States May Get a Second Chance to set up their Exchange

HELENA, Mont. (AP) — The Obama administration said Tuesday that states that have not adopted their own insurance exchanges may get a second chance to avoid getting one run solely by the federal government.

Only 11 states have fully embraced the idea of taking federal money to set up their own state-run insurance exchange, a U.S. Department of Health and Human Services official said Tuesday. The exchange, a key part of Obama's health care overhaul, is designed to help uninsured people buy coverage from a choice of plans with federal tax credits.

But states that have been slow to accept the idea, or outright rejected it in resistance to the law, will have another chance.

U.S. Department of Health and Human Services officials told Montana legislators Tuesday that the agency is working on a new partnership model to let state agencies help run the exchange — perhaps without the need for legislative authorization.

Marguerite Salazar, a regional director of the Department of Health and Human Services, said the proposal for the partnership is new within the past two months. State agencies are being invited to Washington D.C. next month to discuss it.

"I think it is going to be the option for states that are nervous about a full-fledged exchange," she said in an interview.

Montana is one of many states that have so far refused to pass a law authorizing a state-level insurance exchange, paid for by the federal government. Like some other states, Montana's legislature does not likely meet again soon enough to authorize an exchange prior to the January 2014 implementation.

And under the health care law, the federal government will impose its version of the exchange on states that don't set up their own.

Republican-led states have been particularly resistant to the idea as many of those legislatures have worked to undermine the federal law.

Texas for instance, led by Gov. Rick Perry who is now a leading GOP contender to challenge Obama, also blocked moves to lay the groundwork for expanded coverage under the federal law that many Republicans hope will be thrown out by the courts.

Perry, who has made total repeal of "Obamacare" a top campaign promise, has however signaled he may use executive authority in Texas to carry out the exchange in order to avoid one run by the federal bureaucracy.

In Montana, Republican legislators who currently hold commanding majorities may be convinced to eventually change their mind about the exchange in order to avoid a federally mandated version, one GOP lawmaker said.

"I think there may be enough mainstream Republicans that realize the more input Montana has on our own exchange will be a great benefit to the citizens of the state," said Republican state Rep. Tom Berry, who lives in the conservative eastern Montana town of Roundup.

Berry chairs an interim committee of Montana lawmakers who were discussing the state's options Tuesday with the federal officials in the wake of the full legislature's rejection of the exchange earlier this year.

The Montana lawmakers were told Health and Human Services may also let them later take over a federally run exchange after it is designed over the next two years.

In the interim, Berry said he likes the sound of the new, undefined proposal from the federal government for a partnership that lets the state craft an exchange run by the feds.

In Montana, Democrats run the executive branches overseeing health care and insurance. They may be more likely to accept the federal offer for a partnership.

Republicans on the panel quizzed the Health and Human Services officials over which part of the state government would be allowed to obligate the state into the partnership.

"That is undecided. I think this is an area where we may want to allow for a certain amount of state authority," said Amanda Cowley, acting director in the agency's state exchange division. "It will be set by the secretary of HHS in guidance or regulation."

PPACA Tax Provisions

IRS.Gov




Affordable Care Act Tax Provisions



The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that take effect this year and more that will be implemented during the next several years. The following is a list of provisions now in effect; additional information will be added to this page as it becomes available.



Health Insurance Premium Tax Credit
Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. Exchanges will operate in every state and the District of Columbia. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums. On Aug.12, 2011, the IRS issued proposed regulations that describe who will be eligible to receive the premium tax credit and how to compute the credit. The proposed regulations also describe how to reconcile any advance credit payments for health benefits purchased through an Exchange with the final credit amount. The proposed regulations provide numerous examples, solicit written comments and provide a notice of public hearing. Comments must be submitted by Oct. 31, 2011.



The portion of the law that will allow eligible individuals to use tax credits to purchase health coverage through an Exchange is not effective until 2014.



Exchanges will offer individuals a choice of health plans that meet certain benefit and cost standards. The Department of Health and Human Services (HHS) administers the requirements for the Exchanges and the health plans they offer..



Small Business Health Care Tax Credit
This new credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. Learn more by browsing our page on the Small Business Health Care Tax Credit for Small Employers.

Changes to Flexible Spending Arrangements
Effective Jan. 1, 2011, the cost of an over-the-counter medicine or drug cannot be reimbursed from Flexible Spending Arrangements or health reimbursement arrangements unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan. A similar rule goes into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs). Employers and employees should take these changes into account as they make health benefit decisions for 2011.



For more information, see news release IR-2010-95, Notice 2010-59, Revenue Ruling 2010-23 and our questions and answers.



FSA and HRA participants can continue using debit cards to buy prescribed over-the-counter medicines, if requirements are met. For more information, see news release IR-2010-128 and Notice 2011-5.



IRS partners can spread the word to their clients with the help of a Health Plan Changes flyer and a drop-in article, Does your Healthcare Program need a checkup?

Health Coverage for Older Children
Health coverage for an employee's children under 27 years of age is now generally tax-free to the employee. This expanded health care tax benefit applies to various work place and retiree health plans. These changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit. This also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return. Learn more by reading our news release or this notice.

Excise Tax on Indoor Tanning Services — First Quarterly Payment Was Due Nov. 1, 2010

A 10-percent excise tax on indoor UV tanning services went into effect on July 1, 2010. The first payment of the tax was due Monday, Nov. 1. Payments are made along with Form 720, Quarterly Federal Excise Tax Return. The tax doesn't apply to phototherapy services performed by a licensed medical professional on his or her premises. There's also an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee. For more information on the tax and how it will be administered, see the Indoor Tanning Services Tax Center.
Employer-Provided Health Coverage — Not Taxable; Reporting is Voluntary for All Employers for 2011 and Small Employers for 2012
Starting in tax year 2011, the Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. To give employers more time to update their payroll systems, Notice 2010-69, issued last fall, made this requirement optional for all employers in 2011. IRS Notice 2011-28 provided further relief for smaller employers filing fewer than 250 W-2 forms by making the reporting requirement optional for them at least for 2012 and continuing this optional treatment for smaller employers until further guidance is issued. Notice 2011-28 also includes information on how to report, what coverage to include and how to determine the cost of the coverage.



The 2011 Form W-2 is available for viewing on IRS.gov. This is the W-2 that most employees will receive in early 2012. The form includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan.

This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income, and it is not taxable.



For more information, see the 2011 Form W-2, IR-2011-31, Notice 2010-69, Notice 2011-28 and our IRS YouTube video and frequently asked questions.


Adoption Credit

The Affordable Care Act raises the maximum adoption credit to $13,170 per child, up from $12,150 in 2009. It also makes the credit refundable, meaning that eligible taxpayers can get it even if they owe no tax for that year. In general, the credit is based on the reasonable and necessary expenses related to a legal adoption, including adoption fees, court costs, attorney’s fees and travel expenses. Income limits and other special rules apply. In addition to filling out Form 8839, Qualified Adoption Expenses (see instructions), eligible taxpayers must include with their 2010 tax returns one or more adoption-related documents to avoid slowing down a refund.

For other information, see our news release, tax tip, questions and answers, flyer, Notice 2010-66, Revenue Procedure 2010-31 and Revenue Procedure 2010-35.
Medicare Shared Savings Program
The Affordable Care Act establishes a Medicare shared savings program (MSSP) which encourages Accountable Care Organizations (ACOs) to facilitate cooperation among providers to improve the quality of care provided to Medicare beneficiaries and reduce unnecessary costs. More information can be found in Notice 2011-20, which solicits written comments regarding what additional guidance, if any, is needed for tax-exempt organizations participating in the MSSP through an ACO. This guidance also addresses the participation of tax-exempt organizations in non-MSSP activities through ACOs. Comments must be submitted by May 31, 2011. Additional information on the MSSP is available on the Department of Health and Human Services website.

Qualified Therapeutic Discovery Project Program
This program was designed to provide tax credits and grants to small firms that show significant potential to produce new and cost-saving therapies, support U.S. jobs and increase U.S. competitiveness. Applicants were required to have their research projects certified as eligible for the credit or grant. IRS guidance describes the application process.

Submission of certification applications began June 21, 2010, and applications had to be postmarked no later than July 21, 2010, to be considered for the program. Applications that were postmarked by July 21, 2010, were reviewed by both the Department of Health and Human Services (HHS) and the IRS. All applicants were notified by letter dated October 29, 2010, advising whether or not the application for certification was approved. For those applications that were approved, the letter also provided the amount of the grant to be awarded or the tax credit the applicant was eligible to take.



The IRS published the names of the applicants whose projects were approved as required by law. Listings of results are available by state.



Learn more by reading the IRS news release, the news release issued by the U.S. Department of the Treasury, the page on the HHS website and our questions and answers.

Group Health Plan Requirements
The Affordable Care Act establishes a number of new requirements for group health plans. Interim guidance on changes to the nondiscrimination requirements for group health plans can be found in Notice 2011-1, which provides that employers will not be subject to penalties until after additional guidance is issued. Other information on requirements is available on the websites of the Departments of Health and Human Services and Labor and in additional guidance.

Tax-Exempt 501(c)(29) Qualified Nonprofit Health Insurance Issuers
The Affordable Care Act requires the Department of Health and Human Services (HHS) to establish the Consumer Operated and Oriented Plan program (CO-OP program). It also provides for tax exemption under section 501(c)(29) for recipients of CO-OP grants and loans that meet additional requirements. IRS Notice 2011-23 outlines the requirements for tax exemption under under section 501(c)(29) and solicits written comments regarding these requirements as well as the application process. Comments must be submitted by May 27, 2011.



An overview of the CO-OP program is available on the Department of Health and Human Services website.

Medicare Part D Coverage Gap “donut hole” Rebate

The Affordable Care Act provides a one-time $250 rebate in 2010 to assist Medicare Part D recipients who have reached their Medicare drug plan’s coverage gap. This payment is not taxable. This payment is not made by the IRS. More information can be found at www.medicare.gov.

Additional Requirements for Tax-Exempt Hospitals
The Affordable Care Act adds requirements in the Internal Revenue Code that tax-exempt hospitals must meet to maintain their tax-exempt status. IRS Notice 2010-39 and Notice 2011-52 described the new requirements and solicited public comments. Due to changes to IRS forms and systems to reflect the additional requirements for charitable hospitals, the start of the 2010 filing season for hospital organizations is delayed. Tax-exempt organizations that are required to file Form 990, Schedule H (Hospitals), may not file their 2010 Forms 990 before July 1, 2011. Furthermore, IRS Announcement 2011-37 advises hospital organizations that Part V, Section B of Schedule H is optional for the 2010 tax year. The 2010 Form 990 and Schedule H include new questions relating to the new requirements that are in effect for tax years beginning after March 23, 2010, addressing the financial assistance, emergency medical care, billing and collection policies and charges for medical care.

Annual Fee on Branded Prescription Pharmaceutical Manufacturers and Importers
The Affordable Care Act created an annual fee payable beginning in 2011 by certain manufacturers and importers of brand name pharmaceuticals. On Aug. 15, 2011, the IRS issued temporary regulations and a notice of proposed rulemaking on the branded prescription drug fee. The temporary regulations describe the rules related to the fee, including how it is computed and how it is paid. The notice of proposed rulemaking solicits comments regarding these rules.



For additional information and guidance previously issued, see Notice 2010-71, Notice 2011-9, Revenue Procedure 2011-24 and Notice 2011-46.

Modification of Section 833 Treatment of Certain Health Organizations
The Affordable Care Act amended section 833 of the Code, which provides special rules for the taxation of Blue Cross and Blue Shield organizations and certain other organizations that provide health insurance. IRS Notice 2010-79 provides transitional relief and interim guidance on the computation of an organization’s taxpayer’s Medical Loss Ratio for purposes of section 833, the consequences of nonapplication and changes in accounting method. Notice 2011-04 provides additional information and the procedures for qualifying organizations to obtain automatic consent to change its method of accounting for unearned premiums. Notice 2011-51

Limitation on Deduction for Compensation Paid by Certain Health Insurance Providers
The Affordable Care Act amended section 162(m) of the Code to limit the compensation deduction available to certain health insurance providers. The amendment goes into effect for taxable years beginning after Dec. 31, 2012, but may affect deferred compensation attributable to services performed in a taxable year beginning after Dec. 31, 2009. Initial guidance on the application of this provision can be found in Notice 2011-2, which also solicits comments on the application of the amended provision.

Employer Shared Responsibility Payment
Starting in 2014, certain employers must offer health coverage to their full-time employees or a shared responsibility payment may apply. More information and a request for comments on approaches to determining who is a full-time employee for purposes of this new provision are in Notice 2011-36. Learn more by reading our news release.

Patient-Centered Outcomes Research Institute
The Affordable Care Act establishes the Patient-Centered Outcomes Research Institute and that the institute be funded by the Patient-Centered Outcomes Research Trust Fund. The institute will assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing clinical effectiveness research. The Trust Fund is to be funded in part by fees to be paid by issuers of health insurance policies and sponsors of self-insured health plans. IRS Notice 2011-35 requests comments regarding how the fees to fund the institute should be calculated and paid, including several possible rules and safe harbors.

No Money to Pay for Federal Exchanges

Announcing...

HHS exchange may require creativity


By: J. Lester Feder



While sorting out the policy kinks in setting up a federal exchange, HHS must tackle another problem: There is no money to pay for it.



A quirk in the Affordable Care Act is that while it gives HHS the authority to create a federal exchange for states that don’t set up their own, it doesn’t actually provide any funding to do so. By contrast, the law appropriates essentially unlimited sums for helping states create their own exchanges.



The lack of funding for a federal exchange complicates what is already a difficult task. HHS will likely be operating exchanges in states like Louisiana and Florida that oppose the ACA on principle and have said they will not comply with the exchange provisions. But HHS also will likely be responsible for several other states that may want to set up exchanges, but will be unable to enact laws and set up the infrastructure under the short time frame specified by the law.



A federal exchange will have the same authority states do to impose fees on insurance sold through the exchange once it is open for business. But there is no money coming in until people start purchasing insurance, and there is a great deal of work to be done to prepare to open the doors of federal exchanges.



“It’s very clear that [the HHS] secretary should ‘use such sums as may be necessary’” for supporting states in creating their exchanges, but it’s “sort of silent” on the federal fallback exchange, said Jon Kingsdale, the founding director of the Massachusetts Connector, who is advising HHS on the creation of the federal exchange.



“What you’d have to do is probably get creative about the financing,” perhaps enticing contractors to do development for free in the expectation that they would get paid once the exchange started collecting fees, Kingsdale said.



The CCIIO will also face the challenge of paying for the functions of state exchanges, such as the infrastructure for doing risk adjustment, which it has indicated it will be willing to pick up under “partnership” arrangements with the states. HHS proposed the partnerships in draft regulations in order to create an alternative to an all-federal exchange in a state that's unable to meet all of the requirements on time.



The general pot of money that the ACA makes available for implementation is surprisingly small, given that it is ushering in a series of new regulations covering a sector that accounts for a major chunk of the American economy. It only appropriates $1 billion for all federal administrative costs.



“Everyone expects that billion dollars not to be adequate,” said Edwin Park of the Center on Budget and Policy Priorities, which would make it necessary for HHS to find ways to draw on regular appropriations.



“You’d presume some mix of that billion dollars and regular appropriations” would provide the funding for setting up the federal exchange, he said.



HHS has distributed a quarter of the $1 billion in implementation funds, according to written answers that department Secretary Kathleen Sebelius submitted in March to questions from the House Energy and Commerce Committee. The department did not respond to a request for up-to-date numbers by deadline.



Tevi Troy, who functioned as HHS's chief operating officer in the George W. Bush administration as the department’s deputy secretary, explained that although Congress might try to restrain Sebelius’s efforts to use funds for priorities it opposes, there are many accounting tools at her disposal.



“Money is fungible, and implementation is a priority for the administration,” Troy said.



One option is to “tap” one program’s funds to pay for another. During his time at HHS, Troy said, a meeting would be held annually to sort through the taps on various programs to make sure the administration’s priorities got funded. Another option widely cited is to “detail” employees from one program to work on another.



The decision to move CCIIO inside of CMS also makes it easier to fund the office’s work, say those familiar with HHS budgeting, because the CMS budget has fewer line items earmarking funding and it has one of the largest budgets within the department.



“CMS was often one of the big dogs” in the reallocation of resources because of its size, Troy said.



CMS did not respond to questions about funding for the federal exchange by deadline. “We continue to work with all states to establish Affordable Insurance Exchanges for all Americans and are confident that we are on track,” CMS spokesman Brian Cook said in an email. “More than half the states have taken action to date, and many others are working diligently on the approach that best suits their local needs and markets.”

Wall Street Journal Reports Insurance Companies must do in 4 pages what HHS did in 132 pages!

Announcing...Soon after HHS releases "132 pages" of proposed regulations for the Summary of Benefits, The Wall Street Journal reports that the "4 page summary of benefits" required in PPACA will be released Wednesday. Really...... Ronnell




U.S. NEWS
AUGUST 17, 2011
Health-Plan Buyers Get a
Look Under the Hood


By ANNA WILDE MATHEWS And JANET ADAMY



Consumers shopping for health insurance will soon get a peek at a new standard form—akin to the nutrition label on food products—that will lay out the details of each policy, from deductibles to how much it might cost to have a baby.



Associated Press
Don Berwick, head of the Centers for Medicare and Medicaid Services, will help unveil the plan Wednesday.





Federal regulators are expected to unveil the proposed summary form, part of the health-care overhaul law, on Wednesday, and the requirement is supposed to take effect next March.



"Now, every consumer will have clear, easy-to-read, and concise information that tells them what they need to know," said Erin Shields, spokeswoman for the Department of Health and Human Services. Officials including Don Berwick, administrator of the Centers for Medicare and Medicaid Services, are scheduled to announce the proposal.



Currently, states mandate certain disclosures from health insurers, but they vary by state. The information often comes as part of a document known as the certificate of coverage or evidence of coverage, which can run to dozens of densely written pages and is often supplied only after a consumer has signed up for a policy. Employers offering coverage typically provide materials to their workers, but these also don't follow any common national format.



"It's very inconsistent," said Karen Pollitz, a senior fellow at the nonpartisan Kaiser Family Foundation and a former Health and Human Services official.



The proposed new summary is expected to closely follow a draft version from a committee convened by the National Association of Insurance Commissioners, people with knowledge of the matter said. Health and Human Services is expected to finalize the form after a public comment period.



Insurers said they were concerned about the potential cost and administrative burden of the new requirement, particularly if they have to create different iterations of the form for every possible plan design a consumer could explore and for every single employer.



"Some plans would be providing tens of thousands of versions of this document," said a spokesman for America's Health Insurance Plans, an industry group.



The summary form has often been compared to the food-nutrition label, though it is substantially longer, and at six pages the draft offers considerable detail. For instance, it would not only tell consumers their overall deductibles, or the amount they must pay before coverage kicks in, but would also explain deductibles for specific categories, such as drug coverage. In addition to flagging the limit on a consumer's out-of-pocket expenses, the form would lay out which expenses don't count toward that limit.



A list of medical events and associated services, such as home health care and emergency transportation, would likely be shown along with the consumer's costs for each. The summary would also explain the consumer's possible expenses for three common situations: having a baby, treating breast cancer and managing diabetes.



The form would likely be given to people shopping for plans, before they are locked into a selection, by means including insurance agents, email, or websites where policies are sold. Under the health law, it is also supposed to be supplied to workers with employer coverage, when they sign up for plans as new hires or during open enrollment. However, regulators are likely to ask for comment on whether alternative equivalent documents might be acceptable for big employers, people with knowledge of the matter said.



"It would be a big deal to consumers, because they will have a standard way of receiving information," said Amir Mostafaie, director of quality and training at eHealth Inc., parent company of the online insurance marketplace eHealthInsurance.com.



Research has shown consumers are often confused about the details of their insurance. In a McKinsey & Co. survey of consumers, 72% agreed that health plans are sometimes so complicated it is difficult to understand what is covered or what services cost, according to the consulting firm, which polled around 11,000 people under age 65 late last year and early in 2011. In addition, 57% said that they found the process of choosing health insurance overwhelming.



For insurers, the new form would likely have the biggest sales impact in the individual insurance market, which is expected to grow substantially after 2014, when most of the health-care overhaul takes effect. Already, companies are increasingly focused on how to craft marketing and brand-promotion efforts that will resonate with consumers.



"It's not an industry that has been consumer-centric," said Raj Bal, a former executive at insurer WellPoint Inc. who is now an industry consultant. Once it is in effect, the form will likely help shape plan designs and promotion.



Write to Anna Wilde Mathews at anna.mathews@wsj.com and Janet Adamy at janet.adamy@wsj.com

HHS Releases Proposed Regulations on Summary of Benefits!

News Release




FOR IMMEDIATE RELEASE
August 17, 2011


Contact: HHS Press Office
(202) 690-6343


New Affordable Care Act Policy Helps Consumers Better Understand and Compare Benefits and Coverage

Today, the Departments of Health and Human Services (HHS), Labor, and the Treasury proposed new rules under the Affordable Care Act that will enable consumers to easily understand their health coverage and determine the best health insurance options for themselves and their families. Likewise, these proposed rules will assist employers in finding the best coverage for their business and their employees. Under the proposed rules announced today, health insurers and group health plans will provide consumers with clear, consistent and comparable information about their health plan benefits and coverage. The new forms, scheduled to be available in 2012, will be a critical resource for more than 180 million health insurance consumers with private health insurance coverage.

“Today, many consumers don’t have easy access to information in plain English to help them understand the differences in the coverage and benefits provided by different health plans,” said HHS Secretary Kathleen Sebelius. “Thanks to the Affordable Care Act, that will change.”

“Workers and their families needclear and understandable information regarding their health coverage," said Secretary of Labor Hilda L. Solis. "Today's proposal is a common-sense step that will help workers quickly and easily compare different coverage options, in order to make more informed decisions."

The rules proposed today will enable consumers both to more easily understand the coverage they already have and, when purchasing new coverage, to make apples-to-apples comparisons of available options. Specifically, the proposed regulations would ensure consumers have access to two forms that will help them understand and evaluate their health insurance choices, including:
•An easy to understand Summary of Benefits and Coverage; and
•A uniform glossary of terms commonly used in health insurance coverage, such as “deductible” and “co-pay”.

All health plans and issuers will provide a Summary of Benefits and Coverage, along with a uniform glossary of terms, to shoppers and enrollees upon request and before they buy coverage. Often, health plans and issuers only provide selective details on the plan or policy before it’s purchased, giving consumers a limited understanding of what they are buying. The proposed rules give consumers straightforward, standardized information on their choices upfront, helping them understand the key features of the policy or plan and allowing them to make a more informed decision. The summary will use a uniform glossary to replace the jargon that makes it impossible to compare plans or figure out what is covered. Health plans and issuers must also provide notice at least 60 days before any significant modification is made in the plan or coverage during the plan or policy year.

This Summary of Benefits and Coverage will include a new, standardized health plan or policy comparison tool for consumers known as “Coverage Examples,” much like the Nutrition Facts label required for packaged foods. The Coverage Examples would illustrate what proportion of care expenses a health insurance policy or plan would cover for three common benefits scenarios—having a baby, treating breast cancer, and managing diabetes. Additional scenarios may be added in the future. The examples will help consumers understand and compare their share of the costs of care under a particular policy or plan, and see how valuable the health plan will be at times when they need the coverage.

The proposed rules benefit from the public process led by the National Association of Insurance Commissioners (NAIC) and a working group composed of stakeholders. These stakeholders include representatives of health insurance-related consumer advocacy organizations, health insurers, health care professionals, patient advocates including those representing individuals with limited English proficiency, and other qualified individuals. During its process, the working group met monthly, invited public input, and conducted consumer testing of the language and forms. Today’s proposed regulations adopt the recommendations submitted by the NAIC after that process, and request comments on how the forms can be improved.

More information about the proposed regulation is available at: http://www.healthcare.gov/news/factsheets/labels08172011a.html.

To view the proposed template for the Summary of Benefits and Coverage, visit: http://www.healthcare.gov/news/factsheets/labels08172011b.pdf

To view the Notice of Proposed Rulemaking or learn how to submit public comment, visit: http://www.gpoaccess.gov/fr/

Other technical information is available at: http://cciio.cms.gov/


###

Women's Preventative Services Rule Issued Under Health Care Reform

By Sara Hansard


Rules requiring new health insurance plans to cover women's preventive health services without charging copayments, coinsurance, or deductibles were issued jointly Aug. 1 by three agencies that are implementing the health care reform law.



The Department of Health and Human Services' Centers for Medicare & Medicaid Services, the Department of Labor's Employee Benefits Security Administration, and the Department of the Treasury's Internal Revenue Service issued an interim final rule adopting guidelines recommended July 19 by the Institute of Medicine (19 HCPR 1167, 7/25/11).



The interim final rule was published in the Aug. 3 Federal Register (76 Fed. Reg. 46621), but the effective date of the rule is Aug. 1, when it was released. Comments on the interim final rule are due Sept. 30.



The IRS also issued a separate proposed rule which would amend excise tax regulations. Comments on the IRS proposed rule, also published in the Aug. 3 Federal Register (76 Fed. Reg. 46677), are due Oct. 3.

In a telephone press briefing with reporters, HHS Secretary Kathleen Sebelius called the guidelines “historic,” saying they will “help women get the preventive care they need to stay healthy.”



Group and individual health insurance policies with plan years beginning on or after Aug. 1, 2012, will have to cover a wide range of preventive services without requiring cost-sharing payments, including contraception, well-woman visits, breastfeeding supplies and support, domestic violence screening, screening for gestational diabetes, human papillomavirus DNA testing for women 30 years and older, sexually transmitted infection counseling, and human immunodeficiency virus screening and counseling.



“This kind of care can prevent illness and improve health,” Sebelius said. “But for too long, too many Americans have gone without it, in many cases because it cost too much,” she said. A recent study found that each year more than half of women avoid or delay key preventive care because of cost, which hurts public health and drives up health care costs, she said. As one example, she said it is estimated that if 90 percent of mothers were able to breast-feed in the first six months, it would save the lives of 1,000 infants and save the health care system $13 billion each year.



The Patient Protection and Affordable Care Act requires plans begun after the law was enacted in 2010 to cover preventive services for men and women without requiring policyholders to make cost-sharing payments, and rules were issued in 2010 for that requirement.



The interim final rule issued Aug. 1 implements a provision of PPACA requiring that preventive services specifically for women be covered without cost sharing. Previously, preventive services for women had been recommended one by one or as part of guidelines for men as well, HHS said.



“Grandfathered” plans that began before PPACA was enacted and that meet HHS criteria for not making many changes are not required to meet the preventive service requirements.



‘Millions’ of People Will Be Affected



Howard Koh, HHS assistant secretary for health, said during the press briefing that “millions of people will be positively affected” by the rules. “This puts forward a national standard for the first time and will have broad impact,” he said.



Some 88 million people will be in nongrandfathered plans by 2013, of which about 34 million will be women ages 18 to 64, he said. “New plans are being created all the time,” Koh said.



The administration also released an amendment allowing religious institutions that offer insurance to their employees the choice of whether to cover contraception. HHS said this provision is based on “the most common accommodation for churches available in the majority [18] of the 28 states” that already require insurance companies to cover contraception. The agency asked for comments on this provision.

Sebelius said the guidelines “reflect common sense,” and they bring “fairness to the health insurance market for women.” Birth control is the most common drug prescribed to women ages 18 to 44, she said. Not covering it “would be like not covering flu shots or any of the other basic preventive services that millions of Americans count on every day.”



Women have unique medical needs, and are more likely than men to suffer from some serious illnesses, such as diabetes, Koh said. On average, women need to use more preventive services than men, yet women typically earn lower incomes than men and are often less able to pay, he said. As a result, they are more likely to forgo some services because of cost, he said.



Plans may use reasonable medical management to help define the nature of the covered service, and plans have the flexibility to control costs and promote efficiency by such methods as imposing cost-sharing payments for branded drugs if a generic version is available and safe, HHS said.



Small Increase in Premiums



Mayra Alvarez, director of public health policy in HHS's Office of Health Reform, said during the briefing that HHS believes the rules will result in a “very small increase” in premiums since most employer plans already cover the services.



But America's Health Insurance Plans, which represents about 1,300 insurers covering about 200 million people, issued a statement from President and Chief Executive Officer Karen Ignagni saying that the preventive care coverage recommendations “would increase the number of unnecessary physician office visits and raise the cost of coverage.”



While Koh said that the IOM recommendations adopted in the interim final rule are based “on the best available science and data,” Ignagni said the IOM recommendations “would broaden the scope of mandated preventive services beyond existing evidence-based guidelines, suspend current cost-sharing arrangements for certain services, and encourage consumers to obtain a prescription for routine supplies that are currently purchased over the counter. Exceeding current evidence-based guidelines sets a troubling precedent for the IOM's future coverage recommendations, including the essential health benefits that will significantly impact the affordability of coverage and the cost to taxpayers.”



Under PPACA HHS is to release rules later this year on “essential health benefits” that health insurers must cover.



Consumer Groups Applaud Rule



Health care consumer groups applauded the interim final rule. “Investing in these essential services makes good health and economic sense,” Families USA Executive Director Ron Pollack said in a statement.



But Debra Ness, president of the National Partnership for Women & Families, said in a statement that, while the group supports much of the interim final rule, it is “disappointed that the administration is considering a refusal clause that would allow some employers to refuse to provide their employees with coverage for contraception.” The clause is “unnecessary and potentially harmful,” and was not recommended by the IOM, she said.



Both Koh and Alvarez indicated that the administration hopes to make preventive care coverage more uniform for private as well as public health plans. The women's preventive interim final rule pertains to new commercial plans, “but we are working very hard to improve prevention throughout the country regardless of the source of insurance,” Koh said, noting that some PPACA prevention provisions affect both Medicare and Medicaid. “We are moving steadily toward creating a true system of prevention for the country,” he said.



The interim final rule issued by CMS, EBSA and the IRS is at http://www.gpo.gov/fdsys/pkg/FR-2011-08-03/pdf/2011-19684.pdf.

The IRS proposed rule is at http://www.gpo.gov/fdsys/pkg/FR-2011-08-03/pdf/2011-19685.pdf.

The Facts about Upcoming New Benefits in Medicare

MEDICARE MODERNIZATION ACT OF 2003

MEDICARE is an essential health care program for people age 65 and older, people with certain disabilities, and people with End-Stage Renal Disease.

Recently, President Bush and Congress worked together to pass a new law to bring people with
Medicare more choices in health care coverage and better health care benefits.

This new law preserves and strengthens the current Medicare program, adds important new prescription drug and preventive benefits, and provides extra help to people with low incomes.
You will still be able to choose doctors, hospitals and pharmacies.

If you are happy with the Medicare coverage you have, you can keep it. Or, you can choose to enroll in new options described below. No matter what you decide, you are still in the Medicare
program.

Drug Discount Cards Start in 2004

Medicare-Approved Drug Discount Cards will be available in 2004 to help you save on prescription drugs. Medicare will contract with private companies to offer new drug discount cards until a Medicare prescription drug benefit starts in 2006. A discount card with Medicare’s seal of approval can help you save 10–25% on prescription drugs.

You can enroll beginning as early as May 2004 and continuing through December 31, 2005. Enrolling is your choice. Medicare will send you information soon with details about how to enroll.

People in the greatest need will have the greatest help available to them. If your income is no more than $12,569 for a single person, or no more than $16,862 for a married couple, you might qualify for a $600 credit on your discount card to help pay for your prescription drugs. These income limits change every year. Different rules may apply if you live in Puerto Rico or a U.S. territory. (You can’t qualify for the $600 if you already have drug coverage from Medicaid, TRICARE for Life or an employer group health plan.)

Also new in 2004, Medicare Advantage is the new name for Medicare + Choice plans. Medicare Advantage rules and payments are improved to give you more health plan choices and
better benefits. Plan choices might have improved already in your area. To find out more, call 1-800-MEDICARE (1-800-633-4227).

New Preventive Benefits will be covered, including:
■ A one-time initial wellness physical exam within 6 months of the day you first enroll in Medicare Part B.

■ Screening blood tests for early detection of cardiovascular (heart) diseases.

■ Diabetes screening tests for people with Medicare at risk of getting diabetes.

These benefits add to the preventive services that Medicare already covers, such as cancer screenings, bone mass measurements and vaccinations.

Prescription Drug Plans Start in 2006

Prescription Drug Benefits will be added to Medicare in 2006. All people with Medicare will be able to enroll in plans that cover prescription drugs. Plans might vary, but in general, this
is how they will work:

■ You will choose a prescription drug plan and pay a premium of
about $35 a month.

■ You will pay the first $250 (called a “deductible”).

■ Medicare then will pay 75% of costs between $250 and $2,250 in drug spending. You will pay only 25% of these costs.

■ You will pay 100% of the drug costs above $2,250 until you
reach $3,600 in out-of-pocket spending.

■ Medicare will pay about 95% of the costs after you have spent $3,600.

Some prescription drug plans may have additional options to help you pay the out-of-pocket costs.

Extra Help Will be Available for people with low incomes and limited assets. Most significantly, people with Medicare in the greatest need, who have incomes below a certain limit
won’t have to pay the premiums or deductible for prescription drugs. The income limits will be set in 2005. If you qualify, you will only pay a small co-payment for each prescription you need.

Other people with low incomes and limited assets will get help paying the premiums and deductible. The amount they pay for each prescription will be limited.

Medicare Advantage plan choices will be expanded to include regional preferred provider organization plans (PPOs). Regional PPOs will help more people with Medicare have multiple choices for Medicare health coverage, no matter where they live. PPOs can help you save money by choosing from doctors and providers on a plan’s “preferred” list, but usually don’t require you to get a referral. PPOs are among the most common and popular plans right now for working Americans.

All of these options are voluntary. You can choose to remain in the traditional Medicare plan you have today.
For the latest information about Medicare, visit www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.

To get a copy of this information in Spanish, call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. Para una copia en español, llame gratis al 1-800-MEDICARE (1-800-633-4227). Los usuarios de TTY deben llamar al 1-877-486-2048.