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Roe: PPACA Grandfathering Has Backfired

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The government should revise regulations that are supposed to help employers that like their plans keep their plans, according to Rep. Phil Roe.

The government should revise regulations that are supposed to help employers that like their plans keep their plans, according to Rep. Phil Roe.

Roe, R-Tenn., chairman of the House Education and the Workforce Committee health subcommittee, made that argument today at a hearing on the effects of PPACA on employer-provided health coverage.

PPACA already has started to apply many new rules, such as a ban on lifetime benefits limits and new minimum annual benefits limits, on group health plans, and the law is applying other rules, such as new benefits determination review rules, both group and individual plans.

The U.S. Department of Health and Human Services and the U.S. Labor Department have worked to develop regulations meant to free plans and policies that stay more or less the same from many of the new rules, to help President Obama keep his promise that, “If you like your plan, you will be able to keep it.”

Many had concerns about that promise, and “there was reason for concern,” Roe said.

Roe, a medical doctor, noted that 80% of small group plans and more than 34% of large group plans have lost or soon will lose grandfathered status.

“Today, even a modest change can trigger a loss of a benefit plan’s exempted status,” Roe said. “Employers are faced with an impossible decision: Pay more to keep their current coverage, buy higher-cost insurance that is subject to the law’s new mandates, or drop coverage entirely.”

Plans can make some changes, and even change carriers, but they cannot take steps such as increasing co-payment levels or raising the percentage of the premium paid by enrollees by more than 5 percentage points.

Robyn Piper, president of Piper Jordan L.L.C., San Diego, a benefits firm, said the grandfathered regulations interfere with normal annual plan evaluations and keep employers from trying cost- management strategies such as value-based design methods, which are supposed to decrease out-of-pocket costs for services that could sharply reduce overall plan costs, such as diabetes management services, and increase costs for other types of care.

If an employer does lose grandfathered status, it suddenly must cover emergency services without pre-authorization, let patients use gynecologists and pediatricians as primary care providers, and treat all emergencies as in-network care, Piper said.

The employer also must cover immunizations and preventive care without cost-sharing, and comply with the federal internal claims and external review standards, she said.

The requirements related to emergency services and primary care provider designations have not had much effect, but other new PPACA requirements have had a significant impact, Piper said.

For grandfathered plans, PPACA has increased premiums by about 1% to 4%.

Many non-grandfathered plans, such as plans that were using limited-benefit plan coverage, have experienced much bigger increases or were required to pay for care for plan enrollees who had exceed their lifetime benefits maximums, Piper said.

She reported that one employer has ended up having to pay about $35,000 per month out of its own resources to pay for an enrollee’s hemophilia medication.

“Unfortunately, tremendous relief was not available,” Piper said. “Financial burdens have been placed on employers, but we have not recognized an increase in resources to reduce these burdens…. In many instances, employers finding the greatest ease with compliance are those who offered the least generous plans.”