As employers are well aware, the Patient Protection and Affordable Care Act requires that all plans that renew or have plan years that begin on or after Sept. 23, 2010 cover certain preventive care services with no member cost-sharing, with an exception for grandfathered plans.
Complying with this provision is much more complicated than simply not charging members for certain preventive care services.
The list of services is extensive, health plan and administrators' claims payment systems must be reconfigured and provider office policies must be revised. This, coupled with the grandfathered plan provision, no doubt will cause confusion for employers, employees, administrators and providers.
Adding to the uncertainty is that the definition of "routine care" or "preventive care" historically has caused disagreements between members and administrators, as each member can have a different understanding of what is "routine" or "preventive."
Issues for employers
In addition to creating confustion, compliance with this provision also will increase costs. The estimated cost of adding these preventive care services, and the likely follow-up care and services that will be utilized as a result of these "free" visits, is a 1% to 3% increase.
The theory behind offering preventive care services with no cost-sharing is that members will schedule annual exams and that chronic or catastrophic conditions can be detected earlier, thus improving health and lowering costs over time. However, there are some unintended consequences of this provision in the law.
Some of the issues that employers and members will face as the preventive care provision is implemented are:
* The grandfather provision. Most employees and dependents do not understand the provision, nor the reasons an employer might want to retain grandfathered status.
Although media and government outreach will be telling members that preventive services are available with no cost-sharing, it may not be the case with their plan their employer is grandfathered. When employees in a grandfathered plan talk to employees at other companies that are not grandfathered, they may feel their employer plan is penalizing them.
* Medical management. A member may think a service or procedure is "routine" or "preventive" for him or her because of an existing medical condition, but services are classified as preventive based on certain criteria in the law.
Additionally, if a condition is discovered as part of the preventive care examinations, there is no requirement that the treatment for that particular condition be covered, or be covered with no cost-sharing.
* Provider reactions. Providers that collect co-pays will have additional responsibilities. The relatively simple procedure of collecting co-payments is complicated by several factors: Is the plan grandfathered? Is the service preventive care? What if the initial reason for the visit preventive, but follow-up tests and services are related to a particular condition?
* Follow-up care. Although PPACA requires that preventive care services be covered with no cost sharing, follow-up tests, care and procedures (that are covered by the plan) will increase claim costs for both members and employers.
Most plans have a deductible or some member cost-sharing, so members' cost will increase for these tests.
Employers, in the short run, will see claims cost increases as members who did not previously seek preventive care, now do so because the services are "free." The claims cost will increase in both more preventive claims, and in the more expensive follow-up lab tests, MRIs, scans, etc.
* Administrator reactions. Claims payors, self-insured administrators and health plans that have to administer this provision, will also have challenges. T
hey need to reconfigure their claims payment and adjudication systems to recognize grandfathered and non-grandfathered plans, preventive care services vs. non-preventive care services and the related follow-up care.
Some plans are already restricting employers as to whether they can grandfather or not, whether by only allowing grandfathered plans to be a certain employee size, or by limiting the number of plan design choices offered.
Although many employers have already implemented robust wellness programs, or have plan designs that cover some preventive care services with no co-payment, the preventive care provisions in PPACA have more far-reaching implications for employers than simply improving health and access to preventive care services.
As with all regulatory or other employee benefit changes, employers must communicate their employee benefits strategy, the impact to employees as a result, and the business or employee relations reasons for them.
This year, employees and their dependents will be more educated than ever about what is happening with health insurance benefits. It will be important that they understand what will impact them and why - from their employer.
Patrick J. Haraden, CEBS, CLU, ChFC, REBC, RHU, LIA, MBA, is senior vice president of employee benefit services at Longfellow Benefits (www.longfellowbenefits.com), a Boston-based employee benefits consulting firm. He can be reached at 617-351-6054 or firstname.lastname@example.org. Follow EBN on: Twitter | Facebook | LinkedIn | Podcasts
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