A year after federal regulators barred employers from offering so-called “skinny” Affordable Care Act health plans that did not pay for hospital stays, some employers are presenting workers with plans for 2016 that exclude payment for outpatient surgeries.
Today two-thirds of all operations in the United States are outpatient surgeries, where the patient returns home after a procedure without an overnight stay in a hospital, according to hospital industry data.
The Kaiser Family Foundation, which spotlighted the move to the new generation of “skinny” plans, notes that the offer of such a plan by an employer means its workers cannot qualify for federal subsidies if they decide to buy more comprehensive coverage in online insurance marketplaces.
These newer “skinny” plans may, like their predecessors, not pass muster with federal regulators, according to some experts queried by Kaiser.
Timothy Jost, a law professor at Washington and Lee University in Virginia and an authority on the ACA, believes that “refusing to cover any outpatient physician surgical services is arguably a violation.”
The American Hospital Association “is deeply concerned” about plans that exclude outpatient surgery, a spokeswoman told Kaiser.
Outpatient surgeries, performed in hospitals or surgery centers, typically involve hernia repairs, knee arthroscopies, repairs to bone fractures and other fairly routine operations. They generally cost less than an inpatient procedure, but the bill can still total tens of thousands of dollars.
Excluding outpatient procedures from a plan can save money for employers, but can also leave workers with crippling bills, Kaiser notes.
Insurance sold to individuals and small businesses through online marketplaces is required to offer specific “essential health benefits” listed in the health law.
Plans offered by large employers face a different standard. Large employers must offer plans that are affordable and that provide “minimum value.” Minimum value can be determined by use of an online calculator, but it is generally interpreted to mean coverage roughly comparable to that of a high-deductible, “bronze” marketplace plan.
2016 is the second year under the health law in which large employers must offer affordable minimum-value coverage or face penalties of approximately $3,000 per worker.
Large employers must also offer plans that provide “minimum essential coverage,” or face fines for noncompliance. Nearly all workplace-based plans that offer some types of preventive care meet this requirement, according to Kaiser.
Plans that don’t pay for outpatient surgeries are being marketed primarily to employers in industries that historically did not offer major medical coverage, such as staffing companies, restaurants, home health agencies, hoteliers and other lower-wage employers.
These are among the employers that sponsored the previous form of skinny plans, according to industry consultants.
A Minnesota-based benefits company told Kaiser that more than 30 of the employers it works with have implemented 2016 plans that do not cover outpatient surgery.
This year a Pennsylvania staffing company offered nearly 700 employees a skinny plan lacking outpatient surgery benefits, according to its chief financial officer. She told Kaiser that the firm sought to offer affordable coverage that conformed to ACA rules. “As an employer, we want to do the right thing,” she said.
She acknowledged that making the offer of the skinny plan could disqualify some workers from receiving subsidies to buy better coverage in the marketplaces. But offering its workers more costly full coverage, or offering no insurance and paying hefty ACA penalties, could wipe out hundreds of jobs “because we can’t stay in business” with those expenses, she said.
Consultants who sell skinny plans to companies with low-wage workers point out that the plans, while excluding coverage for outpatient surgery, do pay for other medical care such as office visits, emergency room care and prescriptions.