Wednesday, September 29, 2010

Most think health reform should have done more, AP poll finds

Even six months after the passage of major health reform legislation, you still hear almost daily rumblings that the American public is unhappy with health reform. Many view this unhappiness as a sign that health reform should be repealed. But is that what the unhappiness is really saying?

According to a recent AP poll, the numbers of Americans who think the law should have done more actually outnumber those who think the government should stay out of health care by 2-to-1. Further, about four in 10 adults think the new law did not go far enough to change the health care system, regardless of whether they support the law, oppose it or remain neutral, the AP poll found.

In both the "get out of healthcare" faction and the "do-more" group, broad majorities said health insurance, medical care, and prescription drugs all cost too much. In both groups, most feel that the system should aim to increase the number of insured people and let Americans get the care they need, while improving quality.

Despite the agreement between the “get-outs” and the “do-mores,” the differences become evident when it comes to the how this should be accomplished:

  • Only 25 percent of the "get-outs" favor requiring health insurance companies to sell coverage to people regardless of pre-existing medical conditions, while 54 percent of the "do-mores" support it. Health reform legislation requires insurers to cover children regardless of health problems starting this year, and that protection is extended to people of all ages in 2014.

  • Among those who want a law that does more, 68 percent favor requiring medium to large companies to provide insurance to their workers or pay a fine, a view that stands at only 28 percent among those who want the government out of healthcare. The law does not require employers to offer coverage, but companies face a penalty if any full-time employee gets a government health insurance subsidy.

  • The "get-outs" overwhelmingly reject the health care law's requirement that most Americans carry health insurance starting in 2014. But the "do-mores" are split, with 34 percent favoring the mandate, 33 percent opposing it, and 32 percent neutral.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Monday, September 27, 2010

Employers to address health reform’s effect in this year’s open enrollment materials

Now that health reform’s six-month anniversary has come and gone (and many provisions just took effect), you could be thinking that the hoopla over health reform might quiet down for a bit. Think again. For most companies, the health plan open enrollment season is rapidly approaching.

What will companies do in terms of talking about health reform in this year’s open enrollment materials? Good question and one that the folks at HighRoads, an employer health care compliance company, have just addressed in a new survey.

According to HighRoads, 75 percent of employers plan to address the effect of health-care reform in their open enrollment materials. In fact, 63 percent of respondents are creating new communication materials specifically for the communication of health-care reform. The companies responding represented communication practices for 1.5 million total employees.

“The changes demanded by the Health Care Reform Act and other recent legislation such as mental health parity and FMLA require employers of all sizes to make changes to their plans and to communicate these changes to plan participants in a timely manner,” said Kim Buckey, practice lead, ERISA Communications, HighRoads. “While open enrollment materials and other short-term communication vehicles can meet the immediate need, it’s critical that employees and their families have an up-to-date, comprehensive guide to using their benefits.”

Other survey highlights:
  • The biggest change expected in the next few years is updating summary plan descriptions (SPDs) for plan design and health-care reform changes, with 71 percent of respondents expecting to do so within the next year.

  • 71 percent of respondents—up from 65 percent last year—have no idea how much they spend to create, store and distribute SPDs to their participants.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

    Friday, September 24, 2010

    Insurers Critique Grandfather Provision, And Feds Provide Some Relief

    The Department of Labor's Employee Benefits Security Administration (EBSA) will temporarily disregard certain changes in an insured group health plan's contribution rate which normally would cause the plan to lose its grandfathered plan status under health reform.

    In newly released guidance (in the form of frequently asked questions (FAQ)) on implementing the Patient Protection and Affordable Care Act, EBSA addressed a variety of issues raised by employers and insurers, including insurers' concerns that they do not always have the information needed to know whether (or when) an employer plan sponsor changes its rate of contribution towards the cost of group health plan coverage.

    This is important because the interim final regulations on grandfathered plans provide that a group health plan or health insurance coverage will cease to be a grandfathered health plan if the employer decreases its contribution rate towards the cost of coverage by more than 5 percentage points below the contribution rate on March 23, 2010.

    According to EBSA, until the issuance of final regulations, an insured group health plan will not be treated as having ceased to be a grandfathered health plan immediately based on a change in the employer contribution rate if the employer plan sponsor and issuer take the following steps:

    Upon renewal, an insurer requires a plan sponsor to disclose its contribution rate for the plan year covered by the renewal, as well as its contribution rate on March 23, 2010; and

    The insurer's policies, certificates, or contracts of insurance disclose in a prominent and effective manner that plan sponsors must notify the insurer if the contribution rate changes at any point during the plan year.

    For policies renewed prior to Jan. 1, 2011, insurers should take these steps no later than Jan. 1, 2011. If these steps are taken, an insured group health plan that is a grandfathered health plan will continue to be considered a grandfathered health plan.

    Similar relief is available to multiemployer plans that do not know whether (or when) a contributing employer changes its contribution rate as a percentage of the cost of coverage.

    The relief is terminated when the issuer knows that there has been at least a 5-percentage-point reduction.

    Other Issues Raised

    EBSA's new FAQs address a number of other issues in the Affordable Care Act, including these:

    Grandfathered plans. Current rules state that grandfathered group health plan status is lost if the plan changes carriers. EBSA notes that implementing agencies will soon address the circumstances under which grandfathered group health plans may change carriers without relinquishing their status as grandfathered health plans.

    External review. One of the standards set forth in a recent technical release on external claims reviews  requires self-insured plans to contract with at least three independent review organizations (IROs) and to rotate claims assignments among them (or to incorporate other independent, unbiased methods for selection of IROs, such as random selection). The FAQ noted that "a self-insured group health plan's failure to contract with at least three IROs does not mean that the plan has automatically violated PHSA Sec. 2719(b). Instead, a plan may demonstrate other steps taken to ensure that its external review process is independent and without bias."

    EBSA also noted that the technical release does not require a plan to contract directly with any IRO: "Where a self-insured plan contracts with a TPA that, in turn, contracts with an IRO, the standards of the technical release can be satisfied in the same manner as if the plan had contracted directly. Of course, such a contract does not automatically relieve the plan from responsibility if there is a failure to provide an individual with external review. Moreover, fiduciaries of plans that are subject to ERISA have a duty to monitor the service providers to the plan."

    In addition, the IRO is not required to be in the same state as the plan. Plans may contract with an IRO even if it is located in another state.

    Dependent coverage of children. Plans may limits health coverage for children until the child turns 26 to only those children who are a son, daughter, stepson, stepdaughter, or an eligible foster child (IRC Sec. 152(f)(1)). For any other individual, such as a grandchild or niece, a plan may impose additional conditions on eligibility for health coverage, such as a condition that the individual be a dependent for income tax purposes.

    Out-of-network emergency services. PHSA Sec. 2719A generally provides, among other things, that a group health plan must cover emergency services without regard to whether a particular health care provider is an in-network provider with respect to the services, and generally cannot impose any copayment or coinsurance that is greater than what would be imposed if services were provided in network. At the same time, the statute does not require plans to cover amounts that out-of-network providers may "balance bill." Accordingly, the interim final regulations under Sec. 2719A set forth minimum payment standards to ensure that a plan does not pay an unreasonably low amount to an out-of-network emergency service provider who, in turn, could simply balance bill the patient.

    The EBSA FAQs noted that if a state law prohibits balance billing, plans are not required to satisfy the payment minimums set forth in the regulations. Similarly, if a plan is contractually responsible for any amount balance billed by an out-of-network emergency services provider, the plan is not required to satisfy the payment minimums. In both situations, however, patients must be provided with adequate and prominent notice of their lack of financial responsibility with respect to such amounts, to prevent inadvertent payment by the patient. Nonetheless, even if state law prohibits balance billing, the plan may not impose any copayment or coinsurance requirement that is higher than the copayment or coinsurance requirement that would apply if the services were provided in network.

    For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform and other developments in employee benefits, just click here.

    Wednesday, September 22, 2010

    A Bit Of Relief For Claims Appeals Rules

    Amid all the hoopla surrounding the six-month implementation date for health reform is some new (albeit quite technical) guidance that should help a bit with the new claims appeals rules.

    In Technical Release No. 2010-2, the Department of Labor’s Employee Benefits Security Administration (EBSA) provides an enforcement grace period until July 1, 2011, for some of the new standards required under the Patient Protection and Affordable Act (ACA) for health care internal claims and appeals and external review. The enforcement grace period is in response to some group health plans and insurers’ requests for more time to change plan or policy procedures and to modify computer systems in order to comply with the new interim final claims regulations issued on July 23, 2010, and Aug. 23, 2010, to implement Public Health Service Act Sec. 2719 (click here for these and other ACA regulations).

    PHSA Sec. 2719, as added by the ACA, requires that group health plans and health insurance issuers maintain an effective internal claims and appeals process and external review.

    Specifically, during the grace period, the DOL and the IRS will not take any enforcement action against a group health plan, and HHS will not take any enforcement action against a self-funded nonfederal governmental health plan, that is working in good faith to implement the additional standards but that does not yet have them in place, with respect to the following standards:
    • the timeframe for making urgent care claims decisions,

    • providing notices in a culturally and linguistically appropriate manner,

    • requiring broader content and specificity in notices, and

    • substantial compliance failure and deeming the claimant to have exhausted the plan's or issuer's internal claims and appeals process.

    HHS also is encouraging states to provide similar grace periods to insurers and assures states that they will not be cited for failure to substantially enforce these provisions.

    Model Notice Revised

    EBSA also has released a revised version of its “Model Notice of Adverse Benefit Determination.” In August, EBSA first released a set of model notices to satisfy the disclosure requirements of the interim final regulations, including the notice of adverse benefit determination and notices of a final internal adverse benefit determination and a final external review decision.

    Claims regulations made changes to shorten the times for initial determinations with respect to urgent care claims, but did not make any changes to the times for making internal appeals decisions. The revised model notice makes clear that only the times for making the initial benefit determination were changed.

    The revised notice of adverse benefit determination is here.

    Monday, September 20, 2010

    Major Health Reform Provisions Take Effect Beginning This Week

    On this Thursday, September 23, a series of health reform provisions impacting employer-based health plans begin to take effect. Among the provisions of the Patient Protection and Affordable Care Act (P.L. 111-148) which become effective for plan years beginning on or after Sept. 23, 2010, are the following:

    Covering dependents up to age 26. Group health plans with dependent child coverage must make available coverage for the enrollee's adult children who are younger than age 26, regardless of whether or not the dependent is a full-time student, disabled, or married.

    Prohibition on lifetime and annual benefits. Lifetime or annual benefit limits cannot be imposed by group health plans. A phase-in rule applies for annual benefit limits and "essential health benefits."

    Prohibition on rescissions of health coverage. Health insurance issuers in the group and individual market may not rescind an enrollee's coverage, except where an individual has engaged in fraud or made an intentional misrepresentation of material fact as prohibited under the terms of the plan or coverage.

    Requirement to provide preventive care services. All plans are required to cover, without any cost-sharing, preventive services and immunizations that are recommended by the U.S. Preventive Services Task Force and the Centers for Disease Control (CDC). Also required to be covered, without any cost-sharing, are certain child preventive services recommended by the Health Resources and Services Administration. Not applicable to grandfathered plans.

    Requirement that insurers maintain minimum loss ratios. Insurers offering group or individual health insurance must annually report on the percentage of health premiums used for claims reimbursement and must maintain certain minimum medical loss ratios. If minimums are not maintained, rebates must be provided to health plan participants.

    Developing standards for summaries of benefits. Effective for plan years beginning on or after Sept. 23, 2010, the Department of Health and Human Services (HHS) has been ordered to develop standards for use by group health plans and health insurers in compiling and providing a summary of benefits and explanation of coverage. The summaries must be in a uniform format, using easily understood language, and must include uniform definitions of standard insurance and medical terms. The explanation also must describe any cost-sharing, exceptions, reductions, and limitations on coverage, and use examples to illustrate common benefits scenarios.

    Insured health plan compliance with nondiscrimination rules. Insured group health plans must comply with existing nondiscrimination rules for self-funded plans. These include nondiscrimination rules for eligibility and benefits. Previously there were no federal laws for fully insured health plans that prevented discrimination in favor of the highly compensated. In other words, employers could establish fully insured medical reimbursement plans for a select group of employees, such as key employees. That is no longer true. Not applicable to grandfathered plans.

    Group health plan reporting requirements. The HHS will establish reporting requirements for group health plans and health insurers offering group or individual health insurance coverage. Reporting will include information on plan or coverage benefits and health care provider reimbursements. Ed. Note: The HHS has two years after enactment to publish regulations that provide criteria for health provider reimbursement structure. Then, within 180 days of the publication of regulations, the Government Accountability Office must submit a report to Congress reviewing the impact of the requirements on the quality and cost of care.

    Implementing effective claims appeals processes. Group health plans and a health insurer must implement an effective process for appeals of coverage determinations and claims, including an internal and external claims appeal process and employee notification. Not applicable to grandfathered plans.

    Expanding patient selection of providers. Effective for plan years beginning on or after Sept. 23, 2010, health insurance plans must allow enrollees to select any participating primary care provider available, including a pediatrician for children, and to cover emergency services provided at a hospital emergency department regardless of the hospital's participation in the plan preferred provider network and without prior authorization requirements. Female enrollees must be able to obtain obstetrical/gynecological specialist services without a referral from another primary care provider. Not applicable to grandfathered plans.

    Provisions Already In Effect

    A number of provisions in the Affordable Care Act already have taken place, including the following:

    Small employer health insurance credit. For amounts paid or incurred in tax years beginning in 2010, an eligible small employer may claim a 35% tax credit (25% in the case of tax-exempt eligible small employer) for the premiums it pays toward health coverage for its employees in tax years beginning in 2010 through 2013.

    Special deduction change for Blue Cross and Blue Shield. For tax years beginning after Dec. 31, 2009, the special deduction from regular tax that Blue Cross and Blue Shield organizations, and other qualifying health insurance organizations, are allowed under IRC Sec. 833 is modified to provide that these organizations will only be entitled to this special tax treatment if 85% or more of their insurance premium revenues are spent on clinical services.

    Grandfathered plans. Individuals who are enrolled in a group health plan or individual health coverage at the date of enactment (March 23, 2010) may not be required to terminate that coverage. Any group health plan or health insurance coverage to which this provision applies is considered a "grandfathered health plan..

    Tax code change in the definition of dependents. Effective on March 23, 2010, children younger than age 27 will be considered dependents of a taxpayer for the following situations:
    • for purposes of the general exclusion for reimbursements for medical care expenses of an employee, spouse, and dependents under an employer-provided accident or health plan,

    • the deduction for the health insurance costs of a self-employed person, spouse, and dependents,

    • the rule that allows a qualified pension or annuity plan to provide benefits for sickness, accident, hospitalization, and medical expenses to retired employees, spouses, and dependents, and

    • the rule that treats a voluntary employee benefits association (VEBA) that provides sick and accident benefits to its members and their dependents as a tax-exempt organization.

    State grants for health ombudsman programs. Beginning with fiscal year 2010, the HHS must award grants to eligible states (or to Exchanges operating within a state) to enable the state to establish (or expand) either an office of health insurance consumer assistance or a health insurance ombudsman program, in order to provide consumers with assistance in navigating health insurance requirements under federal and state law. States receiving such a grant must comply with relevant criteria established by the HHS.

    Increase in adoption credit. For tax year beginning in 2010, the dollar limitation for the adoption credit and income exclusion for employer-paid or employer-reimbursed adoption expenses through a qualified adoption assistance program is increased by $1,000 to $13,170 per eligible child (including a special needs child). In addition, the adoption credit has been made refundable.

    Breastfeeding at work. Effective on March 23, 2010, an employer must provide a reasonable break time for an employee to express breast milk for her nursing child each time the employee needs to express milk for one year after the child's birth.

    Automatic enrollment. Effective on March 23, 2010, employers who have more than 200 full-time employees and who offer one or more health benefit plans are required to automatically enroll new employees in a plan. Automatically enrolled employees must have the opportunity to opt out of the coverage.

    Temporary reinsurance program for early retirees. Beginning 90 days after enactment (June 23, 2010) and ending on Jan. 1, 2014, the HHS must establish a temporary reinsurance program that reimburses part of the claims cost for participating employment-based plans that provide health insurance coverage for early retirees (ages 55 to 65), eligible spouses, surviving spouses, and dependents of such retirees. The reimbursement is for 80% of plan claims that are between $15,000 and $90,000.

    Temporary high-risk insurance pool. Within 90 days after enactment (June 23, 2010), the HHS was ordered to establish a temporary high risk health insurance pool. This pool is designed to provide health insurance coverage for individuals who have been uninsured for six months or who have been denied a policy because they have preexisting conditions. The pool will run for the period from the day the program is established until Jan. 1, 2014.

    Tanning tax. For services (whether paid by insurance or otherwise) performed on or after July 1, 2010, a 10% excise tax is imposed on amounts paid for indoor tanning services.

    Review of premium increases. Beginning with the 2010 plan year, an annual review process of "unreasonable increases" in premiums for health insurance coverage is established. Prior to implementing premium increases, a health insurance issuer must submit to both HHS and the relevant state a justification for the premium increase.

    Government health care internet portal. No later than July 1, 2010, the HHS must establish an Internet portal to help beneficiaries and small businesses identify affordable health insurance coverage options in each state.

    For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform and other developments in employee benefits, just click here.

    Friday, September 17, 2010

    Ambiguity About Preventive Care Regulations Threatens To Increase Costs For New Mandates

    The ERISA Industry Committee (ERIC) has submitted comments on the interim final regulation for group health plans and health insurance issuers relating to coverage of preventive services under the Patient Protection and Affordable Care Act. The Departments of Health and Human Services (HHS), Labor, and Treasury published the interim final regulation in the July 19 Federal Register.

    ERIC's letter expresses support for provisions in the interim final regulations that permit employers to apply reasonable medical management techniques to preventive care, but also warns that the regulations impose mandates that are based on recommendations for an audience of health care providers and, as such, are often ambiguous or unclear with respect to their application to health plans.

    Moreover, "[d]epending on the scope of these mandates, plans could be forced to expand their coverage for preventive services beyond the level required by the statute, adding significant new cost burdens at a time when increasing costs are already driving many employers to question the extent of the coverage they offer," said Mark Ugoretz, ERIC president. In a separate statement, he added that the "preventive care regulations should not be a stealth tactic to mandate medical procedures and benefits."

    Recommendations Offered

    ERIC's letter offers several recommendations to resolve some of this ambiguity to help employers understand the parameters of the regulation and comply with the new preventive care mandate, including:

    • clarifying and illustrating the scope of a plan's discretion to use reasonable medical management techniques;
    • making clear that plans are not required to cover the treatment of conditions identified through recommended preventive care;
    • confirming that plans are not required to cover taxable benefits (such as over-the-counter drugs);
    • confirming that a plan will not become subject to the parity requirements of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) merely because it provides a mental health or substance use disorder benefit in compliance with the regulations' recommended preventive services; and
    • explaining technical terms related to counseling and interventions in a way that will clarify for plan sponsors and administrators the scope of the recommendations and the preventive services that must be offered.

    Clarification Of Plan's Discretion Requested

    Although the interim final regulations identify the recommended preventive services that plans must cover, they authorize plans to identify the specific items and services they must cover and to limit the scope of their coverage using reasonable medical management techniques.

    "We agree strongly that such decisions should be left to plan administrators and plan sponsors," Mr. Ugoretz said. "We note, however, that employers face an excise tax of up to $100 per day per individual for each failure to comply with Sec. 2713 [of the Public Health Service Act]. In addition, plan administrators potentially must conduct a burdensome and exacting appeals process to resolve any dispute with participants concerning the preventive services the plan must cover without cost-sharing. Therefore, it is critically important that the Departments clarify and illustrate the extent of a plan's discretion to define the scope of coverage for recommended preventive services," Mr. Ugoretz added.

    ERIC recommends that the Departments add examples to the interim final regulations that will illustrate points addressing frequency of service, recommended range of frequencies, settings for coverage of services, and the method and scope of coverage.

    The letter also urges the Departments to make clear that a plan may limit its coverage to the preventive services that are appropriate for the general population defined by the recommendations and guidelines, and that the plan is not required to cover more frequent screenings or other additional services for specific individuals within that population who might be at higher risk for a particular condition.

    ERIC also recommended that the Departments create an advisory task force that will give group health plans a voice in delineating the recommended preventive care mandates. The letter contends that the groups that develop recommendations and guidelines for preventive care consist mainly of health care providers and other professionals, who have a stake in specific procedures, and do not include representatives of the employer-group health plans that must cover, administer, and pay for these services.

    "It would be extremely helpful if representatives of group health plans could have a voice in the process that will identify new items and services that must be covered as 'recommended preventive services,' and that will determine when items and services should be removed from the mandated coverage list," Mr. Ugoretz contended.

    "Those who sponsor and pay for the benefits offered by health plans have as great a stake in determining the benefits that are offered as those who have a stake in providing the procedures," he added. "Health care costs continue to escalate at an alarming rate and plan sponsors already have reached the limit of the additional costs they can absorb. The burden of increasing costs, increases that we strongly believe need to stop, will increasingly fall on consumers."

    For more information, visit http://www.eric.org.

    For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

    Wednesday, September 15, 2010

    HHS Addresses Waivers For Health Plan Annual Limits Requirements Under Reform

    At the beginning of September, the Department of Health and Human Services' (HHS) Office of Consumer Information and Insurance Oversight (OCIIO) issued guidance on the process for obtaining waivers of health plans' annual limits requirements under Public Health Service Act (PHSA) Sec. 2711, added by the Patient Protection and Affordable Care Act. The guidance is in Memorandum, OCIIO 2010-1.

    PHSA Sec. 2711 requires the HHS to impose restrictions on the imposition of annual limits on the dollar value of essential health benefits for any participant or beneficiary in a new or existing group health plan or a new policy in the individual market for plan or policy years beginning on or after Sept. 23, 2010, and prior to Jan. 1, 2014. Specifically, HHS has the authority to determine what constitutes a "restricted annual limit" that can still be imposed under such plans or policies prior to Jan. 1, 2014.

    Interim final regulations published on June 28 established guidance for these restricted annual limits. The regulations also provided that the HHS may waive these restricted annual limits if compliance with the interim final regulations would result in a significant decrease in access to benefits or a significant increase in premiums.

    Plans affected. Certain group health plans and health insurance coverage, generally known as "limited benefit" plans or "mini med" plans, often have annual limits well below the restricted annual limits set out in the interim final regulations. These group plans and health insurance coverage often offer lower-cost coverage to part-time workers, seasonal workers, and volunteers who otherwise may not be able to afford coverage at all.

    Waiver process. The OCIIO memorandum indicates that a group health plan or health insurer may apply for a waiver from the restricted annual limits set forth in the interim final regulations if the plan or the coverage offered by the insurer was offered prior to Sept. 23, 2010, for the plan or policy year beginning between Sept. 23, 2010, and Sept. 23, 2011, by submitting an application not less than 30 days before the beginning of that plan or policy year, or in the case of a plan or policy year that begins before Nov. 2, 2010, not less than ten days before the beginning of that plan or policy year. The application must include the following information:

    1. The terms of the plan or policy form(s) for which a waiver is sought;
    2. The number of individuals covered by the plan or policy form(s) submitted;
    3. The annual limit(s) and rates applicable to the plan or policy form(s) submitted;
    4. A brief description of why compliance with the interim final regulations would result in a significant decrease in access to benefits for, or significant increase in premiums paid by, those currently covered by, those plans or policies, along with any supporting documentation; and
    5. An attestation, signed by the plan administrator or chief executive officer of the issuer of the coverage, certifying that: (1) the plan was in force prior to Sept. 23, 2010, and (2) the application of restricted annual limits to such plans or policies would result in a significant decrease in access to benefits for, or a significant increase in premiums paid by, those currently covered by those plans or policies.

    The memorandum indicates that the HHS will process complete waiver applications within 30 days of receipt, except that complete applications submitted for plan or policy years beginning before Nov. 2, 2010 will be processed no later than five days in advance of that plan or policy year.

    Waiver approval. A waiver approval granted under this process applies only for the plan or policy year beginning between Sept. 23, 2010, and Sept. 23, 2011. A group health plan or health insurer must reapply for any subsequent plan or policy year prior to Jan. 1, 2014, when the waiver expires.

    Where to send application. Plans may apply for the waiver by sending the required items within the specified time frames to HHS, Office of Consumer Information and Insurance Oversight, Office of Oversight, attention James Mayhew, Room 737-F-04, 200 Independence Ave. SW, Washington, DC 20201 or by emailing the items to healthinsurance@hhs.gov (use "waiver" as the subject of the email).

    For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

    Monday, September 13, 2010

    Health Reform Will Slightly Boost Costs, Significantly Expand Coverage: CMS

    Provisions of the Patient Protection and Affordable Care Act will boost national health care spending and some insureds' costs only slightly from 2010 through 2019, while expanding the proportion of the population with insurance, the Office of the Actuary for the Centers for Medicare and Medicaid Services (CMS) has projected. The increased cost of a greater number of insured individuals is partly offset by savings from Medicare and from lower Medicaid payments. In addition, CMS found that the main driver of increased costs will be the estimated $38 billion cost of establishing the new state health insurance exchanges.

    The report, National Health Spending Projections: The Estimated Impact Of Reform Through 2019, published in the online version of the journal Health Affairs, also estimated that the average annual growth rate in health care spending over the next ten years would be 6.3%, just 0.2 percentage points higher than the February estimate.

    By 2019, the CMS projects that 92.7% of the population will be insured, compared with 85.6% of the population in 2009, with 32.5 million more people insured. Also in 2019, health care costs will represent nearly 20% of the U.S. gross domestic product (GDP), compared with 17.5% of GDP in 2009. More than half of the newly insured population will be covered by Medicaid, and that program along with the Children's Health Insurance Program (CHIP) will insure 82.2 million people, compared with 51.8 million people in 2009.

    Coverage through health insurance exchanges is estimated to rise from 15.8 million people in 2014 to 30.6 million in 2019. Coverage through employment will decline by only 100,000 people due to individuals shifting to coverage through Medicaid or through an exchange. Employer spending for health insurance is estimated to reach $1.2 trillion in 2019, with annual cost increases averaging about 4.8% in the ten years from 2009. In contrast, public funds will pay $2.3 trillion for health care in 2019.

    Two provisions of the Affordable Care Act that take effect this year or next are projected to increase national spending to $10.2 billion through 2013: the high-risk pools for people with preexisting conditions and the coverage extension for dependent young adults up to age 26. Enrollment is expected to peak at about 375,000 people in the high-risk pools in 2011 and at about 1.5 million young adults in their parents' plans in 2013.

    The major coverage expansions provided by the Affordable Care Act begin in 2014 and are expected to boost the growth in national health spending that year to 9.2%, compared with 6.6% growth expected prior to the enactment of health reform, the CMS noted. For years 2015 through 2019, national spending is projected to rise 6.7% annually, on average; the CMS' February projection had been 2.8%.

    Rising enrollment will contribute to faster spending growth rates through 2016. However, the growth will slow substantially after that due to Medicare reduced payment updates for providers and the excise tax on high-cost insurance plans beginning in 2018, the CMS explained.

    "In this analysis, we have shown that the net impacts of key Affordable Care Act and other legislative provisions on total national health expenditures are moderate, but the underlying effects on payer spending levels and growth rates are much more pronounced and reflect the Affordable Care Act's many substantive changes to health care coverage and financing," the CMS concluded. "As the provisions are implemented over time, their actual impacts may well differ considerably from these estimates."

    For more information, visit http://www.healthaffairs.org.

    For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

    Friday, September 10, 2010

    IRS: Stop using FSA debit cards for 2011 OTC purchases

    The IRS has announced that beginning with expenses incurred on and after January 1, 2011, health FSA and HRA debit cards may not be used to purchase over-the-counter (OTC) medicines or drugs.

    What's the reason for this change? According to IRS Notice 2010-59, it relates to changes made to the FSA rules under the Affordable Care Act. You'll recall that under the Act, the cost of an OTC medicine or drug can't be reimbursed from an FSA or similar account unless a prescription is obtained.

    Unfortunately, current debit card systems can't ensure compliance with this new requirement, because the systems aren't capable of recognizing that the medicines or drugs in question are authorized by a prescription.

    The IRS is providing a bit of wiggle room: it will not challenge the use of FSA debit cards for OTC expenses through January 15, 2011. This is intended to help facilitate making the necessary changes to existing systems. On and after January 16, 2011, though, OTC medicine or drug purchases at all providers and merchants (whether or not they have an inventory information approval system) must be substantiated before reimbursement may be made.

    So, how can these expenses be substantiated for reimbursement from an FSA? The IRS offers a couple of  examples. First, a customer receipt issued by a pharmacy that identifies: (1) the name of the purchaser (or the name of the person for whom the prescription applies), (2) the date and amount of the purchase and (3) an Rx number satisfies the substantiation requirements for OTC medicines or drugs. Second, a receipt without an Rx number accompanied by a copy of the latest related prescription also satisfies the requirements.

    Wednesday, September 8, 2010

    Nearly all employers expect to lose ACA grandfathered status by 2014

    While many U.S. companies initially hoped they could preserve much of their pre-reform plan design for their group health plans by maintaining so-called grandfathered status under the Affordable Care Act, that's no longer the case. A recent survey by Hewitt Associates reveals that almost all companies now believe they will not hold on to grandfathered status. Ninety percent of companies report they anticipate losing grandfathered status by 2014, with the majority expecting to do so in the next two years.

    Under the Act, companies can lose their grandfathered status if they make certain changes to plan terms, including reducing benefits, significantly raising co-payment charges, significantly raising deductibles, or (for insured plans) changing insurance carriers.

    According to input from over 450 companies--representing nearly 7 million employees--most companies expect to lose grandfathered status either because of health plan design changes (72 percent) or changes to company subsidy levels (39 percent). Employers also cited consolidation of health plans (16 percent), changes to insurance carriers (16 percent) and union negotiations (15 percent) as additional reasons.

    The story's the same for both self-insured and fully insured plans. Of those companies with self-insured plans, most (51 percent) expect to first lose grandfathered status in 2011, while another 21 percent plan to lose the status in 2012. For those with fully insured medical plans, loss of grandfathered status is expected to occur either in 2011 (46 percent) or 2012 (18 percent).

    For free CCH analysis of recent regulatory developments on health care reform, go to http://hr.cch.com/.

    Friday, September 3, 2010

    Is ACA really a threat to student health plans?

    The uproar over a letter sent in August by the American Council on Education (ACE) to Kathleen Sebelius, Secretary of the HHS, raises the question of whether or not the Patient Protection and Affordable Care Act (ACA) really poses a threat to student health plans. According to the letter, the ACE is concerned that the application of several provisions under the ACA could eventually make it impracticable for institutions of higher learning to continue offering student health plans.

    The ACE's letter focuses on the individual mandate, which requires Americans to obtain minimum essential health insurance coverage by 2014 or pay a penalty. The ACE is concerned that most student health plans, because they typically consist of short-term coverage as defined by HIPAA, would not meet the definition of "minimum essential coverage" under Sec. 5000A(f)(1) of the ACA, meaning that students would have to purchase additional coverage if they wanted to avoid the penalty.

    The ACE is asking the HHS to issue guidance clarifying that student health coverage be considered "minimum essential coverage" under the individual mandate if it meets certain specified requirements.

    Conservatives are pointing to the ACE letter as one example of possible detrimental effects of the ACA on Americans' current health care coverage, arguing that the ACA will, despite promises from the White House, result in the eventual demise of cheap university health care plans. More liberal commentators, on the other hand, are pointing out that the ACE is merely asking for clarification.

    For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

    Wednesday, September 1, 2010

    Health reform losing popularity

    According to a recent Rasmussen Reports telephone survey, fifty-eight percent of U.S. voters favor repeal of the Affordable Care Act, including forty-six percent who "strongly favor" repeal. Thirty-six percent of those responding were opposed to repeal.

    And, a recent Kaiser Family Foundation tracking poll shows that health care reform has lost some popular support. Only forty-three percent of Americans responding to the poll viewed the law favorably in August, which is down from fifty percent in July, and forty-five percent held unfavorable views.

    It seems to be the individual mandate that's causing the trouble, since seventy percent of those surveyed by Kaiser were not in favor of the requirement that they either buy health insurance or pay a penalty. On the other hand, approximately seventy-five percent of those surveyed support helping low- and moderate-income Americans to buy coverage via subsidies.

    Both Rasmussen and Kaiser indicate that attitudes toward the health care reform law seem to run along party lines. Rasmussen points out that repeal was favored by eighty-six percent of Republicans and fifty-seven percent of voters not affiliated with either party, while fifty-nine percent of Democrats were opposed to repeal.

    According to Kaiser, sixty-eight percent of Democrats that were polled supported health care reform while seventy-seven percent of Republicans opposed it.

    For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.