When HHS published its template for a Summary of Benefits and Coverage my first thought was, "Wow, this looks a lot like the summary information available in my products and many other products on the market. Now we have yet another version of how to communicate benefits to consumers, and we have the government telling the experts how to do something we have been doing for years."
However, on further reflection I thought maybe this is an opportunity to develop some standards for how insurance carriers provide summary plan information.
On the one hand, payers provide great flexibility in their plan designs. This helps them to compete in the market. On the other hand, all of this flexibility turns into confusion in the consumer's eye, and I do think that is the intention of the Summary of Benefits and Coverage - to make it easier for the consumer to compare and select insurance.
The problem that carrier flexibility in plan design creates is further exacerbated by how carriers communicate this information. This is the area where there might be an opportunity for standardization.
For example, one plan says the plan pays 80%, another says you pay 20%. Today what happens is the broker or an online benefits application "normalizes" the two. The problem is that normalization is a manual process. "Manual" implies errors. And not all cases are as simple as this one.
Prescription drug plans are most commonly grouped as generic, brand formulary, brand non-formulary, and specialty drugs. However, some carriers have adopted the tier concept with Tier 1 being Generic, Tier 2 Brand Formulary, etc. Again, someone has to normalize this. Or sometimes the copay goes against the maximum-out-of-pocket (MOP) and sometimes it doesn't. And sometimes the copay continues after the MOP has been reached and sometimes not. Moreover, this can be different for certain benefits within the same plan. Lastly, some carriers include the deductible in the MOP while others don't. Not exactly apples to apples from a consumer point of view.
The definition of preventive services varies among carriers. PPACA is trying to help here by defining a complete set of preventive services that would be common across all plans. Another example: the PPACA Summary of Benefits and Coverage includes habilitation benefits, but most carriers do not include it in their summary plan descriptions.
Please understand I am not looking for a standard set of insurance plans. Where I think the opportunity arises is in how summary plan information is communicated from carriers to other entities in the supply chain. A standard format for plan pays 80% or you pay 20% (pick one); a standard format for prescription drug tiers; a standard format for MOP, etc.
One silver lining to the cloud that PPACA has created is highlighting areas of opportunity for standardization.
Lamb is VP and group head of the EbixBenergy business unit at Ebix Health.
