by: Patient Services Incorporated (PSI) – Government Relations

At least 21 different provisions in the new federal health insurance reform law go into effect during this year. Some of the most relevant measures include:

Higher Medical Loss Ratios for Insurers

Effective January 1st, individual and small group health plans must spend at least 80 percent of their premium revenue on direct medical care instead of profits and salaries (or 85 percent for large group plans). Those that fail to comply will聽have to issue rebates to consumers starting in 2012.

Closing the Medicare Drug Coverage Gap

Effective January 1st, pharmaceutical manufacturers must provide a 50 percent discount on all brand-name prescriptions filled in the Medicare Part D coverage gap as the Affordable Care Act (ACA) begins to close the “doughnut hole” by 2020. Manufacturers must also begin phasing-in federal subsidies for generic prescriptions. Until now, Medicare enrollees had to pay 100 percent of their drug costs while in the “doughnut hole”.

Eliminated Cost-Sharing for Medicare Preventive Services

Effective January 1st, the ACA eliminates cost-sharing for Medicare-covered preventive services that are rated A or B by the U.S Preventive Services Task Force.

Creation of Center for Medicare and Medicaid Innovation

Effective January 1st, the ACA creates the Center for Medicare and Medicaid Innovation to test new payment and delivery system models that reduce costs while maintaining or improving quality.

Disclosure and Review of Health Insurance Premium Increases

For rate filings on or after July 1st, individual and small group health plans will be required to publicly disclose their financial data justifying any proposed rate hike of at least 10 percent or greater. HHS or the applicable state rate review authority will determine whether the increase is “unreasonable” and post their decision on relevant websites. This 10 percent threshold will be replaced by the specific state-by-state threshold in 2012.

Funding for Health Insurance Exchanges

Beginning on March 23rd, the Department of Health and Human Services (HHS) will issue the second round of federal grants to states to design and implement the new state-based health insurance exchanges for individuals and small employers.

Funding for Medical Malpractice Demonstrations

Beginning with the federal fiscal year 2011, the ACA authorized $50 million to be allocated among the states for five-year demonstration grants that implement and evaluate alternatives to medical malpractice litigation.


Patient Services, Inc. (PSI) is a non-profit, charitable that provides a “safety net” for patients with chronic illnesses who were struggling to keep up with expensive premiums and co-payments. 聽For more information about PSI and their services please visit their website:聽

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