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CCIIO Director: Waivers a Minor Issue

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The annual maximum benefit rule waivers for limited benefit health plans have affected only 1% of U.S. residents with employer-sponsored health coverage, according to the head of an agency implementing part of the Affordable Care Act.

Steve Larsen, director of the Center for Consumer Information & Insurance Oversight (CCIIO) at the Centers for Medicare & Medicaid Services (CMS), talked about the PPACA toolkitannual benefit limit issue today at a oversight subcommittee hearing organized by the U.S. House Energy & Commerce Committee.

CMS is part of the U.S. Department of Health and Human Services (HHS), and the CCIIO has been managing implementation of many of the provisions of the Affordable Care Act that fall under the jurisdiction of HHS.

The Affordable Care Act is the legislative package that includes the Patient Protection and Affordable Care Act (PPACA).

PPACA opponents in Congress have been looking for ways to repeal, change or block implementation of the act.

The CCIIO has been forging ahead with efforts to apply many PPACA provisions, including one that would phase out health plan annual benefit limits.

Many limited-benefit plans have had waivers as low as $2,500.

Starting with policy years beginning between Sept. 23, 2010, and Sept. 22, 2011, non-grandfathered health plans are supposed to have annual benefit caps of at least $750,000. The minimum annual benefits levels will increase twice before 2014. All annual benefits are supposed to go away in 2014.

Applying the annual benefits limit rules to the limited-benefit plans immediately would have hurt their enrollees, Larsen testified, according to a written version of his testimony posted on the committee website.

PPACA critics have noted that the Obama administration has granted hundreds of annual benefit rule waivers to limited-benefit plans – including plans sponsored by organizations that lobbied for passage of PPACA.

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“To be sure, limited benefit plans are not adequate coverage and can leave consumers with unexpected medical bills in the event of hospitalization or chronic disease,” Larsen said. “We are committed to allowing Americans to keep the coverage they have and preventing disruptions in coverage. As a result, pursuant to the statutory language, CCIIO established a process where those plans with annual limits below $750,000 could apply for a 1-year waiver from the law.”

The waiver process lets employers and insurers continue offering

limited-benefit coverage if they can show that complying with the regulations would cause enrollees to experience a significant increase in premiums or decrease in access to benefits, Larsen said.

The CCIIO has been posting a list of approved annual limit waivers that includes the names of the affected companies, Larsen said.

Because of timing rules, many waiver applications arrived in December 2010, Larsen said.

As of Feb. 1, the CCIIO has approved 90% of the waiver applications, and 95% of the waivers came from job-related plans, Larsen said.

The waivers will affect only 2.4 million of the 160 million people who have employer-sponsored health coverage, or “slightly more than 1% of all covered lives in the private insurance market,” Larsen said. (The quotient of 2.4 million divided by 160 million is 1.5%, according to National Underwriter calculations.)

Larsen noted that the CCIIO started with very little data on limited-benefit plans and has just started analyzing the data it has received to determine the approach it should take in the future.

“We will proceed in a manner that minimizes market disruption and ensures Americans have health coverage,” Larsen said.