The federal Departments of Health and Human Services (HHS) and Labor have released three new proposed regulations regarding the Patient Protection and Affordable Care Act’s essential health benefit requirements and other key reform components including the new rating rules for policies issued to individuals and small groups and new requirements for employer-based wellness programs.

The new regulations give states about a month more to choose a benchmark plan on which all essential health benefit mandates for their individual and small group markets will be based. Those states that do not chose a plan will become what are known as federal fallback states and HHS will base their benchmark on the largest plan within the state’s small group market.  HHS also proposed that exchanges determine whether qualified health plans sold in the new insurance markets include state-level benefits beyond what the essential health benefit benchmark allows. States generally have the authority to enforce the essential health benefits package, but the proposed rule says HHS can intervene in states with improper or lax enforcement.

Along with the essential health benefit rule, HHS also released an actuarial value calculator, which is intended to help health insurers categorize plans as bronze, silver, gold or platinum status. A 2% leeway was also included in the calculator, and plans were given flexibility with the law’s $2,000 small group deductible caps when building bronze-level plan options.

In the employer market, the proposed rule will allow insurers to have year round open enrollment periods while those in the small group market will be allowed to limit their enrollment periods to prevent people from waiting to buy insurance until they need it.

The essential health benefits regulations require  that plans cover at least one drug per class or the same number of drugs per class as the state’s essential health benefits benchmark plan, whichever is greater. This rule is intended to balance access with affordability; however, it does not seem that it will be as generous as some other plans, including Medicare Part D.

All three of these proposed rules are open for public comment for thirty days following their official publication in the Federal Register, which is scheduled for November 26, 2012. That means that comments on all three of these regulations are due the day after Christmas.

The Administration, at the request  of the Republican Governors Association, extended the deadline for making decisions about exchanges to December 14, 2012. Many states had postponed making a decision on an exchange model until after the election; some clearly had been hoping that a Republican victory would result in a possible end to the need for states to make health insurance exchange decisions. Now that President Obama has been re-elected, though, exchanges seem to be here to stay. President Obama’s reelection, however, has not stopped states from resisting creating an exchange. 

The lack of regulation surrounding health insurance exchanges seems to encourage some states to create their own exchanges, but act as a deterrent for other. While some states are waiting for the administration to answer their exchange questions before making a final decision, others have already made up their minds. With many states coming out against the creation of their own exchanges, the federal government will play a larger role than it likely anticipated.

Fiscal Cliff
With the election behind us, people in Washington and across the country are buzzing about the looming “fiscal cliff.” Many, however, question what it actually means and what implications it may have for healthcare. The term, reportedly coined by Federal Reserve Chairman Ben Bernanke, refers to more than $500 billion in tax increases and across-the-board spending cuts scheduled to take effect after January 1, 2013 unless the President and Congress reach an alternative deficit-reduction deal. Going over the cliff would result in a tax increase for almost every individual tax payer and business, which would likely lead to a recession. Many are specifically concerned about the federal budget cuts that would likely occur if we go off the cliff.

Certain health programs, such as Medicaid and the Children’s Health Insurance Program, are exempt from potential cuts, but others such as Medicare, could be affected by the fiscal cliff. Payments to hospitals, physicians, and Medicare Advantage plans will be potential areas for budget cuts if actions surrounding the fiscal cliff are not taken within the next few weeks. For example, payments for Medicare providers will be reduced by 27 percent.

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