Administration Releases New Health Law Rules For Insurers, Employers

From: Kaiser Health News

Long-awaited details on how insurers can structure health benefits and premiums for policies that will cover tens of millions of Americans starting in 2014 were released by the Obama administration Tuesday.


The three proposed rules reaffirm key elements of the 2010 federal health law, including its requirement that insurers accept all applicants, even those with health conditions, and not charge higher rates based on health, gender or occupation.

But the proposals add additional details on how premiums can vary based on age and tobacco use, including allowing tobacco users who enroll in programs aimed at helping them quit to be exempted from extra premium costs set out in the law.

While insurers and consumer groups were cautious about issuing an immediate assessment of the proposals, a quick review showed that no one group won everything it wanted. For example, insurers did not succeed in getting the government to phase-in a requirement that limits their ability to charge older applicants more than younger ones. And consumer groups, which wanted specific details on the benefits required in 10 broad categories, instead saw continued discretion given to state regulators to pick "benchmark" plans and benefits.

More On The New Rules

Obama Administration Gives Smokers A Way Out Of Higher Insurance Premiums

"It looks like the Obama administration is continuing to be pragmatic in their approach to the regulations," said Robert Laszewski, a consultant and former health insurance executive.

Insurers, consumer groups and the public have 30 days to weigh in with comments on two of the proposed rules and will have until Jan. 25 for the third, which outlines how employers can structure wellness programs that offer discounts to workers who participate.

Based on documents posted on HealthCare.gov, here’s a quick look at the new regulations:

Essential Health Benefits

Insurance plans sold to individuals who buy their own coverage and to employers – except those that self-insure -- must include a core package of items and services known as “essential health benefits.” The benefits are required to cover 10 categories, among them emergency services, hospitalization and pediatric services, including oral and vision care.

The proposed rules reaffirm earlier directions from the administration that states can choose the exact package of benefits that insurers must provide, based largely on what is already offered in the most popular plans currently sold in their states.

Insurers and state regulators wanted states to have that leeway, but consumer groups wanted more prescriptive details.

"Ultimately, the goal is to establish a clear package of essential benefits," said Stephen Finan, senior director of policy American Cancer Society/Cancer Action Network. "Patients should have same set of evidence-based benefits no matter where they live."

But his group and other consumer advocates are cautiously optimistic about one of the changes in the proposed rules, a move that may expand earlier guidance from the administration on prescription drug coverage. That information, released in a bulletin last December, would have set a minimum standard of only one drug per category in a policy's "formulary." The consumer groups feared such a rule would have led to only one type of drug being covered for large categories of problems, such as depression or asthma or cancer.

The new proposed rule says that the minimum standard should be the number of drugs per category in the state’s chosen benchmark plan or one drug, whichever is greater.

Most of the plans being chosen as benchmarks by the states cover more than one drug per category, so the proposed rule sets “a significantly higher standard” that insurers will have to meet, said Caroline Pearson, a director at Avalere Health, a consulting group in Washington.

"It really ensures robust coverage, but you will have state-to-state variation," Pearson said.

Premiums And Other Cost Issues

Insurers can vary their rates based on age, tobacco use and where an applicant lives, but they cannot charge sick people higher rates than the healthy or charge women more than men.

The proposed rules say that insurers can charge tobacco users 50 percent more than non-users, but offers an exemption to those who try to quit.

They also offer more definition of how insurers can increase rates as a person ages. The health law says older people cannot be charged more than three times what younger people are charged. In most states, this could result in lower rates for older residents than under current practices but higher rates for younger people.

The new rules say premium rates cannot vary by age for individuals under age 21.

But, above that age, insurers could charge slightly more for each birthday until a person hits age 63. Everyone over 63 would pay the same rate. The proposal differs from the most common way insurers now set such "age bands," which are generally in five or 10-year increments.

Karen Ignagni, the head of the industry's trade group, said the proposed rules need to insure that health coverage remains affordable. While welcoming the state flexibility, she said, "We remain concerned that many families and small businesses will be required to purchase coverage that is more costly than they have today. It also is important to recognize that the new EHB requirements will coincide with the new restrictions in age rating rules that also go into effect on January 1, 2014. Both of these provisions may incentivize young, healthy people to wait to purchase insurance until they are sick or injured, driving up costs for everyone with insurance."

The proposal also gives more flexibility to states and insurers to vary annual deductibles, co-pays and other elements of the policies -- so long as the policies’ overall coverage meets a requirement known as minimum actuarial value, or the average percentage the plan pays toward a typical consumer’s estimated annual medical costs.

Wellness Programs

The health law allows employers to provide discounts on health insurance to workers who achieve certain medical or fitness goals, including such things as weight, cholesterol level or blood pressure.

The proposed rule raises the maximum permissible reward, discount or penalty from 20 percent to 30 percent of the cost of the health coverage, and further increases the maximum reward to 50 percent for programs to reduce tobacco use.

But the proposed rules also say the programs must offer alternatives for employees whose health conditions make it "unreasonably difficult" or for whom "it is medically inadvisable" to meet the specified health-related standard.

In addition, the discounts or other rewards must be available to workers annually.

While Tuesday’s announcement was significant, the administration still has yet to issue regulations on other parts of the health law. Those areas include how new taxes on premiums and medical devices will work, and how the federal government will set up insurance markets in states that refuse to do it on their own.

The administration also has to determine how to handle the Supreme Court's decision that states can opt out of the expanded Medicaid program created by the law, and how the government will allot a reduced amount of money targeted for hospitals that care for uninsured people. Also outstanding is a final rule on how birth-control coverage will be provided to employees of religious universities and hospitals that object to it.

Staff writers Jordan Rau and Phil Galewitz contributed to this article.

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To link to the guidance on Essential Health Benefits click here.
  To link to the guidance on Wellness Programs click here.

States Given Extra Month for Health Exchange Blueprints

Bloomberg

President Barack Obama’s administration gave U.S. states one more month to decide how they plan to develop new health exchanges that will let people shop for insurance coverage.
While the states still must say by Nov. 16 if they plan to build their own marketplaces, they can now wait until Dec. 14 to submit the actual blueprint, Health and Human Services Secretary Kathleen Sebelius said in a letter sent yesterday to state governors. States that want to create a partnership with the federal government to manage the exchanges have until Feb. 15 to outline the duties they’ll handle.

All but 13 governors had taken a wait-and-see approach on the exchanges, which are supposed to be running by 2014 as one of the requirements in Obama’s overhaul of the health-care system. Governors who miss the deadline will turn over to the federal government most authority to decide which insurers can sell plans to their state residents.

“The administration is committed to providing significant flexibility for building a marketplace that best meets your state’s needs,” Sebelius said in the letter.

Thirty-four states have accepted at least two grants from the federal government to start planning an exchange, according to Sebelius’s department. That puts about 20 states in a position to build an exchange or partner with the federal government on one, in addition to the 13, plus the District of Columbia, who have already said they’ll run their own.

The federal exchange will also control enrollment of low- income people into state Medicaid programs.

To link to the Bloomberg artcile click here

Federal government to run Missouri’s health insurance exchange

Samantha Liss
Reporter- St. Louis Business Journal

The federal government will run a health insurance exchange in Missouri.

The state of Missouri will not run an online state-based insurance exchange that is supposed to go live in 2014, St. Louis Public Radio reports.

On Tuesday, voters approved Proposition E, which limits the governor from setting up an exchange by requiring legislature approval. Without approval, Gov. Jay Nixon announced he will tell the federal government Missouri will not set up its own exchange. Nov. 16 is the deadline for states to report to the feds how they'll run the exchange.

Unlike Missouri, Illinois is one step closer to setting up a state-based health insurance exchange, a provision of the 2010 Affordable Care Act (ACA), which will allow small businesses and individuals to purchase health insurance and compare prices online. Crain’s reports that the state of Illinois is reviewing five bids to set up the exchange.

To link directly to the article click here

Obama victory secures health care reform law, but questions remain

Jerry Giesel

President Barack Obama's re-election Tuesday night assures continued implementation of the health care reform law, but many details remain unresolved.


And President Obama's defeat of Republican challenger Mitt Romney, who had pledged to repeal the Patient Protection and Affordable Care Act, won't end continued legal challenges to the law.The most immediate impact of President Obama's re-election, observers say, will be a speedup of health care reform law regulations that employers will need to comply with the law.There will be an avalanche of regulations,” said Gretchen Young, senior vice president-health policy with the ERISA Industry Committee in Washington.“They (regulators) have to get it done. It is crucial,” said Chantel Sheaks, a principal with Buck Consultants L.L.C. in Washington.

Penalty questions

For example, employers have been waiting for more than a year and a half for the U.S. Department of the Treasury to release guidance on a reform law provision of critical importance to nearly every company: the imposition of a stiff $2,000-per-full-time-employee penalty on employers that do not offer qualified coverage to employees. Read literally, the law says the penalty applies even if just one full-time employee is not offered coverage. Last year, the Treasury Department said it “contemplated” in forthcoming regulations to make clear that the penalty would not apply if an employer offered coverage to “substantially” all full-time employees.But 18 months later, employers still are waiting for that guidance.Many other health care reform provisions have yet to be fully addressed.

For example, employers are waiting for Treasury to make clear if a provision that imposes a penalty if coverage is not “affordable” applies to individual and family coverage. Earlier, Treasury Department guidance said if the share of the premium paid by an employee for family coverage was at least 9.5% of his or her income and the employee was eligible for and used a reform law subsidy to buy coverage in a public health insurance exchange, the employer would be liable for a $3,000 penalty for that employee. Earlier this year, however, the Treasury Department said it was reconsidering that earlier rule to examine whether the premium should also apply if the premium for individual coverage was not affordable.
Transitional reinsurance program
In addition, employers are waiting for the U.S. Department of Health and Human Services to inform them how much they will have to pay to fund a $25 billion three-year federal reinsurance program that will partially reimburse commercial insurers writing coverage for individuals with high health care costs. Consultants estimate that the assessment for the Transitional Reinsurance Program will be between $60 to $90 per health care plan participant, which would mean that large employers would face millions of dollars in new assessments for a three-year period starting in 2014.Aside from not knowing how much they will have to pay, regulators need to clarify many aspects of the reinsurance program, such as whether the assessment applies to participants in retiree health care plans.“We really need guidance,” Ms. Young said.

Legal challenges

And there is plenty of uncertainty on the legal front. Dozens of organizations have challenged a health care reform law regulation that will require employers, including nonprofit affiliates such as hospitals and universities of religious organizations, to extend coverage for prescription contraceptives.In addition, a suit over premium subsidies, if successful, could stymie the main intent of the health care reform law — a big reduction in the 50 million people in the United States who are uninsured.That suit, filed by Oklahoma Attorney General Scott Pruitt, challenges the legality of Internal Revenue Service regulations that say premium subsidies can be provided to eligible individuals who obtain coverage in exchanges set by the states and the federal government.The Oklahoma suit says the health care reform law makes it clear that the subsidies are available for coverage for exchanges only set up by the states. Since many states — perhaps close to half — may decide against setting up exchanges, millions of people in states where the federal government sets up exchanges because the states don't, would not be eligible for premium subsidies. “Court challenges will continue to be a thorn in the side of the administration,” Ms. Sheaks said.How federal lawmakers tinker with the law is another unknown. But with President Obama's victory Tuesday night and the Democrats retaining control of the Senate, Republicans are likely during the next congressional session to move away from trying to repeal the reform law. “There is no way the law is going to be repealed in the next two years, and Republicans know that,” Ms. Sheaks said.As a result, Republicans will be more likely in 2013 to work with Democrats on making changes to the law, including technical corrections and those that have widespread support, Ms. Sheaks said.


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