From the September 2011 issue of Florida Underwriter • Subscribe!

The Health Care Reform Revolution–Where Are We Now?

A little more than a year ago, the 2,700-page Patient Protection and Affordable Care Act (PPACA) became law, changing many aspects of the health insurance industry and—in a domino effect—the provider market, the agent and broker community, and even state government functions. More changes are headed our way from the legislatures (both federal and state), regulatory agencies, and possibly even the judicial branch.

In the judicial arena, three courts have ruled that the individual mandate in the bill is constitutional, while three other courts have ruled it unconstitutional. In early August, a three-judge panel in the 11th U.S. Circuit Court of Appeals in Atlanta found the individual mandate unconstitutional in a lawsuit brought by Florida and 25 other states. (An interesting side note: The ruling out of Atlanta is the first case where the judges’ decisions did not track based on the party affiliation of the president who appointed them.) The U.S. Department of Justice can appeal in the 11th Circuit for a full-panel hearing versus the three-judge panel ruling recently released. The case is widely expected to end up at the Supreme Court. However, with the Court’s decision not to allow a fast-tracking of any of the related cases, it will most likely be June 2012 before the first appeals case reaches the highest court in the land.

Fighting Back Legislatively
On the legislative side, we have seen several items repealed, including the 1099 provision. This would have required all businesses to report all payments to vendors in excess of $600 per year to the IRS. Also repealed was the free-choice voucher, which mandated that starting Jan. 1, 2014, employers were to give vouchers to employees to aid in purchasing coverage through the exchange that fell into specific guidelines; fines were to be imposed for non-compliance as well.

On the federal level, House and Senate bills have been introduced that would repeal PPACA in its entirety, along with other bills that would repeal specific items in the new law. Several of the repeal efforts include overturning the ban on over-the-counter medication purchases from flexible spending and health savings accounts without a doctor’s prescription, the employer mandate, and the individual mandate. While a full repeal bill has passed the House, the Senate version stands little chance of making it to the floor for a vote. As the primaries and elections take shape in 2012, there may be some movement depending on how the political winds shift.

Many state legislatures are working to enact laws to establish the mandated exchanges. However, Florida and several other states have decided not to enact any legislation regarding PPACA. This will put them far behind other states in the implementation processes as they await the outcome of the court cases and the federal legislative efforts.

The regulatory side has seen a flurry of activity lately with multiple regulation releases on the exchanges for both the individual market and the group market. Also being considered are three transitional programs regarding reinsurance for the individual insurance market, the establishment of a risk corridor for the individual and small group markets, and a state option to adjust risks for non-grandfathered plans. More regulations are on the way, as this will prove to be a contentious topic for most states in their legislative and budget processes.

Changes for Women
Another item recently taking center stage is the addition of specific women’s preventive care services with no cost share for plan participants. These changes will take effect Aug. 1, 2012, or the first plan renewal thereafter.

The Institutes of Medicine released the guidelines on July 19, and revised preventive care regulations were released from the U.S. Department of Health & Human Services (HHS) on August 1. This is one of the quickest regulation releases recorded to date, and will have an impact on health plan premiums going forward with the inclusion of many services that previously were subject to cost-sharing. These additional requirements regarding women’s health services are very broad, including preconception services and prenatal care, all FDA-approved contraceptive methods and sterilization procedures, as well as other testing, screening, counseling, and equipment. While the regulations contain a religious-employer exemption for contraception only for group-based policies, the individual policies do not contain that exemption.

All the new releases notwithstanding, it is a release from last year regarding grandfathered status that is key to each plan renewal. Sponsors of grandfathered plans should re-examine the rules governing grandfathered status to ensure that they do not inadvertently lose that status. All plan changes must be measured against the date that PPACA was enacted (March 23, 2010). Those plans maintaining grandfathered status do not need to comply with certain provisions, such as preventive care covered with no cost to the patient, or discrimination testing, which is currently on hold while the regulations are being revised. Documentation is vital for grandfathered plans, including distribution of the Model Notice of Grandfathered Plans to plan participants, which is available at http://www.healthcare.gov.

Other regulations expected soon include a new four-page summary format that all plans must provide to employees. In addition, employees must be given a glossary of standard medical and insurance terms, and a Coverage Facts Label that has examples of costs based on the plan benefits for maternity, breast cancer treatment, and diabetes management. These regulations were due March 23 from HHS, but have not yet been released. This provision is to take effect for plans renewing on or after March 23, 2012.

With the regulations that have been released eclipsing the page count of PPACA, we are due some major reading between now and 2014, when most of the provisions are effective. Some on Capitol Hill estimate that the regulations will surpass 300,000 pages, which will far exceed even the tax code. Hope you have a great pair of reading glasses.

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