Targeting Obesity Take Two
Posted on: February 1, 2010 |
Author: David
Filed Under: Insurers/Payors, Labor & Employment |
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Late last year Lincoln University began a program named “Fitness for Life.” The program required students who entered the University in 2006 or later with a body mass index above 30 to show they had lost weight or taken a fitness course by the time they graduate. The program attracted a lot of publicity and set off a national debate when a number of students faced the possibility of not being able to graduate. The program was later changed to still encourage obese students to take a fitness course, but to end the requirement that students enrolled in the class as a graduation requirement if they had not lost weight.
In a similar attempt to attack obesity, Whole Foods announced a new program offering employees incentives for being in shape. The program is voluntary, says CEO John Mackey, and is an attempt to lower the amount of money spent on employee health care. The program would increase the store discount based on meeting certain health criteria including blood pressure, cholesterol, and body mass index. An additional aspect of the program is that none of the participants can smoke. The rewards come in the form of employee discounts varying from 22% to 30%. While critics say the program is discriminatory, supporters contend it is not as employees who do not wish to participate in the program will keep their normal 20% employee discount.
The approach taken by Whole Foods is likely to attract much less negative publicity than the Lincoln University proposal. The main difference is the fact Whole Foods’ proposal does not mandate, but rather encourages through rewards, whereas Lincoln University took the approach of encouraging through mandates. By requiring obese students to do something non-obese students were not obligated to do, many felt the policy was discriminatory and affected obese students in a detrimental way. Dissimilarly, Whole Foods obese employees are not affected in any detrimental fashion. The policy does not affect advancement or continued employment, but rather only the potential to keep a little more money in the checkbook and in that sense – only if they shop at Whole Foods. Both Lincoln University and Whole Foods do have one thing in common though. Each is attempting to curb the obesity crisis in America and with most businesses and institutions examining ways to cut costs, it is likely more and more companies will be targeting the costs of employee health insurance in similar ways.
The article outlining the ending of Lincoln University’s obesity rule can be found here.
The article discussing Whole Food’s new policy may be found here.
Using the False Claims Act to Punish Worthless Medical Care
Posted on: February 1, 2010 |
Author: Colin
Filed Under: Fraud & Abuse, Medicaid, Medicare |
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At the health law symposium on October 23rd, 2009, Assistant United States Attorneys Dorothy McMurtry and Andrew Lay spoke about health fraud prosecutions for “worthless service” and quality of care cases. As of Thursday, January 7th, 2010 there is now one more example of this type of case in the St. Louis area. Generally, “worthless service” cases are health fraud prosecutions where the “fraud” lies in services billed for medical care not actually given. Because these cases result in patients receiving less than adequate care, evidence of this type of fraud is usually stomach-churning and profound.
The False Claims Act (FCA) is an important tool in prosecuting these types of cases, despite the fact “negligent medical care” may not have been the exact type of prosecutions the original authors (and subsequent amenders) had in mind. Known sometimes as “Lincoln’s Law,” the FCA was enacted during the Civil War to prosecute fraud committed against the Union Army. Nonetheless, the FCA is still a vital tool for combating and prosecuting fraud committed against government programs and outlays. The key element of FCA cases are the whistleblowers; people with personal, if not direct knowledge of fraud, who bring the fraud to the attention of the authorities. And, importantly, whistleblowers can share in the proceeds of FCA settlements.
Commentary: The story linked below is a great example of how the FCA can be used to prosecute “worthless service” and other medical negligence cases. Firstly, this was a qui tam case, as in it was brought by two whistleblowers. (Assumedly, and hopefully, these whistleblowers took no part in the negligent care, and also did not share in the profits gained prior to the filing.) Because the case had merit, the government “intervened,” and took over the prosecution. Further, there was enough evidence for the government to pursue both a criminal and civil action. The FCA is a federal statute with strict punishment intended to prosecute fraud against government money, but in cases like the one below, it is being used in fraud cases where the greatest benefit will be improved quality of life for the patients. And, for being publicized, it sends a message to other similar facilities that the prosecutor’s office in St. Louis will prosecute these cases wherever it can.
Federal Health Care Reform: A Framework for Consensus
Posted on: December 2, 2009 |
Author: Sidney Watson
Filed Under: Access to Care, Healthcare Reform, Insurers/Payors, Legislation, Medicaid, Medicare, Tax & Finance |
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Despite the noisy demonstrations during the August town hall meetings and a great deal of misinformation spread through email, the internet, talk radio and other media, there is wide scale agreement that the U.S.’s private health insurance system is broken: Private insurers refuse to cover individuals who need medical care; even middle-income families are priced out of private insurance; and businesses, already reeling in the economic downturn, are straddled by skyrocketing health insurance premiums.
There is also significant consensus in Congress on the framework for health reform legislation. Daily headlines that focus on differences in opinion on specific provisions of the reform bills suggest that bipartisan and even Democratic Party agreement is elusive. However, the two bills now moving through Congress use the same framework: (1) reforming private health insurance, (2) guaranteed affordable health insurance for all; (3) using a Health Insurance Exchange to reduce the cost of insurance in the individual and small group markets, and (4) shared responsibility. The major points of disagreement among those supporting reform are how to finance the reforms and whether those who purchase individual policies through the new Health Insurance Exchange should be offered an additional choice of a public option health insurance plan.
The bills being considered by Congress build on what works in today’s health care system, fixing parts that are broken. They protect current coverage-allowing individuals and employers to keep the insurance they have it they like it-and preserve choice of doctors, hospitals and health plans. This brief offers a short description of the framework for consensus on health reform.
Overview of Process in Congress So Far: The House passed a bill on Saturday, November 7. A Senate Bill has reached the floor and is now being debated.
What Comes Next: The next big step is a Senate vote. If the Senate passes a bill, the House and Senate versions will then go to a Conference Committee where they will be reconciled into one bill to be voted on by both houses.
FRAMEWORK FOR REFORM
Private Health Insurance Reforms
Both bills change how private insurance companies do business to guarantee access to health insurance, prohibit discrimination based on health status, and control health care costs. They
- Prohibit private insurance companies from turning down individuals because of pre-existing medical conditions or rescinding policies.
- Stop insurance companies from charging higher premiums because of pre-existing conditions or gender, and limit the extent to which insurance companies can charge higher premiums because of age or where we live.
- Require health insurance plans to cover an essential benefit package that includes hospital, physician, prescription drugs, mental health, preventive care, and other services with the details to be developed by those responsible for implementing the legislation.
- Prohibit annual or lifetime limits on coverage and require annual out of pocket spending caps for consumers.
- Under the House bill, basic plans would have to cover at least 70% of the costs of covered services, with consumers paying the rest through deductibles and copayments. Insurers could also offer three other benefit levels, covering up to 95% of costs.
- In the Senate bill, basic plans would have to cover 60% of the cost of the benefits, and insurers could offer three other benefit plans, covering 70% to 90 % of costs.
- The Congressional Budget Office says policies bought in the individual insurance market cover, on average, 55% to 60% of medical costs. Coverage in the employer sponsored is typically around 80%.
- Require insurance companies to report the percentage of premium dollars spent on administrative overhead and profits rather than medical care.
- The House bill requires insurers to spend at least 85% of premiums for medical care. The Senate version requires insurers spend at least 80% of premiums on medical care in the group market and 75% in the individual market, although this cap on overhead and profits expires in 2013.
Guaranteed Affordable Health Insurance
All the proposals provide for sliding scale premium subsidies for people purchasing insurance through the Exchange to make insurance affordable for lower and middle income families.
- Premium subsidies will be available to families with income up to 400% of poverty level guaranteeing that they will have to spend no more than 9.8%-12% of their income for health insurance premium costs.
- Lower income working families will get more help so their premium costs are no more than 1.5-2% of their income.
- Subsidies will also be available to reduce out of pocket costs.
- The two bills have slightly different subsidy levels, but all the bills recognize that, with premiums now exceeding $13,000 a year for family coverage, even average-income families cannot afford health insurance on their own.
- Expand Medicaid to cover all low income working families and individuals under age 65. The Senate bill extends coverage up to 133% of Federal Poverty Level and the House bill goes up to 150% FPL.
- Enhanced federal match means that the federal government will pick up as much as 91%-95% of the cost for those who are newly eligible. At present, the federal government covers, on average, about 57% of Medicaid costs and 63% of the cost in Missouri.
- This will cover an estimated 14-15 million uninsured individuals from working families.
- Better Medicare coverage for seniors and people with disabilities. Prescription drug coverage would be more affordable. The House bill would significantly reduce and ultimately eliminate the Part D “doughnut hole” while the Senate Finance version provides for 50% discount during the “hole.”
- Preventive services would no longer be subject to co-pays or deductibles.
Creation of a “Health Insurance Exchange”
An Exchange is a new entity that will allow for one-stop shopping for health insurance so individuals can compare options and enroll in the plan that best meets their needs, at the best price. Plans through the exchange will be required to comply with the new health insurance reform rules for issuing and pricing policies.
- An Exchange will make health insurance more affordable by pooling costs across larger numbers of people and reducing the costs of marketing health insurance in the individual and small group markets, where overhead costs typically run as high as 30-40 percent.
- The House bill proposes one large national Exchange, the Senate bills provide for 50 state-based Exchanges, giving states the option to pool together to create regional exchanges.
- Individuals will be able to choose among a variety of types of plans, with individuals making their own trade-offs between lower premiums and higher out of pocket costs.
- The Exchange will be for individuals who are not covered by their employers and will not replace employer-sponsored benefits.
- Small businesses may opt to use the Exchange, giving their employees access to all plans offered by the Exchange. Both bills phase in an option for larger employers to use the Exchange if they wish.
Increased Choices
The most contentious issue is whether individuals and small businesses purchasing health insurance through the Exchange should have the option to enroll in a new health insurance plan, not controlled by private health insurance companies.
- There is agreement in Congress that the private insurance market needs to change and that change can be accomplished by offering new affordable choices to compete with private insurance companies. The House bill includes a health insurance option, similar to the Federal Employees Heath Benefits Plan.
- The Senate bill includes both a non-profit, consumer-controlled private plan, a consumer coop, and a community health insurance plan offered by the government but with claims administered by private entities much like traditional Medicare. Under the Senate bill state legislatures may opt out of offering the community health insurance plan in their state.
- Under both the Senate and House bills, the government would negotiate payment rates for hospitals and providers.
- Whatever form these new plans take, they will be another option-no one will be required to enroll in them-for those Americans who use the Exchange to purchase health insurance.
Shared Responsibility
Everyone is worried about who will pay for health reform, but the key to making coverage affordable is for everyone to do their part.
- Those without coverage will be asked to pay health insurance premiums on an affordable sliding-scale based on income, whether they are young and healthy or older with complex medical needs. Younger adults will pay lower premiums than older adults and both proposals add an option for young adults to continue coverage under their parents’ plans, through age 26 in the House bill and age 25 in the Senate version.
- Both bills impose a financial penalty on those who choose not to get coverage with exemptions for those with “hardships.”
- The Senate version authorizes a penalty only if “affordable” coverage with premiums costing no more than 8% of income is available.
- In the Senate bill, the penalty is $750 per year. The House bill provides a penalty of 2.5% of income for individuals earning more than $8,350 and couples filing jointly earning over $18,700.
- Employers are also expected to do their part, which will level the playing field between those companies that provide coverage and those that do not.
- The House bill assesses an annual fee on larger employers who do not contribute toward their employees’ health insurance. The House bill assesses large employers 8% of payroll and smaller employees with payrolls of $500,000 to $750,000 between 2% and 6% of payroll.
- The Senate Finance bill only assesses a penalty of $750 per employee against larger employers if at least one employee receives an insurance premium subsidy.
- Assistance to small businesses. Both bills exempt very small employers from the employer contribution and provide tax credits to small employers to help them pay for the cost of employee health insurance.
- In addition, small businesses will also benefit from the more affordable coverage available in the Exchange, regardless of health status of employees.
- One-third of the uninsured, 13 million people, work for businesses with fewer than 100 workers.
Paying for Reform
While the federal budget price tag for expanded health coverage seems staggering-about $848 to $894 billion over ten years-this amounts to less than 2-3% of total health care spending. Overall–counting private as well as public spending-it will cost more to do nothing.
- Congressional rules require that the bills be federal budget neutral. The CBO must certify that the bills will not increase the federal deficit, and it has determined that the bills reduce the federal deficit by $104-$130 billion over 10 years.
- About half the cost of health reform will be financed by slowing the growth of Medicare provider payments by about 1% a year-an amount hospitals and other providers have agreed is reasonable given savings that result from reform.
- Other savings come from cuts in the prices of brand name drugs sold to seniors and eliminating overpayments to Medicare managed care plans.
- Both bills provide for new fees on health insurers, drug makers and medical devices.
- The House bill generates the rest of the revenue needed to pay for reform by reversing some of the tax cuts enacted over the last 30 years for the wealthiest households, imposing a 5.4% surtax on couples earning over $1 million and individuals earning more than $500,000.
- The Senate Bill uses other revenue provisions including a 5% tax on elective cosmetic procedures, a ½ percent Medicare payroll tax increase for income over $250,000 a year, and a surcharge on very high cost health insurance plans valued at over $8,500 for individuals and $23,000 for family coverage. Presently, the average cost for coverage in the employer market is $4800 for individual plans and about $13,000 for family coverage.
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