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What are the Misconceptions of Disability Income Protection?

What are the Misconceptions of Disability Income Protection?

There are plenty of common misconceptions about disability insurance:

  • “Disability insurance pays me if I can’t work, regardless.”
  • “My group disability will take care of me.”
  • “My business partner’s DI coverage will fund our Buy-Sell agreement.”
  • “I can pay my staff out of my DI proceeds to keep the doors open.”

Pay Attention! Not All Contracts are Built the Same

Understanding the key contract features can help you avoid the very thing you are trying to insure — loss of income.

The definition of disability and the number of ways a DI policy pays a claim is most important if there comes a time when you need to use the coverage you purchased. A strong definition of disability is, “if you are unable to perform the material and substantial duties of your occupation.” That’s it. This allows you to go to work in any other occupation and you still receive your claim payments from your previous occupation you are no longer able to perform.

For example, Dr. Brown is a neurosurgeon. He’s in a skiing accident and has damage to his fingers on his left hand. Even with proper rehab, he sustains permanent nerve damage. A pure own-occupation definition allows him to continue in practice, earn a high salary and still collect on his DI policy because he can no longer operate as a surgeon.

The definition of residual/partial disability can also vary. The best contracts will consider a 20 percent loss to be residual and will pay from 20 to 80 percent losses. Anything below 20 percent loss is considered full disability.

In addition, if you go on claim for a period of time and then return, and incur an immediate reduction in income, the best contracts will pay the difference until you have regained your previous income level.

A great DI policy pays in four ways: total disability, partial disability, catastrophic disability (cannot do two of the six activities of daily living) and supplemental (six times monthly benefit lump sum for cancer, heart attack and stroke). In addition, the better contracts will pay a presumptive benefit in a lump sum, in addition to the monthly benefit for loss of limb(s), sight and hearing. A good advisor can help you navigate the key contract features.

Don’t Get Lost in the Herd

Most of you have a Group Disability plan. For many of you, it may be the only coverage you own. Don’t get lost in the convenience of these plans. Here are the obvious advantages and some of the disadvantages of a Group DI Plan:

Advantages

  • Minimal cost to the employee
  • Coverage is available for all eligible employees
  • Easy to administer
  • May cover up to 60 percent of base pay

Disadvantages

  • Only covers base pay and no incentive comp or K1
  • Benefits are taxable when employer-paid
  • Monthly caps can reduce the percentage of income replacement well below 60 percent for high-income earners
  • Two-year own occupation definition of disability
  • Benefits are reduced by SSDI and workers comp
  • Cost of the plan goes up each renewal and can be significant if there are claims in the group

The answer to a comprehensive personal disability plan is to supplement the group coverage with a quality individual plan. That way you cover all income, not just base salary. The benefits are received income tax-free, and the policy pays in four ways (discussed earlier) and includes own occupation definition to retirement age.

Benefits and premiums are both guaranteed to retirement age. Done properly, your guaranteed coverage increases overtime to keep up with inflation. Here’s a big one: the contract is guaranteed to be portable, and the discount follows you no matter where you work.

Don’t Just Take Our Word for It

Many professionals have been grateful they had income protection when facing difficult and unexpected illnesses and injuries:

[supsystic-tables id=3]

Note: This is a sampling of all physician claims. The information above is for illustrative purposes only. It is not a complete representation of circumstances surrounding the claims, a representation of all claims or a promise to pay any specific claims.

This Isn’t Working; It’s You, Not Me

Disability Buyout Coverage is all too often either ignored or misunderstood. Many of you are likely in some form of partnership or ownership relationship and have executed a Buy-Sell Agreement.

All properly written agreements include a clause for this protection. The top three events that trigger the execution of a buy-sell agreement are death, disability and divorce. Yet only 2 percent of buy-sell agreements are funded with disability buyout insurance.

Typical buy-sell language states that after 365 days of disability the sale of that partner’s interest is triggered. A Disability Buy-Out policy would pay a tax-free lump sum after the 365 days to the other owner/owners to use for the buyout of the disabled owner’s interest.

This works very much like life insurance and provides a smooth buyout of a partner that can no longer work and contribute to the practice or business. The only real difference is the waiting period to allow the disabled partner time to recover and get back to work if that is still possible.

The risk of disability is far greater than the risk of death and yet the funding for this risk is seldom put in place. And as a function of the insurance budget, this is a very reasonable cost. Again, a professional advisor can walk you through the process and coverages quite easily.

Turn the Lights Back ON! My Staff Is in There!

Individual DI policies are used to protect your income for your personal fixed expenses (family, mortgage, food, bills, etc). Business Overhead Expense is used to protect the expenses of your business if you can’t work for a specified period of time.

If your business/practice does not have other employees/physicians capable of doing your duties, and contributing to the overhead costs, you need BOE. Most practices allocate a share of those costs equally among the staff physicians based on their percentage of ownership and cost commitment.

If you are expecting your personal DI coverage to pay for these costs you could be coming up woefully short on your personal living expenses.

BOE would pay up to $50,000 a month of overhead expenses:

  • Staff salaries
  • Advertising/marketing
  • Utility bills
  • Employee benefits
  • Equipment loans
  • Insurance premiums
  • Leased equipment
  • Rent
  • Office supplies
  • Professional fees

In addition, if you are a high wage earner it is possible that domestic coverage will only be able to protect you for 50 percent loss or less. But you can also obtain additional monthly coverage through specialty programs. Again, your professional advisor can share that option with you.

Bottom line, have one of our professional advisors do a full review of your overall disability risks, and the most cost-effective ways to mitigate them.

Article contributed by Cobbs Allen. Cobbs Allen is an official partner with the Medical Association. For more information about disability insurance, contact Cobbs Allen at (800) 248-0189 or www.cobbsallen.com.

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When Is It Wise to Offer Patients a Reduced Fee Schedule?

When Is It Wise to Offer Patients a Reduced Fee Schedule?

Some of our practice management roundtable participants are offering certain patients an opportunity to pay fees of less than the standard fee schedule for their care. Below we will discuss how they are reaching that decision and if it could be appropriate for your practice.

Some patients have no insurance coverage but want to pay for their care. For this group, there is logic to support a price which is less than the standard fee schedule, if that fee schedule is already set above the amounts paid by all insurance companies and Medicare. The fee reduction is based on an acknowledgment that billed fees for health care are generally set at higher amounts than the providers expect anyway, so some discounting is within reason. A problem occurs when your group’s fees are set at precisely the amounts paid by your largest payers and any discount reduces your fee to levels below what insurance companies or government payers pay you. This can get you into big trouble because those payers are willing to pay only your UCR or Usual and Customary Rate, and if you are regularly making a lower rate available to others, the large payers could ask for repayments. However, if your fee schedule is sufficiently high, a discount to an individual might still leave you with enough fee to protect against violating any “most favored nation” clause in your contract with an insurance company.

After this logic is used to support fee reductions to uninsured patients, can it also be applied to patients who are underinsured? Most employers have received significant annual increases in medical insurance premiums for coverage of their employees. As a result, the employers are modifying the coverage to increase the deductibles dramatically. In one client practice, the annual deductibles per person were raised from $750 to $5,000 after premiums increased 18 percent, 18 percent and 15 percent over the most recent three years. As a result, patients are presenting at medical offices with personal liability so great that they are not able to pay for care. Some administrators even indicate that patients are postponing needed care because of their inability to pay for it.

If a practice has made a decision to reduce fees for patients without coverage, and since many patients are facing large deductibles, those physician offices are extending discounts to insured patients who wish to personally pay a lower fee in full at the time of service. Under HIPAA, patients do have the right to pay for care and request that you not file a claim with their insurance company, but there are forms the patient must sign to correctly document this handling.

The danger associated with any discounting is the possibility that all the discounted dollars serve to reduce physician bonuses at year end. The practice overhead will not be reduced by reason of discounting. If these discounts are thought of as the last dollars collected, then they would have been available for MD payment at bonus time. However, if by discounting you are collecting patient payment monies that would otherwise have become a bad debt not collected, then the amounts you receive are incremental money for distribution to doctors at year end. Which of these situations applies to you will depend on whether your group is writing off uncollected patient balances that could have been obtained, in part, at the time of service.

So what is the take away relative to this trend? First, have a practice which is so well known for excellence in care that you may pick the patients you want and avoid discounting fees to anyone. Next, make sure your standard fee schedule is set higher than the reimbursement you receive from your practice’s highest payer. Finally, reach an agreement among all of your physicians on the discounting process you want to consistently apply and implement that process by training all staff. Times are changing in health care and one major change is the shifting of cost risks to the patients from their insurance carriers. Be sure your practice is adapting to this area of change.

Article contributed by Sae Evans, Maddox Casey and Jim Stroud, Members, Warren Averett Healthcare Consulting Group. Warren Averett is an official Gold Partner with the Medical Association.

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PIPA Open Enrollment During October

PIPA Open Enrollment During October

The Physicians Insurance Plan of Alabama through Blue Cross Blue Shield is available for qualified* members of the Medical Association providing you, your family and staff with strong benefits at affordable premiums as compared to other options. The PIPA health coverage rates for 2019 will have a decrease of 4.5 percent and dental coverage has decreased by 5.3 percent.

Qualified members may sign up for insurance when full Regular Member dues are paid. Your membership dues alone could save you thousands in insurance premiums and out-of-pocket expenses. The PIPA plan does not require all participants in your office be on the same plan.

Let our dedicated staff provide you with one-on-one personal assistance with all your Blue Cross and Blue Shield of Alabama policy needs.

Open enrollment for PIPA is Oct. 1- Oct. 31 for a Jan. 1, 2019, effective date. If you are currently enrolled in PIPA, you do not have to reapply. However, if you or your employees wish to make changes to your current plan, please do so no later than Oct. 31, 2018. You will be billed for the first quarter of 2019 at the beginning of December.

New for 2019

HSA Plan Now Offered

PIPA has added a third health insurance option, which is a High Deductible Plan that can be used in conjunction with a Health Savings Account (HSA). Rates for the high-deductible plan and further information regarding how to set up an HSA account can be found at www.alamedical.org/insurance.

Practices that elect to offer the HSA option will need to “opt in” to the plan by signing the HSA notice agreement on the website and returning it to Brenda Green. Practices will be responsible for the administration of the HSA for their employees as this will be a separate function from the services provided by the Medical Association. The Association will enroll individuals in the Blue Cross high-deductible plan as is currently done with the other plans, and the practice will be responsible for setting up the HSA administration.

If you are currently enrolled in PIPA and wish to continue with no changes, you are not required to take any further action (Premium invoices will be mailed the first week in December). If you or your employees wish to make changes to your current plan, please do so no later than Oct. 31, 2018 (the last day of open enrollment).

If you have any questions, please contact Brenda Green at (334) 954 2514 or toll free at (800) 239-6272. You may also e-mail her at bgreen@alamedical.org.

How to apply

  • Complete the Application for Insurance
  • Complete an Employer Participation Agreement (one per entity)
  • Complete the Cover Page indicating the type of coverage for each application (High, Basic or Dental)
  • Submit the premium amount plus a $10 application fee (per application)
  • Applications will be processed when all information is received, 2019 dues requirements are met by all physicians applying, and all monies have been paid.

Learn more on our website

Visit www.alamedical.org/insurance for full details of the plan and for links to applications and materials. For more information call Brenda Green at (800) 239-6272, e-mail her at bgreen@alamedical.org, or visit www.alamedical.org/insurance to learn more about health insurance with the Medical Association.

*See the Eligibility Decision Tree on our website for guidance. Visit www.alamedical.org/insurance.

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Don’t Get Caught in a Copay Conundrum

Don’t Get Caught in a Copay Conundrum

In the current environment of increasing patient deductibles and copays, the billing and collection of the patient portion of the services you provide is top of mind. In the Department of Health and Human Service’s report dated May 23, 2017, Alabama’s average monthly health insurance premium amounts increased 223 percent from 2013 to 2017, versus the national average increase of 105 percent. In real dollars, average monthly premiums jumped from $178 to $575.

With deductibles and copay amounts increasing as well, it’s becoming more difficult to collect the patient’s portion of the bill. As a provider, you are more than aware of these financial hardships your patients are facing, especially your sicker patients who absolutely need care. You might routinely waive the patient portion of your services because you sense a financial issue. Maybe you treat other physicians or colleagues and write off their portion of the bill as a professional courtesy. You might even provide care to your team of employees at a reduced rate as a perk of their job. But did you know all three of these scenarios can land you in hot water?

These practices, while intended to be a gesture of goodwill, professional courtesy, or “it’s just the way we’ve always done things,” could put you and your practice at risk of violating federal anti-kickback statutes and violating contracts with insurance carriers – not to mention impacting your practice’s financial bottom line.

According to the Office of Inspector General, the federal Anti-Kickback Statute (AKS) is “a criminal law that prohibits the knowing and willful payment of ‘remuneration’ to induce or reward patient referrals or the generation of business involving any item or service payable by the federal health care programs.” Violating the federal Anti-Kickback Statute can lead to criminal penalties and administrative sanctions. The penalties for physicians who pay or accept kickbacks can be up to $50,000 per kickback plus three times the amount of the remuneration in question as well as imprisonment and exclusion from future participation in federal health care programs. The HHS’s A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud & Abuse states the following:

“…Where the Medicare and Medicaid programs require patients to pay copays for services, you are generally required to collect that money from your patients. Routinely waiving these copays could implicate the AKS, and you may not advertise that you will forgive copayments.” In this case, the HHS would determine a practice is violating the AKS if their standard practice is to waive copays. Patients would become the referral source and would be receiving the benefit of a waived copay.

From a commercial insurance carrier’s point of view, if you routinely write off patient’s copays and deductibles, you are in essence decreasing the total charge for the service you are providing. A $100 visit with a $20 copay that is routinely waived has now become an $80 visit.

Commercial insurance carriers can view this as a breach of contract, and they have recently been cracking down on enforcement of collections. Commercial carriers can stipulate that copay portion is required to be paid in order to reimburse the practice its portion. If they find out you have been waiving the patient portion for services, they can come back and seek repayment of funds they’ve already paid for those patients.

Profit margins for services are getting smaller and smaller, and as a medical practice in today’s post-ACA world, your bottom line can’t afford the consistent waiver, or poor collection of these copays and deductibles.

To navigate this issue, we recommend you review/update or implement policies and procedures guided by these best practices:

  1. Immediately stop any current practices of routinely waiving or reducing copays and deductibles.
  2. Where financial need is an issue, develop a policy with outlined procedures to document a patient’s financial hardship. Having a patient merely sign a document stating they have a financial hardship is not enough to substantiate the patient’s inability to pay. Have a designated staff person/financial counselor document the patient’s financial need. You need to perform due diligence with the patient to prove they are unable to pay. The HHS’s Roadmap for New Physicians states, “… you are free to waive a copayment if you make an individual determination that the patient cannot afford to pay or if your reasonable collection efforts fail.” Train front desk and billing staff on these policies and procedures to ensure consistent enforcement.
  3. Bill copays and deductibles and make adequate attempts to collect from the patient. We recommend at least three statements and a phone call as a best practice. Document all communication and collection efforts in the patient’s file to provide an adequate audit trail, should you need such information in the case of an audit.
  4. If these three practices bear no fruit, you can write off the patient’s copay or deductible.

As you can see, justifiable circumstances of financial hardship or need are situations where you can discount or waive patient copays. Use these best practices to implement consistent and reasonable policies and procedures. Steer clear of routine waivers and discounts of copays, and you shouldn’t find yourself in a copay conundrum.

The Do’s and Don’ts of Deductibles and Copays

What you should do…

  • Always bill the full amount.
  • Make a reasonable effort to collect from the patient.
  • When a patient states an inability to pay, establish policies and procedures to determine financial need and keep adequate documentation.
  • Work out a payment plan with a patient, or agreement for paying a certain amount each visit.
  • Collect up front rather than later. Each statement sent costs you time and money.

What you should not do…

  • Routinely or systematically write off copays or deductibles.
  • Advertise that you will forgive copays.
  • Accept the “in-network” copays if you are an “out-of-network” provider.
  • Devalue your services by waiving or reducing the copay and deductibles due.

The information in this article is not intended as tax or legal advice. Please contact your lawyer or CPA for specific information regarding your individual situation.

Article contributed by Jenna Roton, CPA, with Jackson Thornton CPAs and Consultants, an official partner with the Medical Association.

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Summer’s Not Over…Hit the Road with these Safe Travel Tips from Medjet Assist!

Summer’s Not Over…Hit the Road with these Safe Travel Tips from Medjet Assist!

There’s nothing more American than packing up the car and taking a family summer road trip. Whether you’re headed down the road to grandma’s house, across state lines to the nearest beach, or all the way across the country, making sure you get your family there safely is top of mind. By following these summer road trip tips, you’ll help ensure you’ve thought of everything to keep your family safe while you’re on the road.

Tune up the car

Before leaving on your road trip, take your car for a tune-up. Make sure all oil and fluid levels are topped off and that the tires are properly inflated. Consider that your car may soon be under stress it’s not used to, like driving up and down mountain passes, so make sure your brakes are working properly as well.

If you do experience some minor glitch while driving, it helps to know simple car maintenance techniques like how to use jumper cables, how to refill your wiper fluid, how to check the air pressure in your tires and how to change a flat tire—so brush up on your maintenance skills before you leave. Clean your headlights, taillights, signal lights and the inside and outside of your windshield.

Many newer cars come with their own roadside assistance.  Familiarize yourself with the coverage and make sure the emergency numbers are handy.  If you don’t have this coverage, consider joining a roadside assistance service like American Automobile Association (AAA). As a member, AAA will come to your rescue should you lock your keys in the car, get a flat tire, or break down.

Bring a map

You may plan to use GPS to navigate to your destination, but you never know when you may lose signal, cell phone service or your GPS might fail. Good, old-fashioned maps won’t lose power and are reliable no matter what goes wrong, so be sure to bring one along.

Consider the weather

We’re all aware of the dangers of driving in inclement weather. Severe summer weather can often produce heavy downpours, tornados and flash floods. If the weather looks threatening, tune in to a local radio station for updates and keep your ears peeled for storm sirens. It’s always good advice to stay on main roads and highways if possible and try to avoid backcountry roads when you can—especially if you’re driving in unfamiliar areas that may have the threat of flash floods.

If you find yourself in storm conditions that force you to stop driving, make sure you pull all the way off of the highway and turn on your hazard lights. If you are stranded and have to run your vehicle for any reason, do so for 10 minutes every hour and make sure windows are open slightly to prevent carbon monoxide buildup. If you find you’ll be spending the night in your car, illuminating the interior lights will not use as much battery as your exterior light, but still provide a visual indicator to rescuers.

Have a travel safety kit

You should always have a safety kit in your car, but make sure your kit is well stocked before leaving for your summer road trip. Your kit should include warm blankets, water and first aid items, a small flashlight, flares, a battery-operated radio and an emergency contact card. It’s also a good idea to keep a car safety hammer near the driver’s seat. If you happen to be in an accident or your car is submerged in water, the car safety hammer can be used to break the window and create a path to safety.

If you are prescribed important medication, keep it in the car with you and not in the trunk in the event that your trunk becomes inaccessible.

Make sure car seats and boosters are properly installed

The annual family road trip time is a good time to make sure that car and booster seats are properly installed and appropriately fitted to your child. In most cities, local hospitals or fire stations provide free car seat fittings and instillations. Schedule an appointment before you hit the road and travel with peace of mind.

Leave your phone on for cell location

Should your family experience an emergency in a rural environment where communication with the outside world is not possible, remember that cell phone location technologies are extremely helpful in locating missing people. If you’re stranded in your car, keeping your cell phone on will help rescuers pinpoint your location. However, when your phone is out of power it will no longer be helpful in locating you. Keep portable phone chargers and power cords in your car so you’re not stuck with a drained battery in an emergency. Just (And) don’t forget to charge them in advance!

If you’re tired, stop driving

It seems like an obvious tip, but according to the CDC there are 72,000 crashes and nearly 6,000 fatal crashes due to drowsy driving each year. A study by AAA found that the risks of fatigued driving are comparable to drunk driving. We know it can be tempting to push through to your destination, even when you begin to feel tired, but the risks aren’t worth it. If you begin to feel fatigued, get your family to a hotel and resume your drive in the morning.

Let someone know your destination and when you plan to arrive

Communicating your travel plans with someone back home is a crucial piece of your safety plan. Designate a friend or family member to share your itinerary with. If plans change, let them know. When you’ve stopped for the night, check in and share your location as well as your travel plans for the following day. These mundane details could be crucial in locating your family should you suddenly drop off the radar.

Be prepared in a worst-case scenario

It’s hard to think about, but if your family was involved in an auto accident with injuries, what is the long-term plan for returning back home? With an air-medical transport membership like MedjetAssist, members who are hospitalized 150 miles or more from home can arrange medical transport back to their hometown hospital for free, after the cost of the annual membership (sounds expensive but it’s incredibly affordable). Medjet will arrange air medical transfer to a home hospital of choice, regardless of whether it’s deemed “medically necessary.” Your health insurance will only get you to the nearest “acceptable” medical facility (which may not be “acceptable” to you).  The cost for other family members to remain nearby for any extended period of time may also break the bank, so it’s worthwhile coverage to explore.

It can be stressful and overwhelming to think about what danger could befall your family while on the road. Hopefully, you’ll never find a need for this information, but following these safety tips will give you the confidence to handle a crisis, and a sense of comfort knowing that you are prepared for the unexpected.

 

Article contributed by MedjetAssist, an official partner with the Medical Association. With MedjetAssist, you travel prepared. The safer you feel, the more you can focus on the moment. Especially when you travel. MedjetAssist empowers our members to feel safer and more prepared for travel’s many possibilities.

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Four Dangerous Words Physicians Regularly Say

Four Dangerous Words Physicians Regularly Say

One trend evident in all medical practices is the shift in payment responsibility from insurance payers to the insured patients. As employers modify coverage to contain their premium costs, health care providers are treating patients who have $2,500, $5,000 and even $10,000 deductibles. Physicians who have practiced for many years have instructed their collections staff with the phrase “take what insurance pays.” This brief instruction was understandable when the patient portion of the treatment was only a co-pay of $25. The additional charge to the patient’s insurance made it acceptable to extend professional courtesy to many patients. In the era of paper charts, physicians even developed a shorthand note of “TWIP” for this common habit. In the modern era of high deductibles, this habit, if not broken, will cause serious damage to the cash flow of a practice in three ways.

Decline in Cash Flow

The most immediate impact is a decline in cash flow, and since these patient payment dollars can be seen as the last dollars of revenue, the impact on physician income will be dramatic. A practice which formerly collected $1,000,000 but loses 10 percent from failure to collect patient payments will suffer a 20-percent or more decline in physician income. If practice overhead costs 55 percent of collections, there would have been $450,000 left for salaries, fringe benefits and bonuses to the doctors. If collections decline by $100,000, for continued write off of patient payments, the doctor income drops to $350,000 — a 22-percent reduction. This is an example of how daily habits can produce bad cumulative outcomes.

Staff Discouragement

In addition to this drop in profits, the extension of professional kindness can diminish the collection enthusiasm among collections staff. Physicians are quick to instruct staff to extend special dispensation to patients who are friends or socially connected to the doctor. Collections staff members tell us that the doctor refused to let them collect from people who attend the same church as the physician, share a membership in a country club or social organization with the physician or have children who share activities with the physician’s family. When this group, which most likely has the greatest capability to pay for medical care, is excused from responsibility, the collections team is no longer as enthusiastic about collecting from the patients who have no social connection to the doctor. This additional loss of revenue is never known but can be significant.

Training Patients

Finally, affording patients the discretion to pay or not fosters an environment in which the patients are more inclined to take the medical practice for granted. In working with our medical practice clients at Warren Averett, we typically see that the patients who do not pay for their portion of care are also the ones inclined to not show up for appointments, not follow clinical directions and to treat medical staff rudely. These are the patients we recommend be terminated, when possible, in their treatment. To indiscriminately extend professional courtesy regarding patient financial responsibility is cultivating a problem which could have been staunched by simply collecting what the insurance contract stipulated to begin with.

The four words “take what insurance pays” seem benign at first but can be lethal if used unchecked.

Article contributed by Sae Evans, Maddox Casey and Jim Stroud, Members, Warren Averett Healthcare Consulting Group. Warren Averett is an official Gold Partner with the Medical Association.

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As CHIP Funding Lags, Doctors And Parents Scramble To Cover Kids’ Needs

As CHIP Funding Lags, Doctors And Parents Scramble To Cover Kids’ Needs

Dr. Mahendra Patel, a pediatric cancer doctor, has begun giving away medications to some of his patients, determined not to disrupt their treatments for serious illnesses like leukemia, should Congress fail to come up with renewed funding for a key children’s health program now hostage to partisan politics.

In his 35 years of practice, Patel, of San Antonio, has seen the lengths to which parents will go to care for their critically ill children. He has seen couples divorce just to qualify for Medicaid coverage, something he fears will happen if the Children’s Health Insurance Program (CHIP) is axed. He said: “They are looking at you and begging for their child’s life.”

The months-long failure on Capitol Hill to pass a long-term extension to CHIP that provides health coverage to 9 million lower-income children portends serious health consequences, with disruption in ongoing treatments.

While funding promises and estimates of dates for it disappearing vary from week to week and state to state, treatment plans for serious diseases span months into the future, leaving some doctors, like Patel, to jury-rig solutions. The challenges are particularly great for kids with chronic or ongoing illnesses such as asthma or cancer.

Dr. Joanne Hilden, a pediatric cancer physician in Aurora, Colo., and past president of the American Society of Hematology-Oncology, said cancer patients who are worried their CHIP funding will run out can’t schedule care ahead of time.

A San Antonio pediatrician, Dr. Carmen Garza, is advising parents to be sure to keep their children’s asthma medications and other prescriptions current and fill any refills that they can so they don’t get left without vital medicines if CHIP expires.

Federal funding for CHIP originally ran out Oct. 1. In December, Congress provided $2.85 billion to temporarily fund the program. That was supposed to help states get through at least March, but it is coming up well short. The Centers for Medicare & Medicaid Services (CMS) last week said it couldn’t guarantee funding to all states past Jan. 19.

About 1.7 million children in 20 states and the District of Columbia could be at risk of losing their CHIP coverage in February because of the shortfall, according to a report Wednesday by the Georgetown University Center for Children and Families.

A few states, including Louisiana and Colorado, plan to use state funds to make up for the lack of federal funding. But that is a drastic step, since the federal government pays on average nearly 90 percent of CHIP costs. Most states cannot afford to make up the difference and will have to freeze enrollment or terminate coverage when their federal funding runs out.

Virginia and Connecticut can promise to keep their CHIP program running only through February, officials said.

The largest states seem to be in the best shape, though even that guarantees only a few months of care. Florida, California and Texas officials said they have enough CHIP funding to last through March. New York officials said they have enough money to last at least into mid-March.

Before the short-term funding was passed in late December, CHIP programs survived on the states’ unspent funds and a $3 billion redistribution pool of CHIP dollars controlled by CMS.

Republicans and Democrats on Capitol Hill say they want to continue CHIP, but they have been unable to agree on how to continue funding it. The House plan includes a controversial funding provision — opposed by Democrats — that takes millions of dollars from the Affordable Care Act’s Prevention and Public Health Fund and increases Medicare premiums for some higher-earning beneficiaries.

The Senate Finance Committee reached an agreement to extend the program for five years but did not unite around a plan on funding.

But two key Republican lawmakers — Sen. John Cornyn of Texas, who is part of the Senate leadership, and Rep. Greg Walden of Oregon, who chairs the House Energy and Commerce Committee — told reporters Wednesday that they think an agreement is close.

Alabama and Utah are among several states unsure how long their federal CHIP funding will last, according to interviews with state officials. Part of the problem is they have not been told by CMS how it will be disbursing money from the redistribution pool. Under the pool restrictions, states with excess dollars would have to give money to states running low.

Although health care provider groups and child health advocates have for months been sounding the alarm about CHIP, the Trump administration has kept quiet, saying it’s up to Congress to renew the program.

When Marina Natali’s younger son broke his arm ice-skating last year, she did not have to worry about paying: CHIP footed all of his medical bills.

Had that accident happened this year, though, Natali, 50, of Aliquippa, Pa., might be scrambling. She cannot afford private coverage for her two children on her dental hygienist pay.

“It’s creating a lot of anxiety about not having insurance and the kids getting sick,” she said.

Dr. Todd Wolynn, a Pittsburgh pediatrician, said families are reacting with “fear and disbelief” to CHIP’s uncertain future. The group practice hasn’t changed any scheduling for CHIP patients, but he said “families are terrified” about the program having to be terminated.

Pennsylvania officials sent a notice to CHIP providers in late December — who then sent it to enrollees — saying it would have to end the program in March unless Congress acts.

“These families don’t know if the rug is being pulled out from them at any time,” he said.

Dr. Dipesh Navsaria, a Madison, Wis., pediatrician and vice president of the state’s chapter of the American Academy of Pediatrics, said many parents and doctors have been told for months that Congress would firm up long-term funding for CHIP, but those promises have been dashed.

“If CHIP coverage disappears, we run the risk of kids going without care or emergency room visits going up,” he said.

Navsaria also worries that many parents will be surprised if their children are suddenly without coverage. They may not know the state-branded programs they use, such as BadgerCare Plus in Wisconsin, Healthy Kids in Florida and All Kids in Alabama, are part of the CHIP program.

Ariel Haughton of Pittsburgh said she’s upset her federal lawmakers have left CHIP in flux for her two children and millions of kids around the country. “They seem so cavalier about it,” she said.

If CHIP gets canceled by the state, she likely won’t bring Javier, 2, for his two-year checkup if nothing seems wrong. “We will have to decide between their health and spending the money on something else,” she said.

Article reprinted from Kaiser Health Network. KHN’s coverage of children’s health care issues is supported in part by the Heising-Simons Foundation

Posted in: CHIP

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Children’s Insurance, Other Health Programs Funded — For Now — In Bill

Children’s Insurance, Other Health Programs Funded — For Now — In Bill

The bill passed by Congress in late December to keep most of the federal government funded for another month also provided a temporary reprieve to a number of health programs in danger of running out of money, most notably the Children’s Health Insurance Program, or CHIP.

Funding for CHIP technically expired Oct. 1. States have been operating their programs with leftover funds provided by the Department of Health and Human Services since then. But nearly half of the states were projected to run out of money entirely by the end of January, putting health coverage for nearly 2 million children at risk by that point.

The funding provided by Congress for CHIP — $2.85 billion — is for six months, but it is back-dated to Oct. 1, so it will run out at the end of March 2018. The program covers 9 million children across the country.

This week, Alabama announced it would curtail enrollment and renewals starting Jan. 1, and start disenrolling children currently in the program Feb. 1. On Friday, the state posted a notice on its website that those plans were now canceled. Several other states, including Colorado, Virginia and Utah, have begun the process of notifying families that their coverage could end unless Congress acts.

The funding bill also provided a temporary reprieve for a raft of other health programs that were running out of money, most notably the nation’s community health centers, which provide basic primary care to 27 million Americans. Many centers are already freezing hiring, laying off staff and closing sites due to the uncertain funding stream from Washington.

Other health programs that were set to expire but have been funded, for now, include the National Health Service Corps, which places health practitioners in medically underserved areas, and the teaching health centers program, which trains medical residents in community health centers.

Backers of CHIP complain that short-term funding fixes are disruptive to the program.

“By failing to extend long-term funding for the Children’s Health Insurance Program, Congress falls far short of the reassurance and relief families deserve,” said a statement from the American Academy of Pediatrics.

A coalition of children’s groups, including the Children’s Defense Fund and the March of Dimes, agreed, saying the short-term funding “only causes more chaos and confusion on the ground.”

Both Republicans and Democrats strongly support CHIP, which was created in a 1997 budget bill. What they disagree on is whether its funding — expected to be roughly $8 billion over the next 10 years — should be paid for by cutting other health programs. The House in November passed a five-year renewal that would finance CHIP primarily by reducing the Affordable Care Act’s Prevention and Public Health Fund and by raising some people’s Medicare premiums. Democrats question why CHIP needs to have its funding offset while Republicans are adding $1.4 trillion to the deficit through their tax cut bill.

KHN’s coverage of children’s health care issues is supported in part by the Heising-Simons Foundation. Article by Julie Rovner, jrovner@kff.org, @jrovner

Posted in: CHIP

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Legislative Update: What Happened This Week in Washington…

Legislative Update: What Happened This Week in Washington…

From President Trump’s new tax plan to renewed funding for the Children’s Health Insurance Program to former President Obama’s Independent Payment Advisory Board, health care has been at the center of a lot of discussions this week on Capitol Hill.

Vote Expected Today for CHIP — The House is expected to vote today to pass legislation to refund Children’s Health Insurance Program and send federal funds to community health centers. However, questions remain about how to pay for the funding efforts. The original funding legislation for CHIP expired a month ago leaving state programs scrambling to extending their budgets to cover millions of covered children. It’s expected that the bill will face party opposition in the Senate. While both parties have agreed to renew CHIP, how to pay for the program remains the sticking point.

New Tax Plan Proposed — The proposal repeals the student loan interest deduction — a policy that helped more than 12 million students with education loans save up to $2,500 on their tax bills in 2015. Taxpayers aren’t required to itemize their deductions to claim it, but it’s available to anyone paying interest on either private or public student loans and makes less than $80,000 in a year. Many of those student loan holders are recent medical school graduates, who make a median $54,600 in their first year of residency, according to the Association of American Medical Colleges.

No More IPAB? — The House voted Thursday to abolish the Independent Payment Advisory Board (IPAB), a federal panel that was intended to find ways to curb Medicare spending with little Congressional oversight. It was a creation of the ACA, yet the IPAB’s presidentially-appointed members were never named. The bill now moves to the Senate where Republicans may have difficulty finding the necessary votes to pass it as a stand-alone bill before the end of the year.

Posted in: Advocacy

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Metro Areas Increasingly Dominated by Single Insurance Companies

Metro Areas Increasingly Dominated by Single Insurance Companies

In an analysis of competition in health insurance markets across the U.S., a study conducted by the American Medical Association found that in 169 of 389 metropolitan areas (43 percent), a single health insurer had at least a 50 percent share of the market. This represents an eight percent increase in such markets over just two years. The finding comes from the newly released 2017 edition of the AMA’s Competition in Health Insurance: A Comprehensive Study of U.S. Markets, which examines market concentration in 2016.

High market concentration tends to lower competition among commercial health insurers. These markets become ripe for the exercise of health insurer market power, which harms patients by raising premiums above competitive levels.

The AMA study presents the most comprehensive data on the degree of competition in health insurance markets across the country, and is intended to help researchers, policymakers and regulators identify markets where consolidation among health insurers may cause anti-competitive harm to patients and the physicians who care for them.

“After years of largely unchallenged consolidation in the health insurance industry, a few recent attempts to consolidate have received closer scrutiny than in the past, including the proposed mergers of Anthem and Cigna, as well as Aetna and Humana,” said AMA President David O. Barbe, M.D. “Previous versions of the AMA study played a key role in efforts to block the proposed mega-mergers by helping federal and state antitrust regulators identify markets where those mergers would cause anti-competitive harm.”

The 2017 edition of AMA’s Competition in Health Insurance: A Comprehensive Study of U.S. Markets offers the largest and most complete picture of competition in health insurance markets for 389 metropolitan areas, as well as all 50 states and the District of Columbia. The study is based on 2016 data on commercial enrollment in fully and self-insured health maintenance organization (HMO), preferred provider organization (PPO), point-of-service (POS), public health exchange and consumer-driven health plans (CDHP).

In addition to assessing competition in the commercial health insurance market at large, the study also separately examines competition for the main plan types, including HMO, PPO, POS, and the exchanges.

The prospect of future consolidation in the health insurance industry should be viewed in the context of the lack of competition that already exists in most health insurance markets. According to the AMA’s latest study:

  • A significant absence of health insurer competition was found in 69 percent of metropolitan areas. These markets are rated “highly concentrated” based on federal guidelines used to assess the degree of competition in a market.
  • In 43 percent (169) of metropolitan areas, a single health insurer had at least a 50 percent share of the commercial health insurance market, compared to 40 percent (156) in 2014.
  • Anthem has a bigger geographic footprint than any other health insurance company in the United States. Anthem was the largest health insurer by market share in 82 of 389 metropolitan areas examined by the AMA. Health Care Service Corp. was second with a market share lead in 42 metropolitan areas, followed by UnitedHealth Group with a market share lead in 26 metropolitan areas.
  • The 10 states with the least competitive commercial health insurance markets were: 1. Alabama, 2. Delaware, 3. Hawaii, 4. South Carolina, 5. Louisiana, 6. Michigan, 7. Kentucky, 8. Vermont, 9. Alaska, and 10. Illinois.
  • The commercial health insurance market in 27 states became more concentrated between 2014 and 2016.
  • The 10 states that experienced the largest increase in market concentration between 2014 and 2016 were: 1. Kentucky, 2. Alaska, 3. South Carolina, 4. Mississippi, 5. South Dakota, 6.Oklahoma, 7. Vermont, 8. Arkansas, 9. Nevada and 10. New Mexico.

Competition in Health Insurance: A Comprehensive Study of U.S. Markets is free to AMA members. The study is also available to non-members. To order a copy, visit the online AMA Store, or call (800) 621-8335 and mention item number OP427117.

Editor’s Note: Credentialed members of the media can obtain a free copy of the AMA’s newest study on competition in the nation’s health insurance industry by contacting AMA Media & Editorial at: (312) 464-4430.

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