Implications of the PPACA on Group Health Plans

Presentation Overview Upcoming Requirements to Consider Important Regulatory Guidance Accountable Care Organizations PPACA’s Effects on Plans Current Legislative Developments

Plan Reforms Effective 2011 Employers to Begin Reporting on Cost of Coverage:  Cost of Coverage Entails?  Report on Succeeding Year’s W-2  Provided to Employees at Departure  Certain Types of Coverage Exempted CDHPs Penalties:  Increased Penalty for Non-Qualified Use  Cap on FSAs

Plan Reforms Effective 2012 & 2013 Plans to Report on Health Outcomes Provide Plan Explanations Plans to Pay Per-Life Fee Plan Summaries Employers to Disclose Coverage Options Medical Loss Ratio

Plan Reforms Effective for Plan Years Beginning 2014 Implementation of Insurance Exchanges Individual Mandate Employer Mandate Prohibition of Pre-X Exclusions Rating Rules Guaranteed Availability Renewability Prohibition on Waiting Periods > 90 Days Out-Of-Pocket Maximums Deductible Maximums

Guidance - Grandfathered Plan Modifications Defined as Plans in Existence 3/23/10 Exempted from Certain Plan Requirements Allowable Changes:  Claims Payment Policy  Increase in Nominal Premium Amount  Changes to Comply with PPACA & State Law  Changes to Plan Service Providers  Addition of Dependents and New Hires  Limited Increase in Fixed Cost-Sharing Amounts (other than co-pays) Prohibited Changes:  Decrease in Benefits  Increase in % of Employee Contribution/Premium (> 5%)  Increase in % Coinsurance Cost-Share  Increases in Deductibles or Out-of-Pocket Limits (> medical inflation + 15%)  Increases in Copayments (the > of $5 or medical inflation + 15%)  Addition or Increase of Annual Limits

Guidance - Coverage of Young Adult Dependants Plans May Not Deny Coverage Based On:  Financial Dependency  Residency  Student Status  Employment  Marital Status Young Adult Dependents Defined:  Biological Children  Stepchildren  Adopted Children  Foster Children

Guidance - Annual and Lifetime Limits Limits Only Apply to TBD “Essential Health Benefits” Phase -In:  Plan years beginning after 9/23/10 - $750,000  Plan years beginning after 9/23/12 - $1.250,000  Plan years beginning after 9/23/13 - $2,000,000

Guidance - Provider Provisions Primary Care Provider:  Any Available Provider Pediatrician:  Pediatricians as PCP  Plan May Require In-Network Obstetrician and Gynecologist:  Required Referral for In-Network Provider Prohibited

Guidance - Coverage of Prevention and Wellness 1 st Dollar Coverage for Prevention and Wellness:  Required Cost-Sharing For Out-Of-Network Allowed Services Plans Must Cover:  Recommendations of the U.S Preventive Services Task Force  Recommended Immunizations  Evidence-Based Prevention for Children Recommended by HRSA

Guidance - External Review Informing of Review Process Notification of Rights to Review Allow for Emergency Review Contract With 3 Independent IROs Notification of the Decision

Guidance - MLR Plans to Report and Disclose:  Earned Premiums  Reimbursements for Clinical Services  Spending on Programs to Improve Quality  Spending on all Non-Claims Costs Separate Reports for Each Market Deductibility of Taxes Rebates Option to Adjust Ratio in Individual Markets

Accountable Care Organizations Description of ACOs ACO Federal Guidelines and Provisions Concerns with ACOs

PPACA’s Impact on Group Plans Decision to Remain Grandfathered:  Cost Benefit Analysis Changes in Benefits:  Costly Plan Reforms May Lead to a Decrease in Benefits Administrative Burdens:  Increased Admin Raising Plan Costs Employers Continuing Coverage:  Too Much Burden for a Less Needed Benefit? Insurers to Continue Offering Health Products:  Costs/Requirements Incentive to Leave Market?

Current Legislative Developments Attempts to Repeal Attempts to Defund Incremental Changes Made: Future Attempts for Change Non-PPACA Reform Ideas Legal Challenges

Questions? Jay Fahrer Director, Government Relations Self-Insurance Institute of America (SIIA)