New Rules May Hamstring Employers’ Ability to Innovate Existing Plans…Unless Healthcare Performance Management Principles are Implemented
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 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 grandfather clause, the rules essentially diminish employer flexibility to make plan design changes by tying allowable changes to current plan structures.
In this report, we examine the grandfather clause, the new HHS rules that will govern its implementation and the likely impact on employer health plans. We also will address some factors organizations should consider when deciding whether or not the benefit of retaining grandfather status outweighs making certain plan design changes and how Healthcare Performance Management (HPM) technology can help them operate more cost-effectively.