(Editor’s Note:  We want to welcome a new voice to our blog and hope that she’ll be a frequent contributor to Say Ahhh!  Sabrina Corlette has taken over the reins from our former colleague Karen Pollitz and is our new resident expert on regulation of the private health insurance market and consumer protection issues.  While she’s technically with the Health Policy Institute, she collaborates closely with CCF.)

By Sabrina Corlette, Research Professor, Georgetown University Health Policy Institute

On Tuesday, I sat in the East Room of the White House and listened to the President as he announced the release of a set of rules implementing provisions of the Affordable Care Act that will help protect consumers from some of the worst insurance industry abuses.  I couldn’t help but think back ten years ago, when I was a staffer in the U.S. Senate, working on “Patients’ Bill of Rights” legislation.  At the time, I met with many patients and families from around the country who’d suffered from decisions by their health plan to deny or limit needed care, and to limit their choice of doctors.  Many of these families had children with special health care needs and were facing terrible decisions about what tests, surgeries, and drugs they could afford because their health plan was not providing the coverage they needed.

That was ten years ago.  While the bill never garnered the votes it needed for passage, the difficulties those families faced never went away.  Thousands of children continue to be denied coverage because of a “pre-existing” medical condition.  Families that dutifully pay their premiums are abruptly dropped from their policies after filing a claim – and told it’s because they didn’t fill out their application correctly.  And countless children with high cost medical conditions are hitting their plans’ annual and lifetime limits on coverage, leaving families to forgo needed treatment or face medical bankruptcy. 

On Tuesday, as I listened to the President describe the insurance reforms that will be effective in September of this year in this latest round of rulemaking, I realized – it took ten long years, but we finally passed that “Patients’ Bill of Rights”.  It was one of the happiest moments of my life.

So what does this rule do?

First, it says that insurance companies can no longer deny or limit coverage for children who have a pre-existing medical condition.  This provision is estimated to help up to 162,000 children gain access to coverage they don’t currently have.  This provision applies to all plans except individual policies that are grandfathered (i.e., those that were in existence prior to the law’s enactment and have not made significant changes since.)  For families that are in grandfathered plans, they may need to change their policy in order to get the necessary coverage for their child.

Second, it stops insurance companies from setting lifetime limits on coverage, and restricts the amount of annual limits on essential benefits.  The ban on lifetime limits applies to all plans, while the restrictions on annual limits apply to all plans except those individual policies that are grandfathered.  The restrictions on annual limits are adjusted over time – in the first year the limits can be up to $750,000, in the second year up to $1.25 million, and in the third year up to $2 million.  Starting in 2014, all annual limits on coverage of essential benefits are banned.  HHS is charged with defining what constitutes the essential benefits package, which will determine what items and services would be covered under the annual limits restrictions.  However, HHS has not yet issued those regulations, and families will temporarily need to rely on plans’ “good faith” definitions of what constitutes essential benefits.

Third, it stops insurance companies from retroactively cancelling a policy because of an unintentional mistake on an application.  This is a particularly nasty industry practice that leaves people stranded just when they need coverage the most. This rule applies to all plans, including those that are grandfathered.

Fourth, it makes clear that health plan enrollees have the freedom to choose any available participating primary care provider in their plan’s network, including any available participating pediatrician for their children.  It also prohibits companies from requiring a referral to see an OB/GYN.  This applies to all plans except those that are grandfathered.

Lastly, it prohibits all plans except those that are grandfathered from charging higher cost-sharing for patients who need to use an out-of-network emergency room.  And it sets some requirements for how plans reimburse out-of-network providers to help protect patients from potential “balance billing.“

These new rules, which will go into effect starting September 23, 2010, will provide critical relief and peace of mind to thousands of families who count on their insurance to be more than an empty promise.  It was a long time in the making, but we finally did it.