1
Q
The “triple aim” (three goals) of health policy
A
- Better care for individuals - Quality characteristics include: safe, effective, patient-centered, timely, efficient, and equitable
- Better health for populations
- Lower per-capita costs
2
Q
Causes of poor health and public initiatives to address them
A
- Environmental factors that contribute to poor population health:
a. Unsanitized water
b. Pollution (air and water)
c. Violence (domestic and street)
d. Unhealthy living environments
e. Food-borne illness
f. Lack of access to fresh, healthy foods - Community disease prevention
- Lifestyle initiatives
- Smoking and substance abuse
- Socioeconomic factors
- Wellness and disease management solutions
3
Q
PPACA individual and group market reforms
A
- Individual mandate
- Employer mandate - beginning in 2014, ERs with 50 or more FT EEs must offer coverage or pay a fee. Fee = $2000 * (full-time EEs - 30), adjusted based on number of EEs who receive a premium tax credit
- Essential benefit package - required for qualified health plans beginning in 2014. Provide a comprehensive set of services, preventive services without cost sharing, cover at least 60% of the actuarial value of the covered benefits, and limit annual cost sharing to current law HSA limits
- Medical loss ratio (MLR) - starting in 2011, plans must provide rebates to consumers if the MLR is below 85% for large groups (101+ EEs) or 80% for small group and individual plans
- Benefit and coverage requirements
- Rating requirements
- Benefit tiers - all new plans must be either platinum (covering 90% of benefit costs), gold (80%), silver (70%), or bronze (60%). Insurers may offer a catastrophic plan to enrollees under age 30 and those who are exempt from the individual mandate
- Grandfathering of existing plans - plans in existence March 23, 2010 are exempt from many PPACA requirements, but most benefit and coverage requirements still apply
4
Q
PPACA benefit and coverage requirements effective in 2010
A
- All individual and group plans must cover dependent children up to age 26
- Rescissions of insurance coverage are prohibited except in cases of fraud
- Pre-existing condition exclusions for children are prohibited
- No individual or group plans may impose lifetime limits, and plans may impose annual limits only for non-essential health benefits (this was graded in through 2014)
- Services rate A or B by the US Preventive Services Task Force must be covered at 100%
5
Q
PPACA rating requirements effective in 2014
A
- Individual and small group plans must be offered on a guaranteed issue and renewal basis
- Plans may not impose pre-existing condition exclusions
- Rating variation is only allowed based on:
a. Age (limited to a 3:1 ratio)
b. Geographic rating area
c. Tobacco use (limited to a 1.5:1 ratio)
d. Family composition - Waiting periods for coverage must not exceed 90 days
6
Q
Provisions of PPACA health insurance exchanges
A
- Each state will have an American Health Benefit Exchange for individuals and a Small Health Options Program (SHOP) Exchange for business with up to 100 EEs
- Plans in the exchange must cover essential health benefits, have an OOP max at or below the HSA limit, and fall into one of the PPACA benefit tiers
- Risk pooling - insurers must pool all individual market plans (other than grandfathered plans) into a single risk pool. Similarly, all small group plans must be pooled together
- Participating insurers must meet many qualification requirements such as networks, marketing, reporting, and consumer assistance
- Exchanges may also offer Consumer Operated and Oriented Plans (CO-OPs), which are nonprofit, member-run health insurance companies
7
Q
Other PPACA provisions
A
- Premium credits and cost sharing subsidies for those with low incomes (effective in 2014)
a. Premium credits for qualified individuals and families with incomes between 133% and 400% of FPL for coverage purchased through the exchanges
b. Cost sharing subsidies for those enrolled at the silver level in an exchange with incomes between 100% and 400% of FPL - Small business tax credits
- Medicare provisions:
a. Medicare Advantage plans can receive bonuses or reallocations of rebates based on quality. Beginning in 2014, plans are subject to MLR requirements
b. Medicare Part D - beneficiary coinsurance in the coverage gap will be phased down from 100% to 25% by 2020. Retiree drug subsidy payments lost their tax exempt status beginning in 2013 - Revenue provisions:
a. New health insurer tax will collect $8 billion in 2014, grading up to $14.3 billion in 2018, and indexed thereafter
b. Excise tax for high-cost health plans (beginning in 2018)
c. Limitations on tax-favored allowances for FSAs and HSAs
d. New taxes on certain medical devices - Medicaid - expanded to all non-Medicare eligible individuals with incomes up to 133% of FPL. Due to Supreme Court ruling, federal government can’t withhold original Medicaid funding from states who do not expand
8
Q
Potential problems in an unregulated insurance market
A
- A dishonest company could gain a competitive edge via:
a. Misleading marketing materials
b. Unfair price
c. Inadequate reserves - Customers do not have the time or expertise to determine which firms are dishonest
- Companies could become insolvent with no warning, leaving policyholders without coverage
9
Q
Goals of insurance regulation
A
- Eliminate policies not providing the benefits expected
- Prevent insolvency
- Eliminate policies that provide poor value
- Solve minor consumer problems
- Maintain fair competition
- Raise tax money
- Promote social goals
10
Q
The steps of regulation
A
- Licensing
- Information gathering
- Prior approval of policy language, premium rates, reinsurance agreements, dividends, mergers, and investments
- Enforcement via penalties, fines, and/or legal action/license removal
- Receivership
11
Q
Actions commonly taken by state regulators to prevent insolvency
A
- Capital requirements (such as RBC)
- Guaranty funds
- Reserve requirements
12
Q
Types of consumer protection regulation in the US
A
- Disclosure - disclose key policy features via a shopper’s guide, outline of coverage, summary of benefits, or illustration.
- Reasonableness - loss ratio requirements, mandates
- Fairness - discrimination is prohibited
13
Q
Responsibilities of the insurance commissioner
A
- Oversee the operation of the insurance department
- Interpret insurance laws
- Make regulations implementing insurance laws
- License insurance companies, agents, brokers, and consultants
- Conduct examinations of insurers, and assess penalties for violations of laws
- Review form and rate filings - may require approval before use
- Regulate advertising - to protect consumers from unfair, inaccurate, deceptive, and misleading advertisements
- Regulate business practices, including U/W and claims
- Enforce prompt pay laws
- Regulate insurer solvency - most important duty
14
Q
Reasons for an insurance commissioner to assume an insurer’s assets
A
- Non-cooperation with examiners
- Refusing to remove questionable officers
- Charter violations
- State law violations
- Endangered capital or surplus
- Technical insolvency
15
Q
Standard group contract provisions required by most state insurance laws
A
- Grace period
- Incontestability
- Application and statements
- Evidence of insurability
- Misstatement of age provision
- Certificates
- Benefits and eligibility
16
Q
Additional contract provisions for group health plans
A
- Preexisting conditions
- Notice of proof of claims
- Legal actions
17
Q
Additional contract provisions for group life plans
A
- There must be a provision identifying the designated beneficiary
- Conversion rights
- Death during the conversion period
- Disability continuance
18
Q
Provider protections related to preferred provider arrangements
A
- Any-willing provider laws
- Limitations on benefit differentials between preferred and non-preferred providers
- Coverage of non-preferred providers (required in some states)
- Requirements that allied medical practitioners (such as chiropractors, dentists, and optometrists) be included in PPOs (uncommon requirement)
19
Q
Consumer protections related to preferred provider arrangements
A
- Insurers must assure reasonable access to covered services and an adequate number of providers
- Some states have tried to regulate quality assurance
- Requirements that patients receiving ER care will have costs reimbursed as though treated by a preferred provider
20
Q
Requirements for an HMO to obtain a certificate of authority
A
- A description of the HMO’s organization, governance, and management
- Contracts with providers
- Coverage agreements
- Financial information
- Provider information
- Grievance procedure
- Quality assurance program
- Insolvency protection measures
21
Q
Advantages of federal qualification for HMOs
A
- Equal contribution requirement
- HMO is allowed to contract as a Medicare or Medicaid provider
- Federal HMO Act preempts all state laws that would prevent the MO from acting in accordance with the federal HMO Act
- Federally-qualified HMOs may be automatically deemed to comply with ERISA’s claim appeal requirements
22
Q
Disadvantages of federal qualification for HMOs
A
- HMO must establish a separate line of business for any non-qualified HMO business
- Minimum coverage requirements of federally-qualified HMOs
- Restrictions on the use of anything more than “nominal” copays
- Federal restrictions on rating may be more restrictive than state requirements
23
Q
HIPAA reforms related to portability and availability
A
- Pre-existing condition exclusions
- Health status underwriting
- Health status rating
- Special enrollment periods
- Multi-employer health plans may not deny a participating employer continued coverage except for nonpayment of contributions, fraud, or noncompliance with plan provisions
- Guaranteed issue
- Insurers must renew or continue inforce coverage for all groups, with limited exceptions
24
Q
Administrative functions that health benefit exchanges must provide
A
- Certifying and assigning quality ratings to plans
- Presenting benefits information in a standardized format
- Providing consumers with eligibility determinations
- Providing certifications for people who are exempt from the individual mandate
- Ensuring that all participating health plans satisfy the exchange’s requirements
25
Key decisions states must make related to health benefit exchanges
1. Should the state establish an exchange?
2. Governance structures
3. Influencing the level of participants
4. Should carriers be required to participate in the HBE?
5. Should the states merge the individual and small group rating pools?
6. Should groups with 51-100 EEs be allowed to join the exchange in 2014?
7. Controlling antiselection
8. Standardized benefit packages
9. Intra-state exchanges
10. Should a basic health plan (BHP) be established? - BHPs are for residents under 200% fo FPL who are not eligible for Medicaid
11. How should the state control which carriers participate in the exchange?
12. What value-added services should the exchange provide?
13. How will the exchange fund admin costs?
26
Approaches for the state to control which carriers participate in the exchange
1. Open market
2. Selecting additional standards for qualified plans
3. Selective contracting agent
4. Active purchaser
27
Major federal laws governing health plans
1. ERISA - applies to benefit plans sponsored by private-sector employers. Includes provisions related to reporting and disclosure, fiduciary standards, civil enforcement and preempton, and claim procedures
2. COBRA - provides enrollees of an employer-sponsored group health plan the opportunity to keep that coverage for a period of time after employment ends, or after certain other qualifying events
3. HIPAA - limits the ability of group health plans to impose pre-existing condition exclusions and prevents plans from basing eligibility or premiums on:
a. Health status
b. Medical condition
c. Claims experience
d. Receipt of health care
e. Medical history
f. Genetic information
g. Evidence of insurability
h. Disability
4. PPACA - amended HIPAA rules to prohibit pre-existing condition exclusions. Requires large employers to provide adequate and affordable coverage or pay a financial penalty
28
Taxation of major group insurance benefits
1. Health (medical, dental, vision, and prescription drugs):
a. ER receives a current tax deduction for its expenses.
b. The benefit value for EE and dependents is free from income and employment taxes
c. No limits on the amount of tax-favored benefits
2. Group term life insurance:
a. ER receives a current tax deduction for its expenses
b. The benefit value for the EE (but not the dependents) is free from income and employment taxes
c. Tax-free coverage is limited to a $50,000 death benefit
3. Disability insurance:
a. ER's expenses are deductible as they are paid
b. If the value of the coverage is taxed, the proceeds paid to the disabled individuals are not taxable
c. If the value of the coverage is not taxed, then the proceeds are taxable
4. LTC insurance - proceeds under a qualified plan are deemed to be health insurance and receive the same tax-favored treatment
29
Types of coverage and nondiscrimination tests for cafeteria plans
1. Eligibility test - measures discrimination in favor of highly-compensated individuals (officers, 5% owners, highly-compensated EEs, and spouses and dependents of these individuals)
2. Contributions and benefits test
3. Key EE concentration test (officers w/ annual pay over $160K, 5% owners, and 1% owners w/ annual pay over $150K)
30
Cafeteria plan benefits
Qualified benefits (can be offered on a pre-tax basis):
1. Premium for accident and health coverage
2. Premium for long-term disability
3. Group term life coverage up to $50K
4. Coverage under qualified group legal plan
5. Post-retirement life insurance (for EEs of educational organizations)
6. 401(k) elective deferrals
7. Medical care reimbursement (from an HSA or FSA)
8. Dependent care assistance benefits
9. ER-provided adoption assistance
Permissible but taxable:
1. Group term life coverage over $50K
2. Elective paid vacation days
3. Cash
Impermissible benefits:
1. Deferred compensation
2. Cash value life insurance
3. Dependent life insurance
4. Educational assistance benefits
5. Meals and lodging for the ER's benefit
6. Reimbursement for cosmetic surgery
7. Retirement health benefits paid for working EEs
8. Overnight camp
31
Advantages and disadvantages of pre-tax qualified benefits
Advantages:
1. Benefits are not taxable
2. Benefits are a substitute for taxable wages
Disadvantages:
1. Funds for medical care reimbursements cannot be carried over from one plan year to the next
2. The plan must comply with many qualification rules
3. Elections must be made before the plan year begins
4. The plan may not discriminate in favor of highly-compensated individuals
32
Special state funds to solve health insurance problems
1. Solvency funds
2. High-risk pools
3. Small group pools
33
Terminology used in health reform
1. Actuarial value - average share of medical spending that is paid for by the plan
2. Actuarially equivalent - plans with the same actuarial value
3. Comparative effectiveness research - comparative study of treatments and technologies with goal of refocusing care delivery on the value of care delivered
4. Pay-for-performance - incentive programs to reward providers for meeting quality, safety and efficiency measures
5. Value-based insurance design - varies cost sharing in a way to encourage use of evidence-based services
34
PPACA individual mandate tax penalties
All individuals (with a few exceptions) must have health insurance coverage or pay a tax penalty, which is the greater of:
1. A dollar amount ($95 in 2014, $325 in 2015, $695 in 2016, and indexed thereafter)
2. A % of taxable income (1% in 2014, 2% in 2015, and 2.5% in 2016 and beyond)
35
PPACA risk sharing mechanisms
Established to mitigate adverse selection an pricing risk resulting from guaranteed issue requirements
1. Risk adjustment - permanent program beginning in 2014; redistributes payments across health plans to account for the relative risk of those who enroll
2. Reinsurance - temporary program from 2014-2016; payments to plans that cover high-risk individuals.
3. Risk corridors - temporary mechanism for 2014-2016; payments based on the plan's target amount (total premiums - admin costs):
a. If actual costs (net of risk adjustment and reinsurance payments) vary from the target by more than 3%, the government shares in gains and losses
b. The government bears 50% of spending between 3% and 8% of the target and 80% of spending beyond 8%
36
(Added) Federal regulations that impact employee benefits and insurance
1. HMO Act
2. ERISA
3. COBRA
4. Civil Rights Act of 1964
5. Americans with Disabilities Act
6. Medicare as Secondary Payor Laws
7. HIPPA
8. Newborns' & Mothers' Health Protection Act of 1996
9. Mental Health Parity Act
10. Family Medical Leave Act
11. PPACA
37
(Added) Why PPACA's individual mandate is necessary
1. Guaranteed issue requirement
| 2. Prohibition of rating on health status
38
(Added) Types of adverse selection on Exchanges
1. Adverse selection due to the tendency of consumers to defer purchase of insurance until it is needed
2. Inside vs. outside the exchange
3. Among plans within the exchange
Group & Health Core
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Decks in class (7)
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