The Obamacare Report (#14) / Design of ACA standards for health insurance policies

October 8, 2013

health-care-lawThis is #14 in a series of Obamacare Reports. (See also postings by Mitchell Law Office)

A basic aspect of the Affordable Care Act (ACA)—now being implemented—is the design of new standards for health insurance policies. All Qualified Health Plans (QHPs) are required to cover Essential Health Benefits (EHBs) in order to reasonably meet the full range of expected medical needs, allow predictability in coverage, and allow individuals to rely on coverage. Standard designs also allow the comparison of policies offered by different companies.

The design of QHPs can have significant impact on legal practices, in terms of which services are covered for policyholders, and how to challenge or defend plans in specific situations.

The statutes define 10 required types of services that must be covered by all QHPs: ambulatory services; emergency services; hospitalization; maternity and newborn care; mental health and behavioral health treatment; prescription drugs; rehabilitative services; laboratory services; preventive services and chronic disease management; and pediatric services.

However, this list does not complete the design of QHPs; it is still necessary to decide how an appropriate balance is to be obtained among these types of services.

One approach to balance could be to allocate allowed costs, to limit how much might be paid for services in each category. This option is obviously too rigid to meet the full range of individual medical needs. It would not work to be “under” a limit for hospital expenses while unable to obtain payment for more office visits.

Another approach could be to fix the level of services allowed by type (with only a specified number of physician visits, or days of hospitalization). This option is also too rigid to fit the wide variety of medical needs, as there are wide variations in how care needs should be approached.

The third approach, chosen by the Department of Health and Human Services (HHS), is to require that the balance among types of services must be chosen to satisfy a defined range of preventive and treatment measures. Both process and outcome measures have been applied.

The procedure makes use of benchmark plans or policies. For each state, three benchmark plans have been selected, to be those plans with the largest enrollment in the state’s small-group market. An evaluation procedure has been set up through accrediting groups. Data are to be collected from these plans for evaluation.

These benchmark plans are to assure that the QHPs set an appropriate balance among the 10 general service categories; do not discriminate based on age, disability or life expectancy; consider a diverse population base; and do not allow denial of essential benefits.

The data that must be collected to support these standards, and the accreditation process for plans, have been discussed in the Federal Register (at Vol. 77, No. 140, pp 42658-42672). As part of the initial regulations, the Utilization Review Accreditation Commission (URAC) and National Committee for Quality Assurance (NCQA) have been accepted as accreditation groups for plans.

A third group, the Accreditation Association for Ambulatory Health Care (AAAHC) is being recognized (based on rules posted on September 13, 2013, with comment to end on October 15, 2013). The accreditation rules include a list of the measures to be evaluated by the AAAHC to determine if a plan meets QHP requirements.

For attorney practices, if individual clients are denied coverage, an understanding of the accreditation arrangements for QHPs may emerge as an important issue. And if an insurance company is challenged over a denial of coverage, attorney assistance may be required to demonstrate the appropriateness of company actions.

More on these and related ACA topics may be found in a recent book by the authors that describes implementation of the ACA, and in a new Practice Guide by the authors that addresses funding and access issues in health care.

Previous installments of “Obamacare Reports” address the various ways in which implementation of the ACA is affecting legal practices:

Report #1   Report #2   Report #3   Report #4   Report #5  Report #6  Report #7  Report #8   Report #9   Report #10   Report #11   Report #12   Report #13