HHS Proposes Three Rules for Implementing Affordable Care Act

November 21, 2012 — The Obama administration on Tuesday proposed three rules outlining how provisions under the Affordable Care Act (PL 111-148) would work, the Washington Post reports (Aizenman, Washington Post, 11/20). The three rules include one that prohibits insurers from discriminating against individuals with pre-existing conditions, another that establishes essential health benefits and a third that expands employer-based wellness programs (Fox, "Vitals," NBC News, 11/20). The rules are not yet final and will be open for comment until Dec. 26 (Washington Post, 11/20).

Pre-Existing Conditions Rule

HHS proposed a rule implementing an ACA provision that prevents insurers from discriminating against individuals with pre-existing or chronic conditions.

In addition to barring insurers from denying coverage because of pre-existing or chronic conditions, the rule would prevent them from charging higher premiums to certain beneficiaries because of current or past health problems, gender, occupation and industry, or employer size.

However, the rule would allow insurance companies to vary premiums -- within limits -- based on age, tobacco use, family size and geography (HHS release, 11/20). For example, insurers would be able to charge elderly individuals up to three times more than younger customers (Baker, "Healthwatch," The Hill, 11/20).

According to HHS, the rule targets 50 million to 129 million U.S. residents who have conditions that insurance companies have cited in coverage denials or insurance increases (Wayne, Bloomberg, 11/20).

The rule also requires states to establish a single statewide risk pool for individual and small-employer markets, unless a state opts to combine the two pools. Premiums and yearly rates would be based on the entire pool. In addition, the rule calls for a catastrophic plan in the individual market for young adults and individuals who cannot find affordable coverage (Zigmond, Modern Healthcare, 11/20).

Essential Health Benefits Rule

HHS also proposed a rule implementing an ACA provision that requires coverage of essential health benefits by plans in the individual and small-group markets, National Journal reports (Sanger-Katz, National Journal, 11/20). The essential benefits are the minimum coverage small health plans must offer, including those selling policies in the state-based health insurance exchanges, which will launch in 2014.

"The proposed rule defines essential health benefits based on a state-specific benchmark plan, including the largest small group health plan in the state," HHS said, adding that states were also given the option of choosing the largest plan or the largest HMO in the state as a benchmark. The essential benefits must include items and services in at least the following 10 categories: ambulatory patient services; emergency services; hospitalization; laboratory services; maternity and newborn care; mental health and substance use disorder services; pediatric services; prescription drugs; preventive and wellness services and chronic disease management; and rehabilitative services and devices ("Vitals," NBC News, 11/20).

Most states are using the benefits provided by the largest health plan in their small-group insurance market as a benchmark. However, the rule requires insurers to provide additional benefits that might not be part of the benchmark plan, including dental care and vision services for children, mental health and drug misuse treatment and "habilitative services" for individuals with conditions such as autism or cerebral palsy.

HHS' proposed rule goes beyond the informal guidelines issued last year by expanding comprehensive prescription drug coverage to include at least two drugs in each therapeutic class (Pear, New York Times, 11/20).

The proposed rule also addresses the actuarial value component of the essential health benefits, which is the percentage of the total average costs for covered benefits that a plan covers. In 2014, a "bronze" plan must cover 60% of all covered benefits, a "silver" plan must cover 70%, a "gold" plan must cover 80% and a "platinum" plan must cover 90%.

The rule would allow plans to be within two percentage points of the standard. For example, a silver plan could cover 68% of the benefits (Modern Healthcare, 11/20).

Wellness Program Rule

HHS, the Department of Labor and the Treasury Department also proposed a rule that would establish and expand workplace wellness programs that promote health and control health spending, Modern Healthcare reports (Modern Healthcare, 11/20).

The rule allows employers to award employees as much as 30% of their health coverage costs for participating in wellness programs, an increase from the current 20%. Meanwhile, workers that enroll in smoking cessation programs could earn back as much as 50% of their coverage costs, HHS said. Employers must provide workers with special medical conditions with alternative means of qualifying for rewards (Viebeck, "Healthwatch,"The Hill, 11/20).