Posts for June 15, 2011

BINGHAM APPOINTED TO OPTIMIZING AND STREAMLINE COUNCIL

Governor Gary Herbert has appointed UMA President Tom Bingham to serve on a newly-created advisory council established to seek ways to optimize and streamline State government. On June 14, Bingham received the following letter, which followed an earlier phone call asking if he would serve on the advisory council.

Dear Tom:

I am pleased to appoint you and welcome your service as a member of the Advisory Council on Optimizing and Streamlining State Government. This Council was established pursuant to H.B. 280 State Agency Realignment, sponsored by Representative Wayne Harper and Senator Stuart Reid, and was adopted during the past legislative session. Utah has been recognized as the “Best Managed State in America.” However, I believe there is room to evaluate and improve the manner in which state services are provided to our residents. In that spirit, it is the focus of this Council to:

1- consider the consolidation of departments of state government with the goal of reducing administrative costs associated with running multiple departments of state government;2- incorporate management and best business models for a number of cabinet-level members who report to the Governor; and3- streamline services, improve the efficiency, and reduce the cost of government. The Advisory Council on Optimizing and Streamlining State Government will build upon the tremendous efforts of the Governor’s Commission on Optimizing State Government, chaired by former Governor Norman H. Bangerter. The newly created Council will be chaired by former Lieutenant Governor Val Oveson, a recognized leader in state government optimization. Council members include leaders in business, government, and representatives of those who receive services from state agencies.
Thank you for your service.

Sincerely,

Gary R. HerbertGovernor

INTERIM COMMITTEE APPROVES MEASURE TO REDUCE MAXIMUM UNEMPLOYMENT RATE
Following a very detailed report from the Unemployment Division of the Department of Workforce Services, the interim Workforce Services Interim Committee of the Utah Legislature today approved the drafting of a bill to reduce the maximum rate for unemployment insurance. The measure, recommended by the Unemployment Advisory Council would drop the maximum rate charged to employers for unemployment insurance from 9% to 7%. When added to the social rate of .4% the overall maximum rate for any employer in Utah would be 7.4% if approved by the legislature in 2012.

The Unemployment Advisory Council, of which UMA President Tom Bingham is a member, reviewed the rates charged employers as well as the Unemployment Trust Fund two weeks ago and determined that a 2% reduction in the rate would not negatively impact the solvency of the trust fund and would give much needed relief to employers with heavy unemployment experience, such as contractors and small manufacturers. The council also discovered that the trust fund is beginning to recover from the heaviest draw down in history and is expected to begin regaining funds as early as 2013. Unlike a year ago when it was not certain whether the trust fund would go insolvent, projections now indicate that the fund will stay solvent.

All this simply proves that the triggers associated with the fund that were proposed by UMA, the Food Industry Association and Associated General Contractors of Utah in the late 1990’s and approved by the legislature have worked as projected and have kept the fund from insolvency. At present, 30 state’s trust funds have gone insolvent and those states have had to borrow from the Federal Government. Utah is a rare exception.

REPORT: CHINA COVERING UP LEAD POISONING EPIDEMIC
Today in Manufacturing
Millions are suffering from lead poisoning despite a crackdown on contamination, and officials are trying to cover up the problem, a rights group alleges ... continue

CONSUMER PRICES RISE SLIGHTLY
Today in Manufacturing
Overall consumer prices rose by the smallest amount in six months, slowed by the first drop in energy costs in nearly a year ... continue

BLOG: KNOWING WHEN TO RESPOND
Today in Manufacturing
Navigating the waters of scientific study, public interest and consumer trends can be tricky, but savvy manufacturers can see the big picture ... continue

WHAT OPPORTUNITIES ARE MACHINERY MANUFACTURERS MISSING?
Quick Manufacturing News
Sales are up but companies face critical tax, talent and supply chain issues. Click to continue

30% OF EMPLOYERS PLAN TO CUT HEALTH INSURANCE AFTER 2014
Quick Manufacturing News
A McKinsey survey reported that companies saw the question of offering employees health insurance shifting from a given to a business decision. Click to continue

PRICES FOR FINISHED GOODS POST BIGGEST INCREASE SINCE 2008
Quick Manufacturing News
BLS: Producer Price Index Rose 0.2% in May, following increases in March and April. Click to continue

OSHA CAN NOW SUBPOENA SAFETY AUDITS
Quick Manufacturing News
Last month, a federal district court ruled that OSHA has the right to subpoena safety audits and other records prepared by an employer’s insurance carrier. Click to continue

FDA INVITES PUBLIC COMMENT ON NANOTECHNOLOGY
Quick Manufacturing News
Some nanotechnology experts have pushed for more explicit guidelines in the nanotechnology field because it would help spur innovation and commercialization. Click to continue

U.S. FACTORY OUTPUT RISES IN MAY
Today in Manufacturing
Factories produced more goods, rebounding after disruptions stemming from the Japan crises and tornadoes in the South cut their output ... continue

The material in this Weekly Briefing is designed to present the prior week's highlights related to issues surrounding healthcare reform. Neither the content nor the manner in which it is presented is done so in a way to reflect the thoughts or opinionsof Aon Hewitt or its employees.
Today's Date: June 15, 2011Last Week in Washington

HHS Announces $40 million in State Grants for Chronic Disease PreventionOn June 7, 2011, the Department of Health and Human Services (HHS) announced the availability of approximately $40 million for the Prevention and Public Health Fund Coordinated Chronic Disease Prevention and Health Promotion Program. The program offers states and territories assistance with implementation of proven prevention and wellness programs targeted at the nation’s five leading chronic disease-related causes of death and disability: heart disease, cancer, stroke, diabetes and arthritis. This initiative, which was included in the Affordable Care Act, will support the implementation of public health programs, surveillance of chronic diseases, translation of research into public health practice, and development of resources for health workers and leaders at the community, state, and national levels. The Centers for Disease Control and Prevention will administer the program and award funds for three-year coordinated statewide chronic disease programs to all 58 states and territories, with approximately $40 million available for the first 12-month budget period.

CMS Issues Final Rule Prohibiting Medicaid From Covering Preventable Conditions On June 1, 2011, CMS released a final rule implementing section 2702 of the Affordable Care Act, which prohibits states from making Medicaid payments to doctors, hospitals and other health care providers for services that result from certain preventable health care acquired illnesses or injuries. The final rule also authorizes states to identify other provider-preventable conditions for which Medicaid payment will be prohibited. According to the CMS press release, the final rule is designed to "reduce preventable infections and eliminate serious medical errors," and to "better align Medicare and Medicaid payment policy." Although the Affordable Care Act requires the regulations to be effective July 1, 2011, CMS believes that states will need additional time to implement policies and reporting mechanisms. Therefore, CMS is delaying compliance with the final rule until July 1, 2012. The final rule was published in the June 6, 2011 Federal Register.

Medical Loss Ratio Requirement Compliance Deadline for Blue Cross Blue Shield Plans Extended
On June 10, 2011, the Internal Revenue Service (IRS) announced that it is extending the interim guidance provided in Notice 2010-79, as clarified and modified by Notice 2011-4 regarding the interpretation and application of the new medical loss ratio (MLR) rule as applicable to Blue Cross Blue Shield and other qualifying health insurance organizations that qualify for special tax treatment under Code section 833. Blue Cross and Blue Shield organizations and other qualifying health insurance organizations are allowed a special tax deduction under Section 833. The Affordable Care Act modified this Code section so that the special tax treatment will not apply unless these organizations meet the new 85% MLR requirement, effective for taxable years beginning after December 31, 2009. For this purpose, the MLR requirement means that these organizations must spend at least 85% of total premium revenue on reimbursement of clinical services during the tax year.

Notice 2010-79 provided transitional relief and interim guidance on the computation of the MLR, the consequences of the nonapplication of § 833 for not meeting the MLR and changes in accounting method. To provide affected taxpayers with sufficient time to adapt to the reporting requirements regarding data used to compute the MLR and to make any administrative or other adjustments that may be necessary in light of the possible nonapplication of § 833 to such taxpayers, the interim guidance provided in Notice 2010-79 is extended to any taxable year beginning in 2010 and the first taxable year beginning after December 31, 2010.

HHS Announces New ERRP Program Guidance: Allocating Post-Point of Sale Negotiated Price Concessions to Individual Early RetireesOn June 7, 2011, the Department of Health and Human Services (HHS) announced the Early Retiree Reinsurance Program (ERRP) post-point of sale negotiated price concession guidance and new cost adjustment claim list layout requirements. Plan sponsors must take into account any negotiated price concessions (such as discounts, direct or indirect subsidies, and rebates) and determine allocation to early retirees. The new post-point of sale negotiated price concession guidance covers the following topics:

Price concessions to be taken into account;
Allocating price concessions before they are finalized for the plan year;
Allocating price concessions after they are finalized for the plan year;
Reporting of cost data for early retirees who would have otherwise met the cost limit but for the reporting of the adjusted price concession data;
Coordination of price concessions from multiple sources; and
ERRP and the retiree drug subsidy.

The claim list layouts have been updated with an additional cost adjustment layout for reporting price concessions applied to costs incurred before June 1, 2010. The current cost adjustment layout should be used for costs incurred on or after June 10, 2010.

IRS Requests Comments on Funding of Patient-Centered Outcomes Research
The Internal Revenue Service (IRS) issued Notice 2011-35 on June 9, 2011, requesting comments on the implementation of provisions of the Affordable Care Act to fund comparative clinical effectiveness research relating to patient-centered outcomes research. The Affordable Care Act includes provisions that promote research to evaluate and compare health outcomes and the clinical effectiveness, risks, and benefits of medical treatments, services, procedures, drugs, and other strategies or items that treat, manage, diagnose, or prevent illness or injury. As required by the Affordable Care Act, a nonprofit corporation—the Patient-Centered Outcomes Research Institute was established to assist patients, clinicians, purchasers, and policymakers in making informed health decisions by advancing comparative clinical effectiveness research.

The Affordable Care Act provides that the Institute will be funded by a Patient-Centered Outcomes Research Trust Fund. The Trust Fund is to be funded in part by fees to be paid by issuers of health insurance policies and sponsors of self-insured health plans. The Treasury and IRS intend to publish proposed regulations providing guidance on the statutory requirements applicable to issuers and plan sponsors that pay those fees. To inform the development of the proposed regulations, Notice 2011-35 invites comments on how the fees should be determined and paid, including comments on several possible rules and safe harbors, including a safe harbor for counting the number of dependents. While this Notice does not provide guidance, it describes potential guidance that the Treasury and IRS expect to propose to implement the new fees and seeks comments on this potential guidance. Comments on Notice 2011-35 are due on or before September 6, 2011.

REPORT EXAMINES EFFECT OF AFFORDABLE CARE ACT ON EMPLOYER-PROVIDED COVERAGE
Aon Hewitt's Health Care Reform Weekly Briefing
On June 6, 2011, management consulting firm McKinsey and Co. issued a report based on an early-2011 survey of more than 1,300 employers across industries, geographies, and employer sizes. The survey found that:

- Overall, 30% of employers will definitely or probably stop offering health coverage in the years after 2014.
- Among employers with a high awareness of reform, this proportion increases to more than 50%, and upward of 60% will pursue some alternative to traditional health coverage.
- At least 30% of employers would gain economically from dropping coverage even if they completely compensated employees for the change through other benefit offerings or higher salaries.
- Contrary to what many employers assume, more than 85% of employees would remain at their jobs even if their employer stopped offering health coverage, although about 60% would expect increased compensation.

McKinsey’s findings are in sharp contrast to the Congressional Budget Office’s findings that only 7% of employees currently covered under employer policies will transition to obtaining coverage through the health insurance exchanges.

The McKinsey report has drawn much attention and criticism, especially from the White House and other supporters of the Affordable Care Act. According to a press briefing, the White House disagrees with the report’s conclusions. The White House stated that historically reforms motivate more businesses to offer insurance, not less and pointed to Massachusetts health reform as an example of increased employer coverage where they also have an exchange, a personal responsibility requirement and an employer responsibility requirement. Further, the White House stated that they are confident the Affordable Care Act will strengthen the existing employer-based system and reduce costs overall.

UTAH AIR QUALITY HEAD BLINKS IN STANDOFF WITH EPA
Utah DEQ
In an email announcement today, Utah DAQ Director reveals direction for addressing Unavoidable Breakdown Rule SIP Call. The following is the notice from Bryce Bird, newly-appointed head of the Division of Air Quality.

Dear Stakeholder,

I would like to extend my appreciation for your participation in the critical initial stakeholder process to review potential solutions to EPA’s State Implementation Plan (SIP) Call on Utah’s Unavoidable Breakdown Rule. This process has provided me with valuable insight into our constituency position on this matter.

The EPA, in its SIP Call, offered Utah several options, i.e., challenge the SIP Call, take no action, or revise the rule per EPA guidance. While Utah, with neighboring states, has informed EPA that ruling by policy is detrimental to our planning process, we had to seriously consider the disruptive nature of a legal challenge and deviation of valuable resources from our important work on SIP development and streamlining efforts. We also considered the ramifications to our communities from potential sanctions. At the end of our deliberations, we determined that the best course of action is to proceed with a rule revision that is crafted to meet the needs of the state while meeting the congressional intent of the Clean Air Act, that can be approved by EPA. We will not be challenging EPA's determination through the mechanism provided in Section 307 of the Clean Air Act. This outcome was generally supported through information gained through the stakeholder process.

The Division's Planning Branch staff will convene a meeting of the stakeholder group in preparation for rule-making by the Air Quality Board to meet EPA’s 18-month time-line to address the SIP Call. As per our established protocol, stakeholders will be asked to significantly contribute to the rule development process.

Sincerely,
Bryce C. Bird
Director-Utah Division of Air Quality

UTAH'S CONGRESSIONAL DELEGATION LEADS CHARGE AGAINST ABUSE OF EXECUTIVE POWER
Utah Shared Access Alliance
Yesterday Utah's Congressmen Bishop and Chaffetz and Senators Hatch and Lee jointly submitted a bill intended to prevent President Obama from creating HUGE national monuments in Utah. Last year Congressman Bishop uncovered internal BLM documents that appeared to show the Obama administration was considering an attempt to create 14 national monuments across the west including in Utah. Utah is still reeling from the politically motivated creation of a 1.9 million acre monument in the Escalante Grand Staircase by President Clinton in 1996.