Until There

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Until Theres a Federal Law

• State Regulation for Insurance Markets and
  Medical Cost Control
• Christopher F. Koller
• Health Insurance Commissioner State Of RI

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Presentation Overview

• State Perspectives on Underwriting Rules
• Efforts in RI for Insurance Affordability
• Rate Regulation
• Primary Care System Investment

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Underwriting Factors (or on what basis can you
vary insurance rates?)

• Risk (think Rumsfeld)
• - known knowns (things that drive costs -
  underwriting factors) and known unknowns
  (random events)
• Underwriting Interest Predict risk as
  accurately as possible and charge appropriate
  cost.
• Insurers/Employers have multiple interests
• - Price risk accurately
• - Limit/shift risk if you can
• Public Interest
• - Fairness, Equity
• - Dont confuse risk with systemic cost drivers.
  

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Underwriting Efforts to Price and Limit Risk

• Pricing Risk
• - Age, Gender, Family Size, Medical History,
  Smoking Status, Group experience, industry,
  geography (Genetics, BMI)
• Limiting Risk
• - Exclusions for Pre-existing Conditions,
  Delayed eligibility, Proof of continuous
  coverage/ enrollment periods, Refusal to Quote.
• Policy Conflict
• - Who pays what is fair and what is equitable
  (within and between groups)?
• - What will create more uninsurance?

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Commercial Underwriting in RI
Market Allowable Underwriting Assessment
Individual Market (15k, single carrier and single pool) Age, gender, family size, medical history, annual open enrollment period (two sub-pools low risk subsidizes high) Good policy, bad politics
Small Group (Under 50 employees - 90k total spread across three carriers) Adjusted Community Rating (age, gender, family size). Guaranteed issue, no pre-ex. 4-1 rate band Tighter eligibility guidelines and common rules. Large declines in micro groups. Tough politics (group purchasing and width of rate bands)
Large Group (gt 50 ees) Guaranteed Issue, no Pre-ex. Experience rating with approval of rate manuals. Broker Driven Little public oversight of underwriting.
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Effect of Federal Underwriting Reforms

• Highly State-Dependent
• - Enormous variation exists (due mostly to local
  politics) See NAIC Chart
• - Length of ramp-up period
• - Federal floor
• Lessons from RI (did this in 2000)
• - Clarify the rules.
• - Audit the plans vigorously.
• - Expect market push-back.

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II. What About the Costs?

• Efforts in RI to Address Underlying Cost Trend
• 1. Health Plan Rate Review
• 2. Primary Care Affordability Standards

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Health Plan Rate Factor Review

• Idea
• - Health Plans in RI have unique standard
  (Policies to promote affordability)
• - Synch up rate factor review to educate public
  and align interests of health plans to get at
  underlying cost drivers.
• Elements
• - Annual review of large and small group rate
  factors.
• - Public disclosure of information.

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Contributions by Cost Category to Proposed Small
Group Premium Increase 2009
Net Increase 13.2
Net Increase 13.9
Source OHIC analysis of 2009 health plan rate
factor filings. Comparison is 2008 approved
factors. Tufts omitted because no 2008 submission
available.
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Rate Factor Review So Far

• Mid May Factors filed
• Late May Increased Business awareness.
  Governor and Candidates weigh in Withdraw
  rates, Proceed right to hearing (AG),
  Negotiate a deal (LG). Front pages.
• Early June Second Public Forum
• Late June OHIC calls on insurers to withdraw
  rates or face rate hearing.
• July 3 All three insurers withdraw filings
  announce plans to refile in six months.

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Rate Factor Review Assessment

• Effect of withdrawal Reprieve only
• Pro
• - More scrutiny of insurers
• - More public education.
• - Good way to get the attention of Insurers
• Opportunity to squeeze administrative costs and
  profits (cost shift back to self-insured)
• Opportunity to push harder on payment reform.
• Con
• - Greater politicization of process. Potential
  for unpredictable, non-rational decisions.
• - Low rate factors now may mean big jumps later.
  

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II. OHIC Affordability Standards

• Question What can health plans in RI uniquely do
  to address underlying cost trends?
• Process Elements
• - OHICs Health Insurance Advisory Council.
• - Grant-funded consulting staff, Expert opinion
  and health services research.
• - Off line work with health insurers
• - Consequences tied to rate factor review
• - Result Affordability Standards

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Final Recommended System Affordability
Priorities Health plans will improve the
affordability of health care in Rhode Island by
focusing their efforts upon provider payment
reform, beginning with primary care. Achievement
of this goal will not add to overall medical
spend in the short-term, and is expected to
produce savings thereafter. Specific areas of
focus in support of this goal are as
follows 1. - Expand and improve the primary care
infrastructure in the state -- with limitations
on ability to pass on in premiums 2.      -
Spread Adoption of the Chronic Care Model-Style
Medical Home 3.      - Standardize EMR
incentives 4.      - Work toward comprehensive
payment reform across the delivery system

• Final Recommended Affordability Standards
• v     Health plans are to be held accountable
  for increasing the proportion of their medical
  expenses spent on primary care by five percentage
  points over the next five years. This money is an
  investment in improved care coordination, not a
  simple shift in fee schedules.
• v       As part of that, health plans will
  promote the expansion of the CSI-Rhode Island
  project by at least 15 physicians in the coming
  year and promote EMR incentive programs that meet
  or exceed a minimum value.
• v   v   Health plans commit to participation in a
  broader payment reform initiative as convened by
  public officials in the future

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Value of Primary Care Spend Target
Incremental Value of Increase (beyond inflation)
gt150 million over five years (plus other lines
of business)
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But these are for system goals not just PCP
payments..
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Next Steps

• How do the health plans invest the money?
• Work with Health Plans on options
• Use Department of Healths Primary Care
  leadership group to vet ideas, drive alignment
  (among PCPs as well as plans)
• 2. Monitoring
• System Outcomes (Inpatient Readmissions, ER
  visits, Primary Care Supply and System Costs)
• Process Health Insurance Advisory Council

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For More Information

• www.ohic.ri.gov
• Rate factor review http//www.ohic.ri.gov/200920
  RateFactorReview.php
• Affordability Standards
• http//www.ohic.ri.gov/Committees_HealthInsuranceA
  dvisoryCouncil_20Materials202009.php