March 23 marks the one-year anniversary of the enactment of the Patient Protection and Affordable Care Act, and the focus since then has been on the monumental task facing the Department of Health & Human Services, the Department of Labor and the Internal Revenue Service, which must write the regulations for the new law.

The job has only begun, but it’s worth considering what’s been accomplished and what still remains.

What’s Been Done?

Many of the Act’s core provisions went into effect September 23, a timetable that gave regulators six months to resolve a host of complex plan-design matters. To meet this schedule, regulators issued several “Interim Final Rules.” Although they are in effect, these regulations are subject to tweaking before the government publishes them in final form. So far, interim rules have been issued on:

  • Grandfathering plans
  • Coverage of adult children to age 26
  • A “Patients’ Bill of Rights,” the moniker regulators gave to a rule covering annual and lifetime limits (and the former’s effect on mini-med plans), pre-existing condition exclusions, rescissions and access to certain providers
  • Free preventive services
  • Internal claims review and external appeals processes
  • Small business tax credits for providing health insurance to employees
  • Medical loss ratio compliance by carriers
  • State/federal premium increase reviews for carriers.

These rules do not represent the end of the process. Thanks to their complexity and some unintended consequences that became apparent once they went into effect, additional clarifying regulatory guidance has been issued on several topics. For example, the rules on grandfathering health plans have generated considerable confusion, especially a provision requiring an insured plan to give up its grandfathered status even if the only change sought was to switch carriers. Criticism of the provision prompted regulators to allow for carrier changes.

Similarly, regulators decided to allow mini-med plans to seek waivers of the strict new rules on annual benefits limits due to mounting evidence that the rules would cause the immediate loss of this coverage for millions of low-wage workers. Such responses are encouraging because they demonstrate some willingness on the part of the regulators to take the concerns of the public and industry into account.

Two other rules are of special interest for you and your firm. The preventive services rules require non-grandfathered plans to provide free coverage of a specified list of preventive services. And to help manage costs, these plans are allowed to employ “value-based insurance design (VBID),” which the regulators have described as “the provision of information and incentives for consumers that promote access to and use of higher-value providers, treatments and services.”

Agents and brokers are already familiar with VBID and indeed are at the forefront of its development. Regulators made VBID the subject of its own public-comment period, which closed at the end of February. In the meantime, plans are not required to wait for the VBID guidelines to be released before developing their own designs. They will need the assistance of agents and brokers.

And while considerable attention has been devoted to the MLR rule and its potential to put downward pressure on commissions, it does have a cost allocation mechanism for carriers. This should mean that, to the extent a cost is incurred for a wellness program run by an agent or broker—an activity that clearly falls on the “good” side of the MLR equation—the carrier will be able to allocate that cost to the category of “activities that improve healthcare quality.” Unlike “other non-claims costs,” the cost is not capped. It follows that wellness and similar health-promotion activities may continue to present an attractive growth opportunity for agents and brokers.

What’s Next?

The regulatory task is not even close to completion. Regulators need to focus attention on the more systemic set of provisions due to take effect in 2014, including the state-based health insurance exchanges, the individual and employer mandates and the government-run, long-term care insurance program. Despite the threat of the pending legal challenges to the law, 48 states and the District of Columbia accepted federal grant money last year to begin the planning process for setting up an exchange. HHS is developing regulations to govern certain operational matters for the exchanges, though it’s not clear when these regulations will take effect.

The IRS has begun work on rules prohibiting discrimination in favor of highly compensated employees by non-grandfathered plans. It also appears regulators have done little to set up a government-run, long-term healthcare program, although its first implementation deadlines are in 2012.

Finally, workplace wellness regulations, including rules to implement increased rewards for programs that rely on health-factor–based goals, seem to be on the back burner at HHS. The agency has said it plans to issue regulations on the higher rewards before 2014.

The enactment of healthcare reform is moving along at a constant pace. We will stay abreast of the action.