Health Care Law
Professor Campbell – Villanova Law School
Spring 2013
· Affordable care act – Insurance Reform Provisions
o Reform rules (apply to everybody):
§ Applicable to all group health plans and issuers of insurance:
· No preexisting condition exclusions for children, effective October, 2010
· No preexisting condition exclusions at all (effective January 1, 2014)
· No waiting period over 90 days (Limits waiting period)
· No rescissions (except for fraud or intentional misrepresentation)
o “Grandfathered” plans, limited to adult kids w/o coverage employer coverage.
§ Started by March 23, 2010, continues unless DQ’ed
· Can add new employees/family members
· But cannot decrease contribution rate by >5%
· Medical Loss Ratio Requirements
o January 1, 2011, health insurers (including GF) must rebate % of premium
§ The difference between average medical loss ratio and the required minimum
o MLR –percentage of premiums used to pay claims over a certain period of time
o Which one applies? Large vs. small
§ Individual/Small Group Market: 80%
§ Large Group (over 100 EEs) Market: 85%
§ Exemptions: – ) Self-insured, long-term care, dental, vision
o Rebates:
§ Payable by August 1 of each year.
§ Calculated by aggregate data from plans in the 3 market categories
· Partial rebate for part-time employees
§ For group policies covering workers in multiple states, look at the state of issue.
§ Rebate follows payment -> split rebate proportionately to how premium is split
o Hypo – VLS paid $12,000 per EE. Half the premium deducted from EE pay.
§ $600 = 10% of $12k, split ½ between EE and ER
§ 85 – 75 = 10 (12000 -> 1200) 1200/2
· ACA Underwriting Rules
o No discriminatory rates (underwriting) in individual/small group, except:
§ Individuals/families (Nothing for couples); Geographic area (Urban vs. rural); Age (ratio limited to 3 to 1); Tobacco use (by up to 1.5 to 1)
o Group health plans and insurers not have rules for eligibility based on:
§ Health status, Medical condition, Claims experience, Receipt of health care, Medical history, Genetic information, Evidence of insurability, Disability
o Wellness Programs:
§ Participatory (Not contingent on attainment of a goal)
· Will reimburse you for gym membership, diagnostic testing, etc)
§ Health-Contingent Wellness program (Must meet/maintain health outcomes)
· Examples – non-smoker, biometric screenings, exercising
· Only permitted if:
o Limited to 20% cost of coverage for participating employees
o Designed to promote health or prevent disease
o Not too burdensome or discriminatory (all similarly situated)
o At least annual qualification
o Reforms Effective Now:
§ Must cover many preventive services without cost-sharing
§ Group health plans and insurers:
· Cannot prior authorize(PA) ob/gyn referrals
· Can’t PA emergency services, or require that they’re in-network
· Must allow pediatrician as kid’s primary care practitioner (PCP)
o Essential Health Benefit Mandate for all non-GF plans in small group/individual markets
§ Note – Also, lots more than listed here…
§ Ambulatory, Emergency services, Hospitalization; Maternity and newborn care
§ Rehabilitative and habilitative services and devices
· Rehab – getting something back that you once had
· Hab – working on some facility that you have not yet developed
· Exchanges
o Exchanges generally (kind of like Priceline)
§ A structured marketplace for private health insurance (only QHP’s offered)
§ Premium credits and cost sharing subsidies are exclusively available
§ States control operation – (1) states alone, (2) States w/ feds, (3) feds alone
o Exchange Functions and Requirements
§ Maintain a website and toll-free helpline
· Drives cost down by creating competition
§ Provide a calculator for individuals to determine the cost of coverage
§ Assign a rating for each plan
o What Exchanges Do (blends non-group market and public programs)
§ Determine eligibility (individual’s or employer’s) and enroll individuals in plans
§ Plan management (ensure accountability), Consumer assistance
· Qualified Health Benefits:
o QHP plans are:
§ (1) Certified as eligible, (2) Offered by licensed insurer, and (3) Offer the “essential health benefits package”
o Essential health benefits package (Must include):
§ Include specific categories of benefits (the essential health benefits)
§ Scope of benefits equivalent to those provided by “typical” employer plans
· “Typical” – Cap number of hospital days, Limit to generic drugs, etc
§ Provide certain levels of coverage (platinum, gold, silver and bronze),
· based on “actuarial value” (% of medical costs plan expected to cover)
· Must offer at least silver or gold (middle range)
§ Meet cost-sharing standards
o Premium Credits
§ Income of 100% – 400% poverty (FPL) qualify for tax credit for exchange plan
§ Amount based on the second lowest cost silver plan available in the exchange
· Can upgrade to more expensive (gold or platinum) plan
· Cost sharing standards
o Limits – Must limit out-of-pocket costs to the maximum for high deductible HAS’s
o CS Subsidies (reduce the already capped cost sharing amounts)
§ Income at 200% FPL = 2/3 reduction
§ Income between 201% – 300% = ½ reduction
§ Income 301% – 400% 1/3 reduction
· Tax exemption in the Modern Health Care System
o Public policy goals on both sides (Lib concerned for uncompensated care; Righties unhappy about loss of tax revenues. Competing for other for-profits)
o Types of exemptions
§ Federal, state/local
· State -> State income tax; sales tax
· Local -> real estate taxes (prime land = lost $$)
· Federal Income Tax
§ For profit vs. non-profit (why does one get advantage over other)
o Federal Tax Exemption – 501(c)(3)
§ Importance/motivations – Donors tax deductions; Entity doesn’t pay Fed taxes;
§ Organization must be “organized and operated exclusively for religious, charitable, scientific, or educational purposes…”
· “Organizational” test is easy to meet
o Limit the organization’s powers to an exempt purpose
· The “operational” test is harder (Excl
ACA Requirements for tax-exempt hospitals
o Form 990 Schedule H – Reporting on Community Benefit Activities
§ Charity care, Community health services, Health professions education, Subsidized health services, Research, Cash and in-kind contributions to community groups, Community building operations
o Additional Requirements
§ Community health needs assessment every 3 years
· Big REQUIREMENT – find out the health needs of the community
· Must adopt, implement and widely publicize written policy to provide financial assistance to patients
§ Billing limits for those who qualify for assistance (same amount as insured)
§ No extraordinary collection actions before reasonable effort to determine eligibility for assistance under the financial assistance policy
Assuring quality in the health care system. Licensure and accreditation, the role of tort and contract law.
· Assuring Quality in the Health Care System
o Quality indicators:
§ License, Medical School, Residency/Training, Specialty and Sub-specialty, Board certification, Experience,
§ Hospital affiliations – may have more access if they are in a good network/group
§ Reputation? Ask trusted individuals? TV appearances? Famous patients?
· these might not actually reflect physician ability or skill.
§ Absence of negatives? Malpractice record? License suspensions?
o Tools to assure minimum competency?
§ Licensure (including ongoing CME – continuing medical education)
§ Certification and Credentialing, Staff privilege
§ Conditions of Participation in Medicare/Medicaid
· Payers becoming more assertive -> Waking the sleeping giant.
o History of Physician Licensure in the US
§ Licensure since the earliest days of our country.
· 1760 – NYC required exams/licensing of physicians (fines on unlicensed)
· 1765 – UPenn opens 1st Med in the colonies.
o Prerequisites – Knowledge of Latin and philosophy.
§ What passed for quality back then? Crazy stuff!
· Paul Star – Benj. Rush (1796 physician/prof) promoted “blood letting”
o “a morbid excitement induced by capillary tension,
o only remedy was to deplete the body by (1) letting blood with the lancet and (2) emptying the stomach w/ drugs
§ Jacksonian era (1880s) saw the repeal of state medical licensure laws:
· Like the modern tea party movement
· From 1832 – 1852 many states repealed medical licensing laws
o AL, MI, SC, MD, VT, GA, NY, IL (passed in 1817, repealed in 1825)
· Civil war created a rebound (back to safer practices)
