Posted on 10 Feb 2012
The Obama administration released finalized new rules for how health insurers describe what their plans cover Thursday, and told insurers that they have until September to prepare the documents for the new open enrollment season.
Insurers will have to provide an eight-page summary of benefits in a standardized question-and-answer format. It must include details of the deductibles and out-of-pocket costs a consumer could expect to pay in situations such as buying generic prescription drugs, visiting an emergency room or receiving mental health treatment.
They will also have to include two detailed examples of how plans would work in the specific scenarios of having a baby and managing Type 2 diabetes, and supply a glossary of terms commonly used in insurance explanations.
The requirement, part of the health care overhaul law, is popular with consumers who hope they will be able to cut through pages of complicated small print and understand their coverage. But employers and insurers say that changing the way they explain insurance could be expensive and lead to more confusion.
Insurance companies will have until Sept. 23 to produce the documents and make them available to all customers as they prepare to enroll in plans for 2013. They must make the summary available to anyone who asks for a copy and in advance of any changes to the plan.
The new deadline will ensure that the change takes effect ahead of the November election, which could give Democratic candidates another popular part of the law to tout while campaigning. Most of the law is not scheduled to be implemented until 2014, and Republican candidates have tapped into negative feelings about it for their election efforts.
Some 84% of respondents said they liked the provision in a poll carried out by the non-partisan Kaiser Family Foundation in November. Only 37% of respondents had a favorable view of the entire law.
The top official at the agency charged with implementing much of the health law said that the new rules would "bring much-needed sunlight to the health insurance market."
"If an insurer's plan offers subpar coverage in some area, they won't be able to hide it in dozens of pages of text," said Marilyn Tavenner, acting head of the Centers for Medicare and Medicaid Services.
Some large employers had been hoping for an exemption to the rule, on the grounds that they already send summary information to their employees about their benefits. Insurers had also warned that complying with the rule could be expensive for them, costing tens of millions of dollars, and that they could end up misleading consumers by over-simplifying their explanations.
"This going to be a burdensome new requirement, there's no other way to think about it," said Paul Dennett, senior vice president of the American Benefits Council, a trade association representing large employers that provide health coverage.
Insurance companies had argued that they would need up to 18 months to prepare for the rule. They also warned that it would be too difficult to cram all of the required information into an eight-page summary, especially for plans that offer a variety of different "tiers" of coverage.
The Blue Cross Blue Shield Association said that a seven-month timeframe to comply with the rule was "simply too short."
"These new requirements involve far more than simply producing one standard form," said Kelly Miller, a spokeswoman for the association, in a statement. "A single Blue Cross Blue Shield Plan could have thousands of different benefit options for employers, as well as individuals that will need to be customized."
Health officials said Thursday that they were not exempting large employers because it was important for all consumers to have standardized formats so that they could make comparisons between plans. They also said that companies could offer the summaries in electronic format to consumers, rather than mailing everyone a paper copy.
They said the final rules would allow insurers to go beyond eight pages if they had to, and that the summaries would include disclaimers that the pregnancy and Type 2 diabetes scenarios shouldn't be interpreted as actual cost projections.
Officials had previously indicated that they would also require information about how a plan might cover breast cancer treatment, but said Thursday that they had dropped this because they thought it would be too difficult for insurers to describe typical treatment.
The rule won praise from consumer and patient groups. "We were concerned that it might be weakened," said Lynn Quincy, senior policy analyst for Consumers Union, the policy and advocacy division of Consumer Reports. "The timing is great."