New statements will give ‘apples to apples’ comparison of health insurance benefits
Comparing health insurance plans can be a dreaded activity, as Americans try to make sense of the coverage, deductibles, co-pays and out-of-pocket costs.
“Consumers have a terrible time understanding and comparing health insurance products, and it shouldn’t be too surprising, because health insurance products are very complex,” says Lynn Quincy, senior health policy analyst at Consumers Union, the policy and advocacy division of Consumer Reports.
That’s why Quincy and other consumer advocates are praising new federal regulations that require “summary of benefits and coverage” statements from health insurers and employer-sponsored and self-insured group health plans to be far more consumer-friendly.
The regulations, which are part of federal health care reform, require that consumers receive benefits and coverage information in chart form. The charts will show such things as a policyholder’s overall deductible, out-of-pocket limits, annual dollar limit for coverage and sample costs in situations such as having a baby.
|New statements from health insurers will provide examples of how your plan would pay for things such as delivering a baby.|
In announcing the new regulations in February 2012, U.S. Health and Human Services Secretary Kathleen Sebelius said: “All consumers, for the first time, will really be able to clearly comprehend the sometimes confusing language insurance plans often use in marketing. This will give them a new edge in deciding which plan will best suit their needs and those of their families or employees.”
The standardized and more simplified “summary of benefits and coverage” forms will be headed your way starting Sept. 23, 2012. According to the Department of Health and Human Services, private insurers, employer-sponsored health plans and self-insured health plans must provide information under these circumstances:
• When shopping for coverage: Consumers can compare critical cost information for each plan, such as deductibles, co-pays, co-insurance, limits and exclusions, and sample costs for laboratory tests, prescriptions and office visits.
• When coverage is renewed: Consumers will receive the forms before each policy year or before selecting new coverage options with an existing insurer.
• When coverage changes: Group health plans and other private insurers will be required to notify their policyholders about significant changes in coverage at least 60 days before the changes take effect.
• At any time: A consumers can request the summary of benefits and coverage, and a health insurer must provide it within seven business days.
‘Nutrition facts’ labels
To be able to compare health care plans, the new statements will provide examples of how your insurance plan would pay for things such as delivering a baby or managing Type II diabetes.
Federal officials compare the “summary of benefits” template that all insurers will use to the existing “nutrition facts” labels for packaged foods.
“Insurers fought pretty hard against this regulation,” Quincy says. “They may think it’s not advantageous for consumers to compare plans on an apples-to-apples basis.”
Detailed examples of coverage can ensure that a consumer chooses a health plan that best suits his or her needs, Quincy says, and can demonstrate the value of being insured when facing expensive surgeries or treatments.
In addition to the pregnancy and diabetes examples, the Department of Health and Human Services intends to include up to four more coverage scenarios, according to Consumers Union. Premium amounts won’t be included in the summary-of-benefits forms, but it’s possible that information could be featured in future versions, according to Consumers Union.
Insurers also will need to provide a glossary of terms often used by health plans, such as deductible, co-payment, co-insurance, pre-authorization and UCR (usual, customary and reasonable). Starting in the fall, the glossary will be posted on three government websites: www.HealthCare.gov, www.cciio.cms.gov and www.dol.gov/ebsa/healthreform.
These tools will give consumers a better grasp of their health insurance coverage, says Joyce Rogers, senior vice president of AARP, a lobbying group for Americans 50 and older. “All Americans should have clear and accessible information about their health insurance coverage to make the best possible decisions for themselves and their families,” she says.
Health insurers concerned
The changes to the summary-of-benefits statements were proposed in August 2011. Health insurers, health care professionals, health care consumer advocacy organizations and patient advocates provided feedback about such concerns as deadlines, information requirements and form recipients.
With the September 2012 kickoff date approaching, health insurers contend the changes will be a burden.
Kelly Miller, a spokeswoman for the Blue Cross Blue Shield Association, told the Los Angeles Times: “These new requirements involve far more than simply producing one standard form. Plans will need to make major and costly systems changes and produce customized benefit statements for every health care option.”
Karen Ignagni, president and CEO of America’s Health Insurance Plans, a trade association representing the health insurance industry, says more time and flexibility are needed to avoid costs that could outweigh any benefits to consumers.
Insurers are being required to conduct an “almost complete overhaul and redesign of how information must be provided to consumers,” Ignagni says. A survey by Ignagni’s group estimated that initial startup costs for insurers would total $188 million, and one year of ongoing expenses would be $194 million.
She says the federal regulations require a separate document to be created for every possible family size and benefit package, which would include information about various deductibles, co-pays and prescription drug lists.
“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 says.