Coverage extensions, payment updates will help payers plan ahead
Insurers and their members have more time to adapt to healthcare reform regulations, thanks to the Obama administration again extending noncompliant health plans.
The extension, which has been both overstated and oversimplified in the mainstream press, is fairly narrow: It only applies to nongrandfathered plans in the individual or small group markets that meet certain conditions. That's led to some short-term confusion in the marketplace--and added fuel for political opposition to the Affordable Care Act.
But it could ultimately help people become better health insurance consumers.
"With all the emotion and political energy surrounding the implementation of the ACA, perhaps this move will give time for the dust to settle and for consumers to be able to decipher what changes really mean for them," Debbie Gordon, vice president of marketing, sales and product strategy for senior products at Massachusetts-based Tufts Health Plan, told FierceHealthPayer in an exclusive interview.
In November 2013, President Barack Obama announced a one-year extension for nongrandfathered plans. That first administrative fix for canceled health plans left insurers facing uncertainty and blame.
HHS now allows insurers to renew those nongrandfathered plans for two more years to give insurers the certainty needed to plan ahead for 2015, according to a bulletin from the U.S. Department of Health and Human Services.
"Many of the new regulations are intended as consumer protections so that people won't be in substandard plans," Gordon added. With that in mind, insurance companies offering transitional policy renewals must notify consumers about consumer protections not included in renewed plans.
In addition to extending the transitional policy for nongrandfathered plans through Oct. 1, 2016, HHS also gave consumers an extra month to sign up for 2015 coverage and states extra time to make the switch to a state-run marketplace.
The extension could unleash negative dynamics for consumer oriented and operated plans (CO-OP), which already have lopsided reform success, given they don't offer transitional plans.
Such is the case for Utah-based Arches Health Plan, which still plans to take a "glass half full" view of the new timeline. "We say 'Bring it on,'" Shaun Greene, chief operating officer of Arches Health Plan, told FierceHealthPayer in an exclusive interview.
"We're taking the approach that people should look at all their options because they could save money."
This week, the Obama administration also gave insurers updated limits on out-of-pocket expenses for the 2015 benefit year. Under the new final rule, the annual limit on cost sharing for self-only coverage will max out at $6,600 next year, while the annual deductibles for self-only coverage in the small group market cannot exceed $2,050.
The final rule also will modify the controversial risk corridors, reinsurance and risk adjustment programs. For example, the threshold at which reinsurance is triggered dropped to $45,000 for the 2014 benefit year and 70,000 for 2015. And because issuers did not consider transitional policies when setting premiums, HHS implemented a state-level adjustment to make risk corridors budget neutral. HHS also clarified that it has authority to audit insurers in the risk adjustment and reinsurance programs.
Republican lawmakers called the recent changes politically motivated, Reuters reported. They maintain the two-year extension will help Democrats heading into the 2014 midterm elections by preventing more policy cancellations.
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