Health Insurance Regulation in South Carolina by John Ruoff

Transcription

1 Health Insurance Regulation in South Carolina by John Ruoff John C. Ruoff, Ph.D. The Ruoff Group 6142 Crabtree Rd. Columbia, SC

2 Pre-2014 ACA Provisions Affecting State Regulation No lifetime limits in essential benefits Restricted annual limits until 2014 Rescissions only for fraud or intentional misrepresentation Coverage of preventive health services Adult dependent coverage to age 26 Internal and External Review Coverage of emergency services and direct access to providers

3 Pre-2014 ACA Provisions Involving State Regulation Health insurance consumer assistance office and ombudsperson Reporting of Loss Ratios and rebates Rate review for excessive increases Uniform explanation of coverage documents and standardized definitions (March 2012) Annual reports of quality improvement benefits and reimbursement structures (March 2012) Administrative Simplification Requirements (January 1, 2013)

4 Could DOI Enforce Immediate ACA Standards without New Laws? Does your state have authority to enforce federal rules? Yes, the Director has the general authority to supervise and regulate the service of every insurer doing business in this State and fix just and reasonable standards, classifications, regulations, practices, and measurements of service to be observed and followed by every insurer in this state. Also, it is unlawful for an insurer doing business in this state to issue or sell any policy, contract, or certificate until it has been filed with and approved by the director or his designee. See e.g., S.C. Code Section (A)

5 Could DOI Enforce Immediate ACA Standards without New Laws? Does your state have sufficient legal authority to conduct policy form reforms? The director or his designee may disapprove the form if it (1) does not meet the requirements of law, (2) contains any provisions which are unfair, deceptive, ambiguous, misleading or unfairly discriminatory, or (3) is going to be solicited by advertisement, dissemination, communication, is deceptive or misleading. The Director may also withdraw approval of a form that does not meet the requirements of law. See e.g., Section (B).

6 Could DOI Enforce Immediate ACA Standards without New Laws? Does your state have sufficient legal authority to investigate complaints? Sections and give the Director the ability to investigate and order an insurer to cease and desist from any practice that he determines is unfair or deceptive. Also, the director has the ability to investigate a carrier and its agents under section

7 Could DOI Enforce Immediate ACA Standards without New Laws? Does your state have sufficient legal authority to investigate complaints? The Department has and will continue to conduct market conduct examinations as deemed necessary to protect the citizens of this state and policyholders. The director also has the ability to examine any insurer about its practices or the business transacted in South Carolina. See S.C. Code Ann. Section

8 2014 ACA Provisions Involving State Regulation Prohibition of Preexisting Condition exclusions Adjusted community rating [Only age (3x1 max.), smoking (1.5x1 max.), geography and family size.] Guaranteed issue and renewability No discrimination based on health status Waiting periods for group plans limited to 90 days Clinical trials covered Carriers may not discriminate against any provider operating within their scope of practice

9 2014 ACA Provisions Involving Exchange Requirements for Qualified Health Plans Essential health benefits package Limits on deductibles and cost sharing Levels of Coverage State opt-out of abortion coverage

10 SC Premium Regulation Prior to ACA Individual Policies, Mass-Marketed Group, Franchise and Blanket Policies (NAIC model) Prior Approval based on Guaranteed MLR (anticipated loss ratio based on actuarial memorandum) no lower than 55 % * Required insurer-paid-for audits with refunds Small Group Policies (Employees 50) No prior approval reasonable in relationship to benefits Modified community rating with some limitations on increases in rates within rating bands Large Group Policies (Employees > 50) No prior approval reasonable in relationship to benefits After ACA Individual Policies MLR no lower than 80 % unless USHHS issues waiver Small Group Policies (1-50 employees) MLR no lower than 80 % Large Group Policies MLR no lower than 85 % * 60 % for optionally. renewable policies and 50 % for non-cancelable

11 Medical Loss Ratio Under SC Code Incurred losses Earned premiums Under ACA Reimbursement for clinical services + Expenditures to improve health care quality Total premium revenue -Federal and State taxes and licensing or regulatory fees (and accounting for risk adjustment, risk corridors and reinsurance)

12 Premium Review ACA requires review of premium increases in Individual and Small Group Markets for unreasonable premium increases. Starting September 1, 2011, covered insurers seeking rate increases of 10 percent or more for non-grandfathered plans publicly disclose the proposed increases and the justification for them. State or Federal experts review to determine whether they are unreasonable. Consumer-friendly disclosure made publicly available through HHS, State and/or insurer websites. Starting September 1, 2012, a State-specific threshold, using data that reflect insurance and health care cost trends particular to that State. States with Effective Rate Review Systems will conduct the reviews. If a State lacks the resources or authority to conduct actuarial reviews, HHS would conduct them. July 1 decision on states.

13 Adverse Selection The history of exchanges is that adverse selection rules inside and outside the Exchange that result in better risks buying outside the exchange and poorer risks inside the exchange kills exchanges by driving up prices to the point that not enough people can afford to buy through the exchange.

14 Adverse Selection The ACA includes features designed to reduce adverse selection: 1. The personal responsibility requirement; 2. Premium credits and out-of-pocket subsidies only available through the Exchange; 3. Insurers required to offer Gold and Silver plans in both the Exchange and outside with same plan, same premium rules; 4. All non-grandfathered plans required to offer essential benefits package; 5. Insurer s individual and small group plans are each in a single risk pool, whether inside or outside Exchange; 6. Marketing rules keep insurers from encouraging the healthy to enroll and the sick to not;

15 Adverse Selection But state rules for insurers outside the Exchange are needed to further protect against adverse selection. South Carolina might: 1. Require insurers to operate in both markets with the same standards and products; 2. Create standardized minimum levels of benefits and mandated benefits across both markets; 3. Have same participation rates for small group plans in both markets; 4. Regulate producer/navigator compensation the same in both markets; 5. Charge the same Exchange-funding administrative fees on products sold in either market; and 6. Structure enrollment periods and change rules to limit purchases and upgrades when health problems arise.

16 Outstanding Issues Will the Exchange have to be licensed as a Broker? Will anyone selling insurance through the Exchange have to be a licensed producer? What are roles of Navigators? Producers? How will required/needed changes work if General Assembly refuses to change our insurance regulatory laws?