Not withstanding the fact that the U.S. House of Representatives is planning to vote next week on a bill to repeal the Patient Protection and Affordable Care Act, today I continue my section-by-section review of the law. Coupled with parts one and two, this will conclude the review of Subtitle A ("Immediate Improvements in Health Care Coverage for All Americans") in Title I ("Quality, Affordable Health Care For All Americans").
Bringing Down Health Care Coverage Cost
Cost Accounting. For each plan year, health insurers must report to the Department of Health and Human Services the percentage of total premium revenue their plans and policies spend on:
- Reimbursement to enrollees for clinical services
- Activities that improve health care quality
- All other non-claims costs, not including state taxes, licensing and regulatory fees
HHS will post the reports on its public Web site.
Minimum Loss Ratios. Until December 31, 2013, for each plan year, health insurers must provide pro-rata rebates to enrollees in amounts equal to the amount that non-claim costs (excluding state taxes and fees) exceed 20 percent of total plan premium revenue (25 percent for individual policies.) States may set these percentages at lower levels, but HHS may adjust the percentage for the individual market in a particular state if it determines that the 25 percent level would destabilize the market there. When setting percentages, states must seek to ensure adequate participation by health insurers, competitive markets, and consumer value.
Hospital Charges. Each year, hospitals must create, update and make public lists of their standard charges for the items and services they provide, including for diagnosis-related groups of items and services.
HHS must consult with the NAIC to issue regulations creating uniform definitions for all of these activities.
Appeals Process
Every health insurer and plan must implement an effective process for appeals of coverage determinations and claims, including:
- An internal claims appeal process
- Notice to enrollees, "in a culturally and liguistically appropriate manner," of available internal and external appeals processes and the availability of help with appeals from state offices of health insurance consumer assistance or health insurance ombudsman programs
- The ability of an enrollee to review his file, present evidence and testimony as part of the appeal, and to receive continued coverage pending the outcome of the appeal
- An external review process including the consumer protections contained in the NAIC's Uniform External Review Model Act.
Every provision I've discussed up to this point took effect last September 23.
Health Insurance Consumer Information
Effective last March 23, HHS may award grants to states that create offices of health insurance consumer assistance or health insurance ombudsman programs. HHS has $30 million for grants the first year and has congressional authorization for future appropriations as necessary. These offices and programs must, working alone or with state insurance regulators and consumer assistance organizations, receive and respond to consumer inquiries and complaints about health insurance coverage. They also must meet criteria contained in regulations that HHS must issue. The offices and ombudsmen must:
- Help with filing complaints and appeals, including appeals with plans' and insurers' internal appeals processes and providing information about the external appeals process
- Collect, track and quantify consumer problems and inquiries. They will have to report this information to HHS, which will use it to identify areas in need of improved enforcement and to share with state insurance regulators and the federal labor and treasury departments for their own enforcement efforts.
- Educate consumers on their health coverage rights and responsibilities
- Help consumers with plan or coverage enrollment by providing information, referral and assistance (EDITORIAL COMMENT: Health insurance agents and brokers can and should broadcast their ability to do this better than these public entities can.)
- Resolve consumers' problems with getting premium tax credits.
Ensuring That Consumers Get Value For Their Premium Dollars
Effective last March 23, working with the states, HHS must create a process for annually reviewing "unreasonable" health insurance coverage premium increases. The process must require health insurers, prior to implementing "unreasonable" premium increases, to submit justifications for the increases to HHS and the relevant state regulators. Insurers will have to prominently display this information on their Web sites. State insurance regulators will report to HHS trends in premium increases. They also will make recommendations to their state exchanges about whether certain insurers should be excluded from the exchanges due to patterns of excessive or unjustified premium increases.
Starting in 2014, states will have to consider excess premium growth outside of their exchanges (compared to that within the exchanges) when deciding whether to offer large group plans through the exchanges. HHS has $250 million to distribute as grants (ranging from $1 to $5 million) to the states to help cover the cost of premium reviews and reporting. HHS will calculate the grant amounts based on a state's population and the number of plans available there.
That closes the book on Title I, Subtitle A. Next week, we'll look at Subtitle B, which applies to uninsured people with pre-existing conditions, retirees, and identification of affordable coverage options.
can you expand on the min. cost ratio? Would covered individuals literally receive a check or something similar when they do not use their entire deductible? Not sure I have read that correctly.
Posted by: Jen | January 19, 2011 at 01:55 PM
Jen,
This has to do with insurance company spending, not an individual insured's deductible. According to HealthCare.gov (http://www.healthcare.gov/law/provisions/premiums/index.html):
Your health insurance company must report yearly to the Secretary of Health and Human Services on the share of premium dollars spent on health care services and quality improvement and any rebates required. The first report, covering calendar year 2011, will be filed June 1, 2012...•Insurers will be required to make the first round of rebates to consumers in 2012. If you are owed a rebate you will receive a reduction in your premiums, a rebate check, or, if you paid by credit card or debit card, a lump sum reimbursement to your account. If your employer paid all or part of your premium, the same share of any rebate may go to your employer.
This provision has been controversial because it makes no allowance for agents' and brokers' commissions, leading some to believe that insurers will cut commission levels. The IIABA is lobbying Congress to modify this.
Posted by: Tim Dodge | January 20, 2011 at 09:33 AM