The Patient Protection and Affordable Care Act (PPACA), better known as federal Health Care Reform, contains a myriad of new programs and rules that affect employers, employees, health insurance plans and health care providers. This issue of TOPICS contains the third installment in our series highlighting some of PPACA's new programs and rules.
The primary focus of PPACA is not health care reform, but health insurance reform. PPACA brings about changes to the benefits that must be covered, as well as who is eligible for coverage. These changes are phased in through 2014. Some of these changes do not affect "grandfathered" plans - which generally are health plans that were in effect on March 23, 2010, or plans maintained pursuant to collective bargaining agreements - provided the plans are not changed substantially after that date.
A. Coverage for Dependants
For plan years beginning on or after September 23, 2010, all individual and group plans, including self-insured plans, must offer dependant coverage for a policyholder's dependants (married or unmarried) that are under 26 years old if the dependant is not eligible for coverage through the dependant's employer. Children of the dependant, however, are not required to be covered.
B. Preventive Health
For plan years beginning on or after September 23, 2010, health plans, except for grandfathered plans, will have to fully cover, with no cost sharing, preventive health services, such as check-ups and immunizations. These plans will also have to cover emergency room visits, and may no longer require a referral or pre-authorization for OB/GYN services.
C. No Lifetime or Annual Limits
For plan years beginning on or after September 23, 2010, health plans can no longer impose lifetime limits on "essential" health benefits. For plan years beginning on or after January 1, 2014, health plans can no longer impose annual limits on "essential" health benefits.
D. No Pre-Existing Conditions
For plan years beginning on or after September 23, 2010, all health plans, except grand-fathered individual plans, may not exclude coverage for any pre-existing conditions for any person under age 19. Starting in 2014, this protection is extended to all persons, regardless of age, that are covered by a group plan, but not an individual plan.
E. Appeals Process
For plan years beginning on or after September 23, 2010, non-grandfathered plans must implement a claims appeals process that includes an opportunity for both internal and external review of claims.
F. Quality of Care
Beginning in 2012, health plans must report to the Department of Health and Human Services (HHS) on whether their benefits and policies satisfy four criteria: (i) improve health outcomes, (ii) prevent hospital readmissions, (iii) improve patient safety and reduce medical errors and (iv) improve wellness and health promotion. This information will be rated, and provided on a government website that enables consumers to evaluate health plans.
G. Insurance Premiums
Beginning in 2014, individual and small group plans (but not grandfathered plans), will be limited in the factors they can consider when setting premium rates. Generally these plans will only be able to adjust premiums for the following factors: (i) family structure, (ii) geographic rating area, (iii) age (with a ratio of no more than 3 to 1), and (iv) tobacco use (with a ratio of no more than 1.5 to 1). Importantly, while this places limits on the factors that health plans may consider in setting premiums, it does not impose premium caps or otherwise place limits on the amount of premiums that health plans may charge.
H. Guaranteed Coverage
Beginning in 2014, each health insurer (not self funded plans) that offers coverage in the individual or group market in a state must accept every individual or employer in that state that applies for coverage with the health insurer, regardless of health status, claims experience, medical history, or genetic information. The insurer may still restrict new policies to open enrollment or special enrollment periods. In addition, the insurer must continue the coverage as long as the individual or employer desires. These provisions do not apply to grandfathered plans.
I. Medical Loss Ratios
For plan years beginning on or after January 1, 2011, all health plans (except self funded plans) must report to HHS the percentage of their premiums that are spent on clinical services (claims) and quality improvements versus other expenses. In addition, these plans must give a rebate to their policyholders if, and to the extent that, the plan's medical loss ratio (the percentage of their premiums spent on paying claims and quality improvements) is less than 85% for large group plans or 80% for small group and individual plans.