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The American College Health Association (ACHA) first issued standards for Student Health Insurance/Benefit Programs (SHIBPs) in 1986. The standards were updated in June, 2000, and again in March, 2008. A growing number of colleges and universities are publishing their compliance commitment in their annual SHIBP program brochures, an indication that the importance of the standards is increasing. A desire to be fully compliant with ACHA's standards is often a key component of institutional decisions to require health insurance as a condition of enrollment. As the cost of SHIBPs has increased, many colleges and universities are increasing the amount of time and resources devoted to effective program management. Unfortunately, there is still widespread lack of compliance with the requirement for providing catastrophic coverage (first introduced in 2000), for providing plan benefits that meet the fiduciary responsibility to manage programs in the best interest of covered students (see Standard III), and for having coverage that is consistent with common practices of the group health insurance field (see Standard II).
This document provides the rationale for each standard and example applications. Although this article was reviewed by numerous student affairs and college health administrators, as well as by several national health insurance/managed care experts (including legal counsel), the content of this paper is not endorsed or approved by the American College Health Association and solely reflects the opinions of Stephen L. Beckley and Associates, Inc (SLBA). Nothing in this article should be construed to be legal advice or legal opinion from SLBA.
The importance of ACHA's insurance standards for providing guidance to SHIBP managers/committees cannot be overstated. These standards recognize many of the common strengths and long-standing challenges for effective management of SHIBPs. SLBA's article entitled "Health Insurance Choices for College Students" provides additional perspective on SHIBPs and provides links to numerous informational sites and resources that may be helpful to readers in understanding the operation of insurance/benefit programs.
Many student health insurance/benefit plans do not provide catastrophic coverage. SHIBP coverage should include at least a $1 million lifetime maximum benefit. Even a lifetime maximum benefit of $1 million may not be sufficient if a significant number of potential plan participants perceive this level of coverage to be inadequate protection. In many environments, the plan maximum should be no less than the amount common for employer-sponsored plans ($2,000,000 to unlimited coverage).
It is important to note that colleges and universities cannot comply with this standard by offering optional catastrophic coverage. Catastrophic protection must be included in the program in which students are enrolled if they do not complete a waiver/refund petition. Also, programs providing a maximum benefit of $50,000, $100,000, or $250,000 per year or per accident or injury do not meet this standard because there is an extraordinarily low probability of a student incurring separate illnesses or injuries that would equal a $1 million lifetime maximum (or incurring large expenses for the same illness or injury over many years).
Successful SHIBP management requires balance be struck between the cost of coverage and
benefits. The optimum balance point between benefits and cost varies significantly among
colleges and universities based on the characteristics of the student population, scope of
care available on-campus, and other environmental factors. Nonetheless, after the program
provides appropriate catastrophic coverage and satisfies all applicable state and federal
benefit mandates, there should be a hierarchy for providing coverage that is based on
a careful assessment of the needs of a specific student population and students' financial
resources. In general, the following process is recommended as a basis for developing a
student health benefits plan.
The following is a general discussion of each of the major legal compliance components for SHIBPs under federal law, state laws and regulations, and general liability.
Title IX mandates colleges and universities not discriminate on the basis of sex for specifically identified programs and policies. In regard to SHIBPs, there are two specific mandates under Title IX: (1) the cost of coverage cannot be different based on the sex of the student or the sex of the student's spouse; and (2) pregnancy benefits must be provided on the same basis as any other temporary disability for both student and spouse coverage. This means that pregnancy benefits must be provided at a level that is neither less than nor greater than coverage for other conditions. Readers should note there is an exception for no pre-existing condition exclusion for pregnancy, discussed later in this section, for the majority of states that have implemented the Health Insurance Portability and Accountability Act of 1996 (HIPAA) for SHIBPs on the same basis as employer-sponsored programs. Also, a provision in the Civil Rights Restoration Act of 1987 removed the original requirement in Title IX for providing coverage for voluntary termination of pregnancy.
Section 504 mandates that colleges and university not discriminate on the basis of covered handicapping conditions. There are two levels of impact for Section 504 on SHIBPs. First, the program cannot deny access to either students or dependents who have handicapping conditions. This means, for example, that no medical underwriting procedures can be used that might deny a person (either a student or dependent) eligibility based on a covered handicap (e.g., physical impairment, communicable diseases, mental health conditions, or major chronic conditions such as diabetes or HIV). This medical underwriting is also impermissible for evaluating whether qualified late enrollees may be allowed to participate in a SHIBP. The second level of compliance relative to Section 504 occurs when exclusions are so injury or illness specific that they are tantamount to denial of access to the program. For example, a SHIBP that excludes medical expenses resulting from a sexually transmitted disease is likely to be found by either the United States Department of Education's Office for Civil Rights (OCR) or a federal court not to be in compliance with Section 504. The American College Health Association's advice to its member institutions is to provide benefit levels that are adequate for Section 504 covered conditions and review all program limitations and exclusions for Section 504 compliance. OCR has ruled that pre-existing condition exclusions will not be reviewed under Section 504 because such provisions broadly apply to both handicap and non-handicap covered conditions.
Note: This section pertaining to the Age Discrimination Act of 1975 was updated in July, 2003.
The Age Discrimination Act of 1975 (ADA) does not have specific mandates for SHIBP management or benefit levels. Although there is no case law or OCR rulings relative to the Age Discrimination Act, the United States Department of Education's Office for Civil Rights (OCR) has confirmed that age-rated student health insurance/benefit programs do not violate the Age Discrimination Act of 1975 if such policies: (1) do not exclude access to the program based on age; and (2) the age-rating practice falls within the normal operations exception for the Age Discrimination Act of 1975. More specifically, there must be a sound actuarial standard as the basis for the age rating.
For states regulating student health plans on a group basis, it is common to find that some student health plans are not reducing or waiving the pre-existing condition exclusion for students who have previous creditable coverage. Some programs in these same jurisdictions have not completely removed the pre-existing condition exclusion for pregnancy, regardless of the existence of any previous creditable coverage. The compliance penalties for HIPAA under group programs fall solely upon the college or university as the plan sponsor. Again, it is essential SHIBP managers consult with legal counsel, who has experience in the insurance regulatory law environment, regarding compliance requirements for their particular state.
The problem of legal compliance is worsened by the numerous state insurance regulatory agencies that do not have the resources to fully examine insurance company applications, policy forms, and program marketing material and certificates of coverage. For example, many SHIBPs continue to take always secondary payor status in coordinating benefits with other group health insurance programs even though most states have adopted coordination of benefit rules (based on model legislation endorsed by the National Association of Insurance Commissioners) precluding always secondary payor positions for SHIBPs that cover both illness and injury conditions.
Although the penalties for failure to comply with state mandates usually apply to only the insurance company underwriting the coverage (or the college or university under self-funding arrangements when state regulations and mandates apply), periodic review of mandated coverage by legal counsel retained by the college or university is recommended. An especially good time for this kind of review is prior to periodic request for proposal processes. This review should also pay particular attention to health maintenance organizations and other managed care organizations that are likely to be subject to additional state mandates. One area of state regulation that varies significantly based on jurisdiction is the permissibility of self-funding. Legal research should be conducted before any component of a SHIBP is self-funded, including internal claims liability at a student health service or student counseling center.
Health insurance, including managed care programs, is one of the most heavily regulated products in our society. As is the case with most consumer protection legislation, it followed a period of widespread abuse by the least reputable parts of the industry, and acknowledgment by legislators and regulatory agencies that consumers were often irreparably harmed by inappropriate practices. Each state extensively regulates advertising for health insurance products. Most states prohibit the use of fear tactics (e.g., statements suggesting that failing to have health insurance may jeopardize an uninsured person's ability to access health care services), testimonials, and misleading use of statistics. The advertising codes also specify that negative features cannot be stated positively (e.g., the program includes a "favorable pre-existing condition exclusion"), and that all terms and conditions of the coverage must be included in marketing materials providing any explanation for the schedule of benefits. Many SHIBPs do not comply with one or more aspects of state advertising code regulations.
Another aspect of state regulation for public universities is compliance with purchasing rules and regulations for state agencies. As noted under the discussion of Standard VIII, sole source selections (e.g., changing insurance carriers without a formal request for proposal process) of student health insurance vendors should occur only under highly unusual circumstances, and agents/brokers or other parties should not be allowed, under any circumstance, to control (or inappropriately influence) the selection of the insurance carrier for the college or university.
Standard III establishes a fiduciary requirement for SHIBPs to be managed in the best interests of the covered students. General liability could evolve for a college or university under numerous circumstances for failing to act in the best interests of covered students. Examples under this area of general liability include:
Regarding the last point, readers should note that rebating, i.e., providing gifts by insurance carriers or insurance agents to influence the sale of an insurance product, is expressly illegal in all state jurisdictions.
Although there does not appear to be any specific case law for general liability for SHIBPs, each of the examples noted has occurred recently in actual program management. Management of this kind of liability can be reduced by complying with Standard VII specifying an annual report of program income and expenditures and periodic, independent audits, and with Standard VIII pertaining to compliance with institutional and/or governmental purchasing policies.
Another concern for general liability is SHIBPs that have exclusions that are arbitrary or capricious (i.e., clearly outside the norm for the group health insurance field). A common inappropriate provision for SHIBPs is exclusion for attempted suicide or self-inflicted injury. In addition to being a concern for compliance with Section 504, these provisions are now being called into question by various state regulatory agencies. The Colorado Division of Insurance has noted the following in regard to these plan provisions:
"Health policies cannot exclude benefits based on suicide attempts or self-inflicted injuries if the circumstances are such that the covered person was unable to form intent for those actions. For example, if the person were unable to control his actions due to severe mental illness, attempts to harm himself would be accidental, not intentional. Case law has supported this position of requiring intent in order to apply exclusions for self-inflicted injury. This limitation on exclusions applies to all health policies, including disability income and long term care."
Other examples of arbitrary and capricious plan provisions include moral turpitude exclusions (e.g., expenses resulting from consumption of alcohol or illicit drugs), exclusions for treatment of non-malignant lesions (or other conditions where a negative medical finding is covered but a positive medical finding is excluded) and exclusions for perceived high risk behaviors (e.g., hang gliding or operating a motorcycle or three-wheeled vehicle). As noted under the rationale discussion for Standard II, all plan limitations and exclusions should be evaluated to make sure they are meaningful (i.e., they provide substantive protection for the program).
This standard speaks to the need for annual review of SHIPBs, and the requirement for
program managers and management committees to have a basic understanding of the factors
that influence both short- and long-term costs.
Generally speaking, the current student health insurance/benefit field does not provide sufficient catastrophic coverage and often has too much first dollar/100 percent coverage for minor health care conditions. Excessive coverage for relatively minor health care conditions can greatly increase the overall cost of the program. Again, as a general rule, providing 100 percent coverage for services should usually be a result of either special negotiations with health care providers who are providing extraordinary discounts/cost reductions or concern for access to essential services that affect campus safety (e.g., prescription drug coverage for psychotropic medications and/or mental care benefits).
Agents are legally obligated to work in the best interests of the insurance carrier they represent. Their compensation is a commission that is not subject to review or approval by the college or university. Agents who refer to themselves as brokers, however, may be doing so in the context that they represent more than one insurance vendor rather than having a formal brokerage appointment from the college or university.
Agents of Record or Brokers are legally obligated to work in the best interest of the college or university. They receive a commission that is agreed upon by the college or university. The agent of record or broker often prepares request for proposal documents and helps obtain proposals from insurance carriers. They then often assist the college or university in reviewing the proposals, conducting vendor interviews, assisting with program implementation program, conducting annual renewal negotiations, and often providing routine daily services that would often otherwise be provided by an agent of the insurance carrier.
Consultants are legally obligated to the work in the best interests of the college or university and are usually compensated on a fee basis. The consultant should not have any other financial relationships with insurance carriers or other potential vendors (including acting as an agent for insurance carriers at other locations). Consulting services may be expanded to include actuarial and/or legal work (often through sub-contractors of the consultant) for assistance in managing partially self-funded programs or other alternative funding arrangements.