The Why and What Behind Another ObamaCare Delay
ObamaCare (technical name The Affordable Care Act or ACA for short), among other things, mandates that health insurance companies have to offer certain benefits called "Essential Health Benefits". Essential Health Benefits must include items and services within 10 specific categories. These categories include benefits like hospitalization and prescriptions but also such things like chronic disease management and behavioral health treatments. While the law was passed March 23, 2010, it is up to various agencies like Health and Human Services (HHS) and the Department of Labor (DOL) to further define the law and help implement it. When HHS issued it's final regulations on Essential Health Benefits, it stated that Out-of-Pocket limits (known as OOP and is the maximum amount that a patient can pay in medical costs in any given policy year), could not be higher than $6350 for an individual or $12700 for a family.
However, not all costs are created equal. Prior to the law, usually only the amounts paid by a patient related to hospital stays typically went toward satisfying this maximum amount*. Flat fee costs (called copays) for doctor visits and prescriptions typical didn't accumulate to a maximum amount. The ruling by HHS went further in that it included these amounts paid to doctors and for outpatient prescriptions. Therein lies the problem and the reason for the delay.
To understand why, one must understand the landscape in which insurance companies and self-funded plans (large corporations that typically choose to act as their own insurance company to save money, oftentimes with help from insurance companies and managing organizations designed for that purpose) operate. Insurance companies oftentimes rely on specialized vendors to handle parts of their plan. It's like a grocery store-- the store doesn't actually "grow" the food or manufacture the products...it relies on outside vendors. Same thing with insurance companies...many don't have their own pharmaceutical services, but oftentimes "farm out" that component of their health plan to a pharmaceutical services company. It's why so many people see "ABC Pharmaceutical Services" on their health insurance cards, right under "XYZ Insurance Company". With the new ruling affecting all the amounts paid for prescriptions, (which prior to this were not part of that calculation) because they were being managed by another entity, there were more complexities to deal with. It's not hard to see why extra time was needed for these entities to comply.
Last note...not all health plans are affected...only those that use multiple administrators get the one-year reprieve...but all will have to comply starting January 2015.
* TECHNICAL NOTE The term "hospitalization" is used in the above context for simplicity reasons; deductible and coinsurance (the "80/20" part of a health plan...I put 80/20 in quotes because that is what most people know it as; however, ANY combination is applicable such as 50/50 plans, 70/30 plans, etc.) typically go towards the Maximum Out of Pocket. Certain insurance plans can (and do) require that other items like doctor visits, lab work, outpatient surgery and/or prescriptions, etc. go towards deductibles, coinsurance etc. and in that instance could contribute to the Maximum Out of Pocket amounts.
Dan M. Heffley is a nationally-recognized author, columnist and health care advocate with over 20 years experience in the health care financing arena. He can be reached at 702-581-4048 or dan.bgb@gmail.com. He can also be found on LinkedIn.
