New Report from Healthcare Performance Management Institute Breaks Down Health Reform’s New Grandfather Clause

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New Rules May Hamstring Employers’ Ability to Innovate Existing Plans...Unless Healthcare Performance Management Principles are Implemented

HPM Institute

“Employer comments urge that the final rules should be modified to provide greater flexibility for grandfathered plans to make changes that advance cost control measures as well as pro-innovation changes,” said George Pantos, Institute Executive Director.

A new report from the Healthcare Performance Management Institute (http://www.hpminstitute.org) analyzes the implications of interim rules issued this summer by the Obama administration designed to define whether or not – and how – employers can maintain existing healthcare insurance plans for employees.

The report, entitled: “Breaking Down Health Reform’s Grandfather Clause,” finds that the new rules may in fact hamstring employers’ ability to innovate and make practical changes to existing plans without running the risk of violating conditions set forth in health reform. However, the authors of the report – George Pantos, Executive Director, HPM Institute, and Scott Haas, Vice President, Wells Fargo Insurance Services USA Inc., – point out that the benefits of retaining “grandfather status” may in many cases be significant, and that the principles of healthcare performance management (HPM) can go a long way toward helping organizations preserve this status.

The “Grandfather Clause” is a provision in the Patient Protection and Affordable Care Act that seeks to keep a key promise made to citizens by the Obama administration: “If you like your health care plan, you can keep your health care plan." But interim final rules handed down by the Department of Health and Human Services (HHS) and other federal agencies on June 17, 2010 appear likely to frustrate the intent of the law and hamstring employers’ ability to offer the best coverage options in a cost-effective manner. In adopting an overly restrictive interpretation of the law’s grandfather clause, the rules essentially diminish employer flexibility to make plan design changes by tying allowable changes to current plan structures.

“Employer comments urge that the final rules should be modified to provide greater flexibility for grandfathered plans to make changes that advance cost control measures as well as pro-innovation changes,” said Pantos. “Employers may want to wait until final rules are issued later this year before deciding about grandfather status.”

This report takes a close look at the new HHS rules that will govern its implementation and the likely impact on employer health plans. It also identifies factors organizations should consider when deciding whether or not the benefit of retaining grandfather status outweighs making certain plan design changes.

To download this report for free, visit: http://www.hpminstitute.org/Breaking_Down_Grandfather_Clause_WP

About the HPM Institute

The Healthcare Performance Management Institute (HPM Institute) is a research and education organization dedicated to promoting the use of business technology and management principles that deliver better and more cost-effective healthcare benefits for employers who cover their employees. The institute’s mission is to introduce and develop a new corporate discipline called healthcare performance management (HPM) — a technology-enabled business strategy that tackles the challenge of controlling healthcare cost and quality in much the same way that enterprises have optimized customer relations, supply chain management and enterprise resource management. HPM provides C-level executives with visibility and control over company healthcare benefits spending trends and risk management postures, while protecting individual employee privacy.

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Susan Lackey
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