The Department of Health & Human Services issued a set of rules and guidelines titled “Patient Protection and Affordable Care Act: Exchange and Insurance Market Standards” this month that aims to correct the issues that resulted from the health laws rocky rollout. The release was also accompanied by a bulletin on product discontinuance and cancelled health plans.
The standards will become effective as of 2015, and were demanded by both insurers and consumers across the nation.
Where Did It All Go Wrong?
Much of this demand correlated with the numerous amounts of problems encountered during the health laws rollout back in October of 2013.
Consumers drew attention to the health plans that are available through the online health insurance exchange being too restrictive and too costly. The limited amount of doctors, hospitals, and prescription drugs offered in these plans has caused concern over the value of these “affordable” health plans.
Insurers have also voiced their concerns, specifically over the anticipated costs they may endure from the number of amendments made to policies during the rollout. This includes the risk corridors that have been disrupted due to many cancelled plans being reinstated for almost two additional years.
Both parties believe the over-regulation of the health law's key components could also become costly and disruptive in making healthcare coverage affordable and accessible.
The HHS' Proposed Solution
The HHS is hoping these new sets of standards will help lay the foundation for insurers looking to offer health plans through the federal health insurance exchange. Amongst these standards, there are guidelines for provider network access, product withdrawal as an exception to guaranteed renewability, QHP quality reporting, regulating navigators, modifying or adjusting plans/premiums, and other PPACA provisions that have been labeled “burdensome” for the insurer.
Officials believe health plans need to be monitored under more scrutiny and rely less on state regulations and private exchanges.
This approach has been touted as a way to control premium prices and network access for plans offered in the health insurance exchange. Many of the current plans available held down premiums by limiting consumers to narrow networks. As a result, insurers will now be required to contract with at least 30% of the “essential” providers in their service area, including community health centers, HIV/AIDs clinics, family planning clinics, children’s hospitals and hemophilia treatment centers.
Furthermore, insurers will be required to provide direct links to the to their corresponding policy and benefits coverage information, as well as a detailed listing of their in-network providers.
The HHS introduced new guidelines governing the guaranteed approval and renewability provisions that faced criticism from consumers with “significant health needs” and cancelled health plans. These guidelines will challenge any health plan that requires “prior authorization” and look closely at co-payments on prescription drugs, hospital stays, and specialist visits. Insurers will also be encouraged to pay for a 30-day supply of any prescription drug that a plan member had historically been taking, if that drug is not covered under their new plan.
For insurers worried about the impact the health law’s rollout may have on the industry’s risk corridors, the HHS will implement a “budget neutral” program that tweaks the formula determining the federal subsidy insurers receive. This will involve shifting funds from insurers who fare better under the PPACA’s provisions to those who have fared worse. Additionally, the program will raise the administrative cost ceiling and increase the profit margin floor throughout the risk corridors already in place.
It remains fair to say that this new set of standards will help to mitigate any substantial premium increases in the next few years and provide consumers with more “valuable” plans. However, implementing them may remain a difficult task.
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