Health Insurance
Companies Try to Shape Rules
Published: May 15, 2010 - New York Times
WASHINGTON — Health
insurance companies are lobbying federal and state officials in an effort to
ward off strict regulation of premiums and profits under the new health care
law.
The effort is, in some ways, a continuation of the battle over health care
that consumed Congress last year.
Insurance lobbyists are trying to shape regulations that will define
“unreasonable” premium increases and require them to pay rebates to consumers if
the companies do not spend enough on patient care.
For their part, consumer groups say they worry that their legislative
victories could be undone or undercut by the rules being written by the federal
government and the states.
The health care overhaul provides a classic example of how the impact of a
law depends on regulations needed to interpret it. The rules deal with
relatively technical questions but go to the heart of the law, pushed through
Congress by President
Obama and Democratic leaders with no Republican support.
More than 40 provisions of the law require or permit agencies to issue rules.
Lobbyists are focusing on two whose stated purpose is to ensure that consumers
“get value for their dollars.”
One bars insurers from carrying out an “unreasonable premium increase” unless
they first submit justifications to federal and state officials. Congress did
not say what is unreasonable, leaving that to rule writers.
Another provision, effective Jan. 1, requires that a minimum percentage of
premium dollars be spent on true medical costs related to patient care — not
retained by insurers as profit or used to cover administrative expenses.
Insurers must refund money to consumers if they do not meet the standards, known
as minimum loss ratios.
Michael W. Fedyna, vice president and chief actuary of Aetna,
underlined the importance of this issue, saying no other aspect of the law would
be so “influential in shaping the future of the health care marketplace in the
United States.”
The definition of medical loss ratio will “determine the willingness of
health plans to enter new markets and remain in existing markets,” he said.
Senator John
D. Rockefeller IV, Democrat of West Virginia, said the definition would be
just as important for consumers and small businesses.
“The health insurance industry has shifted its focus from opposing health
care reform to influencing how the new law will be implemented,” he said.
The law requires insurers to spend a minimum percentage of premiums on health
care services and “activities that improve health care quality” for patients.
Insurers are eager to classify as many expenses as possible in these
categories, so they can meet the new test and avoid paying rebates to
policyholders.
Thus, insurers are lobbying for a broad definition of quality improvement
activities that would allow them to count spending on health information
technology, nurse hot lines and efforts to prevent fraud. They also want to
include the cost of reviewing care by doctors and hospitals,
to determine if it was appropriate and followed clinical protocols.
Some consumer advocates, like Carmen L. Balber of Consumer Watchdog, favor a
strict, narrow definition of quality improvement activities, limited to those
that produce measurable benefits to individual patients.
Alissa Fox, a senior vice president of the Blue Cross and Blue Shield
Association, said that if the definition is too narrow, “health plans will come
under enormous pressure to cut back quality improvement activities, including
highly effective programs to reduce hospital infection rates.”
But Charles N. Kahn III, president of the Federation of American Hospitals, a
trade group, said he feared that the quality improvement category would become a
“catchall for a wide variety of expenses not directly related to patient care.”
Under the new law, insurers in the large group market are generally supposed
to spend 85 percent of customers’ premiums on “clinical services” and
quality-enhancing activities. The minimum is 80 percent for coverage sold to
individuals and small groups.
Insurers and insurance regulators say that some companies will be unable or
unwilling to meet the new standards.