By John Reichard, CQ HealthBeat Editor
August 17, 2011 -- Plain English, that’s the ticket. Proposed regulations announced Wednesday by Obama administration officials promise that starting in 2012 consumers will get an “easy-to-understand” summary of benefits and coverage and a glossary demystifying insurance jargon.
“Today, many consumers don’t have easy access to information in plain English to help them understand the differences in the coverage and benefits provided by health plans,’’ said Health and Human Services Secretary Kathleen Sebelius. “Thanks to the Affordable Care Act, that will change.”
The proposed regulations aim to eliminate some major headaches involved in comparing insurance plans. Insurers now may provide only a few selected details describing a plan or policy before a consumer buys it. Or, they may use different terms to describe features of a plan. That makes it difficult for even determined comparison shoppers to feel confident they understand the differences between plans.
“The proposed rules give consumers straightforward, standardized information on their choices up front, helping them understand the key features of the policy,” HHS said in a news release. “The summary will use a uniform glossary to replace the jargon that makes it impossible to compare plans or figure out what is covered.”
Insurers would be required to give consumers the plain English benefits summary and the glossary of terms before they buy coverage. Plans also would have to notify consumers at least 60 days before making any significant change to the plan or its coverage.
A “Coverage Examples” feature would also make it easier to compare benefits. The examples “would illustrate what proportion of care expenses a health insurance policy or plan would cover for three common benefits scenarios: having a baby; treating breast cancer; and managing diabetes,” the news release added. Officials said that additional coverage examples may be required.
They said this feature would be akin to the Nutrition Facts label that helps food shoppers compare products.
Families USA Executive Director Ron Pollack called proposals “a triumph of common sense.”
“In the past, explanations of benefits have often been long, confusing and written in legal gobbledygook that no one could understand. Deciphering basic information about health insurance plan benefits could be as challenging for consumers as learning a new language—without a good translation dictionary,” Pollack said.
He added that “companies who respect their customers and want to encourage competition in the health insurance marketplace should also applaud the rules—clearly describing a product you are offering for sale should not be perceived as a heavy lift.”
But the insurance industry is questioning whether the regulations as proposed are worth the cost and is asked HHS to delay their effective date, noting that release of the proposed rules was delayed.
America’s Health Insurance Plans Press Secretary Robert Zirkelbach said “the benefits of providing a new summary of coverage document must be balanced against the increased administrative burden and higher costs to consumers and employers. For example, since most large employers customize the benefit packages they provide to their employees, some health plans could be required to create tens of thousands of different versions of this new document—which would add administrative costs without meaningfully helping employees.
“Moreover, given that the final regulation is delayed, the implementation date also should be pushed back to give health plans sufficient time to make the operational and administrative changes needed to create these new documents,” Zirkelbach added. “We will be submitting detailed comments and look forward to working with regulators to mitigate potential unintended consequences of this new requirement.”
HHS, the Department of Labor and the Treasury Department jointly drafted the proposed disclosure requirements and template. Essentially, they consist of the disclosure requirements and template recommended by the National Association of Insurance Commissioners and the federal agencies are seeking public comment on the NAIC’s handiwork. The public has 60 days to comment.
An estimated 180 million enrollees in private insurance plans would benefit starting in 2012. The proposed summary requirements apply not only to people buying coverage on their own but also those enrolled in large group plans and in plans provided by self-insured employers.
The three federal agencies said in the proposed regulations that they recognize that changes to the template “may be appropriate to accommodate various types of plan and coverage designs to provide additional information to individuals, or to improve the efficacy of the disclosures recommended by the NAIC.”
Questions About How Rule Will Work
During an afternoon press call Wednesday, federal officials fielded questions about how the rule will work. For example, it’s unclear exactly when consumers will start seeing the simplified explanation.
In many instances it might not be until 2013.
The health law ( PL 111-149 , PL 111-152 ) requires that plans comply by March 23, 2012, But officials said they are asking for comment on the implementation timeline. They added that they want feedback on a potential phase-in of the requirements.
“Normally, a lot of requirements begin at the beginning of a plan year,” one official said. “And many plan years run with the calendar year.” The official added that “if some of these requirements to go in in March of 2012, for many plans if it were on a plan year basis it wouldn’t necessary go into effect until the next calendar year.”
Originally, the regulations were supposed to be released in March, 2011. So Wednesday’s release of the proposed rule was five months late. Asked about insurer comments that the final regulation should be delayed beyond March of 2012 because of the delay in releasing the proposed regs, NAIC officials appeared resistant during another press call Wednesday afternoon.
“The sooner that consumers have this information in their hands the better,” said Teresa D. Miller, chair of the NAIC Consumer Information Subgroup and Oregon Insurance Administrator.
During the earlier briefing, administration officials also were asked about how long the form would be that summarized coverage and benefits. Answer: up to four double-sided pages, which include the coverage examples feature. A sample of the template is three double-sided pages but the proposal allows for four.
Lynn Quincy, a senior policy analyst with Consumers Union, told reporters that when they tested the standardized coverage and benefits summary it was a hit. “Consumers really liked this coverage examples feature,” Quincy added. “There’s no doubt consumers need much better disclosures.”
Centers for Medicare and Medicaid Services (CMS) Administrator Donald M. Berwick said consumers will no longer have to “decipher dozens of pages of dense text” to figure out what a plan offers.
Insurers will have to specifically say if in some respects they are offering sub-par coverage, Berwick noted.
The proposed summary of benefits and coverage form that insurers must fill out asks such questions as: What is the premium? What is the overall deductible? Is there an out-of-pocket limit? Is there an overall annual limit on what the insurer pays?
Insurers also must provide information on what the consumer must pay if using a participating versus a non-participating provider for specific types of services such as urgent care, hospital fees, rehab fees, and mental health care, among others.
Another issue relates to when insurers must provide consumers with the summary of benefits and coverage. Officials said they do not agree with industry suggestions that insurers must only provide the summary after a consumer applies for coverage and pays an application fee. The summary would have to be provided “upon request for information about the health coverage,” one official said. “So it’s before they would actually submit an application, before they would have to put any money down.”
Karen Pollitz, who recently left the Center for Consumer Information and Insurance Oversight at CMS to join the Kaiser Family Foundation as a senior fellow, said the proposed regulation reflected prodigious effort by the NAIC. “They spent a ton of time working on this,” she said. It’s very difficult boiling insurance information down to four pages in a way that is both understandable and meaningful, she added.
John Reichard can be reached at
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