Health Insurance Companies Seek Big Rate Increases for 2016 - How Will This Affect Health Care Businesses and Providers?

Zach Gibson / New York Times

Health care providers need to follow what is happening with health insurance companies: the mergers, the rate increases, the data issues, the complexitites. These mirror what will be happening in the health care industry as a whole. 

Reporter Robert Pear’s article in The New York Times (7/3/15) entitled “Health Insurance Companies Seek Big Rate Increases for 2016” explains how “health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected.” Federal officials say they are determined to see that the requests are scaled back.

“Insurers with decades of experience and brand-new plans underestimated claims costs. Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota." 

The Oregon insurance commissioner just approved 2016 rate increases for companies that cover more than 220,000 people. Moda Health Plan, which has the largest enrollment in the state, received a 25 percent increase, and the second-largest plan, LifeWise, received a 33 percent increase.

Jesse Ellis O’Brien, a health advocate at the Oregon State Public Interest Research Group, said: “Rate increases will be bigger in 2016 than they have been for years and years and will have a profound effect on consumers here. Some may start wondering if insurance is affordable or if it’s worth the money.”

Sylvia Mathews Burwell, the secretary of health and human services, said that federal subsidies would soften the impact of any rate increases. Of the 10.2 million people who obtained coverage through federal and state marketplaces this year, 85 percent receive subsidies in the form of tax credits to help pay premiums.

The good news is that there are more insured consumers. There are opportunities for health care providers and businesses. Consumers may buy catastrophic insurance to keep costs low and pay cash for everyday care where they can choose their own physicians. 

The money is going to the insurance carriers. How will the money trickle down from the carriers to the providers?  There is a pent up demand and my physician clients who provide primary care are completely overwhelmed.  This will change but it will take some years for this to adjust and the price levels to become predictable and for providers and businesses to have an idea of what life will be like in 5 years. 

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

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Donate new unwrapped toys for low income children with autism & developmental challenges serviced by one of our favorite nonprofit and multidisciplinary clinic Professional Child Development Associates for speech, OT (occupational therapy), music therapy, social skills, feeding therapy, and psychological counseling. 

You can drop off at our office in downtown Los Angeles or just have it shipped to our office. If you drive to our office, let us know and we will come and meet you in the parking garage to make it easy for you.

If you read our blog and get some benefit and want to show your gratitude -- this is a way to do it. Or if you have gotten free consultations from our office, here's a great way to show your gratitude with a donation of a new unwrapped toy. 

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Posted by Tracy Green, Attorney and Advocate for children with special needs.

Court of Appeal Upholds Utilzation Controls On Psychology Services Provided By Community Mental Health Clinic

In a setback to community health and the State of California's attempts to handle its budget issues by cutting back services to those most in need, a recent Court of Appeal decision, Mendocino Community Health Clinic v. State Department of Health Care Services, upheld utilization controls imposed by the Department of Health Care Services on psychology services at the rate of two visits per month an outpatient to a community mental health clinic. The Third District Court of Appeal ruled that this regulation does not violate the federal Medicaid Act.

The statute at issue is Welfare and Institution Code Section 14132(a) which provides that Medi-Cal, which implements the federal act, will cover outpatient psychological services rendered at a federally-qualified health center (FQHC) “subject to utilization controls.” The Department then adopted a regulation limiting Medi-Cal coverage of psychology services to a maximum of two per month.

After the two-visit-per-month regulation was adopted, Medi-Cal told the Mendocino clinics it would not reimburse them for more visits than that for fiscal years 2003-2004 and 2004-2005. The clinics sought administrative review in the Sacramento County Superior Court and won at that level by ruling that that as a “federally-qualified health center” under the act, it was entitled to payment for all necessary treatment rendered to its Medi-Cal patients.

The clinics argued that the regulation limiting payment was intended to address overbilling by individual practitioners, not by federally-qualified health centers, or FQHCs, which have a special status under the Medicaid Act. They also argued that they provide “core services” that must be paid for by Medi-Cal under federal law.

The Department appealed. The Court of Appeal overturned the Superior Court and ruled in favor of the Department. The Opinion reasoned that although federal law  requires full reimbursement for core services provided by FQHCs, it does not preclude states from enacting utilization controls in limiting the number of such visits.  

In sum, the Department cannot pay less than 100 percent of reimbursement but it can impose utilization controls. The fact that the federal legislation did not address utilization controls one way or the other was a significant factor in the Court of Appeal's opinion. 

For the mentally ill, limiting services to two per month regardless of the severity or need for treatment is contrary to the intent of federal law. 

Posted by Tracy Green, Esq., a Medi-Cal attorney in Los Angeles, California.