Category News

New Consumer Protections Start This Fall

The new Patients’ Bill of Rights regulations detail a set of protections that apply to health coverage starting on or after September 23, 2010. They are:

No Pre-Existing Condition Exclusions for Children Under Age 19. The new regulations will prohibit insurance plans from denying coverage to children based on pre-existing conditions. This ban includes both benefit limitations (e.g., an insurer or employer health plan refusing to pay for chemotherapy for a child with cancer because the child had the cancer before getting insurance) and outright coverage denials (e.g., when the insurer refuses to offer a policy for the child because of the child’s pre-existing medical condition). These protections will apply to all types of insurance except for individual policies that are “grandfathered,” and will be extended to Americans of all ages starting in 2014.

No Arbitrary Rescissions of Insurance Coverage. Right now, insurance companies are able to retroactively cancel your policy when you become sick, or if you or your employer made an unintentional mistake on your paperwork.

 Under the regulations, insurers and plans will be prohibited from rescinding coverage – for individuals or groups of people – except in cases involving fraud or an intentional misrepresentation of material facts. Insurers and plans seeking to rescind coverage must provide at least 30 days advance notice to give people time to appeal. There are no exceptions to this policy.

 No Lifetime Limits on Coverage. Millions of Americans who suffer from costly medical conditions are in danger of having their health insurance coverage vanish when the costs of their treatment hit lifetime limits. The regulation prohibits the use of lifetime limits in all health plans and insurance policies issued or renewed on or after September 23, 2010.

 Restricted Annual Dollar Limits on Coverage. Annual dollar limits on what an insurance company will pay for health care will phase out over the next three years until 2014, when the Affordable Care Act bans them for most plans. However, employers who demonstrate that current annual limits are necessary to prevent a significant loss of coverage or increase in premiums will be allowed to delay complying with these rules. Limited benefit insurance plans – which are often used by employers to provide benefits to part-time workers — are examples of insurers that might seek this kind of delay. These restricted annual dollar limits apply to all insurance plans except for individual market plans that are grandfathered.

 Protecting Your Choice of Doctors. Being able to choose and keep your doctor is a key principle of the Affordable Care Act. The new rules make clear that health plan members are free to designate any available participating physician as their primary care provider. The rules allow parents to choose any available participating pediatrician to be their children’s primary care provider. These policies apply to all individual market and group health insurance plans except those that are grandfathered.

 Removing Insurance Company Barriers to Emergency Department Services. Some insurers will only pay for health care provided by a limited number or network of providers – including emergency health care. Others require prior approval before receiving emergency care at hospitals outside of their networks. The new rules make emergency services more accessible to consumers and limit the amount of cost-sharing for emergency services received out of network.

 The rules also set requirements on how health plans should reimburse out-of-network providers. This policy applies to all individual market and group health plans except those that are grandfathered.

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Under the Patient Protection and Affordable Care Act, a non-grandfathered group health plan must adopt an improved internal claims and appeal process and follow minimum requirements for external review. On July 23, 2010, interim final regulations were issued implementing these requirements (the Interim Final Rule). The appeals process rules are effective for plan years beginning on or after September 23, 2010. Comments on the Interim Final Rule are being accepted until September 21, 2010.

Key provisions of the Interim Final Rule include information on:

  • How to comply with updated internal claims and appeals processes;
  • Determining whether a state or federal external review process applies for appeals, along with guidance for each process; and
  • Requirements for notices in connection with the appeals process.

This Legislative Brief summarizes the new Interim Final Rule. Please read below for more detailed information. For a copy of the regulations, see www.federalregister.gov/a/2010-18043.

SUMMARY OF THE INTERIM FINAL RULE

Internal Claims and Appeals Process for Group Health Plans

Health care reform requires group health plans to implement an effective internal claims and appeals process. These plans, as well as health insurance issuers providing their health insurance coverage, must follow the Department of Labor’s claims procedure rules for group health plans.[1]

In addition to the existing DOL claims procedure regulations, group health plans must follow a number of new requirements:

  1. New Definition of “Adverse Benefit Determination.” The definition of the term adverse benefit determination is found in the claims procedure regulations. It includes a denial, reduction, termination of, or failure to pay for (in whole or in part), a benefit under the plan. It includes decisions based on an individual’s eligibility to participate in the plan, a benefit not being a covered benefit, imposition of an exclusion, or a benefit being experimental or not medically necessary. Denials can include both pre- and post-service claims.

The Interim Final Rule adds rescissions of coverage to the definition of the term adverse benefit determination. A rescission is a cancellation or discontinuation of coverage that has a retroactive effect. A cancellation because of a failure to timely pay premiums for coverage is not considered a rescission.

  1. Expedited Notice for Urgent Care Claims. Under the Interim Final Rule, group health plans must notify claimants of a benefit determination involving an urgent care claim more quickly. The new deadline is as soon as possible, taking into account the medical circumstances, but not later than 24 hours after the plan gets the claim. There is an exception to the deadline if the claimant does not provide enough information to the plan. The prior rule required the notice to be given within 72 hours. The change is attributable to faster decision-making capabilities, due to electronic communication.
  2. Full and Fair Review. In addition to complying with the claims procedure regulations’ existing requirements, group health plans must follow additional rules to make sure claimants receive a full and fair review. Specifically, the plan must give the claimant any new evidence related to the claim or new rationale for a decision, free of charge. It must be provided as soon as possible and early enough before the appeal deadline to let the claimant respond.
  3. Avoiding Conflicts of Interest. Group health plans must make sure that all claims and appeals are decided in a way that avoids conflicts of interest. The decision method must be designed to ensure the independence and impartiality of the decision-makers. The decision to hire a person involved in deciding claims or appeals must not be made based on the likelihood that they will support a denial of benefits. For example, a plan cannot provide bonuses based on the number of denials made by a claims adjudicator. Also, a plan cannot hire a medical expert based on his or her reputation for outcomes in contested cases, rather than his or her professional qualifications.
  4. Notice. The Interim Final Rule provides new standards regarding notice to enrollees. Group health plans must provide notices required by the claims procedure regulations in a culturally and linguistically appropriate manner. See the section entitled “Required Notices” below for a discussion of the culturally and linguistically appropriate standards. The notices must also include the following additional content:
  • Information sufficient to identify the claim involved, including the date of service, the health care provider, the claim amount, the diagnosis code and its meaning, and the treatment code and its meaning;
  • The reason for the denial must include the denial code and its meaning, as well as any standard used in denying the claim;
  • A description of available internal appeals and external review processes, including information about how to initiate an appeal; and
  • Contact information for any applicable office of health insurance consumer assistance to assist individuals with the internal claims and appeal and external review processes.
  1. Deemed Exhaustion of Internal Claims and Appeals Processes. If a plan fails to comply with these rules, the claimant will be deemed to have exhausted the plan’s internal claims and appeals process, even if the plan claims that it substantially complied with the requirements. That means that the claimant is free to pursue other remedies, such as external review or a lawsuit.
  2. Continued Coverage Pending Outcome of Internal Appeals. Under the new rules, a plan must continue to provide coverage to the claimant until an internal appeal is resolved. Generally, this means that plans may not reduce or terminate an ongoing course of treatment without advance notice and an opportunity for advance review. Also, anyone in an urgent care situation or receiving an ongoing course of treatment may be allowed to proceed with an expedited external review at the same time as the internal appeal.

External Review Standards

Group health plans must comply with either a state external review process or the federal external review process. The Interim Final Rule provides guidance on which process must be followed.

State Standards for External Review

If a state external review process that applies to and is binding on an insurance issuer includes the consumer protections in the NAIC Uniform Model Act in place on July 23, 2010, then the issuer must comply with that state external review process. In that case, where benefits under a group health plan are provided through health insurance coverage, the issuer must provide the external review process and the group health plan itself is not obligated to do so. Some self-insured group health plans may be subject to the state external review process if they are not subject to ERISA preemption.

Any plan or issuer that is not subject to a state external review process must comply with the federal external review process. A plan or issuer will be subject to the federal process if there is not state external review process or if the state external review process does not meet the minimum requirements of the NAIC Uniform Model Act.

The Department of Health and Human Services will determine whether a state external review process meets the minimum requirements. HHS will also provide a transition period for plan years beginning before July 1, 2011, where existing state external review processes will be treated as meeting the minimum requirements. This transition period will give states the opportunity to review and amend their processes. For plan years beginning on or after July 1, 2011, the federal external review process will apply unless HHS determines that the state process meets the minimum standards.

Federal External Review Process

The health care reform law requires a federal external review process to be established. The Interim Final Rule does not establish that process, but it does describe the standards that will be included. Plans or issuers that are not subject to a state external review process will have to follow the federal process. For an insured group health plan, if either the issuer or the plan complies with the federal process, then the obligation is satisfied for both the plan and the issuer.

The federal external review process will apply to most adverse benefit determinations or final internal adverse benefit determinations, including rescissions. However, it will not apply to denials based on a participant or beneficiary’s ineligibility for the plan.

The standards to be issued for the federal external review process will include procedures for initiating and conducting the review, an expedited external review process for certain claims, additional consumer protections for claims involving experimental or investigational treatment, and additional notices and disclosures to claimants.

Required Notices 

Notices of available internal claims and appeals and external review processes must be provided in a culturally and linguistically appropriate manner. This means providing notices in a non-English language if certain thresholds are met for the number of people who are literate in the same non-English language.

For a group health plan that covers fewer than 100 participants at the beginning of the plan year, the threshold is 25 percent of all plan participants being literate in only the same non-English language. For a plan that covers 100 or more participants, it is the lesser of (a) 500 participants, or (b) 10 percent of all plan participants.

If an applicable threshold is met, the notice must be provided in the non-English language upon request. In addition, the plan or issuer must include a statement in the English version of all notices offering the notice in the non-English language. The statement must be prominently displayed in the non-English language. Once a request has been made by a claimant, all future notices to that claimant must be provided in the non-English language. Also, if the plan or issuer has a customer assistance process that answers questions or gives assistance with filing claims and appeals (such as a telephone hotline), the assistance must be provided in the non-English language.

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Missouri voters on Tuesday overwhelmingly rejected a key provision of health care reform law. About 71 percent of Missouri voters backed a ballot measure, Proposition C, that would prohibit the government from requiring people to have health insurance or from penalizing them for not having it. Missouri is the first state to challenge aspects of the federal law in a referendum.

This is just another clear sign that people are not happy about the health care Law.  Anytime there are 71% of people opposing that is a big number.  The Missouri Hospital Association spent $400,000 trying to warn Missouri residents that Proposition C could raise prices at the hospitals. Even with $400,000 being spent to oppose proposition C it still passed by 71%.  The could start a chain reaction of other states opposing the health care reform by referendum.

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With the Affordable Care Act comes medicare Reforms. Historically, Medicare has often led the entire health care system in the adoption of quality and payment innovation. The reforms that go into place will not only affect Medicare but could change the way the health care system is paid.

Meidcare reform means Reform our health care delivery system, appropriately price services and modernize financing systems, and fight waste, fraud and abuse.

Unnecessary hospital readmissions

The Affordable Care Act creates a “hospital readmissions reduction program,” which will help hospitals smooth transitions for patients and reward hospitals that are successful in reducing avoidable readmissions.

 Hospital acquired conditions

The Affordable Care Act imposes payment penalties on the 25 percent of hospitals whose rates of hospital acquired conditions like bedsores, complications from extended use of catheters, and injuries caused by falls, are the highest.

 Rewarding Better Care

CMS will expand payments for value—in 2013—by rewarding better care for five of the most prevalent conditions. Physician payments will also become more closely linked to value with the launch of a physician value-based payment system and the implementation of a “value-modifier” that rewards physicians who deliver better care.

 Accountable Care Organizations

 The Affordable Care Act promotes team-based health care through Accountable Care Organizations (ACOs) under the Medicare shared savings program

Center for Medicare and Medicaid Innovation

To support the ongoing development of new models of payment and delivery, the Affordable Care Act establishes the Center for Medicare and Medicaid Innovation

 Independent Payment Advisory Board

The Affordable Care Act also establishes the Independent Payment Advisory Board, or IPAB, to monitor the fiscal health of the Medicare program and to recommend payment policy revisions to contain Medicare cost growth.

Improvements to productivity and market basket adjustments in certain provider settings

The Affordable Care Act ensures that Medicare more accurately accounts for productivity when determining provider payments and revises annual payment updates in certain health care settingsTo support the ongoing development of new models of payment and delivery, the Affordable Care Act establishes the Center for Medicare and Medicaid Innovation

Ending Overpayments to Medicare Advantage Plans

A major inefficiency that the Affordable Care Act addresses is overpayments to private insurance plans that serve Medicare beneficiaries, known as Medicare Advantage plans

Modified equipment utilization factor for advanced imaging

Provisions in the Affordable Care Act address widely recognized areas of overutilization, such as advanced imaging services, which not only wastes resources but may also pose a danger to beneficiaries from needless exposure to radiation

Bidding for Durable Medical Equipment 

CMS also continues to implement competitive bidding for durable medical equipment (DME), which the Affordable Care Act accelerated

Targeted and efficient anti-fraud activities

The new law gives CMS the authority to target anti-fraud activities to geographic areas, provider types, or services based on the type or level of risk posed to the program.

 Ensures transparency of ownership and ensures provider compliance with Medicare’s requirements

The Affordable Care Act includes new protections that require all providers to have compliance plans. This will ensure that providers are abreast of Medicare requirements and in compliance with them and can focus their attention on patient-care.

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The new health care reform forces everyone to buy health insurance or pay a tax penalty. This has become a major debate with many who oppose the health care reform. This requirement is the corner stone of the white house health plan.  The argument was that if everyone is on a health plan that will help to offset costs for both the insurer and providers. There is a long legal battle a head but if this aspect was determined to be unconstitutional it would have a huge impact on the over all health care reform.

U.S. District Judge Henry Hudson refused to dismiss the state’s lawsuit, which argued the requirement that its residents have health insurance was unconstitutional.

The Judge who noted that his ruling was an initial step, decided the law was ripe for review. He said the issue the state raised — whether forcing residents to buy something, namely health care, is constitutional — had not been fully tested in court.

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On Thursday, the US Department of Health and Human Services announced that there would be federal grants of $1 million to help for each state to set up the health insurance exchange. Each state is then going to be able to set up the exchange how they see fit. The idea is that the Gov sets up the market place and then the private market competes.

New Mexico’s wants to develop “a strong Exchange that promotes competition between plans based on quality and price in a way that is transparent to consumers.”  This is an interesting approach because  this could include restricting plans from the Exchange that would exceed specified premium levels or by requiring cost initiatives of plans participating.  So it looks like New Mexico will decide what carriers get to participate in the exchange.

As states start to develope the exchanges the orginal view that the exchange would act as a market place for carreirs to compete with guarnteed issue plans.  Now the big question is what will a plan in the exchange cost?

Sept. 1st we will see many stats launch their high risk pool plans. Ohio has released details of their high risk pool plan and it was reported that they would only be able to insure 5000 of the 17,000 people that are eligible for the health plan.  They are keeping premiums low $98 to $493 a month for nonsmokers and $98 to $642 a month for smokers. The state of Ohio received $152 million in federal money to pay for the new program and time will tell if that is enough. The first red flag that this program is under funded is that Ohio can not offer to the full 17,000 that need it.

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Section 9006 of the health care bill — just a few lines buried in the 2,409-page document — mandates that beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year.

It has now come to light what a burden this aspect of the health care reform is going to have on small business.

Democrats and Republicans want to repeal it, but getting them to work together on the issue is proving difficult in an election year. 

Republicans want to repeal the filing requirement and pay for it by changing other parts of the new health-care law, a strategy that Democratic leaders won’t support. Democrats want to repeal the filing requirement and pay for it by raising taxes on international corporations and limiting taxpayers’ ability to use special trusts to avoid gifts taxes. Republicans won’t support that.

The House rejected the Democratic bill Friday after Democratic leaders brought it up under a procedure that requires a two-thirds majority for approval. The vote was 241-154, with nearly all Democrats voting in favor of the bill and nearly all Republicans opposed.

Its important to note that both political parties recognize how this law is going to impact small business. Both sides are willing to repeal it but have different ideas on how to make up the funding. This is very important because there will be many more debates on aspect of the health care reform that will need to be appealed or changed.

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Under the health care reform all children under 19 can not be declined or pre x on a health plan. Everyone in the industry had major concerns over this issue.  One of the big concerns was parents would wait until the child had a health care crisis and then enroll them on the plan.  It was just released that carriers are now going to be able to have open enrollments for these types of plans. That means the child can get the plan without underwriting but only once a year.

We are now starting to see the reality of what can and cannot be done under the health care reform. In the last few months almost every Individual carrier pull out of the stand alone child market.  Not only did we see regional carriers pull out but we also saw national carriers.  When national carriers pull out of a  market that is the a huge red flag because they have large reserves. It will be interesting to see if the carriers that pulled out get back in.

Another aspect that might be interesting is the premium for those stand alone policies during the open enrollment period. Will that policy cost more?

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Effective first of the plan year or after September 23, 2010 , health plans will have in effect internal claims appeal procedures. Each plan must allow the insured to review his or her plan to present evidence and testimony as part of the appeal process.

So what this means is if carrier declines a claim the insured now has the right to appeal the claim from an independent source. If the independent source declines the claim the insured can this go to the Department of Insurance and appeal the claim in person. So some could give their testimony in person to appeal the claim.

This would have a huge impact on experimental treatment.  Almost all plans exclude experimental treatment but now the insured has a right to appeal the denied claim. For example if a family had a child that need a experimental heart transplant and received the treatment and the claim was denied. Now that family has multiple sources to appeal the claim.  There is a very good possibility that if a family appeals that claim in person the chance of it being declined is a lot less. Who would decline a claims that saved a child’s life?

Now this does create some situations for groups that are self funded that use reinsurance.  It is vital going forward that the contract states the re insurance will pay for that claim if its appealed and won. Other wise you could have a group that is self funded that is now responsible for paying for a very large claim. So any group that has re insurance contracts in place should be looking at the at this aspect very closely.

If a group is grandfathered in then they do not have to comply with this requirment of the health care reform.

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As we move forward with health insurance reform small group plans with under 50 employees may be dropping health plans all together in 2014.  There is still going to be a need and desire for employee benefits. These future employee benefit packages are going to come in the form on non-medical benefits. This would Long Term Disability, Short term disability, Dental, Vision, Life and supplemental policies. Metlife came out with a study on how to keep your employee happy/loyal should you drop the group health plan. The purpose of these type of benefit packages is show the employee that the company is still investing in them.

According to MetLife’s 8th Annual Study of Employee Benefits Trends, 43% of all employees agree that benefits are a very important reason why they remain with their employers. This number drops to 31% for employees at smaller companies.

While healthcare legislation has grabbed the attention of small business owners and brokers, it is important to recognize that health coverage may become less of a differentiator when it comes to hiring, retaining and motivating workers. Non-medical benefits – like dental, disability, life insurance – and voluntary offerings will likely play an increasingly significant role in driving employee loyalty, retention and engagement.

Building a Better Benefits Program Without Breaking the Budget: Five Practical Steps Every Small Business Should Consider outlines steps that small business owners can take to strengthen their non-medical benefits program and optimize benefits value:

1. Manage costs for dental, disability and life insurance while increasing employee loyalty. Many small business owners underestimate the value that their employees place on non-medical benefits like dental, disability and life insurance. While 59% of small business employees say these benefits contribute to their feelings of employer loyalty, only 34% of employers recognize this. The resource outlines ways that employers can control their budgets while still offering benefits that drive loyalty.

2. Deliver budget-conscious wellness programs to aid productivity and help control medical costs. While 61% of larger employers offer wellness programs, just 22% of small companies offer the programs. However, 67% of small businesses believe wellness programs are effective at reducing medical costs. Low-cost options can be implemented by small businesses to help create a culture of health and control long-term costs. Options can include leveraging local health organizations and associations that can help to educate employees on healthy behaviors, or providing convenient access and time off to participate in wellness programs like weight loss, exercise and smoking cessation.

3. Help employees become financially secure and support productivity goals at the same time. About one in five small business employees admits that in the last 12 months, he/she has taken unexpected time off to deal with a financial problem or taken more time than should be spent at work to deal with personal financial issues. In fact, 64% of small businesses strongly believe that employees’ productivity is impacted when they are worried about personal financial matters. Small businesses can consider tapping into local financial institutions and services to provide retirement and/or financial planning options during work hours, or provide access to web-based financial resources for their employees.

4. Simplify benefits communications for greater benefits effectiveness. Only one in five small business employees believes that his/her employers’ benefits communications effectively educate the employee about their benefits programs. The resource gives best practices for benefits communication including using multiple channels, removing jargon, and making messages relevant to key life events or life stages. Employers can also beta test communications to listen and learn from their employees prior to launching a full communication campaign.

5. Leverage small business workplace advantages for increased worker loyalty. The MetLife Study found a loyalty gap in that nearly two-thirds of small businesses say they feel very loyal toward their employees but only about one-third of employees feel their employers have that strong sense of loyalty. Small business employers can take advantage of their company culture to foster an environment where work-life balance, which garners employee loyalty.

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