ObamaCare Health Insurance Rules, Regulations and Standards

ObamaCare’s Proposed Rules and Regulations: The Minimum Standards all Health Insurance Plans Sold on and Off the Exchange

The proposed ObamaCare health insurance rules and regulations are in. The new ObamaCare health insurance rules dictate the minimum standards of all health insurance plans sold off and on the exchange. The rules proposed November 20th 2012 aren’t technically “new”, but are provisions contained within the bill in a simplified cohesive form.

The new health insurance rules will help states to make decisions regarding their exchanges and will help health insurance companies understand how to structure their plans. ObamaCare’s new rules on health insurance also help consumers consumers to understand and compare health plans and employers to promote and encourage wellness.

There are three new sets of rules in total, each proposed by different departments. The ObamaCare Health Insurance Rules are:

Health Insurance Market Reforms Proposed by The Centers for Medicare & Medicaid Services (CMS)

Essential Benefits Proposed by The Departments of Health and Human Services (HHS)

Wellness Programs Proposed by The Departments of Health and Human Services (HHS), Labor and the Treasury

Don’t forget your State’s Health Insurance Marketplace sells health insurance that follows the ObamaCare rules starting October 1st, 2013. Once you familiarize yourself with the new requirements don’t forget to read up on the Health Insurance Exchange Marketplace. The following rules are summarized by healthcare.gov:

Proposed Rule for Health Insurance Market Reforms

The Centers for Medicare & Medicaid Services (CMS) published some key provisions of ObamaCare that prevent insurance companies from discriminating against pre-existing conditions and protect consumers from insurance provider abuses. Today one in two (129 million non-elderly Americans) have some type of pre-existing health condition, which they can currently be denied for. Also, individuals and small businesses struggle to obtain health insurance due to ever rising premium increases. To address these issues the Health Insurance Market Reforms Rules Include:

Guaranteed Availability of Coverage

Health insurance issuers generally would be prohibited from denying coverage to people because of a pre-existing condition or any other factor.  Individuals generally would need to buy coverage during open enrollment periods.  In addition, individuals would have new special enrollment opportunities in the individual market when they experience certain losses of other coverage.

Fair Health Insurance Premiums

Health insurance issuers in the individual and small group markets would only be allowed to vary premiums based on age (within a 3:1 ratio for adults), tobacco use (within a 1.5:1 ratio and subject to wellness program requirements in the small group market), family size, and geography.  All other factors – such as pre-existing conditions, health status, claims history, duration of coverage, gender, occupation, and small employer size and industry – would no longer be able to be used by insurance companies to increase the premiums for those seeking insurance.

Under the law, states can choose to enact stronger consumer protections than these minimum standards.  In addition, starting in 2017, states have the option of allowing large employers to purchase coverage through the Exchanges.  For states that choose this option, these rating rules also would apply to all large group health insurance coverage.  These proposed rules standardize how health insurance issuers can price products, bringing a new level of transparency and fairness to premium pricing.

Single Risk Pool

Health insurance issuers would be required to maintain a single statewide risk pool for each of their individual and small employer markets, unless a state chooses to merge the individual and small group pools into one pool.  Premiums and annual rate changes would be based on the health risk of the entire pool.  This provision prevents insurers from using separate insurance pools within markets to get around the market reforms and to charge people with greater health problems higher premiums by increasing their premiums at higher rates than other, healthier risk pools.

Guaranteed Renewability of  Coverage

The proposed rule would reaffirm existing protections that individuals and employers have with respect to coverage renewal.  For example, these protections would prohibit issuers from refusing to renew coverage because an individual or employee becomes sick or has a pre-existing condition.

In addition, the proposed rule includes some additional provisions to protect consumers and increase choice for small employers.

Catastrophic Plans

The proposed rule also includes provisions for enrollment in catastrophic plans. Catastrophic plans have lower premiums, protect against high out-of-pocket costs, and cover recommended preventive services without cost sharing—providing affordable individual coverage options for young adults and people for whom coverage would otherwise be unaffordable.

Finally, in preparation for the market changes in 2014 and to streamline data collection for insurers and states, the rule proposes amendments to the rate review program.

To see the proposed rule, please visit:  http://www.ofr.gov/inspection.aspx

Essential Health Benefits, Actuarial Value, and Accreditation Standards: Ensuring Meaningful, Affordable Coverage

The Department of Health and Human Services (HHS) published a proposed rule that helps consumers shop for and compare non-grandfathered private health insurance options in the individual and small group markets by promoting consistency across plans, and protecting consumers by ensuring that plans cover a core package of items and services.

Specifically, this rule outlines health insurance issuer standards related to the coverage of essential health benefits (EHB) and the determination of actuarial value (AV), while providing significant flexibility to states to shape how EHB are defined.  Additionally, the rule proposes a timeline for when issuers offering coverage in a Federally-facilitated Exchange or State Partnership Exchange must become accredited.  The rule also proposes an application process for accrediting entities seeking to be recognized to fulfill the accreditation requirements for issuers offering coverage in any Exchange.

An Open, Public Process

The proposed rule reflects extensive collaboration and work with states, small businesses, consumers, and health insurance issuers. Before issuing this proposed rule, HHS published two bulletins outlining our intended approach to EHB and AV.

We received over 11,000 comments on both bulletins, which we reviewed and considered when developing this proposed rule. Commenters on the bulletins represented a wide variety of stakeholders, including states, tribes, tribal leaders and organizations, health plan issuers, consumer groups, health care providers, industry experts, members of the public, and many others.  In addition, HHS also reviewed studies completed by the Institute of Medicine and the Department of Labor.

We invite public comment on the policies contained in this proposed rule. Comments are due by December 26, 2012. Detailed instructions for submitting comments are included in the proposed rule.

Essential Health Benefits

The Affordable Care Act ensures Americans have access to quality, affordable health insurance. To achieve this goal, the law ensures that health plans offered in the individual and small group markets, both inside and outside of Affordable Insurance Exchanges (Exchanges), offer a core package of items and services, known as “essential health benefits.”  EHB must include items and services within at least the following 10 categories:

  1. Ambulatory patient services
  2. Emergency services
  3. Hospitalization
  4. Maternity and newborn care
  5. Mental health and substance use disorder services, including behavioral health treatment
  6. Prescription drugs
  7. Rehabilitative and habilitative services and devices
  8. Laboratory services
  9. Preventive and wellness services and chronic disease management
  10. Pediatric services, including oral and vision care

The Affordable Care Act sets forth that EHB be equal in scope to benefits offered by a “typical employer plan.”  To meet this requirement in every state, the proposed rule defines EHB based on a state-specific benchmark plan, including the largest small group health plan in the state. The rule proposes that states select a benchmark plan from among several options identified in the proposed rule, and that all plans that cover EHB must offer benefits that are substantially equal to the benefits offered by the benchmark plan. This approach balances consumers’ desires for an affordable and comprehensive benefit package, our legal requirement to reflect the current marketplace, and issuer flexibility to offer innovative benefit designs and a choice of health plans.

The benchmark plan options include: (1) the largest plan by enrollment in any of the three largest products in the state’s small group market; (2) any of the largest three state employee health benefit plans options by enrollment; (3) any of the largest three national Federal Employees Health Benefits Program (FEHBP) plan options by enrollment; or (4) the largest insured commercial HMO in the state. The proposed rule also clarifies that in the event a state does not make a selection, HHS will select as the default benchmark the largest small group product in the state, as described in option (1).

If a benchmark plan is missing any of the 10 statutory categories of benefits, the proposed rule has the state or HHS to supplement the benchmark plan in that category. The proposed rule also includes a number of standards to protect consumers against discrimination and ensure that benchmark plans offer a full array of EHB benefits and services. For example, the proposed rule:

  • Prohibits benefit designs that could discriminate against potential or current enrollees
  • Includes special standards and options for health plans for benefits not typically covered by individual and small group policies today, including habilitative services
  • Includes standards for prescription drug coverage to ensure that individuals have access to needed prescription medications.

The appendix of the proposed regulation includes the proposed list of state-selected EHB-benchmark plans, as well as the default benchmark plan for state that does not select a benchmark plan, for public comment. States can make an EHB-benchmark selection until the close of the comment period for this rule.  Further information on the benchmark plans can be found on the CCIIO website.

Actuarial Value

Actuarial Value, or AV, is calculated as the percentage of total average costs for covered benefits that a plan will cover. For example, if a plan has an AV of 70 percent, on average, a consumer would be responsible for 30 percent of the costs of all covered benefits.

Beginning in 2014, non-grandfathered health plans in the individual and small group markets must meet certain AVs, or metal levels: 60 percent for a bronze plan, 70 percent for a silver plan, 80 percent for a gold plan, and 90 percent for a platinum plan. In addition, issuers may offer catastrophic-only coverage with lower AV for eligible individuals. “Metal levels” will allow consumers to compare plans with similar levels of coverage, which along with consideration of premiums, provider participation, and other factors, would help the consumer make an informed decision.

To streamline and standardize the calculation of AV for health insurance issuers, HHS is providing a publicly available AV calculator, which issuers would use to determine health plan AVs based on a national, standard population, as required by law. Under the proposed rule, beginning in 2015, HHS will accept state-specific data sets for the standard population if states choose to submit alternate data for the calculator. The proposed rule includes standards and considerations for plans with benefit designs that the AV calculator cannot easily accommodate.  Consumer-driven health plans, such as high-deductible health plans and health savings accounts, are compatible with the AV calculator. The proposed AV calculator is posted on the CCIIO website.

HHS recognizes that health plans need some flexibility in meeting the metal levels. Therefore, we propose that a plan can meet a particular metal level if its AV is within 2 percentage points of the standard. For example, a silver plan may have an AV between 68 percent and 72 percent. In addition, the proposed rule provides flexibility for issuers in the small group market by permitting issuers to exceed annual deductible limits to achieve a particular metal level.

Accreditation Standards

Timeline for Accreditation Requirement in a Federally-facilitated Exchange and State Partnership Exchange

HHS is proposing that a Federally-facilitated Exchange, including State Partnership Exchanges, will accept existing health plan accreditation from the National Committee for Quality Assurance (NCQA) and URAC on issuer’s commercial or Medicaid lines of business until the fourth year of certification of a qualified health plan (QHP) (e.g., 2016 certification for the 2017 coverage year).  The timeline outlined in the proposed rule ensures that consumers have access to high-quality plans, but also recognizes the significant time that issuers will need to obtain accreditation. QHP issuers that do not have this existing accreditation must schedule the accreditation review in their first year of certification of the QHP (e.g., 2013), and be accredited on their QHP policies and procedures in their second and third years of certification (e.g., 2014 and 2015).  By the fourth year of certification of the QHP (e.g., 2016 certification for the 2017 coverage year), QHP issuers must be accredited on the basis of local performance of its QHP.

Recognition of Additional Accrediting Entities for the Purposes of QHP Certification

In a final rule published in July 2012, HHS recognized the National Committee for Quality Assurance (NCQA) and URAC as accrediting entities for the purposes of QHP certification, subject to the submission of documentation.[2]  HHS has received that documentation and in a Federal Register Notice being issued concurrently with this proposed rule, HHS is recognizing NCQA and URAC as accrediting entities for the purposes of QHP certification. This proposed rule would allow additional accrediting entities to apply to be recognized as accrediting entities.  Under this proposal, HHS would provide an opportunity for public comment on the applicants being considered for recognition and, after close of the comment period; HHS would notify the public of the names of the accrediting entities recognized and those not recognized for the purposes of fulfilling the accreditation requirement for QHP certification.  New applicants to become accrediting entities would be evaluated using the same criteria used to recognize NCQA and URAC.

Read the proposed rule at: http://www.ofr.gov/inspection.aspx

Today, HHS also provided guidance to State Medicaid programs laying out how existing private plans in Medicaid will have to meet the standards of the Essential Health Benefits provision. The guidance can be found here: http://www.medicaid.gov/Federal-Policy-Guidance/Federal-Policy-Guidance.html

The Affordable Care Act and Wellness Programs

Implementing and expanding employer wellness programs may offer our nation the opportunity to not only improve the health of Americans, but also help control health care spending.

The Affordable Care Act creates new incentives and builds on existing wellness program policies to promote employer wellness programs and encourage opportunities to support healthier workplaces. The Departments of Health and Human Services (HHS), Labor and the Treasury are jointly releasing proposed rules on wellness programs to reflect the changes to existing wellness provisions made by the Affordable Care Act and to encourage appropriately designed, consumer-protective wellness programs in group health coverage. These proposed rules would be effective for plan years starting on or after January 1, 2014.

The proposed rules continue to support workplace wellness programs, including “participatory wellness programs” which generally are available without regard to an individual’s health status.  These include, for example, programs that reimburse for the cost of membership in a fitness center; that provide a reward to employees for attending a monthly, no-cost health education seminar; or that provides a reward to employees who complete a health risk assessment without requiring them to take further action.

The rules also outline amended standards for nondiscriminatory “health-contingent wellness programs,” which generally require individuals to meet a specific standard related to their health to obtain a reward.  Examples of health-contingent wellness programs include programs that provide a reward to those who do not use, or decrease their use of, tobacco, or programs that provide a reward to those who achieve a specified cholesterol level or weight as well as to those who fail to meet that biometric target but take certain additional required actions.

Protecting Consumers

In order to protect consumers from unfair practices, the proposed regulations would require health-contingent wellness programs to follow certain rules, including:

  • Programs must be reasonably designed to promote health or prevent disease. To be considered reasonably designed to promote health or prevent disease, a program would have to offer a different, reasonable means of qualifying for the reward to any individual who does not meet the standard based on the measurement, test or screening.  Programs must have a reasonable chance of improving health or preventing disease and not be overly burdensome for individuals.
  • Programs must be reasonably designed to be available to all similarly situated individuals.  Reasonable alternative means of qualifying for the reward would have to be offered to individuals whose medical conditions make it  unreasonably   difficult, or for whom it is medically inadvisable, to meet the specified health-related standard.
  • Individuals must be given notice of the opportunity to qualify for the same reward through other means. These proposed rules provide new sample language intended to be simpler for individuals to understand and to increase the likelihood that those who qualify for a different means of obtaining a reward will contact the plan or issuer to request it.

Ensuring Flexibility for Employers

The proposed rules also implement changes in the Affordable Care Act that increase the maximum permissible reward under a health-contingent wellness program from 20 percent to 30 percent of the cost of health coverage, and that further increase the maximum reward to as much as 50 percent for programs designed to prevent or reduce tobacco use.

Evidence shows that workplace health programs have the potential to promote healthy behaviors; improve employees’ health knowledge and skills; help employees get necessary health screenings, immunizations, and follow-up care; and reduce workplace exposure to substances and hazards that can cause diseases and injury. The proposed rules would not specify the types of wellness programs employers can offer, and invite comments on additional standards for wellness programs to protect consumers.

Read the proposed rule on wellness programs:

Why The Health Insurance Rules are Important to the Health Exchanges

Many States were waiting for the rules to be released to make a decision on the insurance exchanges. Now that the rules are published states can make an educated decision on how the exchange will work for there state.

A Summary of the New Health Insurance Rules Under ObamaCare

The new rules are meant to educate Americans about ObamaCare and to ensure that the law is followed by insurance companies by laying out standards and consumer protections. We will continue to summarize these rules so we can all better understand how ObamaCare will affect us moving forward into 2014 and beyond.


ObamaCare’s New Rules for Health Insurance

Author: Thomas DeMichele

Thomas DeMichele is the head writer and founder of ObamaCareFacts.com, FactsOnMedicare.com, and other websites. He has been in the health insurance and healthcare information field since 2012. ObamaCareFacts.com is a...

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