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Health Care Reform Implementation Update

Thursday, September 30th, 2010

Sept. 23, 2010, marked the six-month anniversary of the enactment of the Affordable Care Act. There has been a lot of news coverage on this milestone during the past few days and it is likely that more will follow.

Certain provisions of the Affordable Care Act are effective starting with plan years (in the individual market, policy years) beginning on or after Sept. 23, 2010. We believe that some of our members or groups may not recognize or understand the plan/policy year concepts and mistakenly assume that certain Affordable Care Act provisions will immediately apply to their coverage on Sept. 23, 2010.

We ask that you call us with any questions regarding certain provisions of the Affordable Care Act that may not immediately apply to your coverage, but will apply starting with plan/policy years beginning on or after Sept. 23, 2010.

New EOBs and Language Notifications

Beginning Sept. 23, 2010, members and providers will see a new section in Explanation of Benefits (EOBs) and denial letters that is referred to as “Important Updates (not applicable to all policies or plans)”. The new section informs members that if their plan/policy is non-grandfathered, as defined in the Affordable Care Act, and if their plan/policy has renewed after Sept. 23, 2010, then the information in the new section may apply to them. This would also apply to new plans that are effective on or after Sept. 23, 2010.

These requirements do not apply to grandfathered plans. However, you should note that the new notification language will be included on all EOBs and denial letters, including those to members of grandfathered plans. Our call center Customer Advocates will be prepared to help members determine whether or not their plan is grandfathered or non-grandfathered.

Appeals and External Review

Concerning external review of denials, all non-grandfathered plans that are not required to follow an existing state external review law – for example, most self-insured plans – the option to choose to follow either the existing state external review process (when permitted by the state’s Department of Insurance) or to follow the new federal external review process, as of their effective date.

Non-grandfathered ASO self-funded plans to submit an External Review Election Form for their medical benefit plan(s) to their account representative at least 30 calendar days prior to their renewal date. If they do not make their own selection by completing the form at least 30 calendar days prior to renewal, the states external review process will review it. At this time there will be no additional charge for this new service.

Essential Health Benefits

Starting with plan years beginning on or after Sept. 23, 2010, the Affordable Care Act generally prohibits group health insurance coverage from having annual limits on the dollar amount of essential health benefits.

However, for plan years beginning prior to Jan. 1, 2014, group health insurance coverage may have certain restricted annual limits on the dollar amount of essential health benefits in accordance with federal regulations.

Federal regulations and guidance also provide for the waiver of the restricted annual limit requirements under certain circumstances.

Pre-existing Under 19

Starting with plan years beginning on or after Sept. 23, 2010, the Affordable Care Act prohibits group health insurance coverage from imposing pre-existing condition exclusions on enrollees under age 19. If you missed this announcement earlier, you should note that we have now aligned our benefits with the Affordable Care Act by not allowing pre-existing exclusion only for enrollees up to age 19. This is for our fully insured and individual business – ASO/custom accounts may still vary their coverage to provide richer benefits.

Child-only Policies

We are awaiting state Department of Insurance approvals for our new child-only policy. Our target date to begin enrolling members is May 2011.

Special Open Enrollments

Some groups may be having their open enrollment now for plans starting Oct. 1, 2010. Included in open enrollment for these groups is a special open enrollment for adding dependents under the provision of the Affordable Care Act that extends adult child dependent coverage up to age 26. Those individuals who also reached a plan’s lifetime limit are also eligible for the special open enrollment.

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Health Insurance Quotes for Children Don’t Exist

Friday, September 24th, 2010

All insurance carriers are halting sales of individual health insurance for children policies based on confusion over a federal reform provision that takes effect today.

The health insurance reform act that was passed in March requires that policies starting now or in the future cannot exclude, limit, or deny medical coverage to children under 19 based on any health problems that developed before seeking medical coverage. Therefore, there will be no more exclusions for children with pre-existing conditions.

Premiums could double for everyone by mid 2011. Your best choice is to buy health insurance now and lock in a low rate for several years. Many carriers allow you to lock in rates for more than a year at a very small cost per month.

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Health Insurance Reform Washington Update

Thursday, August 12th, 2010

Summary of what has been happening in Washington as of Aug. 6, 2010.

Senators Introduce New Legislation to Increase Transparency and Competition in Insurance Industry
Senators Mark Pryor (D-AR), Jay Rockefeller (D-WV) and Barbara Boxer (D-CA) introduced “The Insurance Competition and Transparency Act” (S. 3685) in the Senate Committee on Commerce, Science and Transportation on Aug 2. The legislation would authorize the Federal Trade Commission (FTC) to use its authority under the Federal Trade Commission Act to “investigate and disclose information about practices employed by insurance companies that may reduce competition in the marketplace.”

The bill goes a step further and explicitly states that since many insurance companies have non-profit status, it would eliminate the exemption under the Act for non-profit insurers. S. 3685 is based on an amendment that was filed by Senators Pryor, Rockefeller and Boxer during the Senate’s health reform debate in December 2009.

Senate Passes Child Nutrition Bill
Led by the Senate Agriculture Committee Chairwoman Blanche Lincoln (D-AR) and Ranking Member Saxby Chambliss (R-GA), the Senate passed the “Healthy, Hunger-Free Kids Act of 2010” (S. 3307) by unanimous consent on Aug. 5. The legislation authorizes a $4.5 billion increase over 10 years for school lunches and other nutrition programs. It also gives the Agriculture Department authority to set nutrition standards for foods sold in vending machines and in a la carte lines in schools.

Of the $4.5 billion, the legislation provides $1.2 billion to increase the number of children receiving food, in an effort to meet President Barack Obama’s pledge to end childhood hunger by 2015. The remaining $3.2 billion would be used to improve the quality of school meals. The cost of the legislation is entirely offset. Review the Congressional Budget Office’s budgetary impact report.

Chairman Tom Harkin (D-IA) of the Senate Health, Education, Labor and Pensions Committee commended Agriculture Committee Chairwoman Lincoln for her work on the bill, noting that it passed both the Agriculture Committee and the full Senate without a single dissenting vote.

The House of Representatives still needs to pass its version of the bill, “The Improving Nutrition for America’s Children Act” (H.R. 5504), in order for President Obama to sign the bill before Sept. 30, when many of the programs are set to expire. The House Education and Labor Committee approved the measure on July 15.

The American Academy of Pediatrics also commended the Senate for its action on the legislation and pushed the House to follow the Senate’s lead. “The AAP urges the House to follow the Senate’s swift action on this bill and pass strong child nutrition legislation when Congress reconvenes in September. All children deserve a healthy future, which starts with access to healthy, nutritious meals every day.”  See the American Academy of Pediatrics’ entire statement.

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Health Insurance Reform Schedule

Wednesday, July 21st, 2010

2010
New programs:

  • Temporary retiree reinsurance program.
  • National risk pool, small business tax credit.
  • $250 rebate for Medicare members who reach the “doughnut hole”.

Health Insurance Reforms:

  • No lifetime benefit limits based on dollar amounts.
  • Allowed restricted yearly limits on the dollar value of certain benefits.
  • No coverage rescissions/cancellations (except for fraud or internal misrepresentation).
  • No cost-sharing obligations for preventive services.
  • Must have dependent coverage up to age 26.
  • New internal and external appeal process.
  • No pre-existing condition exclusions for dependent children (under 19 years of age).
  • New health plan disclosure and transparency requirements.

2011
Insurance Reforms:

  • New uniform coverage documents and standard definitions are developed.
  • Must have minimum medical loss ratios.

Medicare Reforms:

  • Start of Medicare Advantage cost-sharing limits.
  • Medicare beneficiaries who reach the doughnut hole to get a 50% discount on brand name drugs.
  • Primary care doctors and general surgeons practicing in underserved areas, such as inner city and rural communities to get a 10% bonus.
  • Medicare Advantage plans begin having payments frozen.

Other:

  • Yearly fee for brand-name drug manufacturers.
  • Start of voluntary long-term care insurance program giving a cash benefit to help those with disabilities stay in their homes or pay nursing home cost: benefit starts 5 years after paying coverage fee.
  • Increased funding for community health centers to provide care for many low-income and uninsured people.

2012

  • Hospitals, doctors and payers encouraged to join forces in “accountable care organizations”.
  • Hospitals with high rates of preventable readmissions facing reduced Medicare payments.

2013

  • Individuals making $200,000 a year or couples making $250,000 would have a higher Medicare payroll tax of 2.35% on earned income – up from the current 1.45%. A new 3.8% tax on unearned income, such as dividends and interest, also added.
  • Contributions to flexible spending accounts (FSAs) limited to $2,500 a year – indexed for inflation. And the threshold for deducting medical expenses on taxes goes from 7.5% to 10% income.
  • Medical device manufacturers have a 2.9% sales tax on medical devices; with exemptions for some, like eyeglasses, contact lens, and hearing aids.
  • No more deduction for expenses allocable to Medicare Part D subsidy for employers who maintain prescription drug plans for their Medicare Part D-eligible retirees.

2014
Coverage Mandates & Subsidies:

  • New Individual and employer coverage responsibilities.
  • New Individual affordability tax credit and expanded small business tax credits.

Health Insurance Exchange & Insurance Reforms:

  • State individual and small group health insurance exchanges operational.
  • Guaranteed issue, guaranteed renewability, modified community rating and minimum benefit standards (“essential benefits” plan) effective.
  • No more lifetime and yearly dollar limits for essential benefits.
  • New taxes on health insurers.

2018

  • New tax (“Cadillac tax”) on employer-sponsored health plans that offer policies with generous coverage levels.

2020

  • Doughnut hole coverage gap in Medicare prescription benefits is fully phased out. Seniors continue to pay the standard 25% of their drug costs until they reach the threshold for Medicare catastrophic coverage.

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Republican Attempt To Repeal Individual Mandate

Wednesday, June 23rd, 2010

The United States House of Representatives voted 187 to 230 to defeat a Republican proposal to repeal the individual health insurance mandate in the new health reform law, the PATIENT PROTECTION AND AFFORDABLE CARE ACT OF 2010 (PPACA). Twenty-one Democrats joined 166 House Republicans in voting against the requirement that most Americans purchase health care coverage beginning in 2014.

Representative Dave Camp (R-MI) – the senior ranking Republican on the powerful House Ways and Means Committee – offered the proposal as a procedural motion to an unrelated bill. Despite the proposal’s failure, some Republican members believe they scored political points by forcing a vote on the new health reform law. However, House Ways and Means Committee Chairman Sander Levin (D-MI) stated that the vote displayed increased support among House Democrats for the health reform law, because only 21 Democrats voted in support of the Republican proposal, whereas 34 Democrats voted against the health care reform bill in March.

SENATE PASSES DOC FIX LEGISLATION
The Senate passed legislation on June 18 that would avert a 21.3 percent reduction in Medicare physician payment rates that became effective June 1. Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) took to the floor and passed a six-month delay in reimbursement cuts by unanimous consent, after extracting it from a larger tax and benefits package, H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010. The $6.5 billion bill was offset with spending reductions that appeased both Republicans and Democrats.

The House, which is not scheduled to return until the evening of June 22, still must pass the “doc fix” legislation. Earlier this week, a procedural vote to end debate on the legislation failed 52 to 45 (60 votes were necessary for passage). Eleven Democrats broke with their party leaders to vote no. Many Republicans and moderate Democrats believed that the more than $50 billion net cost of the bill should be offset by spending cuts and/or federal revenue increases. The fate of the full tax-extenders legislation, H.R. 4213, remains up in the air.

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CBO Adds Billions of Dollars for Discretionary Spending Cost Estimate

Thursday, May 20th, 2010

On May 11, the Congressional Budget Office (CBO) released a report with additional information about the potential effects of the new health insurance reform law, the Patient Protection and Affordable Care Act (PPACA), on discretionary spending that the CBO initially provided on March 13, prior to the legislation being passed.

The updated analysis adds a minimum of $115 billion over 10 years – more than twice the initial estimate released before President Barack Obama signed the bill into law. This new estimate brings the cost of the new law to well over $1 trillion.

CBO Director Douglas Elmendorf stated that while the CBO does not have a comprehensive estimate of all the potential discretionary costs, they provided information on the major components broken down into three general categories:

  • Costs incurred by federal agencies to implement the new policies
  • Explicit authorizations for grant and program spending for one or more years
  • Explicit authorizations for grant and program spending for which no specific funding levels are specified

Minority Leader John Boehner (R-OH) immediately released a statement admonishing the Administration, saying that the new estimate “provides ample cause for alarm,” and nearly wipes out “the purported deficit reduction in the law.”

A Senate Finance Committee Democratic aide said, “The bulk of discretionary spending referenced in the report is for programs – like the Indian Health Service, the National Health Service Corps and Federally Qualified Health Centers – that were not created under health care reform and would have been funded through the appropriations process, like they have for decades, with or without health care reform.”

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Health Insurance Reform Update for May

Wednesday, May 19th, 2010

As the comment period ended with respect to medical loss ratio (MLR) regulations, a flurry of letters were sent last week to both the National Association of Insurance Commissioners and the U.S. Department of Health and Human Services. In addition to Aetna health insurance and other insurers, several employer groups have written with comments and concerns, including the American Benefits Council, the National Coalition on Benefits and the National Retail Federation. In all cases, the comments point out that it’s important to assure that positive, quality-oriented elements of health care, such as health information technology, disease management and wellness programs, fraud and abuse regimens, all should count as quality measures when calculating a company’s MLR. The National Retail Federation in particular noted the need for a national MLR for large employer business, a position well embraced by Aetna.

In the never-ending roll-out of proposed health care reform regulations, the Administration last week published yet another set of Interim Final Regulations. This set deals with coverage for dependent children up to age 26 pursuant to the requirement that insurers and group plans allow kids to stay on their parents’ policies or coverage until age 26.  Comments are due by August 11, but the rule is effective July 12, 2010. Many insurers have already announced that they will implement this provision early (e.g., May 31 for Aetna) to cover graduating college students who may have otherwise faced the summer without insurance. Whether self-funded employers follow suit is not as clear. Also, with the temporary fix of Medicare physician reimbursement rates set to run out the end of May, the House is expected to take up a more lasting fix sometime this week. If the House proceeds as expected it will attempt to install a five-year suspension of any physician rate cuts. Aetna supports the change, as it will give this market predictability.

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Health Insurance Overhaul Law Costs More

Tuesday, May 18th, 2010

The new health insurance law will add at least $115 billion more to government health care spending over the next 10 years, according to the CBO. If all additional spending called for in the legislation is approved, it would push the cost of the overhaul above $1 trillion. The added spending includes administrative costs to federal agencies carrying out the law, community health centers, and Indian health care.

“If Congress were to approve all of this new discretionary funding authorized in the health care bill, almost all of the administration’s highly touted savings would be made null and void,” said Jennifer Hing.

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Health Insurance Reform State High Risk Pools

Friday, May 7th, 2010

In the new health insurance reform law the states are permitted to create their own high risk pools, expand existing pools, or allow the federal government to create and administer the pools for them.

The following states will operate their own pools:
Alaska, Arkansas, California, Colorado, Connecticut, Illinois, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Vermont, Washington, West Virginia, Wisconsin, and District of Columbia.

The following states will allow the federal government to create and manage the pools:
Alabama, Delaware, Georgia, Hawaii, Idaho, Indiana, Louisiana, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Virginia, and Wyoming.

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Individual Health Insurance Fine 4 Million Will Pay

Friday, April 23rd, 2010

An expected four million people in the U.S can be fined for failing to buy individual health insurance by the year 2016. This is when when the health care overhaul law will be in full force. According, to the CBO forecast on Thursday.

United States citizens must buy health insurance and abide by the individual health insurance mandate set forth in the landmark legislation passed by Congress last month. If citizens do not comply they will face fines. People without coverage can be fined up to two and a half percent of their personal income.

The Congressional Budegt Office also forecasted that the government will collect close to $4 billion annually from these penalties between the years 2017 and 2019.

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