Obama Admin Goes After Plans that Lack Hospital Coverage

Large employer health plans will now be required to cover in-patient hospitalization services, according to a notice from the Treasury Department and HHS on Tuesday morning. The final regulation will be issued next year.

The administration’s move will close a loophole that affected millions. Now, large employer plans lacking hospital coverage will not meet standards under the Affordable Care Act.

“The Departments believe that plans that fail to provide substantial coverage for in-patient hospitalization services or for physician services (or for both) … do not provide the minimum value intended by the minimum value requirement,” according to the notice.

Plans that do not include “substantial coverage” for hospitalizations will not be considered as providing minimum value, according to HHS’ intended proposal. Employers who enrolled workers in plans excluding hospitalizations before November 4 will be allowed for a year.

According to Kaiser Health News (KHN), analysts had assumed that the minimum value calculator, which tests whether or not insurance pays at least 60% of expected medical costs, would require hospital care; however, that is not the case.

Large employers that do not offer minimum value coverage next year could be fined up to $3120 per worker, KHN reported.

The American Hospital Association (AHA) had previously expressed concerns to CMS about the issue, and hailed the administration’s decision to require large employer health plans cover hospitalizations.

“Hospitals were alarmed that plans could offer health insurance that did not include inpatient hospital benefits,” Rich Umbdenstock, president and chief executive officer of AHA, said in a statement. “Comprehensive inpatient hospital coverage is critical.”

However, so-called “skinny plans” will not be required to cover hospital care. These plans are offered by lower-wage firms, such as retailers and staffing companies, and do not include much else more than preventive care benefits. These skinny plans still provide a minimum essential coverage, according to KHN.