House Committee on Insurance – December 3, 2014 Hearing

This report focuses on the committee’s discussion of the following interim charges:
 
Monitor the effects of the Affordable Care Act on the availability and affordability of private health insurance coverage in Texas and on the health insurance market.
 
Evaluate options to expand transparency in the health care marketplace and facilitate informed consumer choice. Monitor the implementation of prior legislation to encourage transparency and adequacy of health care provider networks. Review prior legislative attempts to achieve greater transparency and the effectiveness of regulatory efforts to minimize the negative impacts on consumers related to out-of-network service disputes.
 
Make recommendations for any necessary reforms to address the long-term stability of the residual market for workers' compensation insurance in this state.
 
Workers’ Compensation
 
Nancy Moore, Texas Department of Insurance

• In 1994 the legislature required Texas Mutual Insurance Company to become the insurer of last resort which took the place of the old assigned risk pool
• In 2012 there were 112 policies written through the insurer of last resort and in 2013 there were around 120 so not very many
• The only funding for the Mutual was $300 million in bonds
• Rep. Kenneth Sheets asked if those bonds have been paid off
  • Yes; insurance companies were required to pay a maintenance tax to pay those bonds
• In 2007 the legislature passed a bill to amend the code concerning the Mutual’s assets and liabilities to clarify that their assets do not belong to the state
• The Mutual is licensed only to write insurance in Texas
• In 2013 the Mutual reported $5.5 billion in total assets
• Chairman John Smithee asked if any potential events could put the residual market in a problem area
  • For a crisis to happen in the residual market competition would have to not be as active as it is today; there would have to be some type of event that would cause carriers to not want to write workers’ comp policies in Texas

 
Richard Gergasko, Texas Mutual Insurance Company

• There will always be companies that cannot find coverage through the voluntary market; for instance, companies that have had significant loss experience, companies that have gone through bankruptcy, companies with significant exposure such as dynamite manufacturers, crop dusters, etc.
• On a long term basis, there will be a time in the future where the workers’ comp market will be in a worse situation than it is now perhaps due to medical inflation, an attack on the workers’ comp laws, interest rates, etc.
• If there were a residual market issue it would be best if the risk were spread through all carriers writing workers’ comp in Texas
• Missouri and Nebraska have more of a reinsurance mechanism than other states
• Rep. Van Taylor asked what the Mutual’s outstanding bonds are
  • There aren’t any
• Taylor asked if they have the ability to issue bonds
  • No
• 60% of total claims every year are medical and 40% are indemnity and wage loss
• Sheets asked how the board is selected
  • There are 9 members; 5 appointed by the Governor and 4 are elected by policy holders

 
Jay Thompson, Association of Fire and Casualty Companies of Texas

• There are different mechanisms for residual markets
  • Some states have an exclusive fund in which they write all the comp; some states have a competitive fund like Texas, some states have the reinsurance model like Nebraska
• Texas is the only state left that does not have mandatory workers’ comp insurance; as part of the 1989 reforms Texas allowed some employers to self-insure; subsequently the state created the ability to have a group self-insurance fund for groups like cotton ginners and other, there are only a few of those left
• Do not want Texas Mutual to end up with high deficits as it happened in the 1980s
• The company has grown from $0-$2.3 billion in surplus in a few short years
• Two years ago there was a bill that would create an assigned risk pool and hopefully that approach will not be taken in the future
• Smithee asked if the association believes an assigned risk pool would be an impediment in the market
  • That depends on the adequacy of the rates in that pool

 
Affordable Care Act (ACA) & Transparency and Consumer Education
 
Katrina Daniel, Texas Department of Insurance
ACA

• The Texas uninsured rate in 2012 was 24.6%, in 2014 it was 20.3% but the methodology for calculation was changed by the census bureau
• Sheets asked what the current number for Medicaid eligible but unenrolled is
  • Not sure
• Sheets noted he believes that number added to the non-citizen population considered against the uninsured rate will bring it down to a level similar to other states
• Rep. Chris Turner noted he believes most Medicaid eligible but uninsured are children and the figure of about 1.054 million uninsured is mostly adults
• Rep. Craig Eiland noted about 20% of people who wanted to enroll on the exchange were Medicaid eligible
• Worked with TAHP to get current data regarding pre and post exchange numbers
  • 190,000 were enrolled in plans sold outside of the exchange
  • 602,000 were covered by exchange plans
  • 530,000 covered by pre-ACA plans
• The small employer market had most activity outside of the exchange
  • 229,000 were enrolled in ACA plans sold outside of the exchange
  • 800,000 were covered by pre-ACA plans
• After the ACA there was a reduction in coverage in the small employer market
• Demographic data of people who selected ACA plans shows they were mostly females and over the age of 45; mostly Whites and Latinos
• The silver plan was the most popular plan
• Most people who enrolled in the exchange were eligible for assistance
• 695,000 people were enrolled in pre-ACA individual plans; nearly 165,000 were no longer covered in those plans as of July 31
• Turner asked if more carriers are participating and more plans are available since the implementation of ACA
  • Yes
• Changes in premiums offered between last year and this year have seen an increase in the lowest cost plans of about 7%
• Bonnen noted when discussing premium prices you have to know about the coverage and premiums, etc
  • That information makes it difficult to compare policies year to year
• Bonnen asked about impact on plans for enrollee ages 
  • Do not have that information
• Bonnen asked where the uninsured rate stands today
  • For 2013 it was between 20.3-22.1%
• Sheets asked if there is a decline in uninsured rate for 20-30 year olds
  • Yes, primarily because of extended coverage through parents’ plans
• Sheets asked what is happening with premium rates
  • 5-7% increase is about average on and off exchange
• Sheets asked how many have selected a PCP through the exchange
  • Would have to get that data from the federal exchange or health plans
• Sheets noted that is a big part of factoring costs because people with insurance may still be going to emergency rooms instead of having a PCP
• Taylor noted Medicaid rolls have grown this fiscal year by around 700,000; about the same amount have gained coverage through the exchange; need to determine if the uninsured rate was actually lowered; hospitals are saying uncompensated care is still rising
• Bonnen asked if about 600,000 people purchased a plan through the exchange and paid premiums but it is impossible to know which of those previously had policies so it is hard to know how that affected the uninsured rate
  • Correct
• Turner noted according to the Kaiser Foundation monthly premiums of the silver plan have increased 5.3% before tax credits, after tax credits premiums decreased by 0.8%; providers in Tarrant County have said they have been able to reduce uncompensated care costs when more people enroll in the exchange; if the court rules that you have to be in a state run exchange to receive a tax credit Texans would lose a significant amount of the government subsidy
• Rep. Sergio Munoz asked when it would be a good time to revisit concrete data on the uninsured rate
  • It is difficult because there is no single source for the data

Transparency and Consumer Education

• SB 1367 (83rd) abolished the health insurance risk pool; a few years ago the legislature diverted part of prompt pay penalties to the health insurance pool; without the risk pool those funds are no longer needed so TDI began looking for ways to expand coverage for the uninsured; have developed the TexasHealthOptions.com website to be more consumer friendly; included info about balance billing, continuing to expand that information on the website; had a little more than $60 million from penalties in the account
• SB 1731 (80th) made a number of new requirements for transparency and more information for consumers; put together a website that shows consumers costs of health care for certain procedures identified by region; worked with stakeholders to develop the website and focused initially on about 400 billing codes; received a federal grant for $4 million to focus on transparency; working with UT School of Public Health to improve the website
• Turner noted there is a relatively new hospital in Grand Prairie that was the subject of a news report about exorbitantly high bills patients have received; have learned the hospital is not in-network with anybody; is that common
  • Not sure how common it is but TDI has recently implemented a rule that expands network adequacy requirements for carriers; trying to put regulations in place that minimize the occurrence of balance billing

 
Jamie Walker, Texas Department of Insurance
ACA

• On January 1, 2014 TDI issued rules for navigators addressing insufficiencies in federal standards; rules require background checks, proof of identity and insurance; navigators must be licensed by TDI; rules prohibit navigators from charging consumers, soliciting specific coverage and engaging in electioneering

 
Dr. Patrick Carter, Texas Medical Association
ACA

• Some parts of the ACA make it difficult for doctors to do business
• Must determine if patients are eligible for coverage, what kind of coverage they may already have, how high their deductible is, who to send a bill to, if the clinic is in or out of network
• Must also determine if people need to be reminded to pay their monthly premium and what it means if they do not pay
• Bonnen asked about why the first 90 days is so important for paying premiums
  • If a patient is in a qualified health plan, in the first 90 days of the plan a subsidized member can get counted as being covered just for signing up, if they do not pay their premium in the first 90 days then it is as if they never were covered for those 90 days; in the first 30 days the health plan will eat the cost if they do not pay, in the final 60 days if a person does not pay, the health plan can recoup payments to doctors for services provided; that is a provision of the ACA
• Turner asked if that is unique to the federal exchange or if it applies to state exchanges as well
  • Believe it applies to state exchanges as well
• It is extremely important for consumers to fully understand the way health insurance works
• It would be helpful if ID cards or the eligibility system could clearly identify whether patients receive premium subsidies because of the 90 day period
• Sheets asked if a doctor had information about patient subsidies, what would be done with it
  • Would probably have somebody counsel the patient about paying premiums; it would just be for educational purposes
• Recommend that health literacy and health insurance literacy be required as a viable credit toward agent and broker continuing education requirements
• Sheets asked about administrative burden; average time spent with paperwork for exchange patients
  • Try to do much of the work over the phone ahead of time maybe 5-10 minutes; if there are issues with eligibility when they come in it could add an additional 20-30 minutes
  • For claims, it could take several minutes per claim and there are thousands of them; if incorrect information is given and a claim is sent to the wrong place or if a premium was not paid it would quadruple the time spent on a claim
• Eiland asked why the clinic needs to know if a patient is receiving a subsidy
  • Carter explained the 90 day situation again

Transparency and Consumer Education

• SB 1731 continues to be a useful tool for consumers to identify their out of pocket exposure for health care costs
• Since the passage of SB 1731, TMA has taken the responsibility of informing providers of the requirements of the law
• Aware that many third party companies have worked hard to give cost data to patients as well; health plans have been working diligently on making information accessible as well
• SB 1731 has worked and continues to ensure consumers have access to information; if a legislative approach is felt to be necessary, would like it to work in concert with SB 1731
• Smithee asked if there are any recommended changes to the law
  • Believe that physicians are OK the way it is; would not like any additional legislation that would impede the free market
• Smithee made the point that the health care market does not exactly work as a free market because it is very difficult to determine costs of care
  • A provider must be able to give an estimate of costs but most of the time it is hard to determine what care will be provided until a patient is seen by a provider

 
Jamie Dudensing, Texas Association of Health Plans (TAHP)
ACA

• Open enrollment is going more smoothly than last time but a lot of the fixes from last time have still not been made
• A big part of what is increasing premiums this year was borne from the ACA which is the health insurance tax
• TAHP is calling for the federal government to repeal the health insurance tax
• TDI covered most of what was going to be said

Transparency and Consumer Education

• TAHP is very supportive of efforts intended to increase education and price transparency
• Believe it is a shared responsibility between health plans and providers to be able to provide information to consumers
• Health care literacy is a big part of education because information that is not understood is useful
• Only concern about noting exchange plans and subsidies on ID cards is because of potential discrimination
• If consumers are only given price information they will tend to equate that with quality so it is helpful to provide a full range of information
• In Texas there are very strong network adequacy and transparency laws; when PPO rules were passed they required insurance companies to pay usual and customary amounts to out of network physicians at in-network hospitals; although this has taken place, balance billing is still occurring; agree with CPPP that Texas should move toward a system of mediation
• Bonnen asked about pricing information driving cost; will costs be increased to show higher quality
  • Not necessarily, consumers will just move toward higher prices
• Turner asked how common it is that a particular hospital may not be in-network with any health plans
  • Not very
• Bonnen asked what the value would be for a provider to go in-network
  • Because it would help with cost for consumers and drive business volume
• Bonnen asked if there are cases where an in-network provider is paid more than an out of network provider
  • There very well may be
• Turner asked what usual and customary payments are based on
  • There is no guidance but usually previously paid rates are used along with Medicaid rates and other payments
• Smithee asked about balance billing and mediation
  • Have seen that most cases never make it to mediation and are resolved beforehand; have seen anecdotally that mediation situations bring doctors into networks
• Munoz asked about the CPPP report about mediation
  • Would be fine with prohibiting balance billing all together; do not want the consumer to be in the middle of the process

 
Debra Diaz Lara, Texas Department of Insurance
Transparency and Consumer Education

• Because of new network adequacy provisions in law, many new requirements have been imposed on health plans; waivers may be granted in certain situations
• Eiland asked who determines network adequacy
  • TDI looks at numbers of providers and where they are located, they also look at accessibility; it is calculated in a number of ways
• Eiland asked what the three highest rankings specialties are that are not in-network generally
  • Emergency room physicians, radiologists and pathologists
• Eiland asked if every plan is adequate for those providers
  • No, if they are not adequate they must show how they plan to get their customers that care and usually the usual and customary standard is used for payment
• Eiland asked what teeth TDI needs to require plans to have an adequate network so their members are not subject to balance billing even after the usual and customary rate is paid
  • That is a hard question
• Bonnen noted that is an area with many problems and having a defined methodology for how an out of network provider must be paid will make sense; the market is changing and it could be that over time, some of this will be addressed as bundled payments increase and there is greater incentive for consumers to shop around

 
Trey Berndt, AARP
Transparency and Consumer Education

• The biggest transparency problem in Texas right now is a balance bill in an emergency room situation
• A patient can get three $900 balance bills in Texas and have no right to mediation
• Many consumers pay balance bills without knowing what they are
• Multiple consumer reports show balance billing to be a systemic problem; if the trend continues then what is the definition of an in-network hospital and what does insurance really mean
• Mediation rights are limited but it is important to remember that even if mediation is done there is no guarantee that a consumer won’t be balance billed; there is some evidence that mediation is helping though
• Would like to get consumers out from the middle of balance billing situations; some type of binding arbitration approach; New York has a good system to draw from
• Sheets asked if any states ban balance billing
  • New York is probably the closest

 
Debra Diaz Lara returned

• Eiland asked how TDI calculates usual and customary payments
  • TDI requires PPO plans to line that out and their methodology is accepted
• Eiland asked if TDI has the ability to determine if that is adequate
  • No their methodology is just accepted
• Eiland noted that could use some work this session

 
Public Testimony
 
Maxine Cooper, Self

• Witness suffers from MS
• Described the story of another MS sufferer and spoke about unexpected costs of health care and medication for diseases such as MS
• Would like the legislature to increase market competitiveness by requiring providers to post prices

 
Simone Nichol Seigers, Self

• Described a similar story about unexpected costs of health care and medication
• People with MS are susceptible to balance billing and consumer protections should be strengthened

 
Ivan Wood, Patient Choice Coalition of Texas

• Usual and customary is very difficult to determine for a number of reasons; many insurance companies pay different doctors different amounts for the same procedure so what does usual mean
• Usual and customary should be based on something
• Supportive of transparency; there is a long way to go

 
Ben Head, Self

• Discussed a story of taking his child to an out of network surgery center
• Health plan determined the reasonable amount for the procedure was around $700 and they paid that much then the surgery center sent a bill for $12,000 when his deductible was only $5,000
• Suggests coming up with some definition of what usual and customary actually is

 
Dan Chepkauskas, Patient Care Coalition of Texas

• Health care is basically the relationship between a provider and a patient; it becomes complicated when insurance is injected into the situation
• There is no such thing as a usual and customary payment
• Sheets asked what other states are doing as far as usual and customary
  • Most states are going through the same thing right now
• If out of network goes away the in-network component of plans will, at a point, give the insurance industry complete control of pricing

 
Tom Quirk, United Healthcare

• Main goal is to help consumers make informed health care decisions
• Have about 3 million commercial customers and 500,000 Medicaid customers
• Provide consumers with a health care cost estimator to preview potential costs between providers, hospitals and services
• Developed a technology that creates a care portrait for each customer; basically a snapshot of an individual’s health status and care services they have undergone
• In support of advancing transparency and education
• Would like to stress the importance of health literacy
• In support of efforts to get the consumer out of the middle of balance billing issues
  • Would be supportive of doing away with or lessening the mediation limits on bills
• Bonnen asked about the calculator; does it provide for the patient what their obligation will be or just the total obligation
  • It provides both; for a certain visit the calculator will take into account every procedure or encounter an individual will undergo and bundles it using network contracted rates with a facility and physician then determine where that consumer is within their plan of benefits, adjudicate the claim and apply all benefits to determine what the out of pocket costs to the individual will be
• Bonnen asked if it also shows what the total cost being paid on their behalf would be
  • No, only what their obligation will likely be
• Bonnen noted that is significant because there could be a huge amount that is the remainder of the bill
  • The tool is meant to be a consumer tool and only shows what is relevant to the consumer
• Bonnen noted that is based on the assumption that it is irrelevant to the consumer what the total cost will be

 
Charles Bailey, Texas Hospital Association

• Discussed a report and recommendations from a health care taskforce assembled to look at transparency
• Health plans have a key role in providing key information regarding what will be paid, network status of providers and ultimately what they are responsible for out of pocket
• Suggests that health plans should make customers aware of what will happen when out of network care is sought out
• For uninsured patients the report suggest that the providers have the key role in informing the patient
• Health plans are required to provide information about networks and how a non-facility based provider may balance bill
  • Required to have policies in place to inform customers about charity care and other potential discounts
• SB 1731 has done a pretty good job to impose requirements for health plans and providers to provide better information
• Hancock’s bill requiring network adequacy for PPO plans was pretty good but the standards do not really deal with facility based doctors; suggests consideration for whether network adequacy standards should address facility based doctors
• Suggests that mediation provisions should be expanded to emergency services
• Should consider that if a methodology for calculating usual and customary rates is developed is a rate setting process taking place
• Bonnen noted the idea would be for data collection not deduction of the data; that could be a challenge to deal with stakeholders but would just like TDI to collect and process the data
  • Yes but TDI should not be asked to determine what usual and customary rates are
• Bonnen asked about facility based physicians; do hospitals have some role in addressing the concern
  • Yes; hospitals often have exclusive contracts with a lot of facility based doctors; because of that they do have a role; sometimes hospitals require contracts that their physicians have network contracts with the same health plans they have network contracts with

 
Carl Isett, Texas Association of Benefit Administrators

• Was the House sponsor of SB 1731
• Discussed numerous reports that detailed excess billing and spending by health care providers
• All networks do in his mind is add cost, not benefits
• Texas is among worst states in high cost of health care
• If really want to make health care more affordable then need to make the market more efficient
• Bonnen pointed out some solutions may be market driven not government driven in regard to witness illustrating on his mobile phone internet sites which list health care prices
• Sheets asked about any obstacles or incentives that the legislature needs to put in place
  • Could define billed charges – the only tools legislature has is regulatory 
• Bonnen noted there is a lot of consolidation occurring and that could have an adverse impact – not saying it is bad but small providers are dwindling – when it comes to pricing