Self-insurance draws new converts among small employers

Originally posted by Richard Stolz on March20. 2015 on ebn.benefitnews.com.

An Affordable Care Act-fueled surge in self-insurance for medical benefits among smaller employers appears to have leveled off somewhat, but not due to any disenchantment with the cost-management strategy.

Rather, many that were open to giving self-insurance a try already have done so, observers suggest. Yet a steady flow of hold-outs continues to make the switch, and employers who already are self-insured are gaining the benefit of more competition among stop-loss carriers for their business.

“Brokers are continuing to ask us what we can do to help these groups,” says Rob Melillo, who is responsible for the medical stop-loss line at Guardian, a recent entrant to that market. Guardian began rolling out the coverage at the end of 2013, and has found a strong market among the small to mid-sized employers that represent its primary market for insurance sold to employers.

In 2013, 16% of employees at companies with fewer than 200 workers were covered under a self-insured plan, up from 13% two years prior, according to the Kaiser Family Foundation.

Regulators ill at ease

Meanwhile, state insurance regulators have been expressing more and more concern about smaller employers moving to the self-insurance model, and are working to persuade their legislatures to adopt laws that would impede the trend. California already has done so, and several other states may be close behind.

The growing acceptance of self-insurance among smaller employers is not just about changes wrought by the ACA; the steady increases in health benefit costs are the underlying motivator.

“You’re going to have to make a serious change if you’re going to impact the health care spend,” observes Melillo. And switching from a fully insured model to self-insurance represents “serious change.”

Whereas employers with fewer than 500 employees and dependents were once generally deemed unsuitable for self-insurance, some stop-loss carriers today think nothing of signing up employers with 50 or fewer employees.

Presumably they can do so profitably. Employers suited to self-insurance anticipate savings in the 5% to 10% range, or more, industry participants say.

Part of that stems from savings from avoiding ACA-imposed taxes on fully insured plans. Beyond that, however, is the promise of employers gaining a better vantage point to identify and address specific problem spots in their plans.

The adage, “You can’t manage what you can’t measure,” applies perfectly to this arena, according to Melillo. “When you self-insure, you have access to every claim that’s submitted to your group, every aspirin, every complicated surgery. As that data grows, you can benchmark against industry norms,” and try to figure what’s causing any aberrations.

Although carriers offering fully insured plans typically also try to help employers in this regard, the transparency just isn’t the same, Melillo maintains.

Drilling down

He recalls once, when he was a broker, “drilling down” into some claims data concerning a client’s emergency room utilization. In doing so he discovered that a walk-in clinic used by many employees would code all services rendered after 5:00 p.m. as emergency room treatment, even though nothing had changed but the time of day.

With that insight the employer was able to adjust its plan design to preclude coverage for services at that clinic after 5:00 p.m.

The other fundamental draw of self-insurance is the fact that you are no longer “at the mercy of the carrier for what they will charge for risk pooling,” notes Michael Tesoriero, a consultant with Segal Consulting. That is, the claims experience of an employer that’s too small to be individually underwritten is aggregated with claims of other small employers, many of whose claims track records may be worse, leading to higher than necessary premiums.

Self-insuring also allows employers to:

  • Avoid being subject to state insurance regulation and mandates of benefits not otherwise required by federal law, such as fertility treatments required in some states;
  • Customize (within the broader confines of the ACA) the health plan design; and
  • Control funds reserved to pay health claims, and benefit – initially, last least – from the cash flow benefit of the lag between the accrual of claims, and having to pay them.

Role of community rating

In the ACA world, perhaps the biggest factor that has spurred greater interest in self-insurance among smaller employers is the community rating requirement, which virtually eliminates insurers’ ability to offer preferential rates to employees with healthy workforces.

On the flip side, however, some smaller employers with aging workforces and/or particularly bad claims experience might find community rating works to their advantage. But going that route might sap an employer’s motivation to take aggressive steps to lower employee claims through a focus on what Brian Ball, national vice president, employee benefit strategies and solutions for USI Insurance Services, calls “population health.”

Still, self-insuring isn’t for everyone. One consideration is the cost of stop-loss insurance, as well as the employer’s appetite for claims risk. For smaller employers, an important variable in the cost of stop-loss coverage is their degree of “credibility,” Ball says. That refers to the degree to which a stop-loss carrier will base premiums on the employer’s experience. Often only a portion of the premium will be based on experience, and the rest on a standard formula.

An employer with about 300-350 employees and dependents covered by the plan might be “50%-60% credible,” Ball says. It might take about 500 covered individuals before a stop-loss carrier would deem an employer group “fully credible,” according to Segal Consulting’s Tesoriero.

The larger the group, the less the potential for a year of unusually high claims making the stop-loss policy a losing proposition for the carrier. Stop-loss carriers also, of course, base premiums on the level of the “specific” limit (i.e. the dollar threshold for the stop-loss to begin absorbing claims for a particular individual over the course of year.

Naturally, the lower the threshold, the higher the premium.

Sending the wrong message

In addition, however, when specific low stop-loss thresholds are particularly low, the message to stop-loss carriers is that the employer isn’t fully buying into the self-insurance concept, and therefore may be less motivated to manage claims aggressively. That conclusion would tend to raise the premium as well.

From the employer’s perspective, the level of exposure must not be a cause of sleepless nights. Even smaller employers with balance sheets strong enough to navigate occasional claim spikes that fall below the specific limit have to consider the prospect of a truly horrendous year. That’s where setting the aggregate stop-loss level comes in.

Stop-loss carriers review the employer’s claims history, and produce a number that represents its estimate of total claims for the year. The aggregate limit, also called the attachment point, is set as a percentage (125% is typical) of expected total claims.

There can be some haggling on the estimate of total claims; the lower the number, the greater the probability of being protected by the aggregate limit. However, convincing a stop-loss carrier to make a significant adjustment is a rare event.

If the prospect of being on the hook for claims exceeding the norm by 25% (i.e. 125% of the total) is too daunting, “if you want to pay a little more [in premium], you can take it down to 120% or 115%,” says Ball.

Cash flow considerations

Another common source of employer anxiety is managing corporate cash flow when monthly claims bounce up and down dramatically. But recently a level-funding option has become more widely available. Under that arrangement the total expected claims for the year are divided into 12 equal monthly installments, with a reconciliation of variances at the end.

Several other relatively new bells and whistles are giving employers more options than before. Many state insurance regulators, meanwhile, are not thrilled by the growing popularity of self-insurance among smaller employers.

For one, they don’t like the fact that by self-insuring, employers are evading state-mandated benefits.

Another state concern is adverse selection – that employers with healthy employees (and thus lower costs) that self-insure leave carriers offering fully insured plans with a disproportionate share of high-claims policyholders, driving premiums higher and higher.

A third concern is that some self-insured arrangements with very low stop-loss limits are the functional equivalent of insured plans, and therefore are abusing the system by avoiding state regulation.

Last year California governor Jerry Brown signed a measure setting minimum specific deductibles for employers with under 100 employees at $35,000 (rising to $40,000 in 2016). Minimums are also set for aggregate stop loss, based on a formula.

The law contained several other provisions, including a ban on “lasering,” the carrier practice of demanding higher deductible levels or higher premiums for individuals expected to have unusually high claims due to history or a known ongoing critical illness.

Other states, including Rhode Island and Minnesota, are considering similar measures or have adopted less stringent ones.

Ball is not particularly nervous about the prospect of states’ stamping out self-insuring for smaller employers. In his view, unfolding market dynamics “can only improve” the appeal of self-funding.

New stop-loss options

Stop-loss carriers have been becoming more creative in recent times, according to Segal Consulting consultant Michael Tesoriero. The following are some examples he offers:

  • Caps on future rates. In some competitive situations carriers agree to limit rate increases for the next one or more years. This relieves employers of the risk of a big jump in rates following a year of high claims, when stop-loss thresholds were exceeded significantly.
  • Dividend-eligible policies. Sometimes offered to established clients, under these arrangements employers with below-than-expected claims can receive a slice of the savings the stop-loss carrier enjoys.
  • No new “laser” contracts. Often, stop-loss carriers, based on claims experience, will require an employer to accept a higher deductible, or pay a higher premium, for employees who are expected to have substantial claims over the course of the year, perhaps due to a chronic condition or ongoing critical illness. That is known as lasering. A “no new laser contract” is one limiting the carrier’s ability to establish new laser coverage.
  • Defined rate renewal formula. The carrier eliminates the subjective element of determining new rates at renewal. Instead, rates are adjusted based on a transparent formula linking specified premium increase percentages to the ratio of prior year claim reimbursement totals to premiums paid.

by 6d-destani

Officials Extend Deadline for Submitting Reinsurance Contribution Form

Originally posted November 15th, 2014 on www.thinkhr.com.​

Late Friday, federal officials responded to requests for an extension of the deadline for contributing entities to submit their 2014 enrollment counts in connection with Transitional Reinsurance Program contributions. The deadline has now been extended until 11:59 p.m. on December 5, 2014. The January 15, 2015 and November 15, 2015 payment deadlines remain unchanged.

by 6d-destani

CMS delays enforcement of health plan identifiers in HIPAA transactions

Originally posted by Alden Bianchi on EBN on November 6, 2014.

In a surprise move, the Centers for Medicare & Medicaid Services (CMS) announced an indefinite delay in enforcement of regulations pertaining to “health plan enumeration and use of the Health Plan Identifier (HPID) in HIPAA transactions” that would have otherwise required self-funded employer group health plans (among other “covered entities”) to take action as early as November 5, 2014.

The CMS statement reads as follows:

Statement of Enforcement Discretion regarding 45 CFR 162 Subpart E – Standard Unique Health Identifier for Health Plans

Effective Oct. 31, 2014, the CMS Office of E-Health Standards and Services (OESS), the division of the Department of Health & Human Services that is responsible for enforcement of compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) standard transactions, code sets, unique identifiers and operating rules, announces a delay, until further notice, in enforcement of 45 CFR 162, Subpart E, the regulations pertaining to health plan enumeration and use of the Health Plan Identifier (HPID) in HIPAA transactions adopted in the HPID final rule (CMS-0040-F). This enforcement delay applies to all HIPAA covered entities, including health care providers, health plans, and healthcare clearinghouses.

On Sept. 23, 2014, the National Committee on Vital and Health Statistics (NCVHS), an advisory body to HHS, recommended that HHS rectify in rulemaking that all covered entities (health plans, health care providers and clearinghouses, and their business associates) not use the HPID in the HIPAA transactions. This enforcement discretion will allow HHS to review the NCVHS’s recommendation and consider any appropriate next steps.

The CMS statement followed, but was not anticipated by, a recent series of FAQs that provided some important and welcome clarifications on how employer-sponsored group health plans might comply with the HPID requirements.

Background

Congress enacted the HIPAA administrative simplification provisions to improve the efficiency and effectiveness of the health care system. These provisions required HHS to adopt national standards for electronic health care transactions and code sets, unique health identifiers, and security. As originally enacted, HIPAA directed HHS to establish standards for assigning unique health identifiers for each individual, employer, health plan, and health care provider. The Affordable Care Act modified and expanded these requirements to include an HPID. On Sept. 5, 2012, HHS published final regulations adopting HPID enumeration standards for health plans (“enumeration” is the process of getting an HPID).

For the purposes of HPID enumeration, health plans are divided into controlling health plans (CHPs) and sub-health plans (SHPs). Large CHPs (i.e., those with more than $5 million in annual claims) would have been required to obtain HPIDs by Nov. 5, 2014. Small controlling health plans had an additional year, until November 5, 2015.

The Issue(s)

While we have no idea what led the NCVHS to recommend to CMS that it abruptly suspend the HPID rules, we can make an educated guess—two guesses, actually.

What is it that is being regulated here?

The HIPAA administrative simplification rules apply to “covered entities.” i.e., health care providers, health plans, and health care data clearing houses. Confusingly, the term health plan includes both group health insurance sponsored and sold by state-licensed insurance carriers and employer-sponsored group health plans. Once HHS began issuing regulations, it became apparent that this law was directed principally at health care providers and health insurance issuers or carriers. Employer-sponsored group health plans were an afterthought. The problem for this latter group of covered entities is determining what, exactly, is being regulated. The regulatory scheme treats an employer’s group health plan as a legally distinct entity, separate and apart from the employer/plan sponsor. This approach is, of course, at odds with the experience of most human resource managers, employees and others, who view a company’s group health plan as a product or service that is “outsourced” to a vendor. In the case of an insured plan, the vendor is the carrier; in the case of a self-funded plan, the vendor is a third-party administrator.

The idea that a group health plan may be treated as a separate legal entity is not new. The civil enforcement provisions of the Employee Retirement Income Security Act of 1974 (ERISA) permit an employee benefit plan (which includes most group health plans) to be sued in its own name. (ERISA § 502(d) is captioned, “Status of employee benefit plan as entity.”) The approach taken under HIPAA merely extends this concept. But what exactly is an employee benefit plan? In a case decided in 2000, the Supreme Court gave us an answer, saying:

“One is thus left to the common understanding of the word ‘plan’ as referring to a scheme decided upon in advance . . . Here the scheme comprises a set of rules that define the rights of a beneficiary and provide for their enforcement. Rules governing collection of premiums, definition of benefits, submission of claims, and resolution of disagreements over entitlement to services are the sorts of provisions that constitute a plan.” (Pegram v. Herdrich, 530 U.S. 211, 213 (2000).)

Thus, what HHS has done in the regulations implementing the various HIPAA administrative simplification provisions is to impose rules on a set of promises and an accompanying administrative scheme. (Is there any wonder that these rules have proved difficult to administer?) The ERISA regulatory regime neither recognizes nor easily accommodates controlling health plans (CHPs) and subhealth plans (SHPs). The FAQs referred to above attempted to address this problem by permitting plan sponsors to apply for one HPID for each ERISA plan even if a number of separate benefit plan components (e.g., medical, Rx, dental, and vision) are combined in a wrap plan. It left in place a larger, existential problem, however: It’s one thing to regulate a covered entity that is a large, integrated health care system; it’s quite another to regulate a set of promises. The delay in the HPID enumeration rules announced in the statement set out above appears to us to be a tacit admission of this fact.

Why not permit a TPA to handle the HPID application process?

One of the baffling features of the recently suspended HPID rules is CMS’ rigid insistence on having the employer, in its capacity as group health plan sponsor, file for its own HPID. It was only very recently that CMS relented and allowed the employer to delegate the task of applying for an HPID for a self-funded plan to its third party administrator. By cutting third party administrators out of the HPID enumeration process, the regulators invited confusion. The reticence on CMS’ part to permit assistance by third parties can be traced to another structural anomaly. While HIPAA views TPAs in a supporting role (i.e., business associates), in the real world of self-funded group health plan administration, TPAs function for the most part autonomously. (To be fair to CMS, complexity multiplies quickly when, as is often the case, a TPA is also a licensed carrier that is providing administrative-services-only, begging the question: Are transmissions being made as a carrier or third party administrator?)

HIPAA Compliance

That the HPID enumeration rules have been delayed does not mean that employers which sponsor self-funded plans have nothing to do. The HIPAA privacy rule imposes on covered entities a series of requirements that must be adhered to. These include the following:

Privacy Policies and Procedures: A covered entity must adopt written privacy policies and procedures that are consistent with the privacy rule.

Privacy Personnel: A covered entity must designate a privacy official responsible for developing and implementing its privacy policies and procedures, and a contact person or contact office responsible for receiving complaints and providing individuals with information on the covered entity’s privacy practices.

Workforce Training and Management: Workforce members include employees, volunteers, and trainees, and may also include other persons whose conduct is under the direct control of the covered entity (whether or not they are paid by the entity). A covered entity must train all workforce members on its privacy policies and procedures, as necessary and appropriate for them to carry out their functions. A covered entity must also have and apply appropriate sanctions against workforce members who violate its privacy policies and procedures or the Privacy Rule.

Mitigation: A covered entity must mitigate, to the extent practicable, any harmful effect it learns was caused by use or disclosure of protected health information by its workforce or its business associates in violation of its privacy policies and procedures or the Privacy Rule.

Data Safeguards: A covered entity must maintain reasonable and appropriate administrative, technical, and physical safeguards to prevent intentional or unintentional use or disclosure of protected health information in violation of the Privacy Rule and to limit its incidental use and disclosure pursuant to otherwise permitted or required use or disclosure.

Complaints: A covered entity must have procedures for individuals to complain about its compliance with its privacy policies and procedures and the Privacy Rule. The covered entity must explain those procedures in its privacy practices notice. Among other things, the covered entity must identify to whom individuals at the covered entity may submit complaints and advise that complaints also may be submitted to the Secretary of HHS.

Retaliation and Waiver: A covered entity may not retaliate against a person for exercising rights provided by the Privacy Rule, for assisting in an investigation by HHS or another appropriate authority, or for opposing an act or practice that the person believes in good faith violates the Privacy Rule. A covered entity may not require an individual to waive any right under the Privacy Rule as a condition for obtaining treatment, payment, and enrollment or benefits eligibility.

Documentation and Record Retention: A covered entity must maintain, until six years after the later of the date of their creation or last effective date, its privacy policies and procedures, its privacy practices notices, disposition of complaints, and other actions, activities, and designations that the Privacy Rule requires to be documented.

The HIPAA security rule requires covered entities to conduct a risk assessment, and to adopt policies and procedures governing two dozen or so security parameters.

by 6d-destani

Deadline Looms to Obtain Group Health Plan Identifiers

Originally posted October 17, 2014 by Stephen Miller on www.shrm.org.

updated 9/19/2014

Self-insured employers should take note of approaching deadlines under a Department of Health and Human Services (HHS) final rule that requires large health plans to obtain health plan identifiers (HPIDs) by Nov. 5, 2014; for small plans, the deadline is Nov. 5, 2015.

An HPID is intended to serves as a unique identifier for health plans involved in transactions subject to the Health Insurance Portability and Accountability Act (HIPAA). HIPAA defines a small health plan as one with annual receipts of $5 million or less.

Employers “are really struggling with the requirements for health plan identifiers,” said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee (ERIC), in a news release. “Regulations issued by HHS were clearly not written with self-insured group health plans in mind.”

Clarification Sought

ERIC recently polled its members, who are large employers that sponsor benefit plans for their workers, and found that the vast majority of these companies had not tried to obtain an HPID as of September 2014. The poll indicated that nearly half of the respondents (45 percent) were still waiting, with hopes that HHS would publish relevant guidance.

For those members who have attempted to obtain an HPID, 100 percent found the process to be “very difficult” or “difficult,” Young said. Common problems included the lack of guidance from HHS regarding the manner in which self-insured plans should calculate the number of plans that need an HPID.

“Many plan sponsors use a single document that includes a variety of different benefit programs and they treat all of the benefit programs as a single plan for reporting purposes under ERISA. It is unclear whether companies would need to treat each type of benefit as a separate [controlling health plan] that needs its own HPID, even if they use a single document and their benefits are treated as a single plan for ERISA purposes,” explained Young.

“It is critical that HHS act quickly to address the deficiencies in the current guidance...given the lack of guidance and difficulties using their system,” she said.

Other Self-Funded Arrangements

“While it is the insurer that is responsible to obtain an HPID on behalf of fully insured health plans, plan sponsors of fully insured health plans should be aware that an HPID may be required for other self-funded arrangements,” cautioned Tripp Vander Wal, an attorney with law firm Miller Johnson, in an online article.

Examples of these self-funded arrangements include health reimbursement arrangements (HRAs) or medical flexible spending accounts (FSAs). “The good news is that HRAs and FSAs are likely to qualify as small health plans and have an additional year to obtain an HPID,” he noted.

Update: 

In a subsequently issued set of FAQs, the Centers for Medicaid and Medicare Eligibility stated that neither health FSAs nor HSAs are required to obtain an HPID because they are “individual accounts directed by the consumer to pay health care costs.” In addition, CMS stated that whether an HRA needs an HPID depends on what it reimburses. HRAs that cover only deductibles or out-of-pocket costs do not require HPIDs; however, HRAs that pay for other costs (e.g., health insurance premiums) still need HPIDs.

Commented law firm Alston & Bird LLP in an Advisory Update, “We note that, while this guidance may appear to be welcome news for employers with only fully insured plans and health FSAs or HRAs (whose only potential HPID enumeration responsibility would be because of the health FSA or HRA), it is not consistent with HIPAA’s definition of health plan, under which both health FSAs and HRAs are health plans, as CMS has previously recognized. Employers should be able to rely on CMS’s clear statement in this guidance that FSAs and certain HRAs do not require HPIDs, but we advise caution. Given the inconsistency with previous guidance on FSAs and HRAs and the manner in which CMS has phrased the FAQ, the guidance may not create as broad an exception as it first appears.”

by 6d-destani

Open enrollment checklist for employers

Originally posted July 23, 2014 by Alan Goforth on https://www.benefitspro.com

Wrestling with the implications of the Patient Protection and Affordable Care Act could make the upcoming open enrollment period one of the most challenging in memory. Mercer, a human resources and benefits company in New York City, encourages companies to approach the fall season with a plan.

Mercer’s proposed checklist includes:

  • Consider offering a consumer-driven health plan. The momentum behind this type of plan continues to grow, with 39 percent of large of large employers offering one last year and 64 percent expected to do so within two years.
  • Communicate early and often to the newly eligible. Mercer’s research indicates that one-third of employers still need to make changes to comply with the requirement to extend coverage to all employees working 30 or more hours per week. Start communicating right away with newly eligible employees about who is eligible, why they are eligible, how eligibility was determined, what this means and what they have to now consider. Information should also be delivered to those who still remain ineligible and the options these employees may have in the public exchange arena.
  • Make voluntary benefits a big part of the message. Voluntary benefits can deliver significant value to employees and are an important element of a thoughtfully designed benefits program. They can also be used to overcome misperceptions and confusion around other benefit offerings. These offerings also can assist employees who remain ineligible for the employer-sponsored medical plan.
  • Use open enrollment as an opportunity to reinforce wellness campaigns. This is particularly important if any perceived compliance penalties are going to be introduced next year, such as increased premiums for those who do not participate in health screenings.
  • Deploy decision support and mobile technology to support the accountability theme. Participants are being asked like never before to take accountability for their health benefit decisions and cost outlays. For example, some employers are providing digital “wallet cards” for smart phones and other devices that contain benefit information and contacts needed at the point of service or anywhere else a participant needs this information and/or advice.

by 6d-destani

Final mental health parity regulations have arrived

Originally posted December 02, 2013 by Jessica Webb-Ayer on https://hr.blr.com

The Departments of Labor, Health and Human Services, and the Treasury (Departments) recently released mental health parity final regulations that implement the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

The MHPAEA applies to most employers with more than 50 employees and is designed to provide mental health parity by making sure mental health and/or substance use disorder benefits offered by health plans are equivalent to the medical/surgical benefits the plans offer.

The U.S. Congress passed the MHPAEA in October 2008, and in February 2010, the Departments jointly issued interim final regulations to aid employers and group health insurers in implementing the MHPAEA’s requirements. The new final regulations are not a whole lot different from those initial regulations and mainly just provide new clarifications on various issues.

Classification of benefits

The interim final regulations made clear that parity analysis must be conducted on a classification-by-classification basis and divided benefits into the following six classifications:

  • Inpatient, in-network;
  • Inpatient, out-of-network;
  • Outpatient, in-network;
  • Outpatient, out-of-network;
  • Emergency care; and
  • Prescription drugs.

The new final regulations retain those six classifications, but they do allow plans and issuers to divide benefits furnished on an outpatient basis into two sub-classifications:

  • Office visits (e.g., physician visits); and
  • All other outpatient items and services (e.g., outpatient surgery, facility charges for day treatment centers, laboratory charges, and other medical items).

The final regulations also provide that if a plan (or health insurance coverage) provides in-network benefits through multiple tiers of in-network providers, the plan may divide its benefits furnished on an in-network basis into sub-classifications that reflect those network tiers. However, such tiering must be based on reasonable factors and without regard to whether a provider is a mental health or substance use disorder provider or a medical/surgical provider.

Other clarifications

The mental health parity final regulations also provide other clarifications. For example, they:

  • Make minor, technical changes to the meaning of the terms “medical/surgical benefits,” “mental health benefits,” and “substance use disorder benefits;”
  • Clarify that a plan or issuer is not required to perform the parity analysis each plan year unless there is a change in plan benefit design, cost-sharing structure, or utilization that would affect a financial requirement or treatment limitation within a classification or sub-classification;
  •  Remove a specific exception for “recognized clinically appropriate standards of care” regarding nonquantitative treatment limitations (NQTLs);
  • Add two additional examples of NQTLs: (1) network tier design and (2) restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the plan or coverage;
  • Add a new section that addresses claiming an increased cost exemption under the MHPAEA;
  • Add more examples throughout the regulations to help plans and issuers understand the provisions.

Effective dates and FAQs

The mental health parity final regulations are effective January 13, 2014, and they apply to group health plans and health insurance issuers for plan years beginning on or after July 1, 2014. Until then, plans and issuers must continue to comply with the interim final regulations.

Along with the new regulations, the Departments also published another set of mental health parity FAQs, which request comments on whether and how to ensure greater transparency and compliance.

Mental Health Parity Resources

 

by 6d-destani

States to decide which plans are PPACA-compliant

Originally posted November 21, 2013 by Arthur D. Postal on https://www.lifehealthpro.com

States will be the ultimate determinant as to whether they will allow insurers to renew existing health insurances plans in 2014 even though these policies may not comply with the new Affordable Care Act, President Obama and state insurance regulators agreed at a White House meeting last night.

The meeting with several insurance commissioners and Ben Nelson, chief executive officer of the National Association of Insurance Commissioners, was held as the White House continued itsefforts to smooth the troubled political waters caused by the rocky rollout of the federal exchange that will be used by residents of 36 states to buy individual and small group policies mandated by the law.

The state regulators used the occasion to raise other issues with the president, including their relationship with federal insurance regulators given a voice in insurance regulation left to the states for 150 years. A major issue brought up with the president was the role they want to play in establishing international insurance standards.

As for the healthcare, law, under the Patient Protection and Affordable Care Act, everyone must have health insurance by March 31, 2014, or pay a penalty. However, the exchange website unveiled Oct. 1 has proved unequal to its task, and there are questions whether it will be fully up to speed by the end of the month, as promised by the administration.

The inability of people to access the website, plus the realization that the president’s commitment to allow everyone to “keep their existing policies if they like them” contradicts the law’s mandate that each insurance policy must contain certain essential benefits, has generated a major political problem for the president.

These essential benefits include providing insurance to people with pre-existing conditions, free preventative care, maternity coverage and other benefits. Also included is a requirement to provide contraceptives for women.

However, the realization that most existing policies didn’t include such benefits created a major practical problem as insurers notified thousands of affected consumers that their existing policies would be cancelled.

As the meeting was being held, CareFirst BlueCross Blue Shield, which serves Maryland, announced that it would allow more than 55,000 policyholders to retain their policies for one year even though the policies don’t contain some of the essential benefits mandated by the new law. CareFirst acted one day after the Maryland insurance commissioner said he would approve such action. Other health insurers in the state said they would also do so; others said they would not.

Other states, like Florida, said they would also allow consumers to keep their existing policies for one year. But, others, like New York, Washington and Indiana, said they would not comply. CaliforniaInsurance Department officials said they would announce their decision today.

At the meeting, the state insurance regulators emphasized their concern that different rules for different policies would be detrimental to the overall insurance marketplace and could result in higher premiums for consumers, without addressing the underlying concern of gaps in coverage. They also emphasized the importance of deferring to the states to protect consumers, and highlighted the track record of effective regulation by insurance departments across the country.

However, they acknowledged that they are just standard-setters, not policymakers and reiterated, as stated by Jim Donelon, NAIC President and Louisiana insurance commissioner, that PPACA is “the law of the land."

“Since the passage of ACA, state regulators have been working to ensure that plans are compliant with the new rules,” Donelon said at the meeting.

He said the proposed changes announced by the president in an executive order last Thursday in response to the uproar over the cancellations and the difficulty consumers are having buying policies on the federal website has creating “a level of uncertainty that we must work together to alleviate.”

Donelon made clear, however that state regulators “share the President’s goal of affordable coverage for consumers, and we will work with the insurance companies in our states to implement changes that make sense while following our mandate of consumer protection.”

Donelon attended the meeting with NAIC Chief Executive Officer Senator Ben Nelson, Connecticut Insurance Commissioner Thomas B. Leonardi, and North Carolina Insurance Commissioner Wayne Goodwin.

The group discussed practical implications of implementing the delay in enforcement as well as outstanding questions regarding what specific provisions would be impacted, and talked to reporters at length at what was accomplished at the meeting in a conference call afterwards.

Amongst the presidential aides attending the meeting was Kathleen Sebelius, secretary of the Department of Health and Human Services. Sebelius and officials of the Centers of Medicare and Medicaid Services, which oversaw development of the website, have been under intense fire because the website has failed because of the huge numbers of people who sought access to it, and because testing designed to prove it worked was not even started until a week or so before the Oct. 1 rollout.

The White House released a statement saying the state regulators had been given full authority as to whether to accept the grandfathering. According to the statement, Obama said that his executive order requires that health plans that offer such renewals provide consumers with clear information about consumer protections lacking in those plans and their options and possible tax credits through the exchanges. The statements said that Obama acknowledged that, “States have different populations with unique needs, and it is up to the insurance commissioner and health insurance companies to decide which insurance products can be offered to existing customers next year.”

Additionally, according to the White House statement, the president emphasized that he wants to hear any ideas that insurance commissioners “may have as implementation continues to ensure that Americans across the country have the information they need to get affordable, quality coverage for themselves and their families.”

 

 

by 6d-destani

Groups defend small self-insured plans

Originally posted November 14, 2013 by Allison Bell on www.benefitspro.com

Defenders of self-insured health plans testified on Capitol Hill today that the plans are tools for employers to get more control over benefits programs, not get-out-of-federal-health-regulation free cards.

The witnesses — including Robin Frick, a Madisonville, La., benefit plan administrator, who spoke on behalf of the National Association of Health Underwriters, and Michael Ferguson, the president of the Self-Insurance Institute of America, appeared at a hearing on self-insurance organized by the House Small Business Committee health subcommittee.

Some health policy watchers, including Linda Blumberg of the Urban Institute, who also testified at the hearing, have suggested that young, healthy small groups could use self-insurance simply to escape from Patient Protection and Affordable Care Act requirements, and that a flight toward self-insurance could destabilize the small-group health insurance market.

Frick told subcommittee members that most PPACA market protection rules will apply to self-insured groups as well as to insured groups.

"Further, some protections, like non-discrimination testing, already apply to all self-funded plans," Frick said, according to a written version of his remarks posted on the committee website.

The U.S. Department of Health and Human Services is giving more flexibility to insured plans in some areas, such as employee participation requirements, than to self-insured plans, Frick said.

Ferguson gave a list of some of the many PPACA rules that apply to non-grandfathered self-insured plans, including the ban on annual and lifetime benefits limits, preventive services coverage requirements, benefits summary requirements, disclosure requirements, external claim denial review requirements, limits on waiting periods, and an emergency services coverage mandate.

Many of the PPACA provisions that exempt self-insured groups, such as PPACA health insurance rate rules, are irrelevant to self-insured groups, because the self-insured plan sponsors already have an obvious incentive to try to hold down administrative costs, Ferguson said.

by 6d-destani

PPACA hasn’t killed COBRA – yet

Originally posted by Gina Binole on https://www.benefitspro.com

With full implementation of the Affordable Care Act looming – delays in the employer mandate aside – many in the HR world have been wondering whether health care reform will render COBRA obsolete.

The short answer: yes – and no.

While the new law has no direct impact to the Consolidated Omnibus Budget Reconciliation Act, the indirect effects of the Patient Protection and Affordable Care Act could eventually render COBRA meaningless.

COBRA was designed to bridge coverage for employees who lose their job, or lose health coverage through their job. This was deemed necessary because individual policies can be expensive and quite often imposed pre-existing condition exclusions.

The PPACA, however, seeks to sever the link between employment and health care. It does this by prohibiting pre-existing condition exclusions and creating state exchanges where individual coverage is supposed to be available at affordable rates.

Beginning Jan. 1, individuals who lose employer-provided coverage will have the choice of either purchasing COBRA coverage, or purchasing coverage through the exchanges. While COBRA only allows people to elect the coverage in which they were enrolled on the date they lost their job, the exchanges are meant to offer a range of options and coverage levels.

The premium subsidies that will be available to individuals with household incomes up to 400 percent of the federal poverty level also are expected to make purchasing coverage through an exchange more attractive than paying for insurance through COBRA.

But COBRA isn’t going to disappear overnight, if ever.

“Heath care reform is being marketed as a mechanism for enhancing choice in health care options. (Once Obamacare goes into full effect), the option to remain on an employer’s plan is likely to remain a choice, in addition to plans available through the exchanges,” said Iris Tilley, an Oregon-based benefits attorney. “In addition, while COBRA coverage is typically expensive, for some individuals it may remain less expensive than exchange coverage because the cost of exchange coverage correlates directly to an individual’s age, while employer coverage (and in turn COBRA coverage) reflects a broader range of ages.”

Tilley said individuals who suffer a loss of coverage are likely to weigh the plans available through the exchanges against their employer’s plan. For some, COBRA will make sense.

Moreover, employers with a qualified health plan still will be required to provide the opportunity for a person to elect COBRA coverage. Its rules will remain in force. Tilley also noted that the PPACA does not cover dental, vision, Medical Flexible Spending Accounts, Health Reimbursement Accounts or Employee Assistance Plans, which are subject to COBRA regulations.

“There is certainly a perception that the health care exchanges eliminate the need for COBRA since with the health exchanges, individuals will have access to insurance in ways they don’t today. But employers subject to COBRA today will remain subject to COBRA until such time as Congress decided to potentially do away with COBRA,” Mary Jo Davis, Ceridian’s vice president of product management said during a recent podcast.

Davis sought to clear up what she described as a few myths surrounding COBRA and PPACA. First, she said individuals assume health exchanges will be consistent across every state. But the reality is that states will have latitude to design their own coverage. Secondly, she said people are counting on the exchange premiums to be much cheaper than employer-sponsored health care coverage.

“We don’t know that. It could be more expensive,” she said.

Finally, she said people also assume that health care exchanges will be an option for all employees and consumers in 2014. But that is true only for small employers. Depending on the state, that means those with 100 employees or fewer or 50 and fewer.

Individuals also might have met their out-of-pocket deductible costs with their employer, and it would be costly for them to switch to an exchange. Another reason for COBRA to stay relevant might be that people want to stick with existing health care providers.

Other points to consider:

  • One of the qualified events that trigger the need for a COBRA notice is a dependent losing eligibility under the health plan. Now that the age for dependents to lose coverage has been extended to age 26 under PPACA, it is possible that an adult dependent can continue for an additional 36 months under COBRA or until age 29 on the employer’s health plan.
  • Under PPACA, waiting periods for coverage will be no more than 90 days. This means former employees may not need COBRA coverage for as long as in the past. However, depending on the viability and quality of health plans offered through the state exchanges, it might make more sense for a former employee to elect COBRA coverage if it looks like they will have more than a three-month gap in coverage during the year that could result in a penalty under the individual mandate.

 

 

by 6d-destani

Putting off PPACA with early plan renewals

Original article from benefitspro.com

By Allen Greenberg

Why wait?

That’s the attitude a growing number of employers are expected to adopt this year when it comes to renewing their health plans and, as a result, putting off the day when they have to deal with the many provisions of the Patient Protection and Affordable Care Act.

“It’s actually not anything new,” said Cheryl Randolph, a spokeswoman for United HealthCare Group. “Employers have always had this option.”

Of course, that’s true. But this year’s different.

With the PPACA going into full effect Jan. 1, a number of employers are expected to pull the trigger on renewals in November and December. Just how many, no one knows right now.

But UnitedHealth, Humana and Aetna, among others, are all expected to offer early renewals, health insurance brokers say.

There’s plenty of incentive for employers to renew early.

Health insurance premiums on average could rise by 40 percent under the Patient Protection and Affordable Care Act, according to a study by Milliman, the consulting firm. The study was done on behalf of Center Forward, a bipartisan organization. It focused on premiums for individual and group comprehensive medical insurance plans in Arizona, Florida, Illinois, New Jersey, Ohio and Wisconsin.

Individual premiums, on average, will increase 25 percent to 40 percent due to PPACA, the firm said, while small market group premiums could increase by 6 percent to 12 percent.

Karen Harrison, a broker with Lakewood, Colo.-based Braddock Harrison Agency, said she expected to receive renewal packages from carriers in late August and was letting her clients know now they should consider early renewals this year.

“There are pros and cons to doing this,” Harrison said.

One con? Any employer renewing early this year would not be able to move their renewal date again.

The big pro? For companies with younger, healthier employees, renewing early could limit their rate increase to 15 percent or less, according to an estimated projection Humana shared with brokers.

Whether renewing early will work as a strategy is unclear.

The Illinois Department of Insurance recently warned health insurers it wouldn't approve policies with "arbitrary" renewal dates meant to "delay compliance with the reforms." Also, Rhode Island said it wouldn't approve early renewals of health plans for small businesses.

Harrison, for one, said she didn’t think regulators would have much choice.

“So long as everyone follows the rules, I think it would be very hard” to fight this, she said.

 

by 6d-destani