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The impact of PPACA rules

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The proposed regulations governing essential benefits that must be included in health care plans sold through exchanges provides states and insurers “a high level of flexibility,” according to an analysis.

The rules were proposed by the Department of Health and Human Services (HHS) on Wednesday. The comment period on the rules closes December 26.

States or the federal government will operate the exchanges, with some states deciding not to participate as a political issue.

However, currently, the deadline for when states must select a health insurance plan to serve as a “base-benchmark” for the coverage to be offered on and off the exchanges for benefit years 2014 and 2015 is now shortly after Christmas, according to Beth Mantz-Steindecker of Washington Analysis. It was originally October 1.

The 131 pages of proposed rules are designed to carry out the mandates under  PPACA and govern the individual and small-group markets.

They go into effect in January 2014. The law also mandates that people with pre-existing conditions cannot be denied coverage.

Analysts at Washington Analysis in Washington said the essential health benefits (EHB) proposal seeks to minimize market disruption and is largely consistent with what the analysts expected and what was foreshadowed by HHS in prior directives.

“Although the rule provides few specifics with respect to the individual services that must be covered, outside of the 10 broad benefit categories outlined in the health reform law, the EBH regulation is largely benign for health insurers and is largely premised on plans that are already widely offered in state markets,” the analysts said.

“While stakeholder groups have been critical of a potential expansion of prescription coverage beyond original guidances, which was proposed today, we do not anticipate this to have a significant impact on insurers,” the analysts said.

The analysts said that HHS now estimates that 1,200 plan issuers will each offer 15 potential qualified health plans (QHPs), for a total of 18,000 potential QHPs. 

“These reforms are really at the heart of the Affordable Care Act,” said Gary Cohen, director of the Center for Consumer Information and Insurance Oversight of the Centers for Medicare and Medicaid Services at HHS.

At the same time, it is clear that the law and new rules governing sales to these markets greatly expand the potential market for both insures and agents.

According to the rule, in 2011, only 10.8 million people were enrolled in the individual insurance market, while 48.6 million lacked insurance.

Officials at American Benefits Council said the new proposals include an important clarification that the provisions of Section 2707 of the health care law, which limit the size of deductibles and set standards for out-of-pocket limits for health plans, apply only to plans in the small group market and do not apply to self-insured plans or health insurance in the large group market.

However, American Benefits Council officials said, the premium restrictions – in which premiums are prohibited from – would apply to the large group market if a state permits large employers to purchase coverage through an Exchange (which they are eligible to do beginning in 2017).

According to analysts at Washington Analysis, the new proposals expand prescription coverage for the small group and individual markets.

The analysts said that HHS had previously indicated that insurers would be required to cover at least one drug in each category and class in which the EHB-benchmark plan covered at least one drug.

The analysts said that insurers and pharmacy benefit managers supported such a policy, but patient groups and pharmaceutical lobbyists pushed for more comprehensive minimal coverage. 

In response, the analysts said, HHS has now proposed that plans must cover the greater of (1) one drug in every category and class; or (2) the same number of drugs in each category and class as the EHB-benchmark plan.

HHS does not appear to be considering the “protected class” standards found in Medicare Part D, whereby “all or substantially” all drugs in six protected classes, such as cancer and AIDS treatments, must be covered, the analysts said.

The provisions of the regulation addressing incentives for non-discriminatory wellness programs under the health care law increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan (and any related health insurance coverage) from 20 percent to 30 percent of the cost of coverage – and up to 50 percent for programs designed to prevent or reduce tobacco use, according to American Benefits Council officials.

American Benefits Council officials said the proposed rules closely follow existing guidance in effect for employer wellness programs since 2006.

Those rules establish two categories for wellness programs offered in connection with a health plan or health insurance coverage.

Janet Trautwein, CEO of the National Association of Health Underwriters (NAHU), said the proposals provide additional clarity to the requirements for serving the small business and individual markets.

“Ensuring that both business and families have access an appropriate level of affordable coverage is a key principle of NAHU members,’ she said. “We are pleased to see that HHS recognizes the states’ authority to regulate health insurance, and that they continue to address concerns with implementing and enforcing” the healthcare law.

“Health insurance agents and brokers work with their employer clients to design health plans,” Trautwein said. “Understanding the future structure and cost of benefits will greatly benefit this process so that individuals and families are able to obtain health coverage that is affordable and best suits their particular needs.”  


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