Private Health Insurance:

Progress and Challenges in Implementing 1996 Federal Standards

HEHS-99-100: Published: May 12, 1999. Publicly Released: Jun 11, 1999.

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Pursuant to a congressional request, GAO provided information on: (1) the implementation status of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) provisions in the group insurance market; (2) the price of coverage for certain individuals losing group insurance; (3) the extent of consumer understanding of HIPAA as well as federal, state, and private efforts undertaken to educate consumers about the law's protections; and (4) federal efforts undertaken to ensure HIPAA compliance.

GAO noted that: (1) implementation of HIPAA's insurance standards in the group market has proceeded relatively smoothly--particularly among larger group plans--although carriers and employers continue to express some concerns about certain administrative and interpretive aspects of HIPAA; (2) this ease of transition has occurred partly because many of these group plans had already provided key HIPAA protections before the law was enacted; (3) concerns exist about the extent to which some smaller employers are performing certain required tasks; (4) with respect to HIPAA's requirement that carriers guarantee access to coverage for certain smaller employers, early evidence suggests experiences vary considerably among states, largely depending on the extent of state-level reforms that preceded HIPAA; (5) HIPAA's group-to-individual portability provision ensures that certain consumers who lose group coverage are guaranteed access to at least two individual market insurance products; (6) the so-called HIPAA-eligible individuals who have certain health conditions often pay a higher-than-standard premium for individual coverage, although the amount of the premium increase varies considerably; (7) all but 3 of the 41 carriers GAO surveyed in states using HIPAA standards would charge a HIPAA-eligible with a specified health condition a higher-than-standard rate, and nearly half of these would charge 300 to 464 percent of the standard rate; (8) the average premium for individual coverage for HIPAA-eligibles with a specified health condition that would be charged by the 41 carriers was $381 per month; (9) the 22 states that use a high-risk pool as an alternative to the federal portability standards limit premiums to 200 percent or less of the standard rate, or an average subsidized rate of $221 per month; (10) the exact number of individuals who rely on HIPAA's group-to-individual portability provision to obtain coverage is difficult to determine but appears small according to carrier estimates and risk-pool enrollment figures; (11) consumers' understanding of HIPAA remains limited, and many are largely unfamiliar with the law; (12) federal agencies and others have targeted educational efforts to specific populations in an attempt to reach those most likely to benefit from HIPAA; and (13) HIPAA established a complex regulatory framework in which oversight and enforcement of the law are shared among multiple federal agencies and state regulators.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Health and Human Services, along with the Departments of Labor and the Treasury, developed a model certificate including material that educates consumers on their rights under HIPAA. This model certificate was included in final regulations issued December 30, 2004. In addition, CMS has developed a user-friendly, interactive web site that allows consumers to learn more about the rights HIPAA offers them, specifically the rights referred to in the GAO recommendation. CMS also has published and disseminated a booklet entitled "Protecting Your Health Insurance Coverage," which provides consumers with the type of information referenced in the GAO recommendation.

    Recommendation: The Health Care Financing Administration (HCFA) and the Department of Labor should revise the model certificate of creditable health plan coverage to more explicitly inform consumers of their new rights under HIPAA. At a minimum, the model certificate should inform consumers about appropriate contacts for additional information and HIPAA and highlight key provisions and restrictions, including the (1) limits on preexisting condition exclusion periods and the guaranteed renewability of all health coverage (2) reduction or elimination of preexisting condition exclusion periods for employees changing jobs; (3) the prohibition against excluding an individual from an employer health plan on the basis of his or her health status, and (4) guarantee of access to insurance products for certain individuals losing group coverage and the restrictions placed on that guarantee.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  2. Status: Closed - Implemented

    Comments: DOL agrees with the recommendation and has developed a new model certificate. The model for an expanded certificate was included in the final HIPAA regulations developed jointly by Treasury, HHS, and DOL and issued December 30, 2004.

    Recommendation: The Health Care Financing Administration (HCFA) and the Department of Labor should revise the model certificate of creditable health plan coverage to more explicitly inform consumers of their new rights under HIPAA. At a minimum, the model certificate should inform consumers about appropriate contacts for additional information and HIPAA and highlight key provisions and restrictions, including the (1) limits on preexisting condition exclusion periods and the guaranteed renewability of all health coverage (2) reduction or elimination of preexisting condition exclusion periods for employees changing jobs; (3) the prohibition against excluding an individual from an employer health plan on the basis of his or her health status, and (4) guarantee of access to insurance products for certain individuals losing group coverage and the restrictions placed on that guarantee.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  3. Status: Closed - Implemented

    Comments: An interim final rule with comment period was published in the Federal Register on August 20, 1999, and made effective September 20, 1999.

    Recommendation: To ensure that HCFA is able to fully perform its new oversight role under HIPAA, HCFA should promptly promulgate enforcement regulations.

    Agency Affected: Department of Labor

 

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