Kaiser Health Reform
As employers try to minimize expenses under the health law, the Obama administration has warned them against paying high-cost workers to leave the company medical plan and buy coverage elsewhere.
Such a move would unlawfully discriminate against employees based on their health status, three federal agencies said in a bulletin issued this month.
Brokers and consultants have been offering to save large employers money by shifting workers with expensive conditions such as hepatitis or hemophilia into insurance marketplace exchanges established by the health law, Kaiser Health News reported in May.
The Affordable Care Act requires exchange plans to accept all applicants at pre-established prices, regardless of existing illness.
Because most large employers are self-insured, moving even one high-cost worker out of the company plan could save a company hundreds of thousands of dollars a year. That’s far more than the $10,000 or so it might give an employee to pay for an exchange plan’s premiums.
“Rather than eliminating coverage for all employees, some employers … have considered paying high-cost claimants relatively large amounts if they will waive coverage under the employer’s plan,” Lockton Companies, a large brokerage, said in a recent memo to clients.
The trend concerns consumer advocates because it threatens to erode employer-based coverage and drive up costs and premiums in the marketplace plans, which would absorb the expense of the sick employees. The burden would fall on consumers buying the plans and taxpayers subsidizing them.This KHN story can be republished for free (details).
Administration officials approached independent lawyers about the practice in May, saying, “We don’t like this, but how can we address this?” said Christopher Condeluci, principal at CC Law & Policy, a legal firm. This month’s guidance, he said, “is the first time that they’ve come out explaining how and why the administration believes it violates the law.”
The Affordable Care Act itself doesn’t block companies from paying sick workers to find coverage elsewhere, lawyers said. But other laws do, including the Health Insurance Portability and Accountability Act and the Public Health Service Act, according to three federal agencies.
Specifically, paying a sick worker to leave the company plan violates those statutes’ restrictions on discriminating against employees based on medical status, the departments said in their bulletin.
“If you were to cherry-pick your high-cost individuals and offer them money to send them over to the exchange … this would be a violation of HIPAA,” according to the regulators, said Amy Gordon, a benefits lawyer with McDermott Will & Emery.
The agencies publishing the guidance were the departments of Labor, Treasury and Health and Human Services.
Starting next year, the health law requires large employers to provide medical insurance to most workers or face fines.
How many companies have offered to pay workers with chronic conditions to find coverage elsewhere is unclear.
“I know there are some brokers out there that were pushing this, but it was a limited number that I had heard about,” Condeluci said. Even so, he added, the attitude of the administration was: “We don’t want it to become widespread. Let’s nip it in the bud now.”
So far, the open enrollment period on the federal and state marketplaces—which started Nov. 15 and continues until Feb. 15 for 2015 coverage—is proceeding much more smoothly than last year. But people remain confused about plans, premiums and provider networks. Here are answers to several readers’ questions.
Q. I understand the federal marketplace will renew my coverage automatically this year. That seems really simple. Is there any reason I shouldn’t do it?
A. There’s every reason not to auto-renew, particularly if you’re one of the many people who receive premium tax credits, experts say.
If you do nothing, you’ll generally be automatically re-enrolled in your current 2014 plan and receive the same premium tax credit amount that you qualified for in 2014. That’s probably not in your best interest.
For one thing, the number of plans is increasing about 25 percent, so you may find a better plan at a better price. Although premium increases are modest overall, some plans are raising or lowering their rates significantly next year, and yours may be one of them.
In addition, the plan that was the best option for you last year may have changed for 2015. Even though the insurer will re-enroll you in a plan it considers most similar to your 2014 plan, crucial details related to covered benefits, drug formularies, cost sharing and provider networks could be different, says Timothy Jost, a law professor at Washington and Lee University who is an expert on the health law.
If you’re one of the roughly 85 percent of people on a marketplace plan who receives tax credits to help make premiums more affordable, you could face a big premium hike if you don’t re-evaluate your options and choose a low-cost plan.This KHN story also ran in The Washington Post. It can be republished for free (details).
Premium tax credits, which are available to people with incomes between 100 and 400 percent of the federal poverty level (currently $11,670 to $46,680 for an individual) are based on the second-lowest-cost silver plan in your area. In 2015, that benchmark plan may have changed. If that’s the case, even if your current plan’s premium doesn’t increase, you may owe more if you don’t switch plans because you’ll be on the hook for the premium difference between the new, lower benchmark plan and your existing plan.
Q. I called my doctor’s office to find out if they accept any of the marketplace plans I’m considering, and they said they don’t accept any Obamacare plans. Can that be true?
A. It’s possible, say experts, but you need to check further before you take no for an answer.
The pertinent question is whether your doctor has a contract with the insurer in question to participate in a particular plan. If she does, “there shouldn’t be a difference whether that person buys the plan in the marketplace or not,” says Sarah Lueck, a senior policy analyst at the Center on Budget and Policy Priorities. From the insurer’s perspective, it’s the same plan, no matter where it’s offered.
In some cases, doctors sign contracts with insurers containing “all-product” clauses that obligate them to participate in any network the insurer chooses to have them in, says Sabrina Corlette, project director at Georgetown University’s Center on Health Insurance Reforms. Doctors may not realize they signed a contract with an all-product clause, leading them to provide inaccurate information. This can be frustrating for both doctor and patient.
To get the correct answer from your doctor’s office, you need to know the name of the insurer and the exact name of the plan you’re considering, says Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.) It’s a good idea to check with the insurer as well to see if your doctor’s name appears on their list of participating physicians for a particular plan.More from this series
Q. My doctor is in network, but the hospital he has admitting privileges at isn’t. What happens if I need to go to the hospital?
A. Some policy experts say this situation appears to be occurring more frequently as insurers in some cases exclude higher-cost hospitals, such as academic medical centers, from exchange plans with narrow networks.
If you have to be hospitalized next year and want to stay in-network, you may have to make a choice between your doctor and a hospital.
“Because the hospital expenses are going to be so high, you’re probably going to want to go to the hospital that’s in-network and just use a physician that has admitting privileges there,” says Tolbert.
Of course, you could choose to go to an out-of-network hospital, but that could leave you on the hook for the entire bill, depending on your plan.
Please contact Kaiser Health News to send comments or ideas for future topics for the Insuring Your Health column.
The Obama administration is seeking to clarify rules for the coverage of elective abortion in health insurance exchanges. That is the issue that almost scuttled the Affordable Care Act before it became law.
A complicated compromise that got the final few anti-abortion Democrats to agree to vote for the measure in 2010 required every exchange to include health plans that do not cover abortions except in the cases of rape, incest or a threat to the life of the pregnant woman. Plans that do offer abortion other than in those cases are required to segregate funds and bill for that abortion coverage separately.
But that did not happen, at least not in the first year of exchange coverage. Twenty-three states passed laws banning coverage of elective abortions in all the plans offered on the exchange. A Government Accountability Office report in September looked at the 27 remaining states and found that in five every plan covered elective abortions. And many failed to separately bill for the abortion coverage, as the law required.
Asked about the report in October, Health and Human Services Secretary Sylvia Burwell insisted that no money is being improperly spent.
“There are no federal funds being used for abortions except, as the law states, cases of rape or incest or questions of the life of the mother,” she said. With regard to the specifics of the GAO report, “it’s one where we believe we need to ensure the law is being enforced, and right now [the Centers for Medicare & Medicaid Services] is working on the ways we’re going to communicate with states and insurers.”This KHN story can be republished for free (details).
A huge proposed regulation issued last Friday that outlines health plan standards for 2016 seeks to make abortion coverage rules clearer.
The regulations, among other things, specify ways in which insurers can assess and collect separate payments for abortion coverage, which must total at least $1 per month.
But anti-abortion groups are complaining that the guidance in the new rules does little to address the bigger problem: It is still extremely difficult for the average consumer to tell which plans include elective abortion coverage and which do not.
“It’s just not easy to find and it should be,” said Chuck Donovan, president of the Charlotte Lozier Institute, an anti-abortion research group.
“I know websites can be tricky,” he said. “But you can do these things with a checkmark and a box and I wish that they’d just come up with something simple two years ago as part of the upfront disclosure from the insurance companies.”
In an effort to make the information more widely available, the Lozier Institute has been doing the work itself, contacting individual insurance companies and their customers to discern which plans do and do not offer elective abortion. The resulting website, obamacareabortion.com, was unveiled last week in conjunction with the Family Research Council, another anti-abortion group.
Donovan said the project is still in progress because information has been difficult to find, even with direct calls and individual scouring of companies’ policy summaries. “They don’t always know” if abortion is covered, he said. In some cases, he said, “we’re finding contradictory information.”
But he insists that it’s imperative for consumers to know which plans cover abortion and which do not. “I’ve heard the argument that it stigmatizes the [abortion] coverage, but it’s kind of a settled thing that this is controversial,” he said. “I don’t think it does anything other than let people act in alignment with their conscience while we’re sorting out bigger issues.”
The Obama administration took another step to close what many see as a health-law loophole that allows large employers to offer medical plans without hospital coverage and bars their workers from subsidies to buy their own insurance.
“It has come to our attention that certain group health plan designs that provide no coverage of inpatient hospital services are being promoted,” the Department of Health and Human Services said in proposed rules issued late Friday.
Under the new standard, companies with at least 50 workers “must provide substantial coverage of both inpatient hospital services and physician services” to meet the Affordable Care Act’s threshold for a “minimum value” of coverage, the agency said.
As reported previously by Kaiser Health News, insurance analysts were surprised this summer to learn that HHS’ online calculator for determining minimum value approved plans without inpatient benefits.
Responding to aggressive marketing by consultants, numerous lower-wage employers had already agreed to offer the low-cost plans for 2015 or were considering them.
Because a calculator-approved plan at work makes employees ineligible for tax credits to buy more comprehensive insurance in the law’s online marketplaces, consumer advocates feared the problem would trap workers in substandard coverage.
Large employers aren’t required to offer the “essential health benefits” such as hospitalization, physician care and prescriptions that the law orders for plans sold to individuals and smaller employers.
But few expected the official calculator to approve insurance without inpatient benefits. Meeting the minimum-value standard spares employers from penalties of up to $3,120 per worker next year.
HHS also proposed granting temporary relief to employers that have already committed to calculator-approved plans without hospital coverage for 2015. It also would allow workers at those companies to receive tax credits in the marketplaces if they choose to buy insurance there instead.
For 2016, no large-employer plan will meet the minimum-value test without inpatient benefits, HHS proposes.
“A plan that excludes substantial coverage for inpatient hospital and physician services is not a health plan in any meaningful sense and is contrary to the purpose” of the minimum-value standard, the agency said.
“Minimum value is minimum value,” said Timothy Jost, a consumer advocate and Washington and Lee University law professor who welcomed the change. “Nobody ever imagined that minimum value would not include hospitalization services.”This KHN story can be republished for free (details).
Calculator-tested plans lacking inpatient coverage, designed by Key Benefit Administrators and others, have drawn strong interest from large retailers, restaurant chains, staffing companies and other lower-wage employers seeking to control costs, benefits consultants say. Typically the coverage costs half as much as major-medical insurance including hospital benefits.
The American Worker Plans, an Illinois-based benefits consultant, helped dozens of staffing firms with a total of about 20,000 employees to provide such plans for 2015, said Jon Duczak, the company’s senior vice president. Almost all of them have already signed deals to offer the coverage, he said.
HHS’ move to disallow the insurance “is something I do applaud,” he said. “We were offering a product like this [only] because our clients were asking for it. We needed not only to satisfy our clients but to retain our business.”
Edward Lenz, senior counsel for the American Staffing Association, said the trade group has no problem with requiring hospitalization to meet the minimum-value standard for 2016. But it will seek more leeway for employers that had moved to implement plans without inpatient benefits for 2015.
“Many employers were well along the road” to committing to such plans but delayed signing contracts after Kaiser Health News reported that the administration might move against them, he said. Rather than punishing such companies for their caution, HHS should allow them to temporarily offer such coverage next year, he said.
This story was updated at 2 p.m. with comment from Jon Duczak.
A group of Wall Street analysts predicted Friday that enrollment in health law insurance plans will be higher than the 9 million projected by the Obama administration because insurers are aggressively courting new customers and more small businesses are likely to send workers to the online exchanges in 2015.
Health sector analyst Carl McDonald of Citi Investment Research said he expects about 11 million people to enroll in individual health plans, based on his firm’s survey of clients in October.
“I’m more optimistic,” McDonald said at the 19th annual “Wall Street Comes to Washington” roundtable, sponsored by the Jayne Koskinas Ted Giovanis Foundation for Health and Policy.
More aggressive outreach by insurers and fewer glitches with the online marketplaces will create a “robust 2015,” agreed Ralph Giacobbe, an analyst at Credit Suisse.
But the analysts noted continuing challenges for insurers, from improving what McDonald called a “pretty poor” first-year effort to inform consumers about which doctors and hospitals are in their networks, to controlling spending as high-priced drugs hit the market.
Insurers are also projecting that this year’s enrollees will be younger and healthier than those who signed on in 2014, when the average age was 41, McDonald said. That was a problem for insurers who based this year’s premium rates on the expectation they would see younger customers, he said.This KHN story can be republished for free (details).
The analysts agreed that enrollment would be unaffected by the Supreme Court’s decision to hear a lawsuit challenging the provision of subsidies to residents of states that are relying on the federal exchange. Only 14 states ran their own marketplaces this year.
Nick Leventis, an independent health care sector analyst, said concerns about the case are overblown because the government “could easily give some type of waiver to the states to shift from the federal to the state exchange.”
But McDonald was less sanguine, although he said insurers are already discussing workaround ideas with state insurance officials. Still, he said that not all of the states would act if the court invalidated the subsidies. Some governors and state legislators would be unlikely “to do anything to help reform,” he said.
Giacobbe predicted that governors and lawmakers in such states would be under great pressure, not only from the hospital and insurance industries, but also from consumers, to find ways to keep the subsidies flowing.
It’s hard to take away a program once people are using it, he said, predicting, “This is not going to derail the ACA.”
Should subsidies be cut off by a ruling from the Supreme Court, the marketplaces where the subsidies were no longer available would essentially cease to function since all but the sickest customers would likely drop coverage, the analysts said.