Under the Patient Protection and Affordable Care Act, all plans must cover certain preventive care services with no member cost-sharing - with an exception for grandfathered plans - as of plan years beginning on or after Sept. 23, 2010.
Complying with this provision is much more complicated than simply not charging members for certain preventive care services. The list of services is extensive, health plan and administrators' claims payment systems must be reconfigured and provider office policies must be revised. This, coupled with the grandfathered plan provision, has caused confusion for employers, employees, administrators, advisers and providers.
Adding to the uncertainty is the fact that the definition of "routine care" or "preventive care" historically has caused disagreements between members and administrators, since each member can have a different understanding of what is "routine" or "preventive."
Compliance with this provision also will increase costs. The estimated cost of adding these preventive care services, and the likely follow-up care and services that will be utilized as a result of these "free" visits, is a 1% to 3% increase in the premium.
The theory behind offering preventive care services with no cost-sharing is that members will schedule annual exams and chronic or catastrophic conditions can be detected earlier, thus improving health and lowering costs over time. However, there are some unintended consequences of this provision in the law:
* The grandfather provision. Most employees and dependents do not understand the provision, nor the reasons an employer might want to retain grandfathered status. Although the media and government PR efforts have told members that preventive services are available with no cost sharing, this may not be the case if their employer is grandfathered. When employees in a grandfathered plan talk to employees at other companies that are not grandfathered, they may feel that their employer is penalizing them.
* Medical management. A member may think a service or procedure is "routine" or "preventive" for him or her because of an existing medical condition, but services are classified as preventive based on certain criteria in the law. Additionally, if a condition is discovered as part of the preventive care examinations, there is no requirement the treatment for that particular condition be covered, or be covered with no cost sharing.
* Provider reactions. Providers which collect copays will have additional responsibilities. The relatively simple procedure of collecting copayments is complicated by several factors: Is the plan grandfathered? Is the service preventive care? What if the initial reason for the visit preventive, but follow up tests and services are related to a particular condition?
* Follow-up care. Although PPACA requires that preventive care services be covered with no cost sharing, follow-up tests, care and procedures (that are covered by the plan) will increase claim costs for both members and employers. Most plans have a deductible or some member cost sharing, so members' cost will increase for these tests.
Employers, in the short run, will see claims cost increases as members who did not previously seek preventive care do so because the services are now "free." The claims cost will increase in both more preventive claims, and in the more expensive follow up lab tests, MRIs, scans, etc.
* Administrator reactions. Claims payers, self-insured administrators and health plans which have to administer this provision are also experiencing challenges. They need to reconfigure their claims payment and adjudication systems to recognize grandfathered and non-grandfathered plans, preventive care services vs. non-preventive care services and the related follow-up care. Some plans are restricting employers as to whether they can grandfather or not, whether by only allowing grandfathered plans to be a certain employee size, or limiting the number of plan design choices offered.
Although many employers have already implemented robust wellness programs, or have plan designs that cover some preventive care services with no copayment, the preventive care provisions in PPACA have more far-reaching implications for employers than simply improving health and access to preventive care services.
As with all regulatory or other employee benefit changes, employers must communicate their employee benefits strategy, the impact to employees as a result and the business or employee relations reasons for them. Today it is be more important than ever that employees and their dependents understand what will impact them and why - from their employer.
Patrick J. Haraden, CEBS, CLU, ChFC, REBC, RHU, LIA, MBA, is senior vice president of employee benefit services at Longfellow Benefits in Boston. He can be reached at firstname.lastname@example.org.
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