When people think of HIPAA, they think of the privacy provisions of HIPAA. Yet privacy is nowhere in the title – the Health Insurance Portability and Accountability Act, passed in 1997, was touted as a stake through the heart of one of the great evils of the health insurance market place – refusing to insure sick people. The practice is called medical underwriting.
“Portability”, the P in HIPAA, offered the promise that an individual undergoing treatment for a medical condition, would not have their treatment disrupted because of a “pre-existing condition” if they changed jobs and employer sponsored health plans.
HIPAA has the same elements described in my recent post about Michelle’s Law: a good story line and a very narrow focus. The Rube Goldberg fix over the simple, direct fix.
Anyone looking around at health care today might be surprised to learn that Congress even considered the subject.
HIPAA predominately impacts the group insurance market. Yet most of that market does not use medical underwriting. The law applies ends up applying almost exclusively to the small group market. But rather than go for some kind of risk pooling concept – in today’s debate, the term is an insurance exchange, Congress opted for some feeble, complicated and ultimately ineffective regulations.
So what does the P in HIPAA do? According to the Department of Labor web site, it:
Prohibits discrimination against employees and their dependent family members based on any health factors they may have, including prior medical conditions, previous claims experience, and genetic information.
That is a bit of an over statement.
First, it is limited to the small group market – not by law but by reality. For large groups, medical underwriting is impractical and unnecessary.
It does not eliminate medical underwriting, it limits it.
An insurer can not look back more than six months to find evidence of treatment for an illness or injury. Why six months? Seems like a good number. It means they can’t deny you treatment for something that you were treated for, say, eight months ago.
And the pre-existing exclusion period can not be longer than 12 months. “Goodness gracious” you sputter. What is a “pre-existing exclusion period”? That means that if you had, for example, treatment for hypertension during the six months prior to taking your new job with health insurance, the new insurance company would not pay for any hypertension related treatments for 12 months.
This is what the law allows.
And that assumes that you elect coverage in the health insurance plan when you first became eligible. If, for some reason, you don’t elect coverage when you first become eligible, the “pre-existing exclusion period” is extended to 18 months. Why 12 months and 18 months? Seem like nice numbers.
But wait, you say. What about this P in HIPAA, this portability thing.
The law says that if you have up to 12 months of “creditable coverage” in you old plan, You can use that “creditable coverage” to reduce your “pre-existing exclusion period” in your new plan. Too many quotation marks? Consider it a by-product of thinking small.
So how does this work in our hypertension example? If our sample employee had six months of “creditable coverage” in his old plan, and less than 63 days break in coverage between plans, then his “pre-existing exclusion period” would be limited to six months in his new plan.
Wait a minute, you astutely observe, where did this 63 days come from? And, please, don’t tell me it seems like a good number.
Sixty three days is the allowable “break in service” – more quotation marks – the period from the time you lose coverage under your old plan and the time when you first become eligible for benefits under your new plan. Frankly, I would love to know why exactly 63 days.
If your “break in coverage” is longer than 63 days, say 65 days, then you could be subject to a a 12 or 18 month “pre-existing exclusion period.” Why “could”? Because some states have laws that provide for longer “breaks in service.”
You can use individual coverage as part of your creditable coverage, but your creditable coverage has absolutely no relevance to the medical underwriting of individual policies.
In fact, some insurance companies don’t even guarantee portability from year to year. This is called “guaranteed renewability”. You might think that this could be an easy add-on that would fit under the fix for Portability – the P in HIPAA.
The number that Congress is really reluctant to tackle is 40 million – the number of uninsured in America. They just can’t think that big.