Kayt Sukel

One of the main goals of the ACA, sometimes referred to as Obamacare, was to provide affordable health insurance to every American.

The law’s passage in 2010 made it possible for nearly 54 million Americans-previously denied coverage due to pre-existing medical conditions-to purchase coverage, as well as landmark provisions to protect those who developed an expensive medical condition while insured from being unexpectedly dropped by their health plan.

By all accounts, such provisions helped a record number of Americans procure medical insurance coverage-and, by extension, reduce healthcare costs and avoid medical bankruptcies.

Yet, with the elimination of the individual mandate penalty in 2017, and other policy changes that have forced up the cost of premiums, many Americans are looking for options off the healthcare exchange.

One such option is the short-term limited duration insurance (STLDI) plan, loosely defined as bare bones medical coverage that can last up to 12 months with the potential for renewal. 

® Editorial Advisor Margaret Murray, chief executive officer of the Association for Community Affiliated Plans (ACAP), said such plans “are not really insurance,”-and refers to them as “junk insurance.” With a new 2018 HHS rule that dramatically expands access to this type of coverage, she worries that their availability will hurt consumers.

Private Insurance’s Costs are Skyrocketing

“Insurance brokers may offer these plans to consumers and those consumers may not realize that they largely reverse ACA protections regarding pre-existing conditions and coverage limits,” she says. “These plans don’t cover what you think they will cover, the insurance companies can cancel your policy at any time, and they can deny your access to maternity care and certain drugs. It’s not really major medical insurance and it’s not always easy for your average consumer to see that.”

The Trump Administration contends, with rising insurance premiums, that such short-term plans make health insurance more affordable for the average American.

Cathryn Donaldson, a spokesperson for America’s Health Insurance Plans, a health insurance trade association, says such plans “can provide a temporary bridge for those who are going through a life transition or gap in coverage such as having a baby or changing jobs.” 

Yet, Karen Pollitz, a senior fellow at the Kaiser Family Foundation, says STLDI plans embody the old adage about getting what you pay for. STLDI are not required to comply with many of the ACA’s most important protections, which means insurance companies can exclude coverage for pre-existing conditions, charge higher premiums based on health status, impose annual and/or lifetime caps, and opt out of coverage for things like maternity care or mental health treatment. They can also revoke coverage at will.

“Under the ACA, it used to be that short term and minimum essential coverage [MEC] policies had to have a prominent warning printed on the front place that said, if you buy this, you are not getting full coverage and may even owe a tax penalty,” she explains. “Those warnings are no longer there and that’s of concern.”

Furthermore, late last year, HHS put forth a final rule extending the duration of STLDI from a mere three months up to 364 days. In addition, insurers can offer renewals and extensions for up to three years. What is even more concerning, Murray says, is the current Administration is now actively promoting the use of private web broker sites to market STLDI. This can make it more difficult for consumers to understand which plans offer comprehensive medical coverage and which are the riskier STLDI plans.

“The current administration says such plans offer consumers more affordable options-and more choice,” Murray explains. “But the marketing for these plans is really disingenuous. It’s not just that they are just short-term. They don’t cover what people think they will cover. They are very profitable for insurance companies. But they can be very costly for consumers, who likely won’t realize they don’t have comprehensive coverage until they are sick or injured.”

Over the past few months, several high-profile publications like 

 have printed stories about the dangers, and unexpected costs, of STLDI for consumers.

“It’s like you are in the market for a car and someone offers you a really affordable roller-skate,” says Pollitz. “But a roller-skate is not the same thing as a car. It’s not going to get you as far if you really need to travel. And it’s going to cost you more in the long run.”

Murray also cautions more widespread adoption of such plans can affect the entire insurance market, siphoning cost-conscious consumers from risk pools and driving up premium costs for everyone.

“There are always some young invincibles, who think they won’t get sick-and there are some invincibles, too-and they will be attracted by the lower premiums,” she says. “But in doing so, that will leave people who are sicker to pay higher rates by moving people out of the ACA marketplace.”

That’s one reason why ACAP, as well as six other health organizations, filed a lawsuit in the U.S. District Court for the District of Columbia on September 14, 2018 in order to roll back the new STLDI rule and stop the expansion of such plans. Murray said the HHS rule violates the ACA, “undercutting plans that comply” with the still active legislation. They argue the Trump Administration is using these new rules to try to overturn the ACA-which they have not yet been able to successfully repeal in Congress.

“We thought this was important enough that it was worth suing the federal government in order to try and stop it,” she says. “We had hoped to get a summary judgment last year because we wanted to stop the spread of STLDI plans for the 2020 open enrollment. Unfortunately, we didn’t get that. The judge ruled against us. But we are appealing it-and the hope is that we will have a decision to stop these things being sold in 2021.

Donaldson says it is vital the healthcare community educate consumers about the risks of STLDI plans and make sure they are better aware of what sort of comprehensive plans are available on the Healthcare.gov marketplace.

“While alternative plans such as association health plans and STLDI may present more affordable premiums, they are not a replacement for comprehensive coverage and may not cover the treatments or prescriptions an individual may need throughout the year,” she says.

“We understand that life happens and there may be all manner of reasons why you are separated from coverage,” she says. “But it is becoming harder and harder to distinguish these plans from real coverage especially now that they are now being aggressively marketed to people all over the country. And it’s vital that people understand that 90% of consumers will play less than the listed price on Healthcare.gov marketplace because they qualify for subsidies. It really does pay to take the time to look before you sign up for one of these short-term plans.”

Kayt Sukel is a science and health writer based outside Houston.

Articles

More consumers are purchasing short-term limited duration insurance plans-which will likely have long-lasting effects to consumers and the insurance market as a whole.

Fighting for Coverage

In yet another blow to the ACA, the U.S. Court of Appeals for the 5

 Circuit ruled the individual mandate, or the law’s requirement that individuals have healthcare coverage, is unconstitutional. In addition to this long-awaited decision, the panel also stated it will send the case back down to a lower court in order to determine whether the law can stand without the individual mandate provision. Legal and healthcare experts believe this move all but ensures that this case will eventually end up on the Supreme Court docket-and continued uncertainty for tens of millions of Americans who rely on the law for health insurance as the suit winds its way through the courts.

Filed in early 2018 on behalf of a group of Republican governors and state attorneys general, 

 made the argument that Congress’ elimination of a tax penalty for not having insurance, the ACA’s stick to help enforce coverage, rendered the law unconstitutional. They stated that, as the 2012 Supreme Court decision upholding ACA did so on the basis of Congress’ constitutionally mandated taxing powers, the lack of a tax penalty makes all the tenets of the healthcare legislation null and void. A U.S. District Judge, Reed O’Connor, agreed with that argument late last year, ruling the entire law unconstitutional. The ruling was immediately appealed to the higher court by a coalition of Democratic-led states.

Fewer Americans See Healthcare In Crisis Mode

In yesterday’s decision, two of the Republican-appointed judges on the 5th Circuit panel stated that Americans cannot be compelled to buy healthcare coverage as “the attributes that saved the statute because it could be read as a tax no longer exist.” Yet, the judges did not fully support O’Connor’s read of the case. As such, they will be returning the suit back to U.S. District Court for the Northern District of Texas to answer two key questions: First, which parts of the ACA “are indeed inseverable” without a tax-enforced mandate and, second, whether the ruling should only apply to the Republican-led states that brought the original suit to overturn the law.

California Attorney General Xavier Becerra, who leads the group who is working to save the health law, has already announced that he will appeal the decision to the Supreme Court. Supporters of the law say, even without the tax penalty, the law works well and is helping millions of Americans lead healthier lives. They hope that the Supreme Court will see that and rule for the ACA.

But nothing is certain. To date, the highest court in the land has upheld the ACA in two separate cases. But with the addition of two new Trump appointees, a third legal victory is nowhere near guaranteed -and any changes to the law could have widespread implications for the entire healthcare industry, especially around the ACA’s protections for pre-existing conditions and lifetime caps for coverage.

A new ruling on the ACA adds more uncertainty about the law’s future.

ACA in Limbo After New Individual Mandate Ruling

Digital health, or the use of technology to help enhance healthcare – from the back office to the examining room-has long been heralded as a way to help improve patient outcomes as well as lower healthcare costs. Yet, to date, digital health partnerships have not yielded as much value as anticipated. A new survey, sponsored by global law firm, Ropes & Gray LLP, and conducted by Crain’s Custom Studio, Crain’s New York Business’s content marketing division, entitled 

From Innovations to Solutions: Building Strategic Partnerships in an Evolving Digital Health Landscape

, suggests serious disconnects between healthcare organizations and technology companies-disconnects which result in provider organizations and other life sciences companies being unable to recoup the value, and coveted payer reimbursements, they seek.

Christine Moundas, partner with Ropes & Gray’s healthcare practice group, says the law firm was inspired to conduct the survey as digital health is becoming an increasing area of interest for a wide array of their clients, ranging from healthcare providers and life sciences organizations to technology companies and private equity investors.
	
	“It’s an area that has had a ton of movement in the past several years and we’ve now seen some very interesting new partnerships between healthcare and life sciences organizations with technology companies,” she explains. “We felt it would be a good time to step back to assess the pertinent issues surrounding digital health and how they may be affecting the industry as a whole.”

The survey, which received responses from 284 individuals representing both healthcare organizations and digital health vendors, most of whom held senior management positions, demonstrated that 60 percent of respondents felt that healthcare’s “strongly entrenched business and reimbursement models” make it difficult to bring successful digital health products to market. In addition, nearly half of the survey respondents stated technology companies do not understand the healthcare market-which also impedes that success. When asked about the greatest obstacle to pursuing digital health solutions, 18 percent selected lack of reimbursement by insurers and payer organizations – and an additional quarter of respondents said reimbursement issues also obstruct digital health partnerships.

Moundas says that many of the responses were not so surprising, given what she and other attorneys in Ropes & Gray’s Digital Health practice see on a regular basis but she said it was “heartening” to see so much consensus across the survey.

Physician Consolidation Leads to Higher Healthcare Costs

“Respondents, regardless of industry, all circled around the same kinds of issues when they expressed their take on challenges to digital health adoption and partnerships,” she says. “They agreed the major roadblocks continue to be evidence of efficacy, meeting regulatory and compliance requirements, and data security and privacy standards. That gives us some clear takeaways on what the industry needs to work on to go forward-and what companies who are considering digital health partnerships need to think through as they structure these arrangements.”

Reimbursement issues also came up again and again as an impediment to digital health.  Moundas says while the different players in digital health may have different concerns about current reimbursement streams, they are all very interested in ways to make these kinds of initiatives provide the greatest value.

“Electronic health records were funded by the American Recovery and Reinvestment Act of 2009, which created a funding stream for providers to adopt them,” she says. “But for other digital health opportunities, ranging from health information exchanges or digital health apps, there’s not a clear path to creating a sustainable business model. And both provider organizations and technology companies are really struggling with that-and it’s an ongoing issue that will have to be addressed. Right now, we have a bit of a chicken-and-egg problem where many are nervous to get into the digital health area because they can’t make a business case with current reimbursement streams. And changing reimbursement decisions can’t happen, naturally, until there’s enough adoption to show that the value is clear.”

That’s why Moundas says it is so important for organizations across the digital health space to continue to work through the identified challenges to find a path forward for building these strategic partnerships.

“Digital health is a complex undertaking, but it is one with tremendous promise for value,” she says. “It’s where the industry is headed. So, we are advising all involved to think carefully about these challenges and obstacles and look to the successful models that are already out there, so they can find their own way forward. When these partnerships are done right, they really do have tremendous value.”

A recent study suggests healthcare organizations see reimbursement concerns-as well as differences in business culture – as roadblocks to embracing digital health partnerships.

Reimbursement Remains a Barrier to Digital Health Adoption 

, French researchers from Inserm and public assistance hospitals in Paris found that a pediatric patient’s socioeconomic status is strongly linked to length of stay and the overall cost of care. They suggested that reforming hospital payments to offset such social determinants of health (SDoH) could both help hospitals reduce their costs while improving the quality of care for such vulnerable patients.

While it might be easy to say France’s healthcare system is too different to draw comparisons, Matthew Davis, MD, MAPP, interim chair, department of pediatrics, Ann & Robert H. Lurie Children’s Hospital of Chicago and Northwestern University Feinberg School of Medicine, and colleague Kristin Kan, MD, MPH, MSc, published 

an invited commentary in the same journal issue arguing

 that the United States could also benefit from adjusting Medicaid payments in order to better provide care and support to lower income pediatric patients.

“If the healthcare industry does not consider social determinants of health, the industry will continue to ignore a major influence on patterns of health and health care utilization,” Davis says. “Over the last 10 to 20 years, the healthcare industry has invested healthy in analytics and interventions that try to leverage typical tools of healthcare itself. While those will continue to be important going forward, the leaders in the healthcare industry will be the ones who are able to distinguish themselves by understanding social and environmental influences on child and adult health-and acting to address them in partnership with patients and providers.”

Recent evidence suggests the absence of SDoH considerations in reimbursement models fundamentally distorts payment patterns for the hospitals that are more likely to serve more economically disadvantaged populations. Davis said this is a big problem-and one that has many unintended consequences for balancing costs and care.

“When such hospitals-which often are academic medical centers-experience payments that are lower than needed to appropriately care for individuals at socioeconomic disadvantage, then the academic resources and medical know-how of such institutions are put at risk for 

 socioeconomic strata, not just the populations that are socioeconomically disadvantaged,” he says.

Missed Savings from Mergers and Acquisitions

The answer, Davis and Kan stated, is to find ways to amend Medicaid reimbursements to include these vital SDOH factors. While Davis admitted that including such SDoH in reimbursement strategies remains a challenge, especially considering that most current reimbursement systems do not incorporate data about social factors for patients, making adjustments to add in that information should be relatively straightforward.

 “It’s highly likely that a payer will know the ZIP code of a residence for the patient,” he says. “The ZIP code is an extraordinarily informative connector to many social determinant measures such as poverty, education, employment, and access to healthy foods.”

Davis said that payer organizations will play a central role in implementing the kinds of changes that will allow SDoH to be addressed in reimbursements, considering they largely control the mechanics of reimbursement. But he said policy makers and hospital industry itself could also help ensure that the market makes room for different reimbursement arrangements that take SDoHs into account.

“If the potential policy remedies depend exclusively on legislative or regulatory changes in order to occur, then it is possible they could take effect with such policy advances in a short time period-as soon as a year or two, depending on policymakers’ priorities,” Davis says. “On the other hand, if the healthcare industry itself recognizes and leverages the value of considering social determinants of health in reimbursement arrangements, then the market may drive the adoption of SDoH in reimbursement even faster and farther than policy change alone could accomplish.”

Regardless, Davis and Kan said that it critical that the industry moves toward including consideration of SDoH into future payment models-to both lower costs and help patients.

“Considering SDoH in reimbursement presents an appealing opportunity not only to address inequities in reimbursement for hospitals, but also to make certain that hospitals that serve patients at high risk for poor health continue to have access to hospitals that are most accustomed to serving them,” Davis says.

Could per-person adjustments to Medicaid payments help better address social inequalities that affect overall health?

Author | Kayt Sukel

Articles

Fighting for Coverage

ACA in Limbo After New Individual Mandate Ruling

Reimbursement Remains a Barrier to Digital Health Adoption

Considering Social Determinants of Health in Reimbursement