Healthcare Reform Update: The Latest Guidance

Transcription

1 Healthcare Reform Update: The Latest Guidance July 14, 2010 Presented by: John H. McKendry Norbert F. Kugele (616) April A. Goff Copyright 2010 by Warner Norcross & Judd LLP All Rights Reserved (Materials included in the following outline are not intended to provide legal advice and are for seminar use only.)

2 What We ll Cover Today Grandfathering rules Recent guidance on: Pre-existing condition exclusions Lifetime and annual limits Rescissions Patient protections Wrap Plan Considerations

3 Grandfathering Rules

4 Which Plans are Grandfathered? Coverage provided by group health plan or health insurance issuer At least one individual enrolled on March 23, 2010 Has had at least one individual covered at all times since March 23, 2010 (though it need not be the same individual)

5 Advantages of Being Grandfathered Grandfathered group health plans do not have to comply with the following health care coverage reforms: Automatic enrollment Nondiscrimination rules for insured benefits Preventive care coverage without cost Patient protections (choice of primary care providers, out-ofnetwork emergency care covered same as in-network) external claims appeal requirement Quality of care reporting requirements Deductible limits Coverage for certain clinical test medical costs

6 Reforms that Apply to All Plans Grandfathered group health plans must still comply with the following health care coverage reforms: No pre-existing condition clauses No waiting periods longer than 90 days No lifetime or annual limits Rescission limitations Young adult child coverage up to age 26 Uniform explanation of coverage documents value requirements for insured plans

7 How to Lose Grandfathered Status Entering into a new insurance contract, certificate or policy after 3/23/2010. Can recover grandfathered status by revoking contract, certificate or policy entered into before June 14, Eliminating benefits Eliminating all or substantially all benefits to diagnose or treat a particular condition.

8 How to Lose Grandfathered Status Any Increase in percentage cost-sharing requirement Increase in a fixed-amount cost-sharing requirement above maximum percentage deductibles/out-of-pocket limits Fixed amount copayments Decrease in employer s contribution rate by more than 5% below March 23, 2010 rate.

9 How to Lose Grandfathered Status Changes in annual limits Addition of annual limits where there were no lifetime or annual limits. If had lifetime limit but no annual limits, introducing an annual limit lower than the old lifetime limit. Decrease in existing annual limit

10 Changes That Will Not Jeopardize Grandfathered Status Changes made after 3/23/10 pursuant to: Legally binding contract entered into, on or before 3/23/10 Filing with state insurance department on or before 3/23/10 Written amendments to plan document entered into, on or before 3/23/10

11 Changes that Will Not Jeopardize Grandfathered Status Enrollment changes: Enrolled individuals adding family members after 3/23/10. New enrollees after 3/23/10. But merging plans may be a problem Anti-abuse rule: is principal purpose of merger, acquisition or similar restructuring to cover new individuals under a grandfathered plan? Is there a bona-fide employment-based reason for merging two existing plans or moving employees from one plan to another?

12 Special Rules for Collectively Bargained Plans Grandfathering is not complete. Must still comply with Health Care Reform requirements that apply to grandfathered plan. Grandfathered at least until last collective bargaining agreement in effect on 3/23/10 terminates. Thereafter, may still be grandfathered compare coverage with 3/23/10 coverage.

13 Retiree Health Plans Stand-alone retiree health plans do not have to comply with the health care coverage reforms. Separate health plan document Advantages: Nondiscrimination rules will not apply Stand-alone HRAs can survive Not subject to age 26 requirements Caution: state and local governmental plans, the issue is murky

14 Documentation Requirements Must include the following in any plan materials provided to participants or beneficiaries describing benefits: Statement that plan believes it is grandfathered contact information for questions and complaints. **Model language provided** Must retain documents proving coverage in effect on March 23, 2010 for as long as claim grandfathered status

15 What Should You Do Now? Look at changes under consideration for 2011 Decide whether preserving grandfathered status is important. Ask Insurer/TPAs/benefits consultants about financial impact If nondiscrimination is an issue, consider alternatives

16 What Should You Do Now? If preserving grandfathered status: Keep documentation of plan as it existed on March 23, Add model language to SPDs If planning any mergers or re-organizations, consider impact on grandfathered status. Consider spinning off retiree health benefits into separate plan.

17 New Health Care Reform Regulations Pre-existing Condition Exclusions Lifetime and Annual Limits Rescissions Patient Protections

18 Pre-existing Condition Exclusions No pre-existing condition exclusions regardless of prior creditable coverage Applies to grandfathered plans Effective: Minors under age 19: plan years beginning on or after September 23, 2010 Everyone: plan years beginning on or after January 1, 2014

19 Pre-existing Conditions Exclusions based on when a condition or injury occurred impermissible Example: plan covers cardiac surgery, surgery due to traumatic injury that occurred before the effective date of coverage must be covered All or nothing approach Can still exclude, but if benefit offered exclusion against pre-existing conditions must apply regardless of when condition arose

20 Lifetime Limits No lifetime limits on Essential Health Benefits Applies to grandfathered plans Effective plan years beginning on or after September 23, 2010

21 Essential Health Benefits Ambulatory Patient Services; Emergency Services; Hospitalization; Maternity and Newborn Care; Mental Health and Substance Use Disorder, including Behavioral Health Treatment Prescription Drugs Rehabilitative and Habilitiative Services and Devices Laboratory Services Preventive and Wellness Services Chronic Disease Management Pediatric Services, including Oral and Dental Services This list may be expanded by future guidance. Plans may use good faith efforts and consistent interpretation of Essential Health Benefits until final rules issued

22 Annual Limits No annual dollar limits on Essential Health Benefits Applies to grandfathered plans Transition timeframe Blanket prohibition effective January 1, 2014 Phased-in schedule before that date

23 Minimum Annual Limits Before 1/1/2014 Plan Year Plan year beginning on or after 09/23/10 but before 09/23/11 (January 1, 2011 for calendar year plans) Plan year beginning on or after 09/23/11 but before 09/23/12 (January 1, 2012 for calendar year plans) Plan year beginning on or after 09/23/12, but before 09/23/14 (January 1, 2013 for calendar year plans) Annual Limit Must Be At Least $750,000 $1,250,000 $2,000,000

24 Annual Limits Higher annual limits on Essential Health Benefits allowed Minimums apply on an individual, not family basis

25 Annual Limits Lifetime and annual dollar limits on non- Essential Health Benefits allowed Must be permitted by federal or state law Can exclude any benefit for a particular condition Can even exclude Essential Health Benefit If benefit provided, rules must apply

26 Special Enrollment Right Individuals who were previously ineligible because of annual or lifetime limit Must provide notice and at least a 30-day window No later than first day of plan year beginning on or after September 23, 2010 Coverage must be effective as of first day of plan year

27 Annual Limits HHS waiver program Significant decrease in access to benefits or significant increase in premiums Rules do not apply to: flexible spending arrangements medical savings accounts health savings accounts some health reimbursement arrangements retiree-only health reimbursement arrangements

28 Prohibition on Coverage Rescissions Before: rescission due to misrepresentation of material fact o.k. even if unintentional Now: No rescission unless fraud or intentional misrepresentation of material fact (prohibited by plan or coverage) Applies to grandfathered plans Effective plan years beginning on or after September 23, day notice requirement

29 Patient Protections Choice of Provider Any participating network primary care provider or pediatrician No referral for OB/GYN services Plan must include notice with SPD and plan benefit descriptions Effective plan years beginning on or after September 23, 2010 Only new plans or plans that lose grandfathered status

30 Emergency Services No prior authorization for hospital emergency room services in-network or out-of-network No administrative requirements or benefit limitations for out-of-network emergency Rules on copayment and coinsurance rates Balance billing allowed Plans/issuers must pay reasonable amount What is reasonable?

31 What should you do now? Remove pre-existing condition limitations for minor children Consider whether current lifetime and annual dollar limits apply to Essential Health Benefits Review list of individuals who have become ineligible due to annual or lifetime limits Provide required special enrollment window Revise plan documents and administrative procedures to comply with rescission prohibition Include model notice regarding primary care providers in SPD and open enrollment materials Review plan design regarding out-of-network emergency services

32 Plan Document Requirements

33 Wrap Plan Document Three Reasons ERISA Requirement Simplified Annual, 5500 Reporting PPACA Health Care Reform Documentation

34 Wrap Plan Document ERISA Requirement ERISA 402, 403 requires a written Plan Document which specifies: Funding (trust, if plan assets) Named Fiduciary Allocation of Fiduciary Responsibility Amendment Termination

35 Wrap Plan Document Simplified Annual, 5500 Reporting Form 5500 must be filed for each Plan with: Over 100 Participants Under 100 Participants unless funded from general assets, insurance or HMO Wrap document allows fringe /welfare benefit plans to be filed using a single 5500 Cost Savings in Preparation and Required Audit

36 Wrap Plan Document PPA Health Care Reform Documentation Grandfathered Status Regulations require maintenance of documentation of terms of plan on March 23, 2010

37 Wrap Plan Document PPA Health Care Reform Documentation Other items typically not present in insurance contract documentation: Dependent Definition Nondiscrimination Rules Rescission of Coverage Provisions W-2 Reporting ERISA/External Appeals Process

38 Wrap Plan Document Practical Issues Use Exhibits, Appendices to incorporate other fringe/welfare benefit plan documents and provisions by reference (including cafeteria/ 125 plan enrollment forms) Disciplined, Annual Review and Documentation of Benefit Structure

39 Questions?