Federal & State Healthcare Regulatory Update Affordable Care Act & Chapter 224

1. Federal & State Healthcare Regulatory UpdateAffordable Care Act & Chapter 224 Presented by: Patrick Farrell Regulatory Affairs Manager Fallon Community Health Plan May 22, 2013

2. ACA Changes for 2014 • Merged Market • Taxes, Fees, and Assessments • Employer Requirements • Other

3. ACA Merged Market Changes: 2014 • Actuarial Value (AV) requirements • Essential Health Benefits • Phase-out of rating factors allowed by state but not federal law • Changes in rate calculation • Sole propreitors treated as nongroup • Elimination of Commonwealth Care/ introduction of subsidies • Annual rate filings for nongroup

4. ACA Merged Market Changes: 2016 • Merged market includes employers with up to 100 employees • Method of counting employees switches from state (employees eligible for insurance) to federal (FTEs) • Complete elimination of rating factors not allowed by federal law • Annual rate filings for small group • Will municipalities with 100 or fewer FTEs be treated as small group?

5. ACA Taxes, Fees and Assessments • Comparative Effectiveness Fee • Begins to apply for plan years ending in federal fiscal year 2013 (10/1/2012 – 9/30/2013). Sunsets after federal fiscal year 2019. • $1 per member per year for the first year, increases to $2 for second year, then is adjusted upwards for inflation. • Applies to both fully-insured and self-funded. • Transitional Reinsurance Program Fee • Applies for 2014, 2015 and 2016. • $63 per member per year for 2014. Should scale down for 2015 and 2016. • $12 million to be collected for 2014, $8 million in 2015, $5 million in 2016. • Applies to both fully-insured and self-funded.

6. ACA Taxes, Fees and Assessments • Fee on Health Insurance Providers • First payment due in 2014 based on 2013 membership. Fee is permanent and will not sunset. • Applies to fully-insured only, not to self-funded. • Each insurer will pay a share roughly equivalent to its share of national premium revenue. Falls more heavily on for-profit insurers than not-for-profit. • $8 billion to collected in 2014, scales up to $14.3 billion by 2018, then adjusted by rate of growth in national premium revenue. • “Cadillac Tax” • Applies starting in 2018. • Benchmark of $10,200 individual/$27,500 family.

7. ACA Employer Requirements • Employer Shared Responsibility • Applies to employers with 50 or more FTEs • Must offer coverage to employees working 30 hours or more per week, which meets “minimum value” and “affordability” requirements • What happens to Mass. Fair Share? • Individual Shared Responsibility • Individuals generally must have health insurance, or potentially face penalties • Applies to all individuals, not just those over 18

8. ACA Employer Requirements • Employee Coverage Options Notice • Ban on waiting periods longer than 90 days • Potential future requirements • Autoenrollment • Nondiscrimination • Will W-2 requirement be expanded to smaller employers? • Process for “Federal 1099” • Reporting requirements

9. Other ACA Requirements • Out-of-pocket maximum requirement • $6,350 individual/$12,700 family • Must include all forms of cost-sharing • Benefit mandate for coverage of clinical trials • Cancer or other life-threatening diseases or conditions • Impact of Essential Health Benefits definition on lifetime and annual maximums • Removal of dollar caps on state mandates for low protein foods & prosthetic wigs

10. Chapter 224 • Assessments • Transparency

11. State Assessments • Existing • Health Safety Net ($160 million per year) • Vaccine (approximately $50-$55 million per year) • New (Chapter 224) • “One time only” $165 million assessment • CHIA (about $12.5 million for current fiscal year) • HPC (future)

12. Transparency • All carriers shall establish a toll-free telephone number and website that enables consumers to request and obtain from the carrier, the estimated or maximum allowed amount or charge for a proposed admission, procedure or service and the estimated amount the insured will be responsible to pay for a proposed admission, procedure or service that is a medically necessary covered benefit • based on the information available to the carrier at the time the request is made, including any facility fee, copayment, deductible, coinsurance or other out of pocket amount for any covered health care benefits

13. Transparency • the insured shall not be required to pay more than the disclosed amounts for the covered health care benefits that were actually provided • nothing prevents carriers from imposing cost sharing requirements disclosed in the insured’s evidence of coverage for unforeseen services that arise out of the proposed admission, procedure or service • that the carrier shall alert the insured that these are estimated costs, and that the actual amount the insured will be responsible to pay may vary due to unforeseen services that arise out of the proposed admission, procedure or service.

14. Transparency • 10/1/13: within two working days • 10/1/14: in real time