EXECUTIVE SUMMARY
Some employers and insurance companies are offering healthcare coverage that excludes outpatient surgery in any setting.
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The legality has not been determined.
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The American Hospital Association (AHA) has asked federal regulators to immediately require employers to cover hospital outpatient surgery.
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The AHA also asks the Centers for Medicare and Medicaid Services to define “substantial coverage” in terms of calculating the minimum value threshold in employer health plans.
Distressed. Alarming. Shortsighted. Troubling. These words are being used to describe a new trend of employers offering healthcare coverage that excludes outpatient surgery in all settings: hospitals, surgery centers, and surgeons’ offices.
Employers and insurance administrators were turned back by federal regulators last year when they tried to exclude inpatient care coverage from their health insurance plans that they were required to offer under the Affordable Care Act. Now they’ve targeted outpatient surgery as a new area for exclusion, and their action has gotten the attention of all outpatient surgery providers.
‘“Skinny plans,’ in short, run contrary to the Affordable Care Act’s promise of comprehensive, affordable coverage,” said Richard J. Pollack, president and chief executive officer of the American Hospital Association (AHA).1
Employers see offering health plans without outpatient surgery benefits as a way to save money but still, they hope, comply with government requirements to offer health insurance. According to a recent article by Kaiser Health News and The Washington Post, these insurance plans have been marketed to lower-wage employers that traditionally didn’t offer major medical coverage, such as staffing companies, hotels, and restaurants.2 It’s uncertain how many companies are seeking to exclude outpatient surgery, but last year about one-half of the 1,600 corporations that are members of the American Staffing Association expressed interest in offering no inpatient coverage.2 More than 30 employers that obtain benefits through EBSO in St. Paul, MN, already have implemented insurance plans that don’t include outpatient surgery.2
There are questions about whether this exclusion is legal. Regulators turned down the earlier plans that excluded inpatient care because they said large employers must provide “substantial coverage of hospital and physician services.” Does that requirement include outpatient surgery? It remains to be seen.
In the meantime, outpatient surgery providers in all settings are responding with forceful words. The AHA says it “has been distressed to learn that some emerging employer-sponsored health plans do not cover outpatient surgeries, including those performed in hospital outpatient departments,” wrote AHA Executive Vice President Tom Nickels in a letter to the Centers for Medicare & Medicaid Services (CMS) and the Department of the Treasury.3 The letter urges the agencies to “take swift and decisive action” to protect consumers from the limited-benefit plans that don’t include outpatient surgery.
The AHA points to 2013 statistics that show two-thirds of all surgeries done in hospitals were outpatient. “Health plans that do not cover such surgeries put enrollees’ physical and financial health at risk; violate the Affordable Care Act’s promise of comprehensive, affordable coverage; and hamper efforts to transform the delivery system,” Nickels said.3
The AHA said that the federal government originally required that employer-sponsored plans had to cover services that would meet a 60% threshold of anticipated healthcare costs.
“We are deeply concerned that some plans have interpreted the new policy to mean that they may exclude critical outpatient surgeries as long as they meet the 60% threshold,” the AHA said. “We urge CMS and Treasury to again act to protect consumers from ‘skinny’ health plans that put their physical and financial health at risk.”3
The AHA asks that the federal agencies immediately offer guidance that requires employers to cover hospital outpatient surgery. However, the association strongly recommends that the agencies go beyond that step. “We urge CMS to close any remaining loopholes by further defining ‘substantial coverage’ for purposes of calculating the minimum value threshold of employer-sponsored health plans,” the AHA says. “Plans should be required to provide substantial coverage of a comprehensive range of benefits, including hospital outpatient surgery, among other critical services.”3
The American Association for Accreditation of Ambulatory Surgery Facilities (AAAASF) has asked legislators and regulators at the federal and state level to roll back the skinny plans that exclude outpatient surgery. To do otherwise will have serious implications on healthcare quality, said Foad Nahai, MD, AAAASF president.
“If physicians and patients migrate back to inpatient care, the delayed treatment resulting from having to wait for the hospital OR to become available would further degrade a patient’s condition and force him or her to take additional time off work,” Nahai said. “Restraining access to care will degrade the general wellness of the U.S. patient population and result in more expensive inpatient care.”4
AAAASF Executive Director Theresa Griffin-Rossi pointed out that when employees are offered these skinny plans, they aren’t eligible for federal subsidies to buy more comprehensive coverage in the online insurance marketplace. “The rationale that these plans offer improved coverage for previously uninsured workers is invalid because the plans render employees ineligible to buy subsidized policies individually on their state’s health exchange,” Griffin-Rossi said. “While small businesses certainly must find creative ways to manage the potentially devastating costs of providing coverage, doing so in a manner that reduces employee options and increases out-of-pocket expenses, is not an acceptable solution.”4
Many of those who oppose the skinny plans point to the quality and cost-effectiveness of outpatient surgery. William Prentice, chief executive officer of the Ambulatory Surgery Center Association (ASCA), said, “Provisions that give patients access to the top-quality, cost-effective care that ASCs provide should be a part of every plan.”
Outpatient surgery offers insurance companies and insured patients lower costs such as lower deductibles and typically includes a 20% copay off of the lower overall charge, says Mark Mayo, CASC, executive director of Golf Surgical Center in Des Plaines, IL. “The big issue here is overall cost of care will go up when ‘elective’ procedures are not covered and develop into more serious and much more expensive inpatient care including inpatient surgery,” Mayo says.
In the meantime, outpatient surgery managers are waiting to see what federal regulators will do. Steven A. Gunderson, DO, CEO/Medical Director, Rockford (IL) Ambulatory Surgery Center, says, “In the long run, I suspect that this will be determined to be an inappropriate application of the Affordable Care Act.”
REFERENCES
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American Hospital Association. ‘Skinny Plans’ Deny Access to Needed Care. Perspective, AHA News Now. Feb. 19, 2016.
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Hancock J. Employers push limit of Obamacare by excluding outpatient surgery in plans. Washington Post; Jan. 21, 2016. Accessed at wapo.st/1lAogY8.
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Nickels TP. RE: Hospital Outpatient Benefit Gaps for Some Individuals in Employer-Sponsored Health Plans. Accessed at bit.ly/1STSWST.
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American Association for Accreditation of Ambulatory Surgery Facilities. AAAASF Addresses Health Insurance Plans that Exclude Outpatient Surgery from Coverage. Accessed at bit.ly/1TyTLPT.
