In the United States, the cost of organ transplants range from several hundred thousand to over a million dollars. Without health insurance, most Americans needing a transplant would be unable to afford treatment. The Affordable Care Act (ACA) works to expand access to health insurance by prohibiting discrimination based on health status . The ACA also requires individual and small group health plans to cover ten categories of medical services or EHB, which include basic health services like hospitalization, disease management, and preventive care.
Plans in the state of Washington, however, impose a waiting period for consumers needing a transplant, which was recently brought to light in a Washington Post story. A waiting period is the length of time an individual must wait before accessing treatment or being covered by health insurance. Waiting periods can be used to discriminate against individuals with chronic diseases like cancer or medical conditions like pregnancy because of the high costs associated with treatment.
In response to concerns that benefit-specific waiting periods run afoul of the ACA’s ban on discriminatory benefit design, the Center for Consumer Information and Insurance Oversight (CCIIO) issued guidance clarifying that insurers cannot impose waiting periods for essential health benefits (EHB). CCIIO also requires insurers to remove any waiting periods for EHB within a reasonable timeframe from issuance of its guidance (May 16, 2014).
CCIIO’s decision aligns with the underlying spirit of the ACA and existing federal regulations on EHB implementation that prohibit discrimination based on health status. CCIIO does make an exception for waiting periods related to children’s orthodontic treatment as long as the waiting period is “reasonable,” and not designed in any way to discriminate on the basis of age, expected length of life, present or predicted disability, quality of life, health status or condition. Washington state’s insurance department also recently proposed a rule closing its state’s loophole and mirroring the federal prohibition on EHB-specific waiting periods.
Waiting periods, however, are allowed when not applied to a specific benefit. Under the language of the ACA, insurers or employers offering health insurance can use waiting periods for new employees, but they cannot exceed more than 90 calendar days before coverage begins. Employers often use waiting periods to deter prospective employees from taking a job just for health benefits, and then quitting once he or she receives treatment. Under such a scenario, an employer is left with the expense of a claim without the benefit of the individual’s employment or premium contribution, increasing the cost of health insurance for the employer and the remaining employees.
The ACA’s 90-day rule does not affect large numbers of employers because most of them, if they impose a waiting period, have one that is less than 90 days. Also, federal regulations make certain allowances for employees with varying hours or those that need to meet job-related conditions like professional certifications, and for companies that use trial periods to evaluate an individual’s performance before a final job offer. The regulations are clear, however, that employers cannot try to use these allowances to avoid complying with the 90-day rule. Prior to the ACA, no federal law existed that limited the waiting periods for coverage of employer-sponsored insurance.
While CCIIO’s guidance closes off the option of using benefit-specific waiting periods to discourage the enrollment of people with high cost conditions, insurers can still use reasonable medical management techniques to contain costs. These techniques, if applied in a discriminatory manner, could disproportionately affect higher cost enrollees. “Medical management” refers broadly to practices that aim “to control costs and promote the efficient delivery of care.” Common examples of medical management include requiring preauthorization for a treatment or a copayment for brand name drugs and not generics. However, according to federal regulations and guidance, medical management techniques must be based on nationally accepted medical standards, and not be designed to discriminate against age, disability or expected length of life. As more consumers begin using their health plans this year, regulators will need to continue monitoring the use of medical management techniques that could be discriminatory.