In this ongoing feature, EPM Executive Editor Mark Plaster reviews the recently-enacted health care reform legislation, breaking it down section by section. The summary is taken from the Democratic Policy Committee; Dr. Plaster’s commentary is in red.
Sec. 2718. Bringing down the cost of health care coverage. As amended by Section 10101, requires plans offering coverage in the group and individual markets (including grandfathered plans but excluding self-insured plans) to report to the Secretary the amount of premium revenues spent on clinical services, activities to improve quality, and all other non-claims costs as defined by the National Association of Insurance Commissioners and certified by the Secretary of HHS. Beginning in 2011, large group plans that spend less than 85 percent of premium revenue and small group and individual market plans that spend less than 80 percent of premium revenue on clinical services and quality must provide a rebate to enrollees. In addition, each hospital operating within the United States shall publish a list of standard charges for items and services provided by the hospital.
How much are the insurance companies going to spend demonstrating to the Secretary that they are in compliance? While it is a great idea to hold insurance companies accountable for the administrative overhead, adding another bureaucracy in order to do it seems counter-intuitive. Won’t that just add to the overhead? This sounds to me like a lot of the class action suits that make the lawyers millions while members of the suing class get a ‘coupon.’ Having the hospital publish a list of standard charges is a good idea. Let’s just hope ‘publish’ can be online. Otherwise can you imagine how many trees will die for those mega-catalogs?
Sec. 2719. Appeals process. As amended by Section 10101, requires plans to implement an effective internal appeals process of coverage determinations and claims and comply with any applicable State external review process. If the State has not established an external review process or the plan is self-insured, the plan shall implement an external review process that meets minimum standards established by the Secretary. The Secretary may deem the external review process of a plan in operation as of enactment to be in compliance with this section.
A “State external review process”? In most states, the Social Security Disability Insurance evaluators are currently running 10-18 months behind schedule. How long will it take the State to evaluate a claim of wrongful denial of insurance coverage? Another great idea, but is another bureaucracy the best way to achieve it? What will be the true cost of this secondary appeals board process? Who will pay for it?
Sec. 2719A. Patient protections. As added by Section 10101, requires that a plan enrollee be allowed to select their primary care provider, or pediatrician in the case of a child, from any available participating primary care provider. Precludes the need for prior authorization or increased cost-sharing for emergency services, whether provided by in-network or out-of-network providers. Plans are precluded from requiring authorization or referral by the plan 3
for a patient who seeks coverage for obstetrical or gynecological care by a specialist in these areas.
The first part is meaningless. Every insured already has this. But the preclusion on increased cost-sharing for emergency services? Yahoo! This means even more people will come to the ED. Why not? You can’t be charged more. Now I’ll have to leave for work even earlier to account for the traffic jam going to the ED.
Sec. 1002. Health insurance consumer information. The Secretary shall award grants to States to enable them (or the Exchange) to establish, expand, or provide support for offices of health insurance consumer assistance or health insurance ombudsman programs. These independent offices will assist consumers with filing complaints and appeals, educate consumers on their rights and responsibilities, and collect, track, and quantify consumer problems and inquiries. Provides $30 million in funding and is effective upon the date of enactment of the bill.
Another bureaucracy to help consumers with filing complaints? And who will act on all these complaints? Will they go to the already jammed review board or be litigated by the legions of new health care lawyers? $30 million will get you a billion, I’ll bet.
Sec. 1003. Ensuring that consumers get value for their dollars. For plan years beginning in 2010, the Secretary and States will establish a process for the annual review of increases in premiums for health insurance coverage. Requires States to make recommendations to their Exchanges about whether health insurance issuers should be excluded from participation in the Exchanges based on unjustified premium increases. Provides $250 million in funding to States from 2010 until 2014 to assist States in reviewing and, if appropriate under State law, approving premium increases for health insurance coverage and in providing information and recommendations to the Secretary. As added by Section 10101, allows for the establishment of medical reimbursement data centers to develop fee schedules and other database tools that reflect market rates for medical services.
$250 million for oversight of insurance companies rates? Will this result in lower costs of care or higher overhead? What does experience show us about the cost of contracting with government oversight? What is a database tool that reflects market rates for medical services? That doesn’t sound good.
Sec. 1004. Effective dates. Except for sections 1002 and 1003 (effective upon the date of enactment of this Act), this subtitle shall become effective for plan years beginning on or after the date that is 6 months after the date of enactment of this Act.
Subtitle B – Immediate Action to Make Coverage More Affordable and More Available Sec. 1101. Immediate access to insurance for people with a preexisting condition. Enacts a temporary insurance program with financial assistance for those who have been uninsured for several months and have a pre-existing condition. Ensures premium rate limits for the newly insured population. Provides up to $5 billion for this program, which terminates when the American Health Benefit Exchanges are operational in 2014. Also establishes a transition to the Exchanges for eligible individuals.
This looks something like what everyone was wanting, help for really sick people who couldn’t otherwise get insurance. This looks like a good idea, but the details of how this works are not clear. The devil is in the details.
Sec. 1102. Reinsurance for early retirees. Establishes a temporary reinsurance program to provide reimbursement to participating employment-based plans, including (as clarified by Section 10102) plans sponsored by State and local governments, for part of the cost of providing health benefits to retirees (age 55-64) and their families. The program reimburses participating employment-based plans for 80 percent of the cost of benefits provided per enrollee in excess of $15,000 and below $90,000. The plans are required to use the funds to lower costs borne directly by participants and beneficiaries, and the program incentivizes plans to implement programs and procedures to better manage chronic conditions. The Act appropriates $5 billion for this fund and funds are available until expended. 4
So now if you retire at 55 from a state or local government job, the feds will reimburse your reinsurance up to $90,000. Many state governments, such as California, are going bankrupt because of the generous health care benefits they have provided to unionized state employees. This appears to be a bail-out for these governments and union contracts. While the bill only appropriates $5 billion for the fund, now, it is another cost that will only increase and will be a program that is difficult if not impossible to end.
Sec. 1103. Immediate information that allows consumers to identify affordable coverage options. Establishes an Internet portal for beneficiaries to easily access affordable and comprehensive coverage options. This information will include eligibility, availability, premium rates, cost sharing, and the percentage of total premium revenues spent on health care, rather than administrative expenses, by the issuer. Section 10102 clarifies that the internet portal shall be available to small businesses and shall contain information on coverage options available to small businesses.
This is a great idea! Just this change alone, if it was combined with true transparency, interstate competition, and simplified language, would go a long way to lower costs.
Sec. 1104. Administrative simplification. Accelerates HHS adoption of uniform standards and operating rules for the electronic transactions that occur between providers and health plans that are governed under the Health Insurance Portability and Accountability Act (such as benefit eligibility verification, prior authorization and electronic funds transfer payments). Establishes a process to regularly update the standards and operating rules for electronic transactions and requires health plans to certify compliance or face financial penalties collected by the Treasury Secretary. The goal of this section is to make the health system more efficient by reducing the clerical burden on providers, patients, and health plans.
Uniform standards and operating rules are always good policies. It is good for consumers to compare apples to apples. It is good for providers to have reliable and streamlined payment systems. But I don’t know why compliance is placed under the Treasury Department. Oh yeah, the IRS. It is the new department that will be collecting all the fines handed out by HHS. That’s why we need all those thousands of new IRS agents.
Sec. 1105. Effective dates. Provides that this subtitle is effective upon enactment.