Providers - Not-for-Profit

On January 5, the House passed the “Regulations from the Executive in Need of Scrutiny Act of 2017” (H.R. 26), streamlining the process for Congressional review and rejection of administrative agency rules, including a 10-year sunset provision for rules that Congress has not expressly approved.

In a late night “vote-a-rama” held January 11-12, the Senate approved the FY2017 budget (S. Con. Res. 3), which, absent Presidential veto, will enable Congress to pass budget reconciliation legislation immune to Senate filibuster.  Section 2001 directs assigned committees to report proposed ACA reconciliation bills to the Budget Committee by January 27, and requires the Budget Committee then to send to the full Senate “a reconciliation bill carrying out all such recommendations without any substantial revision.”

However, the big story was open dissent from any Senate plan to repeal the ACA without at least a consensus substitute bill, expressed most materially by Senator Lamar Alexander (Tennessee), chairman of the HELP Committee- i.e., Health, Education, Labor and Pensions.  Others sounding similar notes included Senators Cassidy (Louisiana), Collins (Maine), Corker (Tennessee), Murkowski (Alaska), Paul (Kentucky) and Portman (Ohio).  The loss of those votes for quick repeal, even by budget reconciliation, would require the majority to recruit seven or more minority party Senators.  That seems unlikely.  Nevertheless, a wide range of repeal bills continue to be filed.  Here’s a representative, but not exhaustive, list.

H.R. 394, introduced January 10 and referred to Ways and Means, would repeal the ACA provision that revised the Internal Revenue Code to prohibit HSA expenses for over-the-counter medications.  See also S. 85, introduced January 11 and referred to the Finance Committee.

H.R. 370, a full repeal bill, was introduced January 9 and referred to nine committees.

H.R. 314, a partial repeal bill, was introduced January 5 and referred to three committees.

H.J. Res. 21, amending the Constitution to forbid Congress to tax the failure to purchase a good or service, was introduced January 6 and referred to the House Judiciary Committee.  This amendment would reverse the Supreme Court’s approval of the ACA individual mandate.

S. 58to repeal the Cadillac Plan tax (see also S. 40), was introduced January 9 and referred to the Senate Finance Committee.

We didn’t take ten weeks off because there was nothing to talk about.  Rather, we concluded around Labor Day that anything useful to be said about ACA compliance, pre-election, would be interpreted as political advocacy, so we decided to watch and wait.  The anti-ACA candidate won, and his party carried Congress, too.  That settles that, right?  Probably not, at least for 2017.  Here’s why.

Have you ever heard of federal legislation that repealed and waived payment of tax debts already accrued?  Neither have we.  Employer mandate taxes have accrued monthly since January 2015.  Now that the election is over, we expect IRS to begin mailing proposed assessments, followed by assessment notices, based on data collected from Exchange subsidy certifications and insurer and employer information reports.  To our knowledge, neither the President elect, nor anyone on his team promised otherwise.  And if they had, that promise would be exceedingly hard to keep.

The ACA actually is two laws, once of which (Pub. L. 111-152) was passed by a bare Senate majority in a process called “budget reconciliation” that is filibuster-proof.   Go ahead, click the link.  What’s in there can be repealed by budget reconciliation.  Here’s a hit list of headings:

Sec. 1001. Tax credits.

Sec. 1002. Individual responsibility.

Sec. 1003. Employer responsibility.

Sec. 1004. Income definitions.

Sec. 1005. Implementation funding.

Subtitle B—Medicare

Sec. 1101. Closing the medicare prescription drug ‘‘donut hole’’.

Sec. 1102. Medicare Advantage payments.

Sec. 1103. Savings from limits on MA plan administrative costs.

Sec. 1104. Disproportionate share hospital (DSH) payments.

Sec. 1105. Market basket updates.

Sec. 1106. Physician ownership-referral.

Sec. 1107. Payment for imaging services.

Sec. 1108. PE GPCI adjustment for 2010.

Sec. 1109. Payment for qualifying hospitals.

Subtitle C—Medicaid

Sec. 1201. Federal funding for States.

Sec. 1202. Payments to primary care physicians.

Sec. 1203. Disproportionate share hospital payments.

Sec. 1204. Funding for the territories.

Sec. 1205. Delay in Community First Choice option.

Sec. 1206. Drug rebates for new formulations of existing drugs.

Subtitle D—Reducing Fraud, Waste, and Abuse

Sec. 1301. Community mental health centers.

Sec. 1302. Medicare prepayment medical review limitations.

Sec. 1303. Funding to fight fraud, waste, and abuse.

Sec. 1304. 90-day period of enhanced oversight for initial claims of DME suppliers.

Subtitle E—Provisions Relating to Revenue

Sec. 1401. High-cost plan excise tax.

Sec. 1402. Unearned income Medicare contribution.

Sec. 1403. Delay of limitation on health flexible spending arrangements under cafeteria

plans.

Sec. 1404. Brand name pharmaceuticals.

Sec. 1405. Excise tax on medical device manufacturers.

Sec. 1406. Health insurance providers.

Sec. 1407. Delay of elimination of deduction for expenses allocable to medicare part

D subsidy.

Sec. 1408. Elimination of unintended application of cellulosic biofuel producer credit.

Sec. 1409. Codification of economic substance doctrine and penalties.

Sec. 1410. Time for payment of corporate estimated taxes.

If it was not passed by budget reconciliation, it probably can’t be repealed by budget reconciliation.  But in any event, there must first be a budget to which taxes and spending may be reconciled.  That normally takes months, and in recent years, budget passage has been the exception, rather than the rule.  It would be highly ironic, it seems to us, if the new President were to take Obama-like “executive action” simply to decline to enforce the employer mandate.   So, we expect employer mandate tax assessment and collection in 2017, regardless of the success or failure of ACA repeal or reform legislation.

Similarly, once employers learn the identities of employees who bought Exchange coverage with subsidies, those employees will be protected from employer retaliation under ACA § 1558 (29 U.S.C. § 218C).  In June, HHS began mailing 2016 subsidy certification notices, naming those employees.  Open enrollment for 2017, now underway, will produce many more notices, protecting many more employees.  This anti-retaliation law (see Pub. L. 111-148) cannot be repealed by budget reconciliation; 60 Senate votes will be needed.  We can’t count that high, and we don’t expect OSHA to simply ignore retaliation charges filed under the statute.

The same goes for the ACA’s big coverage cost drivers passed as amendments to ERISA, the PHS Act and the tax Code as part of Pub. L. 111-148 – e.g., limited age banding, prohibition of annual and lifetime limits, health status discrimination prohibitions, preventive health services mandates, guaranteed issue and renewal, etc.  If a reform or repeal bill can’t carry those loads, they may be thrown overboard.

There may be a Senate majority for repeal of the Cadillac Plan Tax (delayed until 2020 already), and perhaps the individual and employer mandate taxes – we can’t imagine one going down to defeat without the other. But the Medicare surtax?  Does the party in power want to be blamed for penury of the Medicare hospital insurance trust fund?

Congress may agree to repeal the Independent Payment Advisory Board – what some have called a “Death Panel.”  It’s in § 3403 of Pub. L. 111-148 (42 U.S.C. § 1395kkk).  It is widely unpopular, even though the Medicare growth rate has not yet triggered IPAB action and the agency has not been staffed.

How about reneging on the feds’ promise to pay almost all of the cost of Medicaid expansion?  Or the premium and cost sharing subsidies that have driven almost all of the business being done on the Exchanges?  It’s far easier to pass a new entitlement program than to repeal it.  As President Reagan famously said, the closest thing to eternal life on this Earth is a federal program, and the ACA is a huge federal program.

Probably, the path to 60 Senate repeal votes leads through an array of replacement compromises that will be worked out over more than one session.  The next real inflection point is the mid-term election of 2018.

We are not discounting efforts to change the content of the ACA or the course of ACA enforcement.  We are predicting that our readers won’t know what will be done for many months.  In the interim, you may have to confront ACA compliance issues from which the new Administration cannot provide relief, despite its best intentions and efforts on your behalf.  We’re keeping a sharp watch out.

Nearly three years ago, having spent hundreds of hours immersed in ACA minutiae, we anticipated that clients would not react well to fees for services that consisted principally of telling them that they had asked the wrong question. So we decided, against tradition and much conventional wisdom, to sink lots of unpaid partner time into this education project. A casual reader of this blog should learn basic ACA terms and concepts, so that he or she can converse effectively with advisors. A regular reader should be able to identify, during such a conversation, a purported ACA expert who’s a poseur. Sadly, they abound. A colleague should find this a thought-provoking reference to ACA rules and guidance documents. Those are our goals.

Substitute nothing you read here for legal or other professional advice about any specific situation. ACA rules and sub-regulatory guidance change frequently and whimsically. Occasionally, the three main enforcement agencies (DOL, HHS, IRS) disagree. Sometimes, they publish a new rule unaware of a related, existing rule. Part of our service to you is to alert you to what we see coming. We usually have guessed right, but we often are guessing. And of course, apparently insignificant factual details can turn out to be determinative. If you regard this blog as cheap – i.e., free – legal advice, you’re rolling the dice at your own risk and the risk might be far bigger than you realize.

Finally, we invite constructive comments, including reasoned criticism, but not rants. We delete hissy-fits and block commenters who seem to be unable to comment otherwise. That goes triple for political hyperbole. Sometimes, we must explain political realities in order to explain a regulatory reality, but we try to be objective. You should, too.

This is the annual hodge-podge of changes to the risk adjustment, reinsurance, and risk corridors programs, cost sharing parameters, cost-sharing reductions, and Healthcare.gov user fees, usually filling hundreds of Federal Register pages. Stuff gets buried deep, scattered among 45 CFR Parts 144, 146, 147, 153, 154, 155, 156 and 158. Yesterday (101 pages) was no exception. ‘Tis the season for over-stuffing.

HHS will change its method of calculating the required contribution percentage, originally 8% of household income (also the subsidy eligibility trigger). For 2017, the number will be 8.16%. The 2017 annual cost sharing limits will be $7,150 (self-only) and $14,300 (family). The IRS uses these HHS calculations to set annual increases in § 4980H assessable payment amounts.

We’re updated, marginally, about HHS efforts to notify employers and to process employer appeals of Healthcare.gov subsidies granted to their employees. Here are the highlights for 2017:

  • No subsidy certification notice will be provided unless the employee actually enrolls in a QHP;
  • Notices needn’t be individual; they may list multiple employees;
  • Notices must be issued, “within a reasonable timeframe following any month an employee was determined eligible for either form of Exchange financial assistance and enrolled in a QHP.”

There is no definition of “reasonable timeframe.” If an employer appeals under 45 CFR § 155.555, Healthcare.gov must give the applicant another chance to prove eligibility, accepting new data for that purpose. Appeal options for rejected applicants also are enhanced.

Until now, there were state-based exchanges and, for states without one, Healthcare.gov. But state-based exchanges are failing. So, HHS will allow them to piggy-back on Healthcare.gov beginning with open enrollment next year – i.e., November 1, 2016 through January 31, 2017. Each will be called a “State-based Exchange on the Federal platform (SBE-FP).” “Although the SBE-FPs are legally distinct from FFEs, this difference will not always be apparent to Healthcare.gov consumers.” So, Healthcare.gov user fees, prescription formularies, network adequacy, meaningful difference and essential community provider standards will apply to issuers selling through such exchanges.

Each insurer offering coverage through Healthcare.gov or an SBE-FP must offer one “standardized option” in each metal level (Bronze – Gold), having identical cost sharing features and just one provider tier. See Table 9 for the details.

HHS will publish minimum network adequacy standards – e.g., required travel to provider locations (county-by-county) and provider/patient ratios – in its annual Letter to Issuers. These will be minimum federal standards below which no state may sink. HHS also will address compensation of non-network physicians who render services at in-network hospitals, and insurer notification to patients of provider network termination. For example, balance billed amounts for EHB must be counted toward the annual cost sharing limit unless the insurer gives an advance written notice. HHS may add wait times to network adequacy determinations and may even contract directly with providers.

Due to recent legislation, “large employer” now will be defined to mean –

An employer who employed an average of at least 51 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year, but . . . a State may elect to define large employer by substituting “101employees” for “51 employees.” Conversely, we propose to revise the regulatory definition of small employer to mean, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 1 but not more than 50 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year, but would provide that a State may elect to define small employer by substituting “100 employees” for “50 employees.”

The 2016 reinsurance deal for Healthcare.gov insurers, subject to 7% sequestration, may be as good as 100% coinsurance with a $90,000 attachment point. And –

[I]f the issuer reported a certified estimate of 2014 cost-sharing reductions on its 2014 MLR and Risk Corridors Annual Reporting Form that is lower than the actual cost-sharing reductions provided, HHS would make an adjustment to the issuer’s 2015 risk corridors payment or charge amount in order to address the impact of the inaccurate reporting on the risk corridors and MLR calculations for the 2014 benefit year. We also propose that the issuer must adjust the cost-sharing reduction amounts it reports for the 2015 MLR and risk corridors reporting cycle by any difference between 2014 reported and actual cost-sharing reductions amounts.

Not commenting; just reporting. There are catches. Study them well, issuers.

As to risk corridors –

[I]f the issuer reported a certified estimate of 2014 cost-sharing reductions on its 2014 MLR and Risk Corridors Annual Reporting Form that is lower than the actual cost-sharing reductions provided (as calculated under §156.430(c) for the 2014 benefit year, which will take place in the spring of 2016), HHS would make an adjustment to the amount of the issuer’s 2015 benefit year risk corridors payment or charge measured by the full difference between the certified estimate reported and the actual cost-sharing reductions provided as calculated under §156.430(c) in order to address the impact of the inaccurate reporting on the risk corridors and MLR calculations for the 2014 benefit year.

HHS also will –

require an issuer to adjust the cost-sharing reduction amount it reports on its 2015 risk corridors and MLR forms by the difference (if any) between the reported cost-sharing reduction amount used to adjust allowable costs and incurred claims on the 2014 MLR Annual Reporting Form and the actual cost-sharing reductions provided by the issuer for the 2014 benefit year (as calculated under §156.430(c) for the 2014 benefit year, which will take place in the spring of 2016). Issuers must report the amount as calculated under §156.430(c) when reporting risk corridors and MLR for the applicable benefit year.

And –

require issuers to adjust the claims reported as allowable costs for the 2015 and later benefit years by the amount by which the issuer’s estimate of unpaid claims for the preceding benefit year exceeded (or fell below) the actual payments that the issuer made after the date of the estimate for claims attributable to the preceding benefit year. For example, if in calculating its 2014 allowable costs, an issuer overestimated the amount of claims it incurred in 2014 that were unpaid as of March 31, 2015, then under this proposal, in calculating its 2015 allowable costs, the issuer would be required to subtract the amount by which its March 31, 2015 claims estimate exceeded the actual payments for 2014 claims that the issuer made between March 31, 2015 and June 30, 2016 (the claims reserves and liabilities valuation dates for the 2014 and 2015 benefit years, respectively).

Issuers’ time to appeal adverse payment determinations will drop from 60 to just 30 days.

Perceived and suspected abuses are targeted. For example, a “plan year” under 45 CFR § 144.103 may not exceed twelve months. HHS is considering limits on variance of state-established rating areas and age curves and may ban or limit insurer rejection of small employers that do not meet minimum participation requirements. TPAs that report reinsurance fees for self-insured plans, or that merely host related data, will be subject to audit under 45 CFR § 153.405(i).

“[S]tudent health insurance coverage [will] be subject to the index rate setting methodology of the single risk pool provision in the regulation at [45 CFR] §156.80(d),” but will be exempt from other AV requirements if it meets the 60% standard.

Thirteen individual mandate hardship exemptions are added to 45 CFR § 155.605(d):

  • Homelessness;
  • Eviction or facing eviction or foreclosure;
  • Received a shut-off notice from a utility company;
  • Experienced domestic violence;
  • Experienced the death of a family member;
  • Experienced a fire, flood or other nature or human-caused disaster that caused substantial damage to your property;
  • Filed for bankruptcy;
  • Experienced unexpected increases in necessary expenses due to caring for an ill, disabled or aging family member;
  • Seeking categorical Medicaid eligibility under section 1902(f) of the Social Security Act (the Act) for “209(b)” States (codified at §435.121);
  • Seeking Medicaid coverage provided to medically needy individuals under section 1902(a)(10(C) of the Act that is not included as government-sponsored minimum essential coverage under IRS regulations and not recognized as MEC by the Secretary of HHS in accordance with the CMS State Health Official (SHO) Letter #14-002;
  • Enrolled in Medicaid coverage provided to a pregnant woman that is not included as government-sponsored minimum essential coverage under IRS regulations and not recognized as minimum essential coverage by the Secretary of HHS in accordance with CMS SHO #14-002;
  • Enrolled in CHIP coverage provided to an unborn child that includes comprehensive prenatal care for the pregnant mother; or
  • As a result of an eligibility appeals decision the individual is eligible for enrollment in a qualified health plan through the Exchange, lower costs on the individual’s monthly premiums or CSRs for a time period when the individual was not enrolled in a QHP through the Exchange.

There is a three year time limit for claiming a hardship. Additional, previously recognized exemptions also are formalized, including residence in a state that did not expand Medicaid.

HHS may expand the list of entities from which issuers must accept third-party premium and cost sharing payments under 45 CFR § 156.1250 to add non-profit charities.

Quality and related reporting standards continue to be tightened.

[A] QHP issuer that contracts with a hospital with greater than 50 beds must verify that the hospital uses a patient safety evaluation system as defined in 42 CFR 3.20. The patient safety evaluation system is defined in the PHS Act as the collection, management, or analysis of information for reporting to or by a Patient Safety Organization. We propose in §156.1110(a)(2)(i)(B) to require that a QHP issuer that contracts with a hospital with greater than 50 beds must ensure that the hospital implemented a comprehensive person-centered discharge program to improve care coordination and health care quality for each patient.

***

We expect that QHP issuer contracted hospitals with more than 50 beds will contract with a PSO and implement a comprehensive person-centered discharge program to improve care coordination and health care quality for each patient. HHS will continue to monitor the status of the PSO program and other patient safety initiatives and will develop additional requirements or guidance, if needed, to support effective patient safety strategies and harmonization of evidence-based standards and requirements under §156.1110.

In addition, HHS strongly supports hospital tracking of patient safety events using the Agency for Healthcare Research and Quality Common Formats, which are a useful tool for a hospital regardless of what patient safety interventions are implemented for ongoing, data-driven quality assessment.

Our round-up concludes with a warning from the HHS Office of Civil Rights that it will enforce ACA § 1557 non-discrimination standards against Exchange issuers.  Among other things, this may mean that OCR will target exclusion of dependent pregnancy coverage.

ACA § 1557(a) (42 U.S.C. § 18116(a)) says:

Except as otherwise provided for in this title (or an amendment made by this title), an individual shall not, on the ground prohibited under title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), or section 794 of title 29, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any health program or activity, any part of which is receiving Federal financial assistance, including credits, subsidies, or contracts of insurance, or under any program or activity that is administered by an Executive Agency or any entity established under this title (or amendments). The enforcement mechanisms provided for and available under such title VI, title IX, section 794, or such Age Discrimination Act shall apply for purposes of violations of this subsection.

Sub-section (b) emphasizes that subsection (a) does not limit the previous application of the statutes referenced in subsection (a). Subsection (c) authorizes the HHS Secretary to “promulgate regulations to implement this section.” All of this has been in effect since March 2010. So, why did HHS need over five years to propose the set of rules published September 8? Here are a few highlights. For brevity’s sake, we omit foreign language service requirements, disability accommodation, compliance certification, grievance procedure and notice posting rules, among others.

Marketplace Insurers Are Covered Comprehensively

Receipt of non-procurement federal financial assistance, including ACA Marketplace subsidies, directly or indirectly, subjects a health insurer to § 1557 coverage, for all its health plans, not just those sold through the Marketplace. See preamble footnote 73 and accompanying text and see 45 C.F.R. § 92.4. Entities legally separate from those insurers might be able to serve as third party plan administrators for otherwise uncovered, self-funded group health plans, subject to “case-by-case inquiry” into § 1557 coverage.  No guidance is given about how that call will be made.

But wait, there’s more! “A health program or activity also includes all the operations of a State Medicaid program,” we learn in preamble footnote 16.

Insurer and Medicaid program exposure matter to the extent that HHS reads § 1557 to forbid otherwise lawful plan designs or practices or to mandate practices or coverages that had been optional. Surprise! According the proposed rules, § 1557 does both.

Gender Transition (Absolutely) and Sexual Orientation (Probably) Are Protected

The proposed rules say –

The term “on the basis of sex is defined to include, but is not limited to, discrimination on the basis of pregnancy, termination of pregnancy, recovery therefrom, childbirth or related medical conditions, sex stereotyping, or gender identity.

Consequently, “discrimination on the basis of sex includes discrimination in the basis of gender identity.” So, “failure to treat individuals in accordance with their gender identity may constitute prohibited discrimination.” Thus, a covered plan may not exclude services related to gender transition. HHS also announces its support for “banning discrimination in health programs and activities . . . also on the basis of sexual orientation,” while requesting comments about the legal authority to do so.

This new protection is augmented by HHS’ decision to forbid a covered entity to discriminate against an individual because he or she, though not in a protected group, is “associated with” someone in a protected group. See 45 C.F.R. § 92.209.

Permitted Discrimination: Age Rating? Dependent Pregnancy Exclusion?

In fifty pages of preamble and rules, HHS references § 1557’s limiting, introductory clause – i.e., “[e]xcept as otherwise provided for in this title” – just four times, saying only once, in preamble footnote 38, what it might mean. See 80 Fed. Reg. 54,181 (Sept. 8, 2015). We learn there that HHS considers the age rating permitted by 45 C.F.R. § 147.102(1)(1)(iii) to be beyond § 1557’s reach. Those rules implemented ACA § 1201(4), which enacted new PHS Act § 2701 (42 U.S.C. 300gg), limiting the age rating spread for individual and non-grandfathered small group plans to a 3:1 ratio. That limit was not imposed on grandfathered or large group plans. Should we infer from footnote 38 that § 1557 bans all age-rating except the 3:1 spread permitted for individual and non-grandfathered small group plans, effectively extending that limit to large group and grandfathered, plans? Or should we infer that age rating, up to 3:1 by individual and small group plans, and all age rating by large group and grandfathered plans is unregulated by § 1557?

Consider also dependent pregnancy coverage. Pregnancy coverage for all is among the “Essential Health Benefits” required of individual and non-grandfathered, small group plans, but EHB are not mandated for grandfathered or for large group health plans. See ACA § 1302(b)(1)(d) (42 U.S.C. 18022) and ACA-added PHS Act § 2707 (42 U.S.C. § 300gg-6). Consequently, grandfathered and large group plans (like state Medicaid plans) typically exclude dependent pregnancy coverage. Does ACA Tile I “otherwise provide for” that exclusion? If not, does the exclusion violate § 1557’s prohibition of discrimination on the basis of sex?

The most obvious place for the rules to explain what “otherwise provided for” means is at 45 C.F.R. § 92.2(b)(2), titled “Limitations.” Here’s the complete text of that subsection: “[Reserved.]” Is HHS reserving its option to tell us later that § 1557 compels what was allowed elsewhere in Title I? That seems contrary to the limiting function of the opening clause. But if so, what specific discrimination, otherwise outlawed by § 1557, does Title I “provide for”? Is 3:1 age rating the sole example? Then why didn’t § 1557 reference only that section, as was done in § 1251, which distinguished the PHS Act amendments that would and would not apply to grandfathered plans?

A Broad Employee Health Plan Exemption

But for § 92.208 of the proposed rules, employer recipients of federal financial assistance might be exposed to significant new health plan mandates. However, that section seems to take back much, maybe all, of what may have been given to employees elsewhere. Here’s the entire section.

 §92.208 Employer liability for discrimination in employee health benefit programs.

A covered entity that provides an employee health benefit program to its employees and/or their dependents shall be liable for violations of this part in that employee health benefit program only when:

(a) The entity is principally engaged in providing or administering health services or health insurance coverage;

(b) The entity receives Federal financial assistance a primary objective of which is to fund the entity’s employee health benefit program; or

(c) The entity is not principally engaged in providing or administering health services or health insurance coverage but operates a health program or activity, which is not an employee health benefit program, that receives Federal financial assistance; except that the entity is liable under this part with regard to the provision or administration of employee health benefits only to the employees in that health program or activity.

The preamble summarizes that section helpfully, twice.

[W]here an entity that receives Federal financial assistance provides an employee health benefit program to its employees, it will be liable for discrimination in that employee health benefit program under this part only in the following circumstances [thereafter stating subs-sections (a) through (c) above].

[U]nless the primary purpose of the Federal financial assistance is to fund employee health benefits, we propose to not apply Section 1557 to an employer’s provision of employee health benefits where the provision of those benefits is the only health program or activity operated by the employer.

This seems to us to undercut any contention that § 1557 mandates dependent pregnancy coverage for employee health plans sponsored by recipients of federal financial assistance. Perhaps HHS did this to avoid having to specify the discrimination that is permitted by § 1557 because it is “otherwise provided for” in ACA Title I.

Note, however, that § 92.208 speaks only to employer liability. HHS sees the employer’s insurer as independently subject to § 1557 if it is a Marketplace participant. Therefore, in order to exclude coverages deemed mandated by § 1557, the employer’s plan might need to be self-funded and administered by a TPA that is not a Marketplace participant.

Comment Period

Comments on the proposed nondiscrimination rules must be received by November 9, 2015.

This is a compliance blog; we don’t do politics. But we can’t explain compliance consequences of the Supreme Court’s King v. Burwell opinion without acknowledging the political context.

Here’s the June calendar of the Supreme Court of the United States.

snip

 

 

 

 

 

 

 

Opinions are posted online on Monday or Tuesday, typically. As early as tomorrow, or as late as June 30, we will read whether the IRS and HHS had authority to grant subsidies to people who bought health insurance through Healthcare.gov.   We expect the government to prevail, 5-4. If we’re right, nothing changes, legally, but much changes practically. That’s because so many employers have tried to wait-out the ACA, hoping for political or judicial relief from its burdens. With a few exceptions (e.g., the Cadillac Plan tax), this appeal is their last hope. If they guessed wrong, there will be a mad scramble for hurried advice and assistance, some of which will be reliable.

If the government loses, there will be no employer mandate for employers with employees only in states served by Healthcare.gov. That’s because subsidy certification triggers the employer mandate taxes assessed under 26 U.S.C. § 4980H. No subsidy, no tax. Of course, Congress could change the law but prospects for agreement seem dim. Senate Democrats are likely to filibuster any change except deletion from Code § 36B(b)(2) of the phrase, “established by the State under 1311 of the Patient Protection and Affordable Care Act.” Republicans have not yet revealed an alternative that is likely to have overwhelming popular support. Stalemate seems to be the most likely outcome.

Stalled legislation could tempt the White House to try another “executive action” detour around Congress, but the hostile judicial reception to the President’s executive action on immigration might cool that ardor. And, with a Presidential election looming, Democrats might prefer to blame Republicans for millions of people losing their subsidized health insurance.

We’ll share our more particular thoughts within hours of reading the Supreme Court opinion.

Update:  People rooting for the plaintiffs here should be encouraged by Justice Roberts’ joinder of this part of the opinion in Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. ___ (June 15, 2015):

More importantly, we would lack the authority to re­write the statute even if we believed that uncompensated fee litigation would fall particularly hard on the bank­ruptcy bar. “Our unwillingness to soften the import of Con­gress’ chosen words even if we believe the words lead to a harsh outcome is longstanding,” and that is no less true in bankruptcy than it is elsewhere. Lamie v. United States Trustee, 540 U. S. 526, 538 (2004). Whether or not the Government’s theory is desirable as a matter of policy, Congress has not granted us “roving authority . . . to allow counsel fees . . . whenever [we] might deem them warranted.” Alyeska Pipeline, supra, at 260. Our job is to follow the text even if doing so will supposedly “undercut a basic objective of the statute,” post, at 3. Section 330(a)(1) itself does not authorize the award of fees for defending a fee application, and that is the end of the matter.

Update:  “The Supreme Court has added non-argument sessions for the announcement of opinions on Thursday, June 25, 2015, and Friday, June 26, 2015, at 10 a.m.”  See http://www.supremecourt.gov/.

 

 

 

In a January 27, 2015 press release, the Centers for Medicare and Medicaid Services (CMS) announced approval of most of an ACA Medicaid expansion proposal called the Healthy Indiana Plan.  Here are highlights of approved elements:

  • Begins February 1, 2015, funded 100% by HHS through 2016, the federal share to decline thereafter;
  • Beneficiary contributions to “POWER” accounts may be used to pay for some health care expenses and if contributions are required, cost sharing will be required only for emergency room services (some subject to an $8 copay for the first ER visit, $25 for the second);
  • Base and enhanced coverages will include all ACA Essential Health Benefits;
  • No essential benefits premium default lock-out for those under 100% of the FPL.

The agreement forbids work requirements, enrollment caps, premium requirements for those under 100% of FPL and premium payments exceeding 2% of income.  The eligible expansion population is estimated to number about 350,000.

The ACA turned mistaken overpayments by intermediaries, carriers and Medicaid agencies into potential False Claims Act violations by healthcare providers when it required that an overpayment be reported and refunded within 60 days after it was “identified.”  The ACA does not define what constitutes “identification” of an overpayment, so providers have been left to wonder when the 60-day period begins to run.  CMS issued proposed regulations in February 2012, not finalized.  They say that an overpayment is identified when a person has “actual knowledge of the existence of an overpayment or acts in reckless disregard or deliberate indifference of the overpayment.”  The preamble also says the 60-day period would not begin to run until the healthcare provider had an opportunity to undertake a “reasonable inquiry” into the circumstances of the overpayment.  So what does “reasonable inquiry” mean?  Does it mean the inquiry necessary to give a healthcare provider a sneaking suspicion that an overpayment might have occurred, or does it mean a detailed investigation that positively shows an overpayment, or something in between?

The U.S. District Court for the Southern District of New York may answer that question in a qui tam lawsuit brought against Continuum Health Partners, Inc., which squarely raises the issue of when is the 60-day time period is triggered.  This case marks the DOJ’s first intervention in a qui tam case premised on the 60-day provision.  The whistleblower alleges that Continuum Health Partners either purposefully or recklessly failed to take steps to identify approximately 900 overpayments after being notified of a suspicion that overpayments existed.  He also contends the 60-day time period begins to run when an overpayment is first suspected.  Arguing for dismissal, Continuum Health Partners explained why the 60 days should not begin to run until the conclusion of a thorough investigation that positively identifies an overpayment.  Continuum Health Partners has a lot of money riding on the Court’s answer, with potential exposure to civil penalties of between $5,500 and $11,000 per false claim, plus three times the amount of the damage the government suffers.  Other healthcare providers have a lot riding on it as well, since the answer will also dictate how much time and money they spend examining and analyzing reimbursements to identify potential overpaments.

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.”

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.