NAIC Summary of Health Plan Coverage Ready for Testing

Tucked somewhere in the behemoth Patient Protection and Affordable Care Act is a readability standard. No, it doesn’t apply to the act itself.

Instead, this standard will require that every health insurer and every group health plan provide a summary of benefits and coverage, or SBC, that is written not exactly in plain English but in a uniform format that will make comparisons across health plans a bit easier. The ACA also requires the development of coverage facts labels, which will illustrate how a health plan might cover treatment for all of the services needed for a certain health condition such as diabetes.

This is important because beginning in March 2012 anyone who applies for health insurance, or has insurance through an employer, will be handed this information packet to shop for benefits or to provide a clearer idea of how their existing benefits work.

The Department of Health and Human Services entrusted the development of the SBC to the National Association of Insurance Commissioners, a group of appointed or elected state government officials who regulate insurance companies in their individual states. In turn, NAIC named a consumer information subgroup of 21 state insurance regulators and 14 industry representatives, health policy wonks, and consumer advocates.

What the subcommittee developed has been likened to the nutrition labels that populate almost every food item in a grocery store. That’s a bit of stretch, though, unless we’re talking industrial sized cans and packages.

Including the coverage fact labels, the SBC runs six pages. It includes definitions for terms such as 'premiums' and 'deductibles,' and presents some what-ifs: If a health plan member visits a healthcare provider’s office to treat an injury, what will be the copay or coinsurance amounts? The numbers are specific to the member’s policy.

The coverage fact labels include three examples of the costs incurred for having a baby, treating breast cancer, and managing diabetes. The care costs are specific to the experience of one individual who received that diagnosis or treatment.

I have to say that I am impressed. The information is useful and the presentation is simple. Plus everything is presented in a readable font and I didn’t see a single asterisk.

The insurance industry is supportive of the effort in general, but is not happy about being required to use real and meaningful cost examples. I had to laugh at a couple of the industry comments submitted to the committee after reviewing a draft of the SBC and coverage fact labels. There were concerns that the labels “might be confusing” or be “too complex” for the average consumer. Seriously? Have you read your own health benefit policies?

Still, in a roundabout way, the industry raises an important point – where should the line be drawn in terms of making a hard-to-understand-topic understandable without oversimplifying it to the point of compromising the usefulness of the information?

The summary of benefits and coverage will undergo two rounds of consumer testing, one by the independent Consumers Union and a second sponsored by the Blue Cross Blue Shield Association and America’s Health Insurance Plans or AHIP.

This is not us-versus-them testing. In many ways the interests of the Consumers Union, AHIP and the BCBSA are aligned. They each want to make sure that this complicated and important information is understandable and meaningful. But their approaches may be a bit different.

Consumer advocates want learn if the information is presented clearly and easily understood. The industry is interested in learning if the SBC packet contains the information consumers want and need.

The industry has raised a red flag about the coverage facts labels, which illustrate sample coverage for threes medical scenarios, including treating breast cancer. In a letter to the subcommittee on insurer recommended that the less complex medical conditions should be used in the examples. That’s a good point and certainly reminds everyone of the danger of oversimplification.

“It is a complicated balancing act,” says Susan Pisano, a spokesperson for AHIP. She points to studies that show that consumers are happy with summaries as long as additional information is available elsewhere, like on a web site.

With healthcare reform expected to being millions of new insurance shoppers into the market, the time is definitely right for a summary of benefits and coverage that can be easily presented and understood. But the coverage facts label may need to be tweaked to make sure that in the push to make health benefits understandable, we don’t trip and make the information meaningless.