APRIL 1, 2010 FOR INTERNAL USE ONLY: Please do not distribute this summary outside of your company, as your member dues fund NADP analyses, federal advisors and other tools to help NADP members prepare for health reform implementation. CONTACT: NADP’s Director of Government Relations, Kris Hathaway [email protected], 972.458.6998x111 NADP GENERAL OVERVIEW HEALTH REFORM AND DENTAL PLANS On March 23, 2010, President Obama signed H.R. 3590, The Patient Protection and Affordable Care Act (PPACA). On March 30, 2010, the President signed H.R. 4872, the Health Care and Education Affordability Reconciliation Act, which made a series of amendments to PPACA. This document provides a preliminary review of select provisions of PPACA, as amended by the reconciliation bill, and discusses their relevance to stand‐alone dental plans. The document is not comprehensive and is subject to change pending additional analyses and additional information becoming available. A.
INSURANCE MARKET REFORM 1. Group and Individual Market Reforms PPACA amends and considerably expands the health insurance market reform provisions of the Public Health Service Act that were created by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA added to the Public Health Service Act a provision that excludes certain types of plans – including “limited scope dental benefits” offered separately – from the HIPAA group insurance market reforms. PPACA includes a conforming amendment1 that appears to apply the HIPAA dental plan exception in a way that would exclude stand‐alone dental plans from most of the group and 1
Sec. 1563(a)(4) For NADP Members Internal Use Only ©National Association of Dental Plans * Dallas, TX * 972.458.6998 * www.nadp.org individual insurance market reforms created in PPACA.2 (However, the legislation also includes an additional amendment to the HIPAA dental plan exception that appears inconsistent with the ordering of the bill and may require technical correction, but that could create ambiguity.3) As discussed below, the legislation allows stand‐alone dental plans to provide required pediatric dental benefits inside of the new Health Insurance Exchanges. The rules that will be written by the Secretary of Health and Human Services to implement this provision will likely address the applicability of market reforms to stand‐alone pediatric dental plans in these circumstances. PPACA also inserts the following provision into the Public Health Service Act in a place where the limited scope dental benefits exception does not appear to apply (meaning stand‐alone dental plans will likely be subject to this provision): Section 1003 adds the following provision to the Public Health Service Act: Sec. 2794. Ensuring that consumers get value for their dollars. Starting in 2010, the Secretary, in conjunction with the states, will annually review unreasonable premium increases. Requires health insurance issuers to justify unreasonable increases and publicly post this information on the Internet. States will recommend whether a particular health insurance issuer should be excluded from the Exchange based on a pattern of excessive premium increases. Beginning in plan year 2014, the Secretary, in conjunction with the states, will monitor premium increases in and outside of the Exchange. Secretary will award grants to states to facilitate premium oversight. Effective on date of enactment. 2. Administrative Simplification Section 1104 of PPACA related to administrative simplification appears to apply to stand‐alone dental plans, consistent with the HIPAA transaction standards which applied to stand‐alone dental plans. Section 1104. Amends the Public Health Service Act and the Social Security Act. Administrative Simplification. The Secretary will adopt a single set of operating rules for electronic transactions: 2
Including the provisions related to no lifetime or annual limits, prohibitions on recissions, coverage of preventive health services, extension of dependent coverage, uniform explanation of coverage documents, quality reporting, medical loss ratios, appeals processes, pre‐existing conditions, rating, guaranteed issue, guaranteed renewability, prohibition of health status discrimination, non‐discrimination against providers, requirements for comprehensive coverage and limited waiting periods.
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Sec. 1563(c)(12)
2 For NADP Members Internal Use Only ©National Association of Dental Plans * Dallas, TX * 972.458.6998 * www.nadp.org •
By July 1, 2011, the operating rules for eligibility for a health plan and health claim status transaction will be adopted and will be effective not later than January 1, 2013. •
Operating rules for electronic funds transfer and health care payment and remittance advice transactions will be adopted by July 1, 2012 and will be effective by January 1, 2014. •
Operating rules for health claims/encounter information, enrollment and disenrollment, premium payments and referral certification will be adopted by July 1, 2014 and will be effective January 1, 2016. •
By December 31, 2013, health plans are required to file a statement with the Secretary certifying that their systems are in compliance with the standards and associated operating rules for electronic funds transfer, eligibility, claim status, and health care payment and remittance advice. •
By December 31, 2015, health plans are required to file a statement with the Secretary certifying that systems are in compliance with standards and associated operating rules for health claims, enrollment/disenrollment, premium payments and referral certification. •
Beginning April 1, 2014, the Secretary will assess penalties for non‐compliance. •
The Secretary will issue a final rule to establish a unique health plan identifier to be effective by October 1, 2012. •
The Secretary will issue a final rule on a standard for electronic funds transfer by January 1, 2012 to be in effective by January 1, 2014. •
The Secretary will issue a final rule to establish a transaction standard and a single set of associated operating rules for health claims attachments consistent with the X12 version 5010 transaction standards. To be adopted by January 1, 2014 and to be effective not later than January 1, 2016. B. HEALTH INSURANCE COVERAGE 1. Minimum Essential Coverage Beginning in 2014, every American will be required to have minimum essential coverage or face tax penalties. Minimum essential coverage means any of the following: • A health plan in the individual or small group market (new plans in these markets must meet the essential health benefits package requirements in the bill discussed below); • A grandfathered health plan; • A health plan in the large group market; 3 For NADP Members Internal Use Only ©National Association of Dental Plans * Dallas, TX * 972.458.6998 * www.nadp.org •
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Medicare; Medicaid; Children’s Health Insurance Program; TRICARE for Life; Veterans health care program; Other health benefits coverage such as a state health benefits risk pool, as recognized by the Secretary. The “small group market” means the health insurance market through which individuals obtain health insurance coverage through a group health plan maintained by a small employer. A small employer means an employer employing at least 1 but not more than 100 employees. (Until 2016, a state can elect to define small employer as “at least 1 but not more than 50 employees.”) The “large group market” means the health insurance market through which individuals obtain health insurance coverage through a group health plan maintained by a large employer. A large employer employs an average of at least 101 employees. (Until 2016, a state can elect to define large employer as “at least 51 employees.”) A “grandfathered plan” is a group health plan or health insurance coverage in which an individual was enrolled on the date of enactment (March 23, 2010), and appears to include dental plans. An individual who is enrolled in a plan or coverage on date of enactment can continue to enroll family members in the plan or coverage. New employees and their dependents also can continue to enroll in an employer group health plan that was offered on the date of enactment. 2. ESSENTIAL HEALTH BENEFITS PACKAGE PPACA creates an essential health benefits package and all new coverage in the individual and small group market must include the essential benefits package. Benefits: For coverage to meet the essential health benefits package requirements, it must offer the essential benefits in each of several categories. The categories are identified in the legislation; the benefits will be defined by the Secretary. The categories include “pediatric services, including oral and vision care.” Out‐of‐pocket limits: Beginning in 2014, plans offering essential health benefits package coverage must limit cost‐sharing for these benefit packages to a specific amount, which is pegged to the out‐of‐pocket limits for high deductible health plans (as defined by the health savings account provisions of the IRS Code). 4 For NADP Members Internal Use Only ©National Association of Dental Plans * Dallas, TX * 972.458.6998 * www.nadp.org Actuarial values: Coverage also must be offered at one of the specific actuarial values identified in the legislation. Each coverage level is based on a specified share of the full actuarial value of the essential health benefits. Bronze level equals 60% A.V.; silver level equals 70% A.V.; gold level equals 80% A.V. and platinum equals 90% A.V. Deductibles: By 2014, small group health plans providing the essential benefits package cannot impose a deductible greater than $2,000 for individuals or $4,000 for other coverage. A deductible cannot be applied to preventive services. 3. ESSENTIAL HEALTH BENEFITS PACKAGE AND PEDIATRIC DENTAL BENEFITS By January 1, 2014, all health insurance issuers offering health insurance coverage in the individual or small group market (with the exception of grandfathered plans) must ensure that the coverage includes the essential health benefits package, including pediatric dental benefits. Outside of the new health insurance exchanges: Although stand‐alone dental plans are specifically exempt from the requirement to offer all essential benefits, for health plans to be recognized as meeting the essential benefits package in the individual and small group market, they must offer pediatric dental benefits. Inside of the new health insurance exchanges: By 2014, states are to establish health insurance exchanges to provide access to affordable health insurance options for individuals and small employers. (By 2017, states can allow large employers to obtain coverage through an exchange). Plans must include all essential benefits to be offered in the exchange. However, stand‐alone dental plans are allowed to offer the required pediatric dental benefits. If a stand‐alone dental plan offering required pediatric dental benefits is available in an exchange, a health plan without these benefits that offers all other essential benefits can be treated as a qualified health plan to offer coverage in the exchange. 4. PREMIUM SUBSIDIES AND COST‐SHARING ASSISTANCE To help individuals and families with low‐to‐moderate incomes purchase affordable health insurance coverage and comply with the coverage mandate, the legislation makes federal subsidies available for premiums and cost‐sharing assistance. Premium subsidies Beginning January 1, 2014, on a sliding scale basis, qualifying individuals up to 400% of the federal poverty level will be eligible for tax credits to purchase an exchange plan. Premium credits under the bill are based on the maximum percentage of income that eligible individuals 5 For NADP Members Internal Use Only ©National Association of Dental Plans * Dallas, TX * 972.458.6998 * www.nadp.org would be required to pay toward the second‐lowest cost “silver” exchange plan in their area (70% actuarial value of the essential health benefits package). For qualifying individuals with incomes between 133% to 300% FPL, the percentage of income they would have to pay ranges from 3% to 9.5%. Qualifying individuals with incomes between 300% and 400% FPL would have to pay no more than 9.5% of their incomes in premiums. Individuals who enrolled in plans that are more expensive than silver‐level coverage would have to pay any additional amount. Cost‐sharing assistance Cost‐sharing subsidies are only available to eligible individuals enrolled in a silver‐level plan. Exchange plans are required to limit out‐of‐pocket costs based on the thresholds for high‐
deductible health plans that meet the qualifying criteria for health savings accounts. In 2010, the out‐of‐pocket maximum for such a HDHP is $5,950 single/$11,900 family. Cost‐sharing subsidies would reduce these out‐of‐pocket limits by two‐thirds for qualifying individuals between 100% and 200% of FPL; by one‐half for those between 201% and 300%, and by one‐
third for those between 301% and 400%. Subsidies and dental With respect to premiums and cost‐sharing related to dental plans providing essential pediatric dental benefits in the Exchange, the legislation requires regulatory actions from the Secretary and says the following: In Sec. 1401 creating Sec. 36B(3)(E) of the Internal Revenue Code: “SPECIAL RULE FOR PEDIATRIC DENTAL COVERAGE.— For purposes of determining the amount of any monthly premium, if an individual enrolls in both a qualified health plan and a plan described in section 1311(d)(2)(B)(ii)(I) of the Patient Protection and Affordable Care Act [stand‐alone dental] for any plan year, the portion of the premium for the plan described in such section that (under regulations prescribed by the Secretary) is properly allocable to pediatric dental benefits which are included in the essential health benefits required to be provided by a qualified health plan under section 1302(b)(1)(J) of such Act [requiring pediatric dental as an essential benefit] shall be treated as a premium payable for a qualified health plan”. Sec. 1402(c)(5): SPECIAL RULE FOR PEDIATRIC DENTAL PLANS.—If an individual enrolls in both a qualified health plan and a plan described in section 1311(d)(2)(B)(ii)(I) [stand‐alone dental] for any plan year, subsection (a) [re: reducing cost‐sharing] shall not apply to that portion of any reduction in cost‐sharing under subsection (c) [determination of cost‐sharing limit] that (under regulations prescribed by the Secretary) is properly allocable to pediatric 6 For NADP Members Internal Use Only ©National Association of Dental Plans * Dallas, TX * 972.458.6998 * www.nadp.org dental benefits which are included in the essential health benefits required to be provided by a qualified health plan under section 1302(b)(1)(J) [requiring pediatric dental as an essential benefit]. C.
HEALTH INSURANCE‐RELATED TAXES 1. EXCISE TAX ON HIGH‐COST EMPLOYER‐SPONSORED HEALTH INSURANCE COVERAGE As originally proposed, this provision would have begun in 2013 and applied an excise tax of 40 percent on insurers and plan administrators for combined health insurance coverage (including medical and dental) that exceeded certain thresholds. The tax was restructured in the amendments passed in H.R. 4872. The restructuring removed stand‐alone dental coverage from the tax. 2. ANNUAL FEE ON HEALTH INSURANCE PLANS PPACA creates a fee on health insurers based on their market share. Dental plans are included in the fee.4 The fee does not apply to self‐insured plans or government entities. For premiums written by tax‐exempt entities, only 50 percent of net premiums related to their tax‐exempt status are taken into account in calculating their fee amount. The fee begins in calendar year 2014 and will total $8 billion in its first year. Subsequently, it will be $11.3 billion in 2015 and 2016; $13.9 billion in 2017; and, $14.3 billion in 2018. After 2018, the amount will be the amount of the previous year increased by the rate of premium growth. Penalties can be imposed for understatement of net premiums written. With respect to the percent of net premiums written that are taken into account in determining the fee amount, if the covered entity has written less than $25 million in net premiums, 0 percent is taken into account. If the covered entity has written more than $25 million but less than $50 million, 50 percent is taken into account. If the covered entity has written more than $50 million, 100 percent is taken into account. 4
According to the Congressional Joint Committee on Taxation, “In general, it is intended that risks in the following lines of business reported on the annual statement as prescribed by the National Association of Insurance Commissioners and as filed with the insurance commissioners of the States in which insurers are licensed to do business constitute health risks for this purpose: comprehensive (hospital and medical), vision, dental, Federal Employees Health Benefit plan, title XVIII Medicare, title XIX Medicaid, and other health.” Technical Explanation of the Revenue Provisions of the “Reconciliation Act of 2010” as amended, in combination with the “Patient Protection and Affordable Care Act.” 7 For NADP Members Internal Use Only ©National Association of Dental Plans * Dallas, TX * 972.458.6998 * www.nadp.org There also are exemptions for voluntary employee benefit associations (VEBAs) and nonprofit covered entities with more than 80 percent of their revenues received from Social Security Act programs that target low income, elderly, or disabled populations. D. MEDICAID AND CHIP 1. MEDICAID AND CHIP EXPANSION AND EXTENSION Medicaid expansion. Beginning January 1, 2014, PPACA creates a new mandatory Medicaid eligibility category for childless adults and certain parents with incomes at or below 133 percent FPL. Coverage for these newly‐eligible individuals will include, at a minimum, essential benefits. From 2014 through 2016, the Federal government will pay 100 percent of the cost of covering newly‐eligible individuals. Children’s Health Insurance Program. PPACA extends the current reauthorization period of CHIP for two years. States are required to maintain income eligibility levels for CHIP through September 30, 2019 and will receive a time‐limited increase in their federal match rates. E.
ORAL HEALTH AND PUBLIC HEALTH 1. ORAL HEALTHCARE PREVENTION ACTIVITIES PPACA establishes an oral healthcare prevention education campaign at CDC focused on prevention and targeted to populations such as children and pregnant women. The legislation also creates demonstration programs on oral health delivery and strengthens oral health surveillance capacity. 2. GENERAL, PEDIATRIC, AND PUBLIC HEALTH DENTISTRY TRAINING PPACA reinstates a separate line of dental funding in Title VII of the Public Health Service Act. It allows dental schools and education programs to use the grants for pre‐doctoral training, faculty development and dental faculty loan repayment. 3. ALTERNATIVE DENTAL HEALTH CARE PROVIDER DEMONSTRATION PROJECT PPACA authorizes the Secretary to award grants to establish training programs for alternative dental health care providers. The intent of this provision is to increase access to dental services in rural, tribal and underserved communities. 8 For NADP Members Internal Use Only ©National Association of Dental Plans * Dallas, TX * 972.458.6998 * www.nadp.org