Diabetes Current-State and Changes to Come
Unless you are Cro-Magnon-man and just emerged from a glacial field you are probably aware of some of the 2010 health care reforms. This article reviews how the United States got to be in such poor shape, health-wise and how some provisions of the 2010 reforms will create incremental changes.
Since I am nearly finished with my second book, the Russell Guide for Diabetes: Type I or Type II This Could Happen To You, let me share some mind boggling information about this scourge. The American statistics on this disease have a huge impact on government funded health plans, including Medicare and these metrics from the CDC explain why :
• The proportion of diagnosed diabetics in the United States has increased by more than 50% since 2007; 17.7 million in 2007 and 25.5 million in 2010
• Fully one third of the U.S. population is expected to be diabetic by 2025; 115 million
• In 2010 18.7% of the 25,564,000 U.S. residents diagnosed as diabetic were African Americans and 10.2% of that number were non Hispanic ( White)
• More than 90% of all diabetics are Type II, which is controllable by diet and exercise
• The CDC estimates that 33% of the country is in pre-diabetic mode in 2011
Obesity
Type II Diabetes is caused from obesity and a diet high in simple sugars and carbohydrates (think fast food, doughnuts, etc,) Being over-weight significantly increases your chances of becoming diabetic. I think it is time we Americans call a-spade-a-spade, so if one of these criteria fit you are fat:
1. 20 lbs. over weight-Yes, you are fat
2. 50 lbs. overweight-This qualifies you as obese
3. 100 or more lbs. overweight-Then you are exogenously obese
4. Body Mass Index or BMI exceeds 30 you are fat
5. If you have to replace the shocks on the driver’s side of your car more frequently than the passenger side, this is a clue that your girth has impacted vehicular performance.
6. If you have broken chairs in your house or someone else’s by sitting in them, yes my friend you are fat.
7. If you need to buy your clothes at Tacoma Tent and Awning, need I say more?
It is time we as Americans put down the doughnuts and look in the mirror. The country needs to go on a 12-Step Program for Over Eaters Anonymous. No more excuses, just bust a hump and get out there. Like everyone else I have had to battle-the-bulge as I’ve aged, but so far I do not qualify in any of the categories above.
Diet
Food is fuel and it really does matter what you consume. If you are going to persist in a diet that is high in simple sugars, lacking in fiber, and complex carbohydrates, it is similar to starving your body of essential food, so it craves more food. Diets which are high in “the whites” meaning white rice, white pasta, white bread, and sugar cause spiking in glycogen which is what the body creates when it breaks down food. Foods that convert to simple sugars cause the glycogen rush and over time damage the pancreas which ultimately ceases to work properly. At that point, listlessness, fatigue, and a sudden weight loss may be symptoms of diabetes. The United States has at least 5 million more people who are undiagnosed diabetics. The later diabetes is diagnosed the worse the damage is to the body systems. Here are some tips on wise food choices:
1. The large pizza is not intended for one person
2. 32 ounces of a soda-you may as well drink three beers calorically speaking; put down that big gulp unless you want the catheter that goes with it when you are on kidney dialysis later
What Happens If America Doesn’t Slim Down
Diabetes was the 7th leading cause of death in the United States as reported by the CDC for 2006 and it is advancing all of the time. And death from diabetes is not a quick process, but a torturous route of injections, circulatory problems (including amputations), hyper tension, and kidney failure. In the United States, 40% of diabetics end up on kidney dialysis. These metrics contrast sharply with other industrialized countries that have much lower renal failure rates, such as Austria at 30% or 34% in Germany. Life expectancy for someone on kidney dialysis in the United States is only a few years.
The link between heart failure and kidney dialysis is pronounced and a 2011 study showed that 36.1% of dialysis patient had high blood pressure, 38.2% had a history of heart infection, and 25% had excessive weight gain between dialysis sessions. All of these symptoms are exacerbated by the dialysis treatment process in the United States, which pushes patients to conform to business practice hours and not optimal clinical outcomes.
What are the Costs
The U.S. Medicare program has financed the cost for kidney dialysis for all persons who have Social Security numbers and are legal residents since 1973. President Nixon signed the legislation and at that time renal dialysis cost $12,273 per patient and 11,000 people needed it in the country. Fast forward to current time and dialysis now costs $77,000 per patient and there are over 350,000 people on it. The vast majority of people on dialysis are diabetic, with age being correlated with an increased incidence of renal failure. In 2010, Medicare spent 20 billion dollars on the renal dialysis program.
What Can Be Done
The vast majority of renal dialysis centers in the United States are operated by for-profit companies, like DaVita, fueled by Medicare’s reimbursement policy which rewards the process not clinical outcomes for dialysis centers. This may all be changing with President Obama’s endorsement of the Comparative Effectiveness Research Institute in 2010. This institute will look at clinical processes and outcomes across systems and compare them to global data to find ways for improvements. For example, the mortality or death rate for patients on kidney dialysis is much worse in the U.S.A. than in other industrialized countries, so this needs to be reviewed. And of course, a much greater percentage of American diabetics end up on dialysis than in other countries.
Another aspect of the 2010 Health care reforms was to require insurance companies to offer wellness or preventive care benefits. In my former career in the insurance business there was always a lot of teeth gnashing over offering preventive benefits because the industry promoted the idea the employees should pay for this service themselves. The industry also discouraged low co-payments or cost sharing as a means to lower the insurance premiums for the employer group. The problem with this mentality is it is inherently short term and the health of a person is a long term process. This is just one example of how the insurance industry has been at odds with promoting health for our country. Though it should be obvious, let me state that by mandating a base level national health surveillance system, such as an annual physical, offered gratis, we can find the people that are hypertensive or pre-diabetic and prevent more serious health damage. By reaching out and treating people earlier we will save money in government funded health programs. In order to accomplish this goal as a nation the country needs to continue to look at aligning provider incentives and reimbursements to promote national health not just a medical service. The goal of the country should be to work towards optimizing the health of its citizens not just treating their illnesses and injuries . If private sector insurance is to be a part of that equation, disease prevention services that are measureable and effective need to be included. Perhaps another model could include national clinics where physicals are administered by public health officials, which would provide privacy for the employee who may not wish to share his personal health metrics with the employer. Despite all of the HIPAA privacy hype, I can assure you there are a myriad of ways for an employer to discover employee health data, especially for a group which is self-insured.
On that note the healthpolicymaven is going to sign off and log my eight miles, which I have averaged per day this year. I recommend that you also slam down that pizza and put on your shoes.
This article was written by Roberta E. Winter, MHA, MPA and may be reprinted with her permission.
Showing posts with label government policy. Show all posts
Showing posts with label government policy. Show all posts
Sunday, December 4, 2011
Thursday, September 2, 2010
Private Sector Exemptions from 2010 Health Care Reforms and the Wellness Mandate
Private Sector Exemptions from 2010 Health Care Reforms and the Wellness Initiative
According to an article in the New England Journal of Medicine, 57% of private employer plans are ERISA self insured plans and are exempted from many of the 2010 health insurance coverage mandates, since these plans are not considered insurance. This means most of the large employers out there will continue to manage their own health care programs as they have in the past. Smaller employers will be the ones most impacted by the insurance mandates and often, they are the least able to pay. The federal subsidies help some small employers, but if you have over 25 employees you are required to provide the expensive first dollar coverage and pay a significant portion of the cost. Perhaps the small employers will elect to pay the penalty rather than play in this pool. It is also worth noting that a lot of start-up companies and nonprofit organizations fall into this size category and their funding is quite restricted.
Cost to Produce the Baseline Surveillance
The impact on the health plan’s cost will of course be a factor in the hiring of new employees. Though it is illegal to discriminate against older workers, one has to wonder why a small employer wouldn’t consider age when it would impact the cost of their medical plan. Even under the Obama reforms age is still a factor in establishing a community rate for the price of a health insurance plan. Yet another nail in the coffin for anyone who is over forty and looking for work. As a student of government policy making I am wondering if the unintended economic consequences were fully considered with this 2010 health care mandate for small employers to buy expensive front-end loaded insurance for their employees.
Encouraging the Desired Effect
I favor the carrot incentive method much more than the punishment stick and keeping the tax deductions for health and welfare plans is critical to employer sponsorship, as well as keeping some flexibility in plan design so the smaller businesses, both for-profit and not-for-profit can participate. The federal subsidies apply only to very small employers with 25 or fewer employees and are targeted to firms with 10 and under workers, which is understandable from a budget standpoint. It is telling that the government considers small business only those with less than 50 employees (the standard most likely to be adopted by the majority of the states), who are exempt from the penalties for not providing medical insurance plans. In the private sector, employers with less than several hundred employees are considered small and in my insurance career, several companies considered all firms with less than 2,000 employees to be small employers. This difference in standards is based on the volatility of the claims performance data and the management required in order to replicate a similar outcome for the smaller firm versus a larger client.
Wellness Care Mandates
Though I understand the importance of providing primary care, which means early detection of costly diseases like high blood pressure (which is a precursor to kidney failure and cardiac problems) through annual exams, perhaps having them provided by insurance companies is not the most effective method. The insurance industry is deft at managing large risks and not at providing disease surveillance or wellness. Any efforts to do so by insurance companies involve add-on commission based products that are provided through a third party and generally not well integrated into program performance. You can bet that plenty of insurance agents are selling wellness programs now that the coverage is a government mandate, but what is the efficiency of this model, other than to make more money for the insurance industry?
Better Way to Provide Wellness Services
Another way to provide disease audit and management could include using public health nurses or clinics to do the surveillance, which would protect the privacy of the individual and provide key surveillance information for a community trying to manage its health care. Since large employers may already use on-site clinics to provide the wellness services, the small employer sector needs a better model for identification of at-risk employees. Also, the public health programs need an infusion of capital and this would be a great way to take the old “school nurse program” and create a community nurse program nationwide. As someone who went through a Minnesota winter with untreated bronchitis I wish there would have been a school nurse in my high school. I would love to see a cost benefit study on using public health programs and federally qualified clinics to provide the wellness services versus the insurance industry products. Everyone likes to complain about the inefficiency of government programs, but the financial support of federally qualified health centers through federal grants has proven so effective it has been reauthorized by three presidencies. Public health programs have been on the front lines in addressing health risks for a hundred years. These programs are effective and they don’t require sophisticated and costly marketing schemes to pitch their results, but they could use your advocacy.
For those of you who have a fear of public health, I can attest to the efficacy of the program as I have been a customer of Seattle Public Health on many occasions, for my travel immunizations (they have the best travel clinic), for primary care treatment when I have been without insurance, and for referrals to other medical facilities, when no one in the private sector would see me. At least with the Obama protocols many of the uninsured will have medical insurance, which will at least enable them to get a private sector physician to schedule an appointment. The Obama health reforms are creating a new baseline for health care design and reporting and maybe in the long run it will empower consumers.
For more information on how the states are reacting and their regulatory authority for the federal health reform mandates, read the September 15th article in my contributing column for the life sciences newsletter of the east coast consulting group Tag44.com at http://www.tag44.com/newsletters/ls%20newsletters.asp?cat=lifescience.
This article was written by Roberta E. Winter, MHA, MPA and may be reprinted with her permission.
According to an article in the New England Journal of Medicine, 57% of private employer plans are ERISA self insured plans and are exempted from many of the 2010 health insurance coverage mandates, since these plans are not considered insurance. This means most of the large employers out there will continue to manage their own health care programs as they have in the past. Smaller employers will be the ones most impacted by the insurance mandates and often, they are the least able to pay. The federal subsidies help some small employers, but if you have over 25 employees you are required to provide the expensive first dollar coverage and pay a significant portion of the cost. Perhaps the small employers will elect to pay the penalty rather than play in this pool. It is also worth noting that a lot of start-up companies and nonprofit organizations fall into this size category and their funding is quite restricted.
Cost to Produce the Baseline Surveillance
The impact on the health plan’s cost will of course be a factor in the hiring of new employees. Though it is illegal to discriminate against older workers, one has to wonder why a small employer wouldn’t consider age when it would impact the cost of their medical plan. Even under the Obama reforms age is still a factor in establishing a community rate for the price of a health insurance plan. Yet another nail in the coffin for anyone who is over forty and looking for work. As a student of government policy making I am wondering if the unintended economic consequences were fully considered with this 2010 health care mandate for small employers to buy expensive front-end loaded insurance for their employees.
Encouraging the Desired Effect
I favor the carrot incentive method much more than the punishment stick and keeping the tax deductions for health and welfare plans is critical to employer sponsorship, as well as keeping some flexibility in plan design so the smaller businesses, both for-profit and not-for-profit can participate. The federal subsidies apply only to very small employers with 25 or fewer employees and are targeted to firms with 10 and under workers, which is understandable from a budget standpoint. It is telling that the government considers small business only those with less than 50 employees (the standard most likely to be adopted by the majority of the states), who are exempt from the penalties for not providing medical insurance plans. In the private sector, employers with less than several hundred employees are considered small and in my insurance career, several companies considered all firms with less than 2,000 employees to be small employers. This difference in standards is based on the volatility of the claims performance data and the management required in order to replicate a similar outcome for the smaller firm versus a larger client.
Wellness Care Mandates
Though I understand the importance of providing primary care, which means early detection of costly diseases like high blood pressure (which is a precursor to kidney failure and cardiac problems) through annual exams, perhaps having them provided by insurance companies is not the most effective method. The insurance industry is deft at managing large risks and not at providing disease surveillance or wellness. Any efforts to do so by insurance companies involve add-on commission based products that are provided through a third party and generally not well integrated into program performance. You can bet that plenty of insurance agents are selling wellness programs now that the coverage is a government mandate, but what is the efficiency of this model, other than to make more money for the insurance industry?
Better Way to Provide Wellness Services
Another way to provide disease audit and management could include using public health nurses or clinics to do the surveillance, which would protect the privacy of the individual and provide key surveillance information for a community trying to manage its health care. Since large employers may already use on-site clinics to provide the wellness services, the small employer sector needs a better model for identification of at-risk employees. Also, the public health programs need an infusion of capital and this would be a great way to take the old “school nurse program” and create a community nurse program nationwide. As someone who went through a Minnesota winter with untreated bronchitis I wish there would have been a school nurse in my high school. I would love to see a cost benefit study on using public health programs and federally qualified clinics to provide the wellness services versus the insurance industry products. Everyone likes to complain about the inefficiency of government programs, but the financial support of federally qualified health centers through federal grants has proven so effective it has been reauthorized by three presidencies. Public health programs have been on the front lines in addressing health risks for a hundred years. These programs are effective and they don’t require sophisticated and costly marketing schemes to pitch their results, but they could use your advocacy.
For those of you who have a fear of public health, I can attest to the efficacy of the program as I have been a customer of Seattle Public Health on many occasions, for my travel immunizations (they have the best travel clinic), for primary care treatment when I have been without insurance, and for referrals to other medical facilities, when no one in the private sector would see me. At least with the Obama protocols many of the uninsured will have medical insurance, which will at least enable them to get a private sector physician to schedule an appointment. The Obama health reforms are creating a new baseline for health care design and reporting and maybe in the long run it will empower consumers.
For more information on how the states are reacting and their regulatory authority for the federal health reform mandates, read the September 15th article in my contributing column for the life sciences newsletter of the east coast consulting group Tag44.com at http://www.tag44.com/newsletters/ls%20newsletters.asp?cat=lifescience.
This article was written by Roberta E. Winter, MHA, MPA and may be reprinted with her permission.
Sunday, May 30, 2010
2010 Health Reform Implementation Guidelines
Health Care Reform Compliance Guidelines
This article addresses the implementation schedule for the health care reforms that apply to private health insurance plans under the Patient Protection and Affordable Care Act and the Public Health Service Act stipulations. It is important to note these new provisions impact both self-insured and fully insured group health insurance plans and are incorporated into ERISA and IRS rules.
Compliance Mandates for 2010
1. COBRA- this provision has been extended from nine months to fifteen months for eligible participants and their dependents. If you were unemployed before February 28, 2009, you may be eligible for a COBRA benefit extension for your group insurance benefits and a federal subsidy for the insurance premiums. The COBRA subsidy was enacted under the American Recovery and Reinvestment Act of 2009 and requires eligible employees to pay a minimum of 35% of the COBRA premium expense (as opposed to 100% previously). Employers are required to administer the extension for qualifying employees and their family members.
New Plans Adopted in 2010 must Conform
2. Most of the health care reform provisions are not effective until 2014, however for health plans that begin on or within six months of the enactment date of the law(s), October 1, 2010 is the compliance target.
Extending Medical Insurance for Adult Children
3. Medical coverage for adult children can be extended from age 23 to age 26 for children who are covered dependents, whether or not they are married or filing separate tax returns, and is effective in 2010. Plans which existed prior to March13, 2010 will have until January 1, 2011 to comply with the mandated plan change for covering adult children. The question is will those adult children be able to adversely select against the parent’s medical plan based on their health needs? For example, if the child has coverage through employment, can they refuse that coverage in favor of the parent’s plan? So parents, your married kids who are living in their own residence can now be covered on your medical plan. It seems like they will never leave the nest.
Uniform Benefit Explanations-2012 Target Date
Uniform Explanations of Coverage must be provided by either the health plan insurance provider or the plan administrator and an electronic summary must be available. Personally, I think this is a good thing. In 1999, when I was building web sites for paperless plan communication and documentation, most insurance companies were not embracing the paperless process. It makes sense when the health care delivery system is converting to electronic medical records that the insurance industry also converts to paperless plan benefit information. This requirement will simply be an enhancement of the Summary Plan Description materials employers have to provide now. Also, if corporations are offering employee benefits it is incumbent on the group to provide understandable plan benefit information and one would hope the participants are already getting this kind of information. The Uniform Benefit Explanation code requirements will be provided by Health and Human Services within 12 months of enactment of the law, which means by March 2011, for published guidelines. Employers will have 12 more months to comply, so at a minimum that would mean March 2012 or at the plan anniversary, which could mean as late as January 2013.
Compliance by 2014
Mandates for Health Insurance Plan Changes Effective in 2014
The Patient Protection and Affordable Care Act, section 1304(b) stipulates that the group insurance market is divided into two segments for administration of the law, groups with over 100 employees, and those with fewer than that. There is a provision that allows states to designate that firms with less than 50 employees will be considered their standard for the small group exemption definition. This exception means small employers will not have to pay the per-employee tax (roughly $166.67/FTE/month Re. the Reconciliation bill amendment) if they don’t offer insurance to full time employees. It is expected that most states will accept the more liberal 50 and under criteria. Other provisions that will impact group medical plans include:
1. Group Health Insurance Plans Cannot Impose Annual Limits on Medical Benefits.
2. Health Insurance Plans Cannot Rescind Coverage except in cases of fraud or misrepresentation.
3. Preventive care must be provided without any co-payment.
4. Pre-existing condition clauses are not permitted.
Insurance Company Reporting Compliance Dates
5. Effective in 2014, Transparency and disclosure of claims utilization rate setting, and other financial data for insurance companies and third party administrators will be standardized. Those identified as insurance administrators or companies will have to provide the same information to the public, in an electronic format, which the government run health insurance exchanges are also required to provide. This includes clear explanations of claims payment standards, financial data disclosure, plan enrollment statistics, rate development information, participant cost-sharing, out of network payment information, and participant rights under the act, as determined by Health and Human Services. Though this is a comprehensive health care transparency law, much of this information is already available to plan administrators and this just codifies it and makes understandability a program performance value. For health care consumers this is a good thing because they will be able to see how their premium contributions are spent.
Plan Reporting Changes by 2014
6. Nondiscrimination rules previously only required under Section 105-H Executive Health Care Plans will now apply to fully insured group health plans and will be phased in by 2014. We can expect to see some new reporting requirement, including a nondiscrimination test probably under a provision in the Department of Labor Form 5500 filings.
7. Codification and reporting of health plan quality will be required by 2014, but no standards are expected from Health and Human Services until 2012. The standards will most likely address disease management programs for high cost chronic diseases like diabetes, hypertension, and COPD. Also, health promotional activities will be required to develop reporting standards. Case management will also be reviewed, as health programs that perform better will be rewarded for quality. Medicare has stipulated an increase in Medicare payments for quality indicators, which will ultimately be adopted in the private insurance sector as well. Complex health care systems already have sophisticated quality measurement programs, so the purpose of this provision is to spread the process improvements throughout the United States. Quality measurement is an important criterion for efficacy of program value and performance. I expect quality reporting to be included in the DOL 5500 reporting standards by 2014.
8. Claims utilization ratios and expenditures from health plans will have to be reported, but this is already available for most firms who have 100 or more employees enrolled on their health and welfare plans, so this is a standardization process. What is new is the requirement that insurers post a minimum loss ratio if they want to work in the insurance exchange market. This will encourage insurers to leave the small group marketplace, which will mean small employers will be relegated to the government insurance exchange offerings. A local nonprofit insurance group in Washington has already decided to leave the small group market and lay off about 25% of its workforce.
9. Uniform External Review Model
Health plans must have an acceptable external audit process, such as the one recommended by the National Association of Insurance Commissioners, which is a consumer protection process.
Observations
The Patient Health Safety Act quality reporting provisions will benefit health care patients who will see more quality indicator reporting. It is valuable to have knowledge of surgical and recovery outcomes by facility before going under the knife. In a perfect world this information will only be a click away in two years, but expect that the implementation for non-alpha organizations will be several years away and 2014 is the target date for mandatory compliance.
Get used to the term “Portal” as the federal government is using this euphemism to describe the mega web site it is creating for the Health Insurance Exchanges, which will serve as a one-stop-shop for various public and private health insurance programs. Portal pricing and plan information as stipulated in Section 2718 of PSACA will apply to plans with inception dates of September 23, 2010 and later. A phase-in period will apply for existing health and welfare plans. Currently data collection is on-going from state insurance commissioners, insurance companies, and Medicaid officials and Health & Human Services is expected to have a preliminary program activated by June 14th, with a “live date” by the July 1, 2010 statutory deadline. High Risk State Insurance Pools (providing health insurance for people who were considered uninsurable in the private sector and ineligible for a public plan) were to have reported their data to state insurance commissioners by May 21, 2010. There must be a lot of overtime at HHS right now!
When I first started writing this article I thought it would be a breeze, but the density of the changes is significant, so if it is a challenge for this policy analyst, I can only imagine how private sector plan administrators will feel. Ideally the government will hire some insurance experts to implement the rules in an effective manner, but that may require private sector experience, and governments are loath to hire anyone from the “for profit” world. My fingers are crossed hoping that some efficiency will emerge from this tsunami of change.
This article was written by Roberta E. Winter, MHA, MPA, a health policy consultant in Seattle and may be reprinted with her permission.
Citations
http://www.hhs.gov/oic/regulations/webportal.html
This article addresses the implementation schedule for the health care reforms that apply to private health insurance plans under the Patient Protection and Affordable Care Act and the Public Health Service Act stipulations. It is important to note these new provisions impact both self-insured and fully insured group health insurance plans and are incorporated into ERISA and IRS rules.
Compliance Mandates for 2010
1. COBRA- this provision has been extended from nine months to fifteen months for eligible participants and their dependents. If you were unemployed before February 28, 2009, you may be eligible for a COBRA benefit extension for your group insurance benefits and a federal subsidy for the insurance premiums. The COBRA subsidy was enacted under the American Recovery and Reinvestment Act of 2009 and requires eligible employees to pay a minimum of 35% of the COBRA premium expense (as opposed to 100% previously). Employers are required to administer the extension for qualifying employees and their family members.
New Plans Adopted in 2010 must Conform
2. Most of the health care reform provisions are not effective until 2014, however for health plans that begin on or within six months of the enactment date of the law(s), October 1, 2010 is the compliance target.
Extending Medical Insurance for Adult Children
3. Medical coverage for adult children can be extended from age 23 to age 26 for children who are covered dependents, whether or not they are married or filing separate tax returns, and is effective in 2010. Plans which existed prior to March13, 2010 will have until January 1, 2011 to comply with the mandated plan change for covering adult children. The question is will those adult children be able to adversely select against the parent’s medical plan based on their health needs? For example, if the child has coverage through employment, can they refuse that coverage in favor of the parent’s plan? So parents, your married kids who are living in their own residence can now be covered on your medical plan. It seems like they will never leave the nest.
Uniform Benefit Explanations-2012 Target Date
Uniform Explanations of Coverage must be provided by either the health plan insurance provider or the plan administrator and an electronic summary must be available. Personally, I think this is a good thing. In 1999, when I was building web sites for paperless plan communication and documentation, most insurance companies were not embracing the paperless process. It makes sense when the health care delivery system is converting to electronic medical records that the insurance industry also converts to paperless plan benefit information. This requirement will simply be an enhancement of the Summary Plan Description materials employers have to provide now. Also, if corporations are offering employee benefits it is incumbent on the group to provide understandable plan benefit information and one would hope the participants are already getting this kind of information. The Uniform Benefit Explanation code requirements will be provided by Health and Human Services within 12 months of enactment of the law, which means by March 2011, for published guidelines. Employers will have 12 more months to comply, so at a minimum that would mean March 2012 or at the plan anniversary, which could mean as late as January 2013.
Compliance by 2014
Mandates for Health Insurance Plan Changes Effective in 2014
The Patient Protection and Affordable Care Act, section 1304(b) stipulates that the group insurance market is divided into two segments for administration of the law, groups with over 100 employees, and those with fewer than that. There is a provision that allows states to designate that firms with less than 50 employees will be considered their standard for the small group exemption definition. This exception means small employers will not have to pay the per-employee tax (roughly $166.67/FTE/month Re. the Reconciliation bill amendment) if they don’t offer insurance to full time employees. It is expected that most states will accept the more liberal 50 and under criteria. Other provisions that will impact group medical plans include:
1. Group Health Insurance Plans Cannot Impose Annual Limits on Medical Benefits.
2. Health Insurance Plans Cannot Rescind Coverage except in cases of fraud or misrepresentation.
3. Preventive care must be provided without any co-payment.
4. Pre-existing condition clauses are not permitted.
Insurance Company Reporting Compliance Dates
5. Effective in 2014, Transparency and disclosure of claims utilization rate setting, and other financial data for insurance companies and third party administrators will be standardized. Those identified as insurance administrators or companies will have to provide the same information to the public, in an electronic format, which the government run health insurance exchanges are also required to provide. This includes clear explanations of claims payment standards, financial data disclosure, plan enrollment statistics, rate development information, participant cost-sharing, out of network payment information, and participant rights under the act, as determined by Health and Human Services. Though this is a comprehensive health care transparency law, much of this information is already available to plan administrators and this just codifies it and makes understandability a program performance value. For health care consumers this is a good thing because they will be able to see how their premium contributions are spent.
Plan Reporting Changes by 2014
6. Nondiscrimination rules previously only required under Section 105-H Executive Health Care Plans will now apply to fully insured group health plans and will be phased in by 2014. We can expect to see some new reporting requirement, including a nondiscrimination test probably under a provision in the Department of Labor Form 5500 filings.
7. Codification and reporting of health plan quality will be required by 2014, but no standards are expected from Health and Human Services until 2012. The standards will most likely address disease management programs for high cost chronic diseases like diabetes, hypertension, and COPD. Also, health promotional activities will be required to develop reporting standards. Case management will also be reviewed, as health programs that perform better will be rewarded for quality. Medicare has stipulated an increase in Medicare payments for quality indicators, which will ultimately be adopted in the private insurance sector as well. Complex health care systems already have sophisticated quality measurement programs, so the purpose of this provision is to spread the process improvements throughout the United States. Quality measurement is an important criterion for efficacy of program value and performance. I expect quality reporting to be included in the DOL 5500 reporting standards by 2014.
8. Claims utilization ratios and expenditures from health plans will have to be reported, but this is already available for most firms who have 100 or more employees enrolled on their health and welfare plans, so this is a standardization process. What is new is the requirement that insurers post a minimum loss ratio if they want to work in the insurance exchange market. This will encourage insurers to leave the small group marketplace, which will mean small employers will be relegated to the government insurance exchange offerings. A local nonprofit insurance group in Washington has already decided to leave the small group market and lay off about 25% of its workforce.
9. Uniform External Review Model
Health plans must have an acceptable external audit process, such as the one recommended by the National Association of Insurance Commissioners, which is a consumer protection process.
Observations
The Patient Health Safety Act quality reporting provisions will benefit health care patients who will see more quality indicator reporting. It is valuable to have knowledge of surgical and recovery outcomes by facility before going under the knife. In a perfect world this information will only be a click away in two years, but expect that the implementation for non-alpha organizations will be several years away and 2014 is the target date for mandatory compliance.
Get used to the term “Portal” as the federal government is using this euphemism to describe the mega web site it is creating for the Health Insurance Exchanges, which will serve as a one-stop-shop for various public and private health insurance programs. Portal pricing and plan information as stipulated in Section 2718 of PSACA will apply to plans with inception dates of September 23, 2010 and later. A phase-in period will apply for existing health and welfare plans. Currently data collection is on-going from state insurance commissioners, insurance companies, and Medicaid officials and Health & Human Services is expected to have a preliminary program activated by June 14th, with a “live date” by the July 1, 2010 statutory deadline. High Risk State Insurance Pools (providing health insurance for people who were considered uninsurable in the private sector and ineligible for a public plan) were to have reported their data to state insurance commissioners by May 21, 2010. There must be a lot of overtime at HHS right now!
When I first started writing this article I thought it would be a breeze, but the density of the changes is significant, so if it is a challenge for this policy analyst, I can only imagine how private sector plan administrators will feel. Ideally the government will hire some insurance experts to implement the rules in an effective manner, but that may require private sector experience, and governments are loath to hire anyone from the “for profit” world. My fingers are crossed hoping that some efficiency will emerge from this tsunami of change.
This article was written by Roberta E. Winter, MHA, MPA, a health policy consultant in Seattle and may be reprinted with her permission.
Citations
http://www.hhs.gov/oic/regulations/webportal.html
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