TOPEKA — Insurance providers have asked lawmakers to allow them to offer new health plans that would require individuals to exclusively use the insurer’s network of doctors and would mandate referrals from primary care physicians before covering specialty care.
Known as Exclusive Provider Organization plans, or EPOs, the plans would in essence act like Health Maintenance Organization (HMO) plans, with those seeking care always going to a single primary care physician first. Insurance companies argue the plans would offer customers lower premiums.
As the legislation is currently drafted, businesses wouldn’t be required to offer alternative plans. In theory, employers could offer their workers a single EPO plan that would govern which doctors an individual could see.
Aetna, UnitedHealth Group and Blue Cross Blue Shield of Kansas City have all lined up in support of the proposal. They say the legislation, House Bill 2454, would help keep down the cost of insurance.
“An EPO product option would allow Kansas consumers a greater choice of health insurance options,” said Steven Robino, state government affairs director for Aetna. “Due to its hybrid nature, EPO policies are usually available in a larger geographic area than traditional HMO plans, allowing more Kansans to benefit from a lower cost option.”
Tax hikes, as well as increased regulation from the Affordable Care Act, prompted a need for such plans, Blue Cross Blue Shield of Kansas City argues. The company said “never-ending” regulations stemming from the controversial federal health law have made insurance more expensive.
When federal regulations are combined with increases in state premium taxes, the results are increasing premiums, said Melissa Panettiere, Blue Cross Blue Shield of Kansas City’s director of government affairs.
In 2015, the Legislature passed and Gov. Sam Brownback signed into law a doubling of the HMO privilege fee, which is used to pay costs associated with KanCare. The fee rose from 1 percent to 3.31 percent to generate millions in additional revenue. Yet the hike was still significantly less than the increase to 5.5 percent originally proposed by Brownback.
The privilege fee is expected to collect $106 million in the current fiscal year and $117 million next year. In an estimate of the fiscal impact of House Bill 2454, state budget director Shawn Sullivan said the legislation could result in lower collections from the privilege fee.
The fee hike was retroactive, and Panettiere said the move resulted in higher premiums for HMO customers.
Asking lawmakers to be sensitive to increasing state premium taxes, Panettiere said HMO plans are able to more efficiently manage costs by requiring that some or all covered services be rendered by in-network providers.
“Passing this legislation to allow us to offer and Exclusive Provider Organization product gives consumers some of the benefits of an HMO product without the additional costs the new taxes are adding to HMO products,” Panettiere told lawmakers this past week at hearing of the House Insurance and Financial Institutions Committee.
Some concerns have been raised. Kansas Insurance Commissioner Ken Selzer, a Republican, supports the proposal, arguing EPO policies will likely be more affordable. But his department is also urging lawmakers to consider appropriate safeguards to protect consumers.
“However, the department would like to caution that the limited provider network could create problems for consumers if they are not fully aware of what these policies cover. It is important that Kansans understand what policies do and do not cover,” Clark Shultz, the insurance department’s director of governmental affairs, told the committee.
Rep. Willie Dove, R-Bonner Springs, expressed concern the move could ultimately limit customer choice and some who are unfamiliar with HMO-type products will select plans that don’t allow them to see their preferred doctor. He also suggested companies may choose to only offer EPO plans.
“Some individuals won’t get that opportunity because some of you will not offer both products,” said Dove, who works in insurance.
EPO plans aren’t new. Missouri’s legislature approved them in 2013. Blue Cross Blue Shield has seen “great success” in the Missouri counties where the company offers EPO plans, Panettiere said.
However, the proposal in Kansas would go further than what is currently allowed in Missouri.
In Missouri, only HMO plans can have gatekeeper provisions — requirements that individuals go to a primary care physician first before seeing a specialist. The proposal in Kansas would open up EPO plans to gatekeepers.
Missouri’s insurance department this summer blocked a UnitedHealthcare attempt to offer health plans with gatekeeper provisions, concluding the provisions violated state law.
“By attempting to utilize specific restrictive elements of an HMO without the HMOs benefits and protections, the (plan) is not reasonably adequate to meet the needed requirements for the protection of Missouri consumers as required (by law),” agency director John Huff wrote in his order.
The Kansas legislation, House Bill 2454, remains at an early stage in the legislative process. It remains in the House Insurance and Financial Institutions Committee.