August 8, 2011

Healthcare Aware – Keeping You Informed on PPACA

Standardized Summary of Benefits and Coverage

On August 17, 2011 the Departments of Health and Human Services, Labor and Treasury issued proposed rules with respect to providing the standardized Summary of Benefits and Coverage (SBC) as well as the accompanying glossary of terms required under PPACA.

The SBC is to be no more than 4 double sided pages long and must include certain standardized information in a standardized format and order. It is required to be provided to eligible employees no later than March 23, 2012. The SBC must include:

  • Uniform definitions of standard insurance terms and medical terms;
  • A description of the coverage, including cost sharing for each category of benefits identified by the Departments;
  • The exceptions, reductions and limitations on coverage;
  • The cost sharing provisions of the coverage, including deductible, coinsurances, and copayment obligations;
  • The renewability and continuation of coverage provisions;
  • A coverage facts label that includes examples to illustrate common benefits scenarios (including pregnancy and serious or chronic medical conditions) and related cost sharing based on recognized clinical practice guidelines;
  • A statement that the SBC is only a summary and that the plan document should be consulted to determine the governing contract provisions.

The requirement that the SBC include statements about minimum essential coverage and minimum value requirements is not yet required. We can look for amendments to this when exchanges become available in 2014. Comments are requested as how to present plans that has multiple tiers or providers to administer different benefits.

SBC’s are required to be provided to all eligible employees and beneficiaries OR one to all at the same address:

  1. When the employee meets in person with the employer for enrollment, the employer may hand deliver the SBC to the employee. Alternately the employer may offer the eligible employee the following options and the SBC shall be delivered in the manner selected by the employee:
    1. A postage paid printed copy mailed within 7 calendar days of the request;
    2. Emailed to an email address provided by the eligible employee;
    3. An electronic copy delivered via the internet;
    4. A copy delivered by any other means acceptable to the employee and employer.
  2. If the enrollment is conducted by phone or mail, the employer must offer a printed SBC within seven days to the address provided by the employee. Alternately the employee may choose one of the methods above.
  3. If the plan provides electronic enrollment, the SBC must be available on the enrollment site and the employee must be required to acknowledge receipt of the SBC as a step necessary to the completion of the enrollment.
  4. The SBC must be provided as part of any written enrollment materials, but as a separate stand alone document. The SBC cannot be incorporated into any other document.

The timing for providing SBC’s is as follows:

  • If written materials are required for renewal the SBC must be provided no later than the date the materials are provided. If the renewal is automatic, the SBC must be provided thirty days prior to the renewal.
  • If the plan does not distribute written enrollment materials the SBC must be furnished no later than the first date the eligible employee is eligible to enroll.
  • Upon request, or upon special enrollment requests, or enrollments completed by phone or mail, the SBC must be provided within 7 days of the request.
  • For those not enrolled, a SBC must be provided for all benefit options for which the individual is eligible. For those currently enrolled a SBC must only be provided for that option in which he or she is enrolled. However, if requesting information for a package they are not enrolled the SBC must be provided within 7 days.
  • If there is a change in information required to be in the SBC before the first day of coverage, the plan must provide a current SBC no later than the first day of coverage.

Finally there is a standardized glossary of terms under development that are to be utilized in association with the SBC. This glossary is to be provided to individuals at the time the SBC is provided.

These regulations are proposed and not yet final so changes are expected and input is being requested. There is consideration of delaying the March 23, 2012 deadline to provide the form. It will be a major effort for employers to comply with the notification requirements and advance benefit planning must take place. As usual Unified is here to help. We will prepare the SBC’s on your behalf, provide you with the glossary of terms and keep you up to date as these regulations unfold.

Hospital Transparency

In keeping you informed, Unified would like to bring to your attention the efforts of PPACA to make hospital charges transparent. The Patient Protection and Affordable Care Act contain a provision that require hospitals to publish a list of their standard charges for items and services. This publication must be in accordance with guidelines developed by the Secretary of Health and Human Services, which are currently under construction.

The mandate is to have hospitals publicly post their standard charges, much like restaurants post their menu at the door. This will permit consumers and benefit plans to see the expected cost, how it compares to the prices of other facilities, and compares the final bill to the stated final charges. Of course some hospital services are not cut and dry, such as a person who has a heart problem with potential complication of another existing condition or finding something else mid-operation. However many costs are predictable, more like a normal restaurant or retail purchase.

We have all heard dramatic stories of mark-ups on hospital provided services, for instance prosthetics. While the law cannot dictate pricing for medical providers, if the providers are required to post that a replacement body part that cost the hospital $3,000, the hospital charges $30,000 for the same part, this is an issue for patients, plans, consumer action groups and health planners to consider. In these types of scenarios where it would be easy to trace the mark-up from when the hospital purchased the item, to when it is resold for patient use, suggestions have been requested as to how to address this issue in the transparency regulations.

Although 100% disclosure of pricing is ideal, it may be deemed unworkable so alternate strategies are being considered, such as disclosure of most frequently provided items or services. The task force assigned to this project is proposing four different amounts to be made public:

  1. the billed charge
  2. the prevailing allowable amount in-network (the median amount a hospital accepts as payment for the services rendered)
  3. the prevailing allowable amount out-of-network
  4. the Medicare reimbursement – inpatient and outpatient (the amount Medicare would reimburse the facility for the services rendered).

Another approach under consideration is to require the hospitals to publish the Medicare amount using the Medicare codes. For instance a published dollar amount for a knee replacement would not be helpful unless the consumer knows all the services covered for the knee replacement. One hospital may publish a low charge for a knee replacement that covers only a portion of the charges, while another may publish a higher charge because they include more services. However pediatric hospitals do not use Medicare codes, so this raises additional consideration as what to do in these instances.

This is a vast and important undertaking of the Department of Health and Human Services and Unified will keep you apprised of any developments.

New Plan Claims Procedures Amended Again

Health Plans that are considered New Plans under PPACA (this information is not applicable to grandfathered plans) have received additional guidance with respect to the claims administration guidelines required under the Act. Unified has provided several notices with respect to these new procedures, which are very complex. However rest assured Unified is handling all of this for you behind the scenes. Rather than repeatedly attempting to bring such a complex set of regulations to your attention to dissect and understand all the delays and amendments, Unified has decidedly taken the approach to brief you on the most recent amendments to these regulations and provide the best administrative option to you.

As you may remember from previous guidance, self-funded New Plans under PPACA are required to adopt new claims procedures and also implement an external review process for use in certain instances when participants do not agree with the outcome of the internal appeals process. The effective date of many of the new claims procedures has been delayed until January 1, 2012. The most recent guidance has stated that non-federal governmental self-funded plans may choose between participating in the Federal external review process administered by the Health and Human Services Agreement through the Office of Personnel Management (the HHS-administered process) or engage in the private accredited IRO process for plans subject to ERISA and/or the Code. To ease administration and ensure consistency, Unified has taken the position to utilize the private IRO process for all its clients with New Plans as defined under PPACA, including those plans that are ERISA plans and those that are non-federal governmental.

As required under the guidance, those New Plans that are non-federal governmental are required to provide notice to Health and Human Services, no later than January 1, 2012, as to which external review option the plan chooses to utilize. As part of our services to your plan Unified will be providing this notice to the department on your behalf.

As always, Unified is committed to excellence in customer service. If you have questions or want more details to the new claims procedures and/or external review process, feel free to contact your Compliance and Plan Document Specialist, Deborah Hester or Denise Baldwin by email at or by phone at 800-291-5837.

Additional Preventive Service Coverage Required For New Plans

Health Plans that are considered New Plans under PPACA have received additional guidance with respect to required preventive care service coverage. As you are aware New Plans are required to cover an extensive list of preventive services at no participant cost sharing if obtained within the plans PPO network area. On August 1, 2011 the department of Health and Human Services released the interim final rule adopting additional guidelines for women’s preventive services. These guidelines become effective the first plan year that begins on or follows August 1, 2012 and include:

  • Well-Woman Visits
    • HHS Guideline for Health Insurance Coverage: Well-woman preventive care visit annually for adult women to obtain the recommended preventive services that are age and developmentally appropriate, including preconception and prenatal care. This well-woman visit should, where appropriate, include other preventive services listed in this set of guidelines, as well as others referenced in section 2713.
    • Frequency: Annual, although HHS recognizes that several visits may be needed to obtain all necessary recommended preventive services, depending on a woman’s health status, health needs, and other risk factors.
  • Screening for Gestational Diabetes
    • HHS Guideline for Health Insurance Coverage: Screening for gestational diabetes.
    • Frequency: In pregnant women between 24 and 28 weeks of gestation and at the first prenatal visit for pregnant women identified to be at high risk for diabetes.
  • Human papillomavirus testing
    • HHS Guideline for Health Insurance Coverage: High-risk human papillomavirus DNA testing in women with normal cytology results.
    • Frequency: Screening should begin at 30 years of age and should occur no more frequently than every 3 years.
  • Counseling for sexually transmitted infections
    • HHS Guideline for Health Insurance Coverage: Counseling on sexually transmitted infections for all sexually active women.
    • Frequency: Annual
  • Counseling and screening for human immune-deficiency virus
    • HHS Guideline for Health Insurance Coverage: Counseling and screening for human immune-deficiency virus infection for all sexually active women.
    • Frequency: Annual
  • Contraceptive methods and counseling. * (see note)
    • HHS Guideline for Health Insurance Coverage: All Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity.
    • Frequency: As prescribed
  • Breastfeeding support, supplies, and counseling
    • HHS Guideline for Health Insurance Coverage: Comprehensive lactation support and counseling, by a trained provider during pregnancy and/or in the postpartum period, and costs for renting breastfeeding equipment.
    • Frequency: In conjunction with each birth.
  • Screening and counseling for interpersonal and domestic violence.
    • HHS Guideline for Health Insurance Coverage: Screening and counseling for interpersonal and domestic violence.
    • Frequency: Annual

* Group health plans sponsored by certain religious employers, and group health insurance coverage in connection with such plans, are exempt from the requirement to cover contraceptive services. A religious employer is one that: (1) has the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a non-profit organization under Internal Revenue Code section 6033(a)(1) and section 6033(a)(3)(A)(i) or (iii). 45 C.F.R. §147.130(a)(1)(iv)(B).

Although these new women’s preventive guidelines are required to be added to the 100% in-network coverage for New Plans effective plan years that begin on or after August 1, 2012, these guidelines do give rise for concern to the grandfathered plan to some degree, dependent upon current coverage.

Although the 100% coverage rules do not apply to a grandfathered plan, because a few of the above preventive benefits move from an “other category to a preventive category,” such as contraceptives and breast pumps, a decision does have to be made as how the plan intends to cover. If the plan wants to keep covering as they always have, an amendment is most likely needed to clarify that contraceptives are under the drug card at copay and devices are deductible coinsurance, for instance. If the plan doesn’t mind that contraceptives and breast pumps pay the same as other wellness, then no amendment is likely as these services would just fall under the current wellness benefit, but again it is dependent upon whether the plan pays for a non exhaustive list of wellness or a limited list, or if it covers wellness at all. Sponsors of grandfathered plans will need to advise Unified of the preferable coverage; however we will take the default position to coverage as currently unless instructed otherwise. Your Unified Account Executive will discuss this issue with you during your applicable renewal.

Exchanges - Preparing for 2014

Just to make you aware, the Department of Health and Human Services released three proposed rules which:

  1. Expands and simplifies Medicaid eligibility and promotes a simple seamless system of affordable coverage by coordinating Medicaid and CHIP with the new exchanges.
  2. Lays out how individuals and families will receive premium tax credits to help defray insurance costs. This is important to employers because eligibility for premium tax credits and enrollment in the exchange is associated with employer mandate penalties. To be eligible for the premium tax credit the individual:
    1. Household’s income must between 100% and 400% of the federal poverty level.
    2. Must be enrolled in a qualified health plan through the exchange.
    3. Must be lawfully present in the United States and not incarcerated.
    4. Must not be eligible for other qualifying coverage such as Medicare or Medicaid or affordable employer sponsored coverage. Affordable employer sponsored coverage is coverage in which the self only premium does not exceed 9.5% of the employees household income or provides a minimum of 60% coverage of total allowed charges. Further guidance is expected to define minimum value of coverage in a way that preserves the existing system of employer coverage, but that does not permit-employers to avoid the statutory responsibility standards.
  3. Details the standards and process for enrolling in qualified health plans and insurance affordability programs. It also outlines the basic standards for employer participation in the Small Business Health Options Program (SHOP). SHOP will provide a new way for small employers that purchase insurance through the exchange to have the clout big businesses currently enjoy when purchasing insurance. These small employers that purchase insurance through SHOP may also qualify to receive tax credits for up to 50% of the employer’s premium contribution. Small employers are defined as not more than 100 employees; however there is a state option to treat 50 or less employees as a small employer.

In the weeks ahead the Administration will conduct an aggressive outreach campaign and ask for public comment on the proposed rules from employers, consumers, state leaders, health care providers and insurers. Comments have already been requested and a safe harbor proposed with respect to the definition of affordable health coverage. The safe harbor provides an employee’s W-2 wage from his employer will be used in the calculation as opposed to household income which is knowledge employers do not have readily available. The departments expect to modify these proposed rules based on the feedback received.

Currently $185 million has been awarded to states and the District of Columbia to help in the building of Affordable Insurance Exchanges, mandated under PPACA. Additionally a letter to Governors has been sent outlining the options and resources for states to work with Health and Human Services to set up Exchanges while making more efficient use of shared resources. For more details on these proposed rules visit

Other Reminders

Unified would like to remind plan sponsors of the importance of providing timely notice to Unified of enrollments, terminations, changes from active status to retiree and employer size changes. Timely enrollment information is important when it comes to seeking stop loss reimbursements. Notices of termination and changes from active to retiree affects COBRA notifications and Section 111 reporting. Having accurate Section 111 reporting is helpful to avoid Medicare requests for information and payment demand letters. Employer size notifications help determine our administration of the Section 111 reporting , whether Medicare is considered primary or secondary in certain instances as well as the application of other employer mandates. We are committed to the proper administration of your plan, and if you have any of the above notifications to provide, contact your Eligibility Specialist at 800-291-5837.

This information is provided by Unified Group Services, Inc. for informational purposes only and is not to be construed as legal advice.