New Trump Order means Insurance has to tell you how much things cost?
Good morning, Ladies and Gentlemen.
Welcome to the people processes podcast where we dive deep into the tools, laws and processes that you need to scale and grow your people processes. I’m your host, Rhamy Alejeal and I’m the CEO of people processes. My company helps organizations all across the United States streamline, optimize, implement, and revolutionize their HR operations. We’ve helped hundreds of companies, thousands of HR leaders across the world get their people processes right. Today, I’m excited to dive in a little bit into a new Trump department of labor health and human services regulation that talks about insurance regulation, how fun, how sexy, how crazy, but this insurance regulations a little different. It says that insurance companies are going to have to disclose how much you will pay for a service before you get it. Whoa. Before we dive too deep, I just want to ask you to please subscribe to our podcast. You can find us on iTunes, Google podcasts, Spotify, Stitcher, pretty much any pod catcher you like. We’re there. You can also subscribe to peopleprocesses.com which is what I love because we give you exclusive subscriber only content in there, like our new on-boarding checklist for 2020 with updated information about the four pretty cool setup. Check it out at peopleprocesses.com.
All right, let’s dive right into this thing. So what is Trump doing? Okay. On November 27th, 2019 the U S department of labor, health and human services and the treasury jointly issued a proposed rule. That rule is actually linked on the peopleprocesses.com website if you want to read it in depth yourself. That rule is going to require group health plans and health insurance issuers in the individual and group markets to disclose price and call sharing information upon request to participants, beneficiaries and enrollees or their authorized representatives.
So that means your actual plan participants, your employees, their spouses and their kids, if they ask the proposal would give consumers real time personalized access to call sharing information including an estimate of their call sharing liability for all covered healthcare items and services through an online tool that most group health plans and health insurance issuers would be required to make available to all of their members and even in paper form at the consumer’s request. Good Lord, I can’t even imagine. Maybe that’d be a two week process to get a letter in the mail or something. This is going to help consumers compare costs between specific providers before receiving care. So imagine you know you need a knee surgery rather than knowing your deductible and your out-of-pocket and assuming, all right, well this is gonna max it out or maybe it will be less or Hey, my doc said it’d probably be around three grand and then trying to figure out what that would mean.
You could use the online tool, look up specific pre-negotiated rates with specific carriers or with your insurance carrier, with specific providers and get an actual estimate of what you would pay given your deductible spend so far, your max deductible, your max out of pocket, your co-insurance rate and their negotiated rate with that provider. It would allow you to shop providers. This could be huge. Together the agencies concluded that the additional price transparency efforts are necessary to empower a more price conscious and responsible healthcare consumer, promote competition in the healthcare industry and lower the overall rate of growth in healthcare spending. Look, I don’t care what your politics are. Healthcare spending has gone crazy for a long time. Really since the mid 2000’s before Obamacare. Though Obamacare really added some costs in there too. It’s been a roughing and one of the reasons is that employees and just consumers in general can’t shop you.
It’s like you went to best buy and you had to just trust the best. And he’s like, I want a TV. And then he goes and picks it for you. And you can’t go compare that to Amazon and you don’t get any pre-estimates. It’s just price transparency is going to be if this is able to be implemented, which no guarantees. But if this rule is able to implement it, it is the first true movement to lowering the cost, the true cost of healthcare in this country. Not what people pay individually, not what companies pay. And I would ensure his pay but just the overall cost. So everybody benefits that. I’ve seen at least since I started in this business about 10 years ago. The proposed rule includes two approaches to make healthcare price information accessible to consumers, allowing for easy comparison shopping.
So these are the two things they’re going to do. First, each non grandfathered group health plan or health insurance issuer offering non grandfathered health insurance coverage in the individual and group markets. So basically everybody who’s not unlike an old plan pre 2013 would be required to make available to participants, beneficiaries and enrollees personalized out of pocket cost information for all covered healthcare items and services. Through an internet based self service tool and in paper form upon request. For the first time, most consumers would be able to get estimates of their call sharing liability for healthcare for different providers, allowing them to both understand how costs for covered healthcare items and services are determined by their plan and shop and compare costs for healthcare before receiving care. Second, each non grandfathered group health plan or health insurance offering non-grant grandfathered individual coverage would be required to make available to the public, including stakeholders such as consumers, researchers, employers and third party developers.
The end network negotiated rates with their network providers and historical payments have allowed amounts to out of network providers through standardized regularly updated machine readable files, I. E. big giant databases that I can turn into proposals. This would provide opportunities for innovation to dive, to drive price comparison, consumerism in the healthcare market. That would be huge. Knowing what the usual and customary out-of-pocket spend is something that’s nearly opaque right now. Even for someone like me who’s in the industry quoting hundreds of companies, working with hundreds of companies every year, being able to see the actual, like you would get a proposal and be like, this is your deductible, your out of pocket maximum and here’s a sampling of negotiated rates for providers in your area. That makes a huge difference. In conjunction with the proposed rule, the DOL posted three appendices to its website.
The model notice proposed data elements for the negotiated rate machine readable file and proposed data elements for the allowed amount. That’s the out-of-pocket or the out of network stuff in machine-readable files, so they actually said, not only do we want you to do it, here’s the notice we want you to put out and here’s how we want your data to look so that everybody can read it. Those came out. That’s the big news for you as a consumer of healthcare. Now there’s a couple of other little things. They changed up how the MLR works. The medical loss ratio basically saying if you can provide information that lets people save money, the insurance company doesn’t have to necessarily rebate that as an MLR. They can split it with the consumer. So basically it frees up a little bit like right now, most MLRs are 80%.
So whatever dollars come into the insurance company, 80% has to go to spend on actual medical payments. This is saying, look, if you can actually lower the cost of health insurance and people are using these tools, we’ll let you go a little bit above 80%. This gives an insurer the incentive to make the system good instead of some just, you know, crappy website that no one ever uses because no one can ever find it. When they do, it doesn’t work. We don’t want that. So it also provides an incentive knowing that a lot of this cost of publishing this information is going to disrupt insurance services and presidents and other, it says if you do it well and it saves people money, you can make a little bit more too.
Now, when would the start? All components of the role would be applicable for plan years beginning on or after one year after the finalization of the rule. So the rule is not final yet. A commons are due on or before January 14th, 2020. So if you really think about this and you want to comment on it, we’ll have a link to our website. We can actually go online and comment to the federal government, department of labor, the joint task force on this and tell them what you think. Those comments are going to be up. You can do them up to January 14th, 2020 and then after that there’s normally a 90 day review period and then the law would go into effect unless they revise it. If that’s the case, then by 2021, we could have this kind of transparency. It would be a game changer, an absolute game changer.
So, you know, wherever your politics are, I gotta say I’m super excited about this. I think it would give us so much more information going in. So keep an eye out. If next fall you renew if you’re a January 1 renewal, so not 2020 that we’re already done with, but 2021 keep an eye on this because your 2021 proposal may be completely different and if your broker isn’t necessarily providing that information to you, you want to shop around, take a look around because this could be the biggest deal in terms of selecting health plans in a long time. My name is Rhamy Alejeal, I’m the CEO of peopleprocesses. We help companies all over the U S with things like on-boarding, payroll, timekeeping, and of course employee benefits. We can help you find and select the best plans for your organization, communicate them, enroll them, handle all the paperwork and talk to each and every one of your eligible employees with one of our licensed benefits counselors whose only job is to help employees understand this stuff. If you’re interested, drop us a line at surfaceatpeopleprocesses.com or at peopleprocesses.com you can book an appointment directly. We’d love to help you out there. In the meantime, it is time for you to go out there, have a great day, and get your work done. Thanks for listening.
Appendices. In conjunction with the proposed rule, the DOL posted the following three appendices to its website:
- Proposed Transparency in Coverage Model Notice
- Proposed Data Elements for Negotiated Rate Machine-Readable File
- Proposed Data Elements for Allowed Amount Machine-Readable File.
Footnotes
5Proposed Rule: Transparency in Coverage, 26 CFR Part 54, 29 CFR Part 2590, and 45 CFR Parts 147 and 158; 84 FR 65464, November 27, 2019; https://www.govinfo.gov/content/pkg/FR-2019-11-27/pdf/2019-25011.pdf.
About the author, Rhamy
Rhamy grew up watching and working with his mother and grandmother in the senior insurance market. This familiarity with the struggles faced by people trying to navigate the incredibly complicated and heavily regulated healthcare market led him to start Poplar Financial while working on his degree at the University of Memphis. After completing his MBA and Bachelors in Finance and Economics, Rhamy guided Poplar Financial through the disruptive opportunity that is the Affordable Care Act. Since then Poplar Financial has received numerous awards from major insurance carriers and has completed its fourth year in a row of doubling in size. Now his team focuses on the processes around human resources and specializes in providing companies with between 20 and 1000 employees with the payroll, benefits, and HR needs.