NAIC Submits Standardized Benefit Summary Recommendations to HHS

Before I worked for a carrier I’d often wonder if the folks who write health plan benefit descriptions go to a special school that teaches them how to write these documents in as confusing and obtuse a manner as possible. After all, each carrier writes documents in their own way sometimes using the same or similar terms to mean something different. As a General Agent, my first job in the industry back in the early 80s, I spent considerable time trying to rewrite these benefit summaries into a somewhat standardized form to help brokers and their clients make more accurate and meaningful apples-to-apples comparisons.

Even today general agents and quoting systems devote a tremendous amount of time, money and resources to molding the various descriptions published by health plans into standard benefit summaries. In fact, one of the biggest barriers of entry for new software aimed at presenting rates and benefits is not the quoting engine itself, but the data entry and especially the benefit descriptions. Given the number of medical insurers and HMOs competing in today’s health care system and that even the offerings from the same carrier can vary significantly from state-to-state, we’re talking about literally thousands of benefit plans. The effort required to wrestle this tsunami of data into a standard format has required a Herculean effort.

The Patient Protection and Affordable Care Act is about to change that. Section 1001(5) of the PPACA requires the Secretary of Health and Human Services to work with the National Association of Insurance Commissioners to develop standards for benefit summaries and coverage explanations for individual and group insurance products. Significantly, HHS and the NAIC is required to establish a working group of representatives from carriers, consumer groups and others with expertise in the area.

After over 25 meetings lasting over 120 cumulative hours with approximately 100 working group members or observers participating, the NAIC has sent to the Secretaries of HHS and the Labor Department their recommendations for both standard benefit descriptions and a glossary.  The recommendations are now available for public review and comment. The Secretary of HHS is required to finalize the standards by March 23, 2011 and carriers must provide the forms to consumers beginning March 23, 2012.

The glossary uses plain language to describe terms of art such as co-insurance, deductible, balance billing, primary care provider and the like. Some terms, such as “formulary” are missing, but the list is relatively complete and will no doubt be added to over time.

And these are terms of art. I once did a man-on-the-street interview asking random individuals what certain health insurance terms meant. One, a teacher, described “co-insurance” as referring to the situation where two people in the same household both have insurance. (Being me, I asked if the two people had to be married. He replied that was a local issue, but not in San Francisco).

For those unfamiliar with the term, the NAIC proposed glossary defines co-insurance as “Your share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service. You pay co-insurance plus any deductibles you owe. For example, if the health insurance or plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your co-insurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.” (And. yes, “Allowed Amount” is also defined in the glossary).

The draft NAIC standardized benefit summary is also a remarkably document. (Remarkable in that most people don’t expect government committees to put forward clearly written work). One welcome feature: in addition to explaining the benefits, the NAIC benefit descriptions also includes a short “Why This Matters” statement which puts the information into a useful context.

The documents could be improved, but even as they stand, they’re much better than what is often provided by carriers and quoting systems. And by aggregating these descriptions in one place they will make it easier for entrepreneurs to find new and helpful ways to provide this kind of information to consumers.

Working at a carrier I discovered there was no school teaching brochure writers to be confusing. Lawyers and the general dynamics of “writing by committee” made such a school unnecessary. And the impact of these groups will continue to assure that each carrier presents information in a unique voice. Still the standardized formats will assure a lot more transparency and clarity across products than exists today.

The PPACA has many provisions that are counter-productive. Anything it does to bring intelligibility and understanding to plan descriptions, however, is a good thing.

8 thoughts on “NAIC Submits Standardized Benefit Summary Recommendations to HHS

  1. My biggest complaints are the lack of standardized terms. Different carriers use different terminology for deductibles (embedded, aggregate, one deductible, etc).

    Another one is that some reports Out Of Pocket Max as the total cash outlay a member might have in a year (my preference). Other carriers reports the amount of money AFTER deductible.

    Oh, and then one carrier might call a plan 5000 which means individual deductible and another one has a 5000 which means family deductible.

    It is hard enough for brokers to keep on top of this. I feel sorry for the consumers out there.

  2. Right on Jerry C! I have studied just about every attempt by GOVERNMENT to bring clarity to Medicare and Medigap. Each and every attempt falls short of the mark. Combine those attempts with a buying public that steadfastly refuses to inform itself about health insurance in all its forms and you have a recipe for clients buying the wrong plans each and every time.

    Look – there’s a whole swath of folks out here in the world that don’t care how the process of buying and selling a stock works but they know they want 50 shares of GE. They are simply not going to learn the ins and outs of Wall Street to accomplish that. That’s why we have licensed stock brokers. Now take health insurance where Exchanges will be staffed by unlicensed navigators who have no skin in the game (We get paid on commission – we rely on folks having a good experience and recommending our services to others or liking what we did for them on health and buying life or LTC or something else from us!). They’ll pick up the phone, answer the question the way they THINK it’s been asked – never thinking of the person on the other end of the line may have a UNIQUE SET OF NEEDS – and bang it’s on to the next call in the queue…

    So here’s the brave new world of buying health insurance in 2014: The blind being led by the disinterested buying something neither understands.

    • P.S. – I love how – in the eyes of government – there’s nothing that can’t be fixed by a nice cartoon drawing (ref: PPACA Glossary).

      Boy would I love to have the concession on that! I can just see it….”We need to explain the federal deficit, the lagging economy, and the need to extend the Bush tax cuts….get me a cartoonist….STAT!!!”

  3. Even with their 150 page book Medicare and You has the Federal government been able to clearly describe the benefits available to a beneficiary. Given that Part A is a standardized benefit; Part B is a standardized benefit; Part D is a standardized benefit. We would think that this should make things easy to comprehend. Then the Feds standardized Medicare Supplements according to letter. But then that wasn’t confusing enough so PPACA comes along and some plans need to be terminated because they no longer make sense. My long worded merry go round is just meant to point out that no matter how noble their intentions, the guys in Washington don’t really “get” insurance nor do they really ask for input from the right people. The buying public (for the most part) needs the protection; support; and advice provided by knowledgable dedicated professionals to accurately understand their coverage – not outlines they won’t read.

    • Jerry: Thanks for the comment. And I don’t disagree. I was pleasantly surprised at the quality of the glossary and standard benefit format. But your key point is absolutely true: no matter how refined and clear the benefit sheets, when choosing something as important as health insurance, consumers need and deserve to have the expertise available only from a qualified, licensed, and professional broker. Thanks for making that explicit.

      • Alan, excellent and very descriptive commentary!

        Not only do I agree with Jerry as well, but would find it refreshing if the consumers actually read their policies and called their agents with questions, within their 30 Day Right to review. When dealing with the elderly, better yet, have their children, or a close friend, present during the interview (concerning a “One on One”).

        And that wish, and $3.50, will get you a Latte at Starbucks.

        Cynical? Not I. Just pragmatic. 🙂

  4. And as is the case today, no one will read the description forms.

    In addition, the certificate of coverage forms will supercede the descriptions in any court claim — look for that disclaimer language on the descriptions.

    Cyncial? Yeah, a bit. But as the saying goes, “everything that is, has happened before, and will happen again.”

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