State insurance regulators are looking at updating two major sets of model rules to reflect the changes made by the Patient Protection and Affordable Care Act of 2010 (PPACA).
The regulators, members of the Regulatory Framework Task Force at the National Association of Insurance Commissioners (NAIC), are asking for comments on a draft of revisions to Model 170, the Accident and Sickness Insurance Minimum Standards Model Act and a draft of revisions to Model 171, the model regulations that go along with the model act.
The NAIC is a trade group for regulators. In most cases, it can only have a direct effect on state insurance rules in states that have created mechanisms for automatically adopting NAIC rules. But NAIC models can have a major influence on the rules states set for themselves.
The accident and sickness models apply to health products other than major medical coverage, or products “excepted” from the Health Insurance Portability and Accountability Act of 1996 (HIPAA) rules that apply to major medical coverage.
Drafters and implementers of PPACA have taken a similar approach to excepting non-medical health products from PPACA.
The current text of the NAIC’s model act states that the act does not apply to Medicare supplement insurance policies, long-term care insurance (LTCI) policies and some other types of non-medical health policies. The model does apply to hospital indemnity coverage, disability income protection coverage, accident-only coverage, specified disease coverage, specified accident coverage and limited-benefit health coverage, according to the text.
Many agents and brokers who sell non-medical health products have been happy about how stable those markets have been in comparison with the major medical market.
Discussions about the NAIC models could affect the rules for those products.
See also: 5 battles over the PPACA-free zone
For a look at some of the areas of disagreement between commenters at America’s Health Insurance Plans (AHIP), a group that represents health insurers, and the people appointed by the NAIC to represent consumers’ interests in NAIC proceedings, read on.
1. Insurers want the changes to be as small as necessary to reflect the PPACA changes. The consumer reps disagree.
Cindy Goff, an AHIP commenter, has written to say AHIP would like to preserve the usefulness of the model law by making the kinds of minimal changes given in the first draft.
The consumer reps say significant revisions are required. “Much has happened in the insurance world since the model act and model regulation were last updated in 1999,” the reps say.
2. Insurers want the revised models to apply to all individual and group benefits that fall outside the scope of HIPAA. Consumer reps want the NAIC to consider doing something else about disability insurance.
The stated purpose of the model act does not mention disability insurance, and disability insurance is subject to detailed standards put out by the Interstate Insurance Product Regulation Commission (IIPRC), the reps say.
The IIPRC standards are much more detailed than the model act and model regulation standards, the reps say.
The reps want to either put more detailed standards in the current models, or else put disability insurance in another model.
3. Insurers want to keep the phrase “limited benefit health coverage” in the models. The consumer reps want the NAIC to cut it out.
Goff says the current definition gives state regulators the flexibility they need to recognize new and innovative products.
The consumer reps say that, under PPACA, it’s unclear what the term refers to. They note that PPACA does not refer to limited benefits coverage.
The model act and model regulation should be referring to excepted benefits, not limited-benefit products, the reps say.