The PPACA's Summary of Benefits and Coverage: What Do the Final Rules Mean for Insurers and Self- Funded Employers?

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1 The PPACA's Summary of Benefits and Coverage: What Do the Final Rules Mean for Insurers and Self- Funded Employers? This roundtable discussion is brought to you by the Health Plan Affinity Group (HP AG) of the Payors, Plans, and Managed Care (PPMC) Practice Group March 30, :00-1:00 pm Eastern Presenter: Martin L. Mitchell, Jr., Esquire State Policy Department America s Health Insurance Plans, Washington, DC, mmitchell@ahip.org Moderator: Kirk J. Nahra, Esquire Partner Wiley Rein LLP, Washington, DC knahra@wileyrein.com 1

2 Overview of Roundtable Discussion PHSA Section 2715 History and Setting NAIC Subgroup & its Proposal Final Rule (Released February 9 th ) Applicability date Required format and content Who must produce the SBC When must it be delivered How can an SBC be delivered Coverage Examples Penalties for non-compliance Questions 2

3 PHSA Section 2715 (a) IN GENERAL. - Not later than 12 months after the date of enactment of the Patient Protection and Affordable Care Act, the Secretary shall develop standards for use by a group health plan and a health insurance issuer offering group or individual health insurance coverage, in compiling and providing to applicants, enrollees, and policyholders or certificate holders a summary of benefits and coverage explanation that accurately describes the benefits and coverage under the applicable plan or coverage. In developing such standards, the Secretary shall consult with the NAIC, a working group composed of representatives of health insurance-related consumer advocacy organizations, health insurance issuers, health care professionals, patient advocates including those representing individuals with limited English proficiency, and other qualified individuals. 3

4 NAIC Subgroup & Its Proposal Work began summer of 2010 NAIC led work group - 23 state regulators; 3 federal; 9 consumers; 4 carriers; AMA; URAC Coverage Team led by Commissioner T. Miller (OR) Definition Team led by Superintendent M. Kofman (ME) Self-funded business never addressed by NAIC Innovative products not addressed by NAIC Operations & implementation issues not addressed by NAIC Consumer testing conducted on late drafts of SBC 4

5 NAIC Subgroup & Its Proposal (Con t) Final NAIC transmittal letter July 7, _transmittal_letter.pdf The SBC Template The Carrier Instructions Individual instructions 14 pages _inst_ind.pdf Group Instructions 15 pages _inst_grp.pdf 5

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12 HHS, DOL, Treasury NPRM (Released 7/22/2011) The Departments are appreciative of the detailed and valuable work the NAIC and its working group has performed in developing recommended standards and materials including the NAIC's extensive efforts to involve numerous stakeholder groups in that process Accordingly, as noted, the Departments are appending to the document accompanying these proposed regulations the NAIC's SBC work product for public comment &AgencyId=8&DocumentType=1 12

13 HHS, DOL, Treasury Final Rule (Released 2/9/2012) Per the HHS Press Release: People in the market for health insurance will soon have clear, understandable and straightforward information on what health plans will cover, what limitations or conditions will apply, and what they will pay for services thanks to the Affordable Care Act Federal Register Volume 77, Number 30 (Tuesday, February 14, 2012) Pages cid=25818&agencyid=8&documenttype=2 13

14 Applicability Date Rule establishes 6 month extension for implementation New Date September 23, 2012 For group coverage disclosures (employer based) Through open enrollment sessions - First day of enrollment on or after 9/23/2012 Through enrollments made other than through open enrollment sessions (including special enrollees and newly eligible enrollees) First day of the first plan year beginning on or after 9/23/2012 For individual or non-group disclosures (self-purchasers) September 23,

15 Required Format and Content At least 12-point font typeface No more than 4 pages in length (now 2-sided) Terminology must be understandable to average enrollee In a culturally and linguistically appropriate manner Generally following claims & appeals standards Standard insurance and medical terms ( Glossary ) Description of the coverage, including cost sharing of EHBs Exceptions, reductions, and limitations of the coverage Renewability and continuation of coverage provisions 15

16 Required Format and Content (con t) Coverage Examples Statement the SBC is only a summary, not policy language Contact Information for questions or to obtain a free SBC Information about any utilized provider networks Information about any utilized drug formularies Contact information on how to obtain the policy or plan docs 16

17 Final SBC Template and Carrier Instructions Final rule adopted, with one major modification, the SBC Template and carrier instructions proposed by NAIC Template designed to provide comparable comparisons To assist consumers in the selection of coverage To educate consumers about coverage before obtaining care Final rule adopted NAIC approach calling for strict compliance with instructions and template form Link to group instructions: Link to non-group instructions: 17

18 Final Rule SBC Template 18

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27 Evolution on Concept of Template Strict Compliance Industry Concerns dating from early NAIC calls Ability of template to accommodate current & innovative products Ability of carriers to present information in compliance with strict requirements laid down by the instructions Ability for carriers to present other important information Modification in Final Rule Modifications in post-rule sub-regulatory guidance 27

28 Who Must Produce the SBC Individual Coverage Health insurance carriers to shoppers, policy holders, and to certain beneficiaries HHS Portal deemer provision Concerns with Coverage Examples, and production responsibilities Insured Group Coverage Health insurance carriers to employers shopping for coverage Joint responsibility for insurer and plan administrator to eligible/enrolled participants and to certain beneficiaries Self-funded Group Coverage Health plan administrator to eligible/enrolled participants and to certain beneficiaries 28

29 When Must an SBC be Delivered Individual Coverage New sales as soon as practical on receiving an application, no later than 7 business days thereafter; if SBC changes, at fulfillment Renewals by application delivery along with application materials Auto renewals 30 days prior to renewal date Group Coverage New sales- to group applicant as soon as practical on receiving an application, no later than 7 business days thereafter; to enrollees with application packages, or upon opening of enrollment window Renewals by application delivery along with renewal packages Auto renewals 30 days prior to new plan or policy year Special/Late Enrollees within 90 days of enrollment 29

30 When Must an SBC be Delivered (con t) Upon Request - soon as practicable, or w/i 7 business days, w/o cost - request can be made by beneficiary Special Rule on Duplicate Deliveries to Participants/Benes Special Group Rule on Deliveries compliant delivery by either carrier or plan is sufficient delivery for both entities Individual Coverage Deemer compliance with HHS Portal filing requirements will be deemed to satisfy the requirements to provide an SBC to any individual or dependent with respect to a request for an SBC prior to application for coverage. No deemer available with regard to subsequent requirements 30

31 How Can an SBC be Delivered Individual Coverage by mail, by e:mail upon agreement of the individual, by internet posting, again with the agreement of the individual, and by any other method that can reasonably be expected to provide actual notice subject to certain communications and posting requirements Group Coverage (where coverage not in place) electronic delivery permitted subject to certain communications and posting requirements Group Coverage (where coverage already in place) electronic delivery permitted under 29 CFR b-1 31

32 Coverage Examples 32

33 DEVELOPMENT OF STANDARD DEFINITIONS The Glossary IN GENERAL. The Secretary shall, by regulation, provide for the development of standards for the definitions of terms used in health insurance coverage, including the insurance- related terms and the medical terms premium, deductible, co-insurance, co-payment, out-of-pocket limit, preferred provider, non-preferred provider, out-of-network copayments, UCR (usual, customary and reasonable) fees, excluded services, grievance and appeals hospitalization, hospital outpatient care, emergency room care, physician services, prescription drug coverage, durable medical equipment, home health care, skilled nursing care, rehabilitation services, hospice services, emergency medical transportation 33

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38 Penalties for Non-Compliance State Enforcement Under PHSA section 2723, a State has the discretion to enforce the provisions against health insurance issuers in the first instance. State enforcement may include imposition of state penalties Federal Enforcement (basic) If states fail to substantially enforce SBC provisions, the PHSA penalty - $100 per day per affected individual and IRS Code excise tax - $100 per day per affected individual may be imposed Federal Enforcement (enhanced) PHSA Section 2715 (f) also establishes a new $1,000 per day penalty for willful violations 38

39 APPENDIX 39

40 FAQs About ACA Implementation (Part VIII) Q2: What is the Departments' basic approach to implementation of the SBC requirement during the first year of applicability? The Departments' basic approach to ACA implementation is: "[to work] together with employers, issuers, States, providers and other stakeholders to help them come into compliance with the new law and [to work] with families and individuals to help them understand the new law and benefit from it, as intended. Compliance assistance is a high priority for the Departments. Our approach to implementation is and will continue to be marked by an emphasis on assisting (rather than imposing penalties on) plans, issuers and others that are working diligently and in good faith to understand and come into compliance with the new law. 40

41 FAQs About ACA Implementation (Part VIII) (Con t) Q3: Are plans and issuers required to provide a separate SBC for each coverage tier (e.g., self-only coverage, employee-plus-one coverage, family coverage) within a benefit package? No, plans and issuers may combine information for different coverage tiers in one SBC, provided the appearance is understandable. In such circumstances, the coverage examples should be completed using the cost sharing (e.g., deductible and out-of-pocket limits) for the self-only coverage tier (also sometimes referred to as the individual coverage tier). In addition, the coverage examples should note this assumption. 41

42 News Release Health Reform to Require Insurers to Use Plain Language in Describing Health Plan Benefits, Coverage People in the market for health insurance will soon have clear, understandable and straightforward information on what health plans will cover, what limitations or conditions will apply, and what they will pay for services thanks to the Affordable Care Act the health reform law according to final regulations published today. The marketing materials that insurers use can sometimes make it difficult for consumers to understand exactly what they are buying. The new rules, published jointly by the Departments of Health and Human Services, Labor and Treasury, require health insurers and group health plans to provide concise and comprehensible information about health plan benefits and coverage to the millions of Americans with private health coverage. The new rules will also make it easier for people and employers to directly compare one plan to another. All consumers, for the first time, will really be able to clearly comprehend the sometimes confusing language insurance plans often use in marketing, said HHS Secretary Kathleen Sebelius. This will give them a new edge in deciding which plan will best suit their needs and those of their families or employees. Under the rule announced today, health insurers must provide consumers with clear, consistent and comparable summary information about their health plan benefits and coverage. The new explanations, which will be available beginning, or soon after, September 23, 2012 will be a critical resource for the roughly 150 million Americans with private health insurance today. Specifically, these rules will ensure consumers have access to two key documents that will help them understand and evaluate their health insurance choices: A short, easy-to-understand Summary of Benefits and Coverage ( or SBC ); and A uniform glossary of terms commonly used in health insurance coverage, such as deductible and co-payment. All health plans and insurers will provide an SBC to shoppers and enrollees at important points in the enrollment process, such as upon application and at renewal. A key feature of the SBC is a new, standardized plan comparison tool called coverage examples, similar to the Nutrition Facts label required for packaged foods. The coverage examples will illustrate sample medical situations and describe how much coverage the plan would provide in an event such as having a baby (normal delivery) or managing Type II diabetes (routine maintenance, well-controlled) These examples will help consumers understand and compare what they would have to pay under each plan they are considering. Today s rules finalize the proposed rules issued in August Input was received from such stakeholders as the National Association of Insurance Commissioners (NAIC) and a working group composed of health insurance-related consumer advocacy organizations, health insurers, health care professionals, patient advocates including those representing people with limited English proficiency, and others. The final rules aim to ensure strong consumer information while minimizing paperwork and cost. 42

43 Q2: What is the Departments' basic approach to implementation of the SBC requirement during the first year of applicability? The Departments' basic approach to ACA implementation, as stated in a previous FAQ (see is: "[to work] together with employers, issuers, States, providers and other stakeholders to help them come into compliance with the new law and [to work] with families and individuals to help them understand the new law and benefit from it, as intended. Compliance assistance is a high priority for the Departments. Our approach to implementation is and will continue to be marked by an emphasis on assisting (rather than imposing penalties on) plans, issuers and others that are working diligently and in good faith to understand and come into compliance with the new law. This approach includes, where appropriate, transition provisions, grace periods, safe harbors, and other policies to ensure that the new provisions take effect smoothly, minimizing any disruption to existing plans and practices." In addition to the general approach to implementation, in the instructions for completing the SBC, we stated: "To the extent a plan's terms do not reasonably correspond to these instructions, the template should be completed in a manner that is as consistent with the instructions as possible, while still accurately reflecting the plan's terms. This may occur, for example, if a plan provides a different structure for provider network tiers or drug tiers than is represented in the SBC template and these instructions, if a plan provides different benefits based on facility type (such as hospital inpatient versus non-hospital inpatient), in a case where a plan is denoting the effects of a related health flexible spending arrangement or a health reimbursement arrangement, or if a plan provides different cost sharing based on participation in a wellness program." Consistent with this guidance, during this first year of applicability, the Departments will not impose penalties on plans and issuers that are working diligently and in good faith to provide the required SBC content in an appearance that is consistent with the final regulations. The Departments intend to work with stakeholders over time to achieve maximum uniformity for consumers and certainty for the regulated community. 43

44 Additional Links NAIC Consumer Information (B) Subgroup: HHS Regulations and Guidance: DOL PPACA: NPRM: d=25258&agencyid=8&documenttype=1 FAQs: 44

45 Q&A 45

46 The PPACA's Summary of Benefits and Coverage: What do the Final Rules Mean for Insurers and Self-Funded Employers? 2012 is published by the American Health Lawyers Association. All rights reserved. No part of this publication may be reproduced in any form except by prior written permission from the publisher. Printed in the United States of America. Any views or advice offered in this publication are those of its authors and should not be construed as the position of the American Health Lawyers Association. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought from a declaration of the American Bar Association. 46