With only about a year to go before the major elements of the Affordable Care Act take effect, federal health officials released details Nov. 20 on how health plans must cover individuals with preexisting conditions, as well as what types of health plans can be offered in state insurance exchanges.
Under the ACA, health plans are barred beginning in 2014 from discriminating against adults with preexisting conditions. In its proposed rule, the Health and Human Services department prohibits insurers from denying or dropping coverage due to a preexisting illness starting on Jan. 1 of that year. The ACA already requires health plans to provide insurance for children regardless of preexisting conditions; that provision went into effect in 2010.
HHS estimates that currently in 45 states, health plans can legally deny coverage to adults with current or past medical conditions when those individuals are shopping for insurance on the individual market.
Under the proposal, insurers are also banned from raising premiums based on health status, preexisting conditions, claims history, gender, duration of coverage, occupation, or employer size. However, insurers can vary premiums somewhat based on age, tobacco use, family size, and geography. The proposed rules will apply to individual and small group plans beginning in 2014, and will be extended to large group plans entering the health insurance exchanges in 2017.
The proposed rule also requires health plans to set up a single statewide risk pool for their individual market and for their small employer market, with the goal of creating larger risk pools that will provide more stable rates for consumers.
Under the proposed rule, HHS also provided additional guidance on what health coverage will look like under the state health insurance exchanges when they debut in 2014.
Under the ACA, health plans operating in the exchanges will be required to offer an "essential health benefits" package that includes services from the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
In order to be offered for sale in the insurance exchanges, health plans will be required to cover the essential health benefits at roughly the same level as a benchmark plan in each state. Each state will choose a benchmark plan, which by law must be one of the largest plans in the state’s small group market, one of the largest state employee health benefit plans, one of the largest plans under the national Federal Employees Health Benefits Program, or the largest insured commercial HMO in the state.
The HHS proposal also outlines a system for identifying the level of consumer cost sharing among the plans offered on the exchange.
The department calls for plans to be identified as platinum, gold, silver, and bronze, with platinum offering lower beneficiary cost sharing but higher premiums. Platinum plans will pay for 90% of all covered services, with beneficiaries responsible for 10%. Gold plans will pick up 80% of the costs, silver plans will pay 70%, and bronze plans will pay 60%.
The requirements for health plans seeking to participate in the exchanges are largely similar to what HHS outlined in a policy bulletin issued last year. One difference, however, is the requirements for prescription drugs.
Under the previous proposal, HHS had floated the idea of requiring plans to cover at least one drug in each category and class covered by the benchmark plans. But following criticism that one drug in each category and class would not offer adequate coverage, HHS modified its approach. Now, health plans would be required to cover at least one drug in every category and class. If the benchmark plan covers more than one drug, the health plans in the exchange must cover the same number of drugs as the benchmark plan.
The proposed rules were slated to be published in the Federal Register on Nov. 26.