What’s in the Healthcare Reform Law
By Emily P. Walker, Washington Correspondent, MedPage Today
Published: April 01, 2010
WASHINGTON — When President Barack Obama signed the “add-on” bill this week, he completed the process of sweeping healthcare reform that is projected to provide insurance coverage to an additional 32 million people and cost $938 billion.
Here’s a summary of the key provisions dealing with coverage, quality improvement, and tax changes in the new law and its add-on bill.
Effective This Year
Starting immediately, HHS will set up an annual review process to make sure insurance companies aren’t raising premiums excessively. Insurers will also have to justify any major premium increases.
The law also gives the FDA the immediate authority to approve generic versions of biologic drugs. Biologic manufacturers are granted 12 years of exclusive use before follow-on generics can be developed.
The law directs the immediate formation of task forces to develop, update, and disseminate recommendations on the use of clinical and community prevention services.
Within 60 days of passage, the Secretary of Health and Human Services (HHS) must create uniform language that clearly describes health insurance benefits. That language must be used by all insurance companies, so patients can easily understand and compare benefits. The agency will also immediately begin awarding grants to states to set up insurance information centers, which will answer consumer questions about health insurance options.
Within 90 days, HHS will create a high-risk insurance pool for those with preexisting conditions. The pool will operate through 2013. Eligible participants include those with preexisting medical conditions who have not had insurance for the previous six months.
Each state is required, by July 1, to create a Web site where residents can easily see what insurance options are available to them.
Within six months, health insurers must eliminate lifetime dollar limits on policy benefits and “unreasonable annual limits.”
The law also prohibits a health insurer from rescinding a plan once an enrollee is covered, except if he or she has knowingly committed fraud, such as lying about a preexisting condition on an insurance application. Even then, the insurance company would have to notify the enrollee prior to terminating coverage.
Other restrictions on health insurers that take effect within six months include:
- A ban on discrimination against lower-wage workers
- Prohibition against preexisting condition exclusions for children
- Allow dependents who are unmarried to stay on their parent’s health insurance until they are 26
Also within six months, hospitals must publish a list of their standard charges for items and services.
By Jan. 1, 2011, insurers must eliminate copays for certain preventive health services, including those that the U.S. Preventive Services Task Force (USPSTF) considers the most likely to improve health; immunizations recommended by the CDC; screenings and preventive care for women that are recommended by the Health Resources and Services Administration, including annual mammograms.
The law specifically prohibits use of the USPSTF’s most recent recommendations on mammograms to determine coverage decisions.
Within a year, the Secretary of HHS must create a new reporting system, and health insurers will be required to report how their plans improve health outcomes, prevent hospital readmissions, improve patient safety and reduce medical errors, and implement wellness activities.
Within two years, health insurers will be required to submit an annual report to HHS breaking down what percentage of premium revenue is spent on paying for clinical services, for activities that improve healthcare quality, and other non-claims costs.
Those reports will be made public on the HHS Web site. The provision is intended to help cut healthcare costs.
Coverage Requirements for Individuals
Starting in 2014, most individuals will be required to have health insurance or else pay a penalty of $95.
That penalty will rise to $325 in 2015 and to $695 in 2016. In the years thereafter, the penalty will be indexed to the cost of living.
The penalty for minors who don’t have insurance will be one-half the penalty for adults.
Certain exceptions are allowed for those who object to health insurance on religious grounds, those who cannot afford coverage and receive a hardship waiver, those for whom the lowest cost plan option exceeds 8% of annual income, Indian tribe members, and those who are incarcerated.
New Insurance Options
The law creates new state-based insurance exchanges called American Health Benefit Exchanges, through which individuals can purchase coverage. The Exchanges must be established by 2014.
All the plans in the Exchanges must meet certain quality and coverage benchmarks, but insurers can offer one of four types of plans: bronze, silver, gold, and platinum, which provide increasing levels of coverage and out-of-pocket spending.
Each state exchange will be required to operate a toll-free hotline and a calculator so consumers can figure out what the costs would be for various plans.
Members of Congress and their staffs will purchase plans through the Exchanges.
The Government Accountability Office will conduct an ongoing assessment of the progress of the exchanges, and whether physicians are accepting patients enrolled in government health programs, including the Exchanges.
The law will also create Small Business Health Options Program (SHOP) Exchanges, through which small businesses with up to 100 employees can purchase coverage, beginning in 2017.
States will have the option to create a basic health plan, which will be open to uninsured individuals with incomes between 133% and 200% of the federal poverty level who are eligible to receive premium subsidies in the Exchanges.
States choosing to create their own plans must offer basic coverage and ensure that enrollees won’t pay more in premiums than they would have in the Exchanges. The federal government will pay states 95% of the funds that would have otherwise gone toward subsidies for purchase of an Exchange plan.
The law also creates a federal program to assist with the operation of nonprofit, member-run health insurance companies known as Consumer Operated and Oriented Plans (CO-OP). Although co-ops were, at one time, touted as a major component of heatlhcare reform, in the end, the government will appropriate just $6 billion for the program.
Also part of the reform law is a temporary $5 billion reinsurance program for employer-sponsored health plans to provide coverage for retirees ages 55 to 64 and their families. It will reimburse plans for 80% of retiree claims between $15,000 and $90,000….
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