HHS loses court fight on regulating limited-benefit health plans
Skip to main content
MDHC_Logotype_white
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • This Week's News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • Mikelle Moore
      The promising future of rural healthcare, even amid the COVID-19 pandemic
      Alicia Wilson
      Q&A: Emerging leader Alicia Wilson on staying close to home
      Presbyterian Hospital in Albuquerque, UNM Sandoval Regional Medical Center in Rio Rancho, N.M., Lovelace Medical Center in Albuquerque and Christus St. Vincent Regional Medical Center in Santa Fe, N.M.
      Providers weigh long-term risks, rewards of post-COVID collaboration
      46.7% of surveyed adults reported delaying dental treatment due to COVID-19. 74.7% delayed a routine checkup.
      Data Points: Dental visits during the pandemic
    • Presbyterian Hospital in Albuquerque, UNM Sandoval Regional Medical Center in Rio Rancho, N.M., Lovelace Medical Center in Albuquerque and Christus St. Vincent Regional Medical Center in Santa Fe, N.M.
      Providers weigh long-term risks, rewards of post-COVID collaboration
      Why healthcare should also fight for $15
      46.7% of surveyed adults reported delaying dental treatment due to COVID-19. 74.7% delayed a routine checkup.
      Data Points: Dental visits during the pandemic
      Mikelle Moore
      The promising future of rural healthcare, even amid the COVID-19 pandemic
    • The Check Up: Dr. Imran Andrabi
      The Check Up: Dr. Imran Andrabi of ThedaCare
      Dr. Imran Andrabi
      Q&A: ThedaCare CEO says lessons from COVID-19 will inform new approaches to population health management
      Hospitals confront water shortages in winter storm aftermath
      beaumont-hospital-royal-oak_i_i_i.jpg
      Beaumont says nearly 2,000 second-shot vaccinations canceled due to vaccine shortage
    • CMS: Group health plans must cover COVID-19 diagnostic testing
      High MLRs inspire insurers to focus on quality improvements
      Blue Cross and Blue Shield of Oklahoma, OU Health Physicians mired in contract dispute
      Beyond the Byline: Insurers are betting on virtual-first plans as COVID-19 shifts care pathways
    • CMS: Group health plans must cover COVID-19 diagnostic testing
      Another Pennsylvania health network vaccinates employee kin
      Why AstraZeneca and J&J's vaccines, in use elsewhere, are still on hold in America
      Lawmakers probe if Cuomo's policy fueled nursing home deaths
    • UPMC's patient volumes stabilize, boosting 2020 profits
      Genomics firms taking advantage of SPACs trend to go public faster
      COVID-19 could dent hospital revenue by at least $53 billion in 2021, AHA says
      deloitte GDP image chart graph going up
      Sponsored Content Provided By Deloitte
      Breaking the cost curve
    • Teladoc reports $383.3M in fourth-quarter revenue, up 145%
      man and woman looking at ipad wearing face masks stock image
      Sponsored Content Provided By Surescripts
      Improvements to benefits data can enhance ePrescribing and the patient experience
      Oscar Health's $1B IPO sets the stage for more health tech exits in 2021
      A map of the U.S. with images of the coronavirus.
      The digital divide becomes a new social determinant of health
    • Fighting COVID on three fronts
      46.7% of surveyed adults reported delaying dental treatment due to COVID-19. 74.7% delayed a routine checkup.
      Data Points: Dental visits during the pandemic
      A provider wearing PPE looking at a wall with patient notes.
      Rethinking quality and safety in the age of COVID
      exam room-main_i.jpg
      Nurse practitioner with not-for-profit clinic in Detroit church expands to COVID-19 vaccines
    • Alicia Wilson
      Q&A: Emerging leader Alicia Wilson on staying close to home
      Michael Jordan, Novant team up to address health equity
      Former Ascension CEO, the first to lead the health system, passes away
      Biden's pick to head CMS would be first Black woman to hold post
    • Midwest
    • Northeast
    • South
    • West
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
    • The Affordable Care Act after 10 years
    • Dr. John Fischer
      Patient-reported outcomes tool for hernia surgery helps physicians improve care
      New care model helps primary-care practices treat obesity
      doctor with patient
      COVID-19 treatment protocol developed in the field helps patients recover
      Rachel Wyatt
      Project to curb pressure injuries in hospitals shows promise
    • What's next for on-demand telehealth companies?
      A map of the U.S. with images of the coronavirus.
      The digital divide becomes a new social determinant of health
      A CalOptima PACE vaccination clinic.
      Will COVID-19 be the catalyst for creating a more sustainable healthcare system?
      Ascension’s St. Mary’s Hospital Surgery Center at Towne Centre and Allegheny Health Network’s Bethel Park surgery center
      Hospitals see opportunity, risk in ambulatory surgery centers
    • Dr. Daniel Hall
      UPMC pilots machine learning, telehealth to inform patient transfers
      A woman being recorded using her inhaler on a smartphone.
      Digital check-ins, connected inhalers help control asthma
      A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
      A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • What's next for on-demand telehealth companies?
      Rising prescription copays drop adherence, spike mortality, research shows
      Dr. John Fischer
      Patient-reported outcomes tool for hernia surgery helps physicians improve care
      Highmark Health inks six-year cloud, tech deal with Google
    • Hospitals' Medicare billing practices suggest upcoding, OIG says
      California hospitals prepare ethical protocol to prioritize lifesaving care
      Amazon, JPMorgan Chase, Berkshire Hathaway disband Haven
      Digital pathways poised to reshape healthcare continuum in 2021
    • Dr. Daniel Hall
      UPMC pilots machine learning, telehealth to inform patient transfers
      A woman being recorded using her inhaler on a smartphone.
      Digital check-ins, connected inhalers help control asthma
      Humana partners with in-home provider for 24/7 care
      A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
    • Coordinated payment policies could speed transition to value, experts say
      CMMI's geographic direct contracting model needs an overhaul, experts say
      Hospitals fight UnitedHealthcare policies over lab test, specialty drug payments
      Cigna eliminates prior authorization for coronary CT scans
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
    • Health Systems Financials
      Executive Compensation
      Physician Compensation
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Dr. Alan Kaplan
      The risks, rewards of taking organizations 'where they haven’t gone before'
      Wellstar CEO calls adapting for the pandemic her bold move
      Howard P. Kern
      Recognizing the value of telehealth in its infancy
      Dr. Stephen Markovich
      A bold move helped take him from family doctor to OhioHealth CEO
    • Dr. Stephen Markovich
      Making sure we're aligned along the path to achieving inclusion
      Barry Ostrowsky
      Ending racism is a journey taken together; the starting point must be now
      Laura Lee Hall and Gary Puckrein
      Increased flu vaccination has never been more important for communities of color
      John Daniels Jr.
      Health equity: Making the journey from buzzword to reality
    • Mikelle Moore
      The promising future of rural healthcare, even amid the COVID-19 pandemic
      In-person visitation must be part of the national COVID-19 response
      We've lost so much to the pandemic, but we've also made gains that will endure
      Medical groups key to meeting president's vaccine pledge
    • Letters: Eliminating bias in healthcare needs to be ‘deliberate and organic’
      Letters: Maybe dropping out of ACOs is a good thing for patients
      Letters: White House and Congress share blame for lack of national COVID strategy
      Letters: VA making strides to improve state veterans home inspections
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Award Programs
    • Nominate
    • Previous Award Programs
    • Other Award Programs
    • Best Places to Work in Healthcare Logo for Navigation
      Nominations Open - Best Places to Work in Healthcare
      Nominations Open - 50 Most Influential Clinical Executives
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Minorities in Healthcare
      • - Luminaries
      • - Top 25 Minority Leaders
      • - Minorities to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • COVID-19 Event Tracker
    • podium march webinar logo lockup
      Sponsored Content Provided By Podium
      Webinar: Critical Touchpoints for Every Patient’s Journey — How Technology Plays an Important Role
      scp health logo lockup march 2021
      Sponsored Content Provided By SCP Health
      Webinar: COVID’s call to action — Reset for success in 2021
    • Women Leaders in Healthcare Conference
    • Social Determinants of Health Symposium
    • Healthcare Transformation Summit
    • Leadership Symposium
    • Virtual Briefings
      • - Hospital of the Future
      • - Mental Health
      • - Patient Safety & Quality
      • - Strategic Marketing
      • - Virtual Health
      • - Workplace of the Future
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Minority Leaders Gala
    • Top 25 Women Leaders Gala
  • Listen
    • Podcast - Next Up
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
    • Next Up Podcast: Educating patients on the COVID-19 vaccine with Tanya Andreadis
      Dr. Joseph Cacchione
      Next Up Podcast: Educating patients on the COVID-19 vaccine with Dr. Joseph Cacchione
      Dr. Karen DeSalvo
      Next Up Podcast: What to expect with telehealth and healthcare technology in the next four years
      Carter Dredge
      Next Up Podcast: Ready, set, innovate! Innovation and disruption in healthcare
    • Beyond the Byline: Insurers are betting on virtual-first plans as COVID-19 shifts care pathways
      Beyond the Byline: How residents' stories shape our coverage of the vaccination rollout in nursing homes
      Beyond the Byline: Regulators aim to boost value push with fraud and abuse law updates
      An older man wearing a mask receiving a vaccine.
      Beyond the Byline: Verifying information on the chaotic COVID-19 vaccine rollout
    • Outreach during COVID-19
      Leading intention promote diversity and inclusion
      Introducing Healthcare Insider Podcast
    • The Check Up: Dr. Imran Andrabi
      The Check Up: Dr. Imran Andrabi of ThedaCare
      The Check Up: Tanya Blackmon
      The Check Up: Tanya Blackmon of Novant Health
      The Check Up: Dr. Patrick Hwu
      The Check Up: Dr. Patrick Hwu of the Moffitt Cancer Center
      The Check Up: Suresh Gunasekaran
      The Check Up: Suresh Gunasekaran of the University of Iowa Hospitals & Clinics
    • ivana naeymi-rad one on one intelligent medical objects
      Video: Ivana Naeymi Rad of Intelligent Medical Objects
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Government
July 06, 2016 01:00 AM

HHS loses court fight on regulating limited-benefit health plans

Harris Meyer
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    The Obama administration suffered a setback in its efforts to strengthen the individual insurance market when a federal appeals court last week struck down an HHS rule barring the sale of certain limited-benefit plans as stand-alone products.

    In Central United Life v. Burwell, the U.S. Court of Appeals for the District of Columbia Circuit overturned a 2014 HHS rule restricting the sale of fixed-indemnity insurance plans that pay policyholders fixed dollar amounts to cover medical services regardless of how much the provider bills. These plans, which are cheaper to buy than comprehensive plans but exclude pre-existing conditions, do not comply with Affordable Care Act provisions on minimum essential benefits or guaranteed issue.

    HHS had allowed the sale of such indemnity plans only to people who also had plans that complied with the ACA's minimum essential coverage standard. It also had mandated that insurers fully inform consumers that these plans were not a substitute for comprehensive coverage and could leave them exposed to the ACA's tax penalty for being uninsured.

    A federal judge last year blocked the minimum essential benefits requirement, and the appellate panel affirmed that ruling (PDF) Friday, calling the HHS rule “administrative overreach.”

    But the panel did not throw out the part of the rule requiring indemnity insurers to notify customers about the limits of the coverage and their potential liability for the ACA tax penalty. It's estimated that as many as 4 million people have fixed-indemnity policies without accompanying comprehensive coverage.

    The Obama administration and some insurance industry officials are worried about the sale of such plans because they offer skimpy coverage and may be sucking younger, healthier consumers out of the individual insurance markets created by the ACA, thus driving up premiums. Last month, HHS proposed a rule restricting another type of cheaper, noncompliant insurance product known as short-term health plans, which have surged in sales. Under the rule, short-term plans could only be offered for less than three months and could not be renewed.

    “By keeping these consumers out of the ACA single-risk pool, such abuses of limited-duration coverage increase costs for everyone else, and they could have a greater impact over time if allowed to become more widespread,” HHS said in a written statement when it issued the proposed rule.

    It's expected that insurers will challenge that rule in court if and when the administration makes it final later this year. They are likely to cite last week's Central United Life decision, said Tim Jost, an emeritus law professor at Washington and Lee University who is an ACA expert. “Short-term coverage is more of a threat to insurance market stability than the special enrollment periods that insurers are up in arms about,” he said.

    Policymakers and insurers say a number of steps are needed to shore up the ACA's individual insurance market, and that it's vital to maximize the number of healthier consumers in that market to offset the costs of sicker members. Currently, many insurers say they're losing money on the exchange business due in part to the sicker pool of customers. Fixed-indemnity and short-term plans likely undermine the ACA risk pool by drawing away healthier customers looking for cheaper premiums.

    One factor that will help improve market stability and reduce overall premiums is that insurers will no longer be allowed to sell grandfathered individual-market plans that kept premiums down by restricting sales to existing customers starting in 2017. That's expected to push hundreds of thousands of healthier people into ACA-compliant plans on and off the exchanges.

    Insurers and some state officials had defended fixed-indemnity plans as a more affordable option for consumers than the comprehensive plans available on the exchanges. They would pay less out-of-pocket even after paying the ACA tax penalty. Eleven states signed a friend-of-the-court brief in the Central United Life case arguing that fixed-indemnity insurance “is a rational choice for these individuals because it provides meaningful access to the health care system.”

    But Jost said many consumers probably don't understand the limits in fixed-indemnity plans, such as pre-existing condition exclusions, dollar limits on benefits and no guarantee of renewal. They only find out when they need healthcare and face big medical bills. “You get what you pay for,” Jost said.

    Another concern is that fixed-indemnity and short-term policies, which are not subject to ACA rules on minimum medical loss ratios, yield high profits for insurers because they pay out relatively small amounts in claims. The medical loss ratio in 2015 for individual short-term health plans—the percentage of premium revenue paid out in claims—was 69.8%, while the medical loss ratio for noncomprehensive medical plans was 58.8%, according to a report from the National Association of Insurance Commissioners (PDF), which currently is working on a model state law for regulating short-term plans.

    “It's a very high-profit business, with very high commissions to agents and brokers and a very low payout to consumers,” Jost said. “It's a good business to be in if you can find someone to buy the stuff.”

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Mistakes were made in regulation of coronavirus serology tests, FDA officials acknowledge
    Mistakes were made in regulation of coronavirus serology tests, FDA officials acknowledge
    States rush to catch up on delayed vaccines, expand access
    States rush to catch up on delayed vaccines, expand access
    Sponsored Content
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Minorities in Healthcare
          • - Luminaries
          • - Top 25 Minority Leaders
          • - Minorities to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Nominate
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Women Leaders in Healthcare Conference
        • Social Determinants of Health Symposium
        • Healthcare Transformation Summit
        • Leadership Symposium
        • Virtual Briefings
          • - Hospital of the Future
          • - Mental Health
          • - Patient Safety & Quality
          • - Strategic Marketing
          • - Virtual Health
          • - Workplace of the Future
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Minority Leaders Gala
        • Top 25 Women Leaders Gala
      • Webinars
      • COVID-19 Event Tracker
    • Listen
      • Podcast - Next Up
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing