HEALTH CARE REFORM                         WHAT DOES IT MEAN?         Bryan D. Bolton                              Robert ...
HEALTH CARE REFORMProgram Overview History of Health Care Reform Patient Protection and Affordable Care Act      Summar...
HEALTH CARE REFORMHistory of Health Care Reform1912          Teddy Roosevelt endorses social insurance,              and t...
HEALTH CARE REFORMHistory of Health Care Reform1934          FDR creates Committee on Economic              Security to ad...
HEALTH CARE REFORMHistory of Health Care Reform1943          Wagner-Murray-Dingell Bill proposes              compulsory n...
HEALTH CARE REFORMHistory of Health Care Reform1947          Truman calls for a National Health Program,              draw...
HEALTH CARE REFORMHistory of Health Care Reform1954          Eisenhower proposes federal reinsurance to              enabl...
HEALTH CARE REFORMHistory of Health Care Reform1960          Federal Employees Health Benefit Plan (FEHBP)              pr...
HEALTH CARE REFORMHistory of Health Care Reform1971          Executive Order imposes wage and price freezes on            ...
HEALTH CARE REFORMHistory of Health Care Reform1977          Annual increases in hospital expenses exceed overall         ...
HEALTH CARE REFORMHistory of Health Care Reform1981          States required to make additional Medicaid payments         ...
HEALTH CARE REFORMHistory of Health Care Reform1987          Census Bureau reports that 31 million people are             ...
HEALTH CARE REFORMHistory of Health Care Reform1993          Clinton convenes White House Task Force on Health            ...
HEALTH CARE REFORMHistory of Health Care Reform1996          States allowed to cover parents and children at              ...
HEALTH CARE REFORMHistory of Health Care Reform2003          Medicare Drug, Improvement and Modernization Act             ...
HEALTH CARE REFORMHistory of Health Care Reform2006          City of San Francisco provides universal health services     ...
HEALTH CARE REFORMHistory of Health Care Reform2008          Sen. Baucus releases White Paper outlining a national        ...
Timeline of Insurance Reforms - 2010 High-risk pool established to provide coverage to people  with pre-existing conditio...
Timeline of Insurance Reforms – 2014 Require guarantee issue and renewal, and allow rating    variation based only on age...
Essential Benefits Plan Minimum essential benefits consists of the following:  ambulatory patient services, emergency ser...
Essential Benefit Plan Coverage Levels Bronze (Basic) Level Coverage – equals 60% of full    actuarial value of the benef...
Qualified Health Plan A “qualified health plan” means a health plan that (A) has a certification that such plan meets the...
Health Insurance Exchange By 2014, States must establish exchanges to facilitate  purchase of qualified health plans and ...
Health Insurance Exchange Functions An exchange will (1) establish procedures for certification and decertification of qu...
Health Insurance Exchange Programs Office of Personnel Management (OPM) shall contract with health    insurers to offer a...
Health Insurance Exchange Insurer Requirements Insurer must offer at least one silver and one gold level plan in  the Exc...
Employer and Individual Mandates Employers offering minimum essential coverage through employer-  sponsored plan must off...
Insurance Market Reforms HHS will award grants to states to establish or expand health  insurance consumer assistance or ...
Insurance Market Reforms - Continued A group health plan or health insurance issuer must give at    least 60 days notice ...
Plan Disclosures Within 24 months of enactment, health plans must use HHS  standards for provision of summary of benefits...
HEALTH CARE REFORM                                                                                   Certain provisions be...
HEALTH CARE REFORMPermitted Grandfathering of Existing Coverage The Act grandfathers plans in effect on March 23, 2010 A...
HEALTH CARE REFORMPermitted Grandfathering of Existing Coverage Even though existing plans are grandfathered, certain int...
HEALTH CARE REFORMInterim Requirements That Do Not Apply toGrandfathered PlansCoverage requirements for preventive care s...
HEALTH CARE REFORMInterim Requirements Effective Dates The interim requirements first become effective for  plan years be...
HEALTH CARE REFORMLifetime and Annual Limits No lifetime limits No annual limits Prior to 2014, plans may establish a r...
HEALTH CARE REFORMLifetime and Annual Limits To the extent that a plan offers specific benefits that  are not considered ...
HEALTH CARE REFORMNo Rescission of Coverage A plan cannot rescind coverage unless the participant or beneficiary has enga...
HEALTH CARE REFORMCoverage for Adult Children Adult children must continue to be eligible to be covered until they turn  ...
HEALTH CARE REFORMCoverage for Adult Children Children of children are not required to be covered For grandfathered plan...
HEALTH CARE REFORMMaterial Modifications Notice of material modifications to plan benefits must be provided at least 60 f...
HEALTH CARE REFORMPre-Existing Conditions A plan may not impose pre-existing condition  limitations on enrollees who are ...
Coverage for Emergency Services Participants may use emergency room services  without the need for prior authorization. I...
HEALTH CARE REFORM2014 Requirements
HEALTH CARE REFORMIndividual Responsibility Individuals will be required to maintain health insurance  (known as “minimum...
HEALTH CARE REFORMNo Pre-existing Conditions Plans may not impose any pre-existing condition As noted above, beginning i...
HEALTH CARE REFORMWaiting Periods Plans may not impose waiting periods that exceed 90 days
HEALTH CARE REFORMNo Health Status Discrimination Plans may not impose coverage rules based on any  health status related...
HEALTH CARE REFORMWellness Programs Wellness programs that do not depend on health status factors:  • Program must be mad...
HEALTH CARE REFORMWellness Programs Wellness programs currently in existence under existing regulations may continue to f...
HEALTH CARE REFORMInsurance Company Required Pay-Outs Insurers required to spend at least $.80 out of every  dollar they ...
HEALTH CARE REFORMInsurance Company Position Include the cost of verifying the credentials of  doctors in its networks F...
HEALTH CARE REFORMPenalties for failing to meet 80% Rule Medical-loss ratio is important because law requires a refund to...
HEALTH CARE REFORMConsumer Advocacy Group Position Insurance industry wants to "water down" the law by  including too man...
HEALTH CARE REFORMInterim Final Rules For Group Health Plans AndHealth Insurance Issues Relating To Coverage OfPreventive ...
HEALTH CARE REFORMInterim Final Regulations Effective OnSeptember 17, 2010A) Interim Final Regulations apply to group heal...
HEALTH CARE REFORM               Stated Need For Regulatory ActionIdentifies three reasons for current under-utilizationof...
HEALTH CARE REFORMInterim Final Regulations Require A Group Health Plan and Health Insurance IssuerOffering Group Or Indiv...
HEALTH CARE REFORMBenefits Anticipated From Interim Final Regulations     1) Individuals will experience improved health  ...
HEALTH CARE REFORM                                 Projection of Lives Saved From                                Increasin...
HEALTH CARE REFORMEstimate Of Average Change In Health Insurance Premiums Resulting From Interim Regulations    The Depar...
HEALTH CARE REFORMInterim final regulations make clear that a plan orissuer is not required to provide coverage or waiveco...
HEALTH CARE REFORMPending Legal Challenges Virginia: Passes Virginia Health Care Freedom Act, prohibiting any  individual...
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Health Care Reform -- What Does it Mean?

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Health Care Reform -- What Does it Mean?

  1. 1. HEALTH CARE REFORM WHAT DOES IT MEAN? Bryan D. Bolton Robert R. Pohls Gary Schuman Funk & Bolton, P.A. Pohls & Associates Sr. Counsel - Litigation Twelfth Floor 10940 Wilshire Boulevard, Ste. 1600 Combined Insurance Company, 36 South Charles Street Los Angeles, California 90024 an ACE, Ltd. company Baltimore, Maryland 21201-3111 Phone: 310.694.3092 1000 N. Milwaukee Avenue Phone: 410.659.7754 Fax: 310.694.3093 Glenview, Illinois 60025 Fax: 410.659.7773 email: rpohls@califehealth.com Phone: 847.953.1506 email: bbolton@fblaw.com Fax: 773.506.5080 email: Gary.Schuman@combined.comInternational Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  2. 2. HEALTH CARE REFORMProgram Overview History of Health Care Reform Patient Protection and Affordable Care Act  Summary of Key Provisions  Implementation Timeline Analysis of Impact QuestionsInternational Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  3. 3. HEALTH CARE REFORMHistory of Health Care Reform1912 Teddy Roosevelt endorses social insurance, and the “Bull Moose” Party adopts the proposal as part of its platform.1915 American Association for Labor Legislation publishes draft bill for compulsory health insurance; American Federation of Labor opposes it.1927 Committee on the Costs of Medical Care forms to study the economic organization of medical care.1929 Great Depression begins.International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  4. 4. HEALTH CARE REFORMHistory of Health Care Reform1934 FDR creates Committee on Economic Security to address old-age and unemployment issues, as well as medical care and insurance.1935 Congress passes the Social Security Act, without a provision calling for compulsory health insurance.1938 Technical Committee on Medical Care publishes its report: “A National Health Program.”1939 Sen. Wagner introduces a National Health Bill which includes a national health program to be funded by federal grants and administered by state and local governments.International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  5. 5. HEALTH CARE REFORMHistory of Health Care Reform1943 Wagner-Murray-Dingell Bill proposes compulsory national health insurance to be funded by payroll taxes.1944 FDR outlines an “economic bill of rights” including the right to adequate medical care and the chance to achieve and enjoy good health.1944 Social Security Board calls for compulsory national health insurance as part of the Social Security system.1946 Bill calling for universal comprehensive health insurance is re-introduced, opposed by American Hospital Association and American Bar Association, and rejected as too “socialistic.”International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  6. 6. HEALTH CARE REFORMHistory of Health Care Reform1947 Truman calls for a National Health Program, drawing opposition from American Medical Association.1948 Final report by National Health Assembly endorses voluntary health insurance, but reiterates need for universal coverage.1948 American Medical Association launches a campaign against national health insurance proposals.1952 Federal Security Agency proposes enacting health insurance for Social Security beneficiaries. (Bill introduced again in 1956 and 1959).International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  7. 7. HEALTH CARE REFORMHistory of Health Care Reform1954 Eisenhower proposes federal reinsurance to enable private insurers to cover broader groups of people.1954 Revenue Act of 1954 excludes employers’ contributions to employee plans from taxable income.1956 Military “medicare” program is enacted to provide government health insurance for dependents of people in the Armed Forces.1957 AFL-CIO supports government health insurance.1958 Congress proposes covering hospital costs for aged persons on Social Security; American Medical Association responds by proposing an “eldercare” plan.International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  8. 8. HEALTH CARE REFORMHistory of Health Care Reform1960 Federal Employees Health Benefit Plan (FEHBP) provides health insurance coverage to federal workers.1960 Kerr-Mills Act (precursor to Medicaid) uses federal funds to support state programs providing medical care to the poor and elderly.1961 House introduces bill to create government health insurance plan for the aged. Draws support from organized labor and intense opposition from the American Medical Association and commercial health insurers. (Reintroduced in 1963).1965 Medicare and Medicaid programs signed into law.International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  9. 9. HEALTH CARE REFORMHistory of Health Care Reform1971 Executive Order imposes wage and price freezes on entire economy, including health care sector.1972 Supplemental Security Income (SSI) program begins providing cash assistance to elderly and disabled; Social Security amended to allow people under age 65 with long term disabilities or end-stage renal disease to qualify for Medicare coverage.1973 Congress passes HMO Act of 1973.1974 Nixon proposes the Comprehensive Health Insurance Plan (CHIP), calling for universal coverage, voluntary employer contribution and a program for the working poor and unemployed.International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  10. 10. HEALTH CARE REFORMHistory of Health Care Reform1977 Annual increases in hospital expenses exceed overall inflation rate by 8.7 percent; Carter proposes limiting hospital expense increases to 3 percent over inflation.1978 Health care provider organizations launch voluntary effort to control health care costs; Initial goal (2% over inflation) met in 1978; All subsequent goals exceeded.1979 Senate passes bill with voluntary restraints on hospital cost growth and triggers for mandatory controls; Bill defeated in House of Representatives.1980 The Boren Amendment required that Medicaid pay nursing home rates that were “reasonable;” states oppose the measure as impossible to operationalize.International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  11. 11. HEALTH CARE REFORMHistory of Health Care Reform1981 States required to make additional Medicaid payments to hospitals that serve disproportionate share of Medicaid and low-income people.1981 States allowed to mandate managed care enrollment of certain Medicaid groups and to cover home and community based long-term care.1982 States allowed to expand Medicaid to children with disabilities who require institutional care but can be cared for at home (the “Katie Beckett Option”).1983 Social Security Amendments of 1983 change Medicare’s payments to hospitals to fixed prices based on diagnosis-related groups.1986 Hospitals participating in Medicare are required to screen and stabilize all emergency room patients regardless of their ability to pay.International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  12. 12. HEALTH CARE REFORMHistory of Health Care Reform1987 Census Bureau reports that 31 million people are uninsured (13% of the population).1988 Medicare coverage expanded to include prescription drugs and cap beneficiaries’ out-of-pocket expenses. Repealed in 1989, but requirements that states pay Medicare premiums and share in costs of covering poor beneficiaries in Medicaid are kept.1988 States required to extend 12 months of transitional Medicaid coverage to families leaving welfare.1989 Budget reconciliation mandates coverage for pregnant women and children under age 6 at 133% of poverty level.1990 Budget reconciliation mandates Medicaid coverage of children age 6-18.International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  13. 13. HEALTH CARE REFORMHistory of Health Care Reform1993 Clinton convenes White House Task Force on Health Reform; appoints First Lady as chair.1993 Health Security Act introduced in Congress. Would give every American a “health security card,” but gets little support.1993 Medicaid waivers approved to allow for test programs. Many states use managed care models and use savings to expand coverage.1993 National health reform proposals (including single-payer health insurance, managed competition without universal coverage and a bipartisan bill to expand coverage) are introduced but fail to pass.International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  14. 14. HEALTH CARE REFORMHistory of Health Care Reform1996 States allowed to cover parents and children at AFDC levels.1996 Health Insurance Portability and Accountability Act (HIPAA) restricts use of pre-existing conditions in health insurance underwriting.1996 Mental Health Parity Act prohibits group health plans from having lower dollar limits for mental health benefits.1997 State Children’s Health Insurance Program (SCHIP) provides coverage for uninsured children, funded by cigarette taxes.1997 Balanced Budget Act of 1997 changes provider payments to slow Medicare spending, permits mandatory Medicaid enrollment in managed care.1997 Census Bureau estimates 42.4 million uninsured (15.7% of population).International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  15. 15. HEALTH CARE REFORMHistory of Health Care Reform2003 Medicare Drug, Improvement and Modernization Act creates voluntary, subsidized prescription drug benefit under Medicare, administered through private plans.2003 Health Savings Accounts created to let individuals set- aside pre-tax dollars for medical expenses.2003 Maine passes Dirigo Health Reform Act, providing subsidized coverage to individuals and small employers.2005 Senate fails to pass the Small Business Health Fairness Act, a measure which would let small businesses pool together as “association health plans” and negotiate for group health insurance.2006 Massachusetts passes legislation to provide health care coverage to nearly all state residents.2006 Vermont passes comprehensive health care reform aimed for near- universal coverage.International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  16. 16. HEALTH CARE REFORMHistory of Health Care Reform2006 City of San Francisco provides universal health services for city residents under program that requires employers to spend a minimum amount for employees’ health care.2007 California fails to pass a health reform plan with individual mandate and shared responsibility for costs.2007 Census Bureau estimates 45.6 million uninsured (15.3% of the population).2007 Congress considers the Healthy Americans Act, requiring individuals to obtain private health insurance through state health insurance purchasing pools.2007 Congress passes two versions of a bill to reauthorize the State Children’s Health Insurance Program (SCHIP). Bush vetoes both.2007 Insurers required to treat mental health and physical conditions on equal basis.International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  17. 17. HEALTH CARE REFORMHistory of Health Care Reform2008 Sen. Baucus releases White Paper outlining a national health reform plan based on Massachusetts model.2009 Obama establishes Office of Health Reform to coordinate efforts at national health reform.2009 Children’s Health Insurance Program (CHIP) reauthorized to provide funding to cover 4.1 million children who would have been uninsured by 2013.2009 Obama releases budget outlining eight principles for health reform and creating $634 billion health reform reserve fund.2010 Obama presides over Bipartisan Health Care Summit at “Blair House.”2010 Obama signs the Patient Protection and Affordable Care Act (March 23, 2010) and the Health Care and Education Reconciliation Act of 2010 (March 30, 2010).International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  18. 18. Timeline of Insurance Reforms - 2010 High-risk pool established to provide coverage to people with pre-existing conditions. Provide dependent coverage for adult children to age 26. Require minimum coverage without cost-sharing for preventive services, including recommended immunizations, rated A or B by the U.S. Preventive Services Task Force. HHS and states begin annual review of unreasonable increases in health insurance coverage premiums. A health insurer cannot implement any unreasonable premium increase without prior justification to HHS and the relevant state.
  19. 19. Timeline of Insurance Reforms – 2014 Require guarantee issue and renewal, and allow rating variation based only on age, premium rating area, family composition and tobacco use. Limits out-of-pocket deductibles based on IRC. Limits waiting period for coverage to 90 days. Prohibits Annual or Lifetime limits on essential benefits. No pre-existing condition exclusion permitted. Create state-based Health Insurance Exchanges. Requires OPM to contract with insurers to offer at least two multi-state plans in each exchange. Create Essential Benefits Package providing comprehensive services and must cover at least 60% of actuarial value of covered benefits and limit cost-sharing.
  20. 20. Essential Benefits Plan Minimum essential benefits consists of the following: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services, and pediatric, including oral and vision care. HHS is required to establish the complete list of essential benefits. Essential benefit plans can differ by levels of coverage.
  21. 21. Essential Benefit Plan Coverage Levels Bronze (Basic) Level Coverage – equals 60% of full actuarial value of the benefits provided by plan. Silver (Enhanced) Level Coverage – equals 70% of full actuarial value of the benefits provided by plan. Gold (Premium) Level Coverage – equals 80% of full actuarial value of benefits provided by plan. Platinum (Premium Plus) Level Coverage – equals 90% of full actuarial value of the benefits provided by plan. Not required to offer Platinum coverage. All plans must offer mental health parity.
  22. 22. Qualified Health Plan A “qualified health plan” means a health plan that (A) has a certification that such plan meets the requirements of each Exchange through which the plan is issued; (B) provides the essential health benefits plan package; (c) is offered by a a licensed health insurer that (i) is licensed and in good standing to offer health insurance in each State where coverage is offered; (ii) agrees to offer at least one qualified health plan in silver and gold levels in each such Exchange; (iii) agrees to same premium rates inside and outside of Exchange; and (iv) complies with regulations.
  23. 23. Health Insurance Exchange By 2014, States must establish exchanges to facilitate purchase of qualified health plans and are charged with enforcing standards. States must establish Small Business Health Options Program (SHOP) Exchange to assist small employers in the process of enrolling employees in qualified health plans offered in the small group market. Regulations will establish criteria for certification of health plans as qualified health plans, but minimum criteria are defined in statute. Only qualified health plans may be offered through an exchange, but a health insurer can offer plans outside of exchanges.
  24. 24. Health Insurance Exchange Functions An exchange will (1) establish procedures for certification and decertification of qualified health plans; (2) offer a toll free number; (3) maintain internet site for standardized comparison of information on plans; (4) assign a rating to each QHBP; (5) utilize standard format for presenting plan options; (6) inform individuals about eligibility for Medicaid CHIP; (7) establish a calculator to determine actual cost of coverage after any premium credit or cost-subsidy; and (8) provide procedures for certification for exemption from individual excise tax.
  25. 25. Health Insurance Exchange Programs Office of Personnel Management (OPM) shall contract with health insurers to offer at least two multi-state qualified health plans through the exchanges to provide individual and small group coverage. Medical loss ratios, profit margins, premiums and other terms and conditions shall be implemented in a manner similar to FEHBA Program. States may offer additional benefits, but cannot add to Federal cost. Small Employers (100 or fewer employees) may elect to make all full-time employees eligible for plans through the Exchange. In 2017, Large Employers can participate in the Exchange
  26. 26. Health Insurance Exchange Insurer Requirements Insurer must offer at least one silver and one gold level plan in the Exchange and charge same plan premium offered inside and outside of the Exchange. Agents and brokers are permitted to serve as “Navigators” and may enroll individuals in plans offered through the Exchange. Health insurers cannot serve as navigators and navigators cannot receive consideration from insurer in connection with participation or enrollment of individuals or employees. HHS will establish standards for navigators by regulation.
  27. 27. Employer and Individual Mandates Employers offering minimum essential coverage through employer- sponsored plan must offer free-choice vouchers to employees to purchase coverage through the Exchange. Voucher amount is determined by the most generous amount the employer would have contributed for coverage under employer’s plan. If employer contributes less than 60% of costs of employer plan or premiums exceed 9.8 percent of employee’s income, then employee is not considered to have minimum essential coverage and is eligible for premium assistance. Employers with more than 200 employees must automatically enroll new full-time employees in coverage with the opportunity to opt out. Individuals are required to maintain minimum essential coverage beginning in 2014.
  28. 28. Insurance Market Reforms HHS will award grants to states to establish or expand health insurance consumer assistance or a health insurance ombudsman. A state office of health insurance consumer assistant or health insurance ombudsman shall: 1) assist with filing and complaints and appeals; 2) collect, track and quantify problems encountered by consumers; 3) educate consumers on their rights and responsibilities; 4) assist consumers with enrollment; 5) resolve problems with premium tax credits. Coverage cannot be rescinded except in the case of fraud or intentional misrepresentation of a material fact.
  29. 29. Insurance Market Reforms - Continued A group health plan or health insurance issuer must give at least 60 days notice if it makes any material modification in the terms of the plan or coverage. Increases wellness incentive limit currently codified in HIPAA, but increases incentive from 20-30%. Wellness incentive may be increased by regulation up to 50%. Cannot require pre-authorization for emergency care in hospital or for female participants for OB/GYN care. Cannot impose conditions for participation in clinical trial.
  30. 30. Plan Disclosures Within 24 months of enactment, health plans must use HHS standards for provision of summary of benefits and coverage explanation. HHS will work with NAIC to develop standards. Standards shall ensure that outline of coverage is: presented in uniform format, not more than 4 pages in length and in 12- point or larger font; in a manner understandable to average enrollee; includes definitions of standard terms; includes coverage limitations or exceptions, cost-sharing provisions, renewability and continuation provisions, examples of common benefit scenarios, a statement the outline is a summary and a web link to the actual coverage policy or group certificate.
  31. 31. HEALTH CARE REFORM Certain provisions become Effective for calendar year Plans: • Coverage for adult children • No lifetime caps • Restriction on annual caps • No pre-existing conditions for children under age 19 6/21/2010 • 0.9% additional Medicare tax becomes 2013 effective • 3.8% Medicare ta on unearned income • Exchanges become becomes operative 3/23/2010 Reinsurance effective Patient 2014 “Cadillac” plan • 2018 mandate Individual Program forRetirees becomes • 2011 Medicare Part D subsidiaries effectively Protection and Act signed tax becomes provisions apply become effective • Employer operative into law taxable responsibility • $2,500 limitation on health FSAs becomes obligations apply effective
  32. 32. HEALTH CARE REFORMPermitted Grandfathering of Existing Coverage The Act grandfathers plans in effect on March 23, 2010 A grandfathered plan may provide that individuals who are covered on March 23, 2010 can continue coverage under the plan generally . without regard to the requirements of the Act Family members may enroll in the grandfathered plan in the future if family coverage was permitted under the terms of the plan as in effect on March 23, 2010 New employees may join the grandfathered plan in the future if the plan permitted new employees to join on March 23, 2010International Claim Association– 101st Annual Education Conference – October 4, 2010 – Renaissance Austin Hotel – Austin, Texas
  33. 33. HEALTH CARE REFORMPermitted Grandfathering of Existing Coverage Even though existing plans are grandfathered, certain interim requirements still apply: • No lifetime limits (2011) • Restrictions on annual limits (2011) • Restrictions on coverage rescissions (2011) • Extension of dependent coverage to adult children (2011) • Advance notice of material modifications (2011) • Uniform summary of benefits (2011-2012) • No pre-existing condition exclusions for enrollees under the age of 19 (2011) • No pre-existing condition exclusions for enrollees of any age (2014) • Maximum waiting period is 90 days (2014)
  34. 34. HEALTH CARE REFORMInterim Requirements That Do Not Apply toGrandfathered PlansCoverage requirements for preventive care servicesCoverage requirements for emergency servicesNon-discrimination rules that apply to insured plans
  35. 35. HEALTH CARE REFORMInterim Requirements Effective Dates The interim requirements first become effective for plan years beginning on or after September 23, 2010 (6 months after the law was enacted) For calendar years plans, the interim requirements will begin to apply on January 1, 2011 For October, November and December fiscal year plans, the interim requirements will begin to apply on the first day of the plan year in 2010
  36. 36. HEALTH CARE REFORMLifetime and Annual Limits No lifetime limits No annual limits Prior to 2014, plans may establish a restricted annual limit (to be determined by HHS) on the dollar value of benefits with respect to the scope of benefits that are “minimum essential benefits” under the Act
  37. 37. HEALTH CARE REFORMLifetime and Annual Limits To the extent that a plan offers specific benefits that are not considered “minimum essential benefits” under the Act, the plan may impose annual or lifetime limits on such specific benefits that are otherwise permissible under federal law Note: The Act does not define the specific benefits covered by this exception
  38. 38. HEALTH CARE REFORMNo Rescission of Coverage A plan cannot rescind coverage unless the participant or beneficiary has engaged in fraud of intentional misrepresentation of material fact as prohibited by the terms of the plan
  39. 39. HEALTH CARE REFORMCoverage for Adult Children Adult children must continue to be eligible to be covered until they turn age 26 Adult children may be covered as dependents tax-free until the year they turn age 27 IRS has clarified that the tax-free status of this coverage runs from March 30, 2010, and that in 2010 cafeteria plans can permit adult children to be covered pre-tax mid-year (and make or change health care FSA contributions) as if their becoming eligible was a change in family status (IRS Notice 2010-38, 4/27/10) Child is defined as a son, daughter, stepson, stepdaughter, eligible foster child, adopted child legally placed with the participant for adoption
  40. 40. HEALTH CARE REFORMCoverage for Adult Children Children of children are not required to be covered For grandfathered plans prior to 2014, an adult child is only required to be offered coverage if such adult child is not eligible to enroll in another eligible employer-sponsored health plan
  41. 41. HEALTH CARE REFORMMaterial Modifications Notice of material modifications to plan benefits must be provided at least 60 fays before the modifications become effective
  42. 42. HEALTH CARE REFORMPre-Existing Conditions A plan may not impose pre-existing condition limitations on enrollees who are under the age of 19 Note: This requirement expands to apply to all enrollees beginning in 2014
  43. 43. Coverage for Emergency Services Participants may use emergency room services without the need for prior authorization. In addition, a plan may not impose any additional co- payment or co-insurance requirements if the emergency facility is not part of the plan’s network Note: Grandfathered plans are not required to include this provision
  44. 44. HEALTH CARE REFORM2014 Requirements
  45. 45. HEALTH CARE REFORMIndividual Responsibility Individuals will be required to maintain health insurance (known as “minimum essential coverage”) Individuals who do not maintain such coverage will be required to pay a penalty equal to the grater of $695 or 2.5% of the individual’s income Families that do not maintain such coverage will be required to pay a penalty equal to the greater of $695 for each non-covered family member (capped at $2,085) or 2.5% of the family’s income
  46. 46. HEALTH CARE REFORMNo Pre-existing Conditions Plans may not impose any pre-existing condition As noted above, beginning in 2011, plans may not impose any pre-existing condition limitations on children under the age of 19
  47. 47. HEALTH CARE REFORMWaiting Periods Plans may not impose waiting periods that exceed 90 days
  48. 48. HEALTH CARE REFORMNo Health Status Discrimination Plans may not impose coverage rules based on any health status related factor Note: For employers, it is not clear how (or if) this requirement differs from the existing HIPAA non- discrimination rules that are applicable to employer- sponsored plans
  49. 49. HEALTH CARE REFORMWellness Programs Wellness programs that do not depend on health status factors: • Program must be made available to all similarly situated individuals • Can reimburse all or a part of the cost for membership in a fitness center • Diagnostic testing program that provides rewards for participation, not outcomes • Encourages preventive care related to a health condition • Reimbursements for costs of smoking cessation programs regardless of outcomes • Rewards for attending periodic health education seminars
  50. 50. HEALTH CARE REFORMWellness Programs Wellness programs currently in existence under existing regulations may continue to follow those regulations as long as those regulations remain in effect
  51. 51. HEALTH CARE REFORMInsurance Company Required Pay-Outs Insurers required to spend at least $.80 out of every dollar they collect in premiums on patient welfare A critical Issue for the insurance industrys bottom line What does this mean precisely ?
  52. 52. HEALTH CARE REFORMInsurance Company Position Include the cost of verifying the credentials of doctors in its networks Ferreting out fraud by identifying doctors performing unnecessary operations Typical business expenses such as insurance commissions to agents/brokers and taxes paid on investments
  53. 53. HEALTH CARE REFORMPenalties for failing to meet 80% Rule Medical-loss ratio is important because law requires a refund to consumers if too much is spent on administrative costs
  54. 54. HEALTH CARE REFORMConsumer Advocacy Group Position Insurance industry wants to "water down" the law by including too many administrative costs under the guise of patient care If six largest for-profit insurers had been required to meet these new standards last year, they would have been required to refund $1.9 billion
  55. 55. HEALTH CARE REFORMInterim Final Rules For Group Health Plans AndHealth Insurance Issues Relating To Coverage OfPreventive Services Under The Patient Protection AndAffordable Care Act Promulgated By Department of Treasury, 26 CFR Part 54; Department of Labor, 29 CFR Part 2590; and Department of Health and Human Services, 29 CFR Part 147.
  56. 56. HEALTH CARE REFORMInterim Final Regulations Effective OnSeptember 17, 2010A) Interim Final Regulations apply to group health plans and group health insurance issuers for plan years beginning on or after September 23, 2020; andB) These interim regulations generally apply to individual health insurance issuers for policy years beginning on or after September 23, 2010. Comments on regulations due on or before September 17, 2010
  57. 57. HEALTH CARE REFORM Stated Need For Regulatory ActionIdentifies three reasons for current under-utilizationof preventive services.1) Turnover in health insurance market offers no incentive for insurers to cover preventive services;2) Preventive services often offer no immediate benefit, making it easy to postpone in the face of immediate cost; and3) Some benefits of preventive services accrue to society as a whole and are not factored into individual decisions.
  58. 58. HEALTH CARE REFORMInterim Final Regulations Require A Group Health Plan and Health Insurance IssuerOffering Group Or Individual Health Insurance Coverage To Provide Benefits For AndProhibits Imposition Of Cost Sharing With Respect To: 1) Evidence-based items or services that have in effect a rating of A or B in the current recommendations of the United States Preventive Services Task Force (Task Force); 2) Immunizations for routine use in children, adolescents, and adults that have in effect a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention (Advisory Committee); 3) With respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration (HRSA); and 4) With respect to women, evidence-informed preventive care and screening provided for in comprehensive guidelines supported by HRSA (not otherwise addressed by the recommendations of the Task Force). Complete list of recommendations and guidelines that are required to be covered under the interim final regulations can be found at http://www.HealthCare.gov/center/regulations/prevention.html.
  59. 59. HEALTH CARE REFORMBenefits Anticipated From Interim Final Regulations 1) Individuals will experience improved health as a result of reduced transmission, prevention or delayed onset, and earlier treatment of disease; 2) Healthier workers and children will be more productive with fewer missed days of work or school; 3) Some of the recommended preventive services will result in savings due to lower health care costs; and 4) The costs of preventive services will be distributed more equitably.
  60. 60. HEALTH CARE REFORM Projection of Lives Saved From Increasing Utilization of Selected Preventive Services To 90 Percent Lives saved annually if Preventive service Population Percent utilizing percent utilizing group preventive preventive service service in increased to 2005 90 percentRegular aspirin use ……………………………… ……….. Men 40+ and women 50+ …………………… 40 45,000Smoking cessation advice and help to quit ………. All adult smokers …………………………….... 28 42,000Colorectal cancer screening …………………………….. Adults 50+ ………………………………………… 48 14,000Influenza vaccination ……………………………………… Adults 50+ ………………………………………… 37 12,000Cervical cancer screening in the past 3 years …….. Women 18-64 ………………………………....... 83 620Cholesterol screening …………………………………….. Men 35+ and women 45+ ……………………. 79 2,450Breast cancer screening in the past 2 years ……….. Women 40+ ………………………………………. 67 3,700Chlamydia screening ………………………………………. Women 16-25 ………………………….. ……….. 40 30,000
  61. 61. HEALTH CARE REFORMEstimate Of Average Change In Health Insurance Premiums Resulting From Interim Regulations  The Departments used BC/BS FEHBA standard plan for comparative purposes;  BC/BS covers most of preventive services listed in the Task Force and Advisory Committee recommendations;  The Departments estimated that adding coverage for genetic screening and depression screening would increase benefits an estimated .10 percent;  Adding lead testing, autism testing and oral health screening would increase insurance benefits by an estimated .02 percent; and  This results in a total average increase in insurance benefits for these services of .12 percent, or just over $4 per insured person.
  62. 62. HEALTH CARE REFORMInterim final regulations make clear that a plan orissuer is not required to provide coverage or waivecost-sharing requirements for any item or servicethat has ceased to be a recommended preventiveservice. Other requirements of Federal or State lawmay apply in connection with ceasing to providecoverage or changing cost-sharing requirements forany such item or service. For example, PHS Actsection 2715(d)(4) requires a plan or issuer to give 60days advance notice to an enrollee before anymaterial modification will become effective.
  63. 63. HEALTH CARE REFORMPending Legal Challenges Virginia: Passes Virginia Health Care Freedom Act, prohibiting any individual from being required to purchase health insurance.  Attorney General filed a lawsuit [Commonwealth v. Sebelius] challenging constitutionality of “individual mandate”  District Court denies motion to dismiss, ruling that constitutional issues must be resolved by hearing on the merits (currently set for October 18, 2010). Other States: Twenty states, two individuals and the National Federation of Independent Business filed a separate lawsuit in the Eastern District of Michigan which makes similar challenges. No Severability Provision: A successful judicial challenge to the constitutionality of any provision could invalidate the entire Act.
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