If federal agencies stick with the rules and timeline given in their new Summary of Benefits and Coverage (SBC) final rule, health insurers, health plans and benefit plan administrators may have to start shopping fast for automated SBC production systems.
Instead of producing just one long summary plan description (SPD) for all group health plan participants or all individual plan policyholders, a plan or health insurer will have to produce SBCs tailored to fit families of every potential size, reflecting every possible benefit design option, according to Karen Ignagni, president of America's Health Insurance Plans (AHIP), Washington.
"Requiring a separate document for each coverage scenario will significantly increase administrative costs and potentially result in consumers having to sort through scores of pages of coverage information," Ignagni warns in a statement.
Three agencies -- the Centers for Medicare & Medicaid Services (CMS), an arm of the U.S. Department of Health and Human Services; the Employee Benefits Security Administration (EBSA), an arm of the U.S. Labor Department; and the Internal Revenue Service (IRS), an arm of the U.S. Treasury Department -- are set to publish the final rule and the compliance guide in the Federal Register Feb. 14.
The agencies developed the SBC regulations to implement Section 2715 of the Patient Protection and Affordable Care Act of 2010 (PPACA), which calls for the government to create a standardized health plan description document, to help consumers do a better job of shopping for coverage, by March 2012.
The SBC will include a summary of basic plan features, along with coverage examples that show how a plan would work if an enrollee had a baby, were managing Type II diabetes, or were dealing with other common illnesses, chronic conditions or life events.
Consumers will get SBCs when they apply for coverage or enrollment in group plans. Consumers also can get SBCs upon request.
The SBC requirements will take effect Sept. 23 for individual coverage and for group plan open enrollment periods that begin on or after Sept. 23, according to the final rule.
For people who enroll in group plans for the first time or as a result of special circumstances, such as a birth or an adoption, the rule will apply on the first day of the first plan year that begins on or after Sept. 23.
Originally, federal agencies were hoping to get plans and issuers to comply with the SBC requirements this March.
The rule could affect 440 companies in the individual, small group and large group health insurance markets that cover a total of about 75 million. The rule also could affect 77 million people in self-insured employer health plans and about 748 health plan administrators, agency officials say.
Officials estimate in an impact analysis that the SBC requirements will cost health plans and health insurance issuers about $73 million per year.
The general idea of coming up with the equivalent of a standard nutrition label for health insurance has broad support. Analysts at the Henry J. Kaiser Family Foundation, Menlo Park, Calif., have reported that about 70% of Republican adults polled in 2011 said they like the SBC concept.
CMS, EBSA and IRS received hundreds of comments on an SBC draft.
Commenters from the insurance industry focused on matters such as persuading regulators to leave some types of plans or coverage issuers out of the SBC requirements, postponing the compliance deadline, and changing specific SBC content and formatting requirements.
Several commenters asked regulators to exempt large group health plans or self-insured group health plans from the SBC requirements.
Officials acknowledge that most large plans already provide SPDs and plan summaries.
"However, the statute includes no ... exemption for large or self-insured plans," officials say.
Making the SBC scope as broad as possible will help individuals compare the options available from different types of plans, officials say.
- Health saving account (HSA) programs need not issue SBCs.
- If an employer offers a health reimbursement arrangement (HRA) or a flexible spending account (FSA) along with a major medical plan, the employer can offer one SBC that indicates how the medical insurance will interact with the HRA or FSA.
- A stand-alone HRA or a stand-alone FSA will have to provide an SBC.
BENEFICIARIES VS. PARTICIPANTS
Some commenters wrote to federal regulators to ask about a PPACA provision requires plans to provide SBCs for the beneficiaries of a plan, rather than the participants in the plan.
Commenters noted that the term "beneficiaries" includes the spouse and children of the holder of an individual policy and of a worker enrolled in an employer-sponsored group plan.
The commenters asked regulators to require that SBCs go only to plan participants, not to beneficiaries, or that SBCs be provided to beneficiaries only upon request.
The statute is ambiguous, and the final rule requires that SBCs be provided to both participants and beneficiaries, officials say.
SBC providers usually can meet that requirement by sending a single SBC to a family, unless some beneficiaries in the family are known to reside at a different address, officials say.