ihp630 4-2

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Feb 20, 2024

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1 4-2 Project Preparation Angel Simmons IHP 630 Southern New Hampshire University Dr. Husmann October 15, 2023 Common Regulatory Requirement #1

2 The Affordable Care Act (ACA) has established the Essential Health Benefits (EHB) rule, which requires health insurance providers in the individual and small group markets to provide essential health benefits and to guarantee a minimum level of coverage for users (consumers) (Sandozi et al., 2023). EHB is a typical legal prerequisite. The implementation of Essential Health Benefits (EHB) is expected to have a substantial financial impact on federal payers, particularly Medicaid and the Children's Health Insurance Program (CHIP). Increasing the cost of coverage, enrolling more people in Medicaid (citizens whose incomes are 138% above the federal poverty line), and paying for premium subsidies under the Affordable Care Act (ACA) to assist low-income earners with their premium payments are some of these expenditures. Additionally, federal subsidies are required for the cost-sharing reductions (CSR) for low-income individual purchasing plans obtained through the marketplace, which raises the expenses for federal payers (Sandozi et al., 2023). The budgets and allotments to healthcare programs made by state payers are impacted by these expenditures. Higher coverage costs, contingent on the number of insured individuals enrolled in state-funded programs, healthcare service consumption rates, and the extent of benefits covered or offered, are among the financial ramifications for state payors (Sandozi et al., 2023). The budgets and allotments to healthcare programs made by state payers are impacted by these expenditures. Third-party payers are financially impacted by EHB requirements. The effects result from adverse selection, in which people with more complex (and hence expensive) healthcare demands choose to enroll in full-scope plans, driving up premiums for the insurers (Sandozi et al., 2023). In order to maintain insurers' financial sustainability and viability, a balance is required. Common Regulatory Requirement #2: Network Adequacy

3 According to Busch and Kyanko (2020), network adequacy refers to payers having enough provider networks to suit the needs of their members and ensure that they have access to necessary healthcare services. Improving consumer protection and healthcare accessibility is the goal. It costs money for federal payers to hire the necessary number of providers. In addition, they must contend with increased reimbursement rates, which raises their total costs (Busch & Kyanko, 2020). The payer's operating expenses are increased by the additional and costly administration costs related to managing the provider network. State payers must invest a significant amount of money in continuing processes to update their networks, assess and validate providers, and fulfill reporting obligations in order to comply with network coverage standards (Busch & Kyanko, 2020). State taxpayers are severely impacted financially by the increased expenses. Third-party payers must take costs into account in order to abide by network adequacy regulations. To add more healthcare providers and extend their current contracts, they have to pay contractual fees (Timbie et al., 2019). In order to keep up the network of providers, they will undoubtedly have to pay more in operating costs (Busch & Kyanko, 2020). Additionally, if they don't follow the network adequacy standards and laws, they risk financial penalties and fines that will hurt their bottom lines. Common Regulatory Requirement #3: Prompt Payment It is a legal mandate that all insurer payers pay providers accurately and promptly for healthcare services provided to policyholders.

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4 Cash flow issues might arise for federal and state payers, particularly during periods of increased utilization and claims (Kar & Navin, 2021). The augmented outflow of funds may supersede the federal budgetary allotments and impact other functions. Cash flow issues and inadequacies may arise from third-party payers' requirement to process and pay claims from providers within predetermined timeframes, often ranging from 30 to 40 days (Kar & Navin, 2021). Penalties and interest charges are examples of financial ramifications of noncompliance that negatively impact the payers' bottom line. Federal Unique Regulatory Requirement One of the provisions of the Affordable Care Act (ACA) is the Medical Loss Ratio (MLR). It requires all health insurance providers to set aside a specific portion of their premium income towards medical claims and quality enhancement. Because the company would have to provide policyholders with refunds in the ensuing year (s), noncompliance with the regulation has a financial consequence as well (Brockett et al., 2021). The clause has an effect on the companies since it restricts how much money they may set aside for administrative costs and has an effect on their profitability. Reorienting its systems, internal rules, processes, and procedures to match with the need and make sure it files all settlement claims will have a strategic impact on the healthcare organization. State Unique Regulatory Requirement Michigan's "No-Fault" vehicle insurance scheme is a special regulatory obligation. In contrast to the traditional fault-based insurance system, Personal Injury Protection (PIP) coverage is required for all auto insurance policies in Michigan (Combs, 2020). The implications are that, regardless of who was at fault in the car accident, the insurer must cover the policyholder's medical bills, lost wages, and rehabilitation expenditures. In order to guarantee that all patients

5 involved in auto accidents receive complete care, the healthcare organization's strategic approach should be to match its processes with the regulation. The idea is that the organization may rest easy knowing that the payer will cover all medical expenses in accordance with the law. Third-Party Unique Regulatory Requirement Third-party insurance businesses are required by the Employee Retirement Income Security Act (ERISA) to adhere to the plan administration criteria for health insurance plans. This includes working in the best interest of participants and providing adequate and accurate information. They must also make sure that all paperwork is timely and complete, and they must report on benefit programs (King, 2020). More financial and administrative resources are needed to meet the high standards of plan administration. By making sure that its systems, internal policies, processes, and procedures, as well as its product and service offerings, are in compliance with the regulations, the healthcare institution may fit its strategy to the requirements. Maximum Strategic Impact The most advantageous ratio for the long-term viability of the healthcare system is the Medical Loss Ratio (MLR). The main justification for this is that the rule forces payers to allocate a larger portion of premium funds toward claim settlement, which benefits the healthcare organization overall as payments are guaranteed. The organization's cash flows and related financial measures, such as its capacity to pay operating costs and maximize efficiency, benefit financially from the large reduction in the risk of non-settlement. With the assurance that payers will fulfill all claims in accordance with legal obligations, the healthcare organization can improve its service offering, which has a strategic impact.

6 References Brockett, P., Golden, L., Yang, C. C., & Young, D. (2021). Medicaid managed care: Efficiency, medical loss ratio, and quality of care. North American Actuarial Journal, 25(1), 1-16 Busch, S. H., & Kyanko, K. A. (2020). Incorrect Provider Directories Associated With Out-Of- Network Mental Health Care And Outpatient Surprise Bills: An examination of the role inaccurate provider directories play in out-of-network mental health treatment and surprise bills. Health Affairs, 39(6), 975-983. Combs, B. (2020). Michigan's No-Fault Reform: A Nightmare for Victims and Their Providers. Wayne L. Rev, pp. 66, 895. Kar, A. K., & Navin, L. (2021). Diffusion of blockchain in insurance industry: An analysis through the review of academic and trade literature. Telematics and Informatics, 58, 101532 King, J.S. (2020). Covid-19 and the need for health care reform. New England Journal of Medicine , 382(26), e104 Sandozi, A., Jivanji, D., Schulman, A., & Khurgin, J. (2023). Pd20-12 Disparities In Infertility Coverage In the United States. The Journal of Urology , 209(Supplement 4), e589. Timbie, J. W., Kranz, A. M., Mahmud, A., & Damberg, C. L. (2019). Speciality care access for Medicaid enrollees in expansion states. The American Journal of managed care, 25 (3), e83

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