Health Insurers Win Some, Lose Some

But Florida's health insurers said that the bill would result in higher costs. They argued that the direct payment is one of the reasons doctors choose to join their networks and without that incentive they will have to pay more to woo doctors. The concern is that the insurer will not be able to negotiate as low of a reimbursement rate if the insurer cannot use the prohibition of direct payment to providers outside the network as a bargaining tool. Health insurers say their pain will only get passed on to their customers in the form of higher premium costs.

"Businesses and consumers lose in two ways," said Jim Bracher, executive vice president of the Florida Association of Health Plans. "First, the higher fees to providers will be reflected in higher premiums. Second, one of the most important features in contracts with network providers is a prohibition against balance billing. This protection will be lost and employees and consumers will be forced to pay higher charges for their health care."

Balance billing laws prevent doctors in HMOs and other managed care networks from charging patients beyond the insurance company reimbursement.

The FMA's Scott said that the insurers' arguments do not hold water. He said doctors join managed care networks to gain access to a large volume of patients. He doubts doctors will leave networks and lose access to patients merely because of the direct-payment bill. "That is an absurd argument," said Scott, in regard to the insurance industry's position. "It ignores the fundamental reality of why doctors join networks."

While the insurance industry believes that the direct-pay provision will raise health costs by millions of dollars, Scott said consumers will actually benefit. "They are taken out of the mix so they don't get involved in the financial transaction between the doctor and the insurance company."

Hurting the insurance industry's argument is that some industry representatives have stated that some major insurers allow payment of benefits to out-of-network providers and have not found it necessary to use this bargaining tool in establishing reimbursement rates.

The Blues Are Unhappy

But Florida's largest insurer, Blue Cross and Blue Shield of Florida (BCBS), said the direct-payment bill would interfere with its ability to negotiate with providers, which would hurt them and major employers, including the state of Florida.

BCBS said that the bill would negatively affect the State Employees Health Insurance Trust Fund, which provides coverage to state workers. BCBS provided an analysis indicating that the 2009 costs would increase as much as $16 million. The state's Department of Financial Services commissioned its own review, which estimated an $11 million fiscal impact on the fund.

Steven Smith, BCBS's director of government and legislative relations, said that failing to stop the direct-payment bill was unfortunate for the industry. "It is definitely a disappointing session at this point," he said.

BCBS has most physicians and all but 10 hospitals in Florida in its network. Smith said that the bill will hurt the bargaining position of patients as well because they no longer will have money to hold back from out-of-network physicians to negotiate lower fees.

Insurers typically pay out-of-network providers less than network doctors, but insurers still have to pay a "reasonable and customary" fee to make the out-of-network benefit available in preferred provider organizations (PPOs) a legitimate benefit. In PPOs, clients can go to non-network providers, but they typically have to pay a higher cost. Smith and other insurers are holding out hope Crist will veto the bill.

Mixed Opinions

The insurance industry had mixed opinions on the bill that the Legislature passed that requires the "guarantee issue" of Medicare supplement policies to people under 65 with disabilities or end-stage kidney disease. BCBS officials said that they were happy with the final bill only because it called for insurers to have separate insurance pools for over 65 and under 65. But the separate-pools requirement would expire in 2015.

"While the bill allows for a temporary separate determination of premiums for this group of persons until 2015, ultimately these premium calculations will be combined with persons over 65," said Bracher of the Florida Association of Health Plans. "Since those persons under 65 generally have significant health problems, premiums for persons over 65 will be impacted."

Under the bill, companies that have offered such policies before Oct. 1, 2009, are provided a one-time opportunity to redefine the age bands used for their premium classes that include ages under 65.

In Florida, Medicare covers approximately 3.1 million people — 2.7 million senior citizens and about 430,000 people with disabilities. About a third of Medicare beneficiaries have secondary coverage with a private insurer.

The federal guaranteed right-to-buy Medicare supplement (Medigap insurance) is limited to persons who qualify for Medicare based on age and does not extend to Medicare beneficiaries under the age of 65. States, however, are allowed to make Medigap insurance available to under-65 beneficiaries. At present, 28 states, to varying degrees, do so. Ten of these states have passed such legislation within the past decade.

Expanding Medigap coverage to those under 65 results in about a two percent increase in premiums for Medicare beneficiaries 65 and over, according to a 2008 study conducted by researchers at the University of South Florida.

Nationally, eight percent of Medicare beneficiaries under the age of 65 who are able to purchase Medigap insurance do so, compared with 28 percent for Medicare beneficiaries aged 65 and over.

Significant Wins

Bracher of the Florida Association of Health Plans said that he was pleased the industry defeated several bills that would have mandated new benefits and resulted in increased health costs. These included bills requiring insurers to cover mental disorders at the same level as physical illnesses and requiring insurers to cover hospital stays for lymph node dissections often done in connection with a breast cancer diagnosis.

Another mandate that was defeated would have blocked insurers from reducing prescription drug coverage if a policyholder was already using the drug.

Florida has more than 50 mandated health benefits, though there is much controversy on how significantly they increase health costs.

One of the scariest bills facing insurers would have established minimum loss ratios for health insurers. The loss ratio is the percent of premium dollars that the insurer uses for health expenses. The bill gained little traction, as insurers argued it would rob them of any flexibility to enact administrative efforts to contain costs and improve quality.

Perhaps the most important health insurance change enacted by the Legislature was a bill that will enable more children to be signed up for KidCare, Florida's version of the federal Children's Health Insurance Program. The bill removes administrative barriers to the program by decreasing the period of time that a child is disenrolled from the KidCare program for nonpayment of premiums from 60 to 30 days.

It also reduces the waiting period from six months to 60 days for KidCare eligibility for families who have voluntarily cancelled their employer-sponsored or private health insurance and increases the number of "good cause" reasons that families can use to voluntarily cancel their health insurance and be immediately eligible for KidCare coverage without a waiting period.

The bill also increases outreach efforts to get more children enrolled. To help pay for the KidCare expansion, the state passed a $1 tax increase on tobacco products. The changes, which take advantage of new federal dollars, are expected to cover 46,000 additional Florida children.