The Fact of the Month
Here’s something to talk about when discussing plan design options and employer contribution strategy with group clients in the New Year.
Paid sick leave provides workers with job-protected paid time off to address short-term illnesses or seek preventive care for themselves and their family members. Currently, 15 states, including New Jersey and Delaware, have enacted laws to require employers to provide paid sick leave. Recent research shows that state implementation of paid sick leave mandates was associated with a 5.6 percent reduction in emergency room visits, equivalent to 23 fewer visits per 1,000 population per year. Visits related to adult dental conditions, adult mental health or substance use disorders, and pediatric asthma notably declined.
Source Ma, Yanlei; Johnston, Kenton J.; Hao, Yu; Wharam, J. Frank; Wen, Hefei. “State Mandatory Paid Sick Leave Associated With A Decline in Emergency Department Use in the US, 2011-2019.” Health Affairs, Vol. 41, No. 8, August 2022 June 3, 2022.
The Big Three
Each month GPAHU identifies three top public policy or legal developments that could impact our members and clients. Here are this month’s big three!
Round-up on Federal Activity Affecting Health Insurance and Employee Benefits
Over the past few weeks, the federal government has been busy with health insurance and employee benefits policymaking. Here is a quick round-up of some of the most important developments.
- CAA and Federal Transparency in Coverage Guidance. The federal Departments of Health and Human Services (HHS), Labor, and Treasury recently issued guidance in the form of frequently asked questions (FAQs) on a wide range of issues concerning the federal Consolidated Appropriations Act of 2021 (CAA) and federal transparency in coverage rules. Among other things, the guidance provides compliance relief on an issue causing consternation for employers across the country—posting machine-readable files of plan provider reimbursement data on their public websites. The new guidance allows this requirement to shift to insurance carriers and TPAs. However, plan sponsors need a written agreement with their carrier or other vendor transferring this posting responsibility. Also, self-funded and level-funded plans maintain liability if their vendor does not post and maintain their files.
- Federal Surprise Billing Guidance. The FAQs also address many questions about the federal surprise billing protections. Topics addressed include (1) applicability of the surprise bill requirements to plans without a network; (2) applicability in plans with a closed network or limited out-of-network access; (3) notice and disclosure requirements; (4) air ambulance services; (5) how behavioral health crisis facilities may be considered emergency care; (6) how self-funded groups calculate their qualifying payment amount if they use multiple TPAs for various plan options; and (7) the independent dispute resolution process.
- 2023 ACA Affordability Percentage Decrease. Recent Internal Revenue Service (IRS) indexing adjustments dramatically lowered the Affordable Care Act (ACA) “affordability percentage” from 9.61% in 2022 to 9.12% in 2023. The ACA requires applicable large employers (ALEs) to either offer medical benefits that meet federal “affordability” and “minimum value” standards to qualified employees or pay tax penalties. The ACA deems an ALE’s plan “affordable” if the lowest-cost employee-only option costs the employee less than 9.5% of their household income. The 9.5% affordability threshold may be adjusted annually to account for inflation. The 2023 change reflects the record-high inflation levels nationally. It decreases the affordability percentage by half a percentage point—the most significant change since this provision of the law went into effect in 2015.
- Inflation Reduction Act Changes. The Inflation Reduction Act of 2022 includes fundamental health policy changes for Medicare and private health insurance coverage. The expanded ACA marketplace premium tax credits for higher-income Americans who purchase individual coverage through a state health insurance exchange or the federal health insurance marketplace will continue for another three years. Also, the federal Medicare program will have the ability to negotiate certain drug prices directly with drug manufacturers. Drug companies will have to pay a rebate to the federal government if prices rise faster than inflation, based on drug use by Medicare beneficiaries. Some financial changes for Medicare beneficiaries include a $2,000 annual cap on overall out-of-pocket prescription drug spending and a $35 monthly cost limit on certain insulin products in Medicare Part D and Medicare Advantage plans.
- Federal ACA Section 1557 Non-discrimination in Health Programs. A newproposed rule would revise and expand existing federal Affordable Care Act (ACA) health program non-discrimination requirements. The rule will explicitly ban discrimination based on race, color, national origin, sex, age, and disability in most federal health programs, health insurance coverage, and other health-related coverage options. That means almost every health insurer and pharmacy benefit manager in the country will be subject to the rule since virtually all touch HHS-based funds through Medicare, Medicaid, premium tax credits, and other funding sources. Agents and brokers who work with affected carriers will also be banned from discrimination when conducting activities on behalf of those coverage issuers.
- Contraceptive Coverage Clarification. The Biden Administration issued FAQs Guidance clarifying their interpretation of the ACA’s requirement that non-grandfathered health plans provide contraception to participants free of out-of-pocket costs. While first-dollar coverage of female contraceptives has been a plan design standard for years, frequently, both fully-insured and self-funded plans do not wholly meet federal standards. When checking to make sure 2023 plans meet the mark, be sure to check: (1) formulary design, (2) if coverage is automatically available in each contraception category without medical management, and (3) if each plan option has a compliant exception process in place.
- HIPAA Privacy Relating to Reproductive Health Care. HHS recently issued new health privacy guidance about protecting women seeking reproductive health services following the Supreme Court’s ruling in Dobbs vs. Jackson Women’s Health Organization. While the document is geared towards individual women and healthcare providers, the HIPAA/HITECH privacy and data security requirements referenced also apply to brokers, health insurance carriers, and self-funded health plans.
PA Individual and Small Group Markets Will Have Increased Competition and Moderate Rate Increases in 2023
Last month, Acting Pennsylvania Insurance Commissioner Michael Humphreys released 2023 rate filing information for individual and small group market plans subject to the full range of the Affordable Care Act’s (ACA) market reforms. According to the data, carriers offering individual market coverage will raise rates by an average of 7.1% in 2023. Rates in the small group market will increase by an average of 5.2% in the year ahead. When submitting their rate requests, carriers cited rising health care costs, projected claims due to pandemic-induced care, and medical and drug utilization cost trends as reasons for the increases.
The Pennsylvania Insurance Department also reports that no counties will lose any individual market insurers participating in the state’s health insurance exchange, Pennie. In fact, some counties will gain access to additional carriers in 2023.
Commonwealth Conducting Network Adequacy Study
Over the next year, Commonwealth officials will be using grant funds to study the accessibility of medical providers through health plan networks throughout Pennsylvania. According to Acting Insurance Commissioner Michael Humphreys, the study aims to understand areas of need and assess if the state’s current healthcare networks can adequately serve the population. The study will consider the ability of providers to accept new patients and how much time it takes to get an appointment with these providers to make these determinations.
In particular, the study will look closely at the accessibility of specialty healthcare providers. Potentially, the provider areas that will be targeted include: physical health specialists, obstetrics and gynecology, neurologists, oncologists, dermatologists, oral surgeons, otolaryngologists, gastroenterologists, behavioral health specialists, licensed clinical social workers, psychologists, licensed professional counselors, child and adolescent behavioral analysts, psychiatrists, and addiction medicine physicians.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!
The Mercer annual employee benefits benchmarking survey is one of the largest of its kind. The survey using 2021 data examines how 1,700 employers handled cost and plan design trends. It also looks at employers’ strategies for managing costs, supporting employees, and pandemic responses. High level findings are available free online or the full report is available for purchase.