Tucker E-Updates for March 8, 2011
HHS Begins Work on Defining the Essential Health Benefits
The Patient Protection and Affordable Care Act (PPACA) has identified at least ten (10) essential categories of items and services that must be included in the essential health package (“EHP”):
- Ambulatory patient services.
- Emergency services.
- Hospitalization.
- Maternity and newborn care.
- Mental health and substance use disorder services, including behavioral health treatment.
- Prescription drugs.
- Rehabilitative and rehabilitative services and devices.
- Laboratory services.
- Preventive and wellness services and chronic disease management.
- Pediatric services, including oral and vision care
Essential health benefits (“EHB”) are required to be offered by qualified health plans participating in health insurance exchanges beginning in 2014, as well as issuers in the individual and small group markets, Medicaid benchmark and benchmark equivalent plans and state basic health programs for low income individuals not eligible for Medicaid. While self-funded group health plans are not required to offer essential health benefits (with the exception of certain preventive services for non-grandfathered plans), if a plan offers any of the essential health benefits, the prohibition on annual and lifetime limits will apply to those benefits. The department of Health and Human Services (HHS) is using the term “essential health package” (EHP) when referring to the essential health benefits that are subject to the annual and lifetime limit rules.
The PPACA delegated authority to define this EHP to the Secretary of HHS. Congress specified that the scope of the EHP essential health benefits should be equal to the scope provided under a typical employer plan. Work by the Department of Labor (DOL) will help to inform that determination. In defining and updating EHBs, the Secretary must ensure that such essential benefits reflect an appropriate balance among specified categories of care so benefits are not unduly weighted in a certain category.
Several restrictions have been placed on HHS. The department cannot make coverage decisions, determine reimbursement rates, establish incentive programs, or design benefits in a way that discriminate against individuals because of age, disability or expected length of life. In addition, HHS must take into account the health care needs of diverse segments of the population including women, children, persons with disabilities and other groups, and ensure that health benefits established as essential not be subject to denial to individuals against their wishes on the basis of individuals age or expected length of life or the individuals present or predicted disability, degree of medical dependency or quality of life. Further, PPACA explicitly permits use of those utilization management practices in common use by group health plans and health insurance insurers at time of enactment and bars the issuance of regulations that prohibits their use.
The impact of the department’s work to define EHPs is expected to be widespread. Its decisions will likely:
- Set coverage standards for significant segments of the private and public insurance markets across the country.
- Provide clear direction to the states and insurance industry, recognizing states are obligated to pay for benefits they mandate above and beyond those required by the Secretary.
HHS acknowledges the diversity of the health insurance industry and need for flexibility across the states in addressing their varying circumstances, practices and priorities. It also recognizes the need to provide meaningful coverage while ensuring an affordable premium.
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HHS acknowledges the diversity of the health insurance industry and need for flexibility across the states in addressing their varying circum- stances, practices and priorities. It also recognizes the need to provide meaningful coverage while ensuring an affordable premium. |
HHS is asking the following questions to consider how EHPs will be logically cohesive and address statutory requirements now and in the future.
- At what level of specificity should EHB be framed?
- How are issues of time, duration, frequency, scope and specific services best addressed?
- What defines and distinguishes a medical service from a non-medical service?
- How should this distinction be considered and applied in the context of EHBs?
- How can the federal standard for benefit coverage best be reconciled with existing state and regional variations in practices and benefit coverage patterns including variations in state mandated benefits?
- How much flexibility should be given to states offered through exchanges?
- What can be learned from the practices of those employers who offer multiple plans today? About plan design, consistency and fairness.
- Considering the varying needs of diverse populations, what policy, principals and criteria should be taken into account to prevent discrimination?
- How can these considerations best be balanced against the content of a typical employer plan and the cost of insurance coverage?
- Assuming insurers continue to have a role in deciding exactly what services to pay for, what information is needed to monitor the decisions that are made?
- How should that information be collected and how should that information be used, if at all, in updating the definition of EHBs over time?
- What are the roles of exchanges, states and the federal government in this task?
- What criteria should be used to adjust the EHBs over time and what should the process be for their modification?
- 14. How can we ensure over time modifications of EHBs are consistent with the initial benefit design but also reflective of involving science?
The Institute of Medicine, at the request of HHS, is currently undertaking a study that will make recommendations on the criteria and methods for determining and updating the essential health benefits package. I will post information as it becomes available on this blog and in our newsletters. To sign up for our newsletters, go to Tucker Administrators Newsletters and Alerts.
Companies of All Sizes Can Operate Viable Self-Insured Group Health Plans
This article was written by the Self-Insurance Institute of America, Inc. (SIIA) White Paper, 2/2011, www.SIIA.org
Some health care reform observers contend that small employers are not capable of bearing the financial risk of self-insuring and suggest that only larger employers should be allowed to self-fund health benefit plans. While it is generally true that larger employers self-insure at higher proportions, there is no valid reason why smaller employers should be restricted from this often advantageous financing option.
Consider the following:
- An Increasing Number of Smaller Employers Successfully Self-Insure Now
- According to a report issued by Pricewaterhouse Coopers in 2010, the percentage of employers with fewer than 1000 covered individuals with self-insured health plans rose from 29% in 2008 to 48% in 2010.
- And among employer plans with between three and 199 workers, 12% were self-insured in 2008--up from 6% a decade ago.
- Quite simply, the private marketplace has demonstrated that self-insurance works for more than just the large employers. One important contributing factor is the reliance on professional consultants who are able to objectively evaluate whether an employer is capable of retaining the financial risk of self-insuring.
- Cash Flow and Workforce Stability Are More Important than Size
- The most important consideration when evaluating the self-insurance option is the ability to pay claims as they are incurred. In this regard, companies with strong cash flow are viable candidates for self-insurance regardless of size.
- Those with good cash flow and stable workforces (low employee turnover) are even better candidates as they are better able to forecast future claims with more accuracy.
- Stop-Loss Insurance Protects Against Catastrophic Claims
- Most small and mid-sized employers who self-insure maintain what is known as stop-loss insurance to protect against catastrophic claims.
- Stop-loss insurance is different than health insurance in that it does not cover individuals, but rather it is contractual liability policy whereby the employer or plan is reimbursed for claims that exceed a specific dollar value.
- Like traditional health insurance companies, stop-loss insurers must be licensed at the state level, must meet solvency standards as dictated by statute and comply with state policy and rate requirements to offer stop loss products.
- The selection of the most appropriate contract is vital to a successful plan. Make sure your consultant is well-versed in stop loss, or better yet have your TPA evaluate your plan and make contract recommendations
- Self-Insurance is an Important Risk Financing Option
- It is important to recognize that self-insurance is an option for companies to finance their health care risk, which often prove most cost effective.
- In recent years, rising health care costs have affected smaller employers more significantly than larger employers, so it is important for employers to have all coverage options.
- No Evidence of Insolvency Problems
- There is no data to demonstrate an insolvency trend among smaller employers that have self-insured health plans.
- Bankrupt companies will normally discontinue health care coverage whether or not they are self-insured.
What is an Aggregating Specific Deductible?
An aggregating specific deductible is sometimes used when the employer (the policyholder) assumes more risk through an additional layer of claims, in exchange for a reduction in stop loss insurance premium. It is just another option when considering ways to reduce stop loss rate increases. Tucker Administrators can walk the plan sponsor through the advantages and disadavantages of this provision. It is most appropriate for employer groups that financially can afford to retain additional risk.
The aggregating specific has two deductible levels:
- The Specific Deductible
- The Aggregating Specific Deductible
The first level, the individual deductible, functions as the traditional individual stop loss deductible, whereby individual claimants incur covered expenses which are applied to the individual deductible. However, instead of receiving reimbursement for claims in excess of the individual deductible, these covered expenses are subsequently applied toward the second level, or aggregating specific deductible.
This second level of risk. the aggregating specific deductible, is the stated amount incurred by an individual or group of individuals over and above the individual deductible. This aggregating specific deductible is the amount that the employer needs to reach in order to obtain reimbursement from the stop loss insurance policy.
Please call us at 704-525-9666 to discuss this feature for your plan or for your client's plan.
A Real-Life Example of Saving a Life and Saving an Employer Catastrophic Claims
iHealth™, an AWAC® division that provides information to participants to improve overall health status, gave a Tucker client’s employee a real-life happy ending. An employee of one of our North Carolina clients dodged a serious cancer threat by having a routine cancer screening. It all started with AWAC® by analyzing all the medical claims data of our clients’ covered members and searches for gaps in wellness screening procedures for each insured. The information is then sent to the iHealth™ division. It provides the member with a customized letter with recommendations for the appropriate wellness screening tests.
One of the recommendations is for cancer screening according to guidelines developed by the American Cancer Society. The employee in our story had her claims analyzed by AWAC® and as a result a letter was sent with the recommendation to have a colonoscopy. She was in good health, and had no symptoms of colon cancer. Although she was hesitant, she made an appointment to have the procedure done. The colonoscopy revealed that she did, in fact, have the early stages of colon cancer. She was treated, and is currently cancer-free. Had her claims not been analyzed for the need of the appropriate wellness screening, and not been notified of the importance of the colonoscopy, she may have had a serious threat to her health, and incurred a high-dollar claims.
This story demonstrates the iHealth™ module as an effective program that provides employers with an economical way to introduce medical prevention and wellness education. It includes educating the participant about positive lifestyle changes along with appropriate wellness and prevention testing. Such measures can bring savings by reducing medical costs through smarter health care utilization and lower claims.
About Tucker Administrators, Inc.
- Total Self-Funded Health Plan Services
- Health Risk Assessment integrated with the group health plan
- Wellness Programs integrated with the group health plan
- On-Site Physician Programs
- Regulatory Compliance Support
- Group Employee Limited Self-Funded Plans
- Group Employee Fully-Insured Health Plans
- Group Employee Ancillary Plans
- FSAs-Medical, Dependent Care and Transportation
- Consolidated Billings Services
We can show you how to control plan costs while encouraging better health for your employees and their families. Call us at 704-525-9666, and visit our website at http://www.tuckeradministrators.com/.
