Transcript PowerPoint Background Template

The Patient Protection and
Affordable Care Act: Implications for
Self-Funded Plans
Presented by
Mike Ferguson
Chief Operating Officer
Self-Insurance Institute of America, inc.
www.siia.org
Presentation Overview
 How Health Care Reform Passed
 Health Care Reform Legislation “At-a-Glance”
 Key Legislative Provisions
 Legal Challenges to PPACA
 SIIA Lobbying Victories
 Industry Threats
 Industry Opportunities
 Outlook
 Conclusion – Q&A
How Health Care Reform Passed
 “Straw Poll” Question
 Conventional Wisdom Often Wrong
 “Negotiating Terms of Surrender”
 Keeping Your “Seat at the Table”
 Conference Committee vs. Reconcilation
PPACA – “At-a-Glance”
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State-Based Insurance Exchanges
Individual Insurance Mandate
Employer Mandates – “Play or Pay”
Insurance Market Reforms
Fees/Taxes/Studies
Oversight of Insurance Company Financial Operations
“Grandfathered” Plans
 Plans in Existence as of 3/23/10 Can Be Deemed
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“Grandfathered”
Exempt From Some New Regulations
“If You Like Your Health Plan You Can Keep Your Health
Plan”
Legislative Intent/History
Regulatory Reality
Value of Grandfathered Status Debatable
Grandfathered Plans
Restricted Changes
 Change in insurance carriers (except CBA plans)
 Elimination of benefits to treat or diagnose a condition
 ANY increase in % of cost savings (e.g. coinsurance) – Trended
 Certain increases in fixed amount cost sharing – not trended
 Change in contribution structure (2 tier to 4 tier)
 A decrease in the employer contribution rate of more than 5
percentile points below the rate of on 3/23/10 for any tier of
coverage for similarly situated individuals
 Certain changes in lifetime/annual limits
Requirements for Non
Grandfathered Plans
 Requiring first dollar coverage of preventative care (2010)
 A new appeals process that includes both internal and
external reviews for appeals of coverage (2010)
 Prohibiting discrimination in favor of highly compensated
employees by fully-insured plans
 Requiring coverage of emergency services without prior
authorization and in-network requirements (2010)
 Prohibiting required authorization or referral for an OBGYN (2010)
Requirements for Non
Grandfathered Plans – Cont.
 Quality of care reporting regarding plan benefits and
reimbursement structures (3/23/12 est.)
 Prohibiting annual cost-sharing limits that exceed the
thresholds applicable to health savings accounts (2014)
 Requiring coverage for participation in clinical trials for
life-threatening diseases (2014)
Grandfathered Plans
If You Lose Status…
 You will not have to, among other things:
- Maintain documentation of your plan as it existed on
3/23/10 in perpetuity
- Calculate the impact of certain benefit changes
- Freeze plan design indefinitely
- Postpone or rework plan changes for the coming year
Grandfathered Status
What Will Employers Do?
 47% of employers expect that one or more of their health plans to
lose grandfather status (Mercer survey)
 The reasons are:
- More cost effective to make plan changes (63%)
- Long-term costs associated exceed value (35%)
- Complying with non-grandfathered plan rules will not be onerous
(26%)
- Making changes to be competitive with competitors (17%)
- Want to comply with health care reform requirements as soon as
possible (11%)
External Claims Review
Requirements
 Applies to non-grandfathered self-insured plans with
policy years beginning on or after 9/23/10
 Plans must contract with at least three accredited
independent review organizations – claims must be
rotated.
 Claimants have four months to file a request for an
external review
 Preliminary review must be completed within 45 business
days – expedited 72 hour reviews for critical situations
Lifetime & Annual Limits
 No lifetime limits and only “restricted annual limit” on the
value of essential benefits are allowed.
- Restricted annual maximum for plans that renew on and
after
9/23/10
$750,000
9/23/11
$1,250,000
9/23/12
$2,00,000
1/1/14
Unlimited
● Some brokers/consultants too quick to push for unlimited
limits immediately
Commercial Plans &
Non-Grandfathered Plans
 Provisions applying to Commercial Insurers:
 Prohibiting Discrimination Based on Salary
 Minimum Loss Ratio
 Rating Rules
 Provisions applying to Non-Grandfathered Plans
 Coverage of Preventive Health Services Without Cost-Share
 Must Cover Clinical Trials for Certain Diseases
 Implementation of External Appeals Process
 Transparency Disclosure – Claims and Rating Policies
Reporting, Disclosure & Admin
 Explanation of Coverage
 Models Developed in 3/2011 – Implementation 2012
 Plans must use Fed Explanation of Coverage Docs
Uniform definitions of standard insurance and medical terms
 Cost-sharing exceptions, reductions and limitations on coverage
 Provide common benefits scenarios
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 Notice Requirements for Employees
 March 2013
 Info on State Exchanges and Free Choice Vouchers
 If –er Coverage is Below 60%
 Availability of Tax Credits
Reporting, Disclosure & Admin
 Individual Mandates
 W-2 Reporting in 2011
 Beginning in 2014 – Reporting to Enforce Mandate
 Availability of Coverage for Employees
 Length of Waiting Periods
 Lowest Cost Option
 Auto Enrollment
 Effective Date Unclear
 Employers over 200 ees must Auto Enroll
 Must Provide Adequate Notice to Opt Out
Employer Fees & Compliance
 Large Employers Offering Coverage
 Effective 2014
 $3,000 for Each Employee Receiving “Premium Assistance”
 Large That Does Not Offer Coverage
 $2,000 Per Full-time Employee
 Can Deduct First 30 Employees from Calculation
 Free Choice Vouchers
 Voucher Equal to Employer Contribution
 Purchase Coverage in Exchange
 Employee Pockets Difference
 Eligibility: <400% FPL & Contributes 8% < X < 9.5%
Tax and Fees on Self-Insured Plans
 Fees on Self-Insured Plans
 Plans Ending 9/30/12
 $1 Per Covered Live in 2013 ($2 per Life in 2014)
 2015 – 2019: Previous Fee + (Previous x % Change in National Health
Expenditure)
 Excise Tax on Generous Plans
o Effective in 2018
o 40% Tax on Coverage Above the Following Thresholds:
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$10,200 for single coverage; $27,500 for family coverage
 TPA and Stop-Loss Assessments
 Temp Reinsurance Program: 2014 – 2016 – TPAs TBD
 High Risk Pools: June 2010 - 2014
Incentives and Opportunities
 Prevention and Wellness
 Beginning in 2014
 Employer Premium Discount or Cost-Sharing Increased to 30%
 HHS Discretion to Raise to 50%
 Formation of Co-Ops
 Beginning in 2014
 Fed Loans and Grants Available to Form Co-Ops (July 2013)
 Organized Under
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State Law as Non-Profit, Member-Run
Encouraged to Enter into Collective Purchasing Agreements
 Other Opportunities
Annual Reports on Self-Insured Plans
 DOL Report on Self-Insured Plans
 Report Due March 2011
 Info From IRS/DOL Form 5500
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Plan Type, Benefit Arrangement, Financial Filings
Sent to Relevant Committees
 Study on Large Group Market
 Compare Characteristics of Employer Health Plans
 Analysis of Adverse Selection
 Why Self-Insurance Can Offer Cheaper Coverage
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Efficient Admin or Denial of Claims
Claim Denials and Coverage Changes in Relation to Economy
SIIA’s Lobbying Victories
 Elimination of Government-Run Health Plan Proposal
 Removal of Prohibition on Self-Insuring Based on Group Size
 Removal of Assessments on TPAs
 Continuation of the Employer-Based System:
 ERISA Waivers
 Creation of Cooperatives
 Protecting Self-Insured Plans from Some Regulations Meant
for Insurance Companies
Legal Challenges to PPACA
 State of Virginia vs. U.S. Dept. of HHS
 Virginia is challenging the individual mandate provision
 Virginia is unique in that it passed a law prior to passage
of PPACA restricting mandated health insurance purchase
 Federal District Court Denied HHS Motion for Summary
Judgment
 Oral Arguments Scheduled for Next Month
 PPACA does not contain “severability” clause, so this case
is significant
Legal Arguments -State of Virginia
 Requiring an otherwise unwilling individual to purchase a
good or service from a private vendor is “beyond the
outer limits” of the Commerce Clause
 Declining to buy health insurance is not “economic
activity” and therefore not subject to federal regulation
under the Commerce Clause
 Congress cannot invoke either the Necessary and Proper
Clause or its taxation powers to regulate economic
inactivity
Legal Arguments - HHS
 Virginia lacks standing to challenge the individual
mandate
 The issues are not ripe for resolution because individual
mandate does not take into effect until 2014
 The individual mandate is amply supported by the
Commerce Clause and the Necessary and Proper Clause
 Congress has independent authority to create the
individual mandate using its taxing and spending power
under the general welfare clause.
Industry Outlook -- Concerns
 Removal of Annual and Lifetime Coverage Limits
 New Administrative Burdens
 Employers Discontinue Plans
 Results of DOL/HHS Market Studies
 Affect on Traditional Health Insurance Carriers
 Future Legislation
 Regulatory Developments
 Election Results (Tea Party)
Industry Outlook - Opportunities
 Self-Insurance Study – Possible “Seal of Approval”
 Fully Insured vs. Self-Insured Plan Cost Trends
 Increased Interest in Self-Insurance (In Anticipation of
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Future Cost Sharing by Health Insurers)
Self-Insured Programs Become More Favorable to Brokers
Additional Legislative Action
New Product/Service Offerings
Election Results (Tea Party)
Questions/Contact Info
Mike Ferguson
Chief Operating Officer
SIIA
800/851-7789
[email protected]