President Delays Healthcare Reform Cap on Some High Deductible Insurance Plans

One of the most important reforms of the Patient Protection and Affordable Care Act that will benefit healthcare provider bottom lines is the cap on out-of-pocket costs for those with health insurance. President Barack Obama’s administration has delayed imposition of those caps for one year on health plans offered by some large employers.

Per the ACA, non-grandfathered health insurance plans must limit deductibles to $6,250 per year per beneficiary beginning Jan. 1. However, according to a February FAQ on the ACA published by the U.S. Department of Labor (relevant section reprinted below), companies with multiple service providers for insurance benefits can take an extra year.

A consortium of consumer groups last week published a letter in protest of the extension, arguing that the extension will hurt underinsured beneficiaries.

For healthcare providers the delay will have a direct impact on bad debt by increasing the exposure of providers resulting from underinsured patients.

Kaiser Health News has more on the story here. From the Department of Labor FAQ:

Q2: Who must comply with the annual limitation on out-of-pocket maximums under PHS Act section 2707(b)?

As stated in the preamble to the HHS final regulation on standards related to essential health benefits, the Departments read PHS Act section 2707(b) as requiring all non-grandfathered group health plans to comply with the annual limitation on out-of-pocket maximums described in section 1302(c)(1) of the Affordable Care Act.

The Departments recognize that plans may utilize multiple service providers to help administer benefits (such as one third-party administrator for major medical coverage, a separate pharmacy benefit manager, and a separate managed behavioral health organization). Separate plan service providers may impose different levels of out-of-pocket limitations and may utilize different methods for crediting participants’ expenses against any out-of-pocket maximums. These processes will need to be coordinated under section 1302(c)(1), which may require new regular communications between service providers.

The Departments have determined that, only for the first plan year beginning on or after January 1, 2014, where a group health plan or group health insurance issuer utilizes more than one service provider to administer benefits that are subject to the annual limitation on out-of-pocket maximums under section 2707(a) or 2707(b), the Departments will consider the annual limitation on out-of-pocket maximums to be satisfied if both of the following conditions are satisfied:

1. The plan complies with the requirements with respect to its major medical coverage (excluding, for example, prescription drug coverage and pediatric dental coverage); and
2. To the extent the plan or any health insurance coverage includes an out-of-pocket maximum on coverage that does not consist solely of major medical coverage (for example, if a separate out-of-pocket maximum applies with respect to prescription drug coverage), such out-of-pocket maximum does not exceed the dollar amounts set forth in section 1302(c)(1).