Health New England

September 1, 2010

RE: Notice of Plan Changes required in relation to Federal Healthcare Reform¹

Dear Employers and Brokers:

As your business partner, HNE is committed to keeping you informed of changes to the healthcare industry, particularly those which could have an impact on your business.

We have reviewed the Federal Healthcare Reform law and have identified the required changes that we will implement for our plans to comply. These include:

Extension of dependent age coverage

Elimination of cost-sharing for preventive services

Prohibition against lifetime benefit caps

New claims and appeals rules

For the most part, HNE already is in alignment with the majority of these new provisions as a result of our ongoing compliance with Massachusetts healthcare reform and our innovative $0 copay for preventive services.

In the interest of keeping the administration of these changes as simple as possible for you, our members, and our other business partners, we will implement changes for all fully funded plans for an effective date of October 1, 2010. We also will work with our self-insured clients on their benefits to ensure that their plans are in compliance.

We’ve included a list of the required changes with this letter. We also provide a brief explanation of how these changes affect HNE plans beginning October 1, 2010. We request that you post these model notices at your work site(s) or otherwise make them available to your employees.

We will continue to keep you informed regarding any additional changes that may be necessary to comply with future provisions of the Federal Healthcare Reform. While many of these provisions are described in general terms under the law, we are awaiting further regulatory guidance that will provide us with the guidance to implement and administer the changes.

In addition to Federal Healthcare Reform, Massachusetts has issued new coverage mandates for early intervention services, autism coverage, and infertility coverage. These mandates will require changes to our HNE benefits for an effective date of January 1, 2011. We will send a subsequent notice on or before November 1 describing these changes. The November 1 notice also will include some changes to our copayments, formulary, and administrative requirements that we will be making for a January 1 effective date. These latter changes are consistent with our ongoing review of the benefits and services we offer to our members as part of our commitment to provide affordable access to high quality health care.

We will notify HNE subscribers of both federal and state changes in a future mailing that we will send prior to January 2011. We also will include information about the changes with pre- and post-enrollment materials that we provide to all subscribers upon renewal.

If you would like further information either on these changes or on Federal Healthcare Reform, please see our special edition of InsideHNE at hne.com. You can also find more detailed information about Federal Healthcare Reform and the changes mandated for 2010 at the U.S. Department of Labor website (http://www.dol.gov/ebsa/healthreform/).

If you have any questions, please call your HNE Account Executive.

Sincerely,

June Gardner
Director of Sales

Federal Health Care Reform Requirement		HNE Coverage before 10/1/10	HNE Coverage on or after 10/1/10
I. New Coverage Requirements
Young Adults on Parents’ Health Plans Federal Healthcare Reform allows certain children to be covered under their parent’s health insurance up to age 26. Employers no longer have to impute income to employees for health coverage of such children, even though they are not tax dependents under the Code.		The new provision is broader than the Massachusetts rule implemented in 2006. Currently, under Massachusetts law, dependent coverage normally ends at age 26 or two years after loss of dependent status under the Internal Revenue Code, whichever comes first.	For HNE’s fully-funded plans, effective June 1, 2010 we stopped terminating dependents under the age of 26. All dependents are allowed to remain on their plans until their 26^th birthday regardless of whether or not they are married, live with the subscriber or are considered an IRS dependent. Dependents under age 26 who have already been terminated from the plan will be directed back to their employer group. If their employer agrees to add them back on to the plan early, HNE will allow the early reinstatement of coverage. Employers also must offer an open enrollment period of at least 30 days to allow dependents to come back on the plan beginning on the first day of the plan year. Back to top >>
Elimination of Cost-Sharing for Preventive Care Plans must provide coverage without cost-sharing for: Services recommended by the US Preventive Services Task Force; Immunizations recommended by the Advisory Committee on Immunization Practices of the CDC; Preventive care and screenings for infants, children and adolescents supported by the Health Resources and Services Administration; and Preventive care and screenings for women supported by the Health Resources and Services Administration. For a complete list of preventive care services please go to: http://www.healthcare.gov/center/ regulations/prevention/recommendations.html		HNE already offers many plans with no cost sharing for preventive care visits.	HNE will adjust copayment and claims payment administration as needed to fully comply with this requirement. HNE may impose cost sharing for: Preventive items and services delivered by out-of-network providers Preventive services that are not described in the regulations HNE may use reasonable medical management techniques to determine the frequency, timing, method, treatment or setting of services to the extent that they are not specified in the relevant recommendation or guideline. Back to top >>
II. Patient Protections
Prohibition on Preexisting Condition Exclusions Prohibits health plans from limiting or excluding benefits (including the denial of coverage) related to a condition that was present before the date of enrollment for coverage for enrollees under the age of 19. This rule applies to all individuals of any age beginning in 2014.		As required by Massachusetts under state health care reform, HNE does not impose a preexisting condition exclusion or discriminate based upon an individual’s health status for any member regardless of age.	No Change needed
Emergency Services Prohibits preauthorization requirements or restrictions for emergency services. If a plan covers emergency services in the emergency department of a hospital, the services must be covered without requiring copayments or coinsurances for non-network services that are greater than what applies to network services.		HNE complied with this regulation prior to the passage of federal healthcare reform.	No Change needed
OB/Gynecologist for Women’s Access Plans may not require authorization or referral for obstetrical or gynecological (Ob/Gyn) care by in-network health care professionals specializing in Ob/Gyn.		HNE complied with this regulation prior to the passage of federal healthcare reform.	No Change needed
Pediatrician for Child’s PCP Plans that require members to choose a primary care provider (PCP) must allow members to choose any participating PCP, or pediatrician in the case of a child, from any available participating PCP or pediatrician available to accept the individual.		HNE complied with this regulation prior to the passage of federal healthcare reform.	No Change needed
Prohibitions against Lifetime Benefit Caps Group health plans or insurance companies providing group or individual market coverage are prohibited from setting lifetime limits on the dollar value of benefits considered “essential.”* Annual limits on essential benefits also will be eliminated on January 1, 2014. However, plans may impose “restricted” annual limits prior to January 1, 2014 as described below: $750,000 for plan years 9/23/2010-9/22/2011 $1.25 million for plan years 9/23/2011-9/22/2012 $2 million for plan years 9/23/2012-12/31/2013		HNE’s fully insured plans do not impose overall lifetime limitations. For most of HNE’s fully insured plans, there are no lifetime or significant annual limits on essential health benefits, with the exception of annual limits on Durable Medical Equipment (DME).	HNE will remove the annual dollar limit from DME services. DME services and supplies provided after October 1, 2010 will not be subject to the $3000 annual limit. Plans still may impose annual and lifetime limits on specific covered benefits that are not essential benefits, which have not yet been defined in regulation. In the interim, “the Departments will take into account good faith efforts to comply with a reasonable interpretation of the term.” Back to top >>
*Essential benefits include the following:
Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance abuse disorder services, including behavioral health treatment	Prescription drugs Rehabilitative and habilitative services and devices Laboratory services			Preventive and wellness services and chronic disease management Pediatric services, including oral and vision care
New Internal Claims & Appeals Rules Group health plans (and health insurance issuers) must establish internal and external review processes for “adverse benefit determinations.”		HNE will revise Claims and Appeals policies and descriptions as needed to comply with the new requirements. Back to top >>
III. Grandfathered Plans
Grandfathered plans will be exempt from some – but not all – of the new requirements under federal healthcare reform. Plans will lose grandfathered status if they choose to make significant changes that reduce benefits or increase cost to members.		Upon reviewing the final interim regulations, HNE has decided not to seek Grandfathered Plan status for its fully insured plans.Our plans are already close to meeting all requirements of the new law. Viewing the cost and administrative implications for immediate compliance against the strong likelihood that a plan would lose any minor benefit of Grandfathered Plan status in the near future, HNE is satisfied that all changes are best made at this time. Back to top >>
IV. Reporting
W-2 Reporting Starting in tax year 2011, Federal Healthcare Reform requires employers to report the value of the health insurance coverage they provide employees on each employee's annual Form W-2. This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludable from an employee's income and it is not taxable. Back to top >>

¹ The federal health care reform law is the Patient Protection and Affordable Care Act (PPACA) as amended by the subsequently enacted Health Care and Education Reconciliation Act (HCERA)