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Robert R. PohlsPohls & AssociatesWalnut Creek, CaliforniaHEALTH INSURANCE LAW UPDATEHealth Insurance Regulation and Litiga...
HEALTH INSURANCE LAW UPDATEAgenda- PPACA Litigation- PPACA Scorecard- Future Changes- Insurance Practices- Insurance Marke...
HEALTH INSURANCE LAW UPDATEPPACA: The Basics- Passed on 3/23/2010- Effective on 3/30/2010- Primary Goal:Increased Access t...
HEALTH INSURANCE LAW UPDATEPPACA: The BasicsAccessibility:- Insurance Practices- Insurance Marketplace- Expansion of Medic...
HEALTH INSURANCE LAW UPDATEPPACA: The BasicsAccessibility:- Insurance Practices- Insurance Marketplace- Expansion of Medic...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateInsurance Practices- Community rating- individual or family coverage- g...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation Update“Congress’s insurance industry reforms . . . willencourage individuals ...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation Update“The reforms also threaten to impose massive newcosts on insurers, who ...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateThe “Individual Mandate”- All individuals must have “minimum essentialc...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateAdverse Selection“. . . unless the individual mandate forcesindividuals...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateAdverse Selection“. . . without full market participation, the financia...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateThe Commerce Clause“The Congress shall have Power . . . To regulateComm...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateNot Authorized by The Commerce Clause“The power to regulate commerce pr...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateThe Necessary and Proper Clause“The Congress shall have the power . . ....
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateNot Valid Under The Necessary and Proper Clause“Each of our prior cases...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateBut: Authorized by the Taxing Clause“The . . . requirement that certain...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateExpansion of MedicaidStates must cover anyone from a family with aninco...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateExpansion of MedicaidCongress may attach appropriate conditions tofeder...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateCoercion DoctrineWhen “power turns into compulsion,” the legislationrun...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateHeld: Unconstitutionally Coercive“The threatened loss of over 10 percen...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateHeld: Unconstitutionally Coercive“The Court today limits the financial ...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateEmployer MandateLarge employers: 50 or more full-time employeesAnnual f...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateEmployer MandateCommerce Clause gives Congress the power to“regulate th...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdatePreventive Care Coverage MandateCertain preventive services must be cov...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdatePreventive Care Coverage MandateMost cases: Dismissed (not ripe)Two cas...
HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdatePreventive Care Coverage MandateUpdated Regulations- Employers who mora...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardDependent CoverageParents may keep childrenon family coverage untilage 26.- Bef...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardPre-Existing ConditionsCoverage for children(under 19) cannot bedenied or limit...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardSmall Business Tax CreditSmall employers (<25employees) can offset asmuch as 35...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardEarly Retiree ReinsuranceERRP reimburses employersup to 80% of early retirees’m...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardEarly Retiree ReinsuranceProblem: How to managethe rising cost of insuringretir...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardLifetime / Annual LimitsNo lifetime limits.Annual limits:- 9/23/2010: Not less ...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardLifetime / Annual Limits- Individual mandate?- Stop loss?- Stop loss sold to a ...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardRescissionsNo rescissions withoutfraud . . . but what ismaterial?- Guaranteed-i...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardInternal AppealsGroup: 29 C.F.R. 2560.503-1Individual: State lawDHHS Standards ...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardInternal AppealsGroup: 29 C.F.R. 2560.503-1Individual: State lawDHHS Standards ...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardIndependentExternal ReviewRequired if claim involvesmedical judgment orrescissi...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardIndependentExternal ReviewSelf-funded ERISA: federalAll others:- state external...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardIndependentExternal ReviewIndependent 3rd PartyDecision is “binding”“Binding” m...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardMedical Loss Ratiosand RebatesIndividual: 80%Group: 85%- 80 million people insu...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardPremium Rate IncreasesReview increases over 10%Unreasonable if:- Excessive - Un...
HEALTH INSURANCE LAW UPDATEPPACA: ScorecardPremium Rate IncreasesJudicial review?- Reviewing entity may be entitled to def...
HEALTH INSURANCE LAW UPDATEFuture Changes- Individual Mandate- Employer Mandate- Health Benefit Exchanges- Expansion of Me...
HEALTH INSURANCE LAW UPDATEFuture Changes: Individual MandateExceptions:- illegal aliens- recognized Indian Tribes- certai...
HEALTH INSURANCE LAW UPDATEFuture Changes: Individual Mandate133% - 400% of FPL:- eligible for health benefit exchanges- s...
HEALTH INSURANCE LAW UPDATEFuture Changes: Individual MandateOver 400% of FPL:- exempt if cheapest plan in exchange is >8%...
HEALTH INSURANCE LAW UPDATEFuture Changes: Employer MandateLarge Employers: 50 or more FTEs (or FTEEs)Penalties:- No cover...
HEALTH INSURANCE LAW UPDATEFuture Changes: Health Benefit ExchangesEffective Date: January 1, 2014- funding for states to ...
HEALTH INSURANCE LAW UPDATEFuture Changes: Health Benefit ExchangesImpact on Agents:- Individual mandate- Employer mandate...
HEALTH INSURANCE LAW UPDATEFuture Changes: Health Benefit ExchangesImpact on Agents:- Medical Loss Ratios- NAIC: accommoda...
HEALTH INSURANCE LAW UPDATEFuture Changes: Expansion of MedicaidProjections:- increased enrollment by 24 million- between ...
HEALTH INSURANCE LAW UPDATEFuture Changes: Expansion of Medicaid52
HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityU.S. Healthcare Spending1980: $256 Billion 2010: $2.6 Trillion53
HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityU.S. Healthcare Spending54
HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityU.S. Healthcare Spending55
HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityU.S. Healthcare Spending56
HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityU.S. Healthcare Spending57
HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityFactors:- technology and prescription drugs- rise in chronic d...
HEALTH INSURANCE LAW UPDATEHealthcare Delivery SystemsHealth Information Technology- federal incentives for “meaningful us...
HEALTH INSURANCE LAW UPDATEHealthcare Delivery SystemsPatient Centered Medical Homes- prompt access to primary care provid...
HEALTH INSURANCE LAW UPDATEHealthcare Delivery SystemsImpact of Changes- Small medical groups are being absorbed- Hospital...
HEALTH INSURANCE LAW UPDATEHealthcare Delivery Systems62
HEALTH INSURANCE LAW UPDATELitigation Hot SpotsRescissions- Only for fraud- Guaranteed issue- Community ratingQuestion: An...
HEALTH INSURANCE LAW UPDATELitigation Hot SpotsRescissions“Materiality is to be determined not by theevent, but solely by ...
HEALTH INSURANCE LAW UPDATELitigation Hot SpotsClaim Denials- Exhaustion of remedies- Conflict of interest- Deference to d...
HEALTH INSURANCE LAW UPDATELitigation Hot SpotsMedical Loss Ratios and Rebates- Public reporting- Medical claims- Quality ...
HEALTH INSURANCE LAW UPDATELitigation Hot SpotsMedical Loss Ratios and RebatesWhat happens if a policy lapses for non-paym...
HEALTH INSURANCE LAW UPDATELitigation Hot SpotsPremium RatesSales PracticesProvider Relations68
HEALTH INSURANCE LAW UPDATEQuestions?Robert R. PohlsPohls & Associates1550 Parkside Drive, Suite 260Walnut Creek, Californ...
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2013 Health Insurance Update

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Transcript of "2013 Health Insurance Update"

  1. 1. Robert R. PohlsPohls & AssociatesWalnut Creek, CaliforniaHEALTH INSURANCE LAW UPDATEHealth Insurance Regulation and LitigationAfter NFIB v. Sebelius1
  2. 2. HEALTH INSURANCE LAW UPDATEAgenda- PPACA Litigation- PPACA Scorecard- Future Changes- Insurance Practices- Insurance Marketplace- Health Care Delivery Systems- Litigation Hot Spots- Questions2
  3. 3. HEALTH INSURANCE LAW UPDATEPPACA: The Basics- Passed on 3/23/2010- Effective on 3/30/2010- Primary Goal:Increased Access to Affordable Health Care3
  4. 4. HEALTH INSURANCE LAW UPDATEPPACA: The BasicsAccessibility:- Insurance Practices- Insurance Marketplace- Expansion of MedicaidAffordability:- Promoting Public Health- Health Care Delivery Systems- Revenue Provisions4
  5. 5. HEALTH INSURANCE LAW UPDATEPPACA: The BasicsAccessibility:- Insurance Practices- Insurance Marketplace- Expansion of MedicaidAffordability:- Promoting Public Health- Health Care Delivery Systems- Revenue Provisions5
  6. 6. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateInsurance Practices- Community rating- individual or family coverage- geographic rating area- age (3:1 ratio)- tobacco use (1.5:1 ratio)- Guaranteed-issue6
  7. 7. HEALTH INSURANCE LAW UPDATEPPACA: Litigation Update“Congress’s insurance industry reforms . . . willencourage individuals to delay purchasing privateinsurance until an acute medical need arises.”Florida v. HHS, 648 F.3d 1235 (11th Cir. 2011)7
  8. 8. HEALTH INSURANCE LAW UPDATEPPACA: Litigation Update“The reforms also threaten to impose massive newcosts on insurers, who are required to acceptunhealthy individuals but prohibited from chargingthem rates necessary to pay for their coverage.”NFIB v. Sebelius, 567 U.S. ___ (2012)8
  9. 9. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateThe “Individual Mandate”- All individuals must have “minimum essentialcoverage” by January 2014 (unless exempt).- Anyone without minimum essential coveragemust make a “shared responsibility payment.”- Tax Year 2014: $95 (or 1% of HHI)- Tax Year 2015: $325 (or 2% HHI)- Tax Year 2016: $695 (or 2.5% of HHI)9
  10. 10. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateAdverse Selection“. . . unless the individual mandate forcesindividuals into the private insurance pool beforethey get sick or injured, Congress’ insuranceindustry reforms will be unsustainable by theprivate insurance companies.”Florida v. HHS, 648 F.3d 1235 (11th Cir. 2011)10
  11. 11. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateAdverse Selection“. . . without full market participation, the financialfoundation supporting the health care system willfail, in effect causing the entire health care regimeto ‘implode’.”Virginia v. Sebelius728 F.Supp.2d 768 (E.D. Va. 2010)11
  12. 12. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateThe Commerce Clause“The Congress shall have Power . . . To regulateCommerce with foreign Nations, and among theseveral States, and with the Indian Tribes.”U.S. Const., Art. I, §8, cl. 312
  13. 13. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateNot Authorized by The Commerce Clause“The power to regulate commerce presupposes theexistence of commercial activity to be regulated.”NFIB v. Sebelius, 567 U.S. ___ (2012)“The individual mandate forces individuals intocommerce precisely because they elected to refrainfrom commercial activity.”NFIB v. Sebelius, 567 U.S. ___ (2012)13
  14. 14. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateThe Necessary and Proper Clause“The Congress shall have the power . . . To make allLaws which shall be necessary and proper forcarrying into Execution the foregoing Powers, andall other Powers vested by this Constitution in theGovernment of the United States, or in anyDepartment or Officer thereof.”U.S. Const., Art. I, §8, cl. 1814
  15. 15. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateNot Valid Under The Necessary and Proper Clause“Each of our prior cases upholding laws under thatClause involved exercises of authority derivativeof, and in service to, a granted power.”“The individual mandate, by contrast, vestsCongress with the extraordinary ability to createthe necessary predicate to the exercise of anenumerated power.”NFIB v. Sebelius, 567 U.S. ___ (2012)15
  16. 16. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateBut: Authorized by the Taxing Clause“The . . . requirement that certain individuals pay afinancial penalty for not obtaining health insurancemay reasonably be characterized as a tax.”“Because the Constitution permits such a tax, it isnot our role to forbid it, or to pass upon its wisdomor fairness.”NFIB v. Sebelius, 567 U.S. ___ (2012)16
  17. 17. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateExpansion of MedicaidStates must cover anyone from a family with anincome below 133% of the federal poverty level.- From 2014 to 2016, the federal governmentwill pay 100% of the increased fees.- The federal government’s percentage will thendrop each year until reaching 90% in 2020.17
  18. 18. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateExpansion of MedicaidCongress may attach appropriate conditions tofederal taxing and spending programs.If a state does not comply, DHHS may declare that“further payments will not be made to the State.”42 U.S.C. §1396c18
  19. 19. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateCoercion DoctrineWhen “power turns into compulsion,” the legislationruns contrary to our system of federalism.Steward Machine Co. v. Davis301 U.S. 548, 590 (1937)19
  20. 20. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateHeld: Unconstitutionally Coercive“The threatened loss of over 10 percent of a State’soverall budget . . . is economic dragooning thatleaves the States with no real option but toacquiesce in the Medicaid expansion.”“§1396c is unconstitutional when applied towithdraw existing Medicaid funds from States thatdecline to comply with the expansion.”NFIB v. Sebelius, 567 U.S. ___ (2012)20
  21. 21. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateHeld: Unconstitutionally Coercive“The Court today limits the financial pressure theSecretary may apply to induce States to accept theterms of the Medicaid expansion. As a practicalmatter, that means States may now choose to rejectthe expansion; that is the whole point.”NFIB v. Sebelius, 567 U.S. ___ (2012)21
  22. 22. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateEmployer MandateLarge employers: 50 or more full-time employeesAnnual fees:- $2,000 per FTE (in excess of 30) if do notoffer “minimum essential coverage.”- $3,000 per FTE with income below400% of federal poverty level who opts outof the employer’s plan.22
  23. 23. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdateEmployer MandateCommerce Clause gives Congress the power to“regulate the terms of the employment contract.”Liberty University v. GeithnerW.D.Va. (November 30, 2010)4th Circuit: Anti-Injunction ActSCOTUS: Certiorari denied23
  24. 24. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdatePreventive Care Coverage MandateCertain preventive services must be covered withoutco-payments, co-insurance or deductibles.- Preventive services include contraception- Regulations exempt certain religious employers.24
  25. 25. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdatePreventive Care Coverage MandateMost cases: Dismissed (not ripe)Two cases: Injunctive relief denied forinsufficient likelihood of successEight cases: Injunctive relief granted toprohibit enforcing preventivecare coverage mandate25
  26. 26. HEALTH INSURANCE LAW UPDATEPPACA: Litigation UpdatePreventive Care Coverage MandateUpdated Regulations- Employers who morally object to providingcoverage for contraception may omit it fromtheir health insurance plans.- Insurers must inform employees they are eligiblefor separate plans that cover contraceptives.- Insurers must pay cost of additional coverage.26
  27. 27. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardDependent CoverageParents may keep childrenon family coverage untilage 26.- Before PPACA: 13 million uninsured (ages 19-29)- After PPACA: 10.5 million uninsured (as of 2011)27
  28. 28. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardPre-Existing ConditionsCoverage for children(under 19) cannot bedenied or limited becauseof pre-existing conditions.- Before PPACA: 10% - 13.3% uninsured (under 18)- After PPACA: 7% uninsured (as of 2011)28
  29. 29. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardSmall Business Tax CreditSmall employers (<25employees) can offset asmuch as 35% of employeehealth insurance costs.- Before PPACA: 4.4 million eligible employers$2 billion reserved for tax credits- After PPACA: 309,000 employers claimed$416 million in tax credits29
  30. 30. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardEarly Retiree ReinsuranceERRP reimburses employersup to 80% of early retirees’medical claims costs.- Effective June 1, 2010- $5 billion in funding- February 2012: $4.73 billion in claims processed30
  31. 31. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardEarly Retiree ReinsuranceProblem: How to managethe rising cost of insuringretirees.The analysis may depend on “the language of therelevant documents, considered against thebackground of employee benefits law and laborlaw precepts.”Aldo v. Raytheon Corp. (9th Cir. 2012)31
  32. 32. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardLifetime / Annual LimitsNo lifetime limits.Annual limits:- 9/23/2010: Not less than $750,000- 9/23/2011: Not less than $1.25 M- 9/23/2012: Not less than $2 M- 1/1/2014: Unlimited32
  33. 33. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardLifetime / Annual Limits- Individual mandate?- Stop loss?- Stop loss sold to a self-funded plan is notreinsurance, but direct insurance subject tostate regulation.Texas DOI v. American National Ins. Co. (Texas 2012)- State law may set “attachment points.”33
  34. 34. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardRescissionsNo rescissions withoutfraud . . . but what ismaterial?- Guaranteed-issue- Community rating: - individual or family coverage- geographic rating area- age (0-20; 21-63; 64+)- tobacco (cannot rescind)34
  35. 35. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardInternal AppealsGroup: 29 C.F.R. 2560.503-1Individual: State lawDHHS Standards (for plan years after 1/1/2012):- Includes rescissions- Decision-makers must have no conflict of interest- “Culturally and linguistically appropriate” notices35
  36. 36. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardInternal AppealsGroup: 29 C.F.R. 2560.503-1Individual: State lawDHHS Standards (for plan years after 1/1/2012):- Any new evidence or rationale must be shared- Reasonable opportunity to respond- Coverage must be provided pending outcome36
  37. 37. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardIndependentExternal ReviewRequired if claim involvesmedical judgment orrescission.As of January 1, 2014: Applies to all benefitdeterminations that do not relate solely to eligibility.37
  38. 38. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardIndependentExternal ReviewSelf-funded ERISA: federalAll others:- state external review program (if it includesconsumer protections found in NAIC’s Model Act).- If not, choose between federal program run byDHHS or federal program run by DOL and Treasury.38
  39. 39. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardIndependentExternal ReviewIndependent 3rd PartyDecision is “binding”“Binding” means the plan or insurer must providebenefits pursuant to the external reviewer’s finaldecision, regardless of whether the plan or insurerintends to seek judicial review.76 Fed. Reg. 37217 (June 24, 2011)39
  40. 40. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardMedical Loss Ratiosand RebatesIndividual: 80%Group: 85%- 80 million people insured by plans subject to MLR- 12.8 million (14%) received rebates- $1.1 billion in rebates (average of $151)40
  41. 41. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardPremium Rate IncreasesReview increases over 10%Unreasonable if:- Excessive - Unjustified - Unfairly Discriminatory45 CFR §154.205(a)CMS Reviews: 20 of 28 increases “unreasonable”State Reviews:- 27 of 35 states reduced or rejected increases- 2 states approved only decreases41
  42. 42. HEALTH INSURANCE LAW UPDATEPPACA: ScorecardPremium Rate IncreasesJudicial review?- Reviewing entity may be entitled to deference.Kirsch v. Department of Consumer and Business Services (Oregon 2012)- Can be difficult to challenge when making a profit.Anthem Health Plans of Maine, Inc. v. Superintendent of Insurance40 A.3d 380 (Maine 2012)42
  43. 43. HEALTH INSURANCE LAW UPDATEFuture Changes- Individual Mandate- Employer Mandate- Health Benefit Exchanges- Expansion of Medicaid43
  44. 44. HEALTH INSURANCE LAW UPDATEFuture Changes: Individual MandateExceptions:- illegal aliens- recognized Indian Tribes- certain religious sects- incarcerated people- anyone with coverage gap of < 3 months- income less than 133% of FPL44
  45. 45. HEALTH INSURANCE LAW UPDATEFuture Changes: Individual Mandate133% - 400% of FPL:- eligible for health benefit exchanges- subsidies will cap premiums at 9.5% of HHI- 400% FPL = $112,176 (family of 4)- 9.5% of HHI = $10,657- alternative: make shared responsibilitypayment of not more than $2,08545
  46. 46. HEALTH INSURANCE LAW UPDATEFuture Changes: Individual MandateOver 400% of FPL:- exempt if cheapest plan in exchange is >8% of HHI- 400% of FPL: $112,176- 8% of HHI: $8,974- “bronze” coverage:- between $12,000 and $15,000/year- $12,000 is 8% of $150,00046
  47. 47. HEALTH INSURANCE LAW UPDATEFuture Changes: Employer MandateLarge Employers: 50 or more FTEs (or FTEEs)Penalties:- No coverage: $2,000/employee (over 30)- Opt-outs: $3,000/employee (if <400% FPL)Projected Impact:- GAO: 2.5% decrease to 2.7% increase- Employers: decrease between 2% and 20%47
  48. 48. HEALTH INSURANCE LAW UPDATEFuture Changes: Health Benefit ExchangesEffective Date: January 1, 2014- funding for states to establish and run- DHHS will establish and run if state does notProjected Impact:- 24 states will establish and run- 26 states will rely on DHHSOpen Enrollment: Begins in October 201348
  49. 49. HEALTH INSURANCE LAW UPDATEFuture Changes: Health Benefit ExchangesImpact on Agents:- Individual mandate- Employer mandate- Exchanges- Navigators- 45 C.F.R. 155.210(d)49
  50. 50. HEALTH INSURANCE LAW UPDATEFuture Changes: Health Benefit ExchangesImpact on Agents:- Medical Loss Ratios- NAIC: accommodate producercompensation in MLR regulations- DHHS: states may seek waivers- H.R. 1206 / S.B. 2288NAIFA: 70% reported commissions decrease53% of those reported decrease of >25%50
  51. 51. HEALTH INSURANCE LAW UPDATEFuture Changes: Expansion of MedicaidProjections:- increased enrollment by 24 million- between $20B and $42B in new costs to statesSCOTUS: states may choose not to participate- 26 states joined in constitutional challenge- 13 states already have opted out51
  52. 52. HEALTH INSURANCE LAW UPDATEFuture Changes: Expansion of Medicaid52
  53. 53. HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityU.S. Healthcare Spending1980: $256 Billion 2010: $2.6 Trillion53
  54. 54. HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityU.S. Healthcare Spending54
  55. 55. HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityU.S. Healthcare Spending55
  56. 56. HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityU.S. Healthcare Spending56
  57. 57. HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityU.S. Healthcare Spending57
  58. 58. HEALTH INSURANCE LAW UPDATEShifting the Focus: AffordabilityFactors:- technology and prescription drugs- rise in chronic diseases- administrative costs58
  59. 59. HEALTH INSURANCE LAW UPDATEHealthcare Delivery SystemsHealth Information Technology- federal incentives for “meaningful use”- significant implementation costsValue Based Purchasing- increased payments if meet quality measures- reduced payments for “excess readmissions”- reduced payments for HACs59
  60. 60. HEALTH INSURANCE LAW UPDATEHealthcare Delivery SystemsPatient Centered Medical Homes- prompt access to primary care provider- primary care provider acts as “gatekeeper”Accountable Care Organizations- responsible for defined Medicare populations- Medicare cost-savings shared if deliver qualitycare while reducing costs60
  61. 61. HEALTH INSURANCE LAW UPDATEHealthcare Delivery SystemsImpact of Changes- Small medical groups are being absorbed- Hospitals are acquiring practice groups for ACOs- Payment models are changing- Medicare- Insurance- Other private financing61
  62. 62. HEALTH INSURANCE LAW UPDATEHealthcare Delivery Systems62
  63. 63. HEALTH INSURANCE LAW UPDATELitigation Hot SpotsRescissions- Only for fraud- Guaranteed issue- Community ratingQuestion: Any other means of showing materiality?63
  64. 64. HEALTH INSURANCE LAW UPDATELitigation Hot SpotsRescissions“Materiality is to be determined not by theevent, but solely by the probable and reasonableinfluence of the facts upon the party to whom thecommunication is due in forming his estimate of thedisadvantages of the proposed contract, or inmaking his inquiries.”California Insurance Code §33464
  65. 65. HEALTH INSURANCE LAW UPDATELitigation Hot SpotsClaim Denials- Exhaustion of remedies- Conflict of interest- Deference to decision-maker?- “Binding” external review65
  66. 66. HEALTH INSURANCE LAW UPDATELitigation Hot SpotsMedical Loss Ratios and Rebates- Public reporting- Medical claims- Quality improvement measures- Improve health outcomes- Prevent hospital readmissions- Improve patient safety; reduce medical errors- Wellness and health promotion activities66
  67. 67. HEALTH INSURANCE LAW UPDATELitigation Hot SpotsMedical Loss Ratios and RebatesWhat happens if a policy lapses for non-payment ofpremiums, but the insurer later gives a rebate?67
  68. 68. HEALTH INSURANCE LAW UPDATELitigation Hot SpotsPremium RatesSales PracticesProvider Relations68
  69. 69. HEALTH INSURANCE LAW UPDATEQuestions?Robert R. PohlsPohls & Associates1550 Parkside Drive, Suite 260Walnut Creek, California 94596T: 925.973.0300 F: 925.973.0330rpohls@califehealth.com69
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