Actuarial Considerations for the Evidence of Coverage Regulation

While the evidence of coverage regulation issued last week is primarily a consumer information regulation, there are several provisions of interest for actuaries.  The required distribution dates of the summary of benefits and coverage (SBC) to consumers may impact rate development timelines.  Actuaries may also be asked to review or develop automated methods for pricing the coverage examples. Finally, actuaries may wish to standardize language around the uniform glossary to minimize confusion within and across organizations.

While many states have required renewal notification dates for products many employers particularly small employers may use the renewal notification to start shopping for the next year’s coverage so the required renewal dates tend to drive much of the rate making calendar.The notice of proposed rule making (NPRM) required group health plans to provide participants a new SBC 30 days before any changes to underlying benefits including plan design.  This would have pushed the rate making calendar ahead as carriers moved to provide renewal notices at least 60 days in advance to provide employers with adequate time for analysis of the renewal and potential plan design changes. The new rule allows allows for a group to provide the SBC upon finalization of a contract if the contract is still under negotiation 30 days before the effective date.  However, the negotiation process may be moved earlier as employers seek to finalize coverage decisions 30 days but without the hard deadline there may be less of a shift. Self funded plans must publish the SBC at least 30 days before renewal if there are any changes so smaller self-funded plans that may not have an open enrollment period will need to make sure plan designs are finalized at least 30 days before renewal.

There are two coverage examples that provide an example of the coverage offered by a particular benefit plan.  The current coverage illustrations are for maternity and diabetes coverage. Each coverage example is a detailed listing of the services performed including CPT, DRG, and NDC codes as well allowed amounts. Actuaries may be tasked to build an automated system for generating the coverage examples.  As part of this process actuaries may also be called on to evaluate the coverage examples for completeness and also for some repricing information. For example, the maternity example uses CPT code 59400 which is a bundled payment for maternity may be repriced as separate services and actuaries may be asked to review the repricing algorithm.

The uniform glossary contains simplified explanations of many terms used in health insurance.  While almost all of terms are standard insurance terms actuaries should review the glossary to make sure there is a common insurance terminology used throughout the organization.

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