if the employee contributes to a health reimbursement account integrated with a health plan, the employer can generally include such contributions as part of the plan’s minimum value percentage.
Following is a link to the actual proposed rule. This is the third document from the Federal Government on the actuarial value with the first being November 2012 and the second in mid-February of this year.
PA SAYS NO TO CMS’ RISK POOL OPTIONS
As most know, the PPACA risk pool program for those who were medically uninsurable in PA stopped enrollment in March because the program had reached its financial capacity. CMS wishes to modify the contract with PA and set a final amount for claims paid between June through December 31, 2013. The state had until Friday May 10 to decide. The alternative means transferring PA risk pool enrollees into the federal risk pool program until it expires December 31. The Insurance Department replied to ask that PA continue administering the program because a transition would mean disruption caused by the change of contract terms, particularly enrollees’ continuity of care.]]>
KATHY McCORMAC RESIGNS
After a long stint as Majority Executive Director of the House Insurance Committee, Kathy McCormac is stepping down May 28. During her tenure, the committee wrestled with innumerable issues such as rate review, surplus lines, health insurance, public adjuster legislation and many more. She plans to spend time with her son who is entering law school in the fall. PERSONAL NOTE…Kathy is a model of integrity and service to her Chairman, the Insurance Committee and to interests like insurance brokers where she always has kept an open door and a fair hearing. If you would like to thank her for her service, Kathy McCormac’s new email is firstname.lastname@example.org. Best wishes Kathy, Vince
ABORTION PROHIBITION BILLS CONTINUE MARCH TO PASSAGE
On April 23, House Bill 818 (Oberlander-R-Clarion) passed the House and was referred to the Senate Banking & Insurance Committee which will take up the bill May 7. This legislation places the health insurance exchanges including federally-facilitated exchanges under state law regarding a prohibition on plan funding for abortion services. The House vote was 144-53 with two Republicans voting no and 36 Democrats voting for. Minority Insurance Committee Chairman Tony DeLuca (D-Allegheny) voted fro HB 818.
The other bill doing the same thing is Senate Bill 3 (White-R-Indiana). It was voted out of the Senate Banking & Insurance Committee April 10.
SENATE COMMITTEE TAKES UP INSURANCE FUNDING BILL
On May 7 the Senate Banking & Insurance Committee takes up Senate Bill 914 (White-R-Indiana) reflecting the Corbett Administration’s desire to replace General Fund resources for the PA Insurance Department with use of a dedicated fund akin to how the Department of Banking & Securities receives its funding. The bill uses moneys from fees and fines collected by the Insurance Department subject to an annual appropriation by the General Assembly. Monies from this new fund may not be used to pay for expenses connected with other departmental dedicated funds including CHIP, Underground Storage Indemnification Fund (USTIF), Workers’ Compensation Security Fund, Medical Care Reduction of Errors Fund (MCARE), Catastrophic Loss Benefits Continuation Fund and money used for rehabilitation and liquidation of insurance companies.
50% of fees such as licensing fees and all moneys collected through fines and settlements shall be deposited into this new fund. Having a dedicated fund has long been a goal of the PA Association of Health Underwriters (PAHU) which feels that the Insurance Department has been under-resourced given its limited staff and mounting work loads aggravated by the Patient Protection Affordable Care Act (PPACA).
A link to the language in the bill follows:
DEPARTMENT OKs HIGHMARK – WEST PENN
On April 29, the Insurance Department issued a statement that it had approved the proposed affiliation of Highmark to the West Penn Allegheny Health System. According to the release, the Department record includes more than 64,000 pages of reports and analytical data and more than 10,000 pages of public comments and six hours of public testimony. A link to a resource page follows:
BUSY WEEK FOR HHS and PPACA
This past week was busy even by HHS standards. Three dealt with Medicare payment rates and four dealt with implementing or explaining the Patient Protection Affordable Care Act
LEGISLATIVE NOTES…Senate Bill 5 sponsored by Senator Edwin Erickson (R-Chester) to fund community-based health centers for the needy will be considered by the House Appropriations Committee this week. …A bill establishing a regulatory structure for plumbers includes a provision requiring $500,000 of liability insurance. It was approved by the Senate Consumer Protection & Professional Licensure Committee. Senate Bill 441 is also sponsored by Senator Erickson.]]>
ABORTION PROHIBITION BILLS MOVE
Legislation placing exchanges under state law regarding a prohibition on plan funding for abortion services saw action both in the PA Senate and the House. On the Senate side, Senate Bill 3 (White-R-Indiana) was reported out by the Senate Banking & Insurance Committee April 10 by 8-5. Democrat James Brewster (Allegheny) voted with Republicans in moving the bill and Cumberland County Republican Pat Vance voted no.
The second bill prohibiting exchange payment for abortion services is House Bill 818 (Oberlander-R-Clarion). It received attention from the House Health Committee on April 15 which moved the bill 15-9 with Republicans joined by Democrat Gerald Mullery (Luzerne) voting for. HB 818 was re-referred to the House Appropriations Committee April 17.
AGING COMMITTEE TAKES UP AGING FUNDING
On April 23, the House Aging & Older Adult Services Committee will hold an informational meeting to discuss the funding formula used to support Area Agencies on Aging. According to committee staff, the issue is a provision of law that says that counties may not receive below an established amount even if the demographic need (numbers of seniors) has shifted to other counties. House Bill 149 (Petri-R-Bucks) will also be discussed as it would end that stipulation. NOTE: Technical language used to describe the issue is ‘hold harmless’ but its meaning is completely different than the legal liability use of the term.
HHS INVITES PRODUCERS FOR PPACA TELECONFERENCE
April 30 and May 1, HHS and the Centers for Medicare Medicaid Services are convening teleconference calls to discuss Patient Protection Affordable Care Act (PPACA ) implementation. Details: Debbie Feierman, HHS Regional Office, 215/861-4297 Debbie.email@example.com .
FEDS ISSUE NAVIGATOR PROPOSED RULE
On April 3, HHS issued a proposed Rule regarding Navigators, an integral part of the new exchanges that are supposed to be operational January 1, 2014. Of interest to health insurance brokers is a conflict of interest section stating that no Navigator may receive income directly or indirectly from health insurance carriers. This includes any health carrier even if the insurer is not at all interested in offering a Qualified Health Plan within the Exchange. A Navigator would also have to disclose if there was previous income from health insurers (five years back) and if there is spousal income from health insurers. P/C insurance producers would not be prevented from becoming Navigators. This is currently open for public comment until May 6, 2013.
FEDS DELAY FULL SHOP UNTIL 2015
HHS announced that because of operational difficulties, the federally-facilitated exchanges will not be able to implement a key component of PPACA’s small business SHOP exchange. While HHS maintains that open enrollment will still be on schedule October 1, employees being able to choose between Qualified Health Plans offered in the SHOP exchange will not take place until January 1, 2015. For now, employers will choose the plan for employees.
ADMINISTRATION MAKES KEY APPOINTMENTS & NOMINATIONS
On April 15, Governor Tom Corbett named E. Christopher Abruzzo Acting Secretary of the Department of Environmental Protection (DEP), replacing Michael Krancer who resigned for a position in the private sector. Previously, Abruzzo served as the Governor’s Deputy Chief of Staff and oversaw DEP and the Department of Conservation & Natural Resources (DCNR).
The Corbett Administration also has appointed Michael Sprow to be Acting Inspector General and has nominated Michael Wolf to be Secretary of Health. Wolf has been Acting Secretary since October while Sprow served as Chief Council to the Inspector since November. Other recent appointment activity includes Bev Makereth as Acting Secretary of the Department of Public Welfare (DPW). A former state legislator from York County, Makereth served as Deputy DPW Secretary for the Office of Children Youth and Families since 2011. She replaced Gary Alexander who returned to his home state of Rhode Island.
Within ninety days from May 1st, Governor Corbett will also be nominating a Supreme Court Justice to replace Justice Joan Orie Melvin, who resigned because of legal actions based on accusations of misusing taxpayers’ dollars for political and campaign purposes. If confirmed by a 2/3 vote by the PA Senate, the new Justice will hold the seat until January 5, 2016. A successor will be elected in November 2015. Currently, the Supreme Court has a complement of six Justices.
FINANCIAL EDUCATION MONTH IS APRIL
Governor Corbett issued a proclamation stating that April is Financial Education Month and credited the PA Department of Banking & Securities, National Credit Union Youth Week April 21-27, “Teach Children to Save Day April 23” sponsored by banks, and other efforts promoting financial literacy.
CORRECTION…LEG REG Review incorrectly listed the date of the Central PA I Day as May 2. The correct date is May 1. Details; www.centralpaiday.com]]>
SENATE COMMITTEE READIES VOTE ON EXCHANGE BILL
On April 10, the Senate Banking and Insurance Committee convenes a voting meeting to consider Senate Bill 3 (White-R-Indiana) to prohibit exchange money to be used for abortion services. The Federal Government has taken the position previously that abortions are PPACA-paid prohibited anyway so it is unclear what reaction HHS would have if the measure becomes law. HHS might say, for example, that the abortion prohibition might be acceptable if PA had opted for a state-based exchange but that with federally-facilitated exchanges, Federal rules apply…speculation only. A link to the legislative language follows:
HHS PRODUCES SLEW OF PPACA REGS
The Federal Government has released a number of pronouncements and rules regarding the Patient Protection Affordable Care Act (PPACA).
The Pennsylvania Association of Health Underwriters’ April 10 Day on the Hill will focus on the proper role of Navigators in not letting them sell, solicit, or negotiate contracts of insurance per PA’s Act 147.
DEPARTMENT ISSUES HEALTH INSURANCE WEBSITE
On April 3, the Insurance Department opened a new website to assist individuals and employers better understand health insurance and to a limited extend, compliance issues stemming from PPACA. Its focus is to provide basics about health insurance, help consumers understand options available to them, and provide information on claims, appeals, etc. The address is www.PaHealthOptions.com.
FEDERAL BUDGET MAY CONTAIN PPACA AMENDMENTS
Everyone knows that the House bill advanced by US Rep. Ryan to repeal the Patient Protection Affordable Care Act is a non-starter in the Democrat-controlled Senate just as a Senate Democratic budget bill has nil chance to pass in the GOP-controlled House. Notwithstanding, the Senate legislation for the new fiscal year starting October 1, contains several PPACA amendments including:
- Elimination of the 3.2% PPACA excise tax on medical device manufacturers. Both PA Senators Republican Toomey and Democrat Casey support the elimination.
- Removal of the 2013 $2,500 limit on Flexible Spending Account contributions
- reinstatement of treating over the counter medications as eligible Health Savings Account medical expenditures
While encouraging, proponents of these amendments should hesitate before breaking out any champagne since it is far from certain that it or any of the Budget Plans will be approved by Congress before the start of the new Federal Fiscal Year October 1.
BY POPULAR DEMAND… I DAY DATES AND CONTACTS
Some have requested that Leg Reg Review re-run the list of I-Days in Pennsylvania since that season is fast approaching. I Day events are scheduled for Philadelphia, Pittsburgh, Camp Hill, and Reading this spring. The Lehigh Valley I Day is held in the fall.
- April 11 Philly I-Day 215/627-5306 www.phillyiday.com
- April 17 Reading I-Day 610/374-4040 x 2222 firstname.lastname@example.org
- April 25 Pittsburgh I-Day www.insclubpgh.com
- May 1 Central PA I Day www.centralpaiday.com]]>
THE WEEK THAT WAS
Media focus was on House Majority Leader Michael Turzai’s successful effort to pass liquor store privatization. House Bill 790 passed the House 105-90. All Democrats voted no along with three Republicans from BucksCounty -Clymer, Farry , and DiGirolamo as well as BerksCounty’s Gillen. Overlooked were a number of important developments of interest to the Insurance and Business communities:
- Senate Bill 5 (Erickson-R-Chester) passed the Senate 50-0 and was referred to the House Health Committee. This bill establishes strong state support for community health clinics which offer free care to the poor and serve as a way to divert some uncompensated care from the hospitals.
- House Bill 252 (Swanger-R-Lebanon) passed the House 199-0. A priority of the PA Association of Health Underwriters (PAHU), House Bill 252 would replace the state’s Intra-Governmental Council on Long-Term Care with a PA Long-Term Care Council whose members would be appointed by the Governor in consultation with the Secretary of Aging. Of interest to brokers is that the bill’s current language calls for the inclusion of a licensed insurance producer who has sold long-term care insurance for a decade or more.
- Reported out of the House Human Resources Committee was House Bill 993 (Murt-R-Montgomery) to change the name of the Department of Public Welfare to the Department of Human Services. The meeting was not without disagreement over the cost of the transition which ranged from $500,000 (a 2010 study) to $8 million, a figure used by the Corbett Administration to oppose the bill.
- The House Insurance Committee held a hearing on PPACA implementation presented by Independent Blue Cross. Among many other things, IBC projected premium costs for those aged 18-24 to increase by up to 45% while those between 45 and 49 would see a modest decrease. These do not reflect the new PPACA taxes. The presenter also said that of the $1.05 trillion in costs associated with PPACA, $700 would be made up from Medicare and the remainder from a host of taxes including the new tax on health insurer premiums.
ANOTHER FEDERAL RULE ON 90 DAYS
The Federal Government has issued a new proposed rule updating the requirement in the Patient Protection Affordable Care Act (PPACA) that a health plan be offered to full-time employees within ninety days after being hired. The new rule clarifies that 90 days means 90 calendar days, not work days. In addition, employers may not push the date to Monday if the 90th day falls on a weekend or to the start of a new month if the 90th day occurs late month. There are however two other ways to apply the rule:
- A firm may have a one-time set number of hours worked not to exceed 1,200 before offering an employee health plan coverage
- A firm may extend the wait time through 12 months if the new employee works “variable” hours.
A link to the text of the rule appears below.
HHS KEEPS FULL-COURT PRESS ON PPACA’S THIRD
The US Dept. of Health & Human Services is continuing its media offensive on the benefits coming to Americans from PPACA. On March 22, for example, HHS touted Rx savings to seniors because of the plugging of the ‘Donut Hole’. In addition, they featured a video testimony about the ‘free’ preventive care services from Helen R., a senior from West Philadelphia, the link to which appears below.
NEW EMPLOYER CITIZENSHIP FORM REQUIRED
The US Citizenship & Immigration Services requires a new form for employers to use to see if prospective workers may legally work. Form I-9 will take effect May 7 and applies only to new hires. It is not required for the employer to submit these forms to the government. Rather, they should be filed and shown in case there is an audit or citizenship question. PPACA NOTE: Employers should complete employee verification before seeking to enroll their employees in the SHOP Exchange should it be operational January 1. Homeland Security might do a check on the employee roster and the employer could be sanctioned if an employee is found without legal status. A link to the form follows. http://www.uscis.gov/files/form/i-9.pdf
PA FAILS PRICE TRANSPARENCY TEST
In terms of medical price transparency, Pennsylvania rates an ‘F’ according to a March 18, 2013 report issued by the Catalyst for Payment Reform, a consortium of large employers such as Wal-Mart, GE, and Boeing, and the Health Care Incentives Improvement Institute. The ‘Report Card’ looked at several variables including accessibility of pricing information and publishing or posting prices for consumer comparison purposes. PA was not alone in that 27 states in all flunked. The only two states receiving an ‘A’ were Massachusetts and New Hampshire. PA did have price transparency legislation introduced two legislative sessions ago in the House but it was not reintroduced. http://www.hci3.org/sites/default/files/files/Report_PriceTransLaws_09.pdf
AUTO PREMIUM STUDY RANKS PA 16th
Insure.com commissioned a study by Quadrant Information Service to compare auto insurance rates for more than 750 car models from six large carriers – State Farm, Farmers, GEICO, Nationwide, Progressive and Allstate. Rates are based on a 40-year old male with a clean driving record who purchased 100/300 for injuries and 50 for property damage with a $500 deductible and uninsured motorist coverage. The most expensive was Louisiana at $2,699. PA’s $1,604 ranked it sixteenth overall.]]>
NCOIL SUPPORTS STATE NAVIGATOR REGULATION
The National Conference of Insurance Legislators (NCOIL) concluded its Washington, DC meeting with passage of a resolution urging states to enact a licensing and regulatory framework for Navigators created by the Patient Protection Affordable Care Act (PPACA). Passage of this type of legislation is the top priority of the PA Association of Health Underwriters (PAHU). PA Senator Jake Corman (R-Centre) chairs the NCOIL Health, Long-Term Care and Health Retirement Committee which was instrumental in promoting passage.
NOTE: If you want to contact Senator Corman about his advocacy on this issue, he may be reached at email@example.com or 717/787-1377. The NCOIL release follows:
AGING & OLDER ADULT SERVICES MOVES LTC LEGISLATION
On March 12, the House Aging & Older Adult Services amended and moved House Bill 252 (Swanger-R-Lebanon) which would replace the state’s Intra-Governmental Council on Long-Term Care with a PA Long-Term Care Council whose members would be appointed by the Governor in consultation with the Secretary of Aging. Of interest to brokers is that the bill’s current language calls for the inclusion of a licensed insurance producer who has sold long-term care insurance for a decade or more. HB 252 is on the House calendar.
OTHER COMMITTEE NEWS
SURPLUS LINES REGULATION PROPOSED
On March 9, the PA Insurance Department issued a proposed regulation for Surplus Lines including changes dictated by passage of 2011 legislation in PA to make the Commonwealth compliant with the Federal Dodd-Frank law. It amends chapter 124 to, among other things, delete bonding and residency requirements for surplus lines licensees and explains the declination requirements. Details:
OTHER LEGISLATIVE NEWS
FEDS ISSUE NEW EMPLOYMENT VERIFICATION FORM
On March 8, 2013, the US Citizenship and Immigration Service released a new version of Form I-9; Employment Eligibility Verification (identified as Rev. 03/08/13). This form is required for all new hires after May 7, 2013. Thanks to law firm Blank Rome for the heads-up Details: Helena Astolfi (Astolfi@blankrome.com) or John Connelly (JConnelly@blankrome.com )
I DAY DATES AND CONTACTS
The Insurance (“I”) Day season is upon us with events scheduled for Philadelphia, Pittsburgh, Camp Hill, and Reading this spring. The Lehigh Valley I Day is held in the fall.
- April 11 Philly I-Day 215/627-5306 www.phillyiday.com
- April 17 Reading I-Day 610/374-4040 x 2222 firstname.lastname@example.org
- April 25 Pittsburgh I-Day www.insclubpgh.com
- May 2 Central PA I Day www.centralpaiday.com
PHC4 RELEASES REPORT HISTORY
The PA Health Care Cost Containment Council (PHC4) released a listing of 75 reports it had compiled from various requesters from PA and elsewhere. Many included inpatient discharges and ambulatory outpatient information. Requestors ranged from hospitals such as Temple University Pulmonary & Critical Care to government agencies such as the Attorney General and the Auditor General. Some of the out of state requests came from universities such as Georgetown and governmental entities (Maryland; US Department of Commerce Bureau of Economic Analysis).]]>
CONSEDINE HEARING FOCUSED ON MEDICAID, CHIP, PPACA
On Feb. 21, Insurance Commissioner Mike Consedine appeared before the Senate Appropriations Committee to explain the Administration’s proposed Insurance Department budget for FY 2013-14. Much of the questioning and discussion centered on the proposed increase in CHIP funding and the Governor’s decision not to expand Medicaid eligibility per the Patient Protection Affordable Care Act (PPACA). Consedine reminded legislators that the Medicaid expansion is a Department of Public Welfare (DPW) issue and that the Insurance Department had been more involved in other PPACA areas such as health information exchanges. Senator Mike Stack (D-Phila.) focused on a 3,000 drop in CHIP enrollment from November 2012 to January 2013 and suggested that dropping a 30-day renewal notice was the cause. (Consedine disagreed.)
PPACA questions centered on the federally-facilitated exchanges and how they will be implemented in PA as well as a question about PPACA ‘sticker shock’. Consedine answered that young people would see the largest rate increase because of the mandatory 3:1 age band for insurance premiums in 2014.
There were two other issues raised, MCARE and the insurance market for volunteer fire companies. Consedine said that PA’s use of a state-owned liability insurance program for health care providers was unique and PA is the only state to have one. He stopped short of suggesting that PA privatize that function, however. Long-time volunteer fire company champion Senator Tim Solobay (D-Washington) asked if the Commissioner if the passage of Act 46 (cancer as an occupational disease for firefighters) was resulting in carriers not offering that coverage. Consedine said that the Department was monitoring the market with L&I and to date; the impact has been most felt by self-insured municipalities.
The Insurance Department will appear before the House Appropriations Committee February 28.
PA CHIDES HHS ON RISK POOL DECISION
On February 20, PA Commissioner Mike Consedine wrote to HHS expressing dismay over the Federal Government’s termination of enrollments into its high risk pool program. The letter said that HHS had assured Pennsylvania as late as February 13 that new enrollments would be taken until November. The Federal announcement came two days later. The decision “creates a ten month gap in the availability of health insurance coverage for individuals who would have been served by PA Fair Care — where are these people supposed to go to access coverage?” The risk pool was designed to serve as a stop-gap way for the medically uninsurable to gain coverage between 2010 and the 1/1/14 effective date of modified community rating with no medically-based underwriting. Pennsylvania opted under former Governor Rendell to establish its own risk pool program called PA Fair Care instead of participating in the Pre-Existing Condition Insurance Plan (PCIP) run by the Federal Government.
Because of this, the Commonwealth’s PA Fair Care program will stop taking enrollments March 2, two weeks later than for PCIP. Details on enrollment:
FEDS ISSUE 2014 MARKET RULES
On February 22, the Department of Health & Human Services (HHS) issued a number of rules designed to implement PPACA’s major market changes in 2014. These include no medical underwriting, a single risk pool, guaranteed renewability, premiums only based on age, tobacco use, family size and geography (not on size of group or past claims). For the full text of the proposed rule, please visit: http://www.ofr.gov/inspection.aspx
Also on February 22, the US Department of Labor’s OSHA issued a new rule prohibiting any employer retaliation to an employee who goes into the exchange and receives a tax subsidy. Per PPACA, an employer offering plans that do not meet the Bronze level (actuarial value) or requires more than a 9.5% employee contribution towards the premium, is subject to a $3,000 per employee fine IF that employees enrolls in an exchange and receives a tax subsidy. Additional information is available at www.dol.gov/opa/media/press/osha/osha20130327.htm or www.osha.gov.
FEDS ISSUE MORE RULES re ESSENTIAL BENEFITS, ACTUARIAL VALUE
On February 20, HHS issued more rules, expanding on rules issued last November 26. The methodology for calculating the actuarial value of plans was presented. Actuarial value relates to what percent of medical expenses a health plan covers starting from 60%, the Bronze plan, to 90% (the Platinum plan).
High Deductible Health Plans (HDHPs) were given somewhat of a break in that the $2,000/$4,000 cap on deductibles which would have voided some HDHPs could be expanded if the plan would otherwise not meet the actuarial value standard. In addition, an employer’s contribution to a health savings account will be taken into account for determining a plan’s minimum and actuarial value. Of course there is more. Link to the Rule:
AHIP REACTS TO MEDICARE ADVANTAGECUTS IN PPACA
America’s Health Insurance Plans (AHIP) issued an Action Alert on February 22 following the Centers for Medicare Medicaid Services (CMS) announcement of cuts to the Medicare Advantage program which insures one out of four Medicare recipients. It says that “14 million seniors and people with disabilities will lose benefits, pay higher costs and have fewer health care choices” with changes that will go into effect April 1, 2013. Details: www.medicarechoices.org AHIP and others have averred that the Obama Administration wants to cut over $700 billion from Medicare Advantage.
The CMS issued several pronouncements February 15 to:
- Align payments to Medicare Advantage (Part C) with fee for service (Parts A & B) and to improve payment accuracy.
- The estimated reduction to Medicare Advantage plans would be 2.2 percent
- Medicare Advantage plans would have to comply with the Medical Loss Ratio requirements of PPACA
- Additionally, CMS proposes lower out of pocket drug spending (co-pays), broadening the target population for medication therapy management (anti-hypertension medications), and prevent Medicare Advantage plans from increasing costs more than $30 per month (down from $36)
CMS ISSUES MEDICAL DEVICE RULE
On February 8, CMS issued a rule dictating the types of reports required of medical device manufacturers, drug manufacturers or medical supplies covered by Medicare, Medicaid or CHIP and to report on physicians’ ownership. These reports are projected to cost the industry $269 millio]]>
LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol. It contains news on the legislative and regulatory scene in Pennsylvania that may be of interest to the Insurance and Business Communities. It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU) or Manufacturers Association of South Central PA (MASCPA). Subscription information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/232-7005 or e-mail to email@example.com. Please email firstname.lastname@example.org supplying both your name and e-mail address if you wish to be removed from this list.
ART GLATFELTER PASSES AWAY
On February 14, an insurance industry icon passed away. Art Glatfelter, founder of the Glatfelter Insurance Group in York founded the agency and established it as a national force in meeting the insurance needs of volunteer fire companies. He was instrumental in setting up PA’s Underground Storage Tank Indemnification Fund (USTIF). USTIF is a fund using a gasoline per gallon assessment run by the PA Insurance Department to cover losses connected with leaks and spills from both above and underground storage tanks. He also was a decorated WWII veteran in the Pacific Theater. PERSONAL NOTE: Art Glatfelter was a personal inspiration to me and a mentor in wisdom and personal integrity.
Now that Governor Corbett has presented his Budget proposal to the General Assembly, it is time for the legislature to examine the Budget by function and by agency. Both the House and Senate Appropriations Committees convene hearings in later February and early March. Selected agency slots follow and a full listing may be obtained at www.legis.state.pa.us . PCN will have many of these hearings televised. www.pcntv.com
|Governor’s Office||2/19 9:30||3/7 10:00|
|Aging||2/27 1:00||2/26 3:30|
|Agriculture||3/5 3:00||3/5 9:30|
|Banking & Securities||3/6 3:00||2/26 1:30|
|Community & Economic Development||3/4 3:00||2/28 11:00|
|Conservation & Natural Resources||2/25 3:00||2/20 9:30|
|Education||3/4 9:30||2/27 9:30|
|Environmental Protection||2/27 2:30||2/20 9:30|
|Health||2/26 3:00||3/5 2:00|
|Insurance||2/21 2:00||2/28 1:30|
|Labor & Industry||3/6 1:00||2/26 11:00|
|Public Welfare||3/5 9:30||3/6 9:30|
|Transportation||3/6 9:30||2/25 1:30|
ENROLLMENT TO END FOR STATE RISK POOL
NAIFA’s Blog reports that HHS announced the closing of enrollments for the various risk pools created by the Patient Protection Affordable Care Act (PPACA) in order to make sure that there is enough money to meet these obligations in 2013. The Blog said that the national risk pool program came up short in terms of enrollment (100,000 versus an expected 375,000 individuals). Pennsylvania has between 8,000 and 9,000 enrolled, about twelve percent of the national total. State programs such as Pennsylvania’s state-based risk pool PA Fair Care program may continue receiving applications until March 2 according to NAIFA although there has not yet been an announcement to that effect by the PA Insurance Department. Details on enrollment:
PAHU PPACA UPDATES
PAHU HAS SET APRIL 10 as DAY ON THE HILL
April 10 is the date set by the PA Association of Health Underwriters (PAHU) as its Day on the Hill in Harrisburg. Key issues being stressed will be support for the dedicated fund concept to adequately fund PA Insurance Department regulatory oversight as well as legislation regulating what PPACA Navigators can and cannot do. Details: 717/232-0022
PPACA INFORMATION CHART RELEASED
In testimony given by before the US Senate Finance Committee Feb. 14, HHS’ Gary Cohen, Director of the Center for Consumer Information &Insurance Oversight, displayed a chart to help guide one through the IT verifications that must be obtained when someone enrolls in a federally-facilitated Exchange.
BUDGET CALLS FOR DEDICATED INSURANCE FUND
Insurance items are eclipsed by some of the larger issues, pension reform (to meet an unfunded $40-plus billion liability), transportation funding (lifting the cap on gasoline taxes), and privatization of the state liquor store system (one billion dollars with $200 million in this year’s budget to help fund education). Other general business issues include:
- Elimination of the Capital Stock & Franchise Tax
- Reduction of Corporate Net income Tax from 9.99% to 6.99% by 2015
- Increasing Net Operating Loss from $3 million to $5 million
Governor Corbett’s proposed State Budget for FY 2013-14 calls for a shift away from how the PA Insurance Department has been funded away from the General Fund. If the legislature concurs, established will be the Insurance Regulation & Oversight Fund using monies collected from fees and fines which now go into the General Fund. There are precedents in state budgeting now with the Department of Banking & Securities funded by regulatory fees, the Office of Attorney General partially funded by fines and the Department of Aging, which is largely funded by the state lottery.
$22.3 million of the anticipated $32.86 million would go into this dedicated fund for the Department’s general operating budget leaving cash balance of $10.5 million. Larger sources of this revenue are licensing of insurance producers $18.2 million and companies’ certificates and filing fees ($1 million) and market conduct ($2.3 million). This compares with $17.9 million in the Department’s operating budget now.
Securing a dedicated source of revenue has been a long-time goal of the PA Association of Health Underwriters.
Other funds controlled by the Department are MCARE ($219.9 million), Insurance Company Liquidation Fund ($35.3 million), Underground Storage and Indemnification Fund (USTIF) at $69 million plus $11.5 million for this Fund from DEP’s budget. In the proposed budget, funding for CHIP would increase by $3.8 million for a centralized eligibility determination process (part of implementation of the Patient Protection Affordable Care Act) and an increase of $13.5 million principally in the outreach area to expand coverage to 9,330 more children. The Insurance Department also operates the Medical Care Availability & Reduction of Error Fund (MCARE), a middle layer of state-run professional liability insurance program for doctors and hospitals — $232.6 million in assessments versus $210.4 million in anticipated claims paid.
Some program measures for the Department for 2013-14 are:
- Enforcement actions against insurance producers 120
- Companies on a watch list 20
- Insurance company reviews 100
- PA Fair Care program (risk pool) enrollment 8,643 (ends in 2014)
OTHER BUDGET ITEMS OF INSURANCE INTEREST
- Crop Insurance Premium Subsidy program remains at zero.
- The Tobacco Settlement Fund funds a number of state programs including Aging’s PACE (Rx assistance) $24.8 million; DCED business investment $3.3 million,; Dept. of Public Welfare $247.5 million including $25.4 for uncompensated hospital care and Medicaid long-term care $88.6 million; Health $56.2 million for health research and smoking cessation.
- Insurance Fraud Prevention Trust Fund assessments on carriers will generate $12.8 million for the work of the Insurance Fraud Prevention Authority (IFPA).
- Health Care Cost Containment Council (PHC4) continues funding at $2.683 million.
- Department of Public Welfare Medicaid includes $3.6 billion for taxpayer-paid long-term care. This amounts to $900 million from Pennsylvania with $2.3 billion coming from the Federal Government (and $473 million coming from nursing home assessments)
- The eHealth Partnership Authority (on-line data base for medical information) funding is $2.2 million.
- The State Workers’ Insurance Fund (SWIF) envisions $325 million in revenues from premiums and interest with $325.1 million being paid out for operations and claims. (SWIF will also pay $3.2 million in premium taxes.) There has been some talk of SWIF being privatized.
CORBETT SAYS NO TO MEDICAID EXPANSION
In his budget Address, Governor Corbett projected new costs to PA taxpayers at one billion dollars by the end of FY 2015-16 and $4.1 billion of new state money by FY 2020-21 if the Commonwealth were to go along with expansion of Medicaid eligibility to 133% of the Federal Poverty Level. Currently, the Department of Public welfare’s budget accounts for over 30% of the state’s $28.4 billion budget and services the 2.2 million lower income, disabled and elderly Pennsylvanians. This move was opposed by Democrats, unions, and advocacy groups. Hospitals had hoped that the Medicaid expansion would reduce their uncompensated care costs. Other DPW news includes a resignation of Secretary Gary Alexander who is returning to his home state of Rhode Island February 15. The Governor has named former state Representative Bev Makereth (R-York) as Acting Secretary of DPW. She served as Deputy DPW Secretary from November 2011 to the present.
THE LEGISLATIVE WEEK
In the week just past, the General Assembly took action on a number of legislative items:
IMPORTANT CONTINUING EDUCATION NOTE
The PA Insurance Department announced that effective February 18, 2013, the mandatory state filing fee for each student per course will increase from $4.00 to $5.00.]]>
FEBRUARY 5 IS THE DAY
Governor Tom Corbett will present his proposed State Budget for FY 2013-14 on February 5 at a joint session of the PA House and Senate. In it, he will outline his Administration’s priorities and specify levels of funding for the various agencies. A special issue of LEG REG Review will list specifics in a number of insurance and business areas.
Early reports indicate he will reveal his transportation infrastructure funding plan, propose $4 million for community-based health clinics and one million dollars for 24 loan repayment slots to keep doctors in PA. Already announced by Insurance Commissioner Mike Consedine on January 30 was an additional $8.5 million for CHIP. This includes monies for expanded outreach to reach an estimated 9,500 new enrollees.
SENATE BANKING COMMITTEE TO MEET
The Senate Banking & Insurance Committee plans to consider five bills February 5, three of which concern banking and two insurance. Insurance bills are:
- SB 194 (Folmer-R-Lebanon) would eliminate an insurer reporting requirement under MCARE. This was sought by the Department as something which is not useful and a drain on limited Department resources. Earlier this year, the House Insurance Committee moved similar legislation.
- SB 379 (Vance-R-Cumberland) reauthorizes CHIP similar to HB 108 (Micozzie-R-Delaware) which the House Insurance Committee moved last week. Also in the bill is language allowing for “benevolent gestures”. It prevents an apology given before legal action from being used against a health care provider in a medical malpractice lawsuit.
Banking bills are:
- SB 371 (Brubaker-R-Lancaster) part of the banking Modernization Package, it repeals the Savings Association Code of 1967 eliminating provisions for incorporation and organization
- SB 380 (Eichelberger-R-Blair) amends Title 13 of the PA Commercial Code to clarify that “remittance transfers” are subject to Article 4A of the Code
- SB 381 (Eichelberger) updates the PA Commercial Code provisions related to secured transactions
OMNIBUS HITECH HIPAA RULE ISSUED
On January 17, HHS issued a HIPAA privacy rule under the Health Information Technology for Economic and Clinical Health (HITECH) statute passed in 2009 as part of President Obama’s Stimulus package. It details responsibilities of Business Associates’ expanded privacy compliance liability under HITECH, expands consumer protections, and clarifies that genetic information under Genetic Information Nondiscriminatory Act of 2008 (GINA) is also under HIPAA’s enforcement purview. Details:
http://www.gpo.gov/fdsys/pkg/FR-2013-01-25/pdf/2013-01073.pdf for the complete text as published in the Federal Register or http://www.hhs.gov/news/press/2013pres/01/20130117b.html for the press release summarizing parts of the Rule.
- NAIC model regulation for Holding Companies Act
- Requirements for qualified and certified reinsurers for funds held as security for payment of obligations of unlicensed, unqualified reinsurers
- Surplus Lines rules in accordance with Surplus Lines law changes in 2011
- Minimum Nonforfeiture standards and minimum standards for valuation
HUGHES HEARING PUSHES FOR MEDICAID EXPANSION
Senator Vincent Hughes (D-Phila.) convened a January 24 hearing of Democratic members of the Senate Appropriations Committee to support expanding Medicaid eligibility in PA per the Patient Protection Affordable Care Act (PPACA). The witness list was comprised of supporters such as hospitals, Philadelphia City officials, PA Health Law Project, unions and the Harrisburg think tank PA Budget and Policy Center. Witnesses argued that Medicaid expansion would mean $4 billion from the Federal Government annually which would cause economic growth (285,000 jobs over ten years).
FEDs BUSY WITH NEW PPACA RULEMAKING
HHS released PPACA rules for minimum coverage and individual mandate exemptions (CMS-9958-P) on January 30 addressing:
- The question of individual religious objections to the contraceptive mandate
- Exemption from the individual mandate for those who would have had Medicaid under PPACA except that a state said no to the expansion of that entitlement program
- Exemption if there are months where the individual has experienced financial or domestic circumstances causing “an unexpected increase in essential expenses”
On February 1, the Federal Government sought to relax some of the contraceptive mandate to non-profit organizations by permitting them not to be forced to provide such coverage. Rather, employees would have receive first-dollar (free) birth control from insurers. This appears to be an attempt to head off a string of lawsuits brought against PPACA by religious organizations, hospitals, and universities (Notre Dame). The agencies — the Internal Revenue Service (IRS), the Employee Benefits Security Administration (EBSA), an arm of the U.S. Labor Department; and the U.S. Department of Health and Human Services (HHS) — have described their latest approach to the mandate in a new batch of proposed rules, “Coverage of Certain Preventive Services Under the Affordable Care Act” (CMS-9968-P) (RIN 00938-AR42). Private for-profit employers would not be exempted.
WHAT’S IN A WORD…Reported by NAHU’s B2B was an HHS pronouncement which seeks to retire the word ‘exchange”:
” . . . Anton Gunn, director of External Affairs at the Department of Health and Human Services (HHS), said Thursday that the “Obama administration has stopped using the term ‘exchanges’ to describe part of the healthcare law because the word doesn’t translate into Spanish.” He said, “We’re going to use the word ‘marketplace’ because it actually makes sense to people.’Exchange’ doesn’t translate to anything in Spanish, but ‘marketplace’ does.” He continued by explaining that “effective language” is important to ensure that “the Affordable Care Act [is] real to people in this country.”]]>