Insurance Market Reform

One of the objectives of the Affordable Care Act (ACA) reform of the nongroup insurance market, including new market and rating rules and reliance on public health insurance exchanges, is to enhance competition. More competing health plans increases consumer choice, as well as the market pressure on health plans to manage administrative costs, improve their service and contract with clinical providers at optimal rates. Especially in the context of health plans contracting selectively with providers in order to hold down payment rates, a choice of more health plans serves consumers well and signals a vibrant market. This brief, prepared by Wakely Consulting Group, provides an early indicator of the level of competition among health insurers that market reforms and state-based exchanges are generating.

The Department of Treasury, Department of Labor, and Department of Health and Human Services issued a joint final rule on employment-based, nondiscriminatory wellness programs. Specifically, these final regulations increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan from 20 percent to 30 percent of the cost of coverage. The final regulations further increase the maximum permissible reward to 50 percent for wellness programs designed to prevent or reduce tobacco use. These regulations also include other clarifications regarding the reasonable design of health-contingent wellness programs and the reasonable alternatives they must offer in order to avoid prohibited discrimination

The IRS released proposed regulations that provide guidance to Blue Cross and Blue Shield organizations, and certain other health care organizations, on computing and applying the medical loss ratio as detailed in the Affordable Care Act (ACA). That provision requires carriers to apply at least 80 percent of paid premiums to health care services and up to 20 percent to administrative costs. 

The Centers for Medicare and Medicaid Services (CMS) released a proposed rule on DSH payments. The proposed rule specifies the methodology for the annual reductions in DSH payments from fiscal year 2014 through fiscal year 2020, as required by the ACA. The rule also outlines some additional proposed DSH reporting requirements. A fact sheet is also available.