Astonishment and apprehension: That’s how many Connecticut employers, insurance carriers and providers are reacting to the onset of federal healthcare reforms.

At CBIA’s Healthcare Update last week in Cromwell, several professionals talked about the approaching reforms. Speakers were Mickey Herbert, a member of the board of directors of Connecticut’s new healthcare exchange; Michelle Zettergren, senior vice president, chief sales and marketing officer for ConnectiCare; and Stephen Frayne, senior vice president, Connecticut Hospital Association. Reviewing the timeline for reform was Jill Bergman, assistant vice president, Cohn Benefits Consultants.

While the deadline for most of the Patient Protection and Affordable Care Act is 2014, directions on how to get there are incomplete, confusing and ever-changing, said the speakers. And, by the way, there are stiff penalties for not following them.

Connecticut ahead

Herbert said that Connecticut is actually ahead of most states in setting up one of first landmarks of healthcare reform. By 2014, each state has to create a health insurance exchange through which individuals and small businesses may shop for affordable, quality coverage—and Connecticut already has a board of directors and some federal funding.

While national politics (the 2012 election) and a probable Supreme Court decision next summer (on state’s court challenges) could change what ultimately happens to reform, said Herbert, Connecticut is going ahead to meet what it knows  to be guidelines and deadlines for the exchange.

Still, in a refrain repeated by the other conference speakers, Herbert said that the federal government is far from issuing regulations on how to make the exchange work.  Yet, “If we don’t move ahead,” said Herbert, “the federal government will come in and administer its own exchange.”

Dizzying mandates

Berman of Cohn Benefits described a dizzying array of new reporting requirements facing Connecticut’s employers, healthcare providers and insurance carriers.  

One of the biggest new reporting requirements, said Berman, is the Uniform Summary of Benefits and Coverage that insurance carriers will have to provide to plan participants by the end of March 2012.

Intended to give employees a clear picture of what their health plan is providing, the summary will put carriers through many regulatory hoops just to produce the documents—from strict deadlines to precise printing requirements.

In addition, and among other things in the next couple of years, employers will have to:

  • Report to the U.S. Department of Health and Human Services on their wellness initiatives.  There’s no guidance on the report yet, said Bergman, but the feds have determined penalties for noncompliance.
  • Report to their employees about the state’s new health insurance exchange, where workers may choose to shop for coverage
  • Pay new withholding taxes for employees over certain wage levels ($200,000 for individuals)
  • Offer their full-time employees “affordable” health insurance coverage or be subject to a new penalty, when the individual mandate becomes effective in 2014. What defines “full-time,” “affordable” and all of the other nuances of how this mandate would work are still unknown, said Bergman.

At a loss

ConnectiCare’s Zettergren said carriers are also facing new regulations on “medical loss ratios,” that is, being able to prove they are paying out 80% to 85%  of premium revenue on direct care and activities that improve the health of their members—such as disease management and promoting health and wellness.

If they don’t hit the required level, carriers will have to issue rebates to employers and employees. Again, the regulatory rules are complex “and they can change at any time,” said Zettergren.

Abiding by the rules for the Uniform Summary are also daunting, she added.  The reports will have to be constantly updated and issued pre-application, post-application, upon any modifications to the plan, at renewals and upon request.

And the “one-size-fits-all” approach to the summary is simplistic, said Zettergren. For example, one page is supposed to show “typical” coverage scenarios for such conditions as cancer treatments and having a baby. But treatments and costs vary widely from state to state, which will only make the report more confusing to consumers.  

All in all, she said, it’s “an administrative nightmare.”

Delicate balance

Frayne, of the Connecticut Hospital Association, said right now, Connecticut has about 61% of healthcare consumers in the state’s private insurance market, which, given the state of the economy, is a “very high level and a terrific story.”

Yet the poor economy and loss of private-sector jobs continue to shift more people from employer-sponsored plans to government-subsidized plans. The problem in Connecticut is made worse, he says, because the state “has shown little will to afford what it promises people,” by traditionally underfunding its Medicaid and Medicare obligations--leaving hospitals short-changed.

Today, hospitals’ operating margin in Connecticut is 25% lower than other New England states and about 40% lower than the national average. Which means Connecticut hospitals are doing a delicate balancing act of providing services and staying afloat fiscally.

If the economy improves and the reforms work, then a good balance can be maintained. But if reforms and the economy move even more people into subsidized programs, hospitals will be put between the proverbial rock and a hard place.

A budget-pressed state government might try to “reach into the provider mainstream” and further reduce funding, but “that’s not a model that will work,” said Frayne.

Tip-toeing

All in all, dealing with the realities of impending federal healthcare reform “is like tip-toeing in a minefield,” said Herbert. It has to be done, but there’s a lot of healthy fear and trembling.

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