In the wee hours of May 5, 2017, a state governor awoke, startled.  Late on May 4, he or she had been briefed on the Patient and State Stability Fund and the Federal Invisible Risk Sharing Program described in § 132 of the American Health Care Act.    The reptilian brain was working, as always, in the background until it brought the body bolt upright in bed.  Our governor mumbled, “Billions would flow annually to states and insurers to fix the problems that Washington couldn’t fix.  The governor who succeeds will be the next President.”

Our hypothetical governor wasn’t dreaming.  If the AHCA becomes law, beginning in 2018, over $15B annually will be spent on this experiment.  Most of that money will fund state waiver programs that will be auto-approved, from 2018 through 2026, unless affirmatively rejected by CMS within 60 days of filing.  See AHCA § 132, adding to the Social Security Act new § 2203.

Of course, strings will be attached.  Applications for 2018 funding must be submitted within 45 days of AHCA enactment, in a form and manner yet to be prescribed by CMS.  Each application must certify, “that the State will make, from non-Federal Funds, expenditures for such purposes in an amount that is not less than the State percentage required for the year under section 2204(e)(1).” And, CMS will have to decide what to do if different state officials submit competing state plans, because the statute does not address that issue.  If no 2018 plan is received, or if the state plan is rejected, then CMS will coordinate a Default Federal Safeguard program with the state’s insurance commissioner.

This isn’t Medicaid expansion by another name.  The use of funds permitted by new § 2202 is broader, including assistance to high risk individuals, individual and small group market stabilization, facilitating access to preventive services, and payments directly to providers.  Plainly, the AHCA seeks to encourage local innovation.

Somewhere, perhaps soon, some governor will study this with staff, come up with something others consider crazy, and repeat these words famously spoken by Dr. Frederick Fonkensteen – “IT . . . COULD . . . WORK!”

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*See New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting)

 

As we discussed in our last post, the election is officially behind us and now we begin to look to the future.  Unfortunately, we are back in the position of having more questions than answers.  Over the last couple of months we have received several questions regarding the future of the status of discriminatory benefits for highly compensated individuals (HCIs).  Remember health care reform included provisions to affect nondiscrimination rules for fully-insured group health plans, however, implementation and enforcement of these provisions were delayed  until regulations or other guidance is issued by the Internal Revenue Service (the “IRS”) (IRS Notice 2011-1.)  As a reminder, prior to the ACA, IRS regulations prohibited only self-funded plans from discriminating in favor of highly compensated HCIs with regard to health benefits.  Historically, employers with fully-insured health plans offered more generous benefits to executive employees as part of their total compensation and benefits package. These benefits have included shorter waiting periods and lower employee additional contributions for a select group of managers.  More commonly, employers would offer a separate plan for executives and managers.  While this has not been enforced, we have been advising clients to be planning for a future where such benefits are no longer permissible.

After six years, we still have not seen any regulations that will trigger enforcement and to be honest we no longer expect any. While President-elect Trump has stated that repealing and replacing the ACA will be a top priority, we do not see anything happening with this portion of the law anytime soon.  It is likely that the repeal of the non-discrimination rules would require legislation and that would require 60 votes in the Senate which means both parties would have to agree.  At present we anticipate that the new administration will not act on enforcement of the provisions while they work on its repeal.

 

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CMS’ efforts to improve the delivery of primary health care moved into new territory this week when the agency announced a new five-year delivery model, Comprehensive Primary Care Plus (CPC+), which CMS’ chief medical officer described as “the future of health care.” CMC+ will launch in January 2017, and evolves from the Comprehensive Primary Care initiative that CMS began in 2013. The announcement of CMS+ comes on the heels of CMS’ March 2016 announcement that it met, ahead of schedule, its goal of tying 30% of Medicare payments to quality-and-value-based alternative payment models by 2016. CMS’ new goal is to make 50% of Medicare payments via alternative payment models by 2018.

CPC+ is CMS’ largest ever such model, and is expected to be implemented in up to 20 regions accommodating 20,000 physicians and clinicians and the 25 million people they serve. Under CMC+, Medicare will partner with commercial insurance plans and state Medicaid agencies to support delivery of advanced primary care by primary care practices (PCP).

PCPs participating in CPC+ will proceed along one of two tracks. Track 1 PCPs must help patients with serious or chronic diseases meet their health goals, give patients 24-hour access to care and health information, deliver preventive care, involve patients and their families in patient care, and work with other health care partners to deliver coordinated health care. Track 2 PCPs must, in addition to these services, provide patients who have complex medical and behavioral health needs with more comprehensive services, which may include systemic assessment of their psychosocial needs and an inventory of resources and supports to meet these needs.

Track 1 PCPs will receive a monthly care management fee in addition to fee-of-service payments under the Medicaid Physician Fee Schedule. Track 2 participants will receive an on-average higher monthly care management fee and a hybrid of reduced Medicaid fee-for-service payments and up-front comprehensive primary care payments. The hybrid payments are intended to give providers freedom to find ways to deliver health care outside of traditional person-to-person encounters.
CMS is soliciting payer proposals to partner with Medicare in CPC+ through June 1, 2016, after which it will identify regions in which PCP+ will be implemented. The geographic reach of selected providers will be a factor in determining the choice of the CPC+ regions. From July 15 to September 1, 2016, CMS will publish the CPC+ regions and solicit applications from practices in these regions. Practices will apply directly for the preferred track, however applicants for the more remunerative Track 2 must include in their application a letter of support from their Health IT vendor that discusses the vendor’s commitment to support the PCP with advanced Health IT capabilities.

[Sources: CMS launches largest-ever multi-payer initiative to improve primary care in America; Comprehensive Primary Care Plus; and Health Care Payment Learning and Action Network, all from CMS.gov.]

This post is intended to be a brief reminder of some of the 2016 deadlines. As originally described in our December post the following are the updated dates for Forms 1094 and 1095.

Forms Original IRS Due Date Updated IRS Due Date
Forms 1095-B and 1095-C Feb. 1, 2016 March 31, 2016
Forms 1094-B, 1095-B, 1094-C, and 1095-C on paper by Feb. 29, 2016 May 31, 2016
Forms 1094-B, 1095-B, 1094-C and 1095-C electronically by March 31, 2016 June 30, 2016

The PCORI Fee

Employers and insurers will need to file Internal Revenue Service (IRS) Form 720 and pay the PCORI fee by July 31, 2016. Remember, the PCORI fee is assessed on both issuers of health insurance policies and sponsors of self-insured health plans and are calculated using the average number of lives covered under the policy or plan. The following chart provides fees as indexed for the provided time periods:

PCORI fees Plan Years
$2 per life ending on or after October 1, 2013, and before October 1, 2014
$2.08 per life ending on or after October 1, 2014, and before October 1, 2015
$2.17 per life ending on or after October 1, 2015, and before October 1, 2016

The Transactional Reinsurance Fee

The next filing deadline is the transactional reinsurance fee. In the first year, HHS required a contributing entity to make two separate payments. The first payment was due by January 15 and the second payment was due by November 15. HHS resolved their technical difficulties in time for the 2015 payment. Like the 2015 payment, contributing entities have the option for the 2016 fee ($27 per covered life) as follows:

  1. The entire fee in one payment no later than January 15 (if not a business day, the next applicable business day); or
  2. Two separate payments, with the first due by January 15, (if not a business day, the next applicable business day) in the amount of the first payment of the bifurcated contribution ($21.60 per covered life for 2016); and the remaining payment due by November 15, (if not a business day, the next applicable business day) in the amount of the second payment of the bifurcated contribution ($5.40 per covered life for 2016).

Individual Market Open Enrollment

The open enrollment for individual health insurance plans for 2017 will be considerably earlier than it was for 2016. Currently, the open enrollment period for the 2017 coverage year is October 15, 2016 through December 7, 2016.

As always, stay tuned for changes and future guidance.

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.

The FDA’s 105-page final rule on chain restaurant nutrition labeling of menu items now has an associated, 53-page, draft guidance document, supplementing the FDA’s 132-page Food Labeling Guide, we learned from the September 16 Federal Register. And you thought the ACA was only for hospitals, doctors and insurers. Silly you.

Need a drink? Here are a few excerpts from the Q&A menu Guidance given to covered bars and restaurants.

7.2 Can the declaration of calories for alcoholic beverages that are variable menu items be provided in a single calorie declaration?

Answer: It depends on how the alcoholic beverages are listed on the menu or menu board.  As with all variable menu items, including alcoholic beverages, that have the same calorie declaration, they can be grouped with a single calorie declaration, provided that the declaration specifies that the calorie amount listed represents the calorie amounts for each individual flavor or variety. See 21 CFR 101.11(b)(2)(i)(A). For example:

Wines by the Glass

Red Wine (Pinot Noir, Merlot, or Cabernet Sauvignon) 120 Cal $8.95

7.3 Can I use the format in the example below to declare calorie information for varieties of an alcoholic beverage, even though the varieties are listed separately on a menu?

Wines by the Glass

Red Wine ……………………………………120 Cal……………………………..$8.95

Pinot Noir (Description)

Merlot (Description)

Cabernet Sauvignon (Description)

Answer: If the varieties and their descriptions are listed separately but grouped in a single section of the menu and all of the varieties have the same calorie declaration, then a single calorie declaration could be used provided that the declaration specifies that the calorie amount listed represents the calorie amounts for each individual flavor or variety. See 21 CFR 101.11(b)(2)(i)(A). Otherwise, the calorie declaration must accompany each variety. See 21 CFR 101.11(b)(2)(i)(A)(4).

7.4 Can calorie declarations for varieties of beer or wine be disclosed in a range at the top of the list of such beverages on a menu or menu board?

Answer: It depends on how the alcoholic beverages are listed on the menu or menu board. If just a generic term is used and there are 3 or more varieties available, then a range can be used, for example:

Beer (70-120 calories)…..$x.xx

However, if each variety or flavor is separately listed then the calorie declaration has to be for each one listed (See 21 CFR 101.11(b)(2)(i)(A)(4)), for example:

Mary’s beer (70 calories)…..$x.xx

Pete’s beer (90 calories) …..$x.xx

Frank’s beer (120 calories) …..$x.xx

7.5 If there is a menu or menu board that lists beer on tap (that is not self-serve and is available upon request behind the bar) along with corresponding calorie declarations that can be viewed at the same time that the beer is selected by consumers, do calories also have to be listed on the top of the nozzle or on a sign adjacent to the nozzle?

Answer: No, if the menu/menu board can be viewed at the same time the customer is selecting the beer that is available on tap, then additional calorie declarations on the top of the nozzle or on a sign adjacent to the nozzle are not needed.

7.7 If a bottle of wine is on the menu list, should the calories be provided by the bottle or by serving size? For example, a 750 ml bottle of red wine contains 5 servings (5 fluid ounces per serving) with a calorie count of 123 calories per serving according to the USDA National Nutrient Database. Can the calorie declaration for that bottle be provided as 5 servings/123 calories per serving?

Answer: As noted in the previous question and answer, the calorie declaration must reflect how the covered establishment prepares and offers for sale the standard menu item. If the covered establishment serves the bottle of wine with glasses, then the calorie declaration could be based on the calorie content per glass, provided the number of glasses in the bottle is also included. Accordingly, if the bottle of wine is served in glasses whose capacity is 5 fluid ounces, then after applying the appropriate rounding rules, the calories could be disclosed as follows: 120 calories per glass; 5 glasses per bottle.

Predicted, related legal industry development: beer tap trolls.

For employers who have delayed ACA compliance this long, you have delayed too long. Even if things go your way this June in King v. Burwell, you’ll be unprepared for EBSA compliance audits and for IRS coverage offer reporting that is independent of that case. And there’s more than you think riding on the bet that things will go your way. There are 12 ACA compliance boxes that large employers should have checked already

The ACA Review’s R. Pepper Crutcher, Jr. authored an article published in Bloomberg BNA’s Health Insurance Report on April 8, 2015. The article detailed actionable items for employers to ensure are completed leading up to the full enforcement of the Affordable Care Act. Mr. Crutcher provided insight on measurement periods, status tracking and coverage offer reporting among other compliance requirements.

To read the Bloomberg BNA article, click here.

Yesterday, the Departments of Labor, Health & Human Services, and the Treasury (collectively, the “Departments”) issued a new FAQ. As with prior FAQ’s, this FAQ is intended to answer a question in order to help people understand the Affordable Care Act and its implementation. The question this FAQ addresses is in regard to the proposed changes to the summary of benefits and coverage (“SBC”). The question was posed as follows:

In the December 2014 notice of proposed rulemaking, the Departments proposed changes to the SBC regulations, as well as a new SBC template and associated documents. Changes to the SBC regulations, template, and associated documents were proposed to apply beginning September 1, 2015. When do the Departments intend to finalize changes to the regulations, SBC template, and associated documents?

Based on the FAQ, it appears that the revised SBC regulations will be issued in time for coverage beginning or renewing on January 1, 2016. With that being said, the FAQ also provided that the Departments anticipate the new template and associated documents will be finalized by January 2016 and will be required to be used for 2017 coverage.

The Departments intend to offer an opportunity for the public, including the National Association of Insurance Commissioners, to provide further input before finalizing revisions to the SBC template and associated documents. As stated above, the Departments anticipate the new template and associated documents will be finalized by January 2016 and will apply to coverage that would renew or begin on or after January 1, 2017 (open enrollment periods in the Fall of 2016). While the Departments indicate that they are “fully committed to updating the template and associated documents (including the uniform glossary) to better meet consumers’ needs as quickly as possible,” they intend to offer an opportunity for the public, including the National Association of Insurance Commissioners, to provide further input before finalizing revisions to the SBC template and associated documents.

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.

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.