Objective 6 - Regulation and Taxation Flashcards
The “triple aim” (three goals) of health policy
- Better care for individuals - Institute of Medicine lists 6 characteristics of quality health care: safe, effective, patient-centered, timely, efficient, equitable
- Better health for populations - public health initiatives to address upstream causes of poor health (list)
- Lower per-capita costs
Causes of poor health and public initiatives to address them
- Environmental factors contributing to poor population health:
a) Unsanitized water
b) Pollution (air, water)
c) Violence (domestic, street)
d) Unhealthy living environment
e) Food-borne illnesses
f) Lack of access to fresh, healthy foods - Community disease prevention - initiatives include childhood immunization requirements, free flu shots and preventive screenings
- Lifestyle (obesity epidemic) - initiatives include healthy school lunch programs, safe pedestrian walkways, taxes on unhealthy foods
- Smoking and substance abuse - anti-smoking laws have been effective
- Socioeconomic factors - income related to poor health. Social programs like Medicaid try to address.
- Wellness and disease management solutions - include programs around disease prevention, smoking, diet, fitness, weight loss
PPACA individual and group market reforms
- Individual mandate (list)
- Employer mandate - beginning in 2014, employers with 50+ full-time employees must offer coverage or pay a fee = $2,000 * (full-time employees - 30), adjusted based on number of employees who receive premium tax credit
- Essential benefit package - must be offered by all qualified health benefit plans by 2014. Will provide comprehensive set of services, cover preventive without cost sharing, cover at least 60% of AV of covered benefits, limit annual cost sharing to current law HSA limits
- MLR - starting in 2011, plans must provide rebates to consumers if MLR is below 85% for LG (101 or more Ees) or 80% for SG and Ind
- Benefit and coverage requirements (list)
- Rating requirements (list)
- Benefit tiers - new plans must be platinum (90%), gold (80%), silver (70%) or bronze (60%). May offer catastrophic plan to enrollees under 30, those exempt from individual mandate
- Grandfathering of existing plans - plans in existence on March 23, 2010 are exempt from many PPACA requirements. But most benefit and coverage requirements still apply.
PPACA benefit and coverage requirements effective in 2010
- All individual and group plans must cover dependent children up to age 26
- Rescissions of insurance coverage are prohibited except for fraud
- Pre-existing condition exclusions for children are prohibited
- No individual or group plans may impose lifetime limits. Plans may impose annual limits only for non-essential health benefits (was graded in thru 2014)
- Services rated A or B by USPSTF must be covered at 100%
PPACA rating requirements effective in 2014
- Individual and small group plans must be offered on guaranteed issue and renewal basis
- Plans may not impose pre-existing condition exclusions
- Rating variation allowed only based on:
a) Age (limited to 3:1 ratio highest:lowest)
b) Geographic rating area
c) Tobacco use (limited to 1.5:1 ratio)
d) Family composition - Waiting periods for coverage must not exceed 90 days
Provisions of PPACA health insurance exchanges
- Each state will have American Health Benefit Exchange for individuals and Small Business Health Options Program (SHOP) for businesses with up to 100 Ees
- Plans in exchanges must cover essential health benefits, have OOP limit at or below HSA limit, and fall into on metal tier
- Risk pooling - insurers must pool all individual market plans (other than GF) into a single risk pool. Similarly, must pool all SG plans.
- Participating insurers must meet many qualification requirements such as networks, marketing, reporting, consumer assistance
- Exchanges may also offer Consumer Operated and Oriented Plans (CO-OPs), which are nonprofit, member-run health insurance companies
Other PPACA provisions
Not covered by other lists
- Premium credits and cost sharing subsidies for those with low incomes (effective 2014)
a) Premium credits for qualified individuals with incomes 133-400% of FPL for covg purchased through exchange
b) Cost sharing subsidies for those enrolled at silver level in exchange with incomes 100-400% of FPL - Small business tax credits
- Medicare provisions
a) MA plans can receive bonuses or re-allocations of rebates based on quality. Beginning 2014, subject to MLR requirements
b) Medicare Part D - beneficiary coins in gap will be phased down from 100% to 25% by 2020. RDS payments lose tax exempt status starting 2013 - Revenue provisions
a) New health insurer tax will collect $8 billion in 2014, grading up to $14.3 billion in 2018, indexed thereafter
b) Excise tax for high-cost health plans beginning 2018
c) Limitations to tax-favored allowances for FSAs and HSAs
d) New taxes on certain medical devices - Medicaid expanded to all non-Medicare elig. inds with incomes up to 133% of FPL. Due to Supreme Court ruling, fed govt cannot withhold original Medicaid funding from states who do not expand
Potential problems in an unregulated insurance market
- A dishonest company could gain competitive edge via:
a) Misleading marketing materials
b) Unfair price (only appears to be good value)
c) Inadequate reserves - Customers do not have time or expertise to determine which firms are dishonest
- Companies could become insolvent with no warning, leaving policyholders without coverage
Goals of insurance regulation
- Eliminate policies not providing benefits expected
- Prevent insolvency
- Eliminate policies that provide poor value
- Solve minor consumer problems
- Maintain fair competition
- Raise tax money
- Promote social goals
The steps of regulation
- Licensing - firm agrees to be regulated. Agents may be required to get a license
- Information gathering - purpose is to monitor financial soundness, confirm compliance, provide consumer information, design new regulatory requirements
- Prior approval of policy language, premium rates, reinsurance arrangements, dividends, mergers, investments
- Enforcement - includes penalties such as fines, legal action and/or license removal
- Receivership - may initially track financial condition, or may take over insolvent company
Actions commonly taken by state regulators to help prevent insolvency
- Capital requirements (such as RBC) - protect against adverse deviations in experience
- Guaranty funds - all companies assessed to create fund to protect insureds of insolvent companies
- Reserve requirements - for claim reserves and liabilities, contract reserves, provider liabilities, and premium deficiency reserves
Types of consumer protection regulation in the US
- Disclosure - must disclose to potential customer the key features of insurance policy. May include shopper’s guide, outline of coverage, summary of benefits, or illustration
- Reasonableness - includes mandated benefits, prohibited exclusions. Premiums must be reasonable in relation to benefits (MLR)
- Fairness - includes prohibitions on discrimination even though data may support it (i.e., unisex rates)
Responsibilities of the insurance commissioner
- Oversee operation of insurance department
- Interpret insurance laws
- Make regulations implementing insurance laws
- License insurance companies, agents, brokers, consultants
- Conduct examinations of licensed insurers, assess penalties for violations of laws
- Review form and rate filings - some states require that commissioner approve forms and rates prior to use
- Regulate advertising - to protect consumers from unfair, inaccurate, deceptive, and misleading advertisements
- Regulate business practices - such as underwriting and claims practices
- Enforce prompt pay laws
- Regulate insurer solvency - most important duty of the commissioner
Reasons for an insurance commissioner to assume an insurer’s assets
- Non-cooperation with examiners
- Refusing to remove questionable officers
- Charter violations
- State law violations
- Endangered capital or surplus
- Technical insolvency
Standard group contract provisions required by most state insurance laws
- Grace period - 31-day grace period for payment of premium
- Incontestability - validity of policy cannot be contested after the policy has been in force for 2 years
- Application and statements - application has to be made part of policy, and statements made by insured are considered representations (not warranties)
- Evidence of insurability - policy must state when evidence of insurability is required
- Misstatement of age provision - policy must state how premiums or benefits will be adjusted due to misstatement of age
- Certificates - insurer must issue certificates to policyholder for delivery to each insured
- Benefits and eligibility - policy must state the benefits and to whom they are payable, and include specific terms of eligibility for coverage
Additional contract provisions for group health plans
In addition to standard group provisions (separate list)
- Preexisting conditions - provision describes exclusions or limitations applying to preexisting conditions
- Notice of proof of claims - establishes time limit for notifying insurer of loss
- Legal actions - provision specifies a time period in which legal action may not be brought on a claim (e.g., during claim’s first 60 days)
Additional contract provisions for group life plans
- Must be a provision identifying the designated beneficiary
- Conversion rights - provision allows policy to be converted to individual policy in certain situations
- Death during the conversion period - if person dies within conversion period, amount available to be converted will be paid as a claim
- Disability continuance - active employees that become totally disabled can continue coverage for up to 6 months by paying the premium
Provider protections related to preferred provider arrangements
- Any-willing-provider laws - require insurers to accept any provider that meets insurer’s terms for participation
- Limitations on benefit differentials between preferred and non-preferred providers - to limit how much extra coinsurance member must pay for non-preferred provider
- Coverage of non-preferred providers (req in some states) - effectively precludes exclusive provider arrangements
- Requirements that allied medical practitioners (chiropractors, dentists, and optometrists) be included in PPOs - these reqs are not common
Consumer protections related to preferred provider arrangements
- Insurers must assure reasonable access to covered services and an adequate number of providers
- Some states have tried to regulate quality assurance (measuring quality is difficult)
- Requirements that patients receiving emergency care will have costs reimbursed as though treated by a preferred provider
Requirements for an HMO to obtain a certificate of authority
- A description of the HMO’s organization, governance, and management
- Contracts with providers - including copies of contracts between providers, TPAs, and other third-party vendors
- Coverage agreements - including copies of individual and group contracts and evidence of coverage forms
- Financial information - including financial statements and a financial feasibility plan
- Provider information - including a description of the geographic service area and a list of all providers
- Grievance procedure - a description of the HMO’s procedure for handling grievances
- Quality assurance program - details of the program for credentialing providers, evaluating care, initiating correction, and reevaluating deficiencies
- Insolvency protection measures - must satisfy minimum net worth requirements, and a deposit of cash or securities is usually required
Advantages of federal qualification for HMOs
- The equal contribution requirement - employers that offer a federally-qualified HMO cannot financially discriminate against a person enrolling in that HMO
- The HMO is allowed to contract as a Medicare or Medicaid carrier
- The federal HMO act preempts all state laws that would prevent the HMO from acting in accordance with the federal HMO act
- Federally-qualified HMOs may be automatically deemed to comply with ERISA’s claim appeal requirements
Disadvantage of federal qualification for HMOs
- The 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” copayments
- Federal restrictions on rating may be more restrictive than state requirements
HIPAA reforms related to portability and availability
- Pre-existing condition exclusions - may not be imposed except in certain situations
- Health status underwriting - eligibility cannot be based on health, and evidence of insurability cannot be required
- Health status rating - higher premiums cannot be charged on the basis of health status
- Special enrollment periods - to permit eligible individuals who lost other coverage to enroll
- 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 - small group carriers must accept all small employer groups and all eligible individuals within those groups
- With certain limited exceptions, insurers must renew or continue inforce coverage for all groups
Administrative functions that health benefit exchanges must provide
- 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