beginning stages of health care reform. grandfathering health plans extension of non-discrimination...

Beginning Stages of Health Care Reform

In the Beginning…

Grandfathering Health PlansExtension of Non-Discrimination Rules100% Preventive Care ServicesProhibition of Pre-Existing Condition ExclusionLifetime and Annual LimitsRescissionsDependent Age to 26AppealsPatient Protection (PCP and ER)Rate JustificationCost Ratio RequirementEarly Retiree Reinsurance Subsidy Program

Update on 9/23 Provisions

Grandfathering Health Plans

Am I eligible?Plans in effect on March 23, 2010 will be

eligibleRisking Grandfathered StatusWhat can I do for my Plan, while also

maintaining the Plan’s grandfathered status?

Grandfathering Health Plans

Types of changes will cause a plan to lose grandfathered status

Key point: while new plans are subject to all of the health reform rule and mandates, grandfathered plans have a reduced level of compliance... At least for now

To maintain grandfathered status, the plan must provide a statement in plan materials (model notice is available) to notify participants that the plan is a grandfathered plan, and who the participant can contact for questions and complaints

Grandfathering

Cannot “significantly” cut or reduce certain conditions or diagnoses (diabetes, HIV, etc.)

Cannot decrease coinsurance levels (90% to 80%)

Cannot “significantly” increase deductibles and out-of-pocket maximums (rate of inflation + 15%)

Cannot “significantly” increase plan copaymentsGreater of $5.00 orMedical Inflation + 15%

Cannot change insurance companies (carriers)

Prohibited Plan Changes to Keep Grandfathered Plan

Decrease in employer contribution rate:Based on cost of coverage (decrease in

employer contribution by more than 5%)Based on a formula (such as hours worked, by

more than 5%)

Changes in annual limits

Prohibited Plan Changes to Keep Grandfathered Plan

Extension of Nondiscrimination Rules

Benefits cannot be based on wages:One of the five highest paid officersA shareholder that owns more than 10% in

value of the employer’s stockAmong the highest paid 25% of all employees

No discrimination on eligibility

Prohibitions of Discrimination

Provision Grandfathered Non-Grandfathered

Dependent Age 26 Required Required

Lifetime/Annual Limits Required Required

No Pre-Ex for Kids under 19

Required Required

100% Preventive Care Not Required Required

Patient Protection (PCP/ER)

Not Required Required

Rescissions Required Required

Appeals Required Required

Grandfathering: A Quick Overview

Preventive Health Care Legislation

Cost sharing cannot be applied to preventive services recommended by the U.S. Preventive Services Task Force

Applies to:All plans and all funding arrangement for:

New groupsNon-grandfathered groups renewing 9/23/2010 or

later

Preventive Health Care Legislation

Preventive Care Legislation Cost-sharing Requirements when the Recommended

Preventive Service is provided during an Office Visit

Preventive Care Services Coverage: In-Network versus Out-of-Network

Reason for Office Visit Cost-Share Allowed on Office Visit?

Primary Reason No

Not Primary Reason Yes

Type of Network Utilization Preventive Care Services Coverage

In-Network 100% Covered

Out-of-Network No coverage required: cost-sharing allowed

Patient has the following benefits: $1,000 Deductible 80/20 In-Network Coinsurance $25 copay for In-Network Office Visits

Visit #1 In-Network Provider – Dr. Greenlee Purpose: Back pain Patient ask Dr. Greenlee if he can get his flu shot while he’s there

Visit #2 In-Network Provider – Dr. Greenlee Purpose: Annual Physical

What does the patient owe for Visit #1 and Visit #2?

Scenario

Visit #1Dr. Greenlee’s office codes the visit with the

primary reason of back painPatient owes $25 copay for the office visit and

owes nothing for the flu shot

Visit #2Dr. Greenlee’s office codes the visit as a

routine preventive carePatient owes nothing

Scenario – The Answers

Visit #3Preventive Service: ColonoscopyIn-Network Outpatient Surgical CenterPolyps found and removedProvider bills one procedure: “Colonoscopy

with Polyp Removal”

How is the patient’s Colonoscopy and Polyp Removal

covered?

Scenario

Visit #3Provided the procedure is coded with the

primary reason being a screening, it will be paid as preventive and no cost-share will apply

Scenario – The Answer

Prohibition of Pre-Existing Condition Exclusions

No waiting period for members under age 19 with pre-existing conditions

No impact to Benefit Waiting Periods

Pre-existing conditions may continue to apply for adults (19+) until 2014

Applies to both, grandfathered and non-grandfathered plans

Pre-Existing Conditions

Scenario

1. Will the Pre-Existing Clause apply to Amy?2. If so, for how long?3. If and when will her Dermatologist treatment be covered?

Visit #1Amy (age 17, dependent

child of employee)Regularly sees a

Dermatologist Family had a four-month

lapse in coverageFamily is eligible for

coverage 9/1/2010

Relevant Information:PPO (renewal date:

1/1/2011)6-month Pre-Existing

Waiting Period80/20 In-Network Coverage$25 copay for In-Network

Office Visits$45 copay for SpecialistsEligible for benefits:

9/1/2010

Visit #1:The pre-existing clause will apply to Amy for

four months

At renewal, the pre-existing waiting period for members under 19 will be lifted

Amy’s dermatology treatment will be a covered benefit beginning 1/1/2011 (upon group renewal)

Scenario – The Answer

Lifetime & Annual Limits

Prohibits imposing lifetime and annual limits on the dollar value of Essential Health Benefits

Allows lifetime and annual per individual dollar limits on specific covered benefits that are not EHB

Applies to both, grandfathered and non-grandfathered plans

Lifetime and Annual Limits

Ambulatory patient servicesEmergency servicesHospitalizationMaternity and newborn careMental health and substance use disorder servicesPrescription drugsLaboratory servicesRehabilitative services and devicesPreventive and wellness services and chronic

disease managementPediatric services, including oral and vision careAny other benefit that the Secretary later

deems “essential”

What are Essential Health Benefits?

Moving Forward…

National Medical Inflation = 4 – 5%

Local Medical Trend = 10 – 12%

Changes in Health Care = 1 – 2%

Cost

Ollis & Company suggests you proceed with the following steps:Meet with your Trusted Advisor and discuss

with him/her what your goals are when it comes to employee benefits

Create a long-term business plan centered around your employee benefits plan

Look at several plan designs and funding arrangements

Be proactivePRAY!

Now What???

Grants for small employer wellness programs ($200M has been set aside)

Over the Counter drugs no longer reimbursable through FSA, HRA or HSA unless prescribed by a physician

HSA penalties for non-medical expenses increase from 10% to 20%

REMINDERS:

Wrap Up Credible Websites:

www.insurance.mo.gov www.statehealthfacts.org www.healthcare.gov

Surveys – Place for your email

Contact InformationThe Whitlock Company3271 E. Battlefield, Suite 300Springfield, MO 65804417-881-0145

Corporate Wellness ConferenceOctober 1st – O’Reilly Family Events Center (Drury)7:30 – NoonRegister Online at www.ollisco.com$35.00

Ollis & Company 2274 E. SunshineSpringfield, MO 65804417-881-8333