As predicted, the Department of Health and Human Services (HHS) recently released new regulations to further implement the Patient Protection and Affordable Care Act (PPACA) last week—several weeks after President Obama was re-elected. The three proposed rules addressed:
- Prohibitions against health insurance companies from discriminating against individuals because of a pre-existing or chronic condition
- policies and standards for coverage of essential health benefits
- expanding employment-based wellness programs to promote health and help control health care spending
The comment period on the proposed regulations ends Dec. 26.
Under PPACA, Americans who are not covered through employers will be able to comparison shop for health insurance in online markets, also known as health insurance exchanges, designed to mimic the shopping experience of popular travel sites. These exchanges will be run by state governments, except in states that elect to leave the job to the federal government or to partner with Washington.
More than 15 states, mostly with Republican governors, have said they will not operate an exchange. Some governors have complained the federal government has put too many requirements on the exchanges.
Essential Health Benefits
The regulations define what “essential health benefits” must be offered to most Americans. The rules lay out 10 broad categories of essential health benefits, but allow each state to specify the benefits within those categories, at least for 2014 and 2015, reported the New York Times. Thus, the required benefits will vary from state to state, contrary to what many members of Congress had assumed when the law was adopted.
The 10 areas include:
- Ambulatory patient services,
- emergency services,
- hospitalization,
- maternity and newborn care,
- mental health and substance use disorder services, including behavioral health treatment,
- prescription drugs,
- rehabilitative services and devices,
- laboratory services,
- preventive and wellness services and chronic disease management and
- pediatric services, including oral and vision care.
Most states are defining essential benefits to be those provided by the largest health plan in the state’s small-group insurance market. However, to comply with the law, federal officials said, insurers must provide certain additional benefits, including dental care and vision services for children, treatment of mental health and drug abuse problems, and “habilitative services” for people with conditions like autism or cerebral palsy.
The proposed rules go beyond informal guidance issued by the administration last December, most notably by requiring more comprehensive coverage of prescription drugs. Administration officials originally suggested that insurers would have to cover at least one drug in each therapeutic class. Since most states’ benchmark plans include more than one drug per category, insurers must now meet “a significantly higher standard,” Caroline Pearson, a director at Avalere Health, told Kaiser Health News. “It really ensures robust coverage, but you will have state-to-state variation.” The new rules will, in many states, require insurers to cover two or more drugs in each class.
Although HHS previously suggested it would propose a single-drug option, pharmaceutical companies and patient advocacy groups lobbied against that idea. As a result, insurers will have to cover far more drugs than they hoped, reported FierceHealthPayer. The new policy “will significantly broaden access to branded pharmaceuticals for patients who buy their insurance on the exchange,” Avalere Health CEO Dan Mendelson told Bloomberg. It will “make exchange offerings more consistent with employer offerings,” he said, adding that costs for plans sold on exchanges also may increase.
Stephen E. Finan, a health economist at the lobbying arm of the American Cancer Society, said, “The proposed rule is an improvement over the bulletin issued last year, but still does not guarantee that cancer patients will have access to all the major cancer drugs they need.”
“By leaving the decision up to the states of which drugs insurance plans must cover, we fear many patients, particularly those with complex medical conditions, may not have the coverage they need,” said Carl Schmid, deputy executive director of the AIDS Institute, to the Los Angeles Times.
Insurance companies are rushing to devise health benefit plans that comply with the federal standards. Starting in October, people can enroll in the new plans, for coverage that begins on Jan. 1, 2014.
Under the rules, insurers cannot deny coverage or charge higher premiums to people because they are sick or have been ill. They also cannot charge women more than men, as many now do. The rules limit insurers’ ability to charge higher premiums based on age. Under the rules, the rate for a 63-year-old could not be more than three times the rate for a 21-year-old. Many states now allow ratios of five to one or more, the administration said.
The White House said it wanted to “minimize disruption of rates in the current market.” But the administration decided not to allow a transition to the new age-rating standards, and insurers said that premiums could increase substantially for young adults.
The rules also give employers new freedom to reward employees who participate in workplace wellness programs intended to help them lower blood pressure, lose weight or reduce cholesterol levels. The maximum permissible reward would be increased to 30 percent of the cost of coverage, from the current 20 percent. Rewards could amount to several thousand dollars a year, officials said, because total premiums in employer-sponsored health plans now average more than $5,600 a year for individual coverage and nearly $16,000 for family coverage.
The rules would further increase the maximum reward to 50 percent for wellness programs intended to prevent or reduce tobacco use. The law permits insurers to set their premiums for tobacco users 1.5 times higher than those for non-smokers. But insurers wouldn’t be allowed to impose the surcharge on smokers enrolled in smoking-cessation programs. HHS also proposed rules to ensure that individuals are protected from unfair underwriting practices that could otherwise reduce benefits based on health status.
The rules include several provisions to prevent discrimination against employees. Employers must, for example, allow workers to qualify for rewards in other ways if it would be “unreasonably difficult” for them to meet a particular standard. For example, if an employee does not meet a standard for cholesterol, the employee might qualify for a reward by following a nurse’s recommendations for diet and exercise.
The new law seeks to protect consumers by limiting what they must pay for health care before insurers begin to pay. In the small-group market, these deductibles are limited to $2,000 for individuals and $4,000 for family coverage. However, the administration said that insurers could charge higher deductibles, if necessary, to hold down the overall value and cost of a plan, reflected in the premiums.
The rule also lays out a complex formula to help consumers figure out how much each plan (labeled a little like Olympic medals) will cover in medical bills. Generally, bronze plans will cover 60 percent of costs, silver plans 70 percent, gold plans 80 percent and platinum plans 90 percent.
“Cindy Mann, the top Medicaid official at HHS, said many of the new requirements for essential benefits would apply to private plans that insure low-income people on Medicaid.”
“Gary Cohen, who oversees insurance regulations at the Department of Health and Human Services, said the administration did not believe this was necessary to attract younger consumers, who will have access to a lower-priced health plan to cover catastrophic illness and also may qualify for new subsidies to offset their premiums.
The administration adjusted several rules to accommodate industry concerns, including allowing insurance companies to institute higher deductibles in plans they sell to small businesses and setting enrollment periods to prevent consumers from signing up for insurance only when they get sick.”
Karen M. Ignagni, the president of America’s Health Insurance Plans, “said the White House needed to focus on the affordability of coverage for consumers and employers.” In the 2008 campaign, Mr. Obama said he would lower annual premiums by $2,500 per family by the end of his first term. “But after a quick look at the proposed rules on Tuesday, Ms. Ignagni said she was concerned that ‘many families and small businesses will be required to purchase coverage that is more costly than they have today.’”