Obama Administration Allows States to Define Health Benefits in 2014

The Obama administration said Friday that it would not define a single uniform set of “essential health benefits” that must be provided by insurers for tens of millions of Americans.

Instead, it will allow each state to specify the benefits within broad categories. The new law lists 10 categories of “essential health benefits” that must be provided by insurance offered in the individual and small-group markets, starting in January 2014. These include preventive care, emergency services, maternity care, hospital and doctors’ services, and prescription drugs.

NY Times article, December 16, 2011

Health Care Reform – Delayed Compliance Date for Summary of Benefits and Coverage

The Patient Protection and Affordable Care Act (PPACA) adds to the list of necessary health plan disclosures by requiring plans and issuers to distribute a summary of benefits and coverage (SBC) to applicants and enrollees. The SBC is intended to be a relatively short document that provides important plan information in plain language so that health consumers can better understand their coverage options. This disclosure requirement applies to both grandfathered and non-grandfathered plans.

On Aug. 22, 2011, the Departments of Health and Human Services, Labor and Treasury (Departments) issued proposed regulations for the SBC. The proposed regulations include guidance on providing and preparing the SBC as well as a proposed template for the SBC. The SBC regulations are not final. The Departments have indicated that they will likely make changes to the SBC regulations before they are finalized.

On Nov. 17, 2011, the Department of Labor (DOL) issued a set of Frequently Asked Questions (FAQs) that addresses when plans and issuers must start providing the SBC. The proposed regulations provided that plans and issuers must start providing the SBC by March 23, 2012. However, in the FAQs, the DOL delays the compliance date for providing the SBC. The DOL provides that plans and issuers can wait to start providing the SBC until after the final regulations are released. Thus, the March 23, 2012 deadline no longer applies.

It is uncertain when the final SBC regulations will be released. However, according to the DOL, plans and issuers will be given sufficient time after the final regulations are released to get ready for complying with the new requirements.

This delay is significant because it gives plans and issuers more time to develop the SBC. Also, because plans and issuers can wait until final regulations are released to complete the SBC, they will not need to prepare the SBC based on the proposed regulations only to have to update it later for the final guidance.

GUIDANCE ISSUED ON ACA’S SUMMARY

The Affordable Care Act (ACA) requires each employer group health plan to provide a 4-page summary of its benefits to all individuals who are eligible for coverage.  This requirement takes effect on March 23, 2012 (two years after the enactment of the ACA).  The three agencies charged with implementing many of the ACA’s requirements have just issued proposed regulations, along with templates of proposed formats, under which a plan may furnish this new “summary of benefits and coverage” (SBC).

Under the proposed rules, employers or plan administrators (for self-funded plans) and insurers (for insured plans) must provide participants and beneficiaries with SBCs detailing, in a “culturally and linguistically appropriate manner,” simple and consistent information about health plan benefits and coverage.  Conceding that this cannot be done in only four pages, the agencies propose to read the statutory reference to “four pages” as four double-sided pages (i.e., eight pages).  Plans also must provide a separate glossary with uniform definitions of specific medical and coverage-related terms.

Each SBC must include the following:

  • Uniform definitions of standard insurance terms and medical terms;
  • A description of the coverage, including cost sharing, for certain benefit categories;
  • Exceptions, reductions, and limitations on coverage;
  • Cost-sharing provisions of the coverage, including deductible, coinsurance, and copayment obligations;
  • Renewability and continuation of coverage provisions;
  • Coverage examples illustrating three common benefit scenarios;
  • Beginning January 1, 2014, a statement as to whether the plan provides “minimum essential coverage” (a determination that will be important under the “Exchanges” that are to be established as of that date);
  • A statement that the SBC is only a summary and that the plan document, policy, or certificate of insurance should be consulted to determine the governing contractual provisions of the coverage;
  • A contact number to call with questions and an Internet address where a copy of the actual individual coverage policy or group certificate of coverage can be reviewed and obtained;
  • An Internet address or directions for obtaining a list of network providers, if applicable;
  • An Internet address or directions for obtaining information about the prescription drug formulary, if applicable;
  • An Internet address to access and review the uniform glossary; and
  • Premium information (or the cost of coverage under self-insured plans).

The SBC templates were prepared by the National Association of Insurance Commissioners (NAIC), and even the NAIC concedes that they will need some tweaking before they can be used by a self-funded plan.  They include not only a blank template, but also detailed instructions for completing the template and a sample of an SBC with the blanks completed.

The templates also include the glossary of uniform definitions, which would have to be used without modification.  Both the templates and the uniform definitions are designed to allow individuals (and employers looking to purchase a health insurance policy) to more easily compare the provisions of multiple plans or policies on an apples-to-apples basis.

Group health plans must provide SBCs as a part of their written enrollment materials (or if none, upon eligibility for enrollment); upon a change in information included in the SBC; upon a special enrollment event; and within seven days of a request.  SBCs need only be provided with respect to benefit packages in which a participant or beneficiary is enrolled, unless an individual requests an SBC for another option as to which he or she is eligible.

SBCs may be furnished in paper form or electronically.  For ERISA plans, SBCs may be delivered electronically so long as the Department of Labor’s electronic disclosure safe-harbor requirements are satisfied.  Group health plan sponsors should note that the obligation to provide SBCs is in addition to any current duty to furnish ERISA summary plan descriptions, summaries of material modifications, or other disclosures.

The proposed rules also require plans to give covered individuals at least 60 days’ advance notice of any mid-year material modifications that affect SBC content.  For this purpose, a “modification” includes not only a benefit reduction, but also a benefit improvement.  A plan (or its administrator) that willfully fails to provide an SBC may be fined up to $1,000 for each affected individual.

Comments on the proposed rules are due by October 21, 2011.  The agencies specifically request input on special considerations for self-funded plans and the feasibility of meeting the March 23, 2012, deadline to begin providing SBCs.  It appears likely that changes will be made to the proposed rules; therefore, group health plans should pay close attention to any changes in the final guidance, which should be issued within the next several months.

 

The Latest Health Care Reform Update, April 15, 2011

Obama Signs Repeal of Health Reform 1099 Reporting Rule 

On April 14, President Barack Obama signed legislation that repeals a much-criticized health care reform law provision requiring employers doing more than $600 in business with a corporate vendor to furnish Form 1099 statements. Small employers, in particular, complained that the burden imposed by the reporting provision, which had been scheduled to go into effect in 2012, was too great.

Obama’s Medicare Proposal: How Would It Work?

President Obama’s debt-relief plan differs profoundly with Republicans’ on the fate of Medicare.  As outlined on Wednesday, a central aspect of the president’s plan would be to double down on one of the most controversial aspects of his health care reform law: an independent board with the power to slow costs in the Medicare system if the program’s spending rises faster than set limits.

Under the health care law, this Independent Payment Advisory Board (IPAB) would start to work if Medicare spending rises faster than the annual growth of the U.S. gross domestic product, plus 1 percent.  Under the plan outlined by President Obama on Wednesday, the board would act if Medicare spending rises faster than GDP plus 0.5 percent.

As it is now structured, the IPAB is supposed to be an organization of 15 members appointed by the president and confirmed by the Senate.  The health care reform law calls for the board to have varied geographic and professional representation, with experts in health care finance, hospital management and health insurance, as well as physicians.

If Medicare spending surpasses its targets, these people are supposed to put their heads together and come up with ways to cut the program so the costs remain under the set threshold.  Their recommendations are then submitted to Congress.

  • If lawmakers vote to approve them, and they are signed by the president, they become law. 
  • If Congress does not vote on the recommendations, they become law.
  • If Congress votes the recommendations down, but the president vetoes what Congress did, and Congress cannot override the veto, they become law.

One thing that makes it controversial is that it takes away some of Congress’s power to deal with Medicare issues.  Former Obama budget director Peter Orszag has said the board might be “the largest yielding of sovereignty from the Congress since the creation of the Federal Reserve.”

According to an analysis of the current law by the Kaiser Family Foundation, the board is prohibited from making recommendations that would:

  • Ration health care procedures,
  • Increase taxes,
  • Change Medicare benefits, or
  • Make the program more expensive for beneficiaries.

What would the board be able to change?  

  • Things Medicare pays for,
  • What it pays to providers, and
  • The program’s structure, among other things.

Since a big target of spending reductions probably would be things that supply income to doctors, hospitals, and other providers, the IPAB is intensely unpopular in the medical establishment.  Changing or repealing it is one of the American Medical Association and the American Hospital Association’s highest priorities.

A Site Helping Consumers Understand Health Care Reform

This new site was established to help comsumers understand what the reform means for them.  This isn’t a goverment website!

The Health Care and You Coalition is made up of some of our country’s leading organizations that represent consumers, patients, physicians, nurses, hospitals and pharmacists. The goal is to provide the public with easy-to-understand information about the health care law. HealthCareandYou.org is a place where individuals, families, small business owners and health care professionals can turn for help in understanding the specific law and how it impacts them.

A New York Times article by Anahad O’Connor states, One poll released by the Kaiser Family Foundation last week found that about 20 percent of people believe — wrongly — that the law was killed when House Republicans voted to repeal it earlier this year, and 26 percent said they didn’t know enough to say whether it was still the law or not. While a bill to repeal the act was approved by House Republicans in January, it was seen as largely symbolic since a similar measure would be unlikely to clear the Democratic-controlled Senate. President Obama has also said he would veto the bill if it reached his desk.

This is a valuable resource for every American.  Please share with someone you love.

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