As boards grapple with the structural components of the Affordable Care Act—value-based purchasing, accountable care organizations, bundled payments, etc.—they need to also keep their eyes on the private insurance components of the Act. These features garner the most attention in the mainstream media but even so, are not well understood by the general public.
Last week the Department of Health and Human Services (HHS) and CMS released new rules and regulations that include guidance on how to implement the insurance provisions of ACA. The proposed rules, covering essential health benefits, premium pricing and wellness, had been delayed as the administration “tried to avoid stirring criticism from lobbyists and interest groups in the final weeks of the presidential campaign.” (New York Times, November 21, 2012). There is a comment period for the proposed rules.
The proposed rules and regulations include:
- Precluding insurers from adjusting premiums based on pre-existing or chronic health conditions
- Specificity regarding benefits that must be included in health insurance exchange plans
- Allowing employers to reward employees who work to remain healthy
- Permitting insurers to set premiums for tobacco users 1.5 times higher than for non-smokers
- Clarifying how insurers may increase premiums as a person ages
The proposed rule relating to essential health benefits affirms an earlier CMS guidance allowing states to choose the exact package of benefits that insurers must provide. The package is based largely on what is already offered in many of the plans currently sold in the respective states. “Essential health benefits” applies to the core package of services sold by insurers to individuals and employers (except self-insured companies) and includes categories such as emergency services, hospitalization, pediatric services, and more. (CQ, November 21, 2012; Health Care Reform Memo, November 26, 2012, Deloitte Center for Health Solutions)
HHS also moved back the deadline for states’ decisions on establishing their own health insurance exchanges from November 16 to December 14. The extension was in response to a request from Republican governors for more time as they begin to decide how they will comply with Federal healthcare law.
The reaction from the insurance industry so far has been muted. Karen Ignagni, president and CEO of America’s Health Insurance Plans, said in a statement, “We appreciate that the proposed rules issued today seek to minimize coverage disruption, and we look forward to working with the department to achieve this goal.” (CQ, November 21, 2012)
The implications of these components of the ACA on hospitals’ revenue will manifest over the next few years—some positive, some negative. The individual players in the healthcare industry are intimately tied to one another, and when one is pressured (i.e., private insurers), the spillover is felt throughout—in this case, by providers. Many experts predict less revenue for hospitals and more incentives to cut costs and restructure the way services are delivered to patients. iProtean experts discuss this conundrum in iProtean’s foundational and advanced courses.
iProtean welcomes Nate Kaufman (Kaufman Strategic Advisers) to our list of experts! Nate will appear in four upcoming advanced courses: Financing Considerations for Integrated Delivery Systems, Making Difficult Decisions About Services and Programs, Value-Based Purchasing and Accountable Care Organizations and Developing an Employed Physician Strategy/Crafting Performance and Compensation Metrics. We will notify our subscribers when the new courses appear in their course lists.
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