Category Archives: Regulation

Considerations for product governance risk management

A key focus of the insurance regulatory authorities around the world has been the protection of policyholder interest. This has resulted in more emphasis on product governance and product life-cycle management. The insurance directive launched under the European Union insurance law has issued guidelines for insurers to embed product oversight and governance into their risk management frameworks.

A robust product governance process can help reduce mis-selling and complaints, and increase policyholder confidence in the market. It can also ensure internal and regulatory compliance for the products offered by the insurer.

The core components of a robust product governance process are:

• Product governance policy
• Product development
• Pricing and value
• Distribution and sales
• Legal, compliance and risk management
• Ongoing assessment of the product

To read more about building a strong product governance policy, read Neha Taneja’s article here.

Implications of proposed changes to short-term medical plans

In February 2018, the Departments of Health and Human Services (HHS), Labor, and the Treasury released a proposed rule that would change the maximum duration of short-term, limited-duration insurance (STLDI) policies. Under the proposed rule, STLDI plans, or “short-term medical” plans, may emerge as an alternative form of individual health insurance. In this article, Milliman actuaries Jason Karcher and Nick Ortner discuss the proposed changes and the potential effect they might have on the individual health insurance market.

Brief study of UK health insurers’ first SFCRs

Solvency and Financial Condition Reports contain a number of Quantitative Reporting Templates (QRTs). They are an important source of information on a company’s financial position under Solvency II. This report by Milliman’s Joanne Buckle and Didier Serre compares and contrasts the information in selected QRTs of 13 health insurers in the United Kingdom.

Nonquantitative treatment limitations in the spotlight

Nonquantitative treatment limitations (NQTLs) continue to be a source of difficulty for many health plans in attaining compliance with the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Now that a few years have passed since the implementation of the final rules, we can see examples of MHPAEA enforcement related to NQTLs and the types of NQTLs being investigated and settled. In this paper, Milliman consultants provide perspective.

IRS announces HSA and HDHP adjusted limits for 2018

The Internal Revenue Service (IRS) recently published Revenue Procedure 2017-37, which provides the inflation-adjusted amounts for health savings accounts (HSAs) for calendar year 2018. The updated limits specify the maximum annual contributions to HSAs that may be tax-deductible, as well as the minimum deductibles and the maximum out-of-pocket expenses allowed under qualifying high-deductible health plans (HDHPs).

The table below reflects the 2018 and 2017 values:

The “catch-up” contribution amount of $1,000 for individuals aged 55 or older was set by law and has not changed since 2009.

Annual out-of-pocket expenses include the HDHP’s deductibles, copayments, and coinsurance, but not premiums paid by plan participants.

Employers that sponsor HSAs and HDHPs should review their programs and communications materials and plan for the updated limits for 2018.

For additional information about the 2018 updated HSA and HDHP limits, please contact your Milliman consultant.

How the Cures Act affects parity of behavioral health services

perlman_j_danielPresident Obama signed the 21st Century Cures Act (Cures Act) into law on December 13. This lengthy bill has gotten attention mostly for its funding of cancer research, reforms to the U.S. Food and Drug Administration (FDA) drug approval process, funding for opioid addiction treatment, and policies to address suicide prevention and serious mental illnesses. Additionally, there are important provisions related to enforcement of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

MHPAEA requires parity of benefits for mental health/substance use (behavioral) conditions and medical/surgical (physical) conditions in health plans that cover both physical and behavioral benefits. It applies to self-funded employer-based plans, and also to insured plans in the large group, small group, and individual markets. MHPAEA applies to quantitative items, such as financial requirements (copays, deductibles, etc.) and some types of treatment limitations (such as annual visit limits). It also applies to nonquantitative items, such as medical management practices and drug formulary design.

The quantitative items have historically received the most attention from health plans and employer plan sponsors, perhaps because there is a clear mathematical test in MHPAEA’s implementing regulations for how to comply. We have seen less attention paid to MHPAEA’s requirements for nonquantitative treatment limitations (NQTLs), where the regulations are less specific. However, NQTLs are just as important in the regulations, and in fact they have been the driving factor behind a number of publicly disclosed enforcement actions under MHPAEA or similar state parity laws.

There are two repeatedly occurring themes throughout the parity-related provisions of the Cures Act. First, the Cures Act seeks to strengthen enforcement of MHPAEA generally. Second, it requires the implementing federal departments (Treasury, Health and Human Services, and Labor) to provide further clarification regarding the NQTL rules under MHPAEA.

Here are key provisions of the Cures Act as related to behavioral health parity:

• The Cures Act requires the departments responsible for enforcement to issue a compliance program guidance document within 12 months. This document should provide concrete examples of what does and does not comply with MHPAEA, including actual examples of findings from investigations. For NQTLs, the examples must provide clear detail to explain the finding of compliance or noncompliance. This document is to be updated every two years with further examples of compliance and noncompliance.

• The law requires the departments to prepare a similar guidance document for health insurers and plan sponsors. This also needs to provide examples of how to comply with the disclosure requirements of MHPAEA. The Cures Act requires the guidance document to provide examples of disclosing information related to what NQTLs there are in a plan, what factors are used to apply an NQTL, and how the plan ensures that they are applied at parity.

• The law enumerates several even more specific types of information for which the departments must provide guidance related to NQTL compliance. For example, the final rules implementing MHPAEA state that in order for an NQTL to be compliant when applied to behavioral services, there must be parity between medical/surgical and behavioral care in the “processes, strategies, evidentiary standards, or other factors used in applying” the NQTL. The Cures Act seeks more clarity and examples regarding the meaning of those terms.

• If a plan issuer or sponsor is found to have violated MHPAEA at least five times, this will trigger an audit by the departments of plan documents in order to help improve compliance. It remains to be seen how “five times” will be defined and interpreted.

• The U.S. Department of Health and Human Services (HHS) is required to produce an “action plan” to improve federal and state coordination of enforcement of MHPAEA.

• For each of the next five years, the departments must submit a report to Congress summarizing the results of all closed federal investigations completed in the past year regarding serious violations of MHPAEA. This report must have detail on how many investigations there were, what benefit classes were examined, what the investigations were about, and how the final decisions were reached.

• The Government Accountability Office (GAO) must prepare a report detailing how well insurers and plan sponsors are complying with MHPAEA. The Cures Act specifically lists NQTL compliance as something to be included in this report, along with a discussion of how well MHPAEA is being enforced.

• There is a brief clarification in the Cures Act that benefits for eating disorders (including residential treatment for eating disorders), if provided, must be provided at parity under MHPAEA.

In short, the Cures Act does not introduce new parity requirements per se, but rather seeks greater clarity and enforcement of existing rules (particularly with respect to NQTLs).