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PPACA rate, wellness and benefits proposals roll out

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The U.S. Department of Health and Human Services (HHS) is getting ready to pump three major Patient Protection and Affordable Care Act (PPACA) regulation proposals into the Federal Register.

HHS published a 131-page proposed rule implementing PPACA health insurance market and rate review rules and a 119-page proposed rule implementing the PPACA essential health benefits (EHB), actuarial value and accreditation provisions.

On the same day, HHS joined with the U.S. Treasury Department and the U.S. Labor Department to publish an 81-page proposed rule implementing PPACA group health plan wellness program provisions.

HHS also is publishing other, related documents. For example, HHS will be publishing a brief notice stating that it is going ahead with previously announced plans to put the National Committee for Quality Assurance and URAC in charge of accrediting the “qualified health plans” (QHPs) that will be eligible to participate in the PPACA health insurance exchange program.

Comments on the proposals HHS is posting by itself will be due 30 days after the official publication date. The comments on the wellness incentive regulations will be due 60 days after the publication date.


Some PPACA opponents are still fighting in Congress, in the courts, in state legislatures and in state agencies to kill PPACA or block implementation, but the U.S. Supreme Court ruled in June that Congress had the authority to pass a key PPACA provision, which would require many individuals to have a minimum level of health coverage. Voters voted President Obama back into office and expanded the Democrats’ majority in the Senate, apparently reducing Republicans’ ability to block or stall PPACA in Congress.

If PPACA takes effect on schedule and works as drafters expect, it will give individuals and small groups the ability to buy standardized coverage from QHPs through the new exchanges, or Web-based insurance supermarkets, by late 2013, with the coverage to start taking effect in 2014.

PPACA also is imposing many other new requirements, such as requirements that QHPs offer, at least, a standardized package of health benefits, or EHB package, and that QHPs provide one of four levels of coverage. A QHP’s “metal level” —platinum, gold, silver or bronze—is supposed to be based on the percentage of the actuarial value of the EHB that the plan covers.

Other PPACA provisions are supposed to take steps such as encouraging plans to make more use of wellness incentive prrograms.

The proposed regulations

In the rate review regulations, HHS officials said they want to support efforts to hold down health care costs.

Officials have included a provision for high-deductible “catastrophic plans” aimed both at individuals ages 30 and younger and at other uninsured individuals who have been certified as being exempt from the usual PPACA minimum coverage ownership mandate because they cannot afford the normal PPACA minimum level of coverage, or because they are eligible for a hardship exemption.

A catastrophic plan need not fit in with the usual metal level actuarial value requirements, and it need not have to cover the EHB package until the enrollee reaches the plan’s annual cost-sharing limit.

A catastrophic plan must cover three primary care visits a year even before the enrollee meets the deductible, but the plan can impose cost-sharing requirements on the use of the primary care visits, officials said in a preamble to the proposed regulations.

The proposed rate regulations also include a section on how to apply the PPACA “age banding” provisions, which permit plans to charge the oldest enrollees three times as much as they charge the youngest enrollees.

In the proposed wellness incentive program regulations, officials at HHS, Treasury and Labor emphasize that most PPACA wellness incentive antidiscrimination rules apply only to programs that reward employees based on performance on actual health measures, such as improvements in weight or blood pressure, and not to programs that simply encourage employees to participate in “participatory wellness” activities, such as exercise classes.

The antidiscrimination rules are meant to encourage employers to use “health contingent” wellness incentives, by spelling out the rules, not to discourage use of the incentives, officials said.

Wellness incentive rules now let health plans use incentives with a value equal to up to 20 percent of the cost of the underlying health coverage.

HHS and the other departments now want to increase the maximum value of the incentives to 30 percent of the cost of the health coverage. The maximum for a program that includes programs designed to prevent or decrease tobacco use would be 50 percent, officials said.

To qualify as nondiscriminatory, a program would have to provide reasonable alternative standards for individuals with personal physicians who stated that the usual standards were inappropriate for those individuals.

“Plans and issuers may impose standard cost sharing under the plan or coverage for medical items and services furnished in accordance with the physician’s recommendation,” officials said in the preamble.

Plans could still use old interpretations that let them target initiatives, such as initiatives aimed at workers with high blood cholesterol workers, officials said.

The departments are asking for comments on “ways to ensure that employees will not be subjected to an unreasonable ‘one-size-fits-all’ approach to designing the different means of qualifying for the reward,” officials said.

In the EHB proposals, officials talk at length about proposals for “habilitative” services, or services such as speech therapy and occupational therapy. Many insurers have covered those types of therapy in the form of rehabilitative services for individuals who have suffered disabling illnesses and accidents, but many have not covered those types of services as “habilitative” services, or services designed for people who were born without the ability to perform some or many normal functions.

Parent of children who are dealing with autism and other challenging conditions succeeded in getting Congress to include habilitative services into the PPACA EHB package. Many states have noted that they have not traditionally required insurers to cover habilitative services and are not sure how to handle those requirements.

HHS officials said they intend to propose a “transitional policy for coverage of habilitative services that would provide states with the opportunity to define these benefits if not included in the base-benchmark plan.”

HHS has asked states to pick a solid but affordable health plan to serve as a “benchmark” plan, or model for the EHB package.

“If the usual base benchmark plan a state picked was not providing coverage of habilitative services, the state may determine the services included in the habilitative services category,” HHS officials said. “We believe that this transitional policy—which provides states with additional flexibility beyond what was initially outlined in [an earlier HHS] EHB Bulletin will provide a valuable opportunity for states to lead the development of policy in this area….”

If a state doesn’t come up a definition of the habilitative services that the EHB should include, then a plan in the state must either report to HHS on its habilitative services coverage rules or else provide parity between habilitative services and rehabilitative services coverage.

Early reactions:

Karen Ignagni, president of America’s Health Insurance Plans (AHIP), said the focus should be on making health care and health insurance affordable.

“We appreciate that the proposed rules issued today seek to minimize coverage disruption and we look forward to working with the department to achieve this goal,” Ignagni said.

One challenge is that the EHB package rules and the age-banding rules could both drive up the cost of coverage for young people, and that encourage them to wait until they are already sick or hurt to buy health coverage, Ignagni said.

AHIP also wants to get Congress to help it repeal PPACA provisions that would impose big new taxes on health plans, Ignagni said.

Adding a new health plan tax would conflict with the goal of lowering the cost of coverage and expanding access, Ignagni said.

Janet Trautwein, the chief executive of the National Association of Health Underwriters (NAHU), said NAHU is still reviewing the regulations but is glad to get them.

“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 PPACA,” Trautwein said.

The Blue Cross and Blue Shield Association said it’s still reading the proposed regulations but would like to get whatever rules will be in effect as quickly as possible, given that the 2014 open enrollment season will start in less than a year.


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