Friday, May 27, 2011

Early state implementation of key health reform provisions should be allowed, experts suggest

More than eight out of 10 leaders in health and health care policy (82%) believe states should be allowed to implement key provisions of the Affordable Care Act early with full federal support, ahead of the timeline outlined in the law, according to a survey by the Commonwealth Fund. Such key provisions include expanding Medicaid eligibility to cover more low-income families and creating insurance exchanges with premium subsidies.

There are wide differences of opinion in Congress and among industry experts about the degree to which the federal government or individual states should have authority over health reform. When asked about the overall state-federal balance in the Affordable Care Act, 41 percent of opinion leaders said the federal government should have more authority and 29 percent say that the law has struck an appropriate balance between states' and the federal government's roles. Only 25 percent of respondents thought the states should have more authority.

On many health care reform provisions, opinion leaders were somewhat more likely to think the federal government should have a stronger role. For instance, under the law, new federal rules will prohibit insurers from restricting coverage or basing premiums on health status or gender. Half of health care opinion leaders support granting the federal government more power to set such health insurance market rules; 23 percent feel the law got the balance between the federal government and states about right. In addition, half of respondents favor a stronger role for the federal government in developing and spreading innovative provider payment methods, including new models like accountable care organizations and patient-centered medical homes.

Barriers to implementation. A wide majority of opinion leaders expressed concerns about the barriers states face in successfully implementing the law. Nearly nine of 10 (89%) are concerned or very concerned about the current fiscal situation and budgetary pressures in many states. In addition, more than 70 percent are concerned about state political resistance and legal challenges (78%) and technical knowledge and capacity of state agencies (71%).

"The strong support voiced by health care leaders for federal support of early state implementation of the Affordable Care Act indicates a vote of confidence in the benefits of the new law," said Commonwealth Fund president Karen Davis. "Leaders have also expressed concerns about barriers to implementation, such as capacity of state agencies and budget pressures, which policymakers must address to facilitate effective implementation of the law."

Other findings. Other findings from the survey include:
  • A majority of opinion leaders (61%) support or strongly support the creation of a federal health insurance exchange, in addition to the state exchanges that will become operable in 2014.
  • Health care opinion leaders are divided on whether states should be given the ability to design their own approaches to health care reform as long as they achieve the same results. About half (49%) support this idea, 32 percent oppose it, and 18 percent neither support nor oppose.
  • A plurality of leaders think there should be more federal authority over the health insurance exchanges (42%), the individual mandate (41%), and medical malpractice (40%).
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 implementation and other recent developments in employee benefits, just click here.

Wednesday, May 25, 2011

Health reform law expected to have minimal effect on medical cost trend in 2012

According to PricewaterhouseCoopers, the 2010 Affordable Care Act will have only a minimal effect on medical cost trends in 2012.  U.S. employers can expect to see healthcare costs rise by 8.5 percent in 2012, compared with an increase of 8 percent in 2011, according to the annual Behind the Numbers report on medical cost trends, published by PwC’s Health Research Institute.  However, mitigating changes in health benefit plan designs, including increased cost-sharing with employees, could keep employers’ costs increases to an average of 7 percent next year, PwC suggests.

Provisions of the federal health reform law that took place prior to 2012 included small changes for which employers already have fully accounted, PwC suggests. The Medicaid expansions, health insurance exchanges, subsidies to buy private insurance, mandates for employers to offer insurance and mandates for individuals to buy insurance take place in 2014 or later, although PwC notes that health reform could contribute to more cost shifting by further discounting Medicare rates for inpatient care.   

“Healthcare organizations are in state of flux over pending health reform provisions, an uncertain economic outlook and financial pressures, and the way they react will have significant implications for their own long-term health in this rapidly changing market,” said Michael Galper, U.S. healthcare payer leader, PwC.  “Health reform is pressuring employers, providers, insurers and pharmaceutical manufacturers to be more cost-conscious and accountable for costs, quality and performance, and they will need to work together to provide better, coordinated care, greater transparency in pricing and more patient-friendly practices.”

As part of the 2011 Touchstone Health and Well-being Employer Survey, PwC asked employers about changes they are making in their benefit plans, particularly in light of health reform. The survey found:  

  • Eighty-four percent of employers said they are likely to make changes in plan design to offset anticipated costs associated with the health reform law;
  • Eighty-six percent of employers said they are likely to re-evaluate their overall benefits strategy;
  • One-half (50 percent) of employers are considering significantly changing or eliminating company subsidies for dependent medical coverage; and
  • Eighty-nine percent of employers will likely increase their health and wellness efforts.

“Employers continue to be concerned about the sustainability of healthcare cost increases especially in the long-term, and they are reacting by making changes now,” said Michael Thompson, principal, human resource services, PwC.  “Healthcare in the future will be very different than we know it today, and uncertainty about these changes complicates healthcare benefits strategies.  However, the most proactive employers are planning for potential future scenarios and making incremental changes now toward a longer-term view of transformational change in the way healthcare is delivered and paid for and a more collaborative and integrated model aligned around health and wellness.”

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 implementation and other recent developments in employee benefits, just click here.

Monday, May 23, 2011

Hefty health insurance rate hikes to face tougher scrutiny

The Department of Health and Human Services (HHS) has issued a final regulation to ensure that large health insurance premium increases will be thoroughly reviewed, and consumers will have access to clear information about those increases. Combined with other protections from the Affordable Care Act, these new rules will help lower insurance costs by moderating premium hikes and provide consumers with greater value for their premium dollar.

In 2011, this will mean rate increases of 10 percent or more must be reviewed by state or federal officials. Many state regulators have the authority to reject increases, though the ACA doesn’t give federal regulators that authority. In fact, according to the National Conference of State Legislatures, about one-fourth of the states allow allowing regulators to approve or disapprove of some types of insurance premium changes.

"Effective rate review works - it does so by protecting consumers from unreasonable rate increases and bringing needed transparency to the marketplace," said HHS Secretary Kathleen Sebelius. "During the past year we have worked closely with states to strengthen their ability to review, revise or reject unreasonable rate hikes. This final rule helps build on that partnership to protect consumers."

Timetable. Starting September 1, 2011, the rule requires independent experts to scrutinize any proposed increase of 10-percent for most individual and small group health insurance plans. States will have the primary responsibility for reviewing rate increases. While most states will take on this responsibility, HHS will serve in a backup role in states that don't have the resources or authority to review rates. HHS has awarded $44 million in Affordable Care Act grants to states to help strengthen their oversight capabilities. An additional $200 million will continue to be available to states under the Act.

Beginning in September 2012, the 10-percent threshold will be replaced by state-specific thresholds that reflect the insurance and health care cost trends in each state. The final rule clarifies that HHS will work with states in developing these thresholds.

Other factors. Publication of the final rule comes as health insurance companies have reported some of their highest profits in years. One cause for these profits is that actual medical costs are growing more slowly than what insurance companies projected when they set their 2011 rates last year. However, many of the rates consumers and small employers pay today don't reflect these lower costs.

The rule requires insurance companies to provide consumers with easy to understand information about the reasons for unreasonable rate increases and post the justification for those hikes on their website as well as on the HHS Affordable Care Act website, http://www.healthcare.gov/.

"Strong and transparent rate review processes are necessary to help bring down costs for consumers," said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight. "Rate review will ensure that increases are based on reasonable estimates and real-time data on medical cost trends and health care utilization."

The regulation finalizes proposed rules issued in December 2010. The final rule has several additions to the proposed rule, including a requirement that states provide an opportunity for public input in the evaluation of rate increases subject to review. This is expected to strengthen the consumer transparency aspects of the new rule.

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 implementation and other recent developments in employee benefits, just click here.

Friday, May 20, 2011

Do Waivers Disrupt The Medical Loss Ratio Provisions?

The Patient Protection and Affordable Care Act (ACA) allows the Department of Health and Human Services to adjust the medical loss ratio (MLR) standard for a state if it is determined that meeting the 80% Medical Loss Ratio standard may destabilize the individual market. In order to qualify for this adjustment, a state must demonstrate that requiring insurers in its individual market to meet the 80% MLR has a likelihood of destabilizing the individual market and result in fewer choices for consumers.

Medical loss ratio is calculated as the cost of health care services provided as a percentage of premium revenues. In general, the higher the medical loss ratio, the more an insurer spends on claims reimbursements and the less it spends on administration and marketing, or retains as profit.

Three states now have been granted waivers: Maine, New Hampshire, and Nevada, and nine other states have requested waivers. Does this dilute the MLR provisions too much? Judge for yourself.


The Maine Bureau of Insurance requested an adjustment of the 80% MLR to a 65% MLR standard. As of September 2010, nearly 37,000 Maine residents obtain health insurance coverage through Maine’s individual health insurance market. One insurer, MEGA Life & Health Insurance Company, which covers more than a third of the market or approximately 14,000 Mainers, has said it may exit the market if required to meet this higher standard in 2011 and 2012. According to the State, since MEGA offers lower cost policies in Maine’s individual market, if the insurer left the market, consumers may not be able to purchase new policies of comparable price and benefit design.

For these reasons, in March 2011 HHS accepted the Maine Bureau of Insurance request for an adjustment to 65% for 2011 and 2012. HHS will allow the adjustment to continue through 2013, as Maine requested, if the State provides additional data at the end of 2012 to support a third year of the adjustment to 65%.

New Hampshire

The New Hampshire Insurance Department requested an adjustment of the 80% MLR to a 70% MLR standard for 2011, 2012, and 2013.

Based on the information provided, including the 2010 MLR data, HHS states that it was “reasonable to establish an MLR standard at 72% for the year 2011, an MLR standard of 75% for 2012, with the 80% standard to apply in 2013. An adjustment to the MLR standard in 2011 and 2012 helps to ensure a stable marketplace, while preserving the intended benefits of the MLR provision for consumers. This approach, which creates a glide path for compliance with the 80% standard, balances the interests of consumers, the State and the issuers in accordance with the principles underlying the MLR provision.”


The Nevada Department of Insurance requested an adjustment of the 80% MLR to a 72% MLR standard for 2011.

According to HHS, as of 2010, more than 86,000 Nevada residents obtained health insurance coverage through Nevada’s individual health insurance market. Two of Nevada’s biggest issuers, Golden Rule and Aetna, insured a combined total of 21,652 enrollees, which constitutes 24% of the individual market. The large impact that an 80% MLR standard would have on Golden Rule’s and Aetna’s profits in Nevada suggests a sufficiently high risk that these two issuers would withdraw if the 80% MLR standard is implemented immediately. A withdrawal by these two issuers could make it difficult for their 21,652 enrollees, particularly those with pre-existing conditions, to obtain alternate coverage. Due to these issuers’ relatively large market share, their withdrawal could also lead the remaining issuers to reduce benefits and raise premiums, which would adversely affect all Nevada residents who obtain coverage through the individual market.

However, seven of Nevada’s top ten issuers are expected to have 2011 MLRs above the 72% requested by the DOI, and at 68 and 70%, Golden Rule and Aetna are fairly close to the DOI’s proposed standard. Furthermore, an adjustment to a 72% standard would deprive consumers of a substantial amount in rebates. Increasing the adjustment from 72% to 75% would reduce the loss of rebates to consumers by $1.1 million, while still providing issuers with low MLRs an opportunity to improve the efficiency of their operations.

For these reasons, HHS has determined to adjust the MLR standard in Nevada to 75% for 2011.

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 implementation and other recent developments in employee benefits, just click here.

Wednesday, May 18, 2011

A Tale Of Two Health Reform Provisions

For reasons that are not all that obscure, two provisions in the Patient Protection and Affordable Care Act (ACA), one aimed at aiding individuals and the other aimed at aiding group health plans, have had strikingly dissimilar results.

As discussed in this blog recently, the Pre-Existing Condition Insurance Plan (PCIP), a temporary high risk health insurance pool for individuals, has a total U.S. enrollment of just over 18,000 individuals, even though estimates of individuals eligible for the program run as high as 5 million. The PCIP requires that an individual be uninsured for six months and plans available often are expensive, thus the low enrollment.

A distinctly different result has been obtained by the Early Retiree Reinsurance Program (ERRP). Group health plans that provide early retiree health coverage are eligible, and reimbursement is available after applying for the program and submitting reimbursement requests—no other strings attached.

In the first 13 months after enactment of the ACA, the Early Retiree Reinsurance Program has made more than $2 billion in reimbursements to 1,728 approved retiree plans, according to a May 2011 report from the Center for Consumer Information & Insurance Oversight (CCIIO).

This is almost three and one-half times the amount of reimbursements recorded at the end of 2010, and includes almost six times more retiree plans.

Retiree plans that received the most reimbursement so far have included public employee systems, unions, and older, more established corporations.  Those plans that have received more than $10 million of the total $2.438 billion in reimbursements include the following:

·        United Auto Workers Retiree Medical Benefits Trust, $220,717,912.70
·        AT&T, Inc., $141,522,095.91
·        California Public Employees' Retirement System (CalPERS) $98,717,679.82
·        Verizon Communications Inc., $91,702,537.71
·        Public Employees Retirement System of Ohio, $70,557,763.84
·        Teacher Retirement System of Texas, $68,074,117.64
·        Commonwealth of Kentucky, $63,420,419.65
·        State of New York, $47,869,043.62
·        Teachers & State Employees, Board, Major Medical Plan, NC, $45,298,812.63
·        State of New Jersey Treasury Department, Pension Accounting Services Department, $38,622,697.74
·        General Electric Company, $36,607,818.08
·        State of Michigan Public School Employees Retirement System, $33,616,554.94
·        The Boeing Company, $34,097,111.22
·        Employees Retirement System of Texas, $30,175,627.20
·        South Carolina Budget & Control Board Employee Insurance Program, $27,142,501.66
·        General Motors, LLC, $26,774,741.50
·        National Carriers' Conference Committee, DC, $25,247,080.98
·        Commonwealth of Pennsylvania, $24,522,631.20
·        Qwest Communications International Inc., $23,584,496.39
·        State Teachers Retirement System of Ohio, $20,334,357.02
·        State of Michigan, $20,247,338.29
·        Wisconsin Education Association Insurance Trust, $18,129,508.49
·        Trustees of the Central States, SE & SW Areas Health and Welfare Fund, IL, $16,983,697.88
·        Deere & Company, $14,240,067.59
·        Wisconsin Retirement System, $14,237,183.91
·        Public Education Employees Health Insurance Fund , AL, $13,011,375.86
·        Public Employees' Retirement Association of Colorado, $12,297,560.30
·        International Business Machines Corporation ("IBM"), $12,989,690.40
·        EI duPont de Nemours and Company, $12,796,589.00
·        United Parcel Service of America, Inc., $12,312,872.80
·        Washington State Health Care Authority, $12,279,128.17
·        Mississippi Department of Finance and Administration, $11,790,014.37
·        Altria Client Services, Inc., $10,995,718.71
·        The Regents of the University of California, $10,704,323.57
·        Alcoa, Inc., $10,654,650.05
·        United Airlines, Inc., $10,269,716.48
·        Sisc III Health and Welfare Fund, $10,207,959.84

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 implementation and other recent developments in employee benefits, just click here.

Monday, May 16, 2011

Death Panel Redux

A well-recognized deficiency of the Patient Protection and Affordable Care Act (ACA) is adequate cost control. And even though the ACA has more cost control tools in its Medicare provisions than in employer-related provisions, the annual release of the Medicare Trust Fund report emphasizes how important additional cost reductions are to to preserve the program.

The Medicare’s Hospital Insurance (HI) Trust Fund (Part A) is now projected to go broke in 2024, five years earlier than projected in last year's report, according to the Medicare Trustees Report released on May 13.

Without the reforms in the Patient Protection and Affordable Care Act (ACA), the Medicare HI Trust Fund would expire in just five years – in 2016. “This report shows that without the Affordable Care Act, the outlook for the Hospital Insurance Trust Fund today would be much worse,” said Donald Berwick, M.D., Administrator of the Centers for Medicare & Medicaid Services (CMS). “CMS is implementing critical reforms to improve care and reduce costs and improve the overall health of Medicare’s beneficiaries and the Trust Fund.” 

There are, of course, only two ways to relieve the pressures of cost increases –reduce expenditures and/or increase revenues.

And there are two very different proposals floating around Washington to deal with the pressures—neither mentions rationing or the death panels envisioned last year—but both proposals eventually would address reducing the amount of Medicare reimbursement available (that’s rationing, or, if you want to make sure there is lots of opposition to the proposal, a death panel).

On the one hand, you have the budget provisions proposed by Budget Committee Chairman Rep. Paul Ryan (Wis.) in a document titled Path to Prosperity, which would do the following:

Convert the current Medicare program to a voucher system under which beneficiaries would be entitled to premium support payments to help them purchase private health insurance. Those payments would grow over time with overall consumer prices. The change would apply to people turning age 65 beginning in 2022; beneficiaries who turn age 65 before then would remain in the traditional Medicare program, with the option of converting to the new system.

The Ryan plan would shrink Medicare expenditures by holding down the amount of the voucher and relying on the private sector to contain costs.  Medicare expenditures would be reduced, but unless overall costs declined, the increases would be borne by Medicare beneficiaries. Although at first praised by many Republicans, recent and vocal opposition to these types of changes to Medicare have made the Ryan proposal a long shot in the political process.

On the other hand, President Barack Obama and the Democrats would rely on existing provisions in the ACA and would expand some of these provisions in the following ways:

  • Strengthen the Independent Payment Advisory Board (IPAB) created by the ACA. When Medicare growth per beneficiary exceeds growth in nominal gross domestic product (GDP) per capita plus 1%, IPAB recommends to Congress policies to reduce the rate of growth to meet that target, while not harming beneficiaries' access to needed services. Mr. Obama's proposal would set a new target of Medicare growth per beneficiary rising with GDP per capita plus 0.5%.

  • Give IPAB additional tools to improve the quality of care while reducing costs, including allowing it to promote value-based benefit designs that promote proven services like prevention without shifting costs to seniors.

  • Reform the federal-state partnerships to strengthen Medicaid and promote simplicity, efficiency, and accountability. Under current law, states face a patchwork of different federal payment contributions for Medicaid and the Children's Health Insurance Program (CHIP). The President's framework would replace the current complicated federal matching formulas with a single matching rate for all program spending that rewards states for efficiency and automatically increases if a recession forces enrollment and state costs to rise.

  • Improve patient safety through the newly formed Partnership for Patients, which is intended to reduce costs by up to $50 billion in Medicare and billions more in Medicaid over the next ten years.

  • Cut unnecessary prescription drug spending by limiting excessive payments for prescription drugs by leveraging Medicare's purchasing power—similar to what was called for by the bipartisan Fiscal Commission. It would speed up the availability of generic biologics and prohibit brand-name companies from entering into "pay for delay" agreements with generic companies. In addition, it would implement Medicaid management of high prescribers and users of prescription drugs.

  • Reduce abuse and increase accountability in Medicaid and Medicare. The proposal would limit states' use of provider taxes to lower their own spending while not providing additional health services through Medicaid; recover erroneous payments from Medicare Advantage; establish upper limits on Medicaid payments for durable medical equipment; and take other actions to improve program integrity.

One of the key strategic and philosophical differences between the Republicans and the Democrats is who would decide on reductions and who would bear the consequences.  For the Republicans, the market would be responsible for reductions and Medicare beneficiaries would bear the consequences.  For Democrats, the government would trigger reductions, and providers (and/or taxpayers) would bear the consequences.

So any successes in holding down Medicare ( and overall health care costs) will, inevitably, involve a different type of rationing than the cost-based rationing that exists today. Whether elected officials or their constituents will be willing to accept these rationing efforts to save the overall Medicare program is doubtful—they have not been willing to do it yet.

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 implementation and other recent developments in employee benefits, just click here.

Friday, May 13, 2011

Continued ACA Implementation Important To Health Benefits Management

At least half of the respondents to an onsite conference survey consider the continued implementation of the Patient Protection and Affordable Care Act (ACA) as important (29%) or very important (21%) to the management of health benefits. Another 29% of participants, who were attending the Midwest Business Group on Health (MBGH) annual conference on May 5 and 6, consider it somewhat important.

Creation of the health insurance exchanges is the ACA provision getting the greatest attention of the greatest proportion of respondents (39%), followed by the excise tax on high cost plans (18%), and the penalty for not providing health coverage (16%). A much smaller proportion was concerned with maintaining grandfathered status (12%), or disclosing the value of health care benefits on employees’ W-2s (5%).

MBGH conference speakers also provided additional information on employer reactions to the ACA. Staying up to date on and complying with the ACA is a top health care strategy for 2012 for 54% of 588 employers with at least 1,000 employees that responded to the Towers Watson/National Business Group’s Health Survey of Purchasing Value in Health Care. These employers collectively employ 9.2 million employees and cover 7.8 million enrollees, Mitchell V. Santiago, senior consultant in Towers Watson’s Health and Group Benefits practice, told the MBGH group. About one-fifth of these respondents also said they would make long-term changes to avoid the ACA excise tax on high cost health plans. Nevertheless, more than one-third of Towers Watson survey respondents said they would continue to focus on measures that encourage employees, and their dependents, toward healthier lifestyles and behaviors, Mr. Santiago noted. Even with the ACA, the great majority of respondents (97%) indicated their commitment to offer health care benefits to employees, but nearly one-fourth (23%), said they would lower their involvement with retiree medical care.

Nearly half (46%) of more than 1,000 employers of all size employee populations surveyed by Aon Hewitt in 2011 said they would continue planning for ACA requirements and make “tactical” changes to continue offering health care benefits to their employees in 2014, explained Cathy Tripp, managing principal in the firm’s Health and Benefits practice. Another 35% indicated they did not have enough of a grasp on the ACA to make a decision currently. Still, by far the top two health care “tactics” for organizations over the next three to five years are to “offer incentives or disincentives to motivate sustained behavior change” (68% of respondents) and “to promote a culture of health in the workplace” (for example, with healthy food in the cafeteria, 58%).

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.

Wednesday, May 11, 2011

Enrollment Grows, But Remains Low, In Health Reform’s Temporary High-Risk Pool

More than 18,000 individuals have enrolled in the Pre-Existing Condition Insurance Plan (PCIP), a temporary high risk health insurance pool established under the Patient Protection and Affordable Care Act, according to the most recent data from the Center For Consumer Information and Insurance Oversight (CCIIO).

The 18,313 total for March 31 is 47% more than in February 2011 and more than twice as many as in late 2010. Nevertheless, the enrollment figures are far below the 5 million expected to enroll in the $5 billion program.

The PCIP is designed to provide health insurance coverage for individuals who have been uninsured for six months and who have been denied a policy because they have preexisting conditions. The pool will run until Jan. 1, 2014, when American Health Insurance Exchanges take effect.

Pennsylvania had the highest number of enrollees, 2,684, followed by California with 1,543 enrollees, and Texas, with 1,298 enrollees. North Dakota had the fewest number of enrollees, 6.

At a recent hearing before the House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations, Steven B. Larsen, Deputy Administrator and Director, CCIIO, said the following about the PCIP: “I am pleased to report that enrollment has grown significantly over the past several months and we anticipate continued growth. We believe that PCIP programs administered by the states and the federal government will continue to fill a market void and provide valuable health insurance coverage to a population that desperately needs it until 2014.…We believe that the PCIP program is a vital bridge to 2014 which provides comprehensive coverage to vulnerable individuals and their families, and we look forward to continuing to improve the program.”

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.

Monday, May 9, 2011

More Than 600,000 Young Adults Covered In Parents' Health Plans Under ACA

As of the first quarter of 2011, at least 637,000 young adults are getting coverage under their parents' health plans as allowed by the Patient Protection and Affordable Health Care Act (ACA), the Kaiser Family Foundation reported based on major insurers' data. The ACA requires health insurance plans to allow young adults up to age 26 to be covered under their parents' plans, even if the young adult is a full-time student, not living with or a dependent of the parent, or married.

Six major health insurers reported the following numbers of young adult new enrollees, according to Kaiser:

  • WellPoint—280,000 new members, about one third its total enrollment growth in the first three months of 2011;

  • Aetna—fewer than 100,000;

  • Kaiser Permanente—about 90,000;

  • Highmark—about 72,000;

  • Health Care Service Corporation—about 82,000; and

  • United Healthcare—about 13,000.

The Federal Employees Health Benefits Program also reported adding 280,000 young adults; meanwhile Tricare, the health care program for active military families, began covering employees' young adults on May 1.

The U.S. Department of Health and Human Services had estimated that about 1.2 million young adults would enroll for coverage in 2011. The early numbers from insurers indicate that it could be much higher, according to Aaron Smith, executive director of the Young Invincibles, a Washington-based nonprofit group that advocates for young adults.

Carl McDonald, an analyst for Citigroup, observed that most of the increase in young people's enrollment occurred among self-insured employers who contract with insurers to administer their plans.

Although the dependent coverage provision went into effect Sept. 23, 2010, health plans were not required to adopt the change until the beginning of the next plan year, which for most plans was January 2011. However, some insurers voluntarily adopted the provision before they were required to do so.

According to federal estimates, adding young adult coverage is likely to increase average family premiums by approximately 1%.

Young adults have the highest uninsured rate of any age group—about 30%, which is thought to be because many work in jobs that do not provide coverage and cannot afford their own employer's coverage, even if granted access.

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

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.

Friday, May 6, 2011

Speak up about health coverage, IRS requests

The IRS requests comments to initiate the development of regulatory guidance regarding shared employer provisions in Code Sec. 4980H. The provisions apply for months beginning after December 31, 2013, in reference to health coverage provided by employers to their full-time employees. The notice invites comments on a number of possible rules, definitions and approaches that may be incorporated as future proposed regulations.

The Department of Treasury, the Department of Labor and the Department of Health and Human Services are working together to coordinate efforts on the shared employer responsibility provisions, the 90-day limitation on waiting periods, the automatic enrollment for employees of large employers and other provisions of the Patient Protection and Affordable Care Act (Affordable Care Act)

Definition of employer. The notice is divided into sections and one of the main issues available for commentary is the definition of an employer, full-time employee and hours of service. The determination of whether an employer is a large employer is discussed. Examples are provided with respect to hourly-paid employees, non-hourly employees, seasonal employees and applicable large employers. The IRS and Treasury are considering proposing possible alternatives to a month-by-month determination of full-time employee status for purposes of calculating an applicable large employer’s potential assessable payment. One option would be to permit applicable large employers to use a look-back/stability period safe harbor that would provide certainty with respect to employees considered full-time for a specific coverage period.

Comments are requested on the challenges employers may face in being able to offer coverage to certain categories of employees even after the changes made by the Affordable Care Act to the group insurance market and other situations where the application of the Code Sec. 4980H assessable payment may not be appropriate. A request is made for comments on the 90-day waiting period limitation, which is under the shared responsibility of the Treasury, DOL and HHS.

How to comment. There are three ways to submit comments:
  • E-mail to: Notice.Comments@irscounsel.treas.gov. Include “Notice 2011-36” in the subject line.
  • Mail to: Internal Revenue Service, CC:PA:LPD:PR (Notice 2011-36), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
  • Hand deliver to: CC:PA:LPD:PR (Notice 2011-36), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.
The deadline for comments is June 17, 2011.

Wednesday, May 4, 2011

Early Retiree Program Issues New Reminders and Tips

The Center for Consumer Information and Insurance Oversight (CCIIO) has published a series of reminders and tips regarding the Early Retiree Reimbursement Program (ERRP), which includes the following information for resolving the most common early retiree list questions:

Submitting the Early Retiree List

Including Eligible Records. When preparing an early retiree list, plan sponsors should ensure that the list includes only early retirees who meet or exceed the $15,000 cost threshold. In addition, plan sponsors should verify that each member record has a corresponding subscriber record, even if the subscriber is no longer eligible for reimbursement under the ERRP.

Adding Early Retirees. If a plan sponsor submits an early retiree list and then finds that additional early retirees need to be added to the list, it may do so by submitting another complete early retiree list. Each early retiree list submission is a full replacement of the previously submitted list.

Reviewing The Early Retiree List Response File

Using the Correct Response File. Each time a plan sponsor submits an early retiree list, the ERRP Center produces an early retiree list response file. If a plan sponsor submits multiple early retiree lists, it should ensure that the correct early retiree list response file is being used to research the data elements identified as errors in the corresponding early retiree list. Plan sponsors should consider saving each response file with a different name to keep multiple response files in order.

Understanding the Early Retiree List Response File Reason Codes. Reason codes are numerical codes that correspond to a specific message about a record in an early retiree list response file. Reason codes advise when an ERRP effective and/or termination date returned by the ERRP Center varies from the plan coverage dates originally submitted by the plan sponsor. The reason code will explain the ERRP effective and/or termination dates provided by the ERRP Center. ERRP coverage periods could be adjusted to a shortened coverage period, or no coverage period at all depending on the following scenarios:
  • No ERRP coverage period; and
  • The ERRP Center will return a reason code and no ERRP coverage period (zeroes in ERRP effective and termination dates) if one or more selected fields are invalid (e.g., last name, first name, eate of birth, coverage effective date, coverage termination date, member ID, member group ID, etc.).
Additionally, the ERRP Center will return a reason code and no ERRP coverage period (zeroes in ERRP effective and termination dates) if one or more of the following can not be confirmed in the ERRP SWS system: plan year start date, application number, ERL submission method, corresponding subscriber record, member ID, and member group ID combination.

Finally, the ERRP Center will return a reason code and a shortened ERRP coverage period (modified ERRP effective and termination dates—not zeroes) and a reason code as applicable, in the following scenarios:
  • The plan coverage effective and/or termination dates submitted by the plan sponsor are outside the plan year.
  • The subscriber is eligible for Medicare during some portion of or all of the plan sponsor submitted coverage period (this also could result in no ERRP coverage period).
  • Subscriber is deceased (this also could result in no ERRP coverage period).
  • Ineligible member coverage dates (this also could result in no ERRP coverage period).
  • Adjusted subscriber coverage dates (this also could result in no ERRP coverage period).
  • Adjusted spouse and/or dependent coverage dates (this also could result in no ERRP coverage period).
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.