New Communication requirements for Insurance companies

February 10th, 2012

by Mila Kofman

and Sabrina Corlette


Editor’s note: See another Health Affairs post on this topic by Tim Jost.

How do you shop for health insurance today? For many of us, our employer makes the decision for us. And if there is a choice of health plans, the employer also provides helpful summaries of the benefits, premium differences, and cost-sharing so that we can compare plans easily and choose one that is right for us.

But for millions of Americans who don’t have job-based coverage, it is not so easy to make an informed choice when options are available.  Because of differences in how coverage works, even different ways deductibles work, it is almost impossible to compare health insurance options.  Even worse, rarely do two insurers use the same definition for the same terminology, leaving some consumers to make decisions in the dark.

On February 9, 2012, the Obama Administration released final rules on what the Kaiser Health Tracking Survey found to be the most popular provision under the Affordable Care Act (ACA)  — known as “section 2715.” Akin to food labels that we use to compare ingredients in our food, section 2715 requires insurance companies and employers to provide people with an easy to understand 4-page summary of what a health insurance policy covers, what’s excluded, and cost information about deductibles, co-insurance, and copayments.   The provision also requires insurance and medical terms to be defined in a standard, easy way.

Soon will be gone the days when a person needs a  PH.D. in insurance law to understand how health insurance works. Section 2715 of the ACA will fundamentally change how insurance is sold and marketed, empowering consumers to make informed decisions about health insurance coverage.

The Development Of The New Rule

We applaud the Administration for taking a big step to empowering consumers through transparency.  The Administration largely adopted the recommendations of the statutory working group established by the National Association of Insurance Commissioners (NAIC).   The working group, on which we both served (and Ms. Kofman co-chaired), included state insurance regulators, insurance companies, physicians and other medical providers, agents, and consumers.

The group spent over a year working through both the substance and format for providing this new information to consumers. In the end, after hundreds of hours of debate and deliberation and public input, and consumer focus group testing, its detailed recommendations for the Departments of Health and Human Services (HHS) and Labor (DoL) were adopted unanimously by the NAIC.  At the working group level, in fact, it was a member of a health plan that moved to adopt, and a consumer advocate that seconded the motion to adopt, the 4-page template and standardized glossary of terms – indicating the level of consensus and the importance of the products that had been developed.

We are pleased that, with relatively few changes, the Administration’s final regulations adopt the 4-page coverage summary and glossary of terms our working group initially developed.   The new consumer-friendly information will be available for individuals and families buying their own coverage, people with job-based coverage, and in 2014 coverage sold through health insurance exchanges.

The final rule addresses many of the issues raised in the August proposed rule as well as those raised by employers, insurers, and consumer groups.  These include:  timing of when consumers should be able to access this new information;  whether employers get a complete pass from providing the 4-page standard document; whether employers and insurers could provide the information in a different form, e.g. embed the new coverage summary in their “summary plan description” (SPD), which is a detailed description of a plan’s coverage and how it operates; whether premium information should be provided;  whether health plans should be allowed to use a “coverage cost calculator” in place of the coverage facts label; and whether the four page summary will include coverage examples to help consumers understand how a policy works.  The final rule addresses these and other issues.

Balancing Consumer Information Needs Against Regulatory Burdens

The rule reflects a balanced approach, weighing the need for consumers to have good information against “regulatory burdens” for employers and insurers.  Some of its key provisions include:

  • A requirement that insurance companies selling individual market coverage provide the standard 4-page summary of coverage. And, in spite of heavy lobbying , employers including self-insured plans and insurers offering small and large group coverage, will also have to provide the SBC to employees.
  • A requirement that insurance companies and group health plans supply consumers and employees with the SBC starting September 23, 2012. While the law requires implementation by March 23, 2012, many in the industry urged delaying implementation until 2014. But the Administration struck a balance, requiring that the SBC be provided to consumers later this year so they can make informed decisions in time for plans’ open enrollment periods, which usually take place in the Fall. Employers  will have to start providing the SBC for open enrollment on or after September 23, 2012 and for plans without open enrollment at plan renewal on or after September 23, 2012 (many plans renew in January 2013 or July 2013). Insurers in the individual market will have to provide the SBC starting September 23, 2012.
  • A requirement that insurers must automatically provide the 4-page coverage summary to a person who completes an application for coverage or to any person who requests a summary (within 7 business days of the request).  Employers must provide the summary when coverage renews (30 days prior to renewal) , must provide an updated summary if there is a material change during the plan year, and also upon request (within 7 business days).

Some will argue that the regulation falls short in the area of coverage examples – information designed to help a consumer to understand better how a policy works.  We believe the two required coverage scenarios – normal pregnancy and diabetes treatment – are a good start. The regulations indicate that up to six coverage examples may be required in the future.  For consumers to understand how a policy works, it will be important to provide additional coverage examples for other common conditions and treatment scenarios.

The NAIC’s recommendations included an example for breast cancer, and we believe there should be an example illustrating how a policy works in the case of a disease that impacts so many women and families in America.  In addition, using a coverage example that demonstrates a treatment scenario for cancer provides consumers with a more comprehensive picture of what a plan covers. Cancer patients must undergo a broad array of health services, such as hospitalization, lab, expensive medicine, mental health and other benefits. This coverage example would have provided a better picture of how a policy works for a broad set of different kinds of services.

Some will also criticize the final regulations for allowing employers to include the 4-page summary in a longer document called SPD —  or summary plan description — which they currently must provide to employees under ERISA.  Although a standalone summary like the one required for the individual market would have been more useful to consumers, the Administration is clearly looking for ways to minimize costs for employers. However, to ensure that the summary of benefits form doesn’t get lost in what is often a long and legalistic document, the regulations specify that if the summary is part of an SPD, it must be intact and prominently displayed, e.g., after the table of contents.

Finally, some will criticize the Administration for not requiring information on premiums to be a part of the SBC.  We support this decision because in most states, individual market coverage is underwritten – meaning that if a person is accepted for coverage (a big “if”), the standard rate will be increased to reflect the person’s health, medical history, gender, occupation, age, and any other factor currently permitted by the state where the consumer lives.  Providing premium information that is standard and not close to what a particular consumer would be charged is not all that helpful to consumers.   In 2014, when insurers are restricted in how they set premiums, premium information will be more useful to consumers purchasing outside of an Exchange.  For those purchasing through an Exchange, premium information will be available.

We applaud the Administration for moving forward with this critical transparency rule. Given the bewildering array of technical and confusing forms that health insurance shoppers are confronted with today, it is no surprise to us that this polls as the most popular provision of the law. When consumers are armed with comprehensible and comparable information about their coverage options, they will be able to make choices that are best for themselves and their families.

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This entry was posted on Friday, February 10th, 2012 at 8:41 am and is filed under All Categories, Consumers, Health Reform, Insurance, Policy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Officials: Care disrupted Medicaid changes causing ‘nightmare’

Health officials who spoke said they have no such complaints about Passport Health Plan.

Deborah Yetter – Louisville Courier-Journal
FRANKFORT, KY.— Health care officials from throughout Kentucky described massive problems Wednesday with the state’s new Medicaid managed- care system — resulting in outcomes they say range from outrageous to absurd.

“This bureaucratic nightmare needs to change,” said Dr. Shawn Jones, a Paducah physician and president of the Kentucky Medical Association, speaking at a meeting of the Senate Health and Welfare Committee.

Jones was one of several officials who testified that it appears any cost savings from managed care will come at the expense of patients.

“It appears to me the only place the savings can come from is the delay and denying of care,” Jones said. “Patient care is being delayed and, in some cases, simply prevented.”

The problems date to Nov. 1 — the day the state hired three companies to handle most Medicaid services outside the Jefferson County region — and include chronically late payments, bungled claims processing and constant battles over new rules that require services once routinely covered by Medicaid to be “pre-authorized” to guarantee payment.

Patients spend hours in physicians’ waiting rooms — or get sent home and told to return after procedures are authorized, Jones said. Pharmacists spend hours on the telephone trying to get prescriptions authorized, said Robert McFalls, executive director of the Kentucky Pharmacists’ Association.

And in one recent case, a woman arrived in labor at the hospital, and the managed-care company insisted that her care be pre-authorized, said Joe Grossman, chief financial officer of Appalachian Regional HealthCare, which operates eight hospitals in Eastern Kentucky.

“Fourteen days later, mom and baby are home and we still have no pre-authorization,” Grossman said.

The managed-care plan, which covers about 560,000 Medicaid members outside the Jefferson County region, is the linchpin of Gov. Steve Beshear’s administration’s plan to achieve savings in the $6 billion-a-year federal-state health plan for the poor and disabled.

Several officials who spoke Wednesday said they believe the companies — CoventryCares of Kentucky, Kentucky Spirit Health Plan and WellCare of Kentucky, all affiliated with out-of-state national chains — may be deliberately stalling payments.

“I feel like I’ve become a bank to these out-of-state insurance companies,” said Grossman, who added that his hospital chain is owed about $8 million. “I’ve lent them money.”

Nancy Galvani, with the Kentucky Hospital Association, said hospitals across the state are owed millions of dollars in unpaid claims since managed care took effect three months ago. Meanwhile, the managed- care companies are getting large payments up front to run Medicaid.

The companies have been paid about $135 million since Nov. 1, according to state Auditor Adam Edelen, who last week opened an inquiry into their claims payments in response to complaints to his office.

No one from the managed-care companies spoke Wednesday. Sen. Julie Denton, a Louisville Republican and committee chairwoman, said she has invited their representatives to speak at next week’s meeting.

The companies issued a statement after Wednesday’s meeting.

“If there are complaints about WellCare, we want to address them and work with our providers to make the program a success,” said WellCare spokeswoman Denise Malecki.

Coventry spokesman Matthew Eyles said the company is willing to address the issues. “With any major new program, some problems will arise that need to be fixed, and we are committed to doing just that and won’t rest until those problems are resolved,” he said.

And Kentucky Spirit spokesman John Lee said the company continues to work “directly with our providers on specific, case-by-case issues.”

Health officials who spoke said they have no such complaints about Passport Health Plan, a nonprofit Medicaid managed care entity that provides service to about 170,000 Medicaid patients in Jefferson and 15 surrounding counties.

Neville Wise, the state’s acting Medicaid commissioner, spoke briefly, saying state officials are continuing to work with the health care providers and the managed-care companies to try to iron out problems. Many are being addressed, he said — such as the requirement that childbirth be pre-authorized. That has been corrected, he said.

Denton told Wise to keep trying to solve problems. “How many more ludicrous scenarios can there be?” she asked.

Health care officials who testified said that, while some problems have been corrected, others continue.

Janice Richardson, chief executive for Rivendell Behavioral Health Services, a children’s psychiatric hospital in Bowling Green, said the managed- care companies’ rules are disrupting care and in the long run are costing more.

For example, the companies limit the stay of children — even in cases where Rivendell doctors believe they need more care. So the children get discharged, get worse outside the hospital and are readmitted, Richardson said.

Managed-care officials have argued with Rivendell about the severity of children’s diagnoses and in one case accused hospital officials of “monkeying around” with a child’s treatment to prolong it, she said. “We are seeing kids over and over and over.”

Further, Richardson said, children who may be severely emotionally disturbed and suicidal are not getting the care they need.

“Somebody’s going to get hurt, and its going to be bad when it happens,” she said.

Steve Shannon, who represents the state’s 14 community mental health centers, said in an effort to head off such problems the centers began meeting with the managed-care companies before the Nov. 1 start-up date and have continued regular meetings and conference calls.

Still, claims processing and late payments are causing major hardships for the nonprofit community mental health centers. And the managed-care companies insist on prior authorization for many services and medications — yet don’t respond within the two days required by the state contracts and regulations.

Some authorizations take days or weeks, he said. Though the companies are supposed to fax the authorizations, one was mailing them, Shannon said.

“They were folding it, putting it in an envelope, licking it and putting a stamp on it,” Shannon said. “There is this thing called the Internet.”

Shannon said that all three of the new managed- care companies have extensive experience in other states and he is surprised they didn’t get off to a smoother start in Kentucky.

“They should know how to do this,” he said.

Shannon was among witnesses who said he wonders whether the delays and denials of care are deliberate on the part of the companies to keep money they get from the state to manage Medicaid.

“Is it really that hard to approve services and pay claims?” he asked.