Proposed rule requires insurers to explain costs and benefits

But an association of health plans says the regulation could burden insurers and complicate the process.

By Doug Trapp — Posted Aug. 29, 2011

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Health plans will be required to provide consumers with a standardized, six-page form explaining the plans' costs and benefits as early as March 2012, according to a proposed rule released by the Dept. of Health and Human Services on Aug. 17.

The proposed Summary of Benefits and Coverage form would include apples-to-apples information on out-of-pocket spending, additional costs for visiting non-network physicians and hospitals, and coverage limits. Consumers also would receive a glossary of health insurance terms to help them understand the form.

"These documents are going to bring much needed sunlight to insurance coverage," said Centers for Medicare & Medicaid Services Administrator Donald M. Berwick, MD. The regulation is required by a provision in the health system reform law.

The proposed rule was due on March 23, 2011, a year after the enactment of the Patient Protection and Affordable Care Act. However, discussions between HHS and the Dept. of Labor pushed back the release date.

Insurers said the additional consideration did not result in all of their concerns about the regulation being addressed.

"The implementation date also should be pushed back to give health plans sufficient time to make the operational and administrative changes needed to create these new documents," said Robert Zirkelbach, spokesman for America's Health Insurance Plans. The rule would require health plans to provide the benefits form to existing and potential plan subscribers beginning March 23, 2012.

Zirkelbach also said HHS must balance the potential benefit of the form against its projected cost to health plans. For example, most large employers customize their benefit packages, so health plans could be required to provide tens of thousands of versions of the form to potential subscribers, a requirement that would drive up administrative costs.

"We will be submitting detailed comments and look forward to working with regulators to mitigate potential unintended consequences of this new requirement," Zirkelbach said.

HHS estimates that the rule would cost health insurers $50 million in compliance costs. The HHS secretary can impose a penalty on noncompliant plans of up to $1,000 per incident, per person, but states and other federal agencies also have enforcement authority.

Patient advocates applauded the proposal.

"Consumers will be able to truly compare plans and make educated choices," said Ron Pollack, executive director of Families USA, a health consumer advocacy organization. "In the past, explanations of benefits have often been long, confusing and written in legal gobbledygook that no one could understand."

The benefits disclosure form will do for health insurance what the nutrition information label has accomplished for food, said Lynn Quincy, senior health policy analyst with Consumers Union, the consumer advocacy organization that publishes Consumer Reports. "Our own surveys reveal that shopping for insurance is a task that consumers dread."

But a coalition of obesity advocacy organizations objected to the proposal's inclusion of bariatric surgery and weight loss programs on a sample list of services health plans might not cover. Including bariatric surgery on such an example list "only continues the pervasive discrimination and stigma associated with treating those that are affected by obesity," said Chris Gallagher of the Obesity Care Continuum, which includes four associations representing dietitians, obesity researchers, bariatric surgeons, and advocates for obese patients.

Bariatric surgery coverage is not uncommon, with 47 of 50 state Medicaid programs covering it, Gallagher said. He also said HHS should clearly identify which services they include under the category of weight loss programs on the sample list.

The proposed rule is based on a draft by a working group convened by the National Assn. of Insurance Commissioners. The group included health care consumer advocates, health plans, health professionals, patient advocates and others, said Oregon Insurance Commissioner Teresa D. Miller, who chaired the working group.

HHS is accepting comments on the proposed rule, which is available online, until Oct. 21.

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Clearing up the clutter

Group health plans will be required to provide clear, comparable health plan coverage and cost information to consumers under a proposed federal rule mandated by the health system reform law. The draft version of the six-page form requires health plans to disclose:

  • Dollar figures for premiums, deductibles, out-of-pocket expense limits and plan coverage limits.
  • The difference in costs for seeking care in the plan's network and outside its network. The comparison includes 32 categories of services, such as physician office visits, specialty drugs, emergency department care, prenatal and postnatal care, physical rehabilitation, eye exams and hospice services.
  • Comprehensive out-of-pocket cost examples for having a baby, receiving breast cancer treatment and managing diabetes, with specific billing codes listed for the services.
  • A list of the types of health care the plan does not cover.
  • Contact information and instructions for appealing a health plan coverage decision.

Source: Dept. of Health and Human Services, Summary of Benefits and Coverage form template, Aug. 17 (link)

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External links

Summary of Benefits and Coverage template, Dept. of Health and Human Services, Aug. 17 (link)

To submit comments on HHS' proposed rule requiring health plans to provide consumers a standardized, six-page form explaining the plans' costs and benefits (link)

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