Employers must cover physician and hospital services to avoid ACA fines

On Feb. 23, the Centers for Medicare and Medicaid Services put on public display final rules that require employer health plans to cover physician and hospital services in order to meet health care reform’s minimum value requirement. The rules also set the contribution self-insured health plans and insurers must make to a premium-stabilization fund for the individual and small-group market; and require features to ensure people can shop for coverage with a minimum of obstacles.

Generally, the rules contain payment and risk adjustment methodology changes plans sold on state-based health insurance exchanges mandated by the Affordable Care Act. The rules, which will have an official publication date of Feb. 27, will regulate insurers and the products they can sell on exchanges, and set standards insurers must follow to sell policies on the federal exchanges.

Highlights

• Minimum Essential Coverage. In order to provide minimum value, plans must include substantial coverage of both inpatient hospital services and physician services, CMS says the final rule, preserving the position it set out in the proposed rule last November.
• It says allowing these designs to be treated as providing MV not only would allow an employer to avoid the shared responsibility payment that the statute [by not offering coverage], but would harm employees (particularly those with significant health risks) who would find such coverage unacceptable, by denying them access to a premium tax credit for individual coverage purchased through an exchange.
• It continues by saying that a plan that excludes substantial coverage for inpatient hospital and physician services is not a health plan in any meaningful sense and is contrary to the purpose of the MV requirement.
• The government turned down some public calls to expand the set of services employers would be required to cover. It will however, issue guidance on the extent of hospital and physician coverage determined as “substantial” enough to meet the MV requirement.
• Contributions to the transitional reinsurance fund. To help stabilize premiums in the individual market, the government created the transitional reinsurance fund for 2014, 2015 and 2016. Insurers and self-insured health plans started paying $63 per covered life for 2014 and $44 per covered life for 2015. The final rule announces that the contribution amount for 2016 will be $27 per covered life.
• Self-insured plans that do not use a third-party administrator do not make reinsurance contributions in the 2015 and 2016 benefit years. A self-funded plan will be considered as not using a TPA even if it: (1) uses an unrelated third party to obtain a provider network or claims repricing services; or (2) limits the amount it uses the TPA to less than 5 percent of claims processing, adjudication or plan enrollment, based on either: (a) the number of transactions, or (b) the value of the claims processing and adjudication and plan enrollment services.
• Expatriate plans, whether insured or self-insured, do not make reinsurance contributions for the 2015 and 2016 benefit years.
• Because of the smaller pool of reinsurance funds, CMS will raise the attachment point for insurers in the individual market, from $70,000 in 2015 to $90,000 in 2016. The agency retaining its $250,000 reinsurance cap and a 50 percent coinsurance rate.
• Premium increases. Insurers trying to increase premium rates by 10 percent or more on individuals and small businesses must publicly disclose the proposed increases and the justification for them. State or federal regulators will review the increases to determine whether they are unreasonable. The trigger for review is at the plan level — not the product level — and that will result in a higher number of rate filings subject to review, which the government says will better protect consumers. This requirement will apply for rates filed in 2016 for coverage that takes effect on or after Jan. 1, 2017.
• Benchmark plans. To define essential health benefits (which employers do not have to cover, but when covered, may not have lifetime or annual limits imposed on them and must observe mental health parity), states may choose a 2014 benchmark plan or they can stick with the benchmark plan they chose in 2012. The benchmark plan must cover reform’s 10 required benefit categories.
• Accessible network information. Provider directories must have information on which providers are accepting new patients, in a manner that is easily accessible to plan enrollees, prospective enrollees, state and federal customers and regulators. Users must be able to search provider networks without having to create an account or enter a policy number. The data must be in electronic data formats so third parties can create resources that aggregate information on different plans.
• Drug formularies. Similarly, plans must publish their drug formularies with all covered drugs, including tiers and all conditions attached to obtaining each drug. They must comply with electronic data format rules. Plans will have to have “pharmacy and therapeutics committees” to make plan coverage decisions. The agency drew from Medicare Part D and the National Association of Insurance Commissioner’s model rule for pharmacy benefit managers to set rules about how often P&T committees must meet, operate, and what kind of members must sit on them. The rule includes a process by which an enrollee can request access to drugs not on a plan’s formulary.
• Provider quality improvement. Health plans must implement programs that raise pay for providers for improving health outcomes, cutting hospital readmissions, improving patient safety and reducing medical errors. They do not need to have such programs to join an exchange, but they have to have one after selling on one for two years. They will have to submit progress reports on those programs each year; formats will vary state-by state. Plans below a certain enrollment level will not have to establish such a program; CMS will set the minimum enrollment trigger in upcoming guidance.
• Translation. In order to operate on an exchange, insurers must translate plan content into each non-English language that is spoken by 10 percent or more of a state’s population. That requirement must be met before the start of the 2017 open enrollment season. It also requires telephonic interpreter services.
• Pediatric services. Coverage for pediatric services will continue only until the end of the month in which the enrollee turns 19 because that this is the industry standard. Under the proposed rule, coverage would have run until the end of the plan year in which the enrollee turns 19.
• Annual open enrollment for 2016 begins Nov. 1, 2015 and runs through Jan. 31, 2016.