Interim Companion Guides, Including Operating Rules

Wednesday, December 09, 2009

It is common for regulatory agencies such as the Deptpartments of Labor, Health and Human Services, and the Internal Revenue Service to issue “temporary” or “interim” regulations, and operating guidelines, while final rules are being developed. Agencies are required to seek public input and issuance of temporary regulations allows for this public input process to take place. A department’s final regulations are often very closely aligned to its temporary regulations, after all, some “temporary” regulations are known to have been in place for years before being finalized.

The Act directs the Secretary of Health and Human Services to provide interim guidelines for Medicare Advantage plans that will include:

o a standardized data transaction format for submitting medical loss ratio data, eligibility, claims status, and other information to the Secretary by October 1, 2011.

Remember, the Act is mandating a medical loss ratio of not less than 85% for a health care plans. The medical loss ratio of a specific health care plan measures the proportion of premium dollars paid towards health care claims and does not include administrative and operating costs, i.e., expenses incurred by performing its normal business operations.

o the interim guidelines must take into consideration current and future legislation, i.e., ERISA, HIPPA, … etc.

Nothing in the Act exempts the Secretary of Health and Human Services or another Federal, state, or local governmental agency from abiding by any current or future legislation.

o operating rules for using and processing the standardized data transactions developed by the Secretary, including standards for first report of injury by January 1, 2014

Since one function of the Act is to reduce duplication of services and functions; standardizing how, when, where and by whom data transactions are executed would, in theory, move the health system towards lower administrative costs, improved delivery of health care, and lower claims costs over time.

o a unique health plan identifier by October 1, 2012

Currently, employer based health care plans that are subject to ERISA are identified by the Employer’s Identification Number (EIN, i.e., corporate tax ID number) plus a three deigit number such as: 501, 501, 503, … etc. Under the “unique health plan identifier”, I would expect that each type of plan (HMO, PPO, POS, … etc.) within an employer’s health care offering would an identifier specific to that offering. Individual plans also have a current identifier, since these plans as reviewed and approved by their respective states of domicile. However, the issue is that none of these current identifiers are “unique”, plus they may not tell the observer the type of plan, the state it is domiciled in, or the issuing carrier.

o expansion of penalties for violations by health plans (brokers, agents, and other parties in interest may also be included)

Unfortunately, without a threat of penalties, some health care providers and parties in interest may not be inclined to adhere to the guidelines.

Will all of this “standardization” result in lower costs, improved health care, greater access to care?