Wednesday, June 30, 2010

Agencies issue guidance on several reform provisions, including annual and lifetime limits

On June 28th, the Departments of Health and Human Services (HHS), Labor and Treasury released an Interim Final Rule (or Regulation) addressing several of the initial reform provisions applicable to plan years beginning on or after September 23, 2010, including pre-existing conditions, annual and lifetime limits, rescission, choice of providers and emergency services.

The most noteworthy clarification was the Regulation’s explanation of the provision that prohibits annual and lifetime limits on essential health benefits.

The Regulation clarifies that:
• Annual and lifetime limits refer to total dollar limit and do not extend to specific treatment limits (such as day or visit limits).
• Prior to 2014, a plan may establish annual limits on essential benefits as follows: $750,000 for the 2011 plan year, $1.25 million for the 2012 plan year and $2 million for the 2013 plan year.
• Prior to 2014, limited medical plans or so-called “mini-med” plans could apply for a waiver if compliance with the new annual limits “would result in a significant decrease in access to benefits or would significantly increase premiums for the plan or health insurance coverage.”

For more information on the Regulation, click to access the Groom Law Group Memorandum or the Interim Final Rule.

Early Retiree Reinsurance Program application posted to HHS website

On June 29th, the Department of Health and Human Services (HHS) released the official application for the Early Retiree Reinsurance Program. To view the application, please click on the following link, Official ERRP Program Application. Other newly posted documents to the HHS website include: Official ERRP Application Instructions, Frequently Asked Questions and Application Submission Dos and Don’ts.

Please note that all qualified applications will be approved and applications will be processed in the order in which they are received. It is not critical to be the first application submitted as payments are made based on when claims are submitted, not when the employer’s application for the program was submitted.

HHS does have the authority to stop accepting applications, but only if it appears that the $5 billion in federal funding is insufficient, as program reimbursements are being paid out. Recent estimates suggest the $5 billion will last roughly two years.

Thursday, June 24, 2010

UHC Shared Savings Program change for fully insured groups

In the past, members who received services from non-network facilities, doctors or other health care professionals could see their claims reimbursed by one of two programs: either receiving discounted rates for those services though UHC’s Shared Savings Program or rates determined by a Medicare-based reimbursement methodology under UHC’s Maximum Non-Network Reimbursement Program (MNRP).

Effective August 1, the Shared Savings Program through UnitedHealthcare (UHC) will no longer provide discounts for certain non-network facility claims for fully insured plans. Claims that will no longer be eligible for the Shared Savings discounts are those that are eligible for adjudication under MNRP.

According to UHC, this change will help decrease costly non-network utilization and better manage rising health care costs for UHC customers. Shared Savings discounts will continue to be applied to claims from non-network doctors and other health care professionals where available.

These program changes do not affect whether a claim is paid at the network or non-network benefit level. Additionally, emergency and approved network gap facility claims will not be subject to MNRP processing and will continue to be processed at the network benefit level.

Member Impact
Less than 0.2% of UHC’s fully insured membership is expected to be affected by this change; however, those members who choose to use non-network facilities may experience higher out-of-pocket costs due to potential balance-billing by those facilities.

Members that used the same non-network Shared Savings Program facility two or more times in the last six months will receive a letter in June notifying them of these upcoming changes. The letter highlights the potential for increased out-of-pocket costs if they continue to receive services at non-network facilities.

For more information on MNRP, please click to view UHC’s Maximum Non-Network Reimbursement Program Summary.

Wednesday, June 23, 2010

Eastern Life and Health and Security Life merger complete

Effective June 21, 2010, Eastern Life and Health and Security Life has merged to become Security Life Insurance Company of America. The combined companies wish to assure clients that you will continue to receive the same quality of service that you enjoyed under the previously separate entities.

Security Life Insurance Company of America will be communicating these changes to policyholders this week.

Tuesday, June 15, 2010

HHS releases draft application for early retiree reinsurance program

The U.S. Department of Health and Human Services (HHS) has released a draft application, application instructions and a frequently asked questions document on the early retiree reinsurance program to help employers prepare for the application process and gather necessary data ahead of time. These documents can be accessed at the HHS Early Retiree Reinsurance Program section of the HHS website.

The official application is not scheduled to be released until later in June and HHS has not determined the specific date that they will begin accepting applications. However, they have confirmed that applications will begin being accepted no later than June 30, 2010.

We will continue to update you with the most recent information regarding the application process as we receive it.

HHS releases regulations for grandfathered health plans

On Monday the U.S. Departments of Health and Human Services (HHS), Labor and Treasury proposed interim final regulations for group health plans to maintain grandfathered status under the Patient Protection and Affordable Care Act (PPACA).

In addition to the guidance provided in the PPACA, these new regulations specify that grandfathered plans will lose their grandfathered status if they make any of the following changes:

Significantly cut or reduce benefits. Grandfathered plans must continue to cover care for major diseases and illnesses currently covered by the plan, such as diabetes, cystic fibrosis and HIV/AIDS.
Raise coinsurance amounts. Grandfathered plans cannot increase the plan’s coinsurance percentage if they wish to maintain their grandfathered status.
Significantly raise co-pay amounts. Grandfathered plans may increase co-pay amounts by no more than the greater of $5 or a percentage equal to medical inflation plus 15%.
Significantly raise deductibles. Grandfathered plans may increase deductibles by no more than a percentage equal to medical inflation plus 15%.
Significantly lower employer contributions. Grandfathered plans can decrease the percent of premium the employer pays by no more than 5%.
Add or tighten an annual limit. Grandfathered plans cannot tighten any annual dollar limit in place as of March 23, 2010. Grandfathered plans cannot impose a new annual dollar limit unless they are replacing a lifetime dollar limit with an annual dollar limit that is at least as high as their lifetime limit.
Change insurance carriers. Grandfathered plans cannot decide to buy insurance from a difference insurance company and maintain their grandfathered status. This regulation does not prevent grandfathered plans that provide their own insurance from switching plan administrators or to a collective bargaining agreement.

Employers that wish to remain grandfathered must also maintain plan documents and records to verify their plan's status as a grandfathered plan and provide a notice to participants and beneficiaries stating that the plan is grandfathered.

The interim final regulations also give regulators the flexibility to disregard plan changes adopted before June 14, 2010 that "modestly exceed" the allowable changes set forth in the new rules.

For more information on these regulations, please refer to the Interim Final Regulations, Groom Law Group Memorandum or the HHS Fact Sheet.

For the PPACA definition of and provisions for grandfathered health plans, please refer to our April 20 post, What is a grandfathered health plan?.

Saturday, June 12, 2010

Mental health parity regulations in effect beginning July 1

According to the Interim Final Rule published on February 2, 2010, the Federal Mental Health Parity Addiction and Equity Act (MHPAEA) will be effective on the first day of the plan year beginning on or after July 1, 2010. The implementation of these regulations comes nearly two years after MHPAEA was originally signed into law in October of 2008.

MHPAEA applies to groups that meet the Federal definition of “large group”, which includes:
• All fully insured and self-funded groups with 51 or more employees
• Groups with 2-50 employees if they had an average of 51 or more total employees during the prior calendar year (including seasonal and/or part-time employees)

The general requirement of MHPAEA states that plans must ensure that the financial requirements and treatment limitations applied to mental health and substance use disorder benefits are no more restrictive than those applied to medical or surgical benefits.

The Interim Final Rule updates the prior 1996 federal mental health parity law to now apply to both mental health and substance abuse disorder benefits. The 1996 law applied to annual and lifetime dollar maximums for benefits for mental health disorders only.

The Interim Final Rule does not mandate coverage of any mental health and substance use disorder benefits. However, a group plan must be in compliance with MHPAEA if it chooses to provide coverage for mental health and substance use disorder benefits. The group plan may define which conditions will and will not be covered, subject to state law mandates for fully insured plans.

For more information, click to access the Interim Final Rule or the MHPAEA Factsheet from The National Council for Community Behavioral Healthcare.

Friday, June 4, 2010

House passes benefits bill without COBRA subsidy extension

The House approved legislation on May 28, 2010, which would require 401(k) fee disclosures, provide relief for pension funds and extend unemployment benefits. The bill also included the so-called ‘doc fix’ that would keep physicians from facing a cut in Medicare payments; however, the planned extension of the COBRA premium subsidy was noticeably absent from the legislation.

Reports suggest that Democrats dropped the extension in order to gain enough votes for passage. According to CongressDaily, the bill would have provided $6.8 billion to extend the 15-month 65% subsidy through November 30, but was removed to appease the fiscally conservative ‘Blue Dog’ Democrats.

Without an extension, employees laid off beginning June 1 would not be eligible for the subsidy. It is unclear whether a retroactive measure will be passed by Congress at a later date. The Senate is not expected to take up the legislation until after returning from their Memorial Day recess on June 7.

Wednesday, June 2, 2010

BCBSNC to implement unlimited lifetime benefit maximums

The recent health reform legislation, collectively known as the Affordable Care Act (ACA), prohibits lifetime dollar limits on any new or renewing plans with an effective date of September 23, 2010 or later.

In response to this legislation, Blue Cross and Blue Shield of North Carolina (BCBSNC) will amend their standard benefit offerings for new groups with effective dates of August 1 or later. As a result, limited lifetime maximum medical plans will no longer be quoted for groups with an effective date on or after August 1, 2010. Any group previously quoted with a limited lifetime maximum will be honored. Groups with an effective date after September 23 must be quoted with an unlimited lifetime maximum to comply with the ACA. Again, this change to unlimited lifetime maximums will be effective at the group's first renewal after September 23, 2010.

The ACA’s provision prohibiting lifetime limits also applies to self-funded groups. To comply with this mandate, unlimited specific stop loss will be standard for all BCBSNC self-funded groups effective immediately.