As we have discussed previously, PPACA is going to require a number of important changes to plans over the next few years. But in thinking long term, it is important not to overlook the seemingly minor changes that occur in the interim. Two importance changes that went into effect as of August 1, 2012, are the application of Medical Loss Ratio (MLR) and the changes to Women's Preventative Health Services.
The Medical Loss Ratio component applies only to fully insured plans. Under this provision, insurers must provide rebates if their percent of premiums spent on medical claims (and quality improvement) for policies issued in a state is less than 80% in the small group and individual markets or 85% in the large group market. This ratio has to be determined on a state-by-state basis and it is measured in the state where the policy is issued. Insurers that fail to achieve these percentages must issue rebates, and notices of rebates, to policyholders. Plan sponsors should be aware notices of rebates are required to be sent, not only to plan sponsors, but to participants enrolled in the plan to which the rebate relates.
PPACA, and its regulations, outline how these rebates are to be used by the plan sponsor depending on the type of entity sponsoring the plan (e.g., for profit, government, etc.) In many cases, a portion of the rebate must be either used to reduce future premiums or distributed to plan participants in the form of a cash payment. Plan sponsors should develop a policy regarding the use of any rebates issued and, in the case where the plan sponsor expects to receive a rebate, an internal communication to plan participants should be generated and distributed. Developing a policy or plan regarding the use of any rebates and communicating directly with plan participants will likely reduce the number of questions and concerns raised by participants once notice of a rebate is sent by an insurer. Under the Women's Preventive Health Services component, non-grandfathered plans have to add women’s preventive care services to their coverage, with no individual customer cost sharing. Some of the basic services include "well-woman" visits, screening for gestational diabetes, and HPV testing. Coverage will include contraceptives for non-religious, non-exempt employers. Plans sponsored by "religious" employers have a one-year delay until the first plan year beginning on or after Aug. 1, 2013. More guidance is expected on this issue, but while most insured plans will be in compliance with this provision through the insurer, self-funded plans should be checking to make sure they have properly complied.
So don't overlook the trees while looking at the forest. As much as long range planning is important, these incremental steps required plan sponsors to keep abreast of the operations of their plans to make sure they properly comply and don't find themselves surprised by changes. If you have questions about compliance, make sure to get advice from your plan professionals.