Closing the Medicare doughnut hole. Pre-existing conditions. Extending dependent coverage. Preventive Care. Limits and denials. Reinsurance for early…

Closing the Medicare doughnut hole. Pre-existing conditions. Extending dependent coverage. Preventive Care. Limits and denials. Reinsurance for early retirees ... checkup time

By Amy Jeter | The Virginian-Pilot

The rubber hits the road this week for the Affordable Care Act, as most Americans will be required to have health insurance or pay a penalty.

But the health care law's journey began nearly four years ago, and many tenets of the 900-page legislation have already taken effect.

Here's a look at its impact in Virginia so far:

policy change

Closing the Medicare doughnut hole

The doughnut hole is a gap in coverage from Medicare prescription drug plans. In most cases, recipients must pay a larger portion of drug costs at this stage.

It starts after the recipient and the plan pay a certain amount ($2,970 in 2013) and ends when the recipient's total out-of-pocket spending reaches the catastrophic stage ($4,750 in 2013). Before 2010, people on Medicare paid 100 percent of their drug costs while in the coverage gap. The health care law phases out the doughnut hole by 2020.

Took effect: Rebates, discounts and increased coverage to close the doughnut hole began in 2010.

How did it go? Shortly after the Affordable Care Act was signed into law, seniors entering the doughnut hole were sent one-time $250 rebate checks.

In 2012, people on Medicare in the doughnut hole received a 50 percent discount on covered brand-name drugs and 14 percent off generic medicines.

More than 80,500 Virginians benefited from the discount, totaling over $58 million, according to the federal government. The average discount per beneficiary was $716.

Some had wondered if drug companies would nullify any savings by raising prices. That didn't seem to happen, and seniors have been pleased with the discounts, said Jim Hutchinson, benefits counseling team supervisor for Senior Services of Southeastern Virginia: "There really is a substantial savings."

policy change

Pre-existing conditions

The Affordable Care Act set up the temporary Pre-Existing Condition Insurance Plan for people who were denied insurance or quoted extremely high rates because of a medical condition. The plan was meant to provide them coverage until 2014, when, under the health care law, private plans no longer can reject people or charge higher rates because of their medical histories. Because of problems with the health insurance marketplaces, the plan has been extended to the end of January.

Took effect: Enrollment began in July 2010.

How did it go? The program started slowly, and federal officials dropped the price of premiums in Virginia by 40 percent after less than a year.

The government had predicted that as many as 375,000 people would enroll in the plan nationwide; ultimately, about 135,000 did.

However, their claims were so expensive, the program stopped accepting new enrollees in February and payment rates were reduced in May to avoid exhausting the $5 billion fund.

Virginia was allotted $113 million. The plan covered 2,893 Virginians, according to the federal government.

For some patients with serious, chronic conditions such as cancer and heart disease, the program offered the most viable option, said Beth Patterson, president of mission delivery for the Patient Advocate Foundation. But it wasn't perfect.

Some didn't benefit from the plan because they couldn't go six months without coverage, as was required to qualify. For others, the program was unaffordable.

Still, Patterson said, "it was a step in the right direction."

policy change

Early retiree reinsurance

The federal government set aside $5 billion for a temporary program to help approved organizations pay the most expensive claims for retirees between 55 and 65 and their families. The program was scheduled to end in 2014.

Took effect: The government started accepting applications in June 2010.

How did it go? Nearly 140 Virginia employers, including several South Hampton Roads governments and school divisions, were among 5,699 across the nation that were approved.

Although the program originally was intended to run through 2013, its popularity forced officials to stop accepting reimbursement requests for claims incurred in 2012 or beyond. The federal government recovered about $54 million in overpayments, which it is using to pay outstanding requests.

The city of Virginia Beach was approved for the program, and consultants estimated that it could receive about $1 million to help with large claims from retirees. However, funding ran out before the Beach could benefit from the program, according to Linda Matkins, the city's director of benefits.

"Anyone who was even mildly cynical sort of took a quick look at that and said, 'This is just money to make employers happy,' " said Karen Pollitz, senior fellow with the Kaiser Family Foundation. "It didn't seem to make any difference at all in terms of expanded retiree health coverage, or eligibility for retiree health coverage, or continuation of retiree plans."

policy change

Extending dependent coverage

Families can include adult children up to age 26 on any individual or group health policy.

Took effect: For plan years beginning on or after Sept. 23, 2010.

How did it go? In 2009, about 73 percent of Virginia civilians ages 18 to 24 had health insurance, according to the U.S. Census. In 2012, the proportion rose to 77 percent, with about 10,300 more young adults reporting coverage.

The share of 25- to 34-year-olds with insurance dropped from 75 to 73 percent during that period, although the number of civilians in that age group reporting that they were insured increased by 21,400.

Before the change, parents already could keep dependents on their employer-based plans if they paid the full premium. It was an option generally selected for young adults who needed significant medical care, Pollitz said.

Some states passed laws allowing the extended coverage before fall 2010, but the change to federal law meant employer plans had to comply.

Dr. Michael Charles, medical director for clinical effectiveness for Sentara Medical Group, said more young adults were seeking health care as a result of the change: "It did meet a need in that population."

Nationally, government officials estimate that more than 3 million young adults gained coverage from this provision.

"A lot of kids came back on," Pollitz said. "Chances are, they were healthier. So it probably didn't add enormously to the cost of employer health plans."

policy change

Preventive care

New health plans must cover without cost-sharing certain preventive services. In some cases, a person must be at a higher risk for the condition in order to qualify. Services include recommended immunizations and some screenings. Medicare also began providing some preventive services with no cost-sharing, including an annual wellness visit.

Took effect: For private plan years beginning on or after Sept. 23, 2010. Began for Medicare in January 2011.

How did it go? Dr. Daniel J. Dickinson, medical director for clinical integration for Sentara Medical Group, said, "We've seen significant increases in the percentage of our patients that are receiving recommended services, including immunizations, mammograms and other services. But it's hard to know whether the increases we've seen in the last two years - since 2011 - are due to affordability or other interventions that we've put into place since that time."

Other factors, he said, include more reminders, incentives and other encouragement from providers, insurance companies and employers.

In Virginia, more than 750,000 people on Medicare received at least one preventive care service at no cost to them during the first 11 months of 2013, according to the federal government. About 106,500 underwent an annual wellness visit.

Hutchinson said the preventive services are most beneficial for new Medicare recipients, some of whom haven't had affordable coverage before aging into the program.

"If you're 80 years old, you probably won't think much of preventive services," he said.

Annual physicals without cost-sharing are a benefit that Medicare recipients have wanted for years, he said: "That's a great benefit because it automatically gives them a reason to go to the doctor."

policy change

Limits and denials

Health plans are prohibited from denying or limiting coverage to children because of pre-existing conditions and from placing lifetime dollar limits on most benefits. Insurance companies can no longer rescind coverage because a member got sick or made a mistake on an application.

Took effect: For plan years beginning on or after Sept. 23, 2010.

How did it go? All three changes were steps toward greater changes scheduled for 2014.

Most large employer plans stopped denying coverage for anyone with pre-existing conditions several years ago, due to other laws, Pollitz said. With the 2010 change, non-group plans no longer could deny children coverage because of a pre-existing condition, but they could charge more. Sometimes, that kept sick kids off the plans.

"Insurers that wanted to could just use a different method to make them go away," Pollitz said, adding that children will see a greater benefit next year, when plans can no longer charge more for pre-existing conditions.

Similarly, doing away with lifetime limits had less impact than doing away with annual limits will - a change scheduled for 2014 - because few people actually hit lifetime limits.

People most at risk for a rescission were those in the individual market who filed large claims in the first few years on the policy, Pollitz said. Insurers would review their paperwork and sometimes find reasons to take away the coverage.

The 2010 change protected people from being dumped from plans after an expensive claim, but it didn't limit the premium increase that insurers could charge upon renewal. Starting next year, premiums in the individual and small group markets may vary based only on age, tobacco use, family size and geography.

"The widespread impact was to make coverage more secure for people," Pollitz said.

policy change

Medical loss ratio

Insurance companies must give consumers refunds if they fail to spend 85 percent of large-group premium revenue and 80 percent of individual and small-group revenue on either medical care or quality- improvement efforts versus administrative costs.

Took effect: Rebates first became available in 2012 for coverage purchased in 2011.

How did it go? Insurers returned a total of $43.1 million to Virginians in 2012, with 687,000 people benefiting. The average refund per family was $115.

In the program's second year, Virginia's total rebate amount dropped to $11.9 million for plans covering about 236,000 people. The average amount was $88.

Pollitz said the decrease in rebate amounts actually is good for consumers.

"It means that insurance got more efficient," she said, "that insurers used more of your premium dollars to pay claims and less to pay for operations - essentially their computers, their staff and CEO salaries, their profits - so that you're getting more for your money in terms of coverage."

policy change

Rate review

Insurance companies must publicly justify requests for premium rate increases of 10 percent or more for plans in the individual and small-group markets.

Took effect: Began in 2011.

How did it go? Before this change was implemented, three out of four requests for premium increases were for hikes of 10 percent or more, federal officials say. Now, their requests reach that level 14 percent of the time.

Virginia'sBureau of Insurance hasn't tracked this information on the state level, according to spokesman Kenneth Schrad. A Kaiser study of requests published online showed that, in 2011, federal officials reviewed three Virginia requests for increases of 10 percent or higher. The average requested change was 14 percent, and all three were found to be unreasonable. According to the study, Virginia officials reviewed 70 filings in 2011. The average rate change request was 2.9 percent, which also was the average rate change implemented.

Virginia received $1 million to bolster its rate review.

Earlier this year, the General Assembly changed state law, expanding the bureau's authority to review rates of all plans in the individual and small group markets. Virginia now has an "effective rate review" program and has been responsible for reviewing rates in both markets since April.

The new rate-review rules and the medical-loss-ratio standard work together to keep premium rates in check, Pollitz said.

"If there's more stringent and exacting rate review at the front end, you're going to see less rebates from the medical loss ratio on the back end," she said. "Insurers know that, even if they're getting a free pass on the rate increases, there's only so much of it they're going to be allowed to keep."

Amy Jeter, 757-446-2730,[email protected]