Health & Life Insurance Actuaries | Lewis & Ellis Inc.

Public Health Emergency extended

Health Care and Health Insurance
by Chris Merkel
PHE has extended for another six months.
PHE has extended for another six months.

Public Health Emergencies (PHE) are a tool that the Department of Health and Human Services (HHS) has to protect Americans in case of disaster. Under section 319 of the Public Health Service (PHS) Act, the Secretary of the Department of Health and Human Services has the power to declare an emergency. COVID-19 was first declared a PHE by former Secretary Alex M. Azar II, on January 31, 2020.

Since then, the state of emergency has been changed and renewed several times, impacting the insurance industry in many ways. But what has the newest adjustment introduced and why does it matter?

When was the PHE extended?

The Administration for Strategic Preparedness & Response renewed the COVID-19 PHE on July 15, 2022. Before that, the extension occurred on the following dates:

  • April 21, 2020.
  • July 23, 2020.
  • October 2, 2020.
  • January 7, 2021.
  • April 15, 2021.
  • July 19, 2021.
  • October 15, 2021.
  • January 14, 2022.
  • April 12, 2022.

The latest PHE will be effective through October 13, 2022, and many of the same stipulations will be in place when it comes to insurance.

According to a quote given to CNN by the Biden Administration, "The Public Health Emergency declaration continues to provide us with tools and authorities needed to respond to the highly transmissible COVID-19 sub-variants that are currently circulating around the country. "The PHE provides essential capabilities and flexibility to hospitals to better care for patients, particularly if we were to see a significant increase in hospitalizations in the coming weeks."

What does the extension mean for insurance?

The operation of state Medicaid programs is seriously impacted by an officially declared PHE. The Medicare continuous coverage protections continue as long as the PHE is in effect. This means that the over 80 million people who are enrolled will have their insurance checked when the PHE lifts. However, for now, their coverage remains without examination.

Currently, many children in the United States are able to receive insurance coverage as dependent on their parents as a result of the pandemic coverage. Currently, those who have insurance through Medicare can not be involuntarily disenrolled. According to a study by Georgetown University, when the Medicare continuous coverage protections end, more than 6.7 million children could potentially lose coverage.

With the renewal of the federal PHE, those who have Medicaid services can receive different advantages. Here are some examples:

  • Regulatory flexibilities for patients, providers and payers.
  • Additional federal matching dollars for Medicaid.
  • Continuous Medicaid coverage.
  • Coverage of COVID-19 testing and vaccines through the Families First Coronavirus Response Act (FFCRA).

Medicare payment and coverage waivers

Certain payments and coverage waivers are tied to the existence of an ongoing PHE period. With the renewal of the emergency situation, these waivers can continue to benefit hospitals and patients:

  • 20% increase in the Medicare payment rate for treatment of patients diagnosed with COVID-19.
  • Waived three-day prior hospitalization requirement for SNF stays for those Medicare beneficiaries who need to be transferred.
  • MA plans are required to cover services at out-of-network facilities that participate in Medicare.
  • Medicare Part D and MA Part D are required to provide up to a 90-day supply of covered Part D drugs to enrollees who request it.
  • Section 1135 waivers allowed the HHS secretary to waive certain program requirements and conditions of Medicare participation during the PHE to ensure beneficiaries have access to benefits and services.

How to manage PHE and risk assessment

For the insurance industry, there are some considerations that need to be made based on the extension of the PHE. This is especially important when it comes to risk assessment analysis. As anyone in the industry is most likely familiar with, risk assessment is an ever-evolving process and should be evaluated regularly.

The extension of the PHE is not only a safety measure but also a public statement to citizens that lets them know that the emergency is not over. The impact on the insurance industry can be seen in several different ways, including casualty insurance, event cancelation insurance and credit risk as a few examples. Insurers should form their understanding of risk through public policy, like PHE, and legislation. Here are some additional factors that should be taken into account:

  • The financial stability of policyholders.
  • The unemployment rate. 
  • The national number of people infected with the virus.
  • Hospitalizations.
  • Fatalities.

There are many other components that experts look at when assessing risk, but population changes are one of the most important. The overall health of the target demographic or population will inform many choices when it comes to risk adjustment.

Insurance companies should use this actuarial tool to adjust payments based on the health of particular at-risk populations. The first PHE had a dramatic impact on the insurance industry, but actuaries now have a better understanding of the impact based on collected data and other information.

Insurers take note of increased possibilities for anti-selection. This is when there is a higher chance that someone may take out an insurance contract due to their own belief that they are at a higher risk of becoming sick. Anti-selection means that the insurance company offers a line of coverage to a person who actually has a higher risk than the company is aware of. For example, if a policyholder thinks that they may be more likely to get COVID-19, they might become more motivated to open a line on the basis of misunderstood risk.

Health care coverage options during a PHE

The insurance industry and the government have made significant steps toward supporting policyholders in continuing their coverage options. Many insurance choices are taken care of by Marketplace coverage, and there are options for people who are unemployed as well.

For example, Medicaid, Children's Health Insurance Program (CHIP), and insurance plans are available. Though the new PHE has impacted risk assessment, these lines of insurance take into account the risk and current health landscape.

However,  you and your team need to adjust in accordance with the changing COVID-19 pandemic and the national response to it. If you need some professional assistance based on reliable data and experience, reach out to Lewis & Ellis today.

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