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HHS publishes interim final rule on Pre-Existing Condition Insurance Plan Program

Posted on July 30, 2010 | Comment (1)

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Key Developments
Implementation Briefs

The Department of Health and Human Services has published interim final rules on the Pre-Existing Condition Insurance Plan Program.

Comment (1)

Yesterday, the Centers for Medicare & Medicaid Services (CMS) suspended enrollment in pre-existing condition insurance plans (PCIPs), effective March 2 of this year. The letter, sent from Richard Popper, the director of Insurance Plan Groups, to PCIP contractors, also included language regarding benefit adjustment analysis.
The Department of Health and Human Services (HHS) issued an amendment to an interim final rule to prevent young illegal aliens allowed to stay in the United States under President Obama's amnesty program from joining a high-risk insurance pool program. from joining high-risk insurance pool programs. The amendment modifies the 2010 interim final rule which implements the Affordable Care Act's (ACA's) Pre-Existing Condition Insurance Plan (PCIP) program. The purpose of PCIP is to enable people who have been uninsured for at least six months due to medical problems to obtain coverage at the same price as those without pre-existing conditions. PCIP will end in 2014 when plans are barred from charging more to consumers with medical problems. The amendment was released because the 2010 interim final rule held that individuals could enroll in these pools if they were citizens, nationals, or a "lawfully present" in the United States.
The Affordable Care Act's (ACA's) Pre-Existing Condition Insurance Plan (PCIP) is the temporary, federal high-risk pool which will provide coverage to uninsured individuals with preexisting conditions until 2014, when exchange coverage becomes available. Nearly 78,000 people have enrolled since the program was implemented two years ago. An issue brief recently released by the Commonwealth Fund compares the PCIP with state-based high-risk pools that existed prior to the ACA. The paper discusses the programmatic differences that could have caused the lower-than-anticipated enrollment and higher-than-anticipated costs for the PCIP. PCIP coverage, like state high-risk pool coverage, likely remains unaffordable to most lower-income individuals with preexisting conditions, but provides much needed access to care for those able to afford it. Operational costs of these programs are also quite high, making them less than optimal as a means of broader coverage expansion.
Individuals who buy coverage directly from a health insurer are often denied coverage due to a pre-existing condition during a process called medical underwriting, which assesses an applicant’s health status and other risk factors. Beginning January 1, 2014, the Affordable Care Act (ACA) prohibits health insurers in the individual market from denying coverage, increasing premiums, or restricting benefits because of a pre-existing condition. The Government Accountability Office (GAO) examined the effect of this provision on adults who are 19-64 years old in a new report released today. GAO examined (1) the most common medical conditions that would cause an insurance company to restrict or deny insurance coverage for adults and the average annual costs associated with these conditions, (2) estimates of the number of adults with pre-existing conditions, and (3) the geographic and demographic profile of adults with pre-existing conditions. To address these three issues...
The Affordable Care Act appropriated $5 billion to create the Pre-Existing Condition Insurance Plan (PCIP) program, which provides insurance for such individuals until new protections take effect in 2014. 27 states opted to run their own PCIPs, while 23 states and the District of Columbia opted to let the Department of Health and Human Services (HHS) run the PCIPs for their residents. Through their study "Pre-Existing Condition Insurance Plans: Program Features, Early Enrollment and Spending Trends, and Federal Oversight Activities," the U.S. Government Accountability Office (GAO) examined 1) PCIP features, premiums, and criteria for demonstrating a pre-existing condition, 2) trends in PCIP enrollment and spending, including administrative costs, and 3) federal oversight activities. The GAO found that state and federally run PCIPs generally had similar cost sharing arrangements. Coverage limits were common but varied, both in terms of the benefits affected and the extent of the limits. Monthly premiums ranged considerably and were generally higher in the federally run PCIP. Enrollment and spending for state and federally run PCIPs have been significantly lower than initial projections. Spending was also lower than anticipated.
Provides funding for a temporary high-risk health insurance pool for individuals with pre-existing conditions.