Regulators will have to make sense of the healthcare reform provisions
Editor’s Note: The following article will continue in a series of blogs on Blog.JHConline.com and JHC’s online portals. Other reform topics will include Medicare and Medicaid; Committees, Boards and Commissions; CMS releases proposed MD fee schedule rate and other health reform information.
There have been several recent developments regarding the implementation of key provisions of the Patient Protection and Affordable Care Act (PPACA) or the so-called “Affordable Care Act,” Public Law 111-148. In passing PPACA, Congress did not go through a normal order of business generating a conference report to guide those writing the implementation regulations. The legislation was basically written in the offices of House Speaker Pelosi and Senate Majority Leader Harry Reid. There is no conference report language because; there was never a House/Senate conference on PPACA. Talk about uncharted waters for federal regulators!
During the last weeks of June, the Departments of Treasury, Labor, Health and Human Services (HHS) and its Centers for Medicare and Medicaid (CMS) began to issue a series of interim final regulations implementing insurance market reforms contained in the Affordable Care Act. This was closely followed by the issuance of regulations addressing preexisting condition exclusions, lifetime and annual limits on benefits, rescissions, and other important provisions.
Insurance reforms
Provision: Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections.
Impacted Entities: Employers, group health plans, and health insurers offering coverage in the group or individual markets.
Summary: On June 22, 2010 the Departments of Treasury, Labor, and HHS published regulations implementing major insurance market reforms contained in the Affordable Care Act. Key provisions of the rule include:
1. A prohibition on the denial of coverage to children due to preexisting conditions, effective for plan years beginning on or after Sept. 23, 2010. Due to pressure from the Obama Administration, many large insurers have already implemented this policy. However, this prohibition does not require insurers to write policies for children.
2. Lifetime limits on medical benefits are prohibited, effective for plan years beginning on or after Sept. 23, 2010.
3. Annual limits on medical benefits are phased-out as follows: no lower than $750,000 for plans issued or renewed as of Sept. 23, 2010; $1.25 million as of Sept. 23, 2011; $2 million as of Sept. 23, 2012; and no annual limit effective Jan. 1, 2014.
4. Health plans and health insurance issuers may only rescind coverage due to fraud or an intentional misrepresentation of material fact. Coverage may not be rescinded due to unintentional mistakes on insurance applications. Additionally, plans will be required to provide at least 30 days advance notice to an individual whose coverage may be rescinded.
5. For plans that provide obstetrical or gynecological care, they are prohibited from requiring women to get prior authorization or a referral for such care when provided by an in-network provider.
This rule was scheduled to be published in the Federal Register on Monday, June 28, 2010. The comment period will likely close around Aug. 20-23, 2010.
Group Health Plans
Provision: Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan.
Impacted Entities: Employers, group health plans, and health insurers offering coverage in the group or individual markets.
Summary: On June 17, 2010 the Departments of Treasury, Labor, and HHS published regulations implementing the “grandfathering” provision of the Affordable Care Act. Plans that existed on March 23, 2010 (the date of enactment of the Affordable Care Act) will retain their grandfathered status, provided they do not significantly reduce benefits or increase out-of-pocket enrollee spending. Under the regulations, a grandfathered plan may carry out the following activities and remain grandfathered: (1) adjusting co-payments, deductibles, and employer contributions to keep pace with medical inflation; (2) adding new benefits; (3) enrolling new employees or employees previously not enrolled; and (4) adjusting premiums. However, the following activities will result in the revocation of grandfather status: (1) increasing the level of coinsurance (e.g., from 20 to 21 percent); (2) adding or lowering existing annual or lifetime limits; (3) an employer changing insurance companies; (4) eliminating all or a substantial portion of benefits to diagnose or treat a particular condition; or (5) rescinding coverage, except in cases of fraud or an intentional misrepresentation of material fact.
These regulations predict that, by the end 2013, between 49 to 80 percent of small employer plans will lose grandfathered status, between 34 to 64 percent of large employer plans will lose grandfathered status, and between 40 to 67 percent of policies in the individual market would lose grandfathered status. Comments to the interim final rule must be submitted by Aug. 16, 2010.
You have to hand it to the regulators at the Departments of Treasury, Labor, HHS/CMS. There will be many more regulatory pronouncements in the years ahead implementing the Affordable Care Act. It must be terribly difficult for the regulators to do their jobs without the benefit of Congress having done theirs – producing appropriate guidance. Subsequently, these departments may not know exactly where they are going with implementation of PPACA, but you have to give them credit for not being late with the regulations.
