Oregon Starts Efforts to Hold Insurers More Responsible for Costs

Remarks by leading Democrats, including Sen. Alan Bates and Gov. Kitzhaber, give credence to the new set of tools that Insurance Commissioner Laura Cali plans to implement in the health insurance rate approval process for the individual and small business markets.

Insurance Commissioner Laura Cali briefed legislators Thursday, promising a few improvements to tack onto Oregon’s already robust health insurance rate approval process for the individual and small business markets, and offering a window into the state’s goals for holding down the cost of medicine.

“We’re beefing up what we’re requesting for cost and quality controls,” said Cali, noting these metrics will record utilization rates of primary care, emergency care and prescription drugs, while the quality ratings will look at such things as diabetes management and child developmental screenings.

In further evidence that the state means business, Sen. Alan Bates, D-Medford, said insurers would be held accountable for these quality metrics at an earlier hearing Wednesday, noting the change would take place before the rate increases are approved for 2016. Cali said the information in this year’s filing would be information-only metrics to set a baseline. She added these data are already regularly gathered by insurance companies and recorded by providers.

Additionally, Gov. John Kitzhaber reiterated Thursday that he wants to ensure that the cost controls and other reforms of the CCOs are transferred from the Medicaid population to the private insurance market. He said this was a big reason he favored keeping some of the oversight for the insurance exchange housed in a downsized Cover Oregon rather than turning everything over to the federal government.

In a separate meeting with legislators, Kitzhaber told them he believes the inflation for private insurance could be stopped at 3.4 percent a year -- the rate at which CCOs are statutorily limited.

“Oregon would have a huge competitive advantage all by itself,” Kitzhaber said.

Missing Data

Jesse Ellis O’Brien, the healthcare advocate for the Oregon State Public Interest Research Group, also testified before the Senate General Government, Consumer and Small Business Protection Committee. He said one shortcoming of the rate approvals made last year was that health insurers did not seem to account for the money saved from a reduction in uncompensated care by hospitals, even as they asked for higher premiums.

Thanks to the Affordable Care Act, hospitals will see fewer uninsured patients and won’t have to pass those costs onto other customers. But the insurers didn’t factor any savings in their rate filings, O’Brien said.

It was a point that also concerned Sen. Laurie Monnes Anderson, D-Gresham. She praised the nonprofit hospitals for their charity care programs, but asked Cali if consumers should now be able to start sharing in those savings or whether the Insurance Division could track if the savings was going to other charities.

Cali replied that last year they didn’t initially ask insurers to explain what happened to such savings, but admitted the question did come up regularly during discussions with each insurer. “We weren’t able to get any further adjustment in that piece,” Cali conceded. But this year, insurers will know it’s coming and should include this data in their filings.

“We have asked for that more explicitly,” Cali said.

The Insurance Division was able to adjust rates down when insurers failed to factor in the federal and state reinsurance programs in their proposed rate hikes. Under these programs, a fee is tacked onto each premium sold and then money is filtered back to insurers that cover high-risk individuals.

“All of the insurance companies failed to account for the savings in the reinsurance program,” O’Brien said, before praising the state for knocking down rate hikes on each insurer by 1 to 2 percent as a result.

Providers Lack Transparency in Costs

Sen. Larry George, R-Sherwood, asked for more transparency in the prices that providers charge insurance carriers, blaming a cost shift from lower-paying Medicaid and Medicare onto private insurance as a leading driver in the price of insurance. 

He also said small business got a worse deal than big business. “The weaker the market position, they’re getting the cost shift to them,” said George, who owns a small business, which grows and distributes filbert nuts.

O’Brien told George he was right, but he didn’t think it was in the purview of the Insurance Division’s rate review process, since the Division only takes into account the two groups with the weakest market position -- the individual and small business markets.

“It’s an issue that goes beyond rate review. It’s not just these plans,” he said. To really see what providers charge customers of all stripes, it would likely require legislation forcing providers to provide such information. Hospital interests have argued such charges are proprietary.

Ironically, the Service Employees International Union also asked for greater price transparency from hospitals, and had drafted a ballot measure to require hospitals to list charges up front as paid by different parties.

The labor union pulled that ballot measure along with a host of others at the request of Kitzhaber, who negotiated with business groups to get them to drop a union-busting “right-to-work” ballot measure at the same time, and, in return received their support for tax reform.

Sen. Chip Shields, D-Portland, has used his bully pulpit as chair of the committee to draw attention to Oregon’s relatively poor level of price transparency, inviting national experts who have compared Oregon negatively to more progressive New England states, where hospitals are required to share such data with consumers.

Chris can be reached at the [email protected].

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