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Health Reform

Health Reform

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Health Reform

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  1. Health Reform August 3, 2010

  2. Summary This presentation will introduce you to the pressing issues you need to be concerned with regarding the Patient Protection and Affordable Care Act signed into law March 2010 Our goal is to help you better understand the impact this will have on you and let you know how we may be able to assist you August 3, 2010

  3. Currently On-going Grandfathered Health Plans Employer Subsides of Medicare D Minimum Loss Ratios Adoption Coverage Breaks for Nursing Mothers August 3, 2010

  4. Grandfathered Health Plans • Individuals and employer group plans that wish to keep their current policy on a grandfathered basis would only be able to do so if the only plan changes made were to add or delete new employees and any new dependents. • Grandfathered plan rules is not limited to individuals enrolled on the date of enactment but rather • New employees (and their families) may be covered under an employer’s grandfathered plan • Family members of current employees who are covered by the grandfathered plan may also be added, if their enrollment was permitted under plan terms on March 23, 2010 PP 43-44, 91, 95, 99, 130-31, 163, 186, 332-34, 767-77, 777

  5. Provisions applicable to all group health plans as of the law’s relevant effect date, regardless of “grandfathered” status, include: • Coverage of adult children up to age 26 (grandfathered group health plans do not have to comply with this requirement until the first plan year beginning on or after January 1, 2014, if the adult child is eligible for coverage under another eligible employer-sponsored health plan) • Lifetime/annual limit restrictions • Rescission restrictions • Preexisting condition exclusions • 90-days waiting period limit • Uniform summary of benefits August 3, 2010

  6. Grandfathered health plans are exempt from various provisions of the health reform law, including: • Coverage of preventive services without cost-sharing • Cost-sharing limits • Insured group health plan nondiscrimination rules • Claims appeals and review process • Selection of doctors and referral requirements • Coverage of clinical trials • No discrimination against providers • In addition, an exception is made for employers that have scheduled plan changes as a result of a collective bargaining agreement August 3, 2010

  7. Update as of July 2010: Keeping Grandfathered Status • Regulation allow for changes in plan’s benefit structure, so long as none of those changes in the following list: • Eliminating all or substantially all benefits to diagnose or treat a particular condition • Increasing a coinsurance or other percentage-based cost-sharing requirement above the level in effect on March 23, 2010 • Increasing a fixed-dollar cost-sharing requirement, such as annual deductible or out-of-pocket limit, by total percentage – measured from march 23, 2010 – that exceeds the sum of the medical inflation rate plus 15% points. • Increasing co-payment by an amount exceeding greater of • The amount just described for other fixed-amount cost-sharing requirements • $5 increased by the medical inflation rate since March 23, 2010. • Decreasing rate of employer contributions to the plan (for any tier, such as employee-only or family) by more than 5% points below rate that was effect on March 23, 2010 • Adopting or decreasing an annual benefit limit, with the specific rules depending on whether the plan had already imposed an annual or lifetime limit as of March 23, 2010 August 3, 2010

  8. Update as of July 2010: Keeping Grandfathered Status • As of now, other types of benefit modifications will not cause a loss of grandfathered status. • Example: the regulation’s preamble asks for comments on whether changing a plan’s network provider, changing from an insured to a self-funded plan, or changing a prescription drug formulary should be added as events causing a loss of grandfathered status. The preamble assures us that any such change in the regulation would be applied only prospectively • The regulations provide that the grandfathering rules apply separately to each “benefit package” made available under a health plan. Thus, a plan offering both an HMO and PPO option might choose to modify the PPO’s deductible or co-payment in a way that would cause the PPO to lose its grandfathered status, without thereby forfeiting the HMO’s grandfathered status. August 3, 2010

  9. Update as of July 2010: Keeping Grandfathered Status • Implies that, beginning in 2014, premiums can vary more widely for grandfathered plans than for non-grandfathered plans for employers with up to 100 employees • For the purpose of good faith standards, changes adopted prior to June 14, 2010, where the change might otherwise cause the plan to become non-grandfathered, the grandfathered status will be preserved. August 3, 2010

  10. Grandfathered Provision: Limited Transition Relief • Plans adopted after March 23, 2010, will: • treated as in effect on that date if they were made pursuant to either a legally binding contract or state insurance department filing that was made prior to that date • Now have a “grace period” during which they may revoke those changes and thereby retain their grandfathered status. • Grace period will end on the first day of the first plan year beginning after September 23, 2010. August 3, 2010

  11. Grandfathered Plan Summary Chart • Summary of 2010-2014 • Losing Status August 3, 2010

  12. Employer Subsidies of Medicare Part D Premiums • Eliminates the deduction for the subsidy to employers who maintain prescription drug plans for their Medicare Part D eligible retirees. • In order for coverage to be available under this part for covered part D drugs of a manufacturer, the manufacturer must: • Participate in the Medicare coverage gap discount program under section 1860D-14A • Have entered into and have in effect an agreement described in subsection (b) of such section with the Secretary August 3, 2010

  13. Have entered into and have in effect, under terms and conditions specified by the Secretary, entered into a contract with under subsection (d)(3) of such section: • (b) Effective date – shall apply to covered part D drugs • (c) Authorizing coverage for drugs not covered under agreement - subsection (a) shall not apply to the dispensing of a covered part D drug if: • The Secretary has made a determination that the availability of the drug is essential to the health of beneficiaries under this part; or • The Secretary determines that in the period beginning on July 1, 2010, and ending on December 31, 2010, there were extenuating circumstances. August 3, 2010

  14. Minimum Loss Ratios • Health plans, including “grandfathered plans”, must annually report on the share of premium dollars spent on medical care and provide consumer rebates for excessive medical loss ratios. (regulatory process starts 2010) • Applies to “issuers” not employers directly • Rebates must be issued to each enrollee on a pro rata basis when “non claims” cost exceeds 15% of revenue for issues in the large group market and 20% for issuers in the individual and small group markets or lower rates as set by the state. (Policy rebates in 2011) • Administered by the HHS • The amendment made by this section shall apply to taxable years beginning after December 31, 2009 August 3, 2010

  15. Adoption Coverage • Limit for employer sponsored assistance for adoptions increase from $10,000 to $13,170 • Credit is extended through 2011 • Phased out for high income earners starting at $182,000 August 3, 2010

  16. Breaks for Nursing Mothers • All employers with 50 or more employees to provide private areas (not restrooms) where mothers of children less than one year old can pump breast milk in private • Employers must provide “reasonable” unpaid time for this • Smaller employers may be exempted if undue hardship can be demonstrated August 3, 2010

  17. Health Reform 2010 August 3, 2010

  18. Summary • Early Retiree Re-insurance • Pre-existing Conditions • Increase in Dependent Coverage • OBGYN Non Referral Provision • Coverage of Preventive Care • Coverage Appeals Process August 3, 2010

  19. Summary • Wellness Grants • Tanning Tax • HSA and MSA Tax • Emergency Service Coverage • Designation of Primary Care Doctor • Web Based Information Portal August 3, 2010

  20. Early Retiree Re-insurance Program • Creates a new temporary reinsurance program to help companies that provide early retiree health benefits for those ages 55-64 offset the cost of that coverage. Employers must apply to the HHS in order to participate in this program. • The federal government will allocate $5 billion toward the creation of a temporary reinsurance program for employer-sponsored early retiree coverage that will reimburse 80% of claims between $15,000 and $90,000. The purpose of the program is to encourage employers that currently offer retiree medical coverage to continue to do so until the Exchanges are up and running. August 3, 2010

  21. Cumulative health benefits incurred in a given plan year and paid for a particular early retiree that fall between those amounts will be eligible for reimbursement (rather than reimbursement being made only for discrete health benefit items or services whose reimbursement total falls between those amounts). Reimbursement will be made only for claims that are incurred during the applicable plan year, and paid. Thus, eligible employers can save up to $60,000 per early retiree each year. • Eligible claims are those for individuals at least age 55 (and their dependents) who are not eligible for Medicare and are not active workers. • Includes documented retiree cost-sharing (deductibles, copays, coinsurance, etc.) • Includes medical and prescription drug claims. • Excludes HIPAA-excepted benefits (e.g., long-term care and limited scope dental or vision benefits). August 3, 2010

  22. Eligible plans must apply for the program and meet minimum requirements for management of participants with chronic and high-cost conditions. Reinsurance payments received by employers must be used to reduce participant and/or sponsor costs. A sponsor must be able to explain how reimbursements will be applied to maintain its level of effort in contributing to support the plan. • Reimbursements are not treated as taxable income to the employer. • The program is effective June 1, 2010, and ends January 1, 2014 (or sooner, if funds are depleted). Sponsors may apply for plan years that begin before June 1, 2010, but end after that date. In that case, the amount of claims incurred before June 1, 2010 (up to $15,000) count toward the $15,000 cost threshold and the $90,000 cost limit. The amount of claims incurred before June 1, 2010, in excess of $15,000 is not eligible for reimbursement and does not count toward the cost limit. The reinsurance amount to be paid is based solely on claims incurred on and after June 1, 2010, and that fall between the cost threshold and cost limit for the plan year. August 3, 2010

  23. Pre-Existing Condition Coverage for Individual Market • Federal High Risk Pool for Individuals with a Pre-Existing Condition (June 2010) • Provides eligible individuals access to coverage that does not impose any coverage exclusions for pre-existing health condition. This provision ends when Exchanges are operational. • May be administered by nonprofit organizations under contract from HHS. • No preexisting condition limitations • Plan must cover at least 65% of medical costs • Limitation on total out of pocket expenses • Rates based upon a standard population with age rating factor max of 4:1 • Eligibility: • Legal resident of the United States • No creditable coverage six months prior to March 23, 2010 or the date on which they apply for coverage under the pool • Has preexisting condition, as determined in a manner consistent with guidance issued by Secretary. • Eliminating Pre-Existing Condition Exclusions for Children • Bars health insurance companies from imposing pre-existing condition exclusions on children less than 19 years of age. (October 2010) August 3, 2010

  24. Increases in Dependent Coverage • A group health plan and a health insurance issuer offering group or individual health insurance coverage that provides dependent coverage of children shall continue to make such coverage available for an adult child until the child turns 26 years of age. Nothing in this section shall require a health plan or a health insurance issuer described in the preceding sentence to make coverage available for a child of a child receiving dependent coverage. • The Secretary shall promulgate regulations to define the dependents to which coverage shall be made available under subsection. August 3, 2010

  25. Nothing in this section shall be construed to modify the definition of ‘dependent’ as used in the Internal Revenue Code of 1986 with respect to the tax treatment of the cost of coverage. • This provision generally is effective for the first plan year beginning on or after September 23, 2010 (i.e., January 1, 2011, for calendar year plans), although collectively bargained plans may have a later effective date. Until the first plan year beginning on or after January 1, 2014, grandfathered group health plans are not required to extend coverage to adult children (up to age 26) who have access to another eligible employer-sponsored health plan (a group health plan or group health insurance coverage which is a governmental plan, or any other plan or coverage offered in the small or large group market within a State). August 3, 2010

  26. OBGYN Non Referral Provision • General Rights • Direct Access- A group health plan, or health insurance issuer offering group or individual health insurance coverage, described in paragraph (2) may not require authorization or referral by the plan, issuer, or any person including a primary care provider described in paragraph(2)(B)) in the case of a female participant, beneficiary, or enrollee who seeks coverage for obstetrical or gynecological care provided by a participating health care professional who specializes in obstetrics or gynecology. Such professional shall agree to otherwise adhere to such plan's or issuer’s policies and procedures, including procedures regarding referrals and obtaining prior authorization and providing services pursuant to a treatment plan (if any) approved by the plan or issuer. August 3, 2010

  27. ‘‘(B) OBSTETRICAL AND GYNECOLOGICAL CARE.—A group health plan or health insurance issuer described in paragraph(2) shall treat the provision of obstetrical and gynecological care, and the ordering of related obstetrical and gynecological items and services, pursuant to the direct access described under subparagraph (A), by a participating health care professional who specializes in obstetrics or gynecology as the authorization of the primary care provider. August 3, 2010

  28. Coverage of Preventive Care • In general – a group health plan and a health insurance issuer offering group or individual health insurance coverage shall, at a minimum provide coverage for and shall not impose any cost sharing requirements for: • 1. Evidence-based items or services that have an effect a rating of ‘A’ or ‘B’ in the current recommendations of the United States Preventive Service Task Force; • 2. immunizations that have in effect a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved; and • 3. with respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration. • 4. For women, additional preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration • 5. For women, the recommendations issued by the United states Preventive Service Task Force regarding breast cancer screening, mammography, and prevention shall be considered the most current other than those issued in or around November 2009 August 3, 2010

  29. Update as of August 1, 2010 • • Be sure preventive service is not separate from an office visit • In-network ONLY • All new group health plans and plans in the individual market must provide first dollar coverage for preventive services • This provision appears to eliminate deductibles or other cost sharing mechanisms for preventative care August 3, 2010

  30. What is covered for adults? • Blood pressure, diabetes, cholesterol tests • Cancer screenings • Counseling on tobacco cessation, losing weight, nutrition (from your doctor) • Routine vaccinations • Flu and pneumonia shots • Healthy pregnancy care August 3, 2010

  31. Considerations • If employers want to cover services more broadly than the USPSTF, there may be disputes over payment • The USPSTF guidelines are for individuals in specific categories based on age, risk factors and other clinical conditions • It’s essential to have someone prepared to work with carriers to create specific plan designs August 3, 2010

  32. Coverage Appeals ProcessUpdate as of July 2010 • Requires that any new group health plan or new plan in the individual market implement an effective appeals process for coverage determinations and claims. • (Update as of July 23, 2010): Under new rules, non-grandfathered heath plans must implement an internal appeals process for denied claims that conforms to new requirements which are MORE RIGOUROUS than those currently required under ERISA. Furthermore, plans must allow for an external appeals process to be utilized in the event that the internal appeal does not yield a favorable result for the participant. August 3, 2010

  33. Coverage Appeals Process (Internal Claims Appeal) • A group health plan and the health insurance issuer offering group and individual health insurance coverage shall implement an effective appeals process for appeals of coverage determinations and claims for: • 1- determination of an individual’s eligibility to participate in a plan • 2- determination that a benefit is not a covered benefit • 3- Imposition of a preexisting condition exclusion on otherwise covered benefit • 4- determination that a benefit is experimental, investigational or not medically necessary August 3, 2010

  34. Coverage Appeals Process (Internal Claims Appeal) • Plan or insurer must notify claimant of benefit determination not later than 24 hours (if urgent care is involved) • Claimant must be provided with new evidence considered, rationale, notice to enrollees, impartiality of personal involved making the decision and reason(s) for final determination. • Continued coverage will be provided during internal review process. August 3, 2010

  35. Coverage Appeals Process (External Appeal Process) • State or Federal external review can be filed within four months of adverse internal claims review determination • During external appeals process, the following will be considered: • Medical records, health professional’s recommendation, terms of coverage, appropriate practice guidelines, documents from health carrier • Within 45 days, written decision of determination will be provided August 3, 2010

  36. Wellness Grants • The Secretary shall award grants to eligible employers to provide their employees with access to comprehensive workplace wellness programs. • The grant program established under this section shall be conducted for a 5-year period. • The term “eligible employer” means an employer (including a non-profit employer) that: • A. employs less than 100 employees who work 25 hours or greater per week • B. does not provide a workplace wellness program as of the date of enactment of this Act. August 3, 2010

  37. An eligible employer desiring to participate in the grant program under this section shall submit an application to the Secretary, in such manner and containing such information as the Secretary may require, which shall include a proposal for a comprehensive workplace wellness program that meet the criteria and requirements. • For purposes of carrying out the grand program under this section, there is authorized to be appropriated $ 200,000,000 for the period of fiscal years 2011-2015. Amounts appropriated pursuant to this subsection shall remain available until expended. August 3, 2010

  38. Tanning Tax • To help pay for the plan, a 10% tax on indoor tanning service • Begins in July 2010 August 3, 2010

  39. HSA and MSA Tax Increases • Increases the additional tax for HSA withdrawals prior to age 65 that are not used for qualified medical expenses from 10 to 20 percent. The additional tax for Archer MSA withdrawals not used for qualified medical expenses would increase from 15 to 20 percent. • HSAs- Section 223(f)(4)(A) of the Internal Revenue Code of 1986 is amended by striking “10 percent” and inserting “20 percent”. • Archer MSAs- Section 220 (f)(4)(A) of the Internal Revenue Code of 1986 is amended by striking “15 percent” and inserting “20 percent”. • Effective Date- The amendments made by this section shall apply to distributions made after December 31, 2010. August 3, 2010

  40. Emergency Services Coverage • Mandates coverage of emergency services at in-network level regardless of provider for: • Fully-insured individual health plans • Fully-insured group plans • Self-insured group health plans August 3, 2010

  41. Definition of Medical Provider as a Primary Doctor • Allows for designation of any participating primary care doctor or pediatrician as primary care doctor • No preauthorization or referral necessary for OB/GYN services August 3, 2010

  42. Web-Based PortalUpdate as of July 2010 • Immediate establishment – not later than July 1, 2010, the Secretary, In consultation with the States, shall establish a mechanism, including an Internet website, through which a resident of any state may identify affordable health insurance coverage options in that State. • August 3, 2010

  43. Connecting to affordable coverage- An Internet website established under paragraph (1) shall, to the extent practical, provide ways for residents of any States to receive information on at least the following coverage option: • Health insurance coverage offered by health insurance issuers, other than coverage that provides reimbursement only for the treatment or mitigation • Medicaid coverage under title XIX of the Social security Act. • Coverage under title XXI of the Social Security • A State health benefits high risk pool, to the extent that such high risk pool is offered in such State; and • Coverage under a high risk pool under section 1101. August 3, 2010

  44. Health Reform 2011 August 3, 2010

  45. Summary • Reporting on W-2’s • Qualified Medical Expenses • Cafeteria Plan Safe Harbor • Non-Retaliation Provision • CLASS Act August 3, 2010

  46. Reporting on W-2’s • Employers must include on annual Forms W-2 the aggregate cost of group health plan benefits (excluding FSA, HSA, or Archer MSA contributions, or the cost of long term care, and certain other excepted benefits) provided to employees for taxable years beginning on or after January 1, 2011 (i.e., Forms W-2 issued in 2012 for 2011 wages, and issued thereafter for subsequent years). • Employers can calculate the reportable value based on a methodology similar to that used under COBRA (minus the 2% COBRA administrative fee, if charged). If the plan provides for the same COBRA continuation coverage premium for both individual coverage and family coverage, the plan would be required to calculate separate individual and family premiums for this purpose. August 3, 2010

  47. Qualified Medical Expenses • Standardizing the Definition of Qualified Medical Expenses. • Conforms the definition of qualified medical expenses for HSAs, FSAs, and HRAs to the definition used for the itemized deduction. An exception to this rule is included so that amounts paid for over-the-counter medicine with a prescription still qualify as medical expenses. • Most over the counter drug purchases will no longer qualify as “medical expenses.” • Administrators must eliminate all coverage for over the counter drugs or establish procedures for verifying that beneficiaries hold valid prescriptions. August 3, 2010

  48. Increases the additional tax for HSA withdrawals prior to age 65 that are not used for qualified medical expenses from 10 to 20 percent. The additional tax for Archer MSA withdrawals not used for qualified medical expenses would increase from 15 to 20 percent. August 3, 2010

  49. Effective for taxable years beginning on or after January 1, 2011, OTC medications (except insulin) that are not prescribed by a physician will no longer be considered qualified medical expenses that can be reimbursed through health accounts, including health FSAs, HSAs, and HRAs. • It appears that expenses for excluded OTC medicines that are incurred on or after January 1, 2011, would no longer be reimbursable through health accounts (but expenses incurred before that date could be reimbursed after that date). August 3, 2010