While financial uncertainties drove many Americans to rein in their consumption of health care services during the recession, the Patient Protection and Affordable Care Act will remove patient out-of-pocket costs for preventive care services under many plans beginning in 2011 and drive an increase in the use of these services, according to Towers Watson (NYSE, NASDAQ: TW), a global professional services company.
“Historically, America's health care system has been focused on the treatment of illness, and this provision is an essential first step to reframe the industry, proactively focusing on the preservation of health”
"In this economic climate, many Americans have delayed or avoided visits to the doctor because they were concerned about the costs they might have to incur," says Randall Abbott, a senior health care consultant with Towers Watson. "Now, covered individuals and their families will not face even nominal financial barriers to preventive care services."
Many employer-provided health plans have promoted low-cost or no-cost preventive care for years, but the new law broadens the range of services covered and establishes a uniform standard for services grounded in the recommendations of the United States Preventive Services Task Force and other similar bodies. Under the provision, insurers and self-funded health plans must cover regular wellness visits based on the patient's age and gender as well as a range of recommended screenings. New additions to coverage for most employees and their families will include depression, supplemental pregnancy, and HIV and other sexually transmitted diseases screenings as well as HPV tests for females. It also includes recommendations to take aspirin to prevent heart disease and fluorides for children.
"Historically, America's health care system has been focused on the treatment of illness, and this provision is an essential first step to reframe the industry, proactively focusing on the preservation of health," notes Harlan Levine, a physician and senior health care consultant with Towers Watson. "The legislation promotes free preventive care and emphasizes the importance of early detection and regular doctor visits in helping both adults and children stay healthy."
Plans that are not considered grandfathered under the law must provide these benefits at 100% beginning in plan years starting on or after September 23, 2010. For employer plans, this is commonly January 1. Towers Watson anticipates that less than half of large employer health plans will retain grandfathered status since most will be making plan design and contribution changes that will exceed the limits permitted by the grandfathered plan rules. Implementing the new preventive care benefits will not be painless: Insurers and employers will face cost increases of 1% to 2%. With an annual 2010 average per covered employee health cost of just over $10,000, this means employers will see an increase of $100 to $200, which will be in addition to expected average annual cost increases of 8% to 10%. Many employers will be scrambling to communicate these new benefits to employees in time for open enrollment in early fall.
Insurers and administrators will face the additional challenge of modifying their claim payment systems by January 1 or establishing processing guidelines for their examiners. "Because there has not been a single standard for the administration of preventive benefits, many employers have taken it upon themselves to define these benefits," says Greg Mansur, senior health care consultant with Towers Watson. "This adds to the complexity of implementation for many regional and national claim payers, and employers should really take the time not only to understand the impact on their plans, but also to test their administrator's capabilities before January 1."
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