OSMA Legislative Update

1. OSMA Legislative Update Jeff Smith, Esq. Director, Government Relations Group

2. Topics • OSMA Legislative Priorities- • Healthcare System Reform • Managed Care Reform- Administrative Simplification • Medical Liability Reform

3. Healthcare System Reform

4. Republicans Personal Responsibility Consumer Directed Healthcare Offer “Mandate Lite” Insurance Tax Credits/Deductions Democrats Universal Coverage SCHIP Expansion Medicaid/Medicare Buy-in Contain Rx Drugs Cost Healthcare System Reform

5. Healing Ohio’s Healthcare System • Access • Wellness & Prevention • Personal Responsibility • Quality & Transparency • Financing

6. Managed Care Reform

7. The State of Healthcare in Ohio Who’s HAPPY with our current Healthcare system?

8. Patients? • “Health Care: Squeezing the Middle Class with More Costs and Less Coverage”January 31, 2007 The Kaiser Commission on Medicaid and the Uninsured • “In Ohio, paychecks lag health premiums” October 18, 2006 The Columbus Dispatch • “Consumer Unease with U.S. health care grows” October 16, 2006 The USA Today • 1.3 Million Uninsured Ohioans- 80% working

9. Patients?

10. Physicians?

11. Physicians? • In 2006, Medical Students graduated with an average debt of $135,000; • Residents in their first years of training earn only $37,000-43,000; • Mean Income for all full-time workers increased 18% from 1996 to 2000, while physician incomes increased just 3%.

12. Employers?

13. Employers? • “Healthcare Costs Continue Double Digit Increase- Employers bearing more of the Costs” December 8, 2003 San Francisco Chronicle • “As Health Care Costs rise, Workers shoulder burden”October 10, 2003 The USA Today • “Health Insurance costs up 6.1% for 2007” September 12, 2007 The Plain Dealer

14. HMOs?

15. Health Insurance Profits 2001-2006 • “Ohio’s HMOs improved bottom lines in 2001” May, 24, 2002 Dayton Business Journal • “HMO Profits Skyrocket 162% in First Quarter 2002”December 18, 2002 Weissratings.com • “Ohio HMOs losing patients, but earning money” January 6, 2003 The Cincinnati Enquirer • “Sky’s the limit; Insurance industry reports increased profit margins” November 2004 Modern Healthcare • “In 2005, the top Seven U.S. health insurers earned a combined $10 billion – nearly triple their profits of five years earlier. The windfall came as insurers raised their prices faster than underlying health costs.” July 31, 2006 The Wall Street Journal

16. Insurance Company YTD2002 YTD2003 YTD2004 YTD2005 YTD2006 UnitedHealth Group $1.4 B up 53% $1.8 B up 29% $2.6 B up 44% $3.3 B up 27% $4.2 B up 27% Anthem/WellPoint $703 M up 69% $935 M up 33% Not Available 2.46 B $3.1 B up 26% Aetna, Inc. $(2.5) B down 794% 933.8 M $2.2 B up 136% $1.63 B down 35% $1.7 B up 8% Humana, Inc. $142.8 M up 22% $228.9 M up 60% $280.0 M up 22% $308.5 M up 10% $487 M up 64% CIGNA Corp. $(447) M (Revenue 19.3B) $632 M $1.44 B $1.63 B $1.01 B Health Insurance Profits 2002-2006 AMA Private Sector Advocacy, Feb. 2007

17. Health Insurers- Putting Profits before Patients • “The bottom line is that insurance companies make money when they don’t pay claims. They’ll do anything to avoid paying, because if they wait long enough, they know the policyholders will die.” New York Times Quote of the Day- March 26, 2007 MARY BETH SENKEWICZ, who resigned last year as a senior executive at the National Association of Insurance Commissioners

18. Initial Solution OSMA initiated state legislation: “The Healthcare Simplification Act” Patient Care, Not Paperwork House Bill 125

19. “The Healthcare Simplification Act”Patient Care, Not Paperwork Transparency in Contracting • Summary Disclosure Form • Terms Governing Compensation • Fee Schedule and the effect of edits on multiple CPT codes • Categories of Coverage • Duration of the Contract • Entity responsible for processing claims • Internal Mechanism for resolving disputes • Subject and Order of Addenda

20. “The Healthcare Simplification Act”Patient Care, Not Paperwork Transparency in Contracting • Restrict “Silent PPOs” • No contracting entity, other than the contracting entity that executes the original contract, shall enforce against a provider the payment or compensation terms of the contract, unless the other contracting entity is contractually bound to all terms and conditions of the original contract, including obligations concerning patient steerage and timeliness and manner of reimbursement. • Require remittance notices to include the name of the payer issuing payment and the name of the contracting entity through which the payment rate/discount is claimed.

21. “The Healthcare Simplification Act”Patient Care, Not Paperwork Fairness in Contracting • Prohibit unilateral contract amendments • 90-day advance notice, must be clear and conspicuous and not effective if provider objects in writing • Restrict “All-Products” and “Future Products” clauses • Prohibit “Most Favored Payer” clauses • Physicians- 3-year moratorium, then permanent ban • Hospitals- 3-year moratorium, then expiration

22. “The Healthcare Simplification Act” Patient Care, Not Paperwork • Standardized Credentialing • Standardized credentialing form- Designate the Council for Affordable Quality Healthcare (CAQH) as the sole credentialing form. • No addenda allowed • Time frames for processing credentialing application • Must process credentialing application within 90 days. After 90 days, a $500 per day penalty paid directly to the provider. • Requires the insurer to notify the provider within 21 days of submittal if credentialing application is deemed incomplete or deficient. • Web-based Insurance Eligibility Verification • Require all contracting entities to develop a web-based system to provide the enrollee’s most current information needed to determine eligibility status, benefits and financial responsibility at the time medical services are provided.

23. Applicability • Will apply to any “entity that has a primary business purpose of contracting with health care providers for the delivery of health care services.” • Health Insuring Corporations (PPOs/HMOs) • Medicaid Managed Care Plans • Third Party Administrators

24. Medical Liability Reform

25. Effects of Liability Reforms: Rates Are Coming Down * 2007 Overall (-10.9%) Medical Protective (-4%) American Physicians (-7%) Medical Assurance (-19.7%) OHIC Insurance Co. (-10%) The Doctors Company (-7.6%)

26. 2005 Medical Liability Claims Data- Ohio Department of Insurance • 5,051 medical liability claims closed in 2005. 4,005 claims had no indemnity payment, while 1,046 resulted in a payment with an average indemnity of $269,374. • Almost 80% of medical liability claims resulted in no payment to a claimant, however, ALL CLAIMS GENERATED EXPENSES FOR INVESTIGATION AND DEFENSE, $24,443 per claim. • 24% of the total claims (1,187) were filed after the enactment of S.B. 281 and could have been subject to the revisions in Ohio Tort law. However none of these claims reached a trial or jury verdict. • The average indemnity payment for these claims was $171,299 and the average cost of the investigation and defense was $9,044…well below the average figure for all claims.

27. “Law firms adapting to fewer malpractice suits”Dayton Business Journal April 14, 2006 Staying Focused • Liability insurance remains a major expense for Ohio physicians. That is why OSMA will continue its efforts: • The OSMA Frivolous Lawsuit Committee will continue groundbreaking work against frivolous “shotgun” lawsuits. • OSMA’s Court Watch program will monitor for potential cases that will affirm Ohio’s tort reform laws. • With two seats on the Ohio Supreme Court up for re-election in November 2008, the OSMA will again work to support candidates with a judicial philosophy of interpreting the law, not rewriting it.

28. Questions? Ohio State Medical Association 3401 Mill Run Drive Hilliard, OH 43026 800-766-OSMA www.osma.org The power of many. The voice of one.