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Feds Issue Final Rule on Summary Benefits and Coverage

By Dena Bunis, CQ HealthBeat Managing Editor

February 9, 2012 -- People who renew or buy health insurance after Sept. 23 will receive a four-page briefing in plain English explaining what health plans will cover and what limitations or exceptions will apply to the policies they buy under a final rule three federal departments recently issued.

The "Summary of Benefits and Coverage" rule (SBC) was required under the health care overhaul law (PL 111-148, PL 111-152). The statute said the requirement for the explanation was supposed to take effect on March 23 but officials moved the date to Sept. 23 because they had missed the original March 2011 target for issuing the rule. Insurers and business officials had asked federal officials to delay implementation of the rule even longer.

On a conference call with reporters, Steve Larsen, head of the Office of Consumer Information and Insurance Oversight, said that the new effective date would still be in time for most consumers to review the summaries before they had to make decisions about their health insurance for 2013 and that there would be enough time to get the materials ready.

Karen Ignagni, president of America's Health Insurance Plans, said in a statement that while the final regulation makes some improvements over the proposed rule, her industry needs more time and flexibility.

"Health plans and employers regularly update the materials they provide to ensure consumers have clear, user-friendly information about the benefits and costs of their health insurance policies," Ignagni said. "The final rule requires an almost complete overhaul and redesign of how information must be provided to consumers. The short time frame in which to implement this new requirement creates significant administrative challenges that will increase costs and result in duplication because many plans are already developing materials for employers whose policies take effect October 1, 2012."

The requirement for the marketing materials will apply to all commercial insurance plans in the group and individual markets. And large employers will also have to comply. Officials at the U.S. Chamber of Commerce had urged federal officials to exempt self-insured employers, saying they already have clear ways of communicating with their workers about their benefit packages.

The final rule did listen to business concerns in at least one aspect: the summaries will not have to include premium and out-of-pocket costs, something that insurers and business officials said could be difficult to list in the shorthand format and that particularly for tiered insurance products, the explanations could be confusing.

"There will be other vehicles for that information,'' Larsen said. "The goal of this provision of the ACA (Affordable Care Act) was really to focus in on the benefits and coverage."

The final rule also scaled back—from three to two—the number of coverage scenarios that the summaries will have to include as a way for consumers to determine how they would be covered for specific illnesses.

In the final rule, the SBCs will have to lay out how a plan would cover the treatment of diabetes and maternity care. Originally, breast cancer was going to be included, something the National Association of Insurance Commissioners had recommended.

That was dropped, Larsen said, because "breast cancer was a more complicated treatment scenario." The treatment for breast cancer, he said, isn't one that's standardized. "We concluded that for now the simplest and most effective way was to proceed with the simpler circumstances like maternity and diabetes." He said he anticipates they might add more scenarios but didn't have a time table as to when that might occur.

The new information tool will also include a uniform glossary of terms commonly used to describe insurance coverage, such as deductibles and co-payments.

Larsen said the penalties for insurers who do not comply with the new regulation will be up to $1,000 per enrollees. The rule will be enforced in part by the states and the federal government, he said.

AARP Senior Vice President Joyce Rogers said in a statement that her group is encouraged by the final rule.

"All Americans should have clear and accessible information about their health insurance coverage to make the best possible decisions for themselves and their families,'' Rogers said. "AARP is encouraged by today's announcement and looks forward to continued conversations around developing these tools to provide consumers with a better understanding of their health insurance coverage."

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