“Small business” health care law

This law (S. 2585) promotes cost containment, transparency and efficiency in the provision of quality health insurance for individuals and small businesses. The law is popularly known as Chapter 288 of the Acts of 2010.

On October 15, 2010, Gov. Patrick signed legislation making “technical corrections” to the original bill, which primarily involved changes to effective dates. Most merged market changes became effective October 1, 2010. Now many provisions of the bill require further guidance from state agencies before implementation can begin.

Below are a few key provisions of the 63-page bill.

  • Limited and tiered networks. One of the most talked about sections of the law is the requirement that insurers offer limited or tiered network plans in the merged market with at least a 12% price differential compared to the base premium for a full-network product. This provision went into effect January 1, 2011.

    FCHP helped to pioneer this approach, introducing FCHP Direct Care back in 2002 as an innovative limited network solution for customers looking to save without sacrificing access to high quality health care. For more information, see our FCHP Direct Care flyer.

  • On-and-off loophole closed. Consumers can no longer buy nongroup insurance shortly before a pricey medical procedure then drop it afterwards—a practice that drove up the costs for everyone. Now insurers will have an open enrollment period.

  • Changes in rating factors. Changes are made to certain rating factors for merged market business. One change requires insurers to use 1-year bands for age rating, for example, as opposed to the current 5-year bands.

  • Increased DOI oversight of rates. Establishes temporary standards for the presumptive disapproval of merged market rates by the Division of Insurance. These standards will be in place for the next two years.

  • Group Purchasing Cooperatives. Small businesses may group together to purchase health care plans.

  • Wellness programs. Offers technical assistance and subsidies to small businesses that initiate employee wellness programs and purchase these programs through the Connector. Group Purchasing Cooperatives also will be required to offer wellness programs.

  • Contract prohibitions. Bans anti-competitive contract provisions between insurance carriers and health providers that restrict product innovation or tie reimbursement rates to those received by other providers.

  • Data collection. Adds several new requirements for providers and insurers to collect and submit standardized data that state regulators will analyze and review.

  • A mandate on mandates. Requires the Division of Health Care Finance and Policy to do a comprehensive review every four years on the cost and public health impact of existing mandates. [An earlier-proposed moratorium on new mandates was not included.]

Content reviewed on December 29, 2011.