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S  2997-G.  LEGISLATIVE  INTENT.  THE  LEGISLATURE  HEREBY  FINDS  AND
DECLARES  THAT  IT  IS  IN THE PUBLIC INTEREST TO ENACT A STATEWIDE SAFE
PATIENT HANDLING POLICY FOR HEALTH CARE FACILITIES IN  NEW  YORK  STATE.
WITHOUT  SAFE  PATIENT  HANDLING  LEGISLATION, IT IS PREDICTED THAT THE
DEMAND FOR NURSING SERVICES WILL EXCEED  THE  SUPPLY  BY  NEARLY  THIRTY
PERCENT  BY  THE YEAR TWO THOUSAND TWENTY THUS DECREASING THE QUALITY OF
HEALTH CARE IN NEW YORK STATE.   THERE ARE MANY  BENEFITS  THAT  CAN  BE
DERIVED  FROM  SAFE PATIENT HANDLING PROGRAMS.  PATIENTS BENEFIT THROUGH
IMPROVED QUALITY OF CARE AND QUALITY OF LIFE BY  REDUCING  THE  RISK  OF
FALLS, BEING DROPPED, FRICTION BURNS, SKIN TEARS AND BRUISES. CAREGIVERS
BENEFIT FROM THE REDUCED RISK OF CAREER ENDING AND DEBILITATING INJURIES
LEADING  TO INCREASED MORALE, IMPROVED JOB SATISFACTION AND LONGEVITY IN
THE PROFESSION. HEALTH CARE FACILITIES REALIZE A QUICK RETURN  ON  THEIR
INVESTMENT  THROUGH  REDUCED WORKERS' COMPENSATION MEDICAL AND INDEMNITY
COSTS,  REDUCED  LOST WORKDAYS AND IMPROVED RECRUITMENT AND RETENTION OF
CAREGIVERS. ALL OF THIS WILL LEAD TO FISCAL IMPROVEMENT IN  HEALTH  CARE
IN NEW YORK STATE.
  S 2997-H. DEFINITIONS. FOR THE PURPOSES OF THIS TITLE:

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It’s the law: New York health care workers must get flu shot or wear mask

A nurse wears a face masks as protection against the influenza virus, as she attends to Fabian Guevara at a public hospital in Santiago.  AP

By Mary Frost
Brooklyn Daily Eagle
Get ready to see more doctors and nurses wearing masks. New rules adopted by the New York Health Department requires all health care workers -- even volunteers -- at hospitals, nursing homes, and other healthcare agencies to either get their flu shots or wear face masks when working with patients.

After last year’s heavy flu season, state Health Commissioner Nirav R. Shah said that health care personnel come into contact with many patients who have chronic conditions, making them more susceptible to flu infections. “This regulation will enable health care workers to meet their obligation to do no harm to patients," and will protect workers as well, he said.

Health care worker vaccination rates are typically below recommended levels, at only 48.4 percent, according to DOH. Masks are not as effective as flu shots, but are better than nothing.

New York State and the nation experienced the worst seasonal influenza season in a decade in 2012-2013, with flu activity strongest from November through April. However, seasonal flu activity can begin as early as October, and usually peaks in January or February.

The requirement that health care workers wear masks will be in effect “during the time when influenza is categorized as prevalent in New York State,” said DOH.

Many health care workers support the new requirement. 1199 SEIU President George Gresham said during last year’s flu season, "We are steadfast in our commitment to protecting the health of our patients and the communities where we work. We strongly support this measure as a sensible precaution to prevent influenza transmission."

The flu vaccine takes about two weeks to establish antibodies. It typically contains three common strains of flu virus, but this year about a fifth of the doses will be supercharged with a fourth strain. These four-strain vaccines are called “quadrivalent.” (All nasal spray vaccines are expected to be quadrivalent.)

Quadrivalent influenza vaccines provide expanded coverage against influenza virus compared to traditional trivalent vaccines. They protect against two influenza A virus strains and two influenza B virus strains. Trivalent vaccines provide coverage against two influenza virus strains and only one influenza B virus strain.

While influenza B accounts for only one quarter of influenza activity each season, it hits kids harder than influenza A. Scientists never know exactly what virus strains will predominate every year, so the quadrivalent vaccines could be especially beneficial to youngsters.

All people six months and older should get an influenza vaccination before the start of each flu season.

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The following example illustrates a regression model approach3
to developing a risk score for a
single member:
Risk Marker Risk Weight
Male, Age 32 0.22
Diabetes with significant co-morbidities 1.32
Asthma/COPD 0.96
Low cost dermatology 0.30
Total Risk Score 2.80


The risk score for a particular individual is the sum of the weights associated with all conditions
that the data indicate the person has (2.80 in the above example). Diagnosis codes and/or
pharmacy national drug codes (NDCs) map to the condition categories.
The ACA Risk adjustment is a permanent program (i.e. will continue indefinitely as opposed to
reinsurance and risk corridors which are only in effect from 2014 through 2016), applying to the
individual and small group markets.
Reinsurance in the context of this paper is a term used to describe methods for protecting
health plans against high cost individuals. Reinsurance methods usually pay back health
insurance companies for some portion (called coinsurance) of costs above some level (called
the attachment point). Sometimes, there is a maximum reimbursement amount or maximum
amount to which the reinsurance will apply, as is the case in the ACA’s reinsurance program.
The following example highlights the structure of the ACA’s reinsurance program and how it
differs from typical commercial reinsurance.

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Therefore, if New York decides to pursue an alternative risk adjustment program, they will only
be able to modify data collection, the choice of the risk adjustment model, and the calculation
of plan average actuarial risk. Besides the basic choices of model and data collection approach,
the following key technical decisions will need to be made if New York administers risk
adjustment:
a) Prospective vs. Concurrent/Retrospective model
b) Consideration of metallic tiers
c) Include pharmacy categories or not
d) Data fields to be used (e.g. first five diagnosis fields versus all available)
e) Rating variables and rating variable integration
f) Area calculations and adjustments
g) Scoring for members with limited experience
h) Whether to phase-in the application of risk adjustment
i) Whether to adjust the model parameters for reinsurance payments
4
A number of risk adjustment models are currently being used for risk-adjusted payment in Medicare, Medicaid
and other public programs including Medicare’s HCC, CDPS, MedicaidRx, ACGs, ERGs, and DxCG. Others have been
developed specifically for reform programs including Milliman’s MARA, Johns Hopkins’ ACG reform model, and
Wakely’s WRA model. Support for This Resource Was Provided By a Grant from the Robert Wood Johnson Foundation’s
State Health Reform Assistance Network Program
Page 9
The types of data used is likely a more important decision than which software model to use.
All models use demographic data and with that diagnosis data, pharmacy data or both
pharmacy and diagnosis data. There are a number of important data characteristics to consider
in selecting a model that uses diagnosis data, pharmacy data or both:
Diagnosis Data
1. More difficult to collect
2. Data quality can be a problem for some organizations and differences in data quality can
drive some of the differences in risk scores
3. May take several months to be reported to health plan
4. Diagnosis codes are relatively stable (major updates don’t frequently happen. The ICD-
10 conversion may happen in 20145
, but this should not create any major challenges
because the ICD-10’s map fairly easily to ICD-9’s)
5. More differentiation within condition categories, especially for a concurrent model
which is recommended for 2014 and 2015.
6. May incentivize providers to record diagnoses that are more severe than the actual
condition the patient has
7. Diagnosis only risk adjustment models have shown good statistical performance,
although real world conditions hamper their performance more than pharmacy models.
Their statistical performance increases significantly compared to pharmacy only models
under concurrent application.
8. Use of diagnoses to develop risk adjustment categories allows model builders more
discretion in defining condition categories for payment than pharmacy only models
allow. This makes it easier to develop a risk adjustment system that incentivizes
efficient care delivery.
Pharmacy Data
1. Easy to collect
2. Relatively uniform quality across organizations as long as pharmacy benefit is provided
uniformly
3. Reported quickly to health plan after the prescription is filled
4. Pharmaceuticals change relatively quickly (new drugs or formularies)
5 Was originally scheduled to occur in late 2013, but has been delayed.Support for This Resource Was Provided By a Grant from the Robert Wood Johnson Foundation’s
State Health Reform Assistance Network Program
Page 10
5. May not differentiate well within disease categories
6. May incentivize health plans or providers to prescribe drugs that will not benefit and
may harm patients in order to maximize revenue. However, given that the pharmacy
only approach would only be used in transition, it would be unlikely to create
meaningful incentives for health plans or providers to behave in detrimental ways.
7. Off label uses may create false indications for some conditions
8. People tend to use prescription drugs on a regular basis, so the underlying condition
shows up relatively consistently in the data
9. Pharmacy only risk adjustment models have shown good statistical performance under
real world conditions (similar or better for prospective applications, but worse for
concurrent applications)
10. Use of pharmacy only model does not allow model builders much discretion in defining
condition categories for payment. Therefore, the use of a pharmacy only model makes
it more difficult (or impossible) to develop a risk adjustment system that incentivizes
efficient care delivery.
Of all of the issues above, one of the primary concerns is the quality of data acro

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6.1 Determine Program Governance and Oversight
When establishing a risk adjustment or reinsurance function, the state must first decide where
the function will reside and who will govern it. Risk adjustment and reinsurance functions
managed by the state can be overseen by the exchange or by another public agency within the
state. The decision-making process for establishing a governance structure will be driven both
by an assessment of existing capacity for data collection, analysis, and related regulatory
oversight functions, as well as a strategic and policy assessment of where these functions best
fit within the overall structure of health care reform. The exchange has a dual role that
encompasses functions analogous to a private company as well as regulatory and oversight
functions more similar to a government agency. Although at times advantageous to play both
roles simultaneously, finding the appropriate balance can be challenging. Some states may elect
to combine both types of functions within the exchange; others may seek to differentiate
purely regulatory functions from more market-oriented functions.
Recommendation: We would expect DOH and DFS to have roles in the programs. DOH is
adept at handling detailed encounter data and running a commercially available risk
adjustment model (CRGs from 3M). DFS has substantial experience administering risk
mitigation programs, collecting assessments, reviewing rate filings in the commercial market,
and auditing health plan data submissions. Authority for the programs could lie at DOH, DFS,
or a new agency or sub-agency.
6.2 Program Financing
State options and requirements for financing the administrative aspects of risk adjustment and
reinsurance programs differ between the start-up/development period (prior to 2014) and the
operational period (2014 and beyond). In the pre-2014 start-up period, costs will be incurred to
develop the infrastructure and functionality of the programs, as well as conducting initial
analysis, simulations, and stakeholder outreach, but will not have an ongoing, dedicated
revenue stream. In most cases, financing for these initial development and implementation
expenses can be sought through Exchange Establishment grants from CMS. Once operational in
2014, states will need to develop an ongoing revenue source to support the administration,
staffing, and ongoing maintenance of the programs.
Final regulations allow states to increase the reinsurance assessment to finance the
administration of the reinsurance program, so no additional state or federal funding is required
for the operation of the reinsurance pool. For risk adjustment, no such assessment is provided
in the regulations, so states will likely need to develop a financing mechanism to support the
program’s ongoing operations. As they do for financing the exchange, states have options with
respect to a source of funding. New York has received grant funding for the initial design and
development of these programs. Ongoing cost can be included in the funding mechanism used
to finance the exchange (e.g., an assessment on participating QHPs or on the entire market).Support for This Resource Was Provided By a Grant from the Robert Wood Johnson Foundation’s
State Health Reform Assistance Network Program
Page 22
To determine the appropriate structure and financing source, as well as to assess the overall
feasibility of supporting state administration of this function, New York must first assess the
overall cost level required to run the risk adjustment program. Key cost drivers for the ongoing
maintenance and operations of the program will include the resources needed to staff and
maintain the collection and storage of data; staff resources to perform ongoing reporting and
analysis; staff resources to perform important plan management and communication functions;
software licensing and updating costs; vendor costs in cases where key functions are
outsourced; and actuarial and consulting fees for the development and analysis of program
models and parameters.
Recommendation: After making design decisions, New York will need to develop a staffing
and operations model, and then identify an ongoing revenue stream to fund risk adjustme

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High-End Health Plans Scale Back to Avoid ‘Cadillac Tax’

Matthew Ryan Williams for The New York Times
Abbey Bruce, a nursing assistant who works a second job cleaning, will pay a sharply higher deductible.
By REED ABELSON
Published: May 27, 2013

PRINT
REPRINTS

Say goodbye to that $500 deductible insurance plan and the $20 co-payment for a doctor’s office visit. They are likely to become luxuries of the past.

Get ready to enroll in a program to manage your diabetes. Or prepare for a health screening to determine your odds of developing a costly health condition.

Expect to have your blood pressure checked or a prescription filled at a clinic at your office, rather than by your private doctor.

Then blame — or credit — the so-called Cadillac tax, which penalizes companies that offer high-end health care plans to their employees.

While most of the attention on the Obama administration’s health care law has been on providing coverage to tens of millions of uninsured Americans by 2014, workers with employer-paid health insurance are also beginning to feel the effects. Companies hoping to avoid the tax are beginning to scale back the more generous health benefits they have traditionally offered and to look harder for ways to bring down the overall cost of care.

In a way, the changes are right in line with the administration’s plan: To encourage employers to move away from plans that insulate workers from the cost of care and often lead to excessive procedures and tests, and galvanize employers to try to control ever-increasing medical costs. But the tax remains one of the law’s most controversial provisions.

Bradley Herring, a health economist at Johns Hopkins Bloomberg School of Public Health, suggested the result would be more widely felt than many people realize. “The reality is it is going to hit more and more people over time, at least as currently written in law, ” he said. Mr. Herring estimated that as many as 75 percent of plans could be affected by the tax over the next decade — unless employers manage to significantly rein in their costs.

The changes can be significant for employees. The hospital where Abbey Bruce, a nursing assistant in Olympia, Wash., worked, for example, stopped offering the traditional plan that she and her husband, Casey, who has cystic fibrosis, had chosen.

Starting this year, they have a combined deductible of $2,300, compared with just $500 before. And while she was eligible for a $1,400 hospital contribution to a savings account linked to the plan, the couple is now responsible for $6,600 a year in medical expenses, in contrast to a $3,000 limit on medical bills and $2,000 limit on pharmacy costs last year. She has had to drop out of school and take on additional jobs to pay for her husband’s medicine.

“My husband didn’t choose to be born this way,” Ms. Bruce said. The union representing her, a chapter of the Service Employees International Union, has objected to the changes. Her employer, Providence Health & Services, says it designed the plans to avoid having employees shoulder too much in medical bills and has reduced how much workers pay in premiums.

Proponents of the law say the Cadillac tax is helping bring down costs by making employers pay attention to what their health care costs are likely to be in the long run. “It’s really one of the most significant provisions” in the Affordable Care Act, said Jonathan Gruber, the M.I.T. economist who played an influential role in shaping the law. “It’s focusing employers on cost control, not slashing,” he said.

Cynthia Weidner, an executive at the benefits consultant HighRoads, agreed that the tax appeared to be having the intended effect. “The premise it’s built upon is happening,” she said, adding, “the consumer should continue to expect that their plan is going to be more expensive, and they will have less benefits. ”

The trend is accelerating. The percentage of employers revising their plans as a result of the tax has increased to 17 percent this year from 11 percent in 2011, according to a survey of United States companies released this month by the International Foundation of Employee Benefit Plans.

Although the tax does not start until 2018, employers say they have to start now to meet the deadline and they are doing whatever they can to bring down the cost of their plans. Under the law, an employer or health insurer offering a plan that costs more than $10,200 for an individual and $27,500 for a family would typically pay a 40 percent excise tax on the amount exceeding the threshold.

“I’m actually much more focused on the Cadillac tax in 2018 than on 2014,” Steve First, a benefits executive at Pfizer, said at a recent meeting of employers. “For us, 2018 is a challenge.”

Raising deductibles is one way to lower the cost.

Since 2009, the percentage of workers in plans with a deductible of at least $2,000 has doubled, to 14 percent, by 2012, according to the Kaiser Family Foundation. A little over a third of workers are in plans with a deductible of at least $1,000 a year.

Larger companies are also trying a variety of initiatives to improve the health of their workers — experimenting with an array of disease management and wellness programs, for instance, or even setting up their own work-site clinics as a way to sidestep the tax.

“These changes will take time, and employers seem to recognize that,” said Barry Schilmeister, a consultant for Mercer.

Cummins, the Columbus, Ind., engine manufacturer is one example of a company experimenting with both approaches. The tax “is in our line of sight,” acknowledged Dr. Dexter Shurney, the company’s chief medical director.

Cummins has switched employees to plans with deductibles as high as $6,000 for a family and is working with health coaches to educate employees on the dangers of high sodium present in processed food, for example, as a way to start reducing the cost of treating chronic diseases like high blood pressure. “There’s a lot of savings there,” said Dr. Shurney. “It’s not only good for us, but good for employees.”

Even employers who won’t talk about details acknowledge the tax is bringing about change. “You’re getting taxed at 40 percent,” explained Larry Boress, the chief executive of the Midwest Business Group on Health. “That kind of hit is something that is viewed as untenable by employers in general.”

But one critic pointed out that employers have been raising deductibles and asking employees to contribute more for many years. Tom Leibfried, a legislative director for the A.F.L.-C.I.O., one of the unions whose plans are vulnerable to the tax, says the demands that workers pay more for their care is a perennial aspect of labor negotiations. “We’re very concerned about the hollowing out of benefits in general,” he said. “What the excise tax will do is just fuel that.”

Others say some of the plans at risk of being taxed as overly generous simply reflect of the high costs of care in certain regions. “These plans are costly, just by the nature of where they are,” said Kinsey M. Robinson, the president of the Roofers’ union, which has recently called for significant changes to the law or its repeal. “The cost of good health care is expensive.” The law does make adjustments, including for older workers or those in certain high-cost professions.

Many employers say they were already taking steps to address rising costs, even as the increases have abated somewhat in recent years. “The 2018 date was looming out there,” said Mary Cranstoun, the senior director of medical benefits for Providence Health, where Ms. Bruce works. But Ms. Cranstoun said Providence had already decided to move more of its employees into high-deductible health plans.

The goal was to have employees pay more attention to costs, which have been rising some 5 to 8 percent a year. “As for any other company, when you take that out long term, those are big trend numbers,” she said.

The hospital system says the move is less about cost-shifting than engaging employees about their health, including offering financial incentives to undergo a health screening or using a high deductible to make them think twice about an expensive test.

The ultimate goal is to make sure the cost of coverage does not eventually exceed the system’s ability to pay for it, Ms. Cranstoun said. “We really are committed to offering our employees benefits in the long term, so we really want to make sure that we can do so,” she said.

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Summary
Beginning in 2018, a 40 percent excise tax will be imposed on the value of health insurance benefits exceeding a certain threshold. The thresholds are $10,200 for individual coverage and $27,500 for family coverage (indexed to inflation). The thresholds increase for individuals in high-risk professions and for employers that have a disproportionately older population.

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Time to Trade-In the Cadillac Health Plan

By Richard A. McGrath, CIC, LIA

In a few years, millions of Americans will likely be trading in their Cadillacs for Corollas.

We’re not talking about cars.  The government invested billions into General Motors, so driving a Cadillac would be protecting your investment.

But if you have a “Cadillac” health plan – one that costs significantly more than the average plan – the government plans to impose a 40% tax on premiums that exceed a price threshold, beginning in 2018.  The new tax was included in the Patient Protection and Affordable Care Act, widely known as Obamacare.

A Cadillac plan is any plan that costs more than $10,200 a year for single coverage and $27,500 for family coverage, including both employee and employer contributions to flexible spending and health savings accounts, but not including vision and dental benefits.  If a plan exceeds the threshold numbers by $1,000, for example, the insurer or employer would pay a $400 tax.

Towers Watson found the average cost of a family plan in 2010 was $14,988.  But, given the high rate of inflation for healthcare, the price of an average plan will be far closer to the threshold by 2018.  Towers Watson predicts that more than 60% of large employers’ active health plans will be subject to the tax, unless the plans are changed.

By defining Cadillac plans based on price, not on the level of benefits provided, the tax could also affect seniors, those who work in risky professions and small businesses.

Insurers base premiums not only on the features plans offer, but on risk.  Insurance costs more for people who are older, who have a history of health problems or who work in high-risk industries, because they are at a higher risk to have costly health problems.  At a large company, risk is spread over many employees, so insurers can accurately predict their costs.  Someone who is self-employed or who works for a small business pays more, because the risk to the insurer is higher.

Congress partially addressed this issue by increasing the threshold to $11,850 for individuals and $30,950 for families who are employed in high-risk professions. In addition, employers with higher costs because of the age or gender of their employees may value their coverage based on a comparison to a national risk pool.



Unions Exempt

The purpose of the tax is twofold – to raise some of the money needed to pay for healthcare reform and to ensure that all Americans have access to roughly the same level of healthcare.

It’s unlikely to accomplish either goal, though, and may instead lower the overall quality of healthcare coverage.

Congress initially projected that the tax would generate $238 billion in revenue over a decade.  The Congressional Budget Office, though, estimates that the tax would raise about $12 billion in 2018, the first year of implementation, and $20 billion in 2019.

While insurance companies and companies that self-insure would pay the tax, insurers would need to pass on much of the cost in the form of higher premiums to remain profitable.  As Cadillac plans are already significantly more expensive than other health plans, passing on the tax would make the plans unaffordable for most, so insurers would likely just stop selling the plans.

Insurers and companies that self-insure will also be forced to spend a great deal of time on compliance, monitoring their costs and trying to stay below the threshold.  The Cadillac tax is one of more than a dozen new taxes created by the healthcare reform, which also includes hundreds of other regulatory changes.

The net result is that the $238 billion included in revenues projected to offset the cost of the Patient Protection and Affordable Care Act, will not be collected.  Instead, assuming the law is not changed, another tax will be needed or healthcare reform will add even more to the federal deficit.

In addition, Congress has already exempted plans covering union employees from the tax.  That creates a big boost for unions, since their employers will be able to continue offering Cadillac plans, but they will become unaffordable for nonunion companies.  So rather than creating equality of coverage, it allows exclusivity for union members.

While the tax would not take effect for six more years, and there is a possibility that it will be overturned by Congress, many employers and insurance companies are already taking action to avoid the tax.

Boeing, for example, announced more than a year ago that it would reduce its coverage and increase deductibles for non-union employees to avoid the tax.

One positive from the Cadillac tax could be that some consumers who no longer have Cadillac coverage may use their health insurance more efficiently, which would help control costs.

Cadillac plans typically offer comprehensive coverage with low deductibles.  The patient shares almost none of the costs.

When patients don’t share the costs, they tend to make expensive decisions.  They may, for example, go to the emergency room for treatment of anything from a headache to a hangnail.  Such non-emergency visits greatly increase the cost of healthcare.

When patients instead have plans with high deductibles and they share the costs, they are unlikely to use their insurance unless they truly need it.

The Cadillac tax could help control healthcare costs for employers that choose to reduce their benefits is some consolation.  Overall, it will simply meet fewer healthcare options, a lower quality of care and the likelihood of an increase in the federal debt.

Keep in mind that the Cadillac tax is just one provision of the Patient Protection and Affordable Care Act.  We can only guess at the cumulative effect of the healthcare reform law.

Richard A. McGrath, CIC, LIA is President and CEO of McGrath Insurance Group, Inc. of Sturbridge, Mass.  He can be reached at rmcgrath@mcgrathinsurance.com.