HHS mandates clear insurance language

The agency requires use of a standard summary-of-benefits document, which has been compared to food nutrition labels.

By Charles Fiegl — Posted Feb. 23, 2012

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The Obama administration will require health insurance plans to publish their coverage information using simple terms and consumer-friendly labels.

New rules mandated by the health system reform law and recently finalized by the Dept. of Health and Human Services would help employers and beneficiaries compare and select health plans more easily, health officials said. Insurers would use templates, similar to nutrition labels used on food products, designed by the administration to detail cost-sharing and coverage limitation information.

"Consumers, for the first time, will really be able to clearly comprehend the sometimes confusing language insurance plans often use in marketing," said HHS Secretary Kathleen Sebelius. "This will give them a new edge in deciding which plan will best suit their needs and those of their families or employees."

Insurers must use new forms that detail coverage beginning Sept. 23. Information will include examples of coverage that highlight the cost-sharing patients can expect to face for certain common medical situations, such as having a baby or managing diabetes.

Patient advocacy organizations applauded the release of the new regulations, but the leading association representing insurers warned the mandates would lead to higher administrative costs.

America's Health Insurance Plans called on HHS to give plans more time to change the policy documents they share with beneficiaries. The rules will require insurers to overhaul how they deliver policy information to beneficiaries, the Washington-based association said in a statement. "The short time frame in which to implement this new requirement creates significant administrative challenges that will increase costs and result in duplication, because many plans are already developing materials for employers whose policies take effect Oct. 1, 2012," the association said.

The final rule also could have the unintended consequence of making the insurance selection process more challenging, AHIP said. Separate information documents must be created for different family sizes, benefit designs, cost-sharing levels, prescription drug formularies and network options. Producing that amount of information could create problems for beneficiaries trying to locate the right information for their situations.

Lynn Quincy, senior policy analyst for Consumers Union, the policy and advocacy division of Consumer Reports, praised the new summary-of-benefits design created by HHS. For the first time, she said, beneficiaries will have uniform documents to determine which plan is best.

"Our consumer testing showed that consumers dread purchasing insurance largely because they don't understand it, and current health plan documents are insufficient," Quincy said. "This rule is a big step in helping consumers better understand and evaluate their insurance options."

An example of the new design is available online (link).

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