Employer-Sponsored Health Plans Preparing for 2011

Transcription

1 Employer-Sponsored Health Plans Preparing for 2011 Brian M. Pinheiro Jean C. Hemphill D. Renee Applegate Jonathan M. Calpas September 14, 2010

2 Scope of Today s Discussion Review recent employer-sponsored group health plan developments Focus on employer tasks to be completed by December 31, 2010 Topics: - Health Care Reform - Mental Health Parity Rules - HIPAA/HITECH Developments 2

3 The Health Care Reform Law(s) Patient Protection and Affordable Care Act ( PPACA ) (Public Law ) and Health Care and Education Reconciliation Act of 2010 ( HCERA ) (Public Law ) - Improve access to health insurance coverage Individuals must enroll or pay Exchanges Employers must pay or play - Improve quality and efficiency of health care - Promote wellness - Reform the insurance market and public programs (Medicare, Medicaid, CHIP) - Pay for itself 3

4 What Do I Need To Worry About Right Now? Health care reform seeks to improve access and quality of coverage right away - Put all forms of coverage on the same playing field by 2014 when the Exchanges open Transition Period: All employer-sponsored plans must satisfy a series of immediate reforms Insured plans Self-funded plans Limited exceptions for grandfathered health plans Exception for retiree-only plans and excepted benefits Grandfathered health plans: continue coverage that existed as of 3/23/ Grandfathered health plan is defined as any group health plan in which an individual was enrolled on March 23, 2010 that continuously covered at least one individual since March 23,

5 Immediate Reforms * Green indicates that requirement applies to Grandfathered Plans Requirement* Pre-existing exclusions prohibited for children under age 19 Prohibition on lifetime dollar maximum on benefits Prohibition on annual dollar limits on restricted benefits Rescissions of coverage for reasons other than fraud or non-payment PHSA Sec st Plan Yr. after 9/23/2010 9/23/2010 9/23/2010 9/23/2010 Required preventive health services without cost-sharing Extension of dependent coverage to age 26 No discrimination based on salary permitted Insured plans must rebate premiums if medical claims ratios too low /23/2010 9/23/2010 9/23/2010 9/23/2010 Mandated appeals process with binding external review /23/2010 5

6 Prohibitions on Pre-existing Conditions Plan may not impose any pre-existing condition exclusion upon coverage for an individual under age 19 Beginning January 1, 2014, the restriction will apply to all individuals, not just those under age 19 6

7 Coverage Of Children Up To Age 26 Plans that provide for dependent coverage must extend such coverage to an adult child (married or unmarried) until the child reaches age 26 Coverage for children may not be conditioned on any factor other than the child s relationship to the employee - Not required to cover a child or spouse of a child receiving coverage Identical coverage must be provided at identical cost - Children must be offered all of the benefit options under the plan that are available to similarly situated dependents - They cannot be required to pay more for coverage than other similarly situated dependents are required to pay Special enrollment period required to elect to cover the child - Special enrollment period must last a minimum of 30 days - For a calendar year plan, the coverage, if elected, must be effective no later than January 1,

8 Coverage Of Children Up To Age 26 Creates a new COBRA continuation coverage period for those children who have already aged out of the plan Code amended to exclude expanded coverage from income tax - Tax exclusion until year the child turns age 27 - Cafeteria plan must be amended by the end of the 2010 plan year Special exception for grandfathered plans - Prior to January 1, 2014, a grandfathered plan may exclude a child who has not attained age 26 from coverage only if the child is eligible to enroll in an employer-sponsored health plan (other than the plan of a parent) State laws may also apply and require coverage beyond age 26 8

9 Lifetime and Annual Limits No lifetime limits on benefits, except for limits on specific non-essential covered benefits Annual limits on essential benefits will be phased out, ending completely in Annual limit of $750,000 for the first plan year beginning on or after September 23, Annual limit ceiling increases over the next two years, first to $1.25 million, then to $2 million Individuals who are subject to lifetime limits need to be notified that they will once again be eligible for benefits and of the right to re-enroll (if they are no longer enrolled in the plan). - Notice must be provided before January 1, 2011 (for calendar year plans) - Enrollment period of at least 30 days must be provided - Notice may be provided individually or in applicable annual enrollment materials May apply to HHS for waivers to allow annual limits in certain circumstances 9

10 Rescission of Coverage Coverage may be rescinded only for fraud or the intentional misrepresentation of a material fact A "rescission" is defined to be the retroactive discontinuance of coverage (the rules do not apply to prospective terminations) Retroactive termination for the failure to pay premiums timely will be permitted At least 30 days advance written notice must be provided for a rescission (even though the effect will be retroactive) 10

11 Patient Protections If a plan requires a participant to pick a primary care provider (PCP), notice must be provided informing each participant of its terms - Can be included in summary description of benefits or SPD model language provided Emergency and OB-GYN services must be covered without pre-authorization and without regard to network provider status 11

12 Preventive Health Benefits Plan must cover, without any cost-sharing requirements: - Evidence-based items and services (currently recommended by U.S. Preventive Services Task Force) - Immunizations - Pediatric preventive care and screenings - Women s health preventive care and screenings including breast cancer screening, mammography Not applicable to Grandfathered Plans 12

13 Appeals Process Plan must implement a modified claims appeals process that, at a minimum, provides - Internal claims appeal process - Notice of appeal process and availability of assistance - Enrollee allowed to review file, present evidence and testimony as part of process and receive continued coverage pending outcome of the appeals process - A binding external review process (minimum standards NAIC consumer protection standards) Not applicable to Grandfathered Plans 13

14 Appeals Process Internal Appeals - Plans subject to ERISA may continue to use DOL safe harbor procedures, subject to certain modifications Urgent claims determinations must be made within 24 hours (down from 72 hours) Additional items to be included in notice of adverse benefit determination - Identifying information (date of service, name of provider, diagnosis code and meaning, treatment code and meaning) - Denial code and meaning, standard used in denying the claim - Description of internal and external appeals process - Disclose contact information for applicable office of health insurance consumer assistance or ombudsman - Continued coverage pending the outcome of an appeal 14

15 Appeals Process External Appeals - Insured plans will use each state s external appeals process (subject to modifications if it doesn t meet federal requirements) - Self-funded plans must meet Federal standards for external appeals DOL has issued an interim safe harbor - Claimant has 4 months after adverse benefit determination to request external review - Plan has 5 days to conduct preliminary review, and 1 day to notify claimant - Plan then assigns an accredited independent review organization (IRO) to review the claim - IRO has 45 days to issue a decision - Plans will need to contract with at least 3 IROs to rotate assignments of claims 15

16 Other Health Care Reform Developments Early Retiree Reinsurance Program - Federal subsidies for providing early retiree health coverage Small employer tax credit for providing health coverage - 35% tax credit available to small employers beginning in 2010 Medicare Part D changes - Retiree Drug Subsidy payment no longer excludable (2013) Health FSA and HSA changes Auto-Enrollment Form W-2 Reporting 16

17 Health FSA and HSA Changes For both Health FSAs and HSAs, over-the-counter (OTC) drugs are no longer eligible for reimbursement - Effective January 1, Cannot reimburse cost of OTC drugs during the grace period for the 2010 plan year Increased excise tax on ineligible distributions from health savings accounts (HSAs) - Increases from 10% to 20% - Effective in 2011 Health FSA contributions limited to $2,500 (as adjusted) - Limit is effective in

18 Auto-Enrollment Employers with more than 200 full-time employees must automatically enroll new employees if it continues to offer a health plan - Employees may opt out; advance notice required - No effective date in the legislation March 23, 2010(?) 18

19 Form W-2 Reporting Requirement Value of employer-sponsored health coverage (Effective 1/1/2011) - ER has to include the value of employer-sponsored health coverage on each employee s Form W-2 Value is calculated using the COBRA rules If an employee enrolls in separate plans for medical, dental and vision coverage, the aggregate value must be reported Not taxable; reporting only 19

20 To Be (Grandfathered) or Not To Be Grandfathered Certain mandated benefit design changes will apply Grandfathered status means less ability to change coverage in effect on March 23, 2010 Exemptfrom other changes Non-Grandfathered All mandated benefit design changes will apply More flexibility to make plan design changes 20

21 Rules Applicable (and Not) to Grandfathered Plans For plan years beginning on or after 9/23/2010: - Must extend benefits to children up to age 26 - Cannot have dollar value limits on lifetime or annual benefits - May not rescind coverage, other than for fraud - No pre-existing condition provisions may apply to children < 19 - Must rebate to enrollees if non-claims costs are too high Grandfathered plans are exempt from other market reforms and exchange requirements, including: - Prohibition on cost sharing for preventive care - Nondiscrimination testing for insured plans - New internal and external review procedures for benefit claim appeals - Various HHS reporting requirements - Minimum coverage requirements and limits on cost sharing 21

22 What is a Grandfathered Plan? Plan in existence on March 23, 2010 with continuous coverage No changes are made to plan that would affect grandfathered status Plan satisfies the recordkeeping and disclosure requirements for grandfathered plans Grandfathering applies separately to each benefit package 22

23 Maintaining Grandfathered Status Grandfathered plans may not: - Change insurers or enter into a new insurance contract - Eliminate benefits for a particular condition Prohibited cost-related changes - Any increase in an individual s coinsurance requirement - Any increase in fixed-dollar cost-sharing other than copayments in excess of the rate of medical inflation since 3/23/10, plus 15% - Any increase in co-payments in excess of the greater of (1) the rate of medical inflation, plus 15 percentage points, or (2) $5.00, as adjusted for medical inflation - Any decrease in the employer contribution towards the cost of any tier of coverage by more than 5 percent of its contribution rate in effect on 3/23/10 - Certain changes to lifetime and annual benefit limits that would be adverse to plan participants 23

24 Impact of Past and Future Changes Transition rules for changes made prior to June 14, Changes made prior to March 23, 2010 do not affect grandfathering - Grace period to correct changes made after March 23, 2010 and before June 14, 2010 Future guidance may prohibit other changes - Changes to plan structure - Changes in provider networks - Changes in prescription drug formularies 24

25 Collectively Bargained Plans Grandfathered collectively bargained plans subject to same requirements as other grandfathered plans For insured collectively bargained plans, grandfathered status maintained until termination of last collective bargaining agreement in effect on March 23, 2010 Change in insurers alone during this period will not cause a loss in grandfathered status 25

26 Disclosure and Recordkeeping Requirements Disclosure to participants of grandfathered status, including contact person for questions and complaints Records documenting the terms of the plan in effect on March 23, 2010 must be kept and made available for review 26

27 Mental Health Parity 27

28 Background Mental Health Parity Act of Prohibited lower annual/lifetime dollar limits on mental health benefits - Did not apply to other types of design provisions - Did not apply to substance use benefits 28

29 What MHPAEA Does Mental Health Parity and Addiction Equity Act of 2008 ( MHPAEA ) - Extends 3 types of parity Parity for lifetime/annual limits to substance abuse Parity for financial requirements Parity for treatment limitations - Quantitative - Nonquantitative - Effective dates Statute - Plan years beginning on or after October 3, 2009 Interim final regulations - Plan years beginning on or after July 1,

30 What MHPAEA Does Not Do It does not - Require plans to provide mental health/substance abuse (MH/SA) benefits - Require plans to cover specific MH/SA conditions - Specify what services are considered MH/SA services - Apply to small employers (ERs with 50 or fewer EEs) - Apply to self-funded government plans that opt-out - Apply to plans that satisfy the increased cost exemption A group health plan can be exempted from the law if it experiences an increase in actual total costs with respect to medical/surgical (MS) and MH/SA benefits of 1% (2% in the first plan year) Regulations do not address the cost exemption; will be addressed in future guidance - Preempt state insurance laws 30

31 Parity for Lifetime and Annual Dollar Limits If a health plan does not impose or imposes a lifetime or annual dollar limit on less than ⅓ of all MS benefits, then it may not impose a limit on MH/SA benefits. If a health plan imposes a lifetime or annual dollar limit on at least ⅔ of all MS benefits, then it may impose the same or a lesser limit on MH/SA benefits. If a health plan imposes a lifetime or annual dollar limit on more than ⅓ but less than ⅔ of all MS benefits, then it may not impose a limit on MH/SA benefits, or it may impose a limit that is equal to the weighted average of the limits imposed. 31

32 Parity for Financial Requirements and Quantitative Treatment Limitations A health plan may not apply any financial requirement or quantitative treatment limitation to MH/SA benefits in any classification that is more restrictive than the requirement or limitation of that type applied to substantially all MS benefits in the same classification. Applies separately to all combinations of available coverage - Examples Three medical benefit options that include MH/SA benefits Three medical benefit options and with a carved out MH/SA benefit option You can t evade the rules for parity by having a separate medical plan and a separate MH/SA plan. The two will be looked at as one for parity purposes. 32

33 Parity for Financial Requirements and Quantitative Treatment Limitations Financial requirements - deductibles, copayments, coinsurance, out-of-pocket maximums, etc. Quantitative treatment limitations - number of office visits, days of coverage, days in a waiting period, and other similar limits on scope of coverage and which provide a numerical limitation Classifications - inpatient/in-network - inpatient/out-of-network - outpatient/in-network - outpatient/out-of-network - emergency care - prescription drugs Level - magnitude of a requirement or limitation (i.e., a copay of $10 versus $5) Coverage unit - Single coverage, family coverage, participant + spouse coverage 33

34 Parity for Financial Requirements and Quantitative Treatment Limitations Two step test - Step 1 Does the type of financial requirement or quantitative treatment limitation apply to substantially all (at least ⅔) of all medical benefits in a classification? If No, the requirement or limitation cannot be applied to MH/SA benefits If Yes, proceed to Step 2 - Step 2 What is the predominant level (applies to more than ½ of the MS benefits) of the financial requirement or quantitative treatment limitation that applies to MS benefits? The predominant level may be applied to MH/SA benefits If no single level applies to more than ½ of MS benefits, a health plan may combine levels until the threshold is met and then apply the least restrictive level in the combination. 34

35 Parity for Financial Requirements and Quantitative Treatment Limitations Related issues - A health plan must provide out-of-network MH/SA benefits, at parity, when it provides out-of-network MS benefits - Separate (even if equal) deductibles and out-of-pocket maximums may not be imposed on MH/SA benefits $200 for medical/surgical and $200 for MH/SA $400 for medical/surgical and $200 for MH/SA - Psychologists and other mental health providers cannot be classified as specialists for the purposes of imposing higher copayments or other cost sharing 35

36 Parity for Nonquantitative Treatment Limitations Any processes, strategies, evidentiary standards, or other factors used by a group health plan in applying a nonquantitative treatment limitation to MH/SA benefits in a classification must be comparable to and applied no more stringently than those used in applying the limitation with respect to MS benefits in the classification, except to the extent that recognized clinically appropriate standards of care may permit a difference. 36

37 Parity for Nonquantitative Treatment Limitations Illustrative list of nonquantitative treatment limitations - Medical management standards limiting or excluding benefits based on medical necessity/appropriateness or whether treatment is experimental/investigative - Formulary design for prescription drugs - Provider network participation standards (including reimbursement rates) - Plan methods for determining usual, customary and reasonable charges - Refusal to pay for higher cost therapies until it can be shown that a lower-cost therapy is not effective - Exclusions based on failure to complete a course of treatment 37

38 New Disclosure Requirements Criteria for medical necessity available to - Current or potential participant - Beneficiary - Contracting provider Reason for denial of coverage available to - Participant or beneficiary Use form and manner consistent with ERISA requirements - ERISA plans must use ERISA requirements - Non-ERISA plans can use ERISA requirements 38

39 HIPAA/HITECH Developments 39

40 HIPAA/HITECH What s New? Health Information Technology for Economic and Clinical Health Act (HITECH) part of the American Recovery and Reinvestment Act (the Stimulus Bill) - Signed into law February 17, Security breach notification rules became effective 9/23/ Statute s effective date of most requirements February 18, Delayed enforcement until regulations become final Patient Protection and Affordable Care Act also includes new HIPAA transaction standards 40

41 HITECH Summary of Requirements Business Associates now subject to regulations directly Enhanced individual rights to restrict disclosure and access information Increased restrictions on use of PHI, sale of PHI, marketing and fundraising; de-identification guidance Changes to authorization requirements - Compound authorizations permitted for current and future research activities - Disclosure of student immunization records to schools Authorization to disclose immunization information about an individual to a school is no longer required if (i) the PHI is limited to proof of immunization; (ii) the school is required by state or other law to have proof of immunization; and (iii) the covered entity obtains permission, which may now be oral, from a parent or guardian to disclose such information New breach notification requirements Increased penalties, enforcement and audits 41

42 HITECH Business Associates Business Associates are now subject to many of the Privacy Rule requirements - Business Associates are entities (e.g., vendors) that Perform functions or activities on behalf of Plan and Services involve the use or disclosure of PHI Subcontractors of business associates now considered business associates Effective February 18, 2010 Transitional deemed compliance provisions 42

43 HITECH - Individual Rights Right to Request Restriction on Disclosures - Covered entity and business associate must honor request to restrict disclosures of PHI If disclosure is to a health plan for purposes of payment or health care operations (not treatment) If PHI relates to a health care item or service that has been paid for out of pocket, in full, with no payment from the plan - Effective February 18, Privacy Notices need to include a specific statement about these rights 43

44 HITECH - Individual Rights Right of Access - Covered entity or business associate must produce an electronic copy of PHI, if requested and available - Individual can have electronic health record sent electronically to a designated individual - Cannot charge more than reasonable cost-based fee, including labor for copying and supplies - Effective February 18,

45 HITECH - Individual Rights New Accounting for Disclosures Requirement - Electronic health records - Must account for disclosures made for treatment, payment, health care operations within three years prior to the request - Effective January 2014 for electronic health records currently held by covered entities; January 2011 for newly acquired electronic health records - Effective date may be delayed 45

46 HITECH Marketing Act and regulations limit health-related communications if CE has received financial remuneration in exchange for making the communication Amends existing exceptions to marketing definition for communications relating to health-related products and services provided by a plan, including case management, alternative treatments, providers, care settings. - These communications are Health Care Operations and can never be subsidized Subsidized treatment communications by providers about health-related products and services are permitted with notice and unburdensome opt out requirements. 46

47 HITECH Fundraising Strengthens notice and opt out requirements for use of PHI for fundraising Communications must include a clear and conspicuous statement of individual s opportunity to elect not to receive further fundraising communications Opt-out method must not cause undue burden Use of PHI for fundraising must be disclosed in privacy notice, including the individual s right to opt-out 47

48 HITECH Individual Notice of Breach Breach Notification Interim Final Rule became effective 9/23/ New requirement that individuals, and in some cases, media and HHS must be notified when an individual s unsecured PHI is breached Final rule posted with OBM but on July 28, 2010, HHS pulled the document In the meantime, 9/23/2009 rules continue to apply. 48

49 HITECH Individual Notice of Breach A Breach is defined as - PHI is used or disclosed in a manner not authorized by the individual or otherwise under HIPAA - Unsecured PHI There are two types of secured PHI: encrypted and destroyed. - Unauthorized use or disclosure poses a significant risk of financial, reputational or other harm - No exception available 49

50 HITECH Breach Identify and implement steps to mitigate further loss and harm If unauthorized use or disclosure occurred, risk assessment must be conducted to determine if notice required - Review and memorialize facts and circumstances of incident - Review nature of PHI involved - Assess likelihood of whether harm occurred or may occur - Does the incident pose a significant risk of financial, reputational or other harm? 50

51 HITECH Breach Notice if Breach Determined - Individual notified without unreasonable delay and no later than 60 calendar days after discovery Written notice - Large breach media/hhs notice 500 or more residents of state - media 500 or more HHS - Small breach 500 or less - Documentation log - Annual HHS submission 51

52 HITECH Breach Breach Notice Content Requirements - Written notice must be provided to each individual whose unsecured PHI reasonably believed by the CE to have been accessed, acquired, used or disclosed as a result of such breach. - Include: Description of event, including date of breach and date of discovery (if known) Description of type of information involved (name, SSN, date of birth, etc.) Steps individuals should take to protect themselves Description of what the covered entity or business associate is doing to investigate the breach, mitigate the harm and protect against future breaches Contact person and addresses for further information 52

53 HITECH 2011 Compliance Checklist Privacy Notice updated to address strengthened privacy rights? Business Associate contracts updated? If you are a Business Associate, do you have written policies and procedures? Written agreements with subcontractors? Breach policies and procedures in place? HIPAA written policies and procedures updated? HIPAA plan sponsor provisions amended? Training conducted? 53

54 HITECH Expanded Enforcement HHS to conduct audits and investigations Affected individuals may share in penalties collected Enforcement authority given to state attorneys general Increased penalties - Civil penalties up to $50,000 per violation/$1.5 million per type per year - Criminal penalties of up to $250,000 and imprisonment for up to 10 years Scope of criminal liability broadened HITECH specifies that a person includes an employee or other individual who obtains or discloses, without authorization, individually identifiable information that is maintained by a CE 54

55 Thank you. Brian M. Pinheiro Jean C. Hemphill D. Renee Applegate Jonathan M. Calpas September 14, 2010