Learning Objective 6 Flashcards
The “Triple Aim” (3 goals) of healthy policy [Card 246]
Almost impossible to get all three done:
Better care/quality
Better health/access
Lower costs
Causes of poor health and public initiatives to address them [Card 247]
Acronym - LESS Well Doing
LIFESTYLE - people are overweight and lazy
ENVIRONMENTAL - violence, dirty water, pollution
SOCIOECONOMIC factors - poor people have poor health
SUBSTANCE abuse - smoking/drinking/drugs
WELLNESS programs - disease mgmt, smoking cessation, diet, fitness etc
DISEASE prevention - immunizations and flu shots
ACA individual and group mandates [Card 248]
Acronym - TIMBERGER!
TIERS for metallic levels
INDIVIDUAL mandate
MEDICAL LOSS RATIO - 85% LG, 80% SG & Ind
BENEFIT requirements - see next card
EMPLOYER mandate - 50+ must offer coverage or pay a fee of $2000 * (X - 30), but adjusted for premium tax credits
RATING requirements - phase out of some rating factors
GRANDFATHERING plans in existence before 3/23/10
EHBs - All plans beginning in 2014
RATE REVIEWS
ACA benefit and coverage requirements effective in 2010 [Card 249]
Acronym - Pre 26, Prevent Max Cancels
Must cover dependents < 26 years old
Cannot exclude pre-existing conditions for children
Preventive procedures covered 100%
No lifetime Maxes
Cannot cancels plans unless fraud is detected
ACA rating requirements effective in 2014 [Card 250]
Acronym - War is PG Rated For All American Soldiers
Waiting period must be less than 90 days
No pre-existing conditions exclusions
Guaranteed issue and renewal basis
Rating factors:
a. Family composition
b. Area
c. Age
d. Smoking
Requirements of ACA health insurance exchanges [Card 251]
Acronym - Quality TREE
Insurers must meet many qualification requirements
a. networks
b. marketing
c. reporting
d. customer assistance
TIERS - plans must fall into one of the metallic or catastrophic tiers
RISK POOLING - insurers must pool together all individual plans into a single risk pool, same with SG plans (URRT)
EHBs - plans must include coverage for all essential health benefits
EXCHANGES - for individuals and SG < 100
“Other” ACA provisions [252]
Acronym - MED MED MED Tax Credit Subsidy
Medicare Advantage - rebates based on quality, MLR requirements
Medicare Part D - gap coinsurance from 100% to 25% by 2020, RDS is no longer tax exempt so moving to Part D
Medicaid - All non-medicare members are eligible if under 133% of FPL
SG Tax Credits - Under 25 EEs and avg < $50,000, you can get up to 35% credit on your 50% contribution to benefits
Premium credits - if between 133% and 400% of FPL
Cost sharing subsidy - if at Silver level on exchange with 100% - 400% of FPL
Potential problems in an unregulated insurance market [Card 253]
Acronym - Insurance for Total Destruction
Insolvency risk at a moments notice could leave policyholders without coverage
Time would be needed to research every competitor to determine who is dishonest, and that’s just unrealistic
Dishonest companies gain an edge through:
a. Misleading marketing materials
b. Unfair prices (only appears to be good value)
c. Inadequate reserves
Goals of insurance regulation [Card 254]
Acronym - BIP is bad, but insurers crush Fantas (BIP CR FS)
ELIMINATE:
Policies not providing the benefits expected
Insolvency
Policies that provide poor value
GOOD:
Solve consumer problems
Raise tax money
Fair competition
Promote social goals
The steps of regulation [Card 255]
Acronym - LIPPER (regulators are like sheriffs w dip)
LICENSING - firm agrees to be regulated
INFORMATION gathering - monitor financial soundness, compliance etc.
PRIOR approval of - language, rates, reinsurance arrangements, dividends, mergers, investments
ENFORCEMENT - fines, penalties etc
RECEIVERSHIP - take over the company if they become insolvent
Actions commonly taken by state regulators to help prevent insolvency [Card 256]
Acronym - Capital Guarantees Reserves
Capital requirements - protect against adverse deviations
Guarantee funds - NAIC Life & Health Guarantee Association Model Act guides the states
a. protects insureds from insurer insolvency
Reserve requirements - Limits insolvency risk
Federal regulation of insurance in the United States (laws)
McCarran-Fergusan Act of 1945 - gives states authority over insurance
ERISA - EE retirement Income Security Act of 1974
a. COBRA is a part of this
b. HIPAA as well
c. Requires funds placed in retirement accounts be there when member retires
HIPAA - Plans must be portable between groups
ACA - Requires individuals to purchase health care
Types of consumer protection regulation in the Unisted States
Acronym - Disclose Nessy!
Disclosure - must disclose key features of policy to insured (EOBs)
Reasonableness - premiums must be reasonable and EHBs must be covered
Fairness - includes prohibitions on discrimination even though data may support it (unisex rating)
a. restricts ability to classify risks
Responsibilities of the insurance Commissioner [Card 258]
Acronym - RAPE & BROILS
REGULATIONS to implement insurance laws
ADVERTISING must be fair and accurate
PROMPT payment from insurers
EXAMINATIONS for licensed insurers
Review BUSINESS practices - UW Review RATE filings OVERSEE operations of insurance dept INTERPRET laws LICENSE insurers, brokers etc Regulate SOLVENCY - Most important duty
Reasons for an insurance commissioner to assume an insurer’s assets [Card 259]
Acronym - QuEST to NC
QUESTIONABLE officers are not removed from office
ENDANGERED capital or surplus
STATE law violations
TECHNICAL insolvency
NON-COOPERATION with examiners
CHARTER violations
Standard group contract provisions required by most state insurance laws [Card 260]
Acronym - SEE MAGIC
STATEMENTS made by the insured are considered representations, not warranties
EVIDENCE of insurability - must state when it is required
EOB - Must send explanation of benefits and eligibility criteria
MISSTATEMENT of age - must state how premiums change if you give the wrong age
APPLICATION - has to be made part of the policy
GRACE period - 31 days for payment of premium
INCONTESTABILITY - cannot contest validity of policy after 2 years
CERTIFICATES - must be issued to policyholder for delivery to all insured
Additional contract provisions for group HEALTH plans ONLY [Card 261] (in addition to 260)
Preexisting conditions - limited to 6 months before effective date
Notice of proof of claims - insurer must receive a notice of claim within a certain time frame
Legal actions - time period when legal action CANNOT be brought on a claim (i.e. first 60 days)
Additional contract provisions for group LIFE plans ONLY [Card 262] (in addition to 260)
Acronym - BC x DC x DC
BENEFICIARY must be identified
CONVERSION rights - can convert to indiv policy
DISABILITY CONTINUANCE - can continue coverage for up to 6 months if you become totally disabled
DEATH in CONVERSION - die while converting (31 days) and amount being converted gets paid as a claim
Provider protections related to preferred provider arrangements (PPOs) [Card 263]
Acronym - NOLA
Non-Preferred providers are sometimes covered - eliminates option of having EPOs
Other types of specialists - chiropractor, dentist, optometrist may be in PPO network
LIMITS on benefit differential between in and out of network providers
ANY-WILLING PROVIDER laws - require insurers to accept any provider that meets the criteria to participate
Consumer protections related to PPOs [Card 264]
Acronym - PAQ
PPA Model Act - if patient receives emergency care but has to go out of network, will be reimbursed like it was in network
ADEQUATE ACCESS to providers and services
Regulate QUALITY assurance
Requirements for an HMO to obtain a certificate of authority [Card 265]
Acronym - DCF has to perform PIG QC
DESCRIPTION of organization
CONTRACTS with providers
FINANCIAL info
PROVIDER info
INSOLVENCY protection - gotta have enough money
GRIEVANCE procedure - how do you handle complaints
QUALITY assurance program
COVERAGE agreements - indiv and group contracts
Advantages of federal qualifications for HMOs [Card 266]
Acronym - Master P’s Electoral Extravaganza
Allowed to contract as a MEDICARE/MEDICAID carrier
PREEMPTS state laws that prevents compliance
EQUAL contribution requirement - cannot discriminate against someone enrolled in federally qualified HMO
ERISA compliant
Disadvantages of federal qualification for HMOs [Card 267]
Acronym - Chris Rock Needs Money (that’s why he made that horrible movie where he was President)
COPAY restrictions
RATING restrictions
NON-QUALIFIED HMOs need their own line of business
MINIMUM coverage requirements are higher than state
HIPAA reforms related to portability and availability [Card 268]
Acronym - PSHH how bout a CIGAR?
PRE-EXISTING conditions exclusions only imposed in certain situations
SPECIAL enrollment periods for eligibles to enroll
HEALTH STATUS UW - eligibility cannot be based on health, and evidence of insurability is not required
HEALTH STATUS rating - higher premiums can’t be charged based on health status
CANNOT deny continued coverage unless groups don’t pay or commit fraud
GUARANTEED issue
RENEW all groups unless they don’t pay or commit fraud
Administrative functions that health benefit exchanges must provide [Card 269]
Acronym - Rescue the Consumer (RESQ C)
Plans meet the REQUIREMENTS of the HBE
ELIGIBILITY determinations
STANDARD benefit formats - easy to follow
QUALITY ratings for every plan
CERTIFICATION of exemption from individual mandate
Key decisions states must make related to health benefit exchanges [Card 270]
Acronym - SPA BC of VG CRAMPS
SHOULD the state even set up a HBE? Or use federal?
PARTICIPATION?
ANTISELECTION issues - risk adjustment
BASIC HEALTH PLAN - If < 200% FPL, not on exchange
CARRIERS - are they required to join?
VALUE-ADDED services - enhance online comparison tool or collect subsidy/premium for distribution
GOVERNMENT structure - part of DOI? Independent?
CARRIERS - how does the HBE pick who they want? Open Market or Active Purchaser?
REGIONAL exchange? Or in state?
ADMIN expense funding - how? taxes? carriers/provider?
MERGED MARKET? - combine SG and indiv risk pool?
PARTIAL CRED - 51 to 100 on HBE? By 2016
STANDARD benefits at each tier? - kills competitive nature of the market and innovation
Approaches for the state to control which carriers participate in the exchange [Card 271]
Acronym - OSSA
OPEN market - anyone who meets requirements
SETTING STANDARDS - additional standards for QHPs
SELECTIVE contracting - based on comparative value
ACTIVE purchaser - negotiate premiums with insurer
Major federal laws governing group health plans [Card 272]
ERISA, COBRA, HIPAA, ACA
ERISA - Employee Retirement Income Security Act 1974
a. Requires disclosure of financial info concerning plan
b. Sets fiduciary standards and code of conduct
c. Ensures claim disputes resolved in a timely fashion
COBRA - Consolidated Omnibus Budget Reconciliation Act 1985
a. Gives employee ability to continue coverage after leaving employment
b. 18 months after terminations
c. 102% of premium
HIPAA - Health Insurance Portability and Accountability Act 1996
a. Can only exclude conditions treated in the last 6 mo
b. Exclusions can only last 12 months
c. ACA amended excl for < 19 in 2010, and all in 2014
d. Cannot rate based on: health status, medical condition, claims experience, medical history, disability
ACA - Affordable Care Act
a. Amended HIPAA
b. Requires employers to provide adequate and affordable coverage for their employees
Taxation of major group insurance benefits [Card 273]
HEALTH - medical, dental, vision, Rx
a. Employer gets a tax deduction for expenses
b. Individuals only get federal tax deduction
c. Same for FI and ASC plans
d. No limits on the amount of tax-favored benefits
e. Benefit value for employee and dependents are free from income and employment taxes
GROUP TERM LIFE
a. Similar to health insurance - deduction for expenses
b. Tax free coverage is limited to $50,000 benefit
c. Tax-favored status doesn’t extend to dependents
d. Benefit value for employee (but NOT dependents) are free from income and employment taxes
DISABILITY
a. Employer’s expenses are deductible as paid
b. If value of coverage is taxed, proceeds paid to disabled individuals are NOT
c. If value of coverage is NOT taxed, then proceeds are taxable
LTC
a. Proceeds under qualified plans are deemed to be health insurance and have same tax treatment
Major small group rating requirements from the NAIC model law [Card 274]
Acronym - No AIR I C
ALLOWABLE RATING FACTORS
a. Not subject to premium range limitation tests below
INDEX RATE
a. Average the highest and lowest premium rates
b. AFTER rates have been adjusted for allowable rating factors and benefit design variations (normalized)
RATE INCREASE LIMIT = sum of:
a. % change in new business rate from prior to current
b. 15% annually for experience
c. Adjustments for change in coverage
INTRA-CLASS RESTRICTIONS a. Rates within a class cannot vary by more than 25% of index rate
CLASS RESTRICTIONS (2 diff classes) a. Rating differential between lowest and highest classes cannot be by more than 20%
Allowable rating factors [Card 275]
Age Gender Area Group Size - max 20% from highest to lowest Family composition Industry - 15% from highest to lowest Other - if given approval
Information needed for reviewing and certifying small group rates [Card 276]
Acronym - The Actuarial CLUMPS
All group level data - rates, size, eff date, benefit changes
Claims data Loss Ratio reporting UW details Marketing materials Policy forms used SG rate manuals (current and prior period)
Types of coverage and nondiscrimination tests for cafeteria plans [Card 277]
Acronym - What the ECK!
Must pass ALL 3 tests, otherwise key employees are taxed on the value of their benefits
ELIGIBILITY TEST
a. Length of service test - no employee is required to complete 3+ years of employment to be eligible
b. Uniform eligibility requirements
c. Does the plan discriminate in favor of higher salaries
CONTRIBUTIONS & BENEFITS TEST
a. Mathematical testing with respect to benefit levels
b. Selection of benefits must not be chosen by all highly compensated people
KEY EMPLOYEE CONCENTRATION TEST
a. Nontaxable benefits for key employees cannot exceed 25% of aggregate benefits for all employees
b. Key = $160k+ salary, 5% owner, 1% owner & $150k
Advantages and disadvantages of pre-tax qualified benefits [Card 278]
Advantages
a. Benefits are not taxable
b. Benefits are a substitute for taxable wages
Disadvantages
a. No carryover of funds
b. Many qualification rules
c. Elect benefits at beginning of year
d. May not discriminate in favor of highly paid indiv
Simple Cafeteria Plans - What are they??
ACA amendment to allow small groups 2-100 to establish “Simple Cafeteria Plans”
Must have specific eligibility and contribution requirements, and in return is exempt from testing
More stringent eligibility requirements than regular cafeteria plans
a. includes all employees with 1000+ hours of service in preceding year
Specific employer contributions requirements
Lower admin costs
Special state funds to solve (taxation) health insurance problems [Card 279]
Acronym - Special Health State Funds (SHS)
Solvency Funds
a. separate fund for health insurance to cover insurer insolvencies
High Risk Pools
a. Cover high risk individuals who can’t get past UW
b. Charge a premium, but it’s inadequate so carriers pick up the rest
Small Group Pools
a. required to offer 2 plans (basic and standard) on a guaranteed basis to individuals who were rejected for other coverage
Terminology used in health reform [Card 280]
Actuarial Value - average share of medical spending paid for by the plan
Actuarially equivalent - same AVs
Comparative effectiveness research - compares new treatments and technologies to what currently exists
Guaranteed issue - provide coverage regardless of health status
High-Risk pools - provide subsidized coverage for individuals who have pre-existing conditions and have been uninsured for 6 months
Individual Mandate - all individuals are required to have health care coverage
Pay for Performance - incentive programs to reward providers for hitting metrics (quality, safety, efficiency)
Premium rating rules/factors - Age (3:1), Tobacco (1.5:1), Family size and Geography
Reinsurance - reimburses insurers for high cost individuals (retirees 55-64 until 2014, SG/Ind first 3 yrs)
Risk Adjustment - tool to adjust payments between health plans to compensate insurers with a riskier pool
Risk Corridor - Limits downside and upside for individual and small group pricing
a. Plan gets money from govt if > 103% target alloweds
b. Plan pays money to govt if < 97% target alloweds
Risk Based Capital - amount of capital that a company needs to support operations based on assumed risk
Risk Pooling - large groups of individuals or employers whose costs are combined to calculate premiums
Value based insurance design - varies cost sharing to encourage services with clinical benefits and discourage those with little or no evidence of a benefit
ACA individual mandate tax penalties [Card 281]
Tax penalty is the greater of:
- A dollar amount ($95 in 2014, $325 in 2015, $695 in 2016, and indexed after that)
- A percentage of taxable income (1% in 2014, 2% in 2015, 2.5% in 2016 and beyond)
ACA risk sharing mechanism (3Rs) [Card 282]
Reinsurance - 2014 to 2016 - reimburses insurers for high cost individuals (retirees 55-64 until 2014, SG/Ind first 3 yrs)
Risk Adjustment - PERMANENT - tool to adjust payments between health plans to compensate insurers with a riskier pool
Risk Corridor - 2014 to 2016 - Limits downside and upside for individual and small group pricing since there is no data on many uninsureds
a. Plan gets money from govt if > 103% target alloweds
b. Plan pays money to govt if < 97% target alloweds
c. Govt bears 50% of spending between 3% and 8%
d. 80% beyond 8% of target
ASOP #8 - Recommended practices for actuaries preparing health filings [Card 283]
ASOP #8 - To provide guidance regarding preparation and review of regulatory filings for health insurers
Acronym - LC PRANCER BIRD
Know the LAWS
Review all CALCULATIONS
State the PURPOSE of the filing
Be familiar with RATING FACTORS
Decide what ASSUMPTIONS are needed
Consider how to handle NEW PLANS
CAPITAL/SURPLUS projections should account for future actions that will impact either
EXPERIENCE data needs to be properly adjusted
Assumptions must be REASONABLE
Make sure you are being consistent with BUSINESS plan
Reliance on INFO from others - use ASOP #23
Projections to compare to REGULATORY BENCHMARKS should be based on available information (LR requirements, are rates excessive? Are they discriminatory?)
DOCUMENTATION
ASOP #8 - Assumptions that may be needed for a rate filing [Card 284]
Acronym - RPM PIT Crew RPM
RETENTIONS
PREMIUM LEVELS - now and future
MARGIN
PAD levels
INVESTMENT EARNINGS
TRENDS - morbidity, mortality, lapsation
COST TRENDS
REINSURANCE impact
PROVIDER contracting changes
MEMBERSHIP changes after increase
ASOP #8 - When using past experience to project future results, adjust for material changes in…. [Card 285]
Acronym - MC PC CREPT PASS BED
MEDICAL practice
COST CONTAINMENT procedures
POLICY conditions
CLAIMS
CATASTROPHIC CLAIMS REGULATIONS EXPENSES PREMIUMS TAXES
PROVIDER contracts
ADMIN procedures
SEASONALITY
SELECTION of risks
BUSINESS operations
ECONOMIC conditions
DEMOGRAPHICS
ASOP #26 - Documentation needed to SUPPORT the actuarial certification of compliance with small group rating methods [Card 286]
ASOP #26 - Guides the preparer for actuarial certification by identifying the issues to be addressed and the required documentation
All of this is to ensure COMPLIANCE
What has been reviewed?
- Description of rating methods
- Plan contracts and certificates
- Sales brochures
- Rating Manual
- Formulas
- Test calculations
- Description of contract changes
- Fees
Demonstrate how the rates are compliant with an example
Document all the underlying assumptions to demonstrate compliance
ASOP #26 - Items to DISCLOSE in an actuarial certification of compliance with small group rating methods [Card 287]
Acronym - Matt PRATER
PRACTICES covered REGULATORY compliance ACTION ITEMS if not compliant TIME PERIOD covered EVENTS that may change things RATING METHODOLOGY changes
ASOP #41 - Disclosures required in an actuarial report [Card 288]
ASOP #41 - Communications that include an actuarial opinion
Acronym - C U DISPLACD
CAUTIONS about risk or uncertainty
Intended USERS of this report
DATA DATE - through when? INFORMATION that was relied on, but not yours SUBSEQUENT events that could have an impact PURPOSE of the assignment LIMITATIONS of use with findings ACKNOWLEDGEMENT of your qualifications CONFLICTS of interest DOCUMENTS for distribution
ASOP #41 - Disclosure requirements for ASSUMPTIONS and METHODS used in an actuarial report [Card 289]
Who did what??
a. Identify the responsible parties for all assumptions
If prescribed by LAW, then disclose the law and if you are in accordance with it
If by another USER, then you have three options:
- If you agree with it - do nothing
- If you disagree with it - disclose that fact
- If you are not able to judge - disclose that
