September 24, 2010

New health care law will cause administrative headaches for Maryland firms, expert says

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As the first of the national health care reform measures kicked in this week, scores of human resources and other executives from Maryland companies got a sobering presentation about how the new law will affect them from a national expert on employee benefits.

Peter Marathas, a compliance adviser from Boston who’s made presentations on the health legislation in more than 35 states, said, “It is the worst piece of legislation I’ve ever seen,” in 16 years of law practice. “It was a rough draft never intended for public consumption… I have never seen anything drafted so poorly.”

Marathas cited provisions of the new law that did not spell out when they were supposed to take effect, or how they were to be interpreted. He was especially critical of new requirements that imposed increased administrative costs on employers already offering good insurance and that would force them to collect “intrusive” data about employees, their spouses’ incomes, and living arrangements.

Marathas spoke Wednesday to about 120 personnel and financial executives who are clients of Silberstein Insurance Group, a broker and benefits adviser with about 550 clients in Maryland.

“We’re seeing more partners and owners saying, ‘I need to wrap my hands around health care reform,’” Richard Silberstein said. The seminar at the BWI Marriott was designed to help companies understand the impact of the new law on their businesses.

The many provisions Marathas covered on Wednesday did not include mandates affecting individual taxpayers that are being challenged in a federal lawsuit to overturn at least parts of the mammoth bill, such as the penalty for not buying health insurance.

He also did not focus on the provisions that took effect Thursday eliminating exclusions for preexisting conditions and limitations on lifetime benefits. Most insurance carriers are complying with the law, or planning to get into compliance.

Marathas focused on provisions that were vague or missing in the legislation or would likely drive up administrative costs for employers. Among them:

● Pediatric services are “essential services” that all health insurance must provide, but the bill did not specify when a child getting these services was considered an adult and no longer eligible.

● A provision that stops companies from excluding pre-existing conditions would allow employees to jump in and out of plans when they are sick. Marathas predicted

Twentysomethings and thirtysomethings “will go bare” – not be covered until they actually need health care, and then drop it when they get well. “This is inviting them to get insurance after the house is burning,” he said. He called it “a disaster in the making” for plan members who must pick up the costs.

● The law also requires companies to cover stepchildren, but it doesn’t define what constitutes a stepchild, a question several of those attending wanted answered.

● In one of its wackier provisions, the law demands insurance plans spell out coverage in no more than four pages, in 12-point type, and in language that is “culturally and linguistically appropriate.”

“We don’t know what that means,” Marathas said. A questioner from the audience jokingly asked if it specified the type of font.

And “they forgot tell us an effective date for this,” Marathas said.

On many of the new provisions, he said, “don’t expect guidance any time soon” from the government, especially if a Republican president is elected in 2012.

Marathas said a colleague of his Proskauer Rose law firm in Boston counted a thousand instances where the law says a U.S. Cabinet secretary will issue regulations to implement a specific provision.

Marathas also went through dozens of changes that will increase paperwork for employers, including requirements to process claims and notify patients faster when they are denied coverage.

He was particularly critical of requirements that employers tell the government when they are not meeting some provisions of the law, and pay penalties based on those admissions. “I don’t know what happened to the Fifth Amendment,” the Constitutional protection against self incrimination, Marathas said.

Marathas was also critical of a number of provisions that asked employers to make coverage decisions and plan offerings based on percentages of “household income.” This would require employers to ask about the income of a spouse, a partner, or children living at home.

The law also wants substantially more data on how much employers spend on health care, the household affairs of employees, and other “intrusive” data.

“This is going to change your life,” Marathas told the audience.

In an interview, the lawyer said while the new law contained some good provisions – like those that went affect Thursday – there’s nothing in the bill that “fixes the spiraling cost of care” and it still will leave some people uninsured, contrary to the stated purpose of the law.