Tag Archive: Affordable Care Act

Federal government expands ACA transitional relief for individual, small group plans

The U.S. Department of Health and Human Services issued guidance today affording states and health plan issuers more time to optionally keep in place health plans not compliant with Patient Protection and Affordable Care Act requirements relating to minimum benefit levels, modified community based rating and guaranteed issue to all applicants without medical underwriting.

The Center for Consumer Information and Insurance Oversight’s extended transitional policy provides transitional relief from these requirements for plans issued through October 1, 2016 as well as the ACA’s requirement that health plan issuers use single statewide risk pools for the individual and small group markets, respectively.

The newly issued guidance follows on similar guidance issued to state insurance commissioners in November 2013 that gave states the option of relieving individual and small group plans from these ACA provisions through September 2015. That guidance was issued in response to a consumer uproar when health plans issued cancellation notices for non-ACA compliant health plans — many of them falling into a time gap between grandfathered plans that were in place when the ACA was enacted in March 2010 and January 1, 2014 when all individual and small group plans must be ACA compliant. President Obama complained the ACA grandfather clause proved “insufficient” in allowing for this gap.

Today’s guidance also extends guidance issued December 19, 2013 permitting individuals whose non-ACA compliant policies were cancelled to qualify for a hardship exemption from the requirement all individuals have health coverage. That exemption allows them to purchase catastrophic coverage and is being extended to October 1, 2016.

Under today’s guidance, states may choose to adopt both the November 2013 transitional policy and the extended transitional policy through October 1, 2016, or adopt one but not the other. States also have the option to apply the relief to both the individual and the small group markets or just one market. Additionally, states can opt to apply the transitional relief solely to large employers if they choose to define the small group market as being employers of 100 or fewer employees for policy years beginning on or after January 1, 2016 as authorized by the ACA.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

For some areas, Affordable Care Act’s goal of enhanced competition proves elusive

The individual and small group insurance market reforms of the Patient Protection and Affordable Care Act are based on a principle known as managed competition. As the term implies, managed competition attempts to bolster market competition by imposing market rules governing what is sold in a given market segment and under what conditions. (The role of managed competition in health care was first described in the late 1970s by economist Alain Enthoven).

The Affordable Care Act’s brand of managed competition is designed to improve choice and value for individuals and small employers when it comes to buying health plans. For insurers, the reforms are also aimed at restoring functionality to these insurance market segments by enhancing the risk spreading function of insurance by mandating they lump together individuals and small employers, respectively, into single statewide risk pools.

The Affordable Care Act gives health plan issuers — including those of multi-state plans created under the law aimed at boosting plan competition and choice — the option to determine whether to offer plans in a given state rating region and at what price. It also doesn’t affect the number of health care providers in a given region, which can vary widely across the United States and particularly between urban and rural areas. Consequently, the Affordable Care Act’s goal to enhance competition and value in individual and small group health coverage can be difficult to achieve in some areas of the nation as Jordan Rau of Kaiser Health News reports. Click here for Rau’s piece published in The Washington Post.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

States tell Obama: Let the market sort it out

The Patient Protection and Affordable Care Act intervenes massively in the individual and small group health insurance markets. Effective January 1, 2014, it establishes standards on what health plans must offer, who can buy them, when and where they can purchase coverage, and who is eligible for subsidies to defray monthly premiums.

With any market overhaul on the scale of the ACA’s, there is bound to be disruption of the existing marketplace and push back from those adversely affected. Among the first are those who have individual plans that don’t comply with the new ACA coverage standards issued after March 23, 2010 and are thus not grandfathered under the ACA’s grandfathering provision. They are being hit with a double whammy. Not only are these policies being shut down by the end of the year. People who have them are being informed they will have to replace them with richer plans that meet ACA standards – and those more robust plans will cost them more. Their displeasure prompted the Obama administration to accommodate their concerns by giving states the option to keep those plans well into 2015.

So far, a lot of the states including most recently, California, have instead decided they will carry on and let the market sort it out given so little remaining time for regulators, state-operated health exchanges and health plan issuers to make the needed adjustments during the year-end holiday period that would only confuse consumers. State insurance commissioners cited a lack of consensus on the issue in declining a White House meeting this week.

Moreover, some consumers will still have some options to keep their existing coverage if their plan issuer takes advantage of an ACA loophole that allows issuers to “early renew” coverage by December 31, 2013, thereby extending their coverage for as late as December 31, 2014. Still, not everyone with these plans will be happy as they too will likely come with higher premiums thanks to the relentless underlying trend of rising health care costs.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Obama cites “insufficient” ACA grandfather clause for policy cancellation uproar

At a press briefing this week announcing his administration will allow individual and small group health plan issuers to temporarily continue offering plans that don’t meet new Affordable Care Act standards effective January 1, 2014, President Obama blamed a shortcoming in the law for the confusion and angst arising from cancellation notices plan issuers recently sent out informing policyholders their current coverage is being cancelled. That coverage will no longer be ACA compliant effective January 1, the notices explained, thereby requiring policyholders to get into new plans that meet ACA coverage standards that take effect that year. Here’s what the president said, according to a White House transcript of the briefing:

With respect to the pledge I made that if you like your plan, you can keep it, I think — and I’ve said in interviews — that there is no doubt that the way I put that forward unequivocally ended up not being accurate. It was not because of my intention not to deliver on that commitment and that promise. We put a grandfather clause into the law, but it was insufficient.

What is the “insufficient” ACA grandfather clause referred to by the president? It’s at Section 1251(a)(2) of the law:

 (2) CONTINUATION OF COVERAGE.—As revised by section 10103(d)(1). Except as provided in paragraph (3), with respect to a group health plan or health insurance coverage in which an individual was enrolled on the date of enactment of this Act, this subtitle and subtitle A (and the amendments made by such subtitles) shall not apply to such plan or coverage, regardless of whether the individual renews such coverage after such date of enactment.

That means those enrolled in individual and small group plans as of the March 23, 2010 ACA enactment date can remain in them. But that’s’ where the insufficiency comes in. It doesn’t apply to plans that came about after the March 23, 2010 ACA enactment date. Those plans aren’t grandfathered and become legally obsolete for plan years starting January 1, 2014 and later. Rather than letting them fall through the cracks and to tamp down outrage over the cancellation notices, the administration is asking plan issuers and state regulators to take it up on a voluntary waiver offer to extend these plans out as far as September 30, 2015.

Congress is also acting to amend Section 1251(a)(2) to bring the orphan plans within the scope of the grandfather clause.

H. R. 3406 and S. 1617 would retroactively extend the clause to state:

(2) CONTINUATION OF COVERAGE- With respect to a group health plan or health insurance coverage in which an individual was enrolled during any part of the period beginning on the date of enactment of this Act and ending on December 31, 2013, this subtitle and subtitle A (and the amendments made by such subtitles) shall not apply to such plan or coverage, regardless of whether the individual renews such coverage. (New text shown in italics).

Passed this week by the House, H.R. 3350 does not amend the ACA but rather enacts new law that allows health plan issuers with individual plans in effect as of January 1, 2013 to continue to sell the plans outside of the state health benefit exchange marketplace in 2014 and deems these plans grandfathered for the purposes of meeting minimum plan benefit standards effective that year.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Insurers nervous about Obamacare ‘fix,’ say it could upset markets – Health Exchange – MarketWatch

Insurers nervous about Obamacare ‘fix,’ say it could upset markets – Health Exchange – MarketWatch.

Some health plan issuers didn’t like grandfathering of pre-3/23/10 plans, concerned about the actuarial and risk pool impact of splitting the individual market into two segments: the “old” and the “new” markets as termed by President Obama at today’s briefing.  The old market can operate under pre-Affordable Care Act standards, which mandate specific benefits and minimum actuarial value for all plans sold after January 1, 2014.

Now that states will have the option of temporarily extending post- 3/23/10 plans as Obama announced today, plan issuers complain actuarial projections upon which they based their new offerings on are being thrown out of kilter. They also worry those buying new plans subject to the ACA standards for benefits will be those more likely to use them, threatening the actuarial stability of the risk pool for those covered under the new plans.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Potentially problematic issues in ACA 2014 rollout for exchanges, employers

There are a couple of potentially problematic issues as major components of the Patient Protection and Affordable Care Act roll out now and into 2014 for state health benefit exchanges and large employers.

For the exchanges, it’s verification of household income of applicants for individual coverage. Eligibility for both advance tax credits used to subsidize the purchase of qualified health plans (QHPs) and for Medicaid benefits are means tested based on family size and household income. The rub here is like that standard investment caveat: past performance does not necessary predict future performance. The same principle applies to household incomes, particularly in a sketchy economy still trying to regain solid footing five years after the 2008 economic downturn. What households earned in 2013 does not necessarily mean that’s what they will earn in 2014, the time frame that determines their eligibility for Medicaid and QHP premium subsidies. Timothy Jost describes the problem in this post at the HealthAffairs Blog:

[V]erification in advance of how much lower-income American families will earn over a year is a fantasy. Lower-income Americans often work in part-time, intermittent, or seasonal jobs and are paid hourly wages, making predicting income exactly a year in advance simply not possible.

The agreement to end last month’s federal government shutdown requires state health benefit exchanges pre-verify the eligibility of individuals applying for premium tax credits and cost sharing reductions. By January 1, 2014, the federal Department of Health and Human Services must describe to Congress the procedures used by the exchanges verify eligibility for premium tax credits and cost-sharing reductions. This summer, HHS issued guidance informing exchanges to attempt to verify income using Internal Revenue Service and Social Security income data provided state exchanges via the federal data services hub.

The income verification issue could end up further complicating an already difficult first year rollout of the exchange marketplace. It may also be overblown in terms of concern that those seeking premium and cost sharing assistance and Medicaid will get more than they are entitled. There are well established income tax planning practices enrollees can keep in mind when they sign up for coverage through the exchange marketplace. Employees know if they claim too many withholding exemptions, they could get stuck owing taxes when they file. Most err on the side of caution and declare too few in order to get a refund of what amounts to an interest free loan to the government. Self employeds pay quarterly estimated taxes and know if they pay too little, they face a big tax bill the following year and possible penalty for underpayment of quarterly amounts due. Enrollees can be counseled to keep these comparative examples in mind to avoid a big tax bill as well as potential penalties if they fraudulently misrepresented their incomes in order to qualify for subsidies or Medicaid.

Employers face potential legal hazard in 2014 as they prepare for the large employer mandate that takes effect in 2015. Those that reduce employees’ average weekly hours to less than 30 in order to avoid having them counted as full time employees for the purposes of the Affordable Care Act’s requirement that employers of 50 or more full time employees provide them health coverage could find themselves in court. Employment law firms warn these employers could face legal exposure under Section 510 of the Employee Retirement Income Security Act of 1974 (ERISA), which bars employers from firing, disciplining or discriminating against employees for the purpose of interfering with their access to employee benefit plans. Adam C. Solander and Elizabeth B. Bradley of the law firm Epstein Becker Green explain at Law360:

In the context of the employer mandate, plaintiffs are likely to argue that an employer’s workforce management efforts interfered with an employee’s right to health coverage. The most likely ERISA 510 claim would seem to involve an employee who averaged 30 hours a week previously. If such an employee’s hours were capped below 30 hours a week, arguments could be made that such a change was made with the intent to deny that individual a right to which he or she would have been entitled. While this scenario seems to be the most likely Section 510 claim, arguments could be made that an employer’s workforce management practices could violate Section 510, regardless of the number of hours the employee worked previously.

Provider networks. For health plan issuers, maintaining networks that offer access to a sufficient number of medical providers to people in their communities could prove challenging, particularly as plan issuers narrow their networks in order to hold down premium rates. Exchanges will also be put to the test to ensure revamped provider listings for Qualified Health Plans are accurately listed on the exchanges.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Troubled launch of federal online exchange marketplace shows importance of IT project risk management

One of the essential elements of prudent project management is to have a plan to manage risks that can derail a project from getting done. Project managers everywhere are likely asking what kind of plan, if any, did the U.S. Department of Health and Human Services have in place to mitigate the risk of the online federal health insurance exchange marketplace that serves nearly three dozen states suffering a serious, systemic failure at launch. If the online marketplace simply bogged down due to heavy traffic during the first week after it opened for 2014 enrollment October 1, that would be a minor risk that could be mitigated by leasing more server capacity or simply by the passage of time as the initial rush died down.

According to today’s New York Times, however, the situation appears more serious than that. The Times quoted people working to get the online system functioning as saying it might not be ready by the December 15 deadline for individuals to enroll for coverage effective January 1, 2014. That would be a catastrophic start to the marketplace since the federal Affordable Care Act and conforming state laws contemplate the new individual health insurance market rules and exchange marketplace effective as of New Year’s Day.

Aware of the time pressure, the Obama administration is crashing the project, pouring in a team of IT experts to work 7/24 to get the online marketplace up and running properly. Many seasoned project managers would likely suspect that wasn’t in the risk management planning but is instead a last ditch response to a crisis.

One option that could have been in the risk management component of the project would have been a team developing a parallel system. If the site didn’t come up, IT staff could then switch over to the parallel site. Yes, it would cost more to have multiple development teams working in tandem. But given the novelty, complexity and high stakes of a functional online exchange marketplace project serving more than half the states, the higher costs would be justifiable.

If the crash fix doesn’t yield rapid relief as The Times story suggests, it’s possible administration officials have a contingency plan to effectively privatize the online federal exchange marketplace by outsourcing it to a commercial entity with experience running an online health insurance marketplace. If it did so, a possible candidate would be EHealth. The company, which operates the online insurance brokerage ehealthinsurance.com, was awarded a $19.3 million contract in July to help develop the federal online marketplace.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

ACA mandates, exchange marketplace could be temporary, 3-year phenom under state waiver provision

Partisan disagreement over the Affordable Care Act’s individual and employer mandates and state health benefit exchange marketplace has jammed the gears of the federal government machinery, leading to a partial government shutdown that began this week. All the strum und drang over these ACA provisions, however, could end up being over a temporary circumstance lasting only three years in at least some states.

Beginning in 2017, ACA Section 1332 titled Waiver for State Innovation allows states to petition the U.S. Department of Health and Human Services for — as the title suggests — a waiver allowing them to opt out of these requirements. The waiver also extends to premium tax credit subsidies and cost sharing reductions for plans sold on the exchange marketplace.

That means states that don’t like the ACA’s approach to restoring their individual and small group markets to functioning can devise their own programs after three years of complying with federal mandates.

The Section 1332 waiver comes with some provisos. States opting out of the ACA rules would have to demonstrate their programs would ensure individual and small group plans would offer coverage at least on a par with plans providing the 10 essential benefits prescribed by the ACA. State programs would also have to ensure residents and small employers have access to coverage with affordable premiums and protections against “excessive” out-of-pocket costs (such as annual maximums) like those for ACA plans and cover a comparable number of residents as ACA plans.

Section 1332 also provides federal funding to aid states opting out of the ACA rules to set up their own programs. States receiving a Section 1332 waiver would be eligible for “pass through” funding operating like an annual block grant. The funding would cumulatively represent what state residents would otherwise be eligible to receive under ACA rules for premium tax credits, cost-sharing reductions and small business credits if they are ineligible for them under the state programs.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Multi-State plans roll out in 30 states, including some large ones and those operating state-based exchanges

The federal Office of Personnel Management (OPM) this week announced a pact with the Blue Cross and Blue Shield Association to offer more than 150 Multi-State Plan (MSP) options in 30 States and the District of Columbia on the Health Insurance Marketplace for plan year 2014.

Section 1334 of the Affordable Care Act creates a federally chartered (via OPM) Multi-State health plan (MSP) that must be offered in 60 percent of the state health benefit exchange marketplace in 2014 and all state exchanges by 2017. Section 1334 requires each state exchange to offer at least two MSPs (one must be a nonprofit) in their individual and small business exchanges. The policy intent is to bolster competition and consumer choice, particularly in states with smaller populations and fewer payers. The Affordable Care Act deems MSPs qualified health plans, according them presumptive eligibility for listing on state exchange marketplaces.

I expected to see MSPs first introduced in federally facilitated and partnership exchanges for 2014 and particularly in less populated states having fewer health plan issuers. Turns out the federal government decided otherwise, opting to initially roll out MSPs in some large states such as Pennsylvania, New York, Illinois and Texas as well as on state-based exchange marketplaces such as California, Maryland, Washington and Nevada. A staggering three dozen MSP options will be offered in Alaska.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Data illustrate growth in insurance coverage of primary care over 50-year period

The California HealthCare Foundation (CHCF) has produced an interactive graphic showing the sources of health care payments in the United States from 1960 to 2011. Particularly striking is the shift in physician and clinical services that comprise much of primary care. In the 1960s, most of these costs were paid directly out of pocket by patients. Beginning in the late 1970s, commercial insurance plans began picking up a larger proportion, reaching a peak of 49 percent in 2005 before declining slightly to 46 percent for 2011, according the CHCF compilation.

Proponents of pre-paid direct primary care contend that covering primary care in the same health plan as high cost catastrophic care such as hospitalization – covered under “major medical” policies in the 1960s — is as nonsensical as using car insurance to cover routine maintenance and oil changes.

The CHCF issued an issue brief on Direct Primary Care Medical Home Plans authored by Dave Chase noting these plans offer significant potential health care cost savings over all inclusive plans such as HMOs while providing economic incentive for primary care physicians – many of whom will be needed to care for new patients obtaining health coverage under the Patient Protection and Affordable Care Act.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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