After a year of PowerPoint presentations and various emergency rules explaining when and how a small employer could keep existing coverage (they can’t), the Insurance Commissioner (OIC) began adopting rules explaining how insurers should develop and file association health plan rates. It’s all very exciting. Small employers still don’t know how things are going to turn out.
They were told Washington would have a SHOP with tax credits but we don’t. Well, we have a SHOP but it’s only for southwest Washington employers. They were told their coverage would not be renewed then maybe it would – wait, no it won’t. They were told they were grandfathered until they weren’t, well maybe…no…oh hell…everyone’s canceled…get out of here! (See e.g., OIC emergency rules – 4/2/2013, 6/28/2013, 7/31/2013, 8/21/2013).
Welcome to health care reform, Washington style.
In the regulatory basement where arcane rules are created governing health plan pricing, the small group market looks like a science experiment gone bad. Association health plans comprising most of the small employer market have as many legal opinions about coverage as there are associations. On October 23, the OIC adopted emergency rules governing association health plan rates which took effect three days later. The rules bumped the proposed rules and the other emergency rules. These new rules said that association health plan rates could not rely upon some important information about member employers:
WAC 284-170-958 Transition of plans purchased by association members.
…4) An issuer must rate a large group plan issued through an association that meets the definition of subsection (1) of this section based on the overall experience of the entire association, and apply rating factors uniformly to each purchasing entity in the association.
(a) An issuer must not use data or information from a specific group purchaser of the association’s health benefit plan to establish rates for that group purchaser. “Data or information” specifically includes specific employer information such as group size, health status, claims experience, participation requirements, and number of employees under COBRA status. Composite rating may not be used to set rates for a large group as described under this subsection unless the composite rates are applied uniformly across the entire large group. For purposes of this section, “composite rating” means the averaged rate issued to a group using the group’s demographically specific rating factors.
(b) For a health benefit plan issued to an association, if the association meets the definition of a large group association in subsection (1) of this section, and the issuer filed the rates for the association as a single case large group, an issuer must submit with its rate filing evidence or documentation of the association’s status as an “employer” under 29 U.S.C.S. 1002(5). The commissioner will accept a letter from the U.S. Department of Labor certifying this status as sufficient documentation.
On December 11, the OIC repealed this association rating standard and enacted new small group rules that take effect January 11, 2014. The new rules repealed the rule quoted above. The notice explained that rule was “not substantially different from that published” on October 2nd, which contained exactly the same words. So I guess the emergency is over and the provision is gone; but, of course, it’s not. Why? The Commissioner explained that the rules were not substantially different even though they used the same words because “the federal standard still applies.” What?
Imagine you are trying to determine new rates for an association health plan. You go to a lot of meetings and rules are proposed, then different ones are adopted as emergency rules effective three days after publication. Later, you get an email announcing repeal of the emergency rating standard. Then you’re advised that the rule isn’t necessary because it’s already the federal standard. You most certainly would seek a chiropractic adjustment.
Would you ask “what federal standard?” Would you search for the federal regulation that banned consideration of association member group size in rating? Would you start looking for the federal composite rating rules?
Would you still wonder why small employers start boiling tar when you say health plan? Would you be surprised to learn that I have absolutely no idea what kind of small group plan can still be sold in Washington? Somebody call me a doctor!
(I don’t have any in my network.)