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Health Care Reform Comes Into Play for Employers

Employers are getting on board with implementing changes required by the Patient Protection and Affordable Care Act as two health reform provisions begin to take effect.

For insurance plans that begin on or after Aug. 1, employers have to offer women’s services including contraception in insurance plans without charging employees co-payments or other fees. Employers are also beginning to distribute insurance company refunds to workers if a percentage of premiums were spent toward administrative costs that exceeded newly imposed limits

Janice Stanger, senior account executive with San Diego-based Intercare Insurance Solutions LLC, said most of the requirements to cover women’s services are noncontroversial and include annual well women preventative visits, gestational diabetes screening for women who are 24 to 28 weeks pregnant, human papillomavirus testing for women over 30, breastfeeding support and counseling, and domestic violence screening and counseling.

Stanger said the portion of the provision generating strong public opinion is the requirement to provide access to all FDA approved contraceptive methods. The provision includes sterilization procedures and patient education and counseling, she said.

Stanger said religious employers are objecting to paying for related services and supplies.

Religious Objections

Although some religious employers such as churches, synagogues and other houses of worship are exempt from covering contraceptives, the narrow definition of who qualifies as a religious employer does not include all affiliated employers such as private universities and hospitals, Stanger said.

“They are still required to provide contraceptive coverage to their employees,” she said. “These organizations have challenged that very strongly.”

Stanger said the debate over religious freedom versus providing contraceptive access has led to lawsuits.

“How this is all going to shake out I can’t say right now,” said Stanger.

Although the contraception requirement goes into effect for insurance plan years that begin on or after Aug. 1, most employers would not have to comply until their plan year begins Jan. 1, 2013.

Jeff Calder, practice group leader in the employee benefits division of insurance services firm Barney & Barney LLC, said employers need to be prepared to make plan amendments as of their renewal date to comply with the law.

Fitting in With State Law

Calder said California law expands preventive care services for women beyond requirements of the federal health care reform act.

“A lot of this coverage is going to be duplicative to what’s already been implemented,” he said.

Ross Afsahi, president of Sorrento Valley-based GS Levine Insurance Services, said employers should be aware there is likely to be upward pressure on premiums and related costs as copays are eliminated and utilization of health care services increases. But, he added that the focus of the employers should be on policies that improve the health of the employees that will control and reduce health care costs in general.

Afsahi said that health care reform puts a focus on access to health care without attention given to the delivery of health care. Unless the delivery of health services for 30 million uninsured now entering the health system is addressed, he said it’s irrational to hope that the costs will go down.

“It’s unfortunate that much focus and attention has been on access of health care and not attacking the root cause of escalating costs, which is the delivery of health care,” Afsahi said.

As for the rebate provision, the Affordable Care Act established a requirement for how much of the premium an employer pays to an insurance company needs to be spent on claims.

When insuring large employers, with 51 or more employees, insurers have to spend at least 85 percent of the premium on claims or activities that improve health care quality. When insuring either employers with 50 or fewer employees or individuals who purchase insurance independently, the mandate is to spend 80 percent of the insurer’s income on claims and activities that improve health care quality.

Rebates are being generated as insurance companies return the amount to policyholders that exceeded the limit set on administrative costs. The checks had to be mailed by Aug. 1.

Nationally, the rebates are totaling $1.1 billion in all markets, according to the organization Health Care for America Now.

Stanger said employers are in a challenging position of figuring out how much of the rebates are theirs to keep and how much should be distributed to employees. Options are potentially available to spend some of the money on wellness programs or other areas that benefit employees, she said.

“It’s challenging to figure out which are optimal and which ones really do satisfy the law, because it is complex” said Stanger.

Calder said Barney & Barney works with employers, numbering about 1,200 in the San Diego market, to help them understand what their options are when they receive the rebate.

Calder said some employers may return a portion to employees based on how much the employees have contributed to the premium, while others may give the employees a break on making monthly contributions. Providing additional benefits to employees may also be allowed, he said.

He said that the insurance industry has been compliant with legislation.

“There’s been no pushback from the industry yet,” he said. “I haven’t seen a problem with compliance.”

Afsahi agreed with that assessment: “It is an interesting concept where the federal government dictates the operational margins of an industry — it’s unprecedented,” he said.

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