HARTFORD, Conn. — In the increasingly tense wrangling between the insurance industry and state regulators over the definition of what spending can qualify as medical care under the new health care law, one of the loudest lobbying voices is a relatively small player: Cigna Corp.
The insurer has stayed in step with larger rivals such as Aetna and WellPoint in an often contentious dialogue with the National Association of Insurance Commissioners — a network of state regulators that's been charged with advising federal officials on implementing the health care law.
Included in that work is defining medical loss ratio, which will determine what proportion of the health premiums collected by insurers is used for patient care and what is considered administrative expense. The new law mandates that insurers meet tight requirements.
The insurance commissioners, who are meeting in Seattle, are expected to present their recommendations to the Department of Health and Human Services by the end of August.
Cigna's chief lobbyist is William Hoagland, a veteran Washington insider who's served as a top Senate staffer, including a stint as a key aide to former Majority Leader Bill Frist, R-Tenn.
Hoagland said that insurance companies should be able to count smoking-cessation programs and health coaching as medical care. He's also in favor of including utilization review, the process in which nurses and administrators employed by the insurer review treatment plans and then approve or deny them.
"If you're trying to modify a health care delivery system to be more focused on prevention and wellness, those should be included," Hoagland said.
At first glance, it might seem that Cigna doesn't need a high-powered lobbyist such as Hoagland on its side. The Philadelphia-based company, the nation's fourth-largest insurer by membership, generates most of its $18 billion in annual revenues providing health plans to large companies that are self-insured.
That means Cigna doesn't carry the risk of insuring those companies' employees, but instead collects fees from them to process claims and perform other day-to-day administrative tasks. Those customers who self-insure are not subject to medical loss ratio requirements.
Cigna also has a hodgepodge of non-health businesses, including disability and life insurance. That helps insulate it from the drawbacks that the industry anticipates with the health care overhaul.
However, for Cigna to compete with larger rivals after the health care law takes effect, analysts said it will need to expand its presence far beyond the under 100,000 policies in the individual and small-group market it underwrites today. That's why few industry experts are surprised that Cigna is working just as hard as its competitors at arguing for as many line items as possible to count as medical care.
"If you're thinking about the future, you have to be concerned about (medical loss ratio)," said Daniel N. Mendelson, the president of consulting company Avalere Health in Washington.
Wall Street isn't so sure Cigna will be able to compete with the likes of Aetna, Wellpoint and UnitedHealth Group — companies with much longer track records serving individuals and small employers. "It's hard to build up those businesses from scratch," said Matthew Coffina, an analyst for Morningstar, who declares himself "less than enthusiastic" about Cigna's growth prospects.
Cigna said it's approaching the new health care law from both an offensive and defensive stance. Toward that end, its executives are scrutinizing opportunities to participate in the health exchanges and other new markets. At the same time, they're lobbying Congress and HHS to clarify the law's ambiguities in ways that will benefit current and future customers.
A trio of Cigna executives is leading the effort: President and Chief Executive David Cordani; Tom Richards, the senior vice president for U.S. products; and Hoagland.
Influencing the medical loss ratio debate is their most immediate concern. The health care law requires insurers to spend 80 percent of the premiums they collect from individuals and small businesses to provide medical care, and 85 percent of the premiums from large employers. If they don't meet those targets, they're required to pay rebates to consumers starting next year.
In its earnings report earlier this month, Cigna said its ratio has fallen this year to nearly 79 percent for the second quarter, and nearly 81 percent for the first half of the year. The company told analysts that the ratio was lower than last year because its beneficiaries used fewer services than expected, partially because of fewer flu-related claims than anticipated, and the company had higher numbers of customers using high deductible plans.
Hoagland often finds himself in a war of words over what should count as medical care. "It's interesting to me that the groups you would think would be most supportive of the things we're talking about — prevention, wellness, coaching and all that _are usually ones who are most reluctant to allow for those kinds of expenditures," he said.
Hoagland said he recently disagreed with representatives from the American Heart Association on the issue. "Obviously there is controversy. Does putting up a poster that says, 'Wash your hands' qualify? No I don't think so," Hoagland said. "But should utilization review be included? I think yes."
Mark Schoeberl, the executive vice president for advocacy at the heart association, said that Cigna should have to prove that any program it classifies as medical care actually improves the health of its members.
"We're far from hostile," Schoeberl says. "We just want to make sure that everything these companies do is evidence-based and outcomes-oriented, and that the results are auditable and available for public review." Purely administrative functions, such as utilization review, shouldn't count as medical care, he said.
Richards and Hoagland have been voicing their concerns about loss ratios and other aspects of health care though the industry association America's Health Insurance Plans, as well as directly to the insurance commissioners, who hold biweekly conference calls that are open to the public.
Sandy Praeger, the Kansas insurance commissioner, said the effort to clarify medical loss ratio requirements has generated more industry input than any other issue the organization has addressed so far.
"Clearly we want to include things that truly are promoting better quality in health care delivery," Praeger said. Services such as health coaches for people with chronic diseases are easier to justify than utilization review, she says. "Utilization review is often just a method of limiting cost."
(Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization that isn't affiliated with Kaiser Permanente.)
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