HHS Proposes Rules to Clarify Health Insurance Coverage

The federal government on Wednesday unveiled proposed rules to help consumers better understand their health insurance benefits and costs, and search for the most appropriate coverage.

"We are telling insurance companies that they need to be more transparent about the benefits they offer, what they are spending premium dollars on, and justifications for any proposed rate increases," Centers for Medicare and Medicaid Services Administrator Donald Berwick, MD, said in a Wednesday afternoon media teleconference. "This is all grounded in the idea that the more informed the patient is, the better decisions he or she can make."

Berwick acknowledged that insurance benefits and cost information confuses many consumers. "Many times people will make decisions on coverage and not understand what it means for them until they get sick or until their care is denied or until they face high out-of-pocket costs," he said.

The Summary of Benefits and Coverage proposed rules would give consumers access to two forms to help them evaluate their health insurance choices, including: a summary of benefits and coverage; and a uniform glossary explaining terms such as "deductible" and "co-pay."

If the proposed rules are adopted, health plans would be required to provide the forms to shoppers and enrollees upon request and before coverage is purchased. The forms are scheduled to be available sometime in 2012 for the more than 180 million health insurance consumers with private health insurance coverage.

America's Health Insurance Plans raised concerns that the proposed rule would create an expensive burden that insurers would pass along to their customers. "The benefits of providing a new summary of coverage document must be balanced against the increased administrative burden and higher costs to consumers and employers," AHIP press secretary Robert Zirkelbach said in a media release.

"For example, since most large employers customize the benefit packages they provide to their employees, some health plans could be required to create tens of thousands of different versions of this new document—which would add administrative costs without meaningfully helping employees."

AHIP also wants the federal government to push back the implementation date "to give health plans sufficient time to make the operational and administrative changes needed to create these new documents.  We will be submitting detailed comments and look forward to working with regulators to mitigate potential unintended consequences of this new requirement," Zirkelbach said.  

Lynn Quincy, a senior health policy analyst with the Consumers Union, sat in on the teleconference with Berwick and said the proposed rules would provide consumers with a single, standard method of understanding health plan features, similar to standard disclosures for mortgage terms or credit cards.

Quincy said the nonprofit Consumers Union has heard "hundreds of stories of consumers who purchased a health plan they didn't understand."

"In the most unfortunate cases the consumer suffered a severe illness and was unpleasantly surprised when he or she learned they didn't have the coverage they thought they had purchased," Quincy said.

"Our own studies have revealed that shopping for health insurance is a task that consumers dread. In part, they told us it's because they find current healthcare documents too difficult to understand. There is no doubt that consumers need much better health insurance disclosures."