Affordable Care Act Review

Affordable Care Act Review

Deadline Extended For Reinsurance Enrollment Information

Posted in Uncategorized

The Affordable Care Act, among other things, established a reinsurance program, which is a three-year transitional program designed to stabilize premiums in the individual market. Because insurers can no longer charge a higher premium for individuals with a potentially costly pre-existing condition, this reinsurance program was created to lessen the impact of adverse selection in the individual market.   This program will be funded through collections received from health insurance issuers and self-funded group health plans.

Each paying entity must enter its annual enrollment count at www.pay.gov (The form is located here). However, before completing the form, they will need to set up an account by going to www.pay.gov, clicking “Register” at the top right, and entering the necessary information. This is also the website through which the payment will be made. After receiving numerous requests, last week CMS has extended the deadline to enter enrollment information through pay.gov. The deadline for the enrollment count is now December 5, 2014. It is important to note that this extension DID NOT change the date the payments are due.  The first payment is due no later than January 15th.

CMS Extends Deadline For Annual Reinsurance Enrollment

Posted in Uncategorized

The Affordable Care Act, among other things, established a reinsurance program, which is a three-year transitional program designed to stabilize premiums in the individual market. Because insurers can no longer charge a higher premium for individuals with a potentially costly pre-existing condition, this reinsurance program was created to lessen the impact of adverse selection in the individual market.   This program will be funded through collections received from health insurance issuers and self-funded group health plans.

Each paying entity must enter its annual enrollment count at www.pay.gov (The form is located here). However, before completing the form, they will need to set up an account by going to www.pay.gov, clicking “Register” at the top right, and entering the necessary information. This is also the website through which the payment will be made. After receiving numerous requests, last week CMS has extended the deadline to enter enrollment information through pay.gov. The deadline for the enrollment count is now December 5, 2014. It is important to note that this extension DID NOT change the date the payments are due.  The first payment is due no later than January 15th.

 

 

 

HHS Notice of Benefit and Payment Parameters for 2016

Posted in Affordable Care Act, Coverage Mandates, Exchanges, Government Employers, Insurers and Brokers, Private Employers, Providers - For Profit, Providers - Not-for-Profit

Running 324 pages, plus a six-page summary in its pre-release (easy to read) version this massive annual update will be published officially in the November 26, 2014 Federal Register.  Based on something like March Madness bracketology, we narrowed the large, attention-worthy field to these final four.

No. 1:

As previously threatened, HHS will amend 45 CFR § 156.145 to deny “minimum value” status to plans that don’t cover hospital care.  Here’s the explanation from the proposed rule’s preamble:

Plans that omit critical benefits used disproportionately by individuals in poor health will enroll far fewer of these individuals, effectively driving down employer costs at the expense of those who because of their individual health status are discouraged from enrolling.

That the MV standard may be interpreted to require that employer-sponsored plans cover critical benefits is evident in the structure of the Affordable Care Act, the context in which the grant of the authority to the Secretary to prescribe regulations under section 1302 was enacted, and the policy underlying the legislation. Section 1302(b) authorizes the Secretary of HHS to define the EHB to be offered by individual market and small group health insurance plans, provided that this definition “include at least” 10 specified categories of benefits, and that the benefits be “equal to the scope of benefits provided under a typical employer plan.”  To “inform this determination” as to the scope of a typical employer plan, section 1302(b)(2)(A) provides that “the Secretary of Labor shall conduct a survey of employer sponsored coverage to determine the benefits typically covered by employers, including multiemployer plans, and provide a report on such survey to the Secretary [of HHS].”48 (Emphasis added.)  These provisions suggest that, while detailed requirements for EHB in the individual and small group health insurance markets were deemed necessary, the benefits covered by typical employer plans providing primary coverage at the time the Affordable Care Act was enacted were seen as sufficient to satisfy the Act’s objectives with respect to the breadth of benefits needed for health plan coverage and, in fact, to serve as the basis for determining EHB. They also suggest that any meaningful standard of minimum coverage may require providing certain critical benefits.

Employer-sponsored plans in the large group market and self-insured employers continue to have flexibility in designing their plans. They are not required to cover all EHB. Providing flexibility, however, does not mean that these plans should not be subject to minimum requirements. A plan that excludes substantial coverage for inpatient hospital and physician services is not a health plan in any meaningful sense and is contrary to the purpose of the MV requirement to ensure that an employer-sponsored plan, while not required to cover all EHB, nonetheless must offer coverage with minimum value at least roughly comparable to that of a bronze plan offered on an Exchange.

For these reasons, the Secretary has concluded that the provisions of section 1302(d)(2) of the Affordable Care Act – requiring that the regulations for determining the percentage of the total allowed costs of benefits that apply to plans that must cover all EHB also be applied as a basis for determining minimum value – reflect a statutory design to provide basic minimum standards for health benefits coverage through the MV requirement, without requiring large group market plans and self-insured plans to meet all EHB standards.

[ . . . ]

Accordingly, we propose to amend §156.145 to require that, in order to provide minimum value, an employer-sponsored plan not only must meet the quantitative standard of the actuarial value of benefits, but also must provide a benefit package that meets a minimum standard of benefits. Specifically, we propose to revise §156.145 to provide that, in order to satisfy MV, an employer plan must provide substantial coverage of both inpatient hospital services and physician services.

Legal authority to augment ACA-defined “minimum value” by adding an EHB element is questionable, but there’s no doubt that HHS intends to do it.

No. 2:

The network adequacy standard of 45 CFR § 156.230 will require each QHP issuer to:

publish an up-to-date, accurate, and complete provider directory, including information on which providers are accepting new patients, the provider’s location, contact information, specialty, medical group, and any institutional affiliations, in a manner that is easily accessible to plan enrollees, prospective enrollees, the State, the Exchange, HHS and OPM. As part of this requirement, we propose that a QHP issuer must update the directory information at least once a month, and that a provider directory will be considered easily accessible when the general public is able to view all of the current providers for a plan on the plan’s public website through a clearly identifiable link or tab without having to create or access an account or enter a policy number.

No. 3:

The 2016 maximum annual cost sharing limits (45 CFR § 156.130) will be $6,850 for self-only coverage and $13,700 for family coverage.

No. 4:

Medicare or Medicare-like quality improvement standards (“QIS”) will be imposed on private insurers under 45 CFR § 156.1130, so that, among other things –

[B]eginning in 2016, a QHP issuer participating in the FFE for at least 2 years would submit a QIS implementation plan to HHS and the applicable Exchange for each QHP offered in the Exchange, followed by annual progress updates. We anticipate that the implementation plan for a QHP issuer’s proposed QIS will reflect a payment structure that provides increased reimbursement or other market-based incentives for addressing at least one of the topics specified in section 1311(g)(1) of the Affordable Care Act.

“FFE,” of course, refers to www.healthcare.gov.  Insurers who sold policies through that federal Exchange in 2014 and 2015 should expect HHS in 2016 to be, “requesting information  . . . regarding the percentage of payments to providers that is adjusted based on quality and cost of health care services.”  HHS also expects that, “one year after submitting the QIS implementation plan, the QHP issuer would submit information including, an annual update including a description of progress of QIS implementation activities, analysis of progress using proposed measures and targets, and any modifications to the QIS.”

House Sues President Over ACA Administration

Posted in Affordable Care Act, Coverage Mandates, Insurers and Brokers, Taxes

The U.S. House of Representatives filed its threatened lawsuit on Friday, November 21, in the D.C. federal district court.  Defendants are the HHS Secretary, HHS, the Treasury Secretary and the Treasury Department.  The House challenges the President’s authority, acting through them, to make payments to insurance companies without Congressional funding authorization and to delay and reduce the employer mandate taxes imposed by Congress.

The spending dispute concerns the “Section 1402 Offset Program.”  Here’s how it’s explained in Complaint paragraphs 26 – 29, 35 and 36:

26. ACA Cost-Sharing Reductions are required by law and are not contingent upon the receipt by Insurers of any offsetting payments from the government. Rather, Insurers – who benefit enormously by participating in the ACA – are statutorily required to provide Cost-Sharing Reductions to Beneficiaries as a condition of being permitted to offer insurance policies through an ACA health insurance marketplace exchange.

27. The ACA also establishes a program by which the government is authorized to make direct payments to Insurers to offset costs that Insurers incur in providing Cost-Sharing Reductions to Beneficiaries (referred to herein as the “Section 1402 Offset Program”).

28. Congress has not, and never has, appropriated any funds (whether through temporary appropriations or permanent appropriations) to make any Section 1402 Offset Program payments to Insurers.

29. In contrast, Congress has appropriated funds for section 1401 of the ACA. That provision authorizes refundable tax credits to be paid for qualified individuals to reduce the cost of their health insurance premiums (referred to herein as the “Section 1401 Refundable Tax Credit Program”) through the standing permanent appropriation for refunds due under the Internal Revenue Code (“IRC”), 31 U.S.C. § 1324. The Section 1402 Offset Program, on the other hand, is not funded through this or any other appropriation.

35.       Notwithstanding the lack of any congressional appropriation for Section 1402 Offset Program payments, defendants Lew and the Treasury Department, at the direction of defendants Burwell and HHS, began making Section 1402 Offset Program payments to Insurers in January 2014, and, upon information and belief, continues to make such payments.10   The Office of Management and Budget (“OMB”) has reported that Section 1402 Offset Program payments to Insurers for Fiscal Year 2014 were estimated to be $3.978 billion.

36. In its Fiscal Year 2015 budget submission, submitted to Congress in March 2014, the Administration dramatically and conspicuously changed course. The Administration’s request for a temporary appropriation to CMS to enable it to make Section 1402 Offset Program payments to Insurers disappeared, and was replaced with a single line item in the Internal Revenue Service (“IRS”) section of the budget, lumping together Section 1401 Refundable Tax Credit Program payments – funding for which is permanently appropriated through the IRC – with Section 1402 Offset Program payments which are not funded through the IRC.

The employer mandate tax dispute is simply that the President refused to assess employer mandate taxes that accrued during 2014 and that he exempted certain employers exposed to such taxes in 2015.

The Complaint asks the court to invalidate and enjoin these two initiatives as unconstitutional abuses of Presidential power.  The Complaint is signed by George Washington University Law Professor Jonathan Turley, whose February 2014 House testimony made basically the same points.  We expect defense counsel to move to dismiss the suit because the House of Representatives is not a proper party to make the arguments advanced in the Complaint.

 

ACA Employer Compliance Post-Subsidy

Posted in Affordable Care Act, Coverage Mandates, Exchanges, Taxes

Granting a petition to review the availability of subsidies for insurance purchased through www.healthcare.gov, the Supreme Court on November 7, 2014 put the question this way:

Section 36B of the Internal Revenue Code, which was enacted as part of the Patient Protection and Affordable Care Act (“ACA”), authorizes federal tax-credit subsidies for health insurance coverage that is purchased through an “Exchange established by the State under section 1311″ of the ACA.

The question presented is whether the Internal Revenue Service (“IRS”) may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through Exchanges established by the federal government under section 1321 of the ACA.

Petitioners’ counsel could not have written it more favorably for their argument.  Winners in the big ACA case of 2012, the Feds may lose this one. But so what?  Here’s what.

Non-deductible taxes to be assessed starting in 2016 under 26 U.S.C. § 4980H enforce large employers’ ACA obligation to offer qualifying, affordable coverage to full-time employees and their dependents.  Those assessments will be triggered by Exchange certifications that such employees are eligible for premium and cost-sharing subsidies because of employer failure to offer qualifying, affordable coverage.  In other words, there is no employer mandate trigger in states where the ACA Exchange lacks authority to certify subsidy eligibility.  The case now before the Supreme Court argues that only an Exchange “established by the State” has such authority.  If so, there is no employer mandate trigger in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi or Texas, among other states served only by www.healthcare.gov.    And because the ACA’s anti-retaliation provision (FLSA §18A) principally protects subsidy recipients, subsidy unavailability would minimize employer exposure to such claims in those states.  Most observers expect a Supreme Court opinion by late June, 2015.

Any relief should be welcomed, but don’t let this give you employer mandate myopia.  Three to six months of employer mandate taxes will have accrued before we have a Supreme Court opinion and the outcome can’t be predicted reliably.  If the Supreme Court agrees with the Petitioners, freeing you from the duty to offer affordable coverage to your full-time employees and their dependents, any group health plan you offer still must comply with all applicable ACA coverage and cost sharing mandates, or you’ll be exposed to audit and severe civil money penalties.  What are those mandates?  Summarized tersely, here they are:

Basic ACA Coverage and Cost Sharing Mandates (by PHS Act section number) NGI NGSI GI GSI
No discriminatory premiums (rating criteria for individual and small group markets) (§ 2701) X      
Guaranteed issue  (§ 2702) X      
Guaranteed renewal (§ 2703) X      
No pre-existing condition exclusion (§ 2704) X X X X
No discrimination based on health status (§ 2705) X X    
No discrimination against licensed providers (§ 2706) X X    
EHB (individual and small group markets) (§ 2707(a)) X      
Cost-sharing caps (§ 2707(b))2 X X    
Maximum waiting period (§ 2708) (not the same as §4980H) X X X X
Clinical trial coverage (§ 2709) X X    
No lifetime or annual limits (§ 2711) X X X X
No rescission except for fraud (§ 2712) X X X X
Preventive services without cost sharing (§ 2713) X X    
Adult child coverage to age 26 (§ 2714) X X X X
Summary of benefits and coverage (§ 2715) X X X X
No discrimination in favor of the highly compensated (§ 2716) X3 3   3
[NA: Study and reporting on wellness programs (§ 2717)] NA NA NA NA
Minimum medical loss ratio and rebates (§ 2718) X   X  
Internal appeals and external reviews of claim denials (§ 2719) X X    

NGI = “Non-Grandfathered, Insured.”  GI = “Grandfathered, Insured.” NGSI = “Non-Grandfathered, Self-Insured.”  GSI = “Grandfathered, Self-Insured.”  

And then, there’s the Cadillac Plan Tax, beginning in 2018.  But that’s a topic for another day.

 

Supreme Court to Hear Case ACA Subsidies

Posted in Uncategorized

As a follow up to our Blog dated 10/21/14 (blog), earlier today, the U.S. Supreme Court agreed to consider a challenge to the premium tax credits (subsidies) that are a key component of the ACA.  King v. Burwell challenges whether the tax credits apply only to consumer marketplaces established by a state or if they are applicable to federally operated sites as well.  It is anticipated that the case will heard in early March 2015.

Minimum Value Plans, Automatic Enrollment and IRS Notice 2014-69

Posted in Affordable Care Act, Coverage Mandates, Government Employers, Insurers and Brokers, Private Employers, Taxes

Yes, there’s a connection.  An employer’s 2015 offer of “minimum essential coverage” (MEC) to at least 70% of its full-time employees and their dependents avoids the employer mandate tax imposed by 26 U.S.C. § 4980H(a).  If that coverage is “affordable,” if it provides “minimum value,” and if all full-time employees are included in the offer, the employer also avoids the employer mandate tax imposed by § 4980H(b), while also making the employees ineligible for www.healthcare.gov premium subsidies, whether or not they accept the employer’s offer.

But, as we’ve explained in prior posts, MEC can be very minimal, excluding hospitalization, for example.  And, if other coverages are enriched sufficiently, a no-hospitalization MEC plan can satisfy (by .3%, in our experience) the 60% value test of the government’s online MV Calculator.  So, a penny-wise employer might avoid employer mandate taxes by automatically enrolling all full-time employees in that sort of plan.  Some have.  Fears of contagion partly explain this year’s failed Senate effort to repeal the ACA’s dormant automatic enrollment mandate.

As you might expect, HHS and IRS are not amused.  On November 4, 2014 (election day), they published Notice 2014-69, warning of forthcoming amended HHS regulations (45 CFR § 156.145), saying:

  • “[U]nder the [new] regulations, an employer will not be permitted to use the MV Calculator (or any actuarial certification or valuation) to demonstrate that a Non-Hospital/Non-Physician Services Plan provides minimum value.”
  • “An employer that has entered into a binding written commitment to adopt, or has begun enrolling employees in [such a plan] prior to November 4, 2014 based on the employer’s reliance on the results of use of the MV Calculator” gets a one-time pass “if that plan year begins no later than March 1, 2015.”
  • No-hospitalization minimum value plans that don’t get that pass will become subject to the new rules when they are published, with no grace period.

Even if the employer gets a pass, employees offered the minimum value plan will remain subsidy eligible, and their employer must communicate that to them.  Here’s how Notice 2014-69 described that obligation.

An employer that offers a Non-Hospital/Non-Physician Services Plan (including a Pre-November 4, 2014 Non-Hospital/Non-Physician Services Plan) to an employee (1) must not state or imply in any disclosure that the offer of coverage under the Non-Hospital/Non-Physician Services Plan precludes an employee from obtaining a premium tax credit, if otherwise eligible, and (2) must timely correct any prior disclosures that stated or implied that the offer of the Non-Hospital/Non-Physician Services Plan would preclude an otherwise tax-credit-eligible employee from obtaining a premium tax credit. Without such a corrective disclosure, a statement (for example, in a summary of benefits and coverage) that a Non-Hospital/Non-Physician Services Plan provides minimum value will be considered to imply that the offer of such a plan precludes employees from obtaining a premium tax credit. However, an employer that also offers an employee another plan that is not a Non-Hospital/Non/-Physician Services Plan and that is affordable and provides MV is permitted to advise the employee that the offer of this other plan will or may preclude the employee from obtaining a premium tax credit.

Bottom line:  if you haven’t enrolled employees in your 2015 minimum value plan, you have seven weeks to devise and implement another ACA compliance option.  Employer be nimble, employer be quick.

New “Go Live” Estimate for Employer Subsidy Certification Appeals: 2016

Posted in Affordable Care Act, Coverage Mandates, Exchanges, Government Employers, Private Employers, Taxes

We have suspected for months that the employer subsidy appeals part of www.healthcare.gov wasn’t built and would not be ready for the open enrollment season beginning November 15, 2014.  Turns out that we were overly optimistic. In guidance published October 23, 2014, CMS announced that a paper-only process will be used “through December 31, 2015.”

We had hoped to see, in connection with this sort of update, a draft notice form, with specifics about when, how and to whom such notices will be delivered.  That information is missing from the employer appeal final rules found at 45 CFR § 155.555. Those rules refer back to the notice that an employer is entitled to receive under 45 CFR § 155.310(h).  Here’s the complete text of that sub-section.

(h) Notice of an employee’s eligibility for advance payments of the premium tax credit and cost-sharing reductions to an employer. The Exchange must notify an employer that an employee has been determined eligible for advance payments of the premium tax credit or cost-sharing reductions upon determination that an employee is eligible for advance payments of the premium tax credit or cost-sharing reductions. Such notice must:

(1) Identify the employee;

(2) Indicate that the employee has been determined eligible for advance payments of the premium tax credit;

(3) Indicate that, if the employer has 50 or more full-time employees, the employer may be liable for the payment assessed under section 4980H of the Code; and

(4) Notify the employer of the right to appeal the determination.

Not terribly enlightening.  Mail-in applicant appeal forms are online here (Alabama, Arkansas, Louisiana, Tennessee) and here (Florida, Georgia, Mississippi, Texas, Virginia).  But not employer appeal forms.    The CMS guidance explains its lack of actual guidance thusly:

We understand that Marketplaces face many challenges and competing priorities regarding system development, which may delay completion of systems to implement the electronic functions of an eligibility appeals program. This extended flexibility enables appeals entities to operate the appeals process as current capabilities allow, protecting the due process rights of appellants while providing additional time for appeals entities to complete the systems development work necessary to implement the electronic requirements of the process. We believe this approach strikes a balance between safeguarding appellant’s rights and the demands on appeals entities.

Employers, someday, someone working for you will get a paper notice that someone has obtained a www.healthcare.gov subsidy by attesting to be your full-time employee not offered affordable, qualifying coverage, potentially triggering employer mandate taxes and other liabilities. You’ll have 90 days to appeal.   One person may be listed in the notice, or any number of people.  We can’t show you what the notice looks like.  As far as we can tell, there is no draft ready for publication.  To use IRS lingo, “be on the lookout.”

Supreme Court Subsidy Review: Maybe Sooner than Expected

Posted in Affordable Care Act, Exchanges, Insurers and Brokers, Taxes

Michael Carvin’s October 14 brief for prompt Supreme Court review of the www.healthcare.gov subsidy authority dispute is making news, focused on this forceful opening:

In 2011, the Eleventh Circuit became the first Circuit to invalidate the ACA’s individual mandate.  Although that provision had survived other parallel challenges and was not even scheduled to take effect for more than two years, the Government recognized the imperative to “put these challenges to rest.”  It therefore eschewed en banc review and asked this Court for definitive resolution. Drawn-out litigation over the legality of a central plank of this landmark legislation, the Government understood, would paralyze the Nation and disserve its citizens.

So too here. Indeed, the subsidies that the IRS has illegally expanded have already begun to flow, meaning billions of taxpayer dollars are pouring out of the Treasury absent congressional authorization and millions of Americans are ordering their lives around an impugned regulation. Yet the Government is content to leave the spigots of cash open and the Nation in limbo in the hopes that (i) the en banc D.C. Circuit reverses the Halbig panel, and (ii) no other Circuit enforces the Act’s plain text. All to avoid this Court’s scrutiny.

***

The question is therefore not whether the Court should resolve this issue, but when. It can do so now, thus minimizing potential unfairness, providing maximum clarity to those subject to the Act, and preserving the integrity of federal expenditures. Or it can do so in 2016 or 2017, after tens of billions of Treasury funds are irretrievably spent, after the insurance industry restructures to adapt to the new regime, after employers lay off countless workers (or cut their hours) to avoid the employer mandate, and after millions of Americans buy insurance because they believe it will be subsidized (or because they are forced to under an individual mandate from which they are properly exempt).

The Supreme Court’s docket indicates that the question of prompt review may be resolved in an October 31 conference.

MOOP and Reference-Based Pricing

Posted in Affordable Care Act, Coverage Mandates, Grandfathered Status, Insurers and Brokers, Providers - For Profit, Providers - Not-for-Profit

With group health plan premium increases limited by market and regulatory forces, insurers and self-insurers have raised deductibles, co-insurance, co-pays and other cost-shifting provisions, subject to the ACA’s 2015 maximum out-of-pocket (“MOOP”) limits – $6,600 per individual, $13,200 per family.  But “reference-based pricing” complicates MOOP enforcement.  In Frequently Asked Questions (“FAQ”) guidance issued October 10, 2014, DOL, HHS and IRS revealed their current views on the subject.

A typical group health plan pays substantially more for services rendered by a network provider than for the same services rendered by an out-of-network provider.  Reference-based pricing can be viewed as an alternative to provider network designation.  The insurer sets a price that it will pay for a certain service in a certain market.  All who provide the service for the reference price are, in effect, network providers. Providers who charge more can collect only the reference price from the insurer, leaving their patients exposed to balance billing.

Suppose that the normal covered cost of a procedure in your market is $26,600, and that a non-grandfathered, large group plan subject to the ACA’s 2015 individual MOOP limit therefore would pay at least $20,000.  What if, instead, the plan sets a reference price of $16,600? Is that equivalent to an unlawful, $10,000 individual MOOP provision?  And what if the reference price is so low that it’s accepted only by a single, over-booked surgeon 150 miles away?  Should that be treated the same as a traditional plan’s network adequacy problem?  Summarized briefly, here are major points emphasized in this FAQ guidance.

  • Reference-based pricing should apply only to services that can be delayed long enough to permit patients to shop around.  If reference-based pricing is applied to emergency services, balances paid must count toward the MOOP limit.
  • If the number or quality of providers of the service for the reference price would not meet applicable, functionally equivalent state network adequacy standards, PHS Act § 2707(b) won’t be satisfied, either.
  • Insurers should pay more than the reference price if the service is not reasonably available for the reference price from a high quality provider in the relevant area.

Finally, if the plan uses reference-based pricing, PHS Act § 2707(b) requires these disclosures (quoted verbatim):

Disclosure. Plans should provide the following disclosures regarding reference-based pricing (or similar network design) to plan participants free of charge.

a.  Automatically.  Plans should provide information regarding the pricing structure, including a list of services to which the pricing structure applies and the exceptions process. (This should be provided automatically, without the need for the participant to request such information, for example through the plan’s Summary Plan Description or similar document.)

b.  Upon Request.  Plans should provide:

  i.  A list of providers that will accept the reference price for each service;

  ii.  A list of providers that will accept a negotiated price above the reference price for each service; and

  iii.  Information on the process and underlying data used to ensure that an adequate number of providers accepting the reference price meet reasonable quality standards.