HIPAA Enrollment Change (Yet Again) - Anthem

Anthem Blue Cross (CA) has made another enrollment change to the HIPAA plans.

Under the prior change, all enrollments in HIPAA were subject to approval followed by a premium notice. The notice would allow payments in two 15-day periods (1-15th, 16-31st paid or postmarked) to start on the first of the following month. Example:

*Premium paid or postmarked 1-15 June would start July 1 (30-day gap)
*Premium paid or postmarked 16-30 June would start August 1 (60-day gap)

Under the latest change, the premium payment period has changed as follows:

*Premium paid or postmarked 1-15 June would start June 1 (slightly retroactive)
*Premium paid or postmarked 16-30 June would start July 1

Also, Anthem Blue Cross CA has indicated that it will accept certain "substitute" documents in lieu of the Certificate of Creditable Coverage which is not issued until after the expiration of continuation coverage.

Anthem CA Rate Increase Withdrawn

According to KGO Radio, Anthem Blue Cross CA has withdrawn the proposed 39% rate hike for California. Apparently they will be re-working the numbers for a more moderate change at some point in the future. Members will be given 30 days notice before any rate changes would go into effect.

KGO Article

The HIPAA Tango Continues (Anthem Blue Cross)

For those who may be looking at my HIPAA page and wondering what is going on with Anthem Blue Cross enrollments, I thought this might help (I hope!).

Effective 5/1/10, Anthem has a new enrollment process for HIPAA plans. The process works like this: application and supporting documents to get approval to enroll, premium notice sent out upon Anthem's "OK" to enroll (approval), then you pay future premium to get future start date. Gaps can run 30, 60, 90 days or more. Sounds crazy, huh?

I have spent the better part of this week tee-ing off Anthem trying to get clarification and work-arounds for enrollments for Californians in need of HIPAA coverage and don't want to gap coverage.

So, to answer the question of whether or not there would be a necessary gap in coverage from group to HIPAA, a firm "maybe". It is going to depend on how early on we can start the process.

It is possible to enroll under the new system at Anthem and have a seamless start date. But it is tricky. Here's what needs to happen to make it work.

60 days prior to the expiration of continuation (or loss of group is terminating active coverage), we will need to provide some or all of the following to help get you enrolled:

1. Completed HIPAA enrollment application.
2. Copy of Termination Notice (either COBRA, Cal-COBRA or from group. This is a letter you receive about 60 days prior to exhaustion indicating that your continuation coverage will expire on a certain date.
3. Records to reflect payments of premiums for the full period including the final month (bank online statements, letter from administrator, etc.). Something to show you've made 18 or 36 months of premium payments (if continuation coverage).
4. Copy of current health insurance ID card and name of employer (usually on the card)for those not eligible for the Cal-COBRA extension to 36 months.
5. If covered 1st 18 months federal COBRA and now on Cal-COBRA extension, a copy of your group health certificate issued after federal COBRA expiration (from the COBRA Administrator or Health Plan)

The purpose of such documentation is twofold. One, we need to help you get Anthem Blue Cross to generate a premium payment "approval letter" as soon as possible within the 60 days prior to eligibility date so that you can submit your HIPAA premium and receive your desired 1st of month start date. Two, your Group Health Certificate (Certificate of Creditable Coverage/Certificate of Prior Health Coverage, it goes by several names) will normally not be provided until 10 days AFTER the expiration of the group health plan. Anthem has stated that they will accept "substitute" proof of exhaustion in lieu of the CoCC to expedite the enrollment process.

From Wall Street Journal "The Wellpoint Mugging"

A very interesting article from the Wall Street Journal.

The Wellpoint Mugging

Some parts of the article are quite telling.

He ought to subpoena California's political class because Wellpoint's rate hikes are the direct result of the Golden State's insurance regulations—the kind that Democrats want to impose on all 50 states. Under federal Cobra rules, the unemployed are allowed to keep their job-related health benefits for 18 to 36 months. California then goes further and bars Anthem from dropping these customers even after they have exhausted Cobra. California also caps what Anthem can charge these post-Cobra customers.

This next one hits home for me as one of the leading Anthem HIPAA producers in California. While I know that Anthem is taking losses on the guaranteed-issue side, I also am confident that my book of Anthem HIPAA business (which apparently is #2 in the state of CA right behind e-healthinsurance)is not creating losses. Yes, the whole pool is losing money and Anthem has been covering almost 80% of it for several years (same with MRMIP). However, I always strive to do proper case development before I pick the appropriate HIPAA plan for a client and find I have a fairly even spread between my three California major medical carriers. And no, Anthem has not invited me to lunch for my high HIPAA production LOL!

This explains why Anthem lost $58 million in California on its post-Cobra customers in 2009. If WellPoint didn't raise premiums amid these losses, it would soon be under assault from its shareholders, if not out of business.

The company presented its findings to California insurance commissioner Steve Poizner last November, who had a month to review the proposed increases and never objected. But recently amid the White House campaign, Mr. Poizner has joined the chorus claiming to be "skeptical" of the increases and demanding that Anthem postpone them while he conducts a review. Anthem has done so.

More HIPAA Dancing

I have learned that Anthem Blue Cross California has again changed its position with regard to HIPAA enrollments.

Apparently they have backed off of the "no premium" with application design (which virtually guaranteed a 60-day minimum gap in coverage) and will allow premium submission with the application in the near future.

The current no premium program was only in effect on the HMO HIPAA plans, not the PPO HIPAA plans. Anthem had indicated a desire to have a unified HIPAA application with no premium pre-payment possible. Apparently this has been scrapped and HIPAA applicants will soon be able to pre-pay premiums for both HMO and PPO HIPAA plans with Anthem Blue Cross CA.

Part Deux: Is The California Individual & Family Health Insurance Market In Critical Condition?

Having recently watched the "bi-partisan" meeting in Washington and many videos on youtube, I wonder if the problem is "un"-fixable.

Speaker Pelosi, in a recent youtube video answering questions on the meeting, pointed out two things which are absolutely of concern. 1, our health insurance system is employer-based in design and function. 2, there are many more people not covered under the employer-based system who choose to remain on the sideline than those who participate in the non-employer health insurance market.

I won't go through the numbers again since they are covered under part one of this topic below. Suffice to say, nearly two-thirds of those who should participate in the health insurance market in California for individual & family coverage do not. No employer-sponsored health plan, whether fully insured or self-funded, could operate at a participation level of 33% or less. Employer plans require 75% of all eligible employees to participate. I have worked in the past for employers who made it mandatory to buy a health plan through their fsa/cafeteria plan unless one had a valid waiver (so as not to mess up participation).

With rare exception, most every vlog I have seen, including the grilling of Anthem/Wellpoint CEO Braly in Washington, have had a nasty, negative tone. While it is without doubt that people are upset by the rate changes and popular press, there are implications to this notwithstanding the fact that my study below shows that even with the "massive" rate increase, Anthem prices below most of the other California carriers for like coverage (including 2 not-for-profits).

Now here's your "inside scoop" for the day, dear readers. I have it on good authority that a very large health insurance company in California (which shall remain anonymous), in the last six months, approached the state regulatory agency/ies to review the option of cancelling the individual & family market product and bailing out. To be clear as to what is at stake....

IN THE LAST SIX MONTHS, ONE OF THE LARGEST HEALTH INSURANCE COMPANIES IN CALIFORNIA ADDRESSED TO A STATE REGULATORY DEPARTMENT THE POSSIBILITY OF NO LONGER SELLING HEALTH INSURANCE TO INDIVIDUALS & FAMILIES IN CALIFORNIA.

The writing is on the wall across the spectrum of carriers. Sales of new plans are flat. HIPAA plans have been reformated to high deductibles and expensive HMO plans to stem the bleeding in that pool. Programs like Tonik for individuals and BeneFits for small group have experienced less-than-stellar sales.

The only two PPO programs (non-HIPAA) that are selling at all right now are SmartSense by Anthem and VitalShield by Blue Shield. Even in those cases, the sales of new plans is not keeping up with the cancellation of existing subscribers.

Anthem has launched three new product portfolios for IFP in the last six months--Core Guard, Clear Protection, and coming April 1, Premier. I will be curious to see whether or not new enrollments in these plans (lower cost) will overtake defections off of coverage as is the current trend.

Until and unless this trend shifts, the IFP market is going to be chaotic at best. Continuous premium increases will become the norm, and this in turn will drive more people off of coverage which will create a repetitive cycle.

So, Dave, you ask, what is your solution to the problem?

Well, I see two choices.

One, like Speaker Pelosi mentioned, mandate coverage and penalize those who do not participate. Increase participation to as close to 100% as possible, guarantee-issue health insurance coverage with no pre-existing conditions problems and create an incentive (tax or othewise) for people to participate in addition to a penalty.

Two, and this is one I may favor over the first one, kill off all non-employer coverage plans and go to a single payer exchange for coverage (with a mandate or incentive). The exchange could offer compliant private plans from carriers that wish to offer them and/or public plans like Medicare/FEHB or other plans designed under federal mandates. Allow carriers to sell private plans outside of the exchange to those who can qualify and wish to purchase outside of the exchange.

Make the exchange available to those who cannot obtain employer-sponsored coverage and do not wish to or cannot purchase a private plan outside of the exchange. Also, provide that any employer under 20 employees (2-19) who chooses the exchange over the group plan must pay a penalty per employee to the exchange, and any company over 20 employees must either provider group coverage or pay a payroll tax penalty per employee to the exchange.

Anthem Agrees To Delay Rate Increase in California

On Saturday (2/13) Anthem agreed to hold off on the March 1 rate increases until May 1 at the soonest. This will give time for independent actuaries and auditors to determine if the increase in rates is appropriate.

Anthem to delay insurance rate hike amid criticism

Anthem Answers Sebelius

Anthem President and CEO of Consumer Business, Brian Sassi, addressed his response to Ms. Sebelius regarding her inquiry concerning Anthem rate increases in California.

Click here to read Mr. Sassi's letter

Is The California Individual & Family Health Insurance Market In Critical Condition?

With the recent LA Times article and notifications to approximately 800,000 CA residents by Anthem Blue Cross of California, the future of individual & family health insurance coverage is looking bleak. Anthem announced a rate increase for March 1, 2010 ranging between 30-39% on many private health plans.

I received information just yesterday that Aetna has now laid off the IFP staff support for northern California (and I supposed SoCal as well). The last time Aetna laid off people in these positions, they exited the market in California.

First a look at some "interesting" numbers and how they relate to this issue.

California population (2009) - 36,900,000 (probably 37,000,000 by now)

# California residents covered by private health plans - 2,100,000
# California residents on average uninsured - 6,000,000
# California residents covered under Group/Medicaid/Medicare - 28,800,000

Those numbers tell us a lot about what is going on. IFP (Individual & Family Plan) represents an average enrollment of 6% of the total population, and 7% of the total insured population of California. 76% of the total population is covered under an employer-sponsored health plan, Medicaid or Medicare and 93% of the total insured population is covered under an employer-sponsored health plan, Medicaid or Medicare.

Sadly, the uninsured population is nearly three times as large as those who have private health insurance.

Group plans (employer-sponsored) flourish in California. The plans are heavily mandated by benefit and also represent a true actuarial "pool" of risk. Carriers require 75% of all eligible employees to participate, thereby spreading the risk across a large and balanced company population. I have heard over the years that actuarily, group plans tend to run 20% using major benefits, 30% using some benefits and 50% using no benefits in any plan year.

While group plans will certainly experience rate increases due to health care costs, they are often minimized by mandated participation. So long as the actuaries do their job, group tends to be more stable.*

Individual plans have few if any mandates and there is no participation requirement. As such, plans react to utilization of benefits and increases in health care costs on a more radical scale than employer-sponsored group plans.

Also, plan benefit levels are continuously being adjusted to keep the utilization in check. Lower deductibles give way to higher deductibles, first-dollar benefits give way to services under deductibles first, co-insurance splits continue downward (Health Net has plans 50/50),and so on.

When I first started in health insurance in California, then Blue Cross of California (now Anthem) had a very impressive set of PPO plans. $10, $20, $30 and $40 co-pay plans with no deductible, low out-of-pockets and 80%-90% coinsurance levels. They also covered all normal benefits including maternity. The $40 co-pay plan was so inexpensive that it became a loss-leader. The plans were retired around 2000 to make room for plans with lower co-insurance levels, deductibles and higher out-of-pockets. This trend has continued since.

The bottom line is that slowly but surely IFP will become undesireable to consumers and carriers. Carriers will bleed money on accelerating health care costs and consumers will hate the plan designs. Every year the IFP carriers introduce "new" plans, all of which are stripped-down from the preceeding plan designs. Carriers will continue to retire plans that are no longer profitable (see Anthem Share PPO plans and Blue Shield Spectrum PPO plans). At the rate things are going, IFP plans in a few years will be completely catastrophic coverage with little or no preventive care, generic only drug benefits and deductibles in the 10-20,000 range. Oh, and you can pretty much forget about maternity on PPO plans in a few years, too.

HMOs will continue to offer richer and stronger benefits (with access restrictions), however, they will eventually price so high as to be unaffordable for many consumers.

* the exception was the major rate increase in the Lumenos HSA plans a couple of years ago for group. This was due to an actuarial error in terms of anticipated benefit utilization. Lumenos group HSA plans offer free no-cost preventive medicine. The utilization by the traditional 50% who normally don't use benefits in a plan year as almost 100% which totally blew the curve. Rates were increase between 25-39% at the first Lumenos plan anniversary to compensate.