Monthly Archives: March 2012

Sec 1001 – the final push

Since I’ve already determined that I will need to get through more than one section a night to get to the end of this law in a reasonable time, I’ll attempt to get through at least the end of Section 1001 tonight.

There are three remaining sub-sections. The first, while long, can be summed up rather succinctly. Entitled “Bringing Down the Cost of Health Care” it requires that health insurance plans submit details of their plan premiums (or revenues) versus losses (or claims).

We should pause for just a moment to recognize that this terminology implies something specific. When you go to the doctor, your insurance company doesn’t think this is a good idea that could potentially save your life – they see it as a loss to their company – the same kind of loss that the grocery store entails when they have to throw away expired milk. Insurance companies would like nothing better than for you to pay premiums every day of your life and never, ever go to the doctor. Unlike car insurance, or fire insurance, where there is a strong chance that you can go your entire life without needing the payout, people are going to go to the doctor. But, we shan’t dwell too much on the fact that insurance is a stupid way to provide a product that everyone is going to need as some point. The best insurance companies can do is try to have more healthy people than sick (at least that they pay for).

Ok, so back to the Act. The insurance plans submit a report with the claims, the costs for improving health care quality, and non-health related costs (often referred to as administrative costs). Then, if the plan spends less than 85% (for large market plans, 80% for small market) of the premiums on health care claims, or quality improvement, they have to give money back to the people who paid the premiums. This started in 2011. In 2014, this payment is based on a three-year average of the ratio.

The second part for tonight requires that plans have an effective appeals process for denied claims, that complies with these regulations , which give some basic timeframes for appeals.

The last part (oh the progress!) says it is called “Patient Protections.” These protections state that you can pick any participating primary care provider that you want. Additionally, that emergency services, if offered, are covered without pre-authorization (because not everyone remembers to call the insurance company on the way to the hospital when they are dying), and covered at the same rate, regardless of whether the doctor or the emergency room is ‘in-network’ or not. The Act defines emergency medical conditions in terms of what is reasonable to a layperson, rather than an insurance administrator, and an emergency service to be an exam and stabilization. It allows you to choose to pick a pediatrician for the primary care provider of children. Finally, the protections ensure that you do not need a referral to see a gynecologist or obstetrician. If you see an OB/GYN, then the care he or she authorizes is as if the primary care physician had done so. It apparently doesn’t require that the plans offer these cover ages, just discusses what happens if they do.

So, we have come to the end of Section 1001. Hopefully the Supreme Court Justices can hold off on their decision until I’ve finished the whole thing, and then they can just read this blog instead of the Act itself. 😉

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Price above rubies?

I promise that I will get back to the PPACA. Probably tonight, because I wanted to be done by June, and at this rate, that will be June of 2015. First, though, I wanted to address briefly the issue of the worth of women.

Now, this is a relevant issue right now in a lot of arenas. Without getting too political, there are those right now saying that women’s health care shouldn’t be paid for in the same way as a man’s would be. Additionally, there are only 11 states that ban the practice of charging women higher insurance rates than men (known as gender rating – which the PPACA would ban nationally – we’ll get to that in a later section). This pricing discrimination makes sense from a purely financial standpoint – in part because women physically have babies while men don’t. Women also tend to go to the doctor more when they are younger. And because our model of health care is based on insurance, this means that women are more expensive in their younger years, when they are getting insurance through private companies and not through government funded Medicare.

So what does this have to do with me? Well, I just graduated with my Master’s in Public Health. My graduation ceremony is in June. My older son lives out of state with his dad during the school year, so I would need to fly him up special to go. And I was having difficulties booking the flight. Because I didn’t feel as though this accomplishment was worth the money for the airfare. Even though the cost was a fraction of the total cost of the degree, and even though I would like nothing more than to have both of my sons there when I walk.

How can I expect other people to value me and other women equally when I don’t myself?

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From my cold, dead, but presumably healthy (except the dead part), hands

The next part of Section 1001 (yes, we are still in section 1001) discusses ensuring quality of care. Quality of care is an important issue, or should be, to most people who are in the health care industry. The United States spends the most money per capita on health care of any country on the planet. We spend almost $2500 more per person than Norway, although as a percentage of GDP, Norway has us beat  However, the WHO ranks our health system as 37th,  our preventable deaths as  14th, and our life expectancy is 24th  (lower than Malta! – who has even ever heard of Malta?).

So, we spend more money than anyone – why don’t we have the best health? The PPACA supports addressing this question, and this next part of Sec 1001 begins to do so. The Act calls for a coalition of insurance providers, quality experts and other stakeholders to develop reporting requirements to improve health outcomes.  The whole reporting requirement comes into play in 2 years after the signing of the act – so now. The specific outcomes the Act wants to address include care coordination, case management, and chronic disease management. This section also addresses the concept of medical homes.

The Medical Home concept was introduced many decades ago, initially to improve the care of children who had multiple specialists dealing with their medical care. In the medical home model of today, also called the patient centered medical home (PCMH), the patient has a team of caretakers, starting with a personal physician. This physician should be part of a team that deals with care coordination, and integrates this care across the whole spectrum. The PCMH is intended to reduce cost while improving health. While there are many more details I could go into, the fact that this methodology was specifically addressed implies, but does not require, that the PPACA would prefer that health care providers implement these practices.

However, the PCMH is a vast change in the way that medicine has been practiced for many years. Currently, doctors are paid by seeing patients and doing things to them. Visits get one level of reimbursement, procedures another. The insurance company doesn’t pay a doctor to have a nurse call you to make sure that you are taking your pills (an example of one implementation of a PCMH intervention). The doctor has to pay the nurse out of their own income. So, for many single practice doctors, or doctors with high levels of Medicare and Medicaid patients (which pay less), implementing this would be very difficult. We’ll discuss the evolving payment structure of health care in later posts.

The Act also wants reporting on how to reduce hospital readmission (coming back for the same problem within a short period of time), patient safety and reduction of medical errors, and implementing wellness programs. That’s a lot to ask for doctors that are often struggling with making rent, paying malpractice insurance, and what was that – oh right, treating patients.

The wellness programs are where the 2nd Amendment comes into the situation. It is specifically designated as “Protection of Second Amendment Gun Rights”. No wellness program may ask for, or maintain, information about the lawful ownership of firearms or ammunition in the home of any patient. You also can’t increase insurance rates on a person who lawfully owns a gun. So even though 2,811 people, including 114 children died in 2009 from firearms, doctors can’t ask about it.  The confusion about this Act becomes clear here, because I know of at least one person who blames the PPACA for a new requirement to ask their patients about guns. Ah, Americans.

I estimate three, maybe four, more days on this section. Woo-hoo!

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Section 1001 – continued!

I did mention section 1001 was a doozy – right?

The next part Section 1001 discusses the prohibition of discrimination in favor of highly compensated individuals. In order to understand this portion of the PPACA, we have to delve into the Internal Revenue Code of 1986. I hope that we are not like the dwarves of, sorry – this should be Mines of Moria, Helm’s Deep, and dig too deep. (My Lord of the Rings knowledge is slacking – must watch all three movies in a row!)

The Internal Revenue Code of 1986 is the name Congress gave to the Internal Revenue Code of 1954 when they updated it in, you guessed it, 1986. (The Federal Government is renowned across the world for its inventive naming system.) It is also referred to as Title 26 of United States Code. Because one name isn’t confusing enough. The PPACA refers to section 105(h)(2) of the aforementioned IRC of 1986 in describing what requirements group health plans under the new system have with regards to highly compensated individuals.

So one implication of this is whether or not the awesome health care provided to the highest paid officers of a business, among others, counts as income for purposes of taxation. It does not, assuming that the business does not discriminate solely in favor of providing health care to the fancy pants employees, and leave the regular joes and joettes alone in the dark, crying out for their Lipitor. Health care plans are not allowed to give great care to the people in charge, and not include everyone else. In any case, the CEO must declare the excess reimbursement for the personal doctor that flies with her on the jet, and pay the Tax Man. (These prohibitions have always applied to self-funded insurance plans, but this part adapts and applies them to group health insurance plans as well).

The next section on ensuring Quality of Care has some nifty stuff about the 2nd Amendment in it, so we’ll save that for tomorrow. (Who knew that guns were so healthy!)

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Section 1001

Yes, Section 1001 is the first section. Hey – don’t blame me, I didn’t number this crazy thing.

The first four sections of the PPACA are grouped under the title “Immediate Improvements in Health Care Coverage for All Americans”. The first of these sections, section 1001, does several things. In part, it amends a previous document, the Public Health Service Act. This Act, enacted in 1944 with subsequent revisions, essentially created the Department of Health and Human Services. DHHS includes many federal agencies, with the most recognizable being the FDA, the CDC, the NIH, and the biggy, CMS. For those of you unfamiliar with acronym bingo, the first makes sure your meat contains a minimum of rat parts, the second tries to keep Contagion from becoming reality, the third trains scientists, and the last is Medicare and Medicaid.

Rather than changing existing text, the first part of section 1001, of the PPACA adds protections for the consumer of health care. Lifetime limits are removed completely. Annual limits are subject to certain requirements. It does allow annual limits on items that are not considered “essential health benefits”. These, benefits (defined in part 1302(b) of the PPACA, which is about 45 pages later than where we are) include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse treatment, prescription drugs, rehabilitation, lab services, preventative care, chronic disease management, and pediatric care, including dental and vision. I’m not therefore, sure exactly what isn’t essential care – maybe things that are covered under certain plans, like IVF, or elective surgeries, can still have limits. But that’s a heck of a lot of things that are now unlimited.

This part also removes rescission – or the ability of a health insurer to drop you because you are too expensive. The actual rates of rescission are hard to identify. Insurance companies have no incentive, and no compulsion, to publish these rates. As of the passage of PPACA, however, they can only drop you for fraud. They can try really, really hard to find ‘fraud’, but it does mean that there is some burden of proof standard that has to be followed.

Preventative care is the next section. It eliminates cost-sharing (co-pays or deductibles) for several items. Those services recommended, and rated ‘A’ or ‘B’ by the Preventative Task Force. This list is not very long – I’ve included a link here: Task Force Recommendations ; immunizations recommended by the CDC, all preventative care for children recommended by the Health Resources and Services Administration; preventative care for women recommended by the same agency, and not included in those from the Preventative Task Force.  Plans are not prohibited from adding additional services.

Does preventative care save money? Evidence is mixed, with much of it depending on how much health care the people saved through preventative care will consume in the future, and whether or not that care will be more expensive or less.  And preventative care unequivocally saves lives.

Coverage is extended until children turn 26 – without the restrictions of being in school. Given the state of the jobless recovery, this isn’t a bad thing for most people. Presumably this will end up being cost-effective, since those insuranceless 24 year olds will no longer just hoof it to the ER when they get the sniffles.

Then there are a whole list of standards about how information about benefits will be given to the public, including how many pages (no more than 4), what type font (no less than 12), what language (culturally and linguistically appropriate), and content (definitions, exceptions, cost-sharing, examples, minimum essential coverage criteria, contact information). This may be an example of excessive government regulation, but there are sections of the original Public Service Act that dictate what level of radiation you have to use on X-rays, so this is not new for the government.

I originally thought I would try to do one section per day, but this is quite the dense document, so I’m going to take more days per section, as needed, and boy, does 1001 need it.

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Health Care in America – a brief tutorial

Let’s start with some background. Why did we even need health care reform? What was driving the passage of this legislation? What does health care in American look like?

Health care in the U.S. is a patchwork of different institutions, at different times in a person’s life. Children are usually covered under their parent’s health insurance, if their parents have it, or a child-only policy. As with all health insurance the benefits of these policies can vary widely. Before PPACA, many of these policies would have both annual and lifetime caps.

If a child’s parents cannot afford health care insurance, either through work, if it is offered, or individually, states have lower-income health insurance plans that are available for small premiums, typically called CHIP or SCHIP plans. These plans are intended to cover those families that are not eligible for Medicaid.

When a child is from a family that meets the low-income and other qualifications for Medicaid, then they are eligible for this program, which is jointly funded by the federal government and the states.

Even with all of these programs, 11% of the nation’s children were uninsured in 2010.

In 2010, most insurance plans allowed children to stay on their parent’s insurance until they were 19, or 23 if they were enrolled in college. After that, you were responsible for your own health insurance. Most adults who have health insurance have it through their employer. There were no laws requiring employers to offer health insurance. The prevalence of employer-based health insurance arose during WWII, when wages were restricted. As any economist would tell you, this lead to non-wage offerings in order to entice workers. One of these was the employer paying for some or all of a health insurance policy. This was supported by the tax-deductibility, for the employer only, mind you, of this cost.

If your employer doesn’t choose to offer health insurance you have to either get it independently, which is usually more expensive due to the concept of adverse selection (the fact that people who need insurance are more likely to want to buy it) or go without. In 2010, 16% of the adult population did just that, and had no health insurance.

If you make it to 65, then you are eligible for the social insurance program known as Medicare. This federally run program guarantees medical care for all citizens over the age of 65. As of 2010, this program accounted for 3.6% of GDP. This was about 75% of what US defense spending was in 2010. It was also more than the GDP of all but 19 of the countries in the world. Because this is an age-based system, no person over 65 is technically without health insurance, although they don’t have to use it if they don’t want to.

What does it matter if people are uninsured? When people aren’t insured, they don’t go to the doctor regularly. This can lead to illnesses that are more expensive to treat, resulting in higher bills overall, when they do finally go to the emergency room, where they are required to be treated. It can lead to higher public health costs, as they are sick and continue to work rather than treating illness. It also forces them to spend money on health care that they could be spending on new cars and sweaters, which can lead to lower employment. Plus there’s the human suffering. But that’s harder to put a number on (but we can try!)

So there you have it, the basic motivation for why health care needed reforming, in 600 words or less.

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Getting to Know the Patient Protection and Affordable Care Act

The Supreme Court is about to start hearing oral arguments to determine the fate of part, or all, of the 2010 health care reform law known as the Patient Protection and Affordable Care Act (PPACA) and perhaps more popularly, as Obamacare.

I suspect that very few people have read the entire document. It is, after all, roughly 1000 pages long and written in policyese. The table of contents takes up 32 pages. Additionally, most of document amends other policies written previously, that will have to be addressed and explained. Therefore, on this the two year anniversary of the signing of the bill, I begin to go through the document, part by part, in order to explain what each section means. True understanding will require a great deal of background information, relating economic theory, and presumptions about the implementation of the various parts of the law. My credentials to do this? A doctorate in Economics and a master’s in Public Health. My motivation? A desire to understand it myself, and to share that understanding with you, my dear readers. My reward? Self-satisfaction and gloating at the next conference I attend.

Join me then, on this journey into the mysteries of health care, insurance, and government.

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