Private Health Insurance Market Reforms in
the Patient Protection and Affordable Care
Act (ACA)
Annie L. Mach
Analyst in Health Care Financing
Bernadette Fernandez
Specialist in Health Care Financing
November 1, 2011April 16, 2012
Congressional Research Service
7-5700
www.crs.gov
R42069
CRS Report for Congress
Prepared for Members and Committees of Congress
Private Health Insurance Market Reforms in the ACA
Summary
The private health insurance provisions in the Patient Protection and Affordable Care Act (P.L.
111-148, ACA, as amended) include market reforms that impose requirements on private health
insurance plans. Such reforms relate to the offer, issuance, generosity, and pricing of health plans,
among other requirements.
ACA’s market reforms largely focus on the individual and small group health insurance markets,
and in this report the reforms have been grouped by effective dates: “immediate” market reforms
that become effective prior to the full implementation date of ACA, and reforms that become
effective on the full implementation date (January 1, 2014).
ACA requires implementation of a number of reforms prior to its full implementation date (i.e.,
prior to plan years beginning on or after January 1, 2014). “Immediate” reforms include a process
to review unreasonable rate increases; an Internet portal to assist consumers in identifying
coverage options; prohibition on lifetime limits and restriction of annual limits; the prohibition on
rescissions; coverage of preventive health services with no cost-sharing; extension of dependent
coverage; prohibition of discrimination based on salary; standards related to medical loss ratios
and rebates to plan participants; appeals process; coverage of preexisting health conditions for
children; patient protections; uniform explanation of coverage documents; and reporting
requirements regarding quality of care.
Market reforms effective beginning in 2014 include nondiscrimination based on health status;
guaranteed issue and guaranteed renewability; coverage of preexisting health conditions
(regardless of age); nondiscrimination regarding clinical trial participation; rating restrictions;
waiting period limitation; and nondiscrimination regarding health care providers.
This report provides background information about the private health insurance market, including
market segments and regulation. It describes each ACA market reform and notes any major
implementation activity that has occurred (e.g., issuance of final rule from a Departmentdepartment such as
Health and Human Services). The appendices of the report provide additional information about
the status of regulations relating to each reform and how the reforms apply to the different market
segments and health plans.
Congressional Research Service
Private Health Insurance Market Reforms in the ACA
Contents
Background...................................................................................................................................... 1
Health Insurance Markets.......................................................................................................... 1
State and Federal Regulation..................................................................................................... 1
ACA Market Reforms...................................................................................................................... 2
“Immediate” Market Reforms ................................................................................................... 3
Process to Review Unreasonable Rate Increases ................................................................ 3
Internet Portal to Assist Consumers in Identifying Coverage Options................................ 4
Prohibition of Lifetime Limits and Restriction of Annual Limits....................................... 4
Prohibition on Rescissions .................................................................................................. 6
Coverage of Preventive Health Services with No Cost-Sharing ......................................... 6
Extension of Dependent Coverage ...................................................................................... 8
Prohibition of Discrimination Based on Salary................................................................... 89
Standards Related to Medical Loss Ratio and Rebates to Plan Participants ....................... 9
Appeals Process................................................................................................................... 9
Coverage of Preexisting Health Conditions for Children ................................................. 10
Patient Protections............................................................................................................. 1011
Uniform Explanation of Coverage Documents ................................................................. 11
Reporting Requirements Regarding Quality of Care ........................................................ 12
2014 Market Reforms.............................................................................................................. 13
Nondiscrimination Based on Health Status....................................................................... 1314
Guaranteed Issue and Guaranteed Renewability............................................................... 14
Coverage of Preexisting Health Conditions (Regardless of Age) ..................................... 14
Nondiscrimination Regarding Clinical Trial Participation................................................ 1415
Rating Restrictions ............................................................................................................ 15
Waiting Period Limitation ................................................................................................. 1516
Nondiscrimination Regarding Health Care Providers....................................................... 1516
Tables
Table 1. Summary of Benefits and Coverage Document Requirements........................................ 1112
Table A-1. Status of Regulations Relating to Health Insurance Market Reforms in ACA,
as of September 30, 2011............................................................................................................ 1617
Table B-1. Applicability of ACA’S Private Health Insurance Market Reforms to Health
Plans ........................................................................................................................................... 1921
Appendixes
Appendix A. Status of Regulations................................................................................................ 1617
Appendix B. Applicability of Market Reforms to Health Plans .................................................... 1921
Congressional Research Service
Private Health Insurance Market Reforms in the ACA
Contacts
Author Contact Information........................................................................................................... 2224
Congressional Research Service
Private Health Insurance Market Reforms in the ACA
T
he Patient Protection and Affordable Care Act (P.L. 111-148, ACA,1 as amended) includes
reforms of the health insurance market that impose requirements on private health
insurance plans.2 Such reforms relate to the offer, issuance, generosity, and pricing of
health plans, among other requirements. Certain reforms also require the participation of public
agencies and officials, such as the Secretary of Health and Human Services (hereafterhereinafter, the
Secretary), in order to facilitate administrative or operational functions.
This report provides background information about the private health insurance market, including
market segments and regulation. It describes each ACA market reform and notes any major
implementation activity that has occurred (e.g., issuance of final rule from a Department such as
Health and Human Services). The appendices of the report provide additional information about
the status of regulations relating to each reform and how the reforms apply to the different market
segments and health plans.
Background
Health Insurance Markets
The private health insurance market is often characterized as having three segments—the large
group, small group, and individual markets. Insurance sold in the large and small group markets
refers to health plans offered through a plan sponsor, typically an employer.3 Large groups
generally have more than 50 workers. Small groups generally refer to firms with 50 or fewer
workers. However, beginning in 2016, ACA will define small groups as employers with 100 or
fewer workers, and large groups as employers with more than 100 workers. The individual
(nongroup) market refers to insurance policies offered to individuals and families buying
insurance on their own (i.e., not through a plan sponsor).
State and Federal Regulation
States are the primary regulators of the business of health insurance, as codified by the 1945
McCarran-Ferguson Act (15 U.S.C. §§ 1011 et seq.). Each state has a large, unique set of rules
that apply to state-licensed insurance carriers and the plans they offer.4 Such rules are broad in
scope and address a variety of issues, such as the legal structure and organization of insurance
issuers (e.g., licensing requirements), business practices (e.g., marketing rules), market conduct
1
Previous CRS reports on the Patient Protection and Affordable Care Act used the acronym PPACA to refer to the
statute. CRS will use “ACA,” in conformance with the more widely-used acronym for the law.
2
For simplicity’s sake, the term “plan” is used generically in this report. It applies to different types of health coverage
provided to groups (e.g., employees of a single firm) and individuals.
3
The reference to group markets technically applies to health plans offered by state-licensed insurance carriers and
purchased by employers and other plan sponsors. However, health insurance coverage provided through a group may
also be sponsored through “self insurance.” Groups that self-insure set aside funds to pay for health benefits directly,
and those groups bear the risk for covering medical expenses generated by the individuals covered under the selfinsured plan. For additional information regarding self-insurance, see CRS Report R41069, Self-Insured Health
Insurance Coverage.
4
State regulation of health insurance applies only to state-licensed entities. Since self-insured plans are financed
directly by the plan sponsor, such plans are not subject to state law.
Congressional Research Service
1
Private Health Insurance Market Reforms in the ACA
(e.g., capital and reserve standards), nature of insurance products (e.g., benefit mandates), and
consumer protections (e.g., plan disclosure requirements), among others.
In addition to the state regulation of insurance, the federal government has established federal
standards applicable to health coverage and imposes requirements on state-licensed insurance
carriers and sponsors of health benefits (e.g., employers). The federal regulation of health
coverage is particularly salient with respect to health benefits provided through employment.5
ACA follows the model of federalism which has been employed in prior federal reform efforts
(e.g., Health Insurance Portability and Accountability Act of 1996). In other words, while ACA
establishes many federal rules, the states have primary responsibility for monitoring compliance
with and enforcement of such rules. In addition, states may impose additional requirements on
insurance carriers and the health plans they offer, provided that the state requirements neither
conflict with federal market reforms nor prevent the implementation of such reforms.
ACA Market Reforms
ACA establishes federal requirements that apply to private health insurance. The reforms affect
insurance offered to groups and individuals, impose requirements on sponsors of coverage, and,
collectively, establish a federal floor with respect to access to coverage, premiums, benefits, costsharing, and consumer protections. While such market reforms may be new at the federal level,
many of ACA’s reforms had already been enacted in some form in some states, with great
variation in scope and specificity across the states.
Most of ACA’s market reforms become effective in 2014, but a number are already effective.6
The following sections describe reforms that are effective “immediately” and reforms that are
effective for plan years beginning on or after January 1, 2014. The descriptions of the reforms
include information from the statute and from regulations, where pertinent. More information
about the status of regulations relating to each reform is available in Appendix A.
The application of reforms across types of plans is not uniform. Often reforms apply differently to
health plans according to the market segment in which the plan is offered and whether the plan
has grandfathered status.7 Moreover, for certain plans the ACA market reforms, as well as other
federal health reforms, do not apply. For example, retiree-only health plans are not required to
comply with federal health insurance requirements, such as the dependent coverage requirement.8
5
Federal regulation applies to both traditional insurance and self-insured plans. For more information about federal
regulation of health benefits provided through employment, see CRS Report RS22643, Regulation of Health Benefits
Under ERISA: An Outline.
6
Most of the private health insurance provisions amend Title XXVII of the Public Health Service Act (PHSA, 42
U.S.C. 300gg et seq.). Title XXVII includes requirements on health insurance coverage for both the group and
nongroup markets, enforcement applicable to such requirements, relevant definitions, and other provisions.
7
A grandfathered health plan refers to an existing plan in which at least one individual has been enrolled since
enactment of ACA (March 23, 2010). To maintain grandfathered status, a plan must avoid certain changes to employer
contributions, access to coverage, benefits, and cost-sharing (e.g., any increase in co-insurance requirement). For more
information about grandfathered status, see CRS Report R41166, Grandfathered Health Plans Under the Patient
Protection and Affordable Care Act (PPACAACA).
8
The federal exemption for retiree-only health plans is not a new exemption. Retiree-only health plans have been
exempt from federal health insurance requirements since enactment of the Health Insurance Portability and
Accountability Act of 1996. For additional information about these issues, see the Appendix in CRS Report R41166, Grandfathered
(continued...)
Congressional Research Service
2
Private Health Insurance Market Reforms in the ACA
In the text of this report the term “plan” is used generally; for information as to the specific types
of plans (i.e., a grandfathered plan in the large group market) to which a reform applies, see
Appendix B.
“Immediate” Market Reforms
ACA requires implementation of a number of reforms prior to its full implementation date (i.e.,
prior to plan years beginning on or after January 1, 2014). The ACA term “immediate” refers to
the legal effective date of the provision. The actual implementation date, however, may not be
immediate due to the time required to make the provision operational.9
The following “immediate” reforms are discussed in this section:
•
process to review unreasonable rate increases;
•
Internet portal to assist consumers in identifying coverage options;
•
prohibition on lifetime limits and restriction of annual limits;
•
prohibition on rescissions;
•
coverage of preventive health services with no cost-sharing;
•
extension of dependent coverage;
•
prohibition of discrimination based on salary;
•
standards related to medical loss ratios and rebates to plan participants;
•
appeals process;
•
coverage of preexisting health conditions for children;
•
patient protections;
•
uniform explanation of coverage documents; and
•
reporting requirements regarding quality of care.
Process to Review Unreasonable Rate Increases
The Secretary must, in conjunction with the states, establish a process for the annual review of
“unreasonable” increases in health insurance rates beginning in the 2010 plan year. Plans are
required to submit to the Secretary, and the relevant state, a justification for an unreasonable rate
increase prior to implementation.10
(...continued)
Grandfathered Health Plans Under the Patient Protection and Affordable Care Act (PPACAACA).
9
For example, within one year of enactment of ACA, the Secretary of Health and Human Services is required to
develop standards for the summary of benefits and coverage (SBC) that plans are expected to provide to their enrollees
(§ 1001: § 2715 PHSA). Plans have to begin offering the standardized SBC within two years of enactment.
10
§ 1003.
Congressional Research Service
3
Private Health Insurance Market Reforms in the ACA
The final rule regarding the review of unreasonable rate increases was published on May 23,
2011.11 It established a rate review program to ensure that all proposed rate increases in the small
group and individual markets that meet or exceed a specified threshold are reviewed by a state or
the Centers for Medicare & Medicaid Services (CMS) to determine whether they are
unreasonable.12 Beginning on or after September 1, 2011, a proposed rate increase is tentatively
considered unreasonable if the increase either is 10% or more (over a 12-month period beginning
on September 1), or meets or exceeds the state-specific threshold.13 Health plans subject to review
are required to submit to the Department of Health and Human Services (HHS) and the relevant
state a justification for the proposed rate increase prior to implementation of the premium, and
HHS will publicly disclose the information. Note that ACA’s rate review process does not
establish federal authority to deny implementation of a proposed rate increase. (This is a
“sunshine” provision designed to publicly expose rate increases determined to be unreasonable.)14
Internet Portal to Assist Consumers in Identifying Coverage Options
The Secretary, in consultation with the states, is required to establish an Internet portal for the
public to easily access affordable and comprehensive coverage options. The Secretary is also
required to determine the minimum information available through the portal and develop a
standardized format for the presentation of information. The interim final rule governing the
portal and its content was published on May 5, 2010,15 and the Internet portal,
www.healthcare.gov, was launched on July 1, 2010.16
The interim final rule requires the portal to provide, at minimum, information on the following
coverage options: health plans offered in the private insurance market; Medicaid and the State
Children’s Health Insurance Program (CHIP); high risk pools; and small group health plans.
In order to provide coverage information consistently, the interim final rule establishes a
standardized format for presentation of information on the portal, including plan eligibility,
availability, premium rates, cost-sharing, and the percentage of total premium revenues spent on
medical claims compared to administrative costs.
Prohibition of Lifetime Limits and Restriction of Annual Limits
For plan years beginning on or after September 23, 2010, ACA generally prohibits plans from
imposing lifetime or “restricted” annual limits on the dollar value of health benefits.17 The interim
final rule on lifetime and annual limits was issued on June 28, 2010.18
11
76 Federal Register 29964, May 23, 2011. An amendment to the final rule was published September 6, 2011 (76
Federal Register 54969).
12
ACA does not apply the rate review requirements to grandfathered health plans.
13
If the a state-specific threshold has not yet been determined by the Secretary, then the threshold for the state is 10%.
14
For additional information about the final rule related to rate review under ACA, see CRS Congressional Distribution
(CD) memorandum “Final Rule related to Rate Review Provision under PPACA,” by Bernadette Fernandez and Mark
Newsom, August 1, 2011, available upon request.
15
75 Federal Register 24470, May 5, 2010.
16
ACA required the Internet portal to become available no later than July 1, 2010. The Department of Health and
Human Services launched a Spanish-language version of the site on September 8, 2010.
17
§ 1001: § 2711 PHSA
Congressional Research Service
4
Private Health Insurance Market Reforms in the ACA
The lifetime limits and the restricted annual limits apply specifically to essential health benefits
(EHB).19 The Secretary has not yet issued regulations defining EHB; therefore, the interim final
rule states that for plan years beginning before the Secretary defines the EHB, the Departments
(the Departments of Health and Human Services, Labor, and Treasury) will take into account
good faith efforts to comply with a reasonable interpretation of EHB. For this purpose, a plan
must apply the definition of EHB consistently. For example, a plan cannot apply a lifetime limit
and a restricted annual limit to the same benefit; applying a lifetime limit implies the benefit is
not an EHB, while applying a restricted annual limit implies that the benefit is an EHB. Because
the lifetime and annual limit requirements are tied to EHBs, health plans are allowed to impose
limits on non-EHBs.
Lifetime Limits
Plans are prohibited from establishing lifetime limits on the dollar value of EHB for any
participant or beneficiary. Plans will be permitted to place lifetime limits on specific covered
benefits that are not EHB, to the extent that such limits are otherwise permitted by federal and
state law.
Under the interim final rule, individuals who reached the lifetime limit under a plan prior to the
applicability date of the regulations and are otherwise still eligible under the plan must be
provided with a notice that the lifetime limit no longer applies. If these individuals are no longer
enrolled in the plan, then the regulations provide an enrollment (or reinstatement in the individual
market) opportunity for such individuals. Individuals who are eligible for this enrollment
opportunity or reinstatement are allowed to enroll in any of the benefit packages that are available
to similarly situated individuals upon initial enrollment. For individuals who reached the lifetime
limit under a group health plan offered by an employer, the interim final rule does not specify
whether both current and former employees are entitled to the enrollment opportunity.
Restricted Annual Limits
The interim final rule provides that plans may establish a restricted annual limit on the dollar
value of EHB prior to January 1, 2014, when annual limits will be prohibited similar to lifetime
limits.
The interim final rule adopts a three-year phased in approach for the restricted annual limits.
Under these regulations, annual limits on the dollar value of benefits may not be less than the
following amounts according to plan years:
•
for plan years beginning on or after September 23, 2010, but before September
23, 2011: $750,000;
•
for plan years beginning on or after September 23, 2011, but before September
23, 2012: $1.25 million; and
(...continued)
18
75 Federal Register 37188, June 28, 2010.
19
As defined by § 1302(b).
Congressional Research Service
5
Private Health Insurance Market Reforms in the ACA
•
for plan years beginning on or after September 23, 2012, but before January 1,
2014: $2 million.
Plans may use higher annual limits than the amounts listed above or impose no limits before
January 1, 2014. The provision for restricted annual limits sunsets with the plan year beginning
January 1, 2014, at which time plans will not be allowed to impose any annual limits.
According to the statute, in defining the restricted annual limits the Secretary should “ensure that
access to needed services is made available with a minimal impact on premiums.”20 In the interim
final rule it was announced that HHS would establish a process whereby limited benefit plans
could request and HHS could grant waivers from the restrictions on annual limits. Limited benefit
plans generally offer coverage with restrictive annual limits on total benefits and/or specific
service categories. Industry groups that offer limited benefit plans argue that the plans are
necessary because more comprehensive coverage is too costly to the workers, and workers would
become uninsured without limited benefit plans.21 Regulators found this argument compelling,
and in establishing the waiver process they assumed that applying the restriction on annual limits
to limited benefit plans would result in significant decreases in benefits and/or significant
increases in premiums.22
Prohibition on Rescissions
The practice of “rescission” refers to the retroactive cancellation of medical coverage after an
enrollee has become sick or injured. Effective for plan years beginning on or after September 23,
2010, ACA generally prohibits rescissions. Rescissions will still be permitted in cases where the
covered individual committed fraud or made an intentional misrepresentation of material fact as
prohibited by the terms of the plan. A cancellation of coverage in this case requires prior notice to
the enrollee.
The interim final rule on prohibition of rescissions was published on June 28, 2010.23 The rule
requires a health plan to provide at least 30 calendar days advance notice to an individual before
coverage may be rescinded. It also clarifies that if any state or federal law that applies to a
rescission or cancellation of coverage is more protective of individuals, beyond the standards
established by ACA, then that other law would apply.
Coverage of Preventive Health Services with No Cost-Sharing
Effective for plan years beginning on or after September 23, 2010, health plans are required to
provide coverage for preventive health services without cost-sharing.24 These preventive services
include the following minimum requirements:
20
§ 1001: § The interim final rule for
20
§1001: §2711(a)(2) PHSA
Letter from the National Business Group on Health, to the Secretaries of Health and Human Services, Labor, and the
Treasury, August 27, 2010; Letter from the National Restaurant Association, to the Department of Health and Human
Services, Office of Consumer Information and Insurance Oversight, August 27, 2010.
22
For more information about the waiver process for restricted annual limits, see CRS Report R41627, Waiving the
Restriction of Annual Limits in Private Health Insurance .
23
75 Federal Register 37188, June 28, 2010.
24
§ 1001: § 2713 PHSA.
21
Congressional Research Service
6
Private Health Insurance Market Reforms in the ACA
the coverage of preventive health services was published on July 19, 2010.25 The preventive
services include the following minimum requirements:
•
evidence-based items or services that have in effect a rating of “A” or “B” from
the United States Preventive Services Task Force (USPSTF); 2526
•
immunizations that have in effect a recommendation from the Advisory
Committee on Immunization Practices of the Centers for Disease Control and
Prevention (CDC);2627
•
evidence-informed preventive care and screenings (for infants, children, and
adolescents) provided for in the comprehensive guidelines supported by the
Health Resources and Services Administration (HRSA);2728 and
•
additional preventive care and screenings for women not described by the
USPSTF, as provided in comprehensive guidelines supported by HRSA.2829
Additional services not recommended by the USPSTF may be offered, but are not required. For
the purposes of this provision the current recommendations of the USPSTF regarding breast
cancer screening, mammography, and prevention are considered the most current other than those
issued on or around November 2009.
ACA permits the Secretary to develop guidelines for plans to utilize value-based insurance
designs. Value-based insurance designs refer to coverage that encourages the use of services that
have clinical benefits exceeding the costs, while discouraging the use of services when the
expected clinical benefits do not justify the costs.29
The interim final rule for the coverage of preventive health services was published on July 19,
2010.30 The rule clarifies when and how cost-sharing requirements could apply to the
25and others in federal law, ACA negates the November 2009
USPSTF recommendation that women receive routine screening mammograms beginning at age
50. As a result, plans are required to cover screening mammograms beginning at age 40, based on
the prior USPSTF recommendation.30
25
75 Federal Register 41726, July 19, 2010. The complete list of recommendations and guidelines required to be
covered under the regulations is available at http://www.healthcare.gov/news/factsheets/2010/07/preventive-serviceslist.html.
26
The USPSTF is currently sponsored by the Agency for Healthcare Research and Quality (AHRQ), as an independent
panel of private-sector experts in prevention and primary care issues. For more background see http://www.ahrq.gov/
clinic/uspstfab.htm. A rating of “A” means the preventive service is recommended and there is high certainty that the
net benefit is substantial. A rating of “B” means the preventive service is recommended, and there is high certainty that
the net benefit is moderate or there is moderate certainty that the net benefit is moderate to substantial. See “U.S.
Preventive Services Task Force Grade Definitions” available online at http://www.ahrq.gov/CLINIC/uspstf/
gradespost.htm#brec.
2627
The Advisory Committee on Immunization Practices consists of 15 experts in fields associated with immunization
who have been selected by the Secretary of Health and Human Services to provide advice and guidance to the
Secretary and the CDC on the control of vaccine-preventable diseases. The Committee develops recommendations for
the routine administration of vaccines to children and adults in the civilian population; recommendations include age
for vaccine administration, number of doses and dosing interval, and precautions and contraindications.
http://www.cdc.gov/vaccines/recs/acip/.
2728
HRSA is the primary federal agency within the Department of Health and Human Services for improving access to
health care services for people who are uninsured, isolated, or medically vulnerable. HRSA provides leadership and
financial support to health care providers in every state and U.S. territory. HRSA grantees provide health care to
uninsured people, people living with HIV/AIDS, and pregnant women, mothers and children. For more background see
http://www.hrsa.gov/about/default.htm.
28
On August 3, 2011, the Department of Health and Human Services issued an amendment to the interim final rule
regarding the additional preventive care and screenings available to women. The guidelines are found at
http://www.hrsa.gov/womensguidelines/.
29
Statement of Peter R. Orszag “Health Care and the Budget: Issues and Challenges for Reform” before the Committee
on the Budget, United States Senate, June 21, 2007, http://www.cbo.gov/ftpdocs/82xx/doc8255/06-21HealthCareReform.pdf.
30
75 Federal Register 41726, July 19, 2010. The complete list of recommendations and guidelines required to be
covered under the regulations is available at http://www.healthcare.gov/law/resources/regulations/prevention/
index.html.
Congressional Research Service
7
Private Health Insurance Market Reforms in the ACA
29
HRSA published its guidelines related to women’s preventive services in August 2011; the guidelines are found at
http://www.hrsa.gov/womensguidelines/. These guidelines include, among other services, coverage for all FDA
approved contraceptive methods and sterilization procedures. On February 15, 2012, the Departments of Health and
Human Services, Treasury, and Labor (the Departments) issued a final rule that included information regarding the
additional preventive care and screenings available to women and their applicability to certain religious employers. On
March 21, 2012, the Departments issued an Advance Notice of Proposed Rulemaking with the intention of soliciting
comments on proposed amendments to the final rule relating to religious employers and the coverage of contraceptive
services. For more information about the requirement to cover contraceptive services without cost sharing, see CRS
Report R42370, Preventive Health Services Regulations: Religious Institutions’ Objections to Contraceptive Coverage,
by Cynthia Brougher.
30
For more information about the USPTF recommendation for covering mammograms, see page 32 of CRS Report
(continued...)
Congressional Research Service
7
Private Health Insurance Market Reforms in the ACA
ACA permits the Secretary to develop guidelines for plans to utilize value-based insurance
designs. Value-based insurance designs refer to coverage that encourages the use of services that
have clinical benefits exceeding the costs, while discouraging the use of services when the
expected clinical benefits do not justify the costs.31
The interim final rule clarifies when and how cost-sharing requirements could apply to the
recommended preventive services. Among the clarifications, the rule states that with respect to a
plan that has a network of providers, the plan is not required to provide coverage for a
recommended preventive service that is delivered by an out-of-network provider, and the plan
may impose cost-sharing requirements for a recommended preventive service delivered out-ofnetwork. The rule also clarifies that if a recommended preventive service does not specify the
frequency, method, treatment, or setting for the service, then the plan can determine coverage
limitations by relying on established techniques and relevant evidence.
Extension of Dependent Coverage
Effective for plan years beginning on or after September 23, 2010, ACA requires that if a plan
provides for dependent coverage, the plan must make such coverage available to a child under
age 26.3132 ACA does not require plans to offer dependent coverage; if a plan chooses not to
provide such coverage, nothing in this statute requires them to do so. The age requirement affects
only plans that choose to offer dependent coverage.
The interim final rule on the extension of dependent coverage was issued on May 13, 2010,3233 and
clarified the following: 3334
•
Plans that offer dependent coverage must continue to make that offer available
until the adult child turns 26 years of age.
•
Plans must make coverage available for both married and unmarried adult
children under age 26, but not for the adult child’s children or spouse.
•
With one exception, these provisions apply to grandfathered plans. Prior to 2014,
grandfathered group plans are not required to make dependent coverage available
to adult children who can enroll in an eligible employer-sponsored plan based on
their employment. (However, if a health plan wishes it may voluntarily make
dependent coverage available to children with employer offers of coverage.)
Prohibition of Discrimination Based on Salary
Effective for plan years beginning on or after September 23, 2010, the sponsors of health plans
are prohibited from establishing eligibility criteria, for any full-time employee, that are based on
the total hourly or annual salary of the employee.34 In no way will eligibility rules be permitted to
discriminate in favor of higher wage employees.
31
(...continued)
R41278, Public Health, Workforce, Quality, and Related Provisions in PPACA: Summary and Timeline.
31
Statement of Peter R. Orszag “Health Care and the Budget: Issues and Challenges for Reform” before the Committee
on the Budget, United States Senate, June 21, 2007, http://www.cbo.gov/ftpdocs/82xx/doc8255/06-21HealthCareReform.pdf.
32
The federal requirements provide a minimum requirement. States that already impose requirements beyond attaining
age 26 may continue to do so. To the extent that the state law is more restrictive than the federal law, the federal statute
would apply.
3233
75 Federal Register 27122, May 13, 2010.
3334
For more information about the extension of dependent coverage, see CRS Report R41220, Preexisting Exclusion
Condition
Exclusion Provisions for Children and Dependent Coverage under the Patient Protection and Affordable Care Act (PPACA).
34
§ 1001: § 2716 PHSA
(ACA).
Congressional Research Service
8
Private Health Insurance Market Reforms in the ACA
Standards Related to Medical Loss Ratio and Rebates to Plan ParticipantsProhibition of Discrimination Based on Salary
Effective for each plan year beginning on or after September 23, 2010, health plans are required
to submit to the Secretary a report concerning the percent of premium revenue spent on medical
claims (“medical loss ratio” or MLR).35 The ACA MLR calculation includes adjustments for
health quality costs, taxes, regulatory fees, and other factors. The law requires plans in the
individual and small group markets to meet a minimum MLR of 80%; for large groups, the
minimum MLR is 85%.36
Beginning not later than January 1, 2011, a health plan will provide an annual rebate to each
enrollee on a pro rata basis if the MLR is less than the required minimum. States are permitted to
increase the percentages, and the Secretary may adjust the state percentage for the individual
market if it is determined that the application of a minimum MLR of 80% would destabilize the
market.
The interim final rule relating to the MLR standards was published on December 1, 2010, 37 and
included explanations of a number of technical issues regarding the calculation and reporting of
the MLR.plan years beginning on or after September 23, 2010, the sponsors of health plans
are prohibited from establishing eligibility criteria, for any full-time employee, that are based on
the total hourly or annual salary of the employee.35 In no way will eligibility rules be permitted to
discriminate in favor of higher wage employees.
Standards Related to Medical Loss Ratio and Rebates to Plan Participants
Under the ACA, health plans are required to submit to the Secretary a report concerning the
percent of premium revenue spent on medical claims (“medical loss ratio” or MLR).36 The ACA
MLR calculation includes adjustments for health quality costs, taxes, regulatory fees, and other
factors. The law requires plans in the individual and small group markets to meet a minimum
MLR of 80%; for large groups, the minimum MLR is 85%.37 States are permitted to increase the
percentages, and the Secretary may adjust the state percentage for the individual market if it is
determined that the application of a minimum MLR of 80% would destabilize the individual
market within the state.
These reporting requirements are effective beginning in plan year 2011, with the first annual
report due to HHS by June 2012 for the prior plan year. Health plans whose MLR falls below the
specified limit must provide rebates to policyholders on a pro rata basis. Any required rebates
must be paid to policyholders by August of that year.
The interim final rule relating to the MLR standards was published on December 1, 2010.38 The
interim final rule included explanations of a number of technical issues regarding the calculation
and reporting of the MLR, and it provided separate treatment for certain “mini-med” policies for
the purpose of the MLR requirements.39 A final rule published December 7, 2011, modifies
certain provisions of the interim final rule, including revising the treatment of mini-med
policies.40
Appeals Process
Effective for plan years beginning on or after September 23, 2010, the law requires that plans
implement an effective appeals process for coverage determinations and claims.38 The process at
a minimum must
•
have an internal claims appeals process;
•
provide notice to enrollees of available internal and external appeals processes,
and the availability of any applicable assistance; and
•
allow an enrollee to review their file, present evidence and testimony and to
receive continued coverage pending the outcome.
To comply with the requirements for the internal claims appeals process, group plans are
expected to initially incorporate the claims and appeals procedures previously established under
federal law39 and will update their processes in accordance with any standards established by the
Secretary of Labor. Individual health plans will provide internal claims and appeals procedures
set forth under applicable law and updated by the Secretary of HHS.
35
§ 1001: § 2718 PHSA. Beginning on January 1, 2014, this calculation would be based on the averages of the
premiums expended on the costs for each of the previous three years for the plan. The Secretary would make these
reports available to the public on the Internet site of the Department of Health and Human Services.
36
Until 2016, ACA allows states to define the small group market as employers who have up to 50 employees or up to
100 employees; in 2016 the small group market will be defined as employers who have up to 100 employees.
37
75 Federal Register 74864, December 1, 2010.
38
§ 1001: § 2719 PHSA.
39
Section 503 of ERISA, codified at 29 CFR § 2560.530-1, requires that employee benefit plans provide adequate
notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth
the specific reasons for such denial, written in a manner calculated to be understood by the participant, and to afford a
reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the
appropriate named fiduciary of the decision denying the claim.
Congressional Research Service
9
Private Health Insurance Market Reforms in the ACA
41 The process at
a minimum must
35
§1001: §2716 PHSA.
§1001: §2718 PHSA.
37
Until 2016, ACA allows states to define the small group market as employers who have up to and including 50
employees or up to and including 100 employees; in 2016 the small group market will be defined as employers who
have up to and including 100 employees.
38
75 Federal Register 74864, December 1, 2010.
39
In the interim final rule it is noted that “mini-med” policies are not defined in statute. Mini-med policies are
generally referred to in the interim final rule as policies that often cover health care services similar to the services
covered by comprehensive medical plans, but do so with unusually low annual benefit limits, often capping coverage
on an annual basis at $5,000 or $10,000.
40
76 Federal Register 76574, December 7, 2011.
41
§1001: §2719 PHSA.
36
Congressional Research Service
9
Private Health Insurance Market Reforms in the ACA
•
have an internal claims appeals process;
•
provide notice to enrollees of available internal and external appeals processes,
and the availability of any applicable assistance; and
•
allow an enrollee to review their file, present evidence and testimony and to
receive continued coverage pending the outcome.
To comply with the requirements for the internal claims appeals process, group plans are
expected to initially incorporate the claims and appeals procedures previously established under
federal law42 and will update their processes in accordance with any standards established by the
Secretary of Labor. Individual health plans will provide internal claims and appeals procedures
set forth under applicable law and updated by the Secretary of HHS.
To comply with the requirements of the external review processes, plans must comply with the
applicable state external review process that at a minimum includes the consumer protections set
forth in the Uniform External Review Model Act promulgated by the National Association of
Insurance Commissioners (NAIC).4043 The health plan is required to implement an effective
external review process that meets the minimum standards established by the Secretary of HHS,
if the applicable state has not established standards that meet the NAIC model requirements, or if
the plan is self-insured and therefore not subject to state insurance regulation.4144
The interim final rule relating to appeals processes was published on July 23, 2010.4245 The
regulations provide updated standards for compliance with the internal claims and appeals
processes, and outline a system that explains the applicability to plans of either a state external
review process or a federal external review process.
Coverage of Preexisting Health Conditions for Children
ACA prohibits coverage exclusions for children under age 19 with preexisting health conditions,
effective for plan years beginning on or after September 23, 2010. In other words, plans may not
exclude benefits based on health conditions for qualifying children.
The interim final rule was issued on June 28, 2010, which includes regulations for coverage for
preexisting conditions.4346 In the preamble of the rule, it states that this provision “protects
individuals under age 19 with a preexisting condition from being denied coverage…based on the
preexisting condition.”44 The regulation defines the preexisting conditions exclusion as “a
limitation or exclusion of benefits (including a denial of coverage) based on the fact that the
condition was present before the effective date of coverage (or if coverage is denied, the date of
the denial).” In other words, the rule broadly defined preexisting condition exclusions to include
the outright denial of coverage, as well as the exclusion of specific benefits.45
Patient Protections
Effective for plan years beginning on or after September 23, 2010, plans are subject to three ACA
requirements relating to the choice of health care professionals and one ACA requirement relating
to benefits for emergency services. 46 The interim final rule relating to patient protections was
published on June 28, 2010.47
4047 The regulation defines the preexisting conditions exclusion as “a
42
Section 503 of ERISA, codified at 29 CFR §2560.530-1, requires that employee benefit plans provide adequate
notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth
the specific reasons for such denial, written in a manner calculated to be understood by the participant, and to afford a
reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the
appropriate named fiduciary of the decision denying the claim.
43
The NAIC is the organization of insurance regulators for all 50 states, the District of Columbia, and 5 territories. The
NAIC is a regulatory support agency that helps state insurance regulators fulfill their obligations to protect the interests
of insurance consumers.
4144
State regulation of health insurance applies only to state-licensed entities. Since self-insured plans are financed
directly by the plan sponsor, such plans are not subject to state law.
4245
75 Federal Register 43330, July 23, 2010.
4346
75 Federal Register 37188, June 28, 2010.
44
75 Federal Register 37188, June 28, 2010, p. 37190.
45
For more information about ACA’s prohibition on preexisting condition exclusions for children under 19, see CRS
Report R41220, Preexisting Exclusion Provisions for Children and Dependent Coverage under the Patient Protection
and Affordable Care Act (PPACA).
46
§ 1001: § 2719A PHSA.
47
75 Federal Register 37188, June 28, 2010.
Congressional Research Service
10
Private Health Insurance Market Reforms in the ACA
47
75 Federal Register 37188, June 28, 2010, p. 37190.
Congressional Research Service
10
Private Health Insurance Market Reforms in the ACA
limitation or exclusion of benefits (including a denial of coverage) based on the fact that the
condition was present before the effective date of coverage (or if coverage is denied, the date of
the denial).” In other words, the rule broadly defined preexisting condition exclusions to include
the outright denial of coverage, as well as the exclusion of specific benefits.48
Patient Protections
Effective for plan years beginning on or after September 23, 2010, plans are subject to three ACA
requirements relating to the choice of health care professionals and one ACA requirement relating
to benefits for emergency services.49 The interim final rule relating to patient protections was
published on June 28, 2010.50
Regarding the choice of health care professionals, a plan that requires or allows an enrollee to
designate a participating primary care provider is required to permit the designation of any
participating primary care provider who is available to accept the individual. This same provision
applies to pediatric care for any child who is a plan participant. A plan that provides coverage for
obstetrical or gynecological care cannot require authorization or referral by the plan or any person
(including a primary care provider) for a female enrollee who seeks obstetrical or gynecological
care from an in-network health care professional who specializes in obstetrics or gynecology.
If the plan covers services in an emergency department of a hospital, the plan is required to cover
those services without the need for any prior authorization and without the imposition of coverage
limitations, irrespective of the provider’s contractual status with the plan. If the emergency
services are provided out-of-network, the cost-sharing requirement will be the same as the costsharing for an in-network provider.
Uniform Explanation of Coverage Documents
No later than March 23, 2011,The ACA required the Secretaries of HHS, Labor, and Treasury (hereafter, the
hereinafter, the Secretaries) will to
develop standards for plans with respect to providing their enrollees with a
summary of benefits
and coverage (SBC).48, no later than March 23, 2011.51 The Secretaries will periodically review and update
update the standards developed. The Secretaries will consult with the NAIC; representatives of healthinsurance
health-insurance related consumer advocacy organizations; health insurance issuers; health care
professionals; patient advocates, including those representing individuals with limited English
proficiency; and other qualified individuals as deemed appropriate. These federal standards
preempt any standards developed under state law. Table 1 summarizes the standards for the SBC
according to the statute.
Table 1. Summary of Benefits and Coverage Document Requirements
Issue area
Prohibitions
Required
description
48
48
For more information about ACA’s prohibition on preexisting condition exclusions for children under 19, see CRS
Report R41220, Preexisting Condition Exclusion Provisions for Children and Dependent Coverage under the Patient
Protection and Affordable Care Act (ACA).
49
§1001: §2719A PHSA.
50
75 Federal Register 37188, June 28, 2010.
51
§1001: §2715 PHSA. The Secretaries published a notice of proposed rulemaking regarding standards for the
disclosure of a summary of benefits and coverage on August 8, 2011 (76 Federal Register 52442).
Congressional Research Service
11
Private Health Insurance Market Reforms in the ACA
Table 1. Summary of Benefits and Coverage Document Requirements
Issue Area
Prohibitions
Required
description
Other
requirements
Requirements
•
Cannot exceed 4 pages in length.
•
Cannot use smaller than 12-point font.
•
Coverage including cost-sharing for each of the essential health benefit categories.
•
Any exceptions, reductions, and limitations on coverage.
•
Renewability and continuation provisions.
•
Whether the plan covers minimum essential benefits.
•
Other benefits as identified by the Secretary.
•
Contact information including a phone number and Internet web address for consumer
information.
§ 1001: § 2715 PHSA.
Congressional Research Service
11
Private Health Insurance Market Reforms in the ACA
Issue area
Other
requirements
Requirements
•
Must be presented in a culturally and linguistically appropriate manner utilizing language
understandable by the average plan enrollee.
•
Must use uniform definitions of standard insurance and medical terms.
•
Must have a statement ensuring that not less than 60% of allowed costs are covered by the
benefits.
•
Must have a statement that the document is a summary and should not be consulted to
determine the governing contractual provisions.
Source: CRS analysis of ACA.
No later than March 23, 2012,The ACA requires that each plan provide a SBC to individuals at the
time of application, prior to
the time of enrollment or re-enrollment, and when the insurance
policy is issued. The SBC can be
in paper or electronic form. Enrollees must be given notice of
any material changes in benefits no
later than 60 days prior to the date that the modifications
would become effective. Any entity that
willfully fails to provide the information required is
subject to a fine of not more than $1,000 for
each such failure, defined as each enrollee that did
not receive the required information.
A notice of proposed rulemakingThe final rule regarding the SBC was published on August 22, 2011.49 The
notice further explains who provides and who receives the SBC, the content of the SBC, how the
SBC will be provided, and when it will be providedFebruary 14, 2012.52 The final rule sets forth
standards as to who provides the SBC, to whom, and when. The requirements for the content and
appearance of the SBC set forth in the final rule generally mirror the requirements in the statute
(presented in Table 1). The ACA requires that plans begin providing the SBC no later than March
23, 2012, and the notice of proposed rulemaking (published August 22, 2011)53 suggests this
applicability date. However, after reviewing the comments submitted on this issue, the Secretaries
determined that it would not be feasible to require plans to comply with the standards by March
23, 2012. The final rule delays the applicability date of the provision for six months. Generally,
plans must comply with the requirements to provide an SBC on or after September 23, 2012.
Reporting Requirements Regarding Quality of Care
Beginning upon ACA enactment (March 23, 2010) and concluding no later than two years after
enactment, the Secretary must develop reporting requirements for use by plans, including
52
53
77 Federal Register 8668, February 14, 2012.
76 Federal Register 52442, August 22, 2011.
Congressional Research Service
12
Private Health Insurance Market Reforms in the ACA
regulations governing acceptable provider reimbursement structures.5054 The Secretary must
develop these requirements in consultation with experts in health care quality and other
stakeholders. Once implemented, plans will annually submit to the Secretary and to enrollees a
report addressing whether plan benefits and reimbursement structures do the following:
•
improve health outcomes through use of quality reporting, case management,
care coordination and chronic disease management;
•
implement activities to prevent hospitalization readmissions;
•
implement activities to improve patient safety and reduce medical errors through
the use of best clinical practices, evidence based medicine, and health
information technology; and
•
implement wellness and health promotion activities.
49
76 Federal Register 52442, August 22, 2011.
§ 1001: § 2717 PHSA. Not later than 180 days after the date on which these regulations are promulgated, the
Government Accountability Office (GAO) is required to conduct a study regarding the impact of these activities on the
quality and cost of health care, and report its findings to the Senate Committee on Health, Education, Labor, and
Pensions, and the House Committee on Energy and Commerce.
50
Congressional Research Service
12
Private Health Insurance Market Reforms in the ACA
The Secretary is required to make these reports available to the public, and is permitted to impose
penalties for non-compliancenoncompliance.
Wellness and health promotion activities include personalized wellness and prevention services,
and specifically efforts related to smoking cessation, weight management, stress management,
physical fitness, nutrition, heart disease prevention, healthy lifestyle support, and diabetes
prevention. These services may be made available by entities (for example, health care providers)
who conduct health risk assessments or who provide ongoing face-to-face, telephonic, or webbased intervention efforts for program participants.5155
2014 Market Reforms
In addition to the immediate reforms in ACA, there are additional private insurance market
reforms that become effective for plan years beginning on or after January 1, 2014.5256 These
reforms include the following:
•
nondiscrimination based on health status;
•
guaranteed issue and guaranteed renewability;
•
coverage of preexisting health conditions (regardless of age);
•
nondiscrimination regarding clinical trial participation;
•
rating restrictions;
•
waiting period limitation; and
•
nondiscrimination regarding health care providers.
As in the previous section of this report, it is important to note that the reforms often apply
differently to health plans according to the market segment in which the plan is offered and
whether the plan has grandfathered status. In the text of this report the term “plan” is used
generally; for more specific information as to the specific types of plans (i.e., a grandfathered
plan in the large group market) to which the reform applies, see Appendix B.
Nondiscrimination Based on Health Status
ACA prohibits health plans from basing eligibility or coverage on health status-related factors.53
Such factors include health status, medical condition (including both physical and mental illness),
claims experience, receipt of health care, medical history, genetic information, evidence of
insurability (including conditions arising out of acts of domestic violence), disability, and any
other health status-related factor determined appropriate by the Secretary. ACA allows, however,
51
54
§1001: §2717 PHSA. Not later than 180 days after the date on which these regulations are promulgated, the
Government Accountability Office (GAO) is required to conduct a study regarding the impact of these activities on the
quality and cost of health care, and report its findings to the Senate Committee on Health, Education, Labor, and
Pensions, and the House Committee on Energy and Commerce.
55
With respect to gun rights, a wellness or promotion activity cannot require disclosure or collection of any
information in relation to (1) the presence or storage of a lawfully possessed firearm or ammunition in the residence or
on the property of an individual, or (2) the lawful use, possession, or storage of a firearm or ammunition by an
individual. A health plan issued in accordance with the law is prohibited from increasing premium rates, denying health
insurance coverage, and reducing or withholding a discount, rebate, or reward offered for participation in a wellness
program on the basis of or on reliance on the lawful ownership, possession, use or storage of a firearm or ammunition.
5256
Unless otherwise noted.
53
§ 1201: § 2705 PHSA.
Congressional Research Service
13
Private Health Insurance Market Reforms in the ACA
.
Congressional Research Service
13
Private Health Insurance Market Reforms in the ACA
•
waiting period limitation; and
•
nondiscrimination regarding health care providers.
As in the previous section of this report, it is important to note that the reforms often apply
differently to health plans according to the market segment in which the plan is offered and
whether the plan has grandfathered status. In the text of this report the term “plan” is used
generally; for more specific information as to the specific types of plans (i.e., a grandfathered
plan in the large group market) to which the reform applies, see Appendix B.
Nondiscrimination Based on Health Status
ACA prohibits health plans from basing eligibility or coverage on health status-related factors.57
Such factors include health status, medical condition (including both physical and mental illness),
claims experience, receipt of health care, medical history, genetic information, evidence of
insurability (including conditions arising out of acts of domestic violence), disability, and any
other health status-related factor determined appropriate by the Secretary. ACA allows, however,
for the offering of premium discounts or rewards based on enrollee participation in wellness
programs, in keeping with prior federal law.5458
Guaranteed Issue and Guaranteed Renewability
ACA requires coverage to be offered on a guaranteed issue basis, as well as on a guaranteed
renewal basis.5559 “Guaranteed issue” in health insurance is the requirement that a plan accept every
applicant for health coverage, as long as that applicant agrees to the terms and conditions of the
insurance offer (such as the premium). “Guaranteed renewability” in health insurance is the
requirement on a plan to renew individual coverage at the option of the policyholder, or renew
group coverage at the option of the plan sponsor (e.g., employer).
Coverage of Preexisting Health Conditions (Regardless of Age)
Beginning in 2014, ACA prohibits plans from excluding coverage for preexisting health
conditions, regardless of the age of the covered individual.5660 A “preexisting health condition” is a
medical condition that was present before the date of enrollment for health coverage, whether or
not any medical advice, diagnosis, care, or treatment was recommended or received before such
date. Excluding coverage for preexisting conditions refers to the circumstance in which an
applicant for coverage is offered health insurance but that coverage does not provide benefits for
treating the applicant’s current medical conditions. The interim final rule relating to the coverage
of preexisting conditions was issued on June 28, 2010.57 (For persons under age 19, this provision
became effective for plan years beginning on or after September 23, 2010.58)
Nondiscrimination Regarding Clinical Trial Participation
ACA prohibits health plans from
•
prohibiting “qualified individuals” from participating in an approved clinical
trial;
•
denying, limiting, or placing conditions on the coverage of routine patient costs
associated with participation in an approved clinical trial; and
54
57
§1201: §2705 PHSA.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) allows group plans to establish premium
discounts or rebates or modify cost-sharing requirements in return for adherence to a wellness program. If a reward is
provided based solely on participation in a wellness program, or if it does not provide a reward, the program complies
with HIPAA without having to satisfy any additional standards, as long as the program is made available to all
similarly situated individuals. If a reward is based on an individual meeting a certain standard relating to a health
factor, then the program must meet additional requirements specified in HIPAA regulations. Under ACA, the reward
must be capped at 30% of the cost of the employee-only coverage under the plan, but the Secretaries of HHS, Labor,
and the Treasury would have the discretion to increase the reward up to 50% of the cost of coverage if the increase is
determined to be appropriate.
55
§ 59
§1201: § 2702, 2703 PHSA.
56
§ 60
§1201: § 2704 PHSA.
57
75 Federal Register 37188, June 28, 2010.
58
For additional information about this provision, see CRS Report R41220, Preexisting Exclusion Provisions for
Children and Dependent Coverage under the Patient Protection and Affordable Care Act (PPACA).
Congressional Research Service
14
Private Health Insurance Market Reforms in the ACA2704 PHSA.
58
Congressional Research Service
14
Private Health Insurance Market Reforms in the ACA
treating the applicant’s current medical conditions. The interim final rule relating to the coverage
of preexisting conditions was issued on June 28, 2010.61 (For persons under age 19, this provision
became effective for plan years beginning on or after September 23, 2010.62)
Nondiscrimination Regarding Clinical Trial Participation
ACA prohibits health plans from
•
prohibiting “qualified individuals” from participating in an approved clinical
trial;
•
denying, limiting, or placing conditions on the coverage of routine patient costs
associated with participation in an approved clinical trial; and
•
discriminating against “qualified individuals” on the basis of their participation in
approved clinical trials.5963
ACA defines qualified individual, for purposes of this provision, as an individual who is eligible
to participate in an approved clinical trial for treatment of cancer or other life-threatening disease
or condition, and who either has a referring health care provider who has concluded that the
individual’s participation is appropriate, or who provides medical and scientific information
establishing that participation in a clinical trial would be appropriate.
Rating Restrictions
ACA imposes adjusted (or modified) community rating rules on the determination of premiums.6064
“Adjusted community rating” rules prohibit health plans from pricing health insurance products
based on health factors, but allows it for other key characteristics such as age or gender. ACA’s
rating rules restrict premium variation to the following factors: self-only or family enrollment;
rating area,6165 as specified by the state; age (by no more than a 3 to 1 ratio across age rating bands
established by the Secretary, in consultation with the NAIC);62 and tobacco use (by no more than
1.5 to 1 ratio).63
Waiting Period Limitation
ACA prohibits plans from establishing waiting periods greater than 90 days.64 A “waiting period”
refers to the time period that must pass before an individual is eligible to be covered by health
benefits.
Nondiscrimination Regarding Health Care Providers
ACA imposes nondiscrimination requirements with respect to health care providers.65 Plans are
not allowed to discriminate, with respect to participation under the plan, against any health care
provider who is acting within the scope of that provider’s license or certification under applicable
state law. This provision does not require a plan to contract with any health care provider willing
to abide by the plan’s terms and conditions, and the provision cannot be construed as preventing a
plan or the Secretary from establishing varying reimbursement rates for providers based on
quality or performance measures.
59
§ 1201: § 2709 PHSA.
§ 1201: § 2701 PHSA.
6166 and tobacco use (by no more than
1.5 to 1 ratio).67
61
75 Federal Register 37188, June 28, 2010.
For additional information about this provision, see CRS Report R41220, Preexisting Condition Exclusion
Provisions for Children and Dependent Coverage under the Patient Protection and Affordable Care Act (ACA).
63
§1201: §2709 PHSA.
64
§1201: §2701 PHSA.
65
For example, some states have enacted rating rules in the individual and small group markets that include geography
as a characteristic on which premiums may vary. In these cases, the state has established rating areas. Typically, states
use counties or zip codes to define those areas.
6266
“By no more than a 3 to 1 ratio” means that a plan will not be allowed to charge an older individual more than 3
times the premium that the plan will charge a younger individual.
6367
“By no more than a 1.5 to 1 ratio” means that a plan will not be allowed to charge a tobacco user more than 1.5 times
the premium that the plan will charge an individual who does not use tobacco.
64
§ 1201: § 2708 PHSA.
65
§ 1201: § 2706 PHSA.
60
Congressional Research Service
1562
Congressional Research Service
15
Private Health Insurance Market Reforms in the ACA
Waiting Period Limitation
ACA prohibits plans from establishing waiting periods greater than 90 days.68 A “waiting period”
refers to the time period that must pass before an individual is eligible to be covered by health
benefits.
Nondiscrimination Regarding Health Care Providers
ACA imposes nondiscrimination requirements with respect to health care providers.69 Plans are
not allowed to discriminate, with respect to participation under the plan, against any health care
provider who is acting within the scope of that provider’s license or certification under applicable
state law. This provision does not require a plan to contract with any health care provider willing
to abide by the plan’s terms and conditions, and the provision cannot be construed as preventing a
plan or the Secretary from establishing varying reimbursement rates for providers based on
quality or performance measures.
68
69
§1201: §2708 PHSA.
§1201: §2706 PHSA.
Congressional Research Service
16
Appendix A. Status of Regulations
Table A-1. Status of Regulations Relating to Health Insurance Market Reforms in ACA, as of September 30, 2011
Health Insurance
Market Reform
Process to Review
Unreasonable Rate
Increases
Status of Federal
Regulations
Final rule: May 23, 2011
by the Department of
HHS
Amendment to final rule:
September 6, 2011 by
the Department of HHS
Federal Register
Entry
76 Federal Register
29964
Effective Date of
Final or Interim Final
RegulationsRegulationsa
Applicability and DateaDateb
July 18, 2010
No stated applicability
November 1, 2011
No stated applicability
76 Federal Register
54969
Internet Portal to Assist
Consumers in
Identifying Coverage
Options
Interim final rule: May 5,
2010 by the Department
of HHS
75 Federal Register
24470
May 10, 2010
No stated applicability
Prohibition of Lifetime
Limits and Restriction of
Annual Limits
Interim final rule: June
28, 2010 by the
Departments of HHS,
Labor, and Treasury
75 Federal Register
37188
August 27, 2010
The interim final rule generally applies to group health
plans, group health insurance coverage, and individual
health insurance coverage, for plan years and policy years
beginning on or after September 23, 2010.
Prohibition on
Rescissions
Interim final rule: June
28, 2010 by the
Departments of HHS,
Labor, and Treasury
75 Federal Register
37188
August 27, 2010
The interim final rule generally applies to group health
plans, group health insurance coverage, and individual
health insurance coverage, for plan years and policy years
beginning on or after September 23, 2010.
CRS-17
Health Insurance
Market Reform
Status of Federal
Regulations
Coverage of Preventive
Health Services with No
Cost-sharing
Interim final rule: July 19,
2010 by the
Departments of HHS,
Labor, and Treasury
75 Federal Register
41726
September 17, 2010
The interim final rule implements the regulations for
coverage of preventive services and generally applies to
group health plans, group health insurance issuers, and
individual health insurance issuers for plan years and
policy years beginning on or after September 23, 2010.
Amendment to interim
final rule: August 3, 2011
by the Departments of
HHS, Labor, and
Treasury
CRS-16
76 Federal Register
46621
August 1, 2011
The amendment to the interim final rule generally applies
to group health plans and group health insurance issuers
beginning August 1, 2011.
Health Insurance
Market Reform
Status of Federal
Regulations
Extension of Dependent
Coverage
Interim final rule: May
13, 2010 by the
Departments of HHS,
Labor, and Treasury
Prohibition of
Discrimination Based on
Salary
No regulatory action to
date
Standards Related to
Medical Loss Ratio and
Rebates to Plan
Participants
Appeals Process
Federal Register
Entry
Effective Date of
Final or Interim Final
Regulations
Applicability and DateaFinal rule: February 15,
2012 by the
Departments of HHS,
Labor, and Treasury
77 Federal Register
8725
Advance Notice of
Proposed Rulemaking
(ANPRM): March 21,
2012 by the
Departments of HHS,
Labor, and Treasury
Extension of Dependent
Coverage
Interim final rule: May
13, 2010 by the
Departments of HHS,
Labor, and Treasury
Prohibition of
Discrimination Based on
Salary
No regulatory action to
date
Standards Related to
Medical Loss Ratio and
Rebates to Plan
Participants
Interim final rule:
December 1, 2010 by
the Department of HHS
CRS-18
Final rule: December 7,
2011 by the Department
of HHS
Federal Register
Entry
Effective Date of
Final or Interim Final
Regulationsa
September 17, 2010
April 16, 2012
Applicability and Dateb
The interim final rule implements the regulations for
coverage of preventive services and generally applies to
group health plans, group health insurance issuers, and
individual health insurance issuers for plan years and
policy years beginning on or after September 23, 2010.
The final rule finalizes the provisions of the interim final
rule relating to the authorization of an exemption of
religious employers from having to cover preventive
health services relating to contraception. The final rule
generally applies to group health plans and group health
insurance issuers beginning April 16, 2012.
77 Federal Register
16501
No effective date
75 Federal Register
27122
July 12, 2010
The interim final rule generally applies to group health
plans, group health insurance issuers, and individual health
insurance issuers for plan years and policy years beginning
on or after September 23, 2010.
Interim final rule:
December 1, 2010 by
the Department of HHS
75 Federal Register
74864
January 1, 2011
The interim final rule generally applies, beginning January
1, 2011, to health insurance issuers offering group or
individual health insurance coverage.
January 3, 2012
The final rule contains amendments to the interim final
rule relating to mini-med plans, among other provisions.
The amendments in the final rule generally apply to health
insurance issuers offering group or individual health
insurance coverage beginning January 1, 2012.
76 Federal Register
76574
The ANPRM announces the intention of the Departments
to propose amendments to the final rule relating to
alternatives for certain religious employers who are
required to cover preventive health services relating to
contraception. The ANPRM serves as a request for
comments, which are due on or before June 19, 2012.
Health Insurance
Market Reform
Appeals Process
Status of Federal
Regulations
Interim final rule: July 23,
2010 by the
Departments of HHS,
Labor, and Treasury
Federal Register
Entry
Interim final rule: July 23,
2010 by the
Departments of HHS,
Labor, and Treasury
75 Federal Register
43330
September 21, 2010
Effective Date of
Final or Interim Final
Regulationsa
September 21, 2010
June 22, 2011
76 Federal Register
37208
Applicability and Dateb
The interim final rule generally applies to group health
plans, group health insurance issuers, and individual health
insurance issuers for plan years and policy years beginning
on or after September 23, 2010.
June 22, 2011
76 Federal Register
37208
Amendment to interim
final rule: June 24, 2011
by the Departments of
HHS, Labor, and
Treasury
Coverage of Preexisting
Health Conditions for
Children
Interim final rule: June
28, 2010 by the
Departments of HHS,
Labor, and Treasury
75 Federal Register
37188
August 27, 2010
The interim final rule generally applies to group health
plans, group health insurance coverage, and individual
health insurance coverage, for plan years and policy years
beginning on or after September 23, 2010.
Patient Protections
Interim final rule: June
28, 2010 by the
Departments of HHS,
Labor, and Treasury
75 Federal Register
37188
August 27, 2010
The interim final rule generally applies to group health
plans and group health insurance issuers for plan years
beginning on or after September 23, 2010.
Uniform Explanation of
Coverage Documents
Notice of proposed
rulemaking: August 22,
2011Final Rule: February 14,
2012 by the
Departments of HHS,
Labor, and Treasury
76 Federal Register
52442
No stated effective date
No stated applicability
CRS-17
Health Insurance
Market Reform
Status of Federal
Regulations
Federal Register
Entry77 Federal Register
8668
April 16, 2012
The requirements apply to group health plans beginning
on the first day of the first open enrollment period that
begins on or after September 23, 2012 (for participants
who enroll or re-enroll during an open enrollment
period) and beginning on the first day of the first plan
year that begins on or after September 23, 2012 (for
newly eligible individuals). The requirements apply to
issuers of coverage in the individual market beginning
September 23, 2012.
Reporting Requirements
Regarding Quality of
Care
No regulatory action to date
Nondiscrimination
Based on Health Status
No regulatory action to date
Guaranteed Issue and
Guaranteed
Renewability
No regulatory action to date
CRS-19
Health Insurance
Market Reform
Status of Federal
Regulations
Federal Register
Entry
Coverage of Preexisting
Health Conditions
(Regardless of Age)
Interim final regulation:
June 28, 2010 by the
Departments of HHS,
Labor, and Treasury
Nondiscrimination
Regarding Clinical Trial
Participation
No regulatory action to date
Rating Restrictions
No regulatory action to date
Waiting Period
Limitation
No regulatory action to date
Nondiscrimination
Regarding Health Care
Providers
No regulatory action to date
75 Federal Register
37188
Effective Date of
Final or Interim Final
Regulations
Regulationsa
August 27, 2010
Applicability and Datea
Dateb
The interim final rule generally applies to group health
plans, group health insurance coverage, and individual
health insurance coverage for plan years and policy years
beginning on or after January 1, 2014.
Source: CRS analysis of federal regulations: 75 Federal Register 24470; 75 Federal Register 27122; 75 Federal Register 37188; 75 Federal Register 41726; 75 Federal Register
43330; 75 Federal Register 74864; 76 Federal Register 29964; 76 Federal Register 37208; 76 Federal Register 46621; 76 Federal Register 52442; 76 Federal Register 54969.
a.
CRS-18
As stated in the Federal Register notice, the date on which the regulations generally apply to affected entities.The “effective date” of the final or interim final regulation is the date which the regulation takes effect, as stated in the Federal Register notice. The effective date of the
regulation is not necessarily the date in which all provisions of the regulation become effective.
b.
“Date” in this context is the date on which the regulation generally applies to affected entities, as stated in the Federal Register notice.
CRS-20
Appendix B. Applicability of Market Reforms to Health Plans
Table B-1. Applicability of ACA’S Private Health Insurance Market Reforms to Health Plans
Grandfathered Plansa
Large Group Marketc
Group Marketb
Provision
Fullyinsurede
Selfinsuredf
New Plans (Non-grandfathered)
Individual
Marketg
Fullyinsured
Selfinsured
Small Group Marketd
Fullyinsured
Selfinsured
Individual
Market
Process to Review Unreasonable Rate
Increases
N.A.
N.A.
N.A.
N.A.h
N.A.
9yes
N.A.
9yes
Prohibition on Lifetime Limits
9
9
9
9
9
9
9
9yes
yes
yes
yes
yes
yes
yes
yes
Restricted Annual Limits
9
9
N.A.
9
9
9
9
9yes
yes
N.A.
yes
yes
yes
yes
yes
Prohibition on Annual Limits
9
9
N.A.
9
9
9
9
9
Prohibition on Rescissions
9
9
9
9
9
9
9
9yes
yes
N.A.
yes
yes
yes
yes
yes
Prohibition on Rescissions
yes
yes
yes
yes
yes
yes
yes
yes
Coverage of Preventive Health Services with
No Cost-sharing
N.A.
N.A.
N.A.
9
9
9
9
9
Extension of Dependent Coveragei
9
9
9
9
9
9
9
9yes
yes
yes
yes
yes
Extension of Dependent Coveragei
yes
yes
yes
yes
yes
yes
yes
yes
Prohibition of Discrimination Based on Salary
N.A.
N.A.
N.A.
9yes
N.A.
9yes
N.A.
N.A.
Standards Related to Medical Loss Ratio and
Rebates to Plan Participants
9yes
N.A.
9
9yes
yes
N.A.
9yes
N.A.
9yes
Appeals Process
N.A.
N.A.
N.A.
9
9
9
9
9yes
yes
yes
yes
yes
Coverage of Preexisting Health Conditions for
Children
9
9
N.A.
9
9
9
9
9yes
yes
N.A.
yes
yes
yes
yes
yes
Patient Protections
N.A.
N.A.
N.A.
9
9
9
9
9yes
yes
yes
yes
yes
Uniform Explanation of Coverage Documents
9
9
9
9
9
9
9
9yes
yes
yes
yes
yes
yes
yes
yes
Reporting Requirements Regarding Quality of
Care
N.A.
N.A.
N.A.
9
9
9
9
9yes
yes
yes
yes
yes
Nondiscrimination Based on Health Status
N.A.
N.A.
N.A.
9
9
9
9
9yes
yes
yes
yes
yes
Guaranteed Issue & Guaranteed Renewal
N.A.
N.A.
N.A.
9yes
N.A.
9yes
N.A.
9yes
CRS-1921
Grandfathered Plansa
Group Marketb
Provision
Fullyinsurede
Selfinsuredf
New Plans (Non-grandfathered)
Large Group Marketc
Individual
Marketg
Fullyinsured
Selfinsured
Small Group Marketd
Fullyinsured
Selfinsured
Individual
Market
Coverage of Preexisting Health Conditions
(Regardless of Age)
9
9
N.A.
9
9
9
9
9yes
yes
N.A.
yes
yes
yes
yes
yes
Nondiscrimination Regarding Clinical Trial
Participation
N.A.
N.A.
N.A.
9
9
9
9
9yes
yes
yes
yes
yes
Rating Restrictions
N.A.
N.A.
N.A.
N.A.
N.A.
9yes
N.A.
9yes
Waiting Period Limitation
9
9yes
yes
N.A.
9
9
9
9yes
yes
yes
yes
N.A.
Nondiscrimination Regarding Health Care
Providers
N.A.
N.A.
N.A.
9
9
9
9
9yes
yes
yes
yes
yes
Source: CRS Analysis of ACA.
Notes: N.A. indicates that the reform is not applicable to that type of health insurance plan.
These market reforms do not apply to retiree-only health coverage (see
footnote 8). The reform “Internet Portal to Assist Consumers in Identifying Coverage Options” is not included in this table because the reform does not apply to health
plans.
a.
A grandfathered plan refers to an existing group health plan or a health insurance plan/policy in which at least one individual is enrolled since March 23, 2010. To
maintain grandfathered status, a plan must avoid certain changes to benefits, cost-sharing, employer contributions, and access to coverage.
b.
Health insurance can be provided to a group of people that are drawn together by an employer or other organization, such as a trade union. Such groups are generally
formed for some purpose other than obtaining insurance, like employment. When insurance is provided to a group, it is referred to as “group coverage” or “group
insurance.” In the group market, the entity that purchases health insurance on behalf of a group is referred to as the plan “sponsor.”
c.
Prior to ACA, large groups were defined as groups with more than 50 workers. For plan years beginning before January 1, 2016, a state may elect to keep the previous
definition of large groups, or change the definition to include those groups with more than 100 workers, applicable to ACA-created exchanges and market reforms.
For plan years beginning on or after January 1, 2016, large groups must be defined as groups with more than 100 workers.
d.
Prior to ACA, small groups were defined as groups with 2 to 50 workers, although some states also included self-employed individuals ("groups of one”) in the small
group market. For plan years beginning before January 1, 2016, a state may elect to keep the previous definition of small groups, or change the definition to include
those groups with 1-100 workers, applicable to ACA-created exchanges and market reforms. For plan years beginning on or after January 1, 2016, small groups must
be defined as groups with 1-100 workers.
e.
A fully-insured health plan is one in which the plan sponsor purchases health coverage from a state-licensed insurance carrier; the carrier assumes the risk of paying
the medical claims of the sponsor’s enrolled members.
f.
Self-insured plans refer to health coverage that is provided directly by the organization seeking coverage for its members (e.g. a firm providing health benefits to its
employees). Such organizations set aside funds and pay for health benefits directly. Under self insurance, the organization bears the risk for covering medical claims.
CRS-2022
g.
Consumers who are not associated with a group can obtain health coverage by purchasing it directly from an insurance carrier in the individual (or nongroup) health
insurance market.
h.
The final rule regarding rate review specified that this provision would apply only to nongroup and fully-insured, small group coverage, and not to large groups.
i.
Prior to 2014, grandfathered group health plans are not required to make dependent coverage available to adult children who can enroll in an eligible employersponsored health plan based on their employment; however, if a plan wishes to make dependent coverage available to such adult children it may voluntarily do so.
CRS-2123
Private Health Insurance Market Reforms in the ACA
Author Contact Information
Annie L. Mach
Analyst in Health Care Financing
amach@crs.loc.gov, 7-7825
Congressional Research Service
Bernadette Fernandez
Specialist in Health Care Financing
bfernandez@crs.loc.gov, 7-0322
2224