healthcare reform update leanne gassaway senior regional director – state affairs americas health...

Healthcare Reform Update

Leanne Gassaway

Senior Regional Director – State Affairs

America’s Health Insurance Plans

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Outline of Presentation:

I. Overview of Implementation ProcessII. Immediate/Near Term Reforms (2010 – 2011)III. Longer-Term Reforms (2014+)IV. Purchasing Incentives (2014+)V. Reforms on Products (CLASS, Dental, & Medigap)VI. Reform Financing

AHIP-All Rights Reserved: © AHIP 2010

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Federal Regulatory Process HHS to develop regulations and guidance in cooperation with DOL and

Treasury

NAIC directed to provide standards/definitions for some provisions (e.g., MLRs)

NAIC – http://www.naic.org

Key federal agency websites: DOL - http://www.dol.gov/ebsa/healthreform/ HHS - http://www.healthreform.gov/ White House - http://www.whitehouse.gov/healthreform

AHIP – All Rights Reserved: © AHIP 2010

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Federal Regulatory Guidance/Regulations


Topic Date Issued in Federal Register

Comment Deadline Effective Date

MLR RFI April 14, 2010 May 14, 2010 n/a

Premium Review RFI April 14, 2010 May 14, 2010 n/a

Internet Portal IFR May 5, 2010 June 4, 2010 May 10, 2010

Early Retiree Reinsurance IFR May 5, 2010 June 4, 2010 June 1, 2010

Dependent Coverage to 26 IFR May 13, 2010 August 11, 2010 July 12, 2010

Grandfathered Plan IRF June 17, 2010 August 16, 2010 June 14, 2010

Omnibus Market Reform IFR* June 28, 2010 August 27, 2010 August 27, 2010

Preventive Care Benefits IFR July 19, 2010 September 12, 2010 September 12, 2010

*The Omnibus Market Reform IFR includes guidance on the following PPACA provisions: (a) no pre‐existing condition exclusions for children under 19, (b) restrictions on rescissions, (c) prohibition on limitations on lifetime and

annual dollar maximums, and (d) other patient protections.

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Federal Regulatory Guidance/Regulations (Cont.)


Topic Date Issued in Federal Register

Comment Deadline Effective Date

Pre-Existing Condition Insurance Plan (PCIP) IFR July 30, 2010 September 29, 2010 September 29, 2010

Exchanges RFI August 3, 2010 October 1, 2010 October 1, 2010

Premium Rate Review (2010) TBA

“Restricted” Annual Limit Waiver* (2010) TBA

Internal/External Appeals IFR July 23, 2010 September 22, 2010 September 22, 2010

Nondiscrimination in Favor of Highly-Compensated Individuals (2010)

TBA

MLRs (2011) TBA

Uniform Coverage Documents/Standard Definitions (2011/2012)

TBA

* The “restricted” annual dollar limit regulations allow the HHS Secretary to develop an application and waiver process for limited benefit plans (so called “mini-med” plans).

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• Within 90 days of enactment, the Secretary and the states must administer a pool for high risk individuals until the establishment of the Exchange in 2014 $5 billion in appropriated funding available to carry out this provision

• Pool coverage must abide by the following requirements: Actuarial value of 65% Deductible levels and out-of-pocket caps that do not exceed those levels

allowed for a HDHP-HSA Abide by 2014 premium variation restrictions (geography, family size, and

tobacco use (1.5:1)), but allows a 4:1 age band• Individuals are eligible for high risk pool coverage if they have preexisting conditions, as

determined by the Secretary, and have not had creditable coverage for the six months prior to applying for coverage with the pool

• Health plans and employers will be penalized for incentivizing enrollees to drop coverage and enroll in the high risk pool or if the premium for prior coverage exceeds the premium level required by the pool

National High Risk Pool


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WA

OR

CA

NV UT

ID

MTND

WY

AZNM

CO

SD

NE

KS

OK

TX

AK

LA

AR

MO

IA

MN

FL

MSAL

GA

WI

IL

MI

IN OH

KY

WV

VA

NCTN

SC

ME

PA

NY

MD

DENJ

CTRI

VT

MA

NH

Administrative Services Agreement Only


States Opting to ParticipateStates Opting Not to Participate

State Implementation of National High Risk Pool Program

HI

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Early Retiree Reinsurance• 90 days after enactment, Secretary establishes a temporary reinsurance program

to reimburse employment-based plans for the cost of health benefits to retirees (and to eligible spouses, surviving spouses and dependents) $5 billion appropriated to carry out this section

• Program ends on January 1, 2014• Eligible employers must have coverage offering that includes demonstration

programs that generate cost savings for chronic and high-cost conditions• Reinsurance amounts apply only to claims for individuals between ages 55 and 64

who are not active workers or dependents of active workers and are not Medicare eligible

• Secretary reimburses employers for 80% of the portion those costs that are between $15,000 and $90,000 annually adjusted by medical inflation (CPI)


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Internet Portal• By July 1, 2010, the Secretary is required to create an Internet Portal to

facilitate consumer and small employer purchase of coverage• Portal shall make information available about different coverage

options including access to public programs, high risk pools and private market coverage options

• No later than 60 days after enactment, the Secretary shall develop a standardized format for presentation of coverage options and include information on the percentage of total premium revenue expended on nonclinical costs

• Ongoing efforts by plans and HHS to upload accurate information on carriers and products available on:

www.healthcare.gov AHIP – All Rights Reserved: © AHIP 2010

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• Upon enactment (March 23, 2010), the HHS Secretary and the states have the authority to review “unreasonable” premium increases beginning with the 2010 plan year The term “unreasonable increases” has yet to be defined

• $250 million is provided to fund grants over a five-year period (beginning in FY2010) to assist states with the review and, if appropriate under state law, the approval of rate increases and to establish medical data reimbursement centers Medical Reimbursement Data Centers are established to develop fee

schedules and other database tools that fairly and accurately reflect market rates for medical services accounting for geographic variation

• Health plans must submit a justification for an unreasonable premium increase prior to the implementation of the increase

• Beginning in 2014, the Secretary and the states will monitor premium increases for coverage offered inside and outside the Exchange.

Federal Guidelines for Reasonableness of Rate Process


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State Responses to Phase 1 Rate Review Grant Opportunity


OR

CA

NVUT

ID

MT ND

WY

AZ NM

NE

KS

OK

HI

LA

AR

MO

MN

FL

MS AL GA

IL

MI

IN

WVVA

NCTN

SC

PA

NY

MD

NJCT

RI

MANH

DC

WAVT

OHCO

AK

TX

SD

IA

WI

DE

ME

KY

States Applying for a Federal Rate Review Grant

States Opting Not to Apply for Federal Rate Review Grant

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Grandfathered Plans• “Grandfathered Plans” are group health plans or group or individual health insurance coverage in which an individual was enrolled on March 23, 2010.

• PPACA allows for the addition of family members and employees tograndfathered coverage without impacting the plan’s special status,but does not provide guidance regarding other changes

• Grandfathered plans are exempt from many of the PPACA near-term(2010) and longer-term (2014) reforms


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Grandfathered Plans – Proposed RulesNear Term Reforms (2010) that APPLY to Grandfathered Plans:

• MLR/Reporting Requirements• Extensions of Dependent Coverage to Age 26• Restrictions on Rescissions• No Lifetime Dollar Limits• “Restricted” Annual Limits (Group Only) • No Pre-Existing Condition Exclusion for Children (Group Only)

Near Term Reforms (2010) that DO NOT Apply to Grandfathered Plans:

• Preventive Services Mandate• Emergency Service Mandate• Internal/External Appeals Requirement• Direct Access to OB/GYN• “Restricted” Annual Limits (Individual Only)• No Pre-Existing Condition exclusions for Children (Individual Only)• Access to Pediatricians• Access to Primary Care Physicians

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Grandfathered Plans – Proposed RulesLong-Term Reforms (2014) that APPLY to Grandfathered Plans:

• Prohibition on Excessive Waiting Periods• Auto-Enrollment for Large Groups• No Annual Dollar Limits (Group Only)• No Pre-Existing Condition Exclusions (Group Only)

Long-Term Reforms (2014) that DO NOT Apply to Grandfathered Plans:

• Adjusted Community Rating• Essential Benefit Package Mandate• Cancer Clinical Trials Mandate• Guarantee Issue (Individual Only)• No Pre-Existing Condition Exclusions (Individual Only)• No Annual Dollar Limits (Individual Only)• Federal Risk Corridor Program• Transitional Reinsurance Program• Risk Adjustment Program

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Grandfathered Plans – Proposed RulesChanges that May Relinquish Grandfathering Status:

• Specified Mergers/Acquisitions• Elimination of benefits• Any increase in coinsurance • Specified Changes to Annual Limits• Increases in deductibles above statutory threshold• Increases in co pays above statutory ‐threshold• Increases in OOP limit above statutory threshold• Decrease in employer contribution rate above statutory threshold

Changes that May Not Relinquish Grandfathering Status:

• Addition of family members • Addition of new employees• Modification to conform to federal/state requirements• Cessation of coverage of one or more enrollees• Premium adjustments • Voluntary compliance with PPACA• TPA changes • Early compliance with PPACA

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• Changes Definition of Pre-Existing Condition Exclusion:• “Preexisting condition exclusion means a limitation or exclusion of benefits (including a denial of coverage) based on the fact that the condition was present before the effective date of coverage (or if coverage is denied, the date of the denial) under a group health plan or group or individual health insurance coverage…whether or not any medical advice, diagnosis, care, or treatment was recommended or received before that day.” -- Citation: 26 CFR §54.9801-2; 29 CFR §2590.701-2; 45 CFR §144.103• “A preexisting condition exclusion includes any limitation or exclusion of benefits (including a denial of coverage) applicable to an individual as a result of information relating to an individual’s health status before the individual’s effective date of coverage (or if coverage is denied, the date of the denial) under a group health plan, or group or individual health insurance coverage…such as a condition identified as a result of a pre-enrollment questionnaire or physical examination given to the individual, or review of medical records relating to the pre-enrollment period.” -- Citation: 26 CFR §54.9801-2; 29 CFR §2590.701-2; 45 CFR §144.103

• Prohibits pre-existing condition exclusions for all enrollees effective January 1, 2014

• Provides an early applicability date for children under 19 (plan or policy year after September 23, 2010)

PPACA No Pre-Existing Condition Exclusion for Children (Under 19) – Proposed Rules (IFR)


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• Prohibits annual dollar limits on essential health benefits, except that “restricted” annual dollar limits for essential health benefits (to be determined by the HHS Secretary) are allowed prior to January 1, 2014.• Applies to GROUP grandfathered health plans• Does NOT apply to individual grandfathered health plans.• Provides that HHS will take into account good faith efforts to comply with a

“reasonable” interpretation of essential health benefits• Adopts a 3-year phase-in for “restricted annual limits”

• Permits annual dollar limits on benefits that are NOT essential health benefits• Prohibits lifetime dollar limits on essential health benefits

• Applies to INDIVIDUAL and GROUP grandfathered health plans• Permits lifetime dollar limits on benefits that are NOT essential health benefits• Permits exclusion of all benefits for a condition (i.e., does not consider an exclusion

to be an impermissible limit)

PPACA Annual and Lifetime Dollar Limits – Rules (IFR)


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Guarantee Availability/Guarantee Issue• Mandates that health insurance issuers accept every employer and individual that

applies for coverage. • Allows the HHS Secretary to establish open and special enrollment periods to

mitigate the potential for adverse selection.

Long-Term Reforms (2014): Underwriting and Rating Requirements

Prohibition on Pre-existing Condition Exclusions• Prohibits the imposition of pre-existing condition exclusions.

Risk Pooling• Requires health insurance issuers to consider all enrollees in all individual market

health plans (other than grandfathered plans) as a single pool.• Requires health insurance issuers to consider all enrollees in all small group health

plans (other than grandfathered plans) as a single pool.


Transitional Reinsurance/Risk Corridors/Risk Adjustment Programs• Implements various risk spreading mechanisms in individual and small group

markets

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Federal Rate Review Process• Beginning in the 2014 plan year, requires the HHS Secretary (in conjunction with

the states) to monitor premium increases of health insurance coverage offered both inside and outside the Exchange.

Long-Term Reforms (2014): Underwriting and Rating Requirements

Adjusted Community Rating• Allows for the use of the following factors:

Age (up to 3:1) Family composition Geography Tobacco use (up to 1.5:1)

• Prohibits the use of any factor(s) not specifically identified.

Note: This process will likely build on the rate review process that is developed as part of the immediate/near-term reforms.


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Long-Term (2014) Reforms: Benefit RequirementsEssential Health Benefits Package*

• Requires the Secretary to define an essential health benefits package (EHBP) that includes coverage for at least the following general categories:

ambulatory patient services;emergency services;hospitalization;maternity and newborn care;mental health/substance use disorder services;prescription drugs;rehabilitative and habilitative services and devices;laboratory services;preventive and wellness services and chronic disease management; andpediatric services, including oral and vision care.

* The EHBP will need to be defined in the context of some of the immediate reforms.

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Long-Term (2014) Reforms: Benefit Requirements

Essential Health Benefits Package*

• Coverage must fall into one of four benefit levels Bronze with an actuarial value of 60% Silver with an actuarial value of 70% Gold with an actuarial value of 80% Platinum with an actuarial value of 90%

• In addition, health plans offering coverage through an Exchange must offer a child-only policy (under 21) and may offer a catastrophic-only policy to young adults (under 30).

* The EHBP will need to be defined in the context of some of the immediate reforms.


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• Requires the HHS Secretary to issue regulations as soon as practical after enactment with respect to Exchanges.

• Requires states to establish an Exchange for the individual and small group markets no later than January 1, 2014. Defines “small group” as employers with at least one full-time employee

and no more than 100 full-time employees. State option for plan years before January 1, 2016, to define "small

group" between 1 and 50 FTEs. State option to expand access to large groups beginning in 2017.

• Federal funding is provided to create and operate state-based Exchanges by January 1, 2014.

• States exchanges must be self-sustaining beginning on January 1, 2015, by placing an assessment or user fee on participating health insurance issuers or another funding mechanism.

Exchanges


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• Within the Exchange health plans may only sell Qualified Health Benefits Plans – those plans that cover the essential health benefits package – to individuals and small groups.

• Health plans must be certified by an Exchange by meeting multiple requirements, including: specified marketing and network adequacy requirements use uniform enrollment forms Implementation of quality improvement strategies accreditation of, among other things, clinical quality

measures, utilization management, consumer access, provider credentialing, and appeals.

Exchanges (continued)


27AHIP-All Rights Reserved: © AHIP 2010

Multi-State Plans and CO-OPs

• Multi-State Plans: The Director of the Office of Personnel and Management (OPM) must contract with health plans to offer at least two multi-state qualified health plans within each state Exchange. Such plans must offer individual and small group coverage, meet all requirements with respect to a Qualified Health Benefits Plan, offer the plan in all geographic regions and in all states that have adopted adjusted community rating before the date of enactment, and provide for premium determinations based on specified rating requirements.

• CO-OPs: The HHS Secretary must distribute $6 billion in loans and grants to assist in the creation of CO-OPs in each of the states. Entities operating a CO-OP must meet all requirements of state law with respect to solvency, licensure, payments to providers, network adequacy, rate and form filing, and any applicable premium assessments. CO-OPs must meet all insurance market reforms outlined in the Patient Protection and Affordable Care Act.

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Incentives to Purchase Coverage

Personal Coverage Requirement

Requires U.S. citizens and legal residents, by 2014, to purchase coverage or face a penalty (unless otherwise exempt from the mandate).

• Examples of exemptions from penalty include individuals: who qualify because of religious conscience reasons, below the income tax filing threshold, whose period without coverage does not exceed 3 months, and whose premium contributions for the calendar year exceed 8% of

household income.


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Personal Coverage Requirement

The penalty charged for failing to maintain coverage is the greater of:

1) a flat fee of $695/year, or

2) 2.5% of income, phased in over time in the following mannerYear Penalty Amount

2014 The greater of $95 or 1% of income

2015 The greater of $325 or 2% of income

2016 The greater of $695 of 2.5% of income

2017 and thereafter The greater of $695 (+ COLA) or 2.5 % of income


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Tax Credits for Health Insurance Premiums

Provides refundable tax credits to individuals with incomes between 100 and 400% federal poverty level (FPL), as follows:

FPL Percent

Premium assistance percentage

Up to 133 2

133 – 150 3 – 4

150 – 200 4 – 6.3

200 – 250 6.3 – 8.05

250 – 300 8.05 – 9.5

300 – 400 9.5


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87%


Tax Credits for Health Insurance Cost-Sharing Obligations

Increases cost-sharing subsidies for individuals with household incomes between 100 and 400% of the federal poverty level (FPL), as follows:

FPL Percent Amount of Subsidy Percent

100 – 150 94

151 – 200 87

201 – 250 73

251 – 400 70


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Employer Responsibility Requirement

• Large employers that do not offer coverage and that have at least one full-time employee (FTE) receiving a tax credit through the Exchange must pay a penalty equal to the number of FTEs (minus 30 FTEs) for that month multiplied by 1/12 of $2,000.

• Large employers that offer coverage and that have at least one FTE receiving a tax credit through the Exchange must pay a penalty equal to the number of FTEs that are receiving the credit for that month multiplied by 1/12 of $3,000.

• Applies to employers with at least 50 employees and counts part-time employees for purposes of determining if an employer has 50 employees.


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Provisions Impacting ProductsLong Term Care• National, voluntary insurance program established, the CLASS Independence Benefit Plan, to provide community living assistance services and supports, with enrollment beginning in 2012. Features include:

Voluntary opt-out for employers/employees Premiums $123 - $240 per month Benefit not less than $50/day No underwriting No lifetime caps on benefits HIPAA benefit triggers

Dental• Pediatric dental and visions services required as a part of “essential benefits” packages that will need to be offered in the commercial market and through the Exchange beginning in 2014

These benefits will be allowed to be offered as standalone plans through the ExchangeMedigap• In 2015, calls for increased cost-sharing in Medigap plans C & F


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2010 2011 2012 2013 2014

Enactment of CLASS

ACT March 23,

2010

Enactment of CLASS

ACT March 23,

2010

Extension of National

LTC Clearinghouse funding to 2015

Extension of National

LTC Clearinghouse funding to 2015

Secretary to establish

procedures for assessment of

eligibility by January 1,

2012

Secretary to establish

procedures for assessment of

eligibility by January 1,

2012

Secretary to designate a

CLASS benefit plan by

October 1, 2012

Secretary to designate a

CLASS benefit plan by

October 1, 2012

Issuance of Annual Secretary

Reports to Congress

Beginning January 1, 2014

Issuance of Annual Secretary

Reports to Congress

Beginning January 1, 2014

•Formation of CLASS Advisory Council and development of alternative CLASS benefit plans•Establishment of CLASS Independence Fund and Formation of Board of Trustees for CLASS Independence Fund•Establishment of procedures on enrollment, disenrollment, payroll deductions•Establishment of eligibility assessment system in all states

•Formation of CLASS Advisory Council and development of alternative CLASS benefit plans•Establishment of CLASS Independence Fund and Formation of Board of Trustees for CLASS Independence Fund•Establishment of procedures on enrollment, disenrollment, payroll deductions•Establishment of eligibility assessment system in all states

Timeline for Class Act Implementation


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Financing the Coverage Expansion: Revenue Provisions• Excise tax on high-cost insurance

Beginning in 2018, imposes tax equal to 40 percent of the aggregate value of employer-sponsored health coverage that exceeds the threshold amount of $10,200 (individual policy) and $27,500 (family policy), indexed to CPI plus one percent.

Allows for threshold adjustments for retired persons over age 55 , employees engaged in “high risk professions, and instances in which firms have higher health costs due to the age or gender of the workforce.

• Annual fee on health insurance providers Beginning in 2014, imposes premium tax on health insurance sector, allocated by

market share. Increases industry liability as follows: $8 billion in 2014, $11.3 billion in each of

years 2015 and 2016, $13.9 in 2017, and $14.3 billion in 2018 (adjusted in subsequent years per premium growth).

• Delay of limitation on health FSAs under cafeteria plans Imposes $2,500 cap on contributions beginning in 2013.

• Annual fee on pharmaceutical manufacturers and importers• Excise tax on medical device manufacturers


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Thank You!

Leanne GassawaySenior Regional Director, State Affairs


healthcare reform update leanne gassaway senior regional director – state affairs americas health...

Documents

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federal regulatory process

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hhs http

dol http

high risk pool coverage

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