Transcript April 21, 2006 - Legislative Update by Michael Wardrip

April AAHU Legislative Update Program
April 21, 2006
Presented by Michael A. Wardrip LUTCF,
GAHU Director of State Governmental Affairs
Contact info:
Phone: 678-880-0986
email: [email protected]
Cellphone: 678-697-6213
This program will contain a general report
on final legislative action in the 2005-2006
term, followed by discussion of a couple
of major focus items for GAHU.
The first section will take an hour, followed by a break
for AAHU business, and the conclusion of the
presentation. If you have interest or want to make input
today in our legislative programs going forward, you will
want to stay for the second half.
Significant bills passed by
both houses in 2006
*We don’t have reliable info on which have
been signed, not signed or vetoed by the
Governor.
HB 246 Prescription drug orders;
electronic transmission; amend provisions
This bill is most significant because it settles
Kaiser's mail order pharmacy issue. The bill is
narrowly drawn so it only applies to Kaiser.
It is the result of a three year campaign.
Perhaps after a few years of successful
operation, the rest of the industry can formulate
their strongest arguments for why this program
will need to be expanded.
HB 425 Insurers; permit food and
refreshments under certain
circumstances
Clarifies what is permitted during group sales
presentations where meals/refreshments are
concerned.
Previous versions appeared to make buying a
client a meal illegal. This specifically allows
that.
HB 1178 Prescription drugs; unused; medically
indigent persons; establish program
This establishes a program whereby unused prescriptions are
properly reused for the benefit of an indigent patient.
A controversial element is added in Section 2A allowing a
pharmacist to file an objection to dispensing of medications
designed to terminate a pregnancy. It does not however allow
an objection to dispensing birth control medications.
The bill also makes loans more available for physicians
attempting to establish practices in underserved areas of the
state and allows military personnel not to be counted for
purposes of determining a county’s “rural” status.
HB 1257 Insurance; certain change of
address filings; exempt from fee
This bill was sent to conference so the HSA tax break bill
could be added, giving incentives for people to buy them.
It would have made the HDHP premium exempt from state
income tax and state premium tax.
For unknown reasons, the bill could not move out of
conference and pass with the HDHP tax exemptions on it,
so they were stripped.
Here is a summary of the sections of the bill:
Sections 1 through 5 contain a feature that deals with
reimbursement for ambulance providers which was the
product of an agreement between and insurers and a group
representing the ambulance providers.
Section 6 provides that an agent’s change of address filing
will be done without a fee if submitted electronically.
Section 7 allows the Commissioner to waive the exam
requirements for an applicant for a Counselor’s License
based on the applicant́s experience and qualifications and
pursuant to a regulation adopted by the Commissioner.
Section 8 requires that the address of the principal location of
an insurance agency be maintained by the Commissioner.
HB 1304 Life insurance; proceeds;
provisions
The bill protects proceeds of life insurance
policies from attachment unless assigned to a
creditor
HB 1371 The Pharmacy Audit Bill of
Rights; enact
This issue was battled out between insurers,
PBMs and the pharmacists.
The bill establishes the parameters for pharmacy
audits, how they are to be conducted and terms
for recoupment by PBMs and insurers.
HB 1372 State health benefit plans;
termination of coverage; provisions
Many departments were not submitting
premiums on a timely basis to DCH.
This bill establishes cancellation procedures for
these departments.
HB 1451 Long-term Care Partnership Program;
revise certain definitions
A major program that will open new LTC markets with
incentives for individuals to buy LTC coverage
Last year we passed state LTCP legislation under HB 643.
On February 1, 2006, Congress passed and the President
signed the 2005 Deficit Reduction Act which expands statesponsored LTCP programs. As a result, we looked back at
our own bill and determined we needed to make significant
changes to comply with federal definitions and anticipate
regulations that will be promulgated by HHS.
The second section of this program contains more detailed
information on implementation of Georgia’s LTCP program.
HB 1456 Accident and sickness policy;
age of dependent; provisions
This is a bill with significant language on qualifying events
for individual health insurance and with renewal options.
Section 1 allows individuals to switch policies at any
renewal, to a comparable product offered by their insurer
with more limited benefits; to a product with higher
deductibles; or to any optional higher deductibles under the
existing policy. If such change is elected in the 60 day
required period after notice of renewal but before renewal
date, they are not subject to new preexisting conditions
exclusions that did not apply to the original coverage.
Section 2 allows dependents that “age out” of their parents
or guardians’ coverage to elect a comparable plan from the
insurer without regard to health status.
HB 1484 Personal insurance; insurable
interest; clarify circumstances
This clarifies the Code with respect to insurable
interests of trusts and other financial
agreements and planning vehicles. It is to
offset some recent cases eroding confidence in
trusts in other states.
SB 306 Hospital/Nursing Home Liens;
change notice/filing provision; effect of
release
This is fairly broad legislation dealing with
medical liens.
It establishes standards as to timeliness with
respect to efforts by the operator of a hospital,
nursing home, physician practice, or provider of
traumatic burn care medical practice to perfect
a lien against a patient and/or anyone else
liable for medical expenses due such providers.
SB 384 Interstate Insurance Product
Regulation Compact; enact; regulate
designated insurance products; create
commission
When 26 states or enough states to make up 40% of
the market for Life, LTC and Disability join, this will be
a clearinghouse for product filings, etc.
This will be especially important for nationally
promulgated regulations that will govern Qualified
LTC Partnership Program policies.
Major focus bills for GAHU
during the 2006 session

Georgia Assignment Pool Underwriting
Authority (HB 1359)

Georgia Long Term Care Partnership
Program (HB 1451)
Georgia Assignment Pool Underwriting
Authority (HB 1359)
Final legislative status report

HB 1359 advanced as far as HB 320 had in the 2005
session, but did not make it out of the Senate Rules
Committee to pass on the Senate floor, which would
have been an almost certain outcome if it had come
out.
 Opposition organized after the bill moved out of House
Insurance Committee, but was not able to stop it before
it was voted on the House floor and pass with a 123-35
margin. On the other hand, the opponents were able to
use a flanking maneuver and advanced to work the
Senate while we were still focused on getting the bill out
of the House.
 They also managed to recruit powerful business entities
such as the GA Chamber and NFIB to oppose the bill,
which made it a real hot potato, and ultimately led to its
defeat.

The greatest controversy on HB 1359 was its
funding mechanism, which was virtually
identical to the one in the original version of
HB 320 when it was offered in the beginning
of the 2005 session.
 Various options have been examined which
would have been far less controversial in
some respects, but a consensus could not be
established among the Commission members
on them.
 They included appropriations funding,
Premium Tax earmarking and offsets against
assessments in the event the General
Assembly failed to appropriate the needed
funds to run the program.



When things looked grim after a meeting of the bill’s
sponsors with a committee room full of opponents, a bill
was drafted at Rep. Ron Forster’s request that removed
the assessment language and focused on establishing
the board in order to do administrative work and apply
for federal startup funding.
This version of the bill was taken directly to the
Governor by the bill sponsors with no extra time to
spare to get a bill on the final Senate Rules Calendar for
the 39th legislative day. The Governor did not object to
moving the bill and a special meeting of the Insurance &
Labor Committee was called in order to pass HB 1359.
Our sponsors went to Rules three times, but ultimately
there was to be only one real shot to get the bill on the
calendar. Efforts were made to attach the bill when it
failed to move out of Senate Rules, but these options
ran out as time ran out before the close of legislative
business on the 40th day.
The health insurance industry, with one exception
(Assurant) either sat this one out or worked the
opposition.

Insurers with any substantial exposure to the selfinsured market were hard pressed to offend their selfinsured clients when the heat went up. On the other
hand, we have not pressed the carriers to adopt a
cogent policy on how they propose to address the
uninsurable issue. They may have commented to the
Commission, but that is not their own statement of
intent. Any campaign on the issue must involve their
participation and support. Otherwise it would fail
again.
We have not made the plight of medically
uninsurable individuals enough of a constituent
issue for legislators.




With a major election coming right around the corner,
the opportunity exists to develop a communications
campaign to accomplish this.
In 2004, we launched our first ever candidate survey.
We were pleased with a 30% response rate from 514
candidates for House and Senate seats and that
helped us establish a base of support for our
legislative agenda when the GOP took the House and
solidified its hold on the Senate.
Friends who had indicated support for our issues
were suddenly thrust into leadership positions in the
House to match relationships we have developed
over years in the Senate.





We can rely on sentiment favoring a solution to the
uninsurable issue. The question is, what is the
opinion of legislators regarding how to pay for it?
You as our members in the individual market are
the engine for the constituent concerns for your
clients who cannot obtain coverage.
We do not have to worry about violating a client’s
HIPAA privacy rights if they voluntarily contact their
legislators after rejection for coverage.
It is up to us to design the communication program
that makes this happen.
With lots of corporate layoffs and premiums
escalating in the group market, you will have lots
of opportunities to direct individual clients to their
legislators or candidates running in their districts.
How do we participate in the debate about how
to pay for the pool?




It is a certainty that we should not lead the discussion
on funding, but we should definitely voice our concerns
if policymakers head in a direction to repeat battles we
have already fought and lost.
When we worked on the bill that stripped out the
assessment language, I asked GAHU to adopt a policy
position not advocating any funding approach.
Up to that time we were going along with the approach
that had been advocated by the Commission’s
members and endorsed by the House sponsors,
despite anyone’s claims to the contrary.
When the controversy intensified, there was no unity,
and that led to the bill that called for a public process in
this interim to determine how to go forward on funding.

The downside to the current posture is continued
destabilization of the market with no official
process toward a solution, along with loss of the
opportunity to capitalize on the federal startup
grants.

Real suffering is happening among those we
cannot insure.

On the other hand, the dangers of setting up the
program without funding are quite understandable
given the overwhelming sentiment against
allowing the program to become a state funded
entitlement. We know with certainty what won’t
work politically and have had alternatives brought
up that are intriguing.

The most cogent argument against the approach in
HB 1359 before the Committee substitute is the
fact employers who do not offer benefits would
bear no responsibility, along with large selfinsured/self-administered plans. That is the
argument that stuck with the broadest base in the
business community and it has to be addressed if
progress will ever be made on this issue.

One proposal is an impact fee on businesses that
do not offer employee benefits, because they will
be the most likely to impact the system and
generate assignments before and after employees
leave. ERISA issues have to be addressed, and
there of course will be those who will fight this for
their interests as a “new tax”.
The political landscape and
prospects for the future

While much attention focused on the drama of
opposing forces on HB 1359, that bill is dead. It is
time to move on and have serious discussion on how
the issue might be resolved in the future despite the
failure of HB 1359. Ultimately HB 1359 became
radioactive enough that I joked on the last day that if
they turned out all the lights in the Capitol after dark
there would still be an eerie glow from the half-life
embers of that bill.

What needs to be discussed now is how the issue of
covering uninsurables is to be debated and what are
the elements of a successful campaign to that end.
Let’s evaluate some issues:
Is there the political will for a solution
in the 2007-2008 term?



Yes is the answer if we accept the sentiments of the
Governor’s Office.
Of course there is an election ahead and the outcome
is not certain. If there is no major upset in ’06, the
leadership structure among the Constitutional Officers
and House and Senate will not dramatically change in a
way that affects our access and influence. Regardless
of the outcome though, support for a solution has been
building over a period of several years and is not so
easily sidelined by one legislative defeat.
Many major issues have remained unresolved for years
before an answer is seen and no answer ever seems to
be a final answer. We have folks already pledged to
move the issue again. We can step back and cheer
them on and help them in their mission.
Who would need to be on board
for a plan to pass?

It’s obvious the insurers need to be involved, but
we also need to reach out more proactively to the
business community and not, as was pointed out
above, get ourselves into a position of running
into a wall defending a funding mechanism that is
not of our choosing. This means somebody
needs to lead the discussion of finding solutions
that a broad base of interests can support.
Senate Insurance & Labor Chairman Hudgens
put it pretty plainly when he said everyone says
this idea is a great one and something that ought
to be done, but they all say somebody besides
my clients or interests needs to pay for it.
Ralph’s
language suggests an approach of
asking for support with his premise
established, and following that premise with
the question “Well now, how do you propose
this ought to be paid for?”
It is obvious polling and reaching out to
various groups is very labor intensive, but
the work has to be done, just like in a
political campaign.
We’ve narrowly lost a couple of campaigns,
but the fact is we have not yet fielded an
adequate team for a sustained campaign
needed to pass major legislation.




Back to team building, I was approached by the GA
Hospital Association due to the concern of one of
their members that we had missed the startup
grants authorized by the 2005 Deficit Reduction
Act.
I assured them that the operational grants program
is still in place for federal support.
Their concerns show plainly we need to do a much
better job of recruiting support from medical
providers and the groups that represent them.
Just like a grassroots campaign based on health
insurance denials, a campaign can be developed to
recruit physicians and hospitals affected by
uncompensated care costs tied to uninsurable
individuals not eligible for public sector health
plans. We should get involved in the policy
development process for these groups now.



In addition, we need to continue efforts to educate
employers on the costs they pay in insurance,
medical care and the price in general of doing
business as a result of the lack of a solution for the
medically uninsurable issue.
Small employers especially need to be aware how
unstable the small group market is because of the
migration of uninsurables into that market as a
result of unavailability of coverage for medically
uninsurable individuals.
The basic steps of involving big business have
begun, even if it was engaging in battle over
legislation. They now know there are leaders in the
House and Senate and the Governor’s Office that
have expressed the political will to pass legislation
on the issue.
Only time will tell if this time
next year we will have passed
legislation to solve the plight
of uninsurable individuals.
What role will you play?
Georgia Long Term Care Partnership
Program (HB 1451)
 Review
of the 2005 Deficit Reduction
Act
 How did the federal act affect LTCP?
 How will the program function?
 How will it benefit consumers and what
are the rules?
 When to expect the program to become
effective and the regulatory steps ahead
Georgia Long Term Care Partnership Program
(HB 1451)

The point of this segment is to explain recent
changes brought about by passage of the
federal Deficit Reduction Act of 2005.
 We passed state enabling legislation for
Georgia Long Term Care Partnership
Program last year, so the good news in this is
the changes we had to make mean the
program will now be a reality instead of
something speculative.
Review of the 2005 Deficit Reduction Act and
how that leads us to HB 1451
 Let’s
take a look at the federal language
 From
the Congressional Record
a “clean” copy of the LTCP
language in the Act
 From
Now let’s take a look at HB 1451
How did the federal act affect LTCP?

The intent is not to create any dramatic new
changes to LTC insurance, other than to open
up opportunities and incentives for individuals
and companies to purchase long term care
coverage.
 For us, there is the potential to open up a
whole new market for LTC coverage.
 There are some unintentional impacts we
need to guard against…

New anti-discrimination language will likely
lead to a need for us to introduce more
legislation in the 2007 session to update
Georgia’s LTC Code to comply with the 2000
NAIC Model Act, and move DOI to
promulgate new LTC regulations that are
consistent with those adopted per LTCP
requirements.
 We’ve already drafted the new language and
were ready to add it to HB 1451, but our
guidance from “experts” was divided and our
sponsor, Rep. Donna Sheldon was
concerned a sweeping new amendment
would complicate our chances of successfully
passing H 1451.
 We
have time to act and move at a
deliberate speed.
 Abel
Ortiz, the Governor’s Health Policy
Advisor, told me the feds liked our bill,
but we were ahead of them. HHS has
not begun to promulgate new rules for
LTCP, so much work lies ahead on the
federal and state levels.
How will the program function?

As is evident from reading the language in
the legislation, the program will provide asset
disregard to the extent dollar for dollar a
person uses his or her own qualified LTC
coverage to pay their own LTC expenses.
 This means not only will an individual not
have to spend down to near nothing to qualify
for Medicaid benefits,
 They will also be able to protect the assets
they were allowed to retain against estate
recovery.
How will it benefit consumers and
what are the rules?

In the existing four states with LTCP
programs, tens of thousands of people have
applied for LTCP participating coverage.
 Several thousand claims have been filed.
 Tens of millions of dollars of benefits have
been paid and these dollars have been paid
by insurers under LTCP policies, rather than
by Medicaid.
 In all four states combined, only about 100
LTCP program participants have ever gone
on Medicaid.
 The
insured must be a resident of the
state when the LTCP plan was purchased.
 HHS
rules will allow for exchanges, but the
person must have been a resident of the state
when the first plan was purchased.
 As a result there will be no “grandfathering” of
existing polices as was the case with HIPAA,
but exchanges will be allowed to LTCP
participating plans.
(I’m sure some of your ears perked up on that!)


The policy is a qualified long-term care insurance
policy (as defined in section 7702B(b) of the Internal
Revenue Code of 1986) issued not earlier than the
effective date of the State plan amendment.
This means the plan must be tax-qualified!
The policy meets the model regulations and the
requirements of the model Act
This is that tricky area that will require new legislation next
year.
Georgia’s LTC law is 17 years old and predates the 2000
NAIC Model Act. On the other hand, the model regs that
will be adopted by HHS will comply with the Model Act for
LTCP participating plans and the Commissioner is granted
authority to certify that LTCP participating plans comply with
the federal regulations.
 If
the LTCP insured is under the age of
61, they must purchase compound
inflation protection in their LTCP policy.
 If they are between 61 and 75, they
must purchase some type of inflation
protection, but compound inflation guard
is not mandated.
 If they are 76 or older, they may, but are
not required to purchase inflation
protection.

Special training will be required for agents
selling qualified LTCP program coverage.
 The training will cover public and private LTC
coverages and be coordinated by DOI and
DCH.
 LTCP insurers will be required to meet
extensive reporting requirements to both DOI
and HHS
 HHS, in consultation with NAIC, LTC carriers,
LTC consumer groups and the states with
experience in LTCP, will promulgate rules for
reporting requirements.
 They will also develop standards for a central
reporting data set for all the states with LTCP
programs.

A National Clearinghouse for Long Term Care
Information will be established by HHS with the
following duties, to:
(i) educate consumers with respect to the availability and
limitations of coverage for long-term care under the
Medicaid program and provide contact information for
obtaining State-specific information on long-term care
coverage, including eligibility and estate recovery
requirements under State Medicaid programs;
(ii) provide objective information to assist consumers with the
decisionmaking process for determining whether to
purchase long-term care insurance or to pursue other
private market alternatives for purchasing long-term care
and provide contact information for additional objective
resources on planning for long-term care needs; and
(iii) maintain a list of States with State long-term care
insurance partnerships under the Medicaid program that
provide reciprocal recognition of long-term care insurance
policies issued under such partnerships.

The new Georgia LTCP legislation requires that
DCH file a new Medicaid plan amendment
providing asset disregard for LTCP program
participants within 180 days of the effective date
of HB 1451.
 The date on which the LTCP program takes
effect can be no earlier than that date, but it can
be later.
 HHS will promulgate national standards for
reciprocation among LTCP program states.

This will allow for a person to purchase LTCP
participating coverage in another state and still
have asset disregard protection in a new state if
they move and benefits paid in one state will be
treated the same in all states under reciprocal
agreements.
When to expect the program to become
effective and the regulatory steps ahead



With an effective date of 7-1-2006, HB 1451 will
provide for startup of the LTCP program around the
first of 2007 or mid-year.
We will need to capitalize on the goodwill
experienced so far by this popular program to get the
Governor’s Office, DOI, DCH, DHR, the LTC insurers,
LTC consumer advocate groups and the agent
community on the same dance card to work with
HHS, NAIC and other national entities and get
Georgia and many other states up and running with
LTCP programs.
I will actively recruit a few folks in the LTC market to
assist in this project.
Q&A on remaining issues
 Thank
 May
you for your time and attention.
God bless you and your families.