Roger Collier points to this story detailing how Blue Cross/Blue Shield of North Carolina is shedding administrative costs in preparation for the new medical loss ratio requirements and what could become a more competitive environment within the exchanges. According to the Charlotte Observer, the company will “slash its administrative costs by 20% by 2014“:

Blue Cross expects to carve about $200 million from its annual $1 billion budget by eliminating open positions, attrition and early retirements, streamlining operations, and taking other steps to reduce expenses, said CEO Brad Wilson. He warned workers in a memorandum of “tough challenges” ahead.

The nonprofit also plans to review its real-estate portfolio, which includes more than 1 million square feet of Blue Cross offices, mostly in Durham and Chapel Hill. “Over time, Blue Cross will be a smaller company,” Wilson said in an interview.

He would not rule out layoffs among its 4,400 or so employees, most in the Triangle, but said he hopes Blue Cross can avoid them. Still, “no one can guarantee full, permanent employment in perpetuity,” he added.

Blue Cross also will work with hospitals and other providers to reduce surging medical costs. That will include some “tough negotiations” with hospital systems and others statewide, he said.

The National Association of Insurance Commissioners (NAIC) — the insurance industry funded group tasked with making recommendations to HHS about the medical-loss ratio standards in the new health care law — is still working on its final recommendations, which are expected to come out later this month, but it’s promising to see that insurers are adjusting their business models in anticipation of the new regulations. Wilson’s recognition that insurers need to do a better job of negotiating with providers is particularly promising.

AHIP has been claiming for years that its members are lowering administrative spending (“In fact, last year, the percentage of premiums that went toward
administrative costs and profits declined for the sixth consecutive year – from 13.67 percent in 2003 to 11.15 percent in 2009“), which may be true. But stories like these demonstrate that there are a lot more places where waste can be trimmed.

This afternoon, NPR’s Julie Rovner followed up on NRLC’s claim that federal funds for high-risk insurance pools can be used to pay for non-Hyde abortions in Pennsylvania’s program and received denials from state and federal officials. “[E]lective abortions will NOT be allowed in the new program,” they told her:

“Pennsylvania has not signed a contract yet to start operating their Pre-Existing Condition Insurance Plan,” said HHS Spokeswoman Jenny Backus. And when they do, she added, “our contract that states are signing says clearly that we will be issuing guidance on the administration of Pre-Existing Condition Insurance Plan so they know they will have to live by our guidance per the contract” when it comes to abortion coverage.

And that’s no problem, says Rosanne Placey, of the Pennsylvania Department of Insurance. “Very simply, federal law controls. We know that,” she said. “We absolutely do not cover elective abortions.

“We are drawing down federal money. We do that in more that one program,” she said, including Medicaid and the Children’s Health Insurance Programs, which similarly ban abortion. “We understand that.”

But as I pointed out yesterday, the Nelson abortion amendment in the health care law and President Obama’s subsequent executive order place restrictions on federal funding within the exchanges and the community health centers, but says nothing of the moneys appropriated to the temporary high risk pools or other programs like reinsurance for early retirees or the small business tax credits. For instance, consider how Obama’s EO specifically singles out the exchanges and the community health centers, but nothing else:

The Act maintains current Hyde Amendment restrictions governing abortion policy and extends those restrictions to the newly-created health insurance exchanges….The Act specifically prohibits the use of tax credits and cost-sharing reduction payments to pay for abortion services (except in cases of rape or incest, or when the life of the woman would be endangered) in the health insurance exchanges that will be operational in 2014. [...]

The Act establishes a new Community Health Center (CHC) Fund within HHS, which provides additional Federal funds for the community health center program. Existing law prohibits these centers from using federal funds to provide abortion services (except in cases of rape or incest, or when the life of the woman would be endangered), as a result of both the Hyde Amendment and longstanding regulations containing the Hyde language.

In fact, when I spoke to a source in Gov. Ed Rendell’s (D) office, they were surprised to learn that the Hyde restrictions did not apply to the federal funds for high risk pools. “Our high risk proposal and any subsequent contracts must comply with federal law and regulations. So that means that federal law and subsequent regulations would control the high risk plan here. We could not use federal money to cover elective abortions,” Placey also told me in an email. The federal legislative language seems to contradict the state’s interpretation.

Still, given the serious conditions of many of the applicants, the state says it does not expect applicants to need abortion services.

Kaiser Health News is reporting that hospitals aren’t very happy with the final “meaningful use” regulations released yesterday, even though HHS loosened some of the requirements from the draft version. The federal government is providing “$27 billion over the next 10 years to reward doctors and hospitals for installing electronic health systems,” but to receive the incentive payments, providers will have to show that they are making “meaningful use” of the technology. In the final regulation, “hospitals will have to meet 14 objectives, and at least five more goals, instead of being required to meet 23 objectives” and will be required to prescribe a smaller percentage of prescriptions electronically.

The Federation of American Hospitals, which represents for-profit hospitals, issued a statement in support of the new rules, but the American Hospital Association isn’t buying it:

Hospitals will have some additional flexibility in choosing which measures to use to qualify as “meaningful users” of electronic health records under a final rule issued today by the Centers for Medicare & Medicaid Services. At the same time, the AHA is concerned that the requirements may still be out of reach for many of America’s hospitals and more analysis is needed to determine the overall impact on hospitals. “Unfortunately, CMS continues to place some barriers in the way of achieving widespread IT adoption by our nation’s hospitals and physicians,” said AHA President and CEO Rich Umbdenstock.….However, AHA is concerned that individual hospitals in multi-campus settings continue to be excluded from the incentive payments, and that the rule requires hospitals to immediately use Computerized Provider Order Entry, “which can be complicated, costly to implement, and takes time to do right,” Umbdenstock said.

HHS issued the new regulations following extensive consultation with the provider groups and the final rules reflect their concerns. The AHA is upset, but I suspect the if everyone simply accepted the regulations, they would be fairly weak and meaningless. We’ll need to start somewhere if we’re to move to a interoperable standard and if hospitals are to begin reducing costs by 1.5 percentage points each year as they and other health care interest groups promised during the health care reform debate.

Today, the administration is unveiling the preventive services insurers will be required to cover with no co-pays or out-of-pocket costs beginning September 23. “Cancer screenings, including mammograms and colonoscopies, as well as obesity prevention services, immunizations, blood pressure screenings and tobacco cessation services are among those that will be available” at no extra charge, the Wall Street Journal reports. Sen. Jon Kyl (R-AZ) took credit for this provision on Monday and Republicans seem to agree that identifying diseases before they become chronic is a smart way to reduce health care spending over the long term.

But as Dana Goldstein pointed out yesterday, many Republicans don’t think the same is true for family planning services, which could also be available at no additional charge. Regulations for women-specific preventive services — the result of Sen. Barbara Mikulski’s (D-MD) amendment — are expected to be issued in the near future, but Republicans are already laying the groundwork for opposition. From Goldstein’s piece:

The conservative groups are particularly worried that a birth control coverage mandate could include teenage girls and young women covered under their parents’ health insurance plans. “People who are insured don’t want to pay for services they don’t need or to which they have moral objections,” said Chuck Donovan, senior researcher at the Heritage Foundation. “Parents want to have a say over what’s covered and what’s not for their children.” [...]

“I don’t want to overstate or understate our level of concern,” said McQuade, the Catholic bishops’ spokesperson. “We consider [birth control] an elective drug. Married women can practice periodic abstinence. Other women can abstain altogether. Not having sex doesn’t make you sick.”

Planed Parenthood and other health organizations are lobbying HHS to include birth control and other family planning provisions in the category of cost-exempt preventive services, noting that increasing co-payments often put birth control out of reach for lower income women. “Average copayments in employer-sponsored insurance have increased considerably over the past decade, to as much as $46 in 2009 for many brand-name drugs,” one study showed.

Investments in affordable contraception leads to better health outcomes and overall cost savings. As the Guttmacher Institute notes, “every $1 invested in public dollars for contraception saves $3.74 in Medicaid expenditures that otherwise would have been needed to provide pregnancy-related care (prenatal, labor, delivery and postpartum care) for women’s unintended births, as well as one year of medical care for their infants.” And medically, “unintended pregnancies are serious in terms of the lost opportunity to prepare for an optimal pregnancy, the increased likelihood of infant and maternal illness, and the likelihood of abortion.” “The mother is less likely to seek prenatal care in the first trimester and more likely not to obtain prenatal care at all. She is less likely to breastfeed and more likely to expose the fetus to harmful substances, such as tobacco or alcohol. The child of such a pregnancy is at greater risk of low birth weight, dying in its first year, being abused, and not receiving sufficient resources for healthy development.”

Guttmacher estimates that publicly funded contraceptive services and supplies alone help women in the United States avoid nearly 2 million unintended pregnancies each year.