Below are some highlights in phase two of the Health Care Reform Bill.

This is the year when our tax codes are going through significant changes driven by the health care law.  Overall, health care is getting more regulated, therefore it is forcing businesses, health care providers and insurance companies to spend more money on administration.  There are a lot of plans that are studying and “advising” on how to make health care better.  Sadly, those groups and advisory bodies should have been created prior to the enactment of this law.

• Minimum Medical Loss Ratio

Health plans, including grandfathered plans, must report on the share of premium dollars spent on medical care and provide consumer rebates for excessive medical loss ratios.

• Consumer Protection

Prohibits individual and group health plans from placing lifetime limits on the dollar value of coverage as well as rescinding coverage except in cases of fraud.  Annual limits are still in effect until 2014.  The provision also prohibits plans from denying children coverage based on pre-existing medical conditions.

• Standardizing the Definition of Qualified Medical Expense

Match the definition of qualified medical expenses for HSAs, FSAs and HRAs to the definition used by the IRS itemized deduction.  Over-the-counter medicine will now only be considered as medical expense of accompanied by a doctor’s prescription.

• Reporting Health Coverage Costs on Form W-2

Requires employers to disclose the value of the benefit provided by the employer for each employee’s health insurance coverage on the employee’s annual Form W-2.

• Creating Simple Cafeteria Plans

Creates a Simple Cafeteria Plan to provide a vehicle through which small businesses can provide tax‐free benefits to their employees.

• Appealing Health Plan Decisions

Appoints the right to appeal medical claim and/or policy decisions made by any health plan and the right to appeal decisions made by the health plan to an outside, independent decision-maker, no matter what state a person lives in or what type of health coverage a person may have. This includes, for the first time, new self-funded plans.

Medicare Changes

• Closing the Donut Hole

Requires pharmaceutical manufacturers to provide a 50% discount on brand-name prescriptions filled in the Medicare Part D coverage gap.

• Medicare Advantage Payment Reductions

Freezes 2011 Medicare Advantage payment benchmarks at 2010 levels to begin transition.  Continues to reduce Medicare Advantage benchmarks in subsequent years relative to current levels.

• Preventive Health Coverage

Provides a free, annual wellness visit and personalized prevention plan services for Medicare beneficiaries and eliminates cost-sharing for some preventive services.

• Center for Medicare and Medicaid Innovation

Creates the Center for Medicare and Medicaid Innovation to test new payment and delivery system models that reduce costs while maintaining or improving quality.

• National Quality Strategy

Requires the Secretary of the Department of Health and Human Services to annually develop and update a national quality improvement strategy.

• Medicare Independent Payment Advisory Board

Establishes an Independent Advisory Board, comprised of 15 members, to submit legislative proposals containing recommendations to reduce the per capita rate of growth in Medicare spending if spending exceeds targeted growth rates.

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