AHIP’s move sig­nals ACA ac­cep­tance

Modern Healthcare - - NEWS - By Bob Her­man

The de­ci­sion last week to hire Mar­i­lyn Taven­ner as CEO of Amer­ica’s Health In­sur­ance Plans sig­nals that the pow­er­ful lob­by­ing group has ac­cepted the Af­ford­able Care Act as the new busi­ness en­vi­ron­ment and that it wants a CMS in­sider to help dur­ing the next phase of mar­ket de­vel­op­ment.

Her se­lec­tion was crit­i­cized by many observers as an ex­am­ple of the re­volv­ing door be­tween the fed­eral gov­ern­ment and the pri­vate sec­tor, which cre­ates po­ten­tial con­flicts of in­ter­est for gov­ern­ment of­fi­cials. But it will give the in­sur­ance group, which re­cently lost its big­gest mem­ber and faces de­clin­ing rev­enue, the op­por­tu­nity to re­fresh its im­age and oper­a­tions.

Taven­ner, 64, a for­mer hos­pi­tal sys­tem ex­ec­u­tive, stepped down in Fe­bru­ary as CMS ad­min­is­tra­tor. She suc­ceeds the widely re­spected Karen Ig­nagni, AHIP’s long­time CEO, who is leav­ing for Em­blemHealth, a fi­nan­cially trou­bled not-for-profit health in­surer in New York.

The group wanted a “high-pro­file” re­place­ment for Ig­nagni, said Kip Piper, a Washington-based health in­sur­ance con­sul­tant. As a top Obama ad­min­is­tra­tion of­fi­cial over­see­ing Medi­care, Med­i­caid and ACA im­ple­men­ta­tion, “her gov­ern­ment ex­pe­ri­ence will be in­valu­able to AHIP given how rapidly the public sec­tor is dom­i­nat­ing the fi­nan­cial, mar­ket and reg­u­la­tory facets of health plans,” Piper said.

Taven­ner’s ap­point­ment also sig­nals the in­sur­ance in­dus­try’s con­fi­dence that the ACA is here to stay fol­low­ing last month’s U.S. Supreme Court rul­ing up­hold­ing the law’s pre­mium sub­si­dies, ex­perts said. Health plans want some­one who can help them adapt to and ben­e­fit from the law. She also has solid ties to Repub­li­can lead­ers, which could help AHIP if Repub­li­cans win the White House in the 2016 elec­tion.

Un­der Ig­nagni, AHIP voiced sup­port for the ACA and its key in­sur­ance pro­vi­sions, in­clud­ing the in­di­vid­ual man­date. But AHIP fiercely fought med­i­cal-loss ra­tios, Medi­care Ad­van­tage cuts and other pro­vi­sions that ate away at prof­its. The group played both sides of the fence, fund­ing the U.S. Cham­ber of Com­merce in op­pos­ing the law.

“The ACA is now busi­ness, whereas dur­ing its pas­sage, it was seen as a threat by AHIP,” said Larry Ja­cobs, a po­lit­i­cal science and health pol­icy pro­fes­sor at the Univer­sity of Min­nesota. “This (hire) is a sig­nal change.”

Taven­ner over­saw the botched roll­out of the fed­eral in­sur­ance ex­change and the ACA-man­dated cuts in pay­ment rates to Medi­care Ad­van­tage. Ex­change plans and Ad­van­tage plans are two ar­eas of sig­nif­i­cant growth for pri­vate in­sur­ers. Observers said that back­ground made Taven­ner—rather than a ca­reer lob­by­ist or a mem­ber of Congress—the smart choice for AHIP, whose mem­bers are in­creas­ingly shift­ing to­ward gov­ern­ment-based pro­grams.

“They hired her for her po­lit­i­cal con­nec­tions in­side the ad­min­is­tra­tion, in­side the CMS bu­reau­cracy and in­side the con­gres­sional com­mit­tees that reg­u­late them,” said Tim LaPira, po­lit­i­cal science pro­fes­sor at James Madi­son Univer­sity.

AHIP has been strug­gling fi­nan­cially and in­ter­nally. The group’s rev­enue has been on a sharp path down­ward in re­cent years. AHIP recorded $95 mil­lion in rev­enue for 2010, but that fell to $63 mil­lion in 2013, ac­cord­ing to tax records.

Many of its mem­bers are also merg­ing or buy­ing com­pet­ing plans, which could af­fect AHIP in hard-to-pre­dict ways.

Unit­edHealth Group, the na­tion’s largest health in­surer by rev­enue, left the trade group last month be­cause it said its in­ter­ests “are no longer best rep­re­sented by AHIP.”

Ja­cobs said Unit­edHealth’s de­par­ture was sig­nif­i­cant, and it will be im­por­tant for Taven­ner to in­still con­fi­dence in the group’s other ma­jor mem­bers. That exit, how­ever, “doesn’t di­min­ish the im­por­tance of AHIP,” Ja­cobs said.

Taven­ner will have to go through a “cool­ing-off” pe­riod, mean­ing she can’t per­son­ally lobby any Obama ad­min­is­tra­tion of­fi­cials in the im­me­di­ate fu­ture. But po­lit­i­cal science ex­perts note that she may not register as a lob­by­ist at all be­cause AHIP has an army of ex­pe­ri­enced lob­by­ists on staff. She’ll be par­tic­u­larly valu­able in know­ing “which bu­reau­crat to call at CMS,” LaPira said.

De­spite the short-term lob­by­ing re­stric­tions, Taven­ner’s move has cre­ated some un­ease. At CMS, she was the top reg­u­la­tor of Medi­care, Med­i­caid and the ex­change plans, and now she will be ad­vo­cat­ing for the in­sur­ers she for­merly reg­u­lated.

Kevin Ester­ling, a po­lit­i­cal science pro­fes­sor at the Univer­sity of Cal­i­for­nia at River­side, said there are pos­i­tives and neg­a­tives for public pol­icy from this type of move.

Taven­ner will use her ex­per­tise and con­tacts to ben­e­fit a pri­vate in­dus­try group, but she also could help make the gov­ern­ment’s poli­cies more ef­fec­tive and ef­fi­cient through her ad­vo­cacy ef­forts, he said.

Still, Ja­cobs ques­tioned how such re­volv­ing-door moves af­fect the think­ing of gov­ern­ment of­fi­cials. “You just have to won­der when she was in of­fice, was there an inkling that this kind of job was in her fu­ture?” he said.

Taven­ner’s se­lec­tion was crit­i­cized by many observers as an ex­am­ple of the re­volv­ing door be­tween the fed­eral gov­ern­ment and the pri­vate sec­tor. But it will give AHIP the op­por­tu­nity to re­fresh its im­age and oper­a­tions.

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