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HEALTH CARE REFORM LAW & REGULATORY RESOURCES
This webpage provides links to (a) the Patient Protection and Affordable Care Act, as amended and supplemented by the Health Care and Education Reconciliation Act, (b) our summary of the health care reform law, (c) newly proposed or adopted regulations or other regulatory pronouncements relating to the health care reform law, (d) requests for proposal and grant offerings, and (e) additional health reform resources.
>>Health Care Reform Law
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Regulatory Actions | Court Decisions | Requests for Proposal & Grant Offerings | Additional Health Care Reform Resources
>>Regulatory Actions
- CCIIO issues additional MLR guidance. On April 20, 2012, the Center for Consumer Information & Insurance Oversight ("CCIIO") issued a new set of questions and answers ("Q&As") on medical loss ratio ("MLR") requirements under PPACA. Among other things, the Q&A clarifies that exchange user fees paid to a State or Federal Exchange are to be included in licensing and regulatory fees subtracted from the premium for the purpose of MLR calculations. In addition, the Q&A provides guidance related to specific plan types, small employer groups, the method for counting employees, "premium holidays," reinsurance and reporting requirements, the effect of state MLR requirements, mini-med policies, and rebates. For further information, you may access the new guidance at http://cciio.cms.gov/resources/files/mlr-qna-04202012.pdf.
- CMS issues Medicare Advantage and Medicare Prescription Drug Benefits Program guidance. On April 12, 2012, the Centers for Medicare & Medicaid Services issued new regulations, appearing in the Federal Register, implementing changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs. The new regulations, issued as a final rule with comment period, specifically "implement new statutory requirements; strengthen beneficiary protections; exclude plan participants that perform poorly; improve program efficiencies; and clarify program requirements." The new provisions address a range of issues, including:
- the Coverage gap discount program;
- Transparency requirements for entities providing pharmacy benefits management services;
- Filing of Part D appeals with the Independent Review Entity;
- Plan performance ratings;
- Additional benefits for fully-integrated dual eligible special needs plans;
- Clarification of durable medical equipment coverage limits;
- Use of daily cost-sharing rates in drug utilization management and fraud, abuse, and waste control programs; and
- Use of National Provider Identifier and standardized technology for accessing covered Part D drugs.
The regulations also address concerns with pharmacy-related conditions of participation for long-term care facilities. The new regulations largely will enter into effect on June 1, 2012. Because CMS has invited comment on specified issues, comments on those issues will be accepted through June 11, 2012. Click here to access the new guidance [PDF].
- On Monday, April 2, 2012, the U.S. Office of Personnel Management ("OMB") published in the Federal Register final regulations which amend existing Federal Employees Health Benefits ("FEHB") and the Federal Employees Health Benefits Acquisition Regulation ("FEHBAR") provisions related to premium rate-setting methods for community rated plans. With "minor changes" to a June 29, 2011 interim final rule, see 76 Fed. Reg. 38282, the new regulations replace the prior similarly sized subscriber group ("SSSG") rate-setting method with a medical loss ratio ("MLR") calculation.
The updated MLR requirements impose obligations on all community-rated plans, except those subject to "traditional" community rating requirements under state law. The revised MLR regulations, like those embodied in the Patient Protection and Affordable Care Act ("PPACA"), are designed to offer "a more modern and transparent calculation while still ensuring that the FEHB Program is receiving a fair rate." In addition, OPM anticipates that the MLR requirement "will result in a more streamlined process for plans and increased competition and plan choice for enrollees."
The final regulations make four changes to the prior interim final rules:
- In response to public comments, the final rules do not contain any provision barring consideration of a prior year's MLR in determining that of the current plan year. According to OPM, this change is geared toward providing OPM "flexibility to determine a fair and accurate MLR for each plan in each year."
- The new rules provide a deadline for publication of the FEHPleB-specific MLR requirement. Specifically, the regulations require promulgation of the applicable FEHB-specific MLR threshold 8 months prior for plan year 2013, and twelve calendar months in advance for plan years 2014 and beyond. See 48 C.F.R. § 1602.170-14(b).
- The new regulations include technical changes to certification requirements, applicable to carriers using the MLR methodology, based on changes in timing. Under the new provisions, carriers using the MLR methodology must first submit a "Certificate of Accurate Cost or Pricing Data or Community-Rated Carriers," followed by later submission of a "Certificate of Accurate MLR Calculation." See 48 C.F.R. § 1515,406-2(b).
- The new regulations specifically provide that OPM will issue a separate credibility adjustment, apart from that defined by the U.S. Department of Health & Human Services ("HHS"). See 48 C.F.R. § 1602.170-14(c).
CMS declined to permit plans making MLR rebates under the PPACA health reform law to include any rebate required under that law for the FEHBP to be included as a reduction in premium under the FEHBP-specific MLR calculation. It also declined to permit plans to determine FEHBP MLR results based on a composite of multiple years' experience. OPM will expect plans to follow CMS guidelines for determining how to treat expenditures under the FEHBP MLR rule.
The new rules go into effect on May 2, 2012. For more information, click here to find the final regulations, as published in the Federal Register [PDF].
- HHS releases set of PPACA guidance. On March 16, 2012, the Department of Health & Human Services ("HHS") released several rulemakings finalizing regulations on several issues under PPACA. The rulemakings include:
- Final rule on PPACA reinsurance, risk corridor, and risk adjustment standards: These regulations adopt final standards devised to mitigate adverse selection and to promote premium stabilization, as the new Insurance Exchange program begins implementation. Published in the Federal Register on March 23, 2012, the regulations are slated to go into effect on May 22, 2012.
- Final rule and interim final rules on Medicaid eligibility changes: This rulemaking imposes new and revised policy and procedural requirements related to eligibility, enrollment, renewals, public availability of program information, and coordination in the Medicaid and CHIP programs, pursuant to PPACA. Also published in the Federal Register on March 23, 2012, the rule's provisions will go into effect on January 1, 2014. Because some of the rulemaking's provisions were issued as interim rules, comments are being accepted. The deadline for comment submission is May 7, 2012.
- Final rules on student health insurance coverage under PPACA: This rulemaking contains final regulations pertaining to student health insurance coverage, based on provisions enacted as part of PPACA. These regulations were also published in the Federal Register on March 21, 2012, and it's provisions will go into effect on April 20, 2012.
- Advance NPRM on PPACA preventive service regulations: This rulemaking, published in the Federal Register on March 21, 2012, provides an outline for the current Administration's approach to dealing with questions related to women's preventive service coverage in forthcoming amendments to existing regulations under PPACA on the same issue. Specifically, the Advance NPRM addresses the issue of coverage "sponsored or arranged by a religious organization that objects to the coverage of contraceptive services for religious reasons and that is not exempt" under regulations previously issued. The Advance NPRM includes a request for comments, with a comment deadline of June 19, 2012.
- Notice on Early Retiree Reinsurance Program ("ERRP"): This notice, also published in the Federal Register on March 21, 2012, serves as an announcement of the timeline for use of reimbursement funds by plan sponsors participating in the ERRP. Specifically, the notice establishes a December 31, 2014 deadline for such reimbursement fund use.
- HHS releases final Insurance Exchange guidance. On March 12, 2012, the Department of Health and Human Services released the anticipated final rule on insurance exchange establishment and standards for plan, individual, and employer participation. The new regulations will go into effect 60 days after publication in the Federal Register, slated for March 27, 2012. Because some of the provisions are being issued as interim final rules, comments will be accepted until 45 days after publication. Click here for the rulemaking [PDF]. In addition, click here for fact sheet describing the new rulemaking.
- CMS issues Electronic Health Record ("EHR") Incentive Program NPRM. On February 23, 2012, the Centers for Medicare & Medicaid Services ("CMS") issued an NPRM containing Stage 2 criteria for participation in the EHR Incentive Program. Comments on this proposed rule will be due 60 days after publication in the Federal Register, slated for March 7, 2012. Click here to access the NPRM [PDF].
- EBSA releases proposed extension of information collection related to Internal Claims and Appeals and External Review Procedures. On February 22, 2012, the Employee Benefits Security Administration ("EBSA") released a notice regarding information collection related to PPACA provisions on internal claims and appeals and external review procedures for non-grandfathered plans. The notice requests comments with respect to the proposed information collection's relationship to prior amendments (1) providing that plans are not required to include diagnosis and treatment codes on notices of adverse benefit determination and final internal adverse benefit notification, and (2) changing the method for determining who is eligible to receive a notice in a culturally and linguistically appropriate manner. Comments will be accepted through April 23. Click here to access the notice.
- Agencies release new guidance on PPACA provisions. Two rulemakings released on February 22, 2012 aim at providing more transparency and assistance in carrying out various of the provisions under PPACA. First, the Centers for Medicare & Medicaid Services ("CMS") has issued a final rule on the review and appeal process for Section 1115 Medicaid program demonstrations. The resulting regulations impose requirements designed to ensure transparency and public notice in the demonstration process. Second, the Treasury Department and Department of Health and Human Services have jointly issued regulations on the application, review, and reporting process for seeking waivers for state innovation. These regulations, which go into effect on April 27, 2012, can be accessed by clicking here [PDF]. Further information on both of these rulemakings, as well as a discussion on the new round of Affordable Insurance Exchange Establishment Grants, can be found in a CMS press release.
- New guidance issued on Essential Health Benefits. On February 17, 2012, the Department of Health and Human Services released additional guidance on its website related to PPACA provisions on Essential Health Benefits ("EHB"). This guidance includes a new FAQ, which supplements prior guidance on the Centers for Medicare & Medicaid Services' likely approach to defining EHB in forthcoming regulatory actions. Click here for the new guidance [PDF].
- Agencies issue final rules related to women's preventive services coverage. On February 15, 2012, the U.S. Department of Health & Human Services, the Internal Revenue Service, and the Employee Benefits Security Administration collectively published final rules on women's preventive services in the Federal Register. These rules finalized earlier issued interim regulations on the exemption for religious employers from contraceptive services coverage requirements and create a temporary enforcement safe harbor, during which the agencies will consider changes to the regulations. Click here to access this rulemaking [PDF].
- HHS issues proposed rules on the National Practitioner Data Bank. On February 15, 2012, new rules revising existing regulations were published in the Federal Register. Promulgated under section 6403 of PPACA, the new rules would consolidate regulations on the collection and disclosure of all relevant data banks in one CFR part. Comments on this NPRM are due on April 16, 2012. Click here to directly access the proposed rules [PDF].
- Agencies issue Summary of Benefits and Coverage guidance. On February 14, 2012, long anticipated guidance on the Summary of Benefits and Coverage ("SBC"), required under PPACA, was published in the Federal Register. The guidance includes two rulemakings:
Additional guidance, including final templates, instructions, and related materials, as referenced in the Federal Register notice, is available at www.dol.gov/ebsa/healthreform. For a summary and more information on this guidance, you may also visit HHS.gov, which contains an HHS news release on the rulemaking.
- CMS issues proposed rule on reporting and returning of Medicare overpayments. On February 14, 2012, the Centers for Medicare & Medicaid Services released a new notice of proposed rulemaking on the reporting and return of Medicare overpayments, issued under section 6402(d) of PPACA. The new rules would require such reporting and return by the later of 60 days after identification of the overpayment, or the due date of any corresponding cost report. Comments will be due by April 17, 2012. Click here to access the NPRM [PDF].
- IRS issues guidance on automatic enrollment, employer shared responsibility, and waiting periods. On February 9, 2012, the Internal Revenue Service ("IRS") released new guidance on automatic enrollment, employer shared responsibility, and waiting periods under provisions of the PPACA health reform law. This guidance, issued in the form of an FAQ as Notice 2012-17, addresses these three issues, as well as the different approaches under consideration for future related regulatory actions. Click here to access the IRS notice [PDF]. You may also visit the Department of Labor website for substantially identical guidance.
- IRS temporary regulations and NPRM to affect insurance issuers participating in CO-OP program. On February 7, 2012, the Internal Revenue Service ("IRS") published temporary regulations authorizing the IRS to prescribe certain procedures were published in the Federal Register. Specifically, the temporary regulations allow the IRS to prescribe procedures for recognizing exemptions from Federal income tax with an effect on qualified nonprofit health insurance issuers participating in the Consumer Operated and Oriented Plan ("CO-OP") program, created by PPACA. The temporary regulations can currently be found in the Federal Register [PDF]. In addition, an NPRM, with comments due April 9, 2012, which cross-references the temporary regulations, can be found at gpo.gov [PDF].
- CMS issues final rule Medicare Advantage and Prescription Drug Benefits Program rule. On January 11, 2012, CMS released a new final rule implementing and finalizing rules addressing reporting requirements for gross covered retiree plan-related prescription drug costs and retained rebates by Retiree Drug Subsidy sponsors. The rule also addresses CMS's waiver authority. The rule will go into 60 days after publication in the Federal Register, slated for January 12, 2012. Click here for this rulemaking [PDF].
- DOL delegates authority added by PPACA to EBSA. On January 9, 2012 an order of the Department of Labor ("DOL") was published in the Federal Register, delegating authority and assigning certain responsibilities to the Employment Benefits Security Administration ("EBSA"). The order specifically delegates DOL's authority under Sections 45R and 4980H of the Internal Revenue Code (both of which were added through the Affordable Care Act) to EBSA. This delegation includes the authority for defining the term "seasonal worker." Click here for the order [PDF].
- HHS releases Electronic Funds Transfer rules. On January 5, 2012, the Department of Health & Human Services released new rules regarding Electronic Funds Transfers ("EFT"). The interim rule with comment period, promulgated pursuant to PPACA "administrative simplification" provisions, aims to create streamlined standards for submissions from health plans to banks when paying provider claims electronically, as well as standards for Remittance Advice notices. The new rules entered effect on January 10, 2012 and have a compliance date of January 1, 2014. Comments are due by March 12, 2012. Click here for rulemaking, accessed through the Federal Register [PDF].
- CMS issues proposed "sunshine" rule. On December 19, 2011, the proposed "sunshine" rule, pursuant to provisions of the Affordable Care Act, was published in the Federal Register. Issued by the Centers for Medicare & Medicaid Services, this proposed rule imposes transparency and reporting requirements on certain drug and medical supply manufacturers covered by Medicare, Medicaid, or CHIP, requiring them to report annually on payments or transfers made to physicians or teaching hospitals. In addition, it requires such manufacturers and group purchasing organizations to report on certain ownership and investment interests. Comments on this proposed rule are due by February 17, 2012. Click here for the proposed rule [PDF].
- Essential Health Benefits Bulletin released by Department of Health and Human Services. On December 16, 2011, the Department of Health and Human Services issued its Essential Health Benefits Bulletin ("EHHB"), which, pursuant to the Affordable Care Act, outlines proposed policies related to the package of essential health benefits to be offered by individual and small group markets. The EHHB is designed to provide states with flexibility in carrying out requirements under the Affordable Care Act. Click here for the EHHB in its entirety [PDF]. In addition, click here for a CCIIO summary of key aspects of the bulletin.
- Consumer Oriented and Operated Plan Program rule released. On December 13, 2011, the Department of Health and Human Services published in the Federal Register a final rule related to the establishment of the Consumer Operated and Oriented Plan ("CO-OP") Program. This program, established under the Affordable Care Act, makes available loans in every state for the creation of "consumer-governed, private, nonprofit health insurance issuers to offer qualified health plans in the Affordable Insurance Exchanges." The final rule will go into effect on February 13, 2012. The first round of grant awards is anticipated for January 2012, with subsequent quarterly application deadlines to follow through the end of 2012. Click here for the final rule in its entirety [PDF].
- CMS issues ERRP reimbursement announcement. On December 13, 2011, the Centers for Medicare & Medicaid Services announced that, based on projected funding estimates for the Early Retiree Reinsurance Program ("ERRP"), it would be exercising its authority under 45 C.F.R. § 149.45(a) to deny ERRP reimbursement requests for claims incurred after Dec. 31, 2011. Click here for notice of this announcement [PDF].
- DOL releases MEWA guidance. On December 5, 2011, the Employee Benefits Security Administration ("EBSA") released several rulemakings designed to implement provisions of the Affordable Care Act related to multiple employer welfare arrangements ("MEWAs"). Section 521 of ERISA, enacted under Section 6605 of the Affordable Care Act, authorizes the Secretary of the Department of Labor ("DOL") to issue a cease and desist order if it appears that a MEWA is fraudulent, creates an immediate danger to public safety or welfare, or can be reasonably expected to cause significant, imminent, and irreparable injury. It also authorizes the Secretary to issue a summary seizure order if it appears that a MEWA is in a financially hazardous condition.
Accordingly, EBSA has released two proposed rulemakings and two notices to implement the DOL's MEWA authority. First, EBSA has released a proposed rule (1) establishing the procedures for issuance of an ex parte cease and desist or summary seizure order, and (2) establishing procedures for use by ALJs and the Secretary when a MEWA or other person challenges a temporary cease and desist order. Click here for the proposed rule.
Second, EBSA released a proposed rule implementing the registration and reporting requirements for MEWAs under the Affordable Care Act. The proposed rules apply to MEWAs and certain other entities that offer or provide health benefits for employees of two or more employers. Click here for this rulemaking. Both rulemakings will be published in the December 6, 2011 issue of the Federal Register, and comments are due March 5, 2012 (90 days after publication).
Consistent with the two above rulemakings, EBSA has also released two notices of proposed revisions to Form M-1 (Report for MEWAs and Certain Entities Claiming Exception) and Form 5500 (Annual Return/Report filed by administrators of employee benefit plans). These form revisions will update filing requirements for MEWAs pursuant to the Affordable Care Act provisions and proposed rules. Click here for the notice of proposed revisions of the Form M-1. In addition, the proposed revised Form M-1 itself can be found by clicking here. Click here for the notice of proposed revisions to the Form 5500. For further information, you may also wish to view the concurrently issued fact sheet and news release.
- OMB receives hospice services final rule for regulatory review. On December 5, 2011, the OMB received for regulatory review a final rule of the Centers for Medicare & Medicaid Services ("CMS") on requirements for long term care facilities with respect to hospice services. According to the relevant announcement, long-term care facilities will be required to have an agreement with hospice agencies when hospice care will be provided. In addition, the final rule will include quality of care requirements. Click here for the announcement of OMB review.
- Centers for Medicare & Medicaid Services releases final MLR rules. On December 4, 2011, the anticipated rules related to Medical Loss Ratio ("MLR") requirements under the Affordable Care Act were released by the Centers or Medicare & Medicaid Services ("CMS"). Under the final rule, health insurance companies are generally required to spend at least 80 percent of premiums on provision of care. Insurance companies that fail to do so will be required to provide rebates to beneficiaries. The final rule provides, among other things, that rebates received will be tax-free and also includes a number of provisions geared at transparency about the MLR requirements. The final rule also phases down the special circumstances adjustment to mini-med plan MLRs but retains the ex-patriate plan multiplier adjustment. This final rule provides for a comment period, with comments due by January 6, 2012. The modifications to the MLR rules included in the final rule will go into effect on January 1, 2012. Click here for the final rule.
Relatedly, CMS concurrently issued an interim final rule with request for comments on MLR rebate requirements for non-federal governmental plans in group markets. Under the interim final rule, issuers of such plans are to distribute entire MLR rebates to the group policyholder, and the group policyholder is required to use the portion of rebates attributable to the premium paid by subscribers of such plans for the benefit of subscribers. This interim final rule likewise will go into effect on January 1, 2012. Comments are due 60 days after publication in the Federal Register, which is slated for December 7, 2011. Click here for this rulemaking.
Finally, in light of the MLR rule updates, the Department of Labor ("DOL") issued Technical Release No. 2011-04 regarding MLR rebates issued to policyholders who are group health plans under ERISA. According to the guidance, if a group health plan is entitled to a rebate, such rebates may constitute plan assets, requiring the policyholder to comply with ERISA fiduciary provisions for handling the rebates. If the plan sponsor is the policyholder, then the plan's portion of the rebate, if any, may depend on provisions of the plan or the manner of cost-sharing under the policy. The guidance, however, does not expressly address when an MLR rebate becomes an ERISA plan asset or whether an issuer delivering a rebate could be an ERISA fiduciary. Click here for the Technical Release.
- ACO guidance published in Federal Register. On November 2, 2011, the ACO and Shared Savings Program guidance, originally released on October 20, was published in the Federal Register. The interim final rule with comment period addressing Shared Savings Program waivers can now be found by clicking here. These regulations go into effect on November 2, 2011, with comments due by January 3, 2012. The final rule on the Shared Savings Program and ACOs, which enters into effect on January 3, 2012, can now be found by clicking here. Finally, the notice announcing testing of the Advance Payment Model for ACOs is now available by clicking here.
Finally, in addition to the CMS guidance on ACOs, the Federal Trade Commission and the Department of Justice released the final version of their joint policy statement addressing enforcement of antitrust law in the ACO and Shared Savings program context. The final policy statement was published in the Federal Register on October 28, 2011, and can be found by clicking here.
- CMS releases set of Medicare payment systems guidance. On November 2, 2011, the Centers for Medicare & Medicaid Services ("CMS") released several rulemakings on the public inspection desk related to Medicare payment systems and related revisions to existing regulations. First, CMS released a final rule with comment period revising the Medicare hospital outpatient and ambulatory surgical center payment systems. In addition, this rule contains revisions to the Hospital Value-Based Purchasing Program, provisions on exceptions to the physician self-referral prohibition, and patient notification requirements in provider agreements. The new regulations will be effective January 1, 2012, with comments on the final rule due by March 2, 2012. This rulemaking can currently be found at http://www.ofr.gov/(X(1)S(xkgxxoy4rjchn3f3knzh0mjd))/OFRUpload/OFRData/2011-28612_PI.pdf.
Second, CMS released a final rule containing updates to the End-Stage Renal Disease ("ERSD") prospective payment system for 2012. This rule also finalizes prior guidance in the form of an interim final rule. In addition to the ERSD-related updates, this rule revises the ambulance fee schedule regulations and durable medical equipment regulations. This rule likewise goes into effect on January 1, 2012. It can currently be found by clicking here.
Finally, CMS released an additional final rule with comment period revising the Part B physician fee schedule and payment policies so as to conform with changes in medical practice and the relative value of services. These regulations also go into effect on January 1, 2012, and comments are due 60 days after the date of issuance for public inspection (i.e. 60 days from November 2, 2011). This final rule can be found by clicking here.
- HHS announces extension of Temporary Certification Program. On November 2, 2011, the Department of Health and Human Services ("HHS") released a notice announcing the extension of the Temporary Certification Program. This program helps make Certified Electronic Health Record ("EHR") Technology available for adoption and use for participants in the Medicare and Medicaid EHR Incentive Programs. Originally set to expire on December 20, 2011, the Temporary Certification Program will be extended to align with the effective date of forthcoming rules adopting new standards and rules regarding meaningful use of EHR technology. The notice announcing the extension can presently be found by clicking here.
- CMS announces new Medicare premiums and deductibles for 2012. On November 1, 2011, the Centers for Medicare & Medicaid Services ("CMS") published in the Federal Register several notices setting forth new Medicare premium and deductible rates for the upcoming year. First, CMS announced new inpatient hospital deductibles and hospital and extended care services coinsurance amounts for Medicare Part A. Click here for this announcement. Second, CMS announced Medicare Part B monthly actuarial rates, premium rates, and annual deductibles. Click here for this notice. Finally, CMS announced Medicare Part A premiums for uninsured aged and certain disabled individuals who have exhausted other entitlement. Click here for this notice. The new rates will enter into effect as of January 1, 2012.
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Centers for Medicare & Medicaid Services releases final ACO rule and additional guidance
On October 20, 2011, the Centers for Medicare & Medicaid Services released the final rule on the Medicare Shared Savings Program, in addition to further related guidance, for Accountable Care Organizations ("ACOs"). The Shared Savings Program is an initiative geared toward more coordinated care among providers. The program enables ACO providers and suppliers to receive traditional fee-for-service payments under Medicare Parts A and B, and to become eligible for additional payments if they meet program quality standards and savings requirements. According to the Department of Health and Human Services ("HHS"), the final rule includes broader incentives and a streamlining of the program in comparison to the earlier proposed rule. The regulations will go into effect 60 days after publication in the Federal Register, which is slated for November 2, 2011. Click here for the final rule.
In addition to the final Shared Savings Program rule, CMS has released (1) a notice announcing testing of the Advance Payment Model for ACOs, and (2) an interim final rule with comment period on waivers of application of the physician self-referral law, anti-kickback statute, and certain civil monetary penalty provision to ACOs. The first notice provides information for interested physician-owned and rural providers participating in the Shared Savings Program, with background about the model and the application process. Click here for the notice. Click here for the interim final rule on waiver provisions, issued jointly with the HHS Office of Inspector General. Comments on the interim final rule are due 60 days after publication in the Federal Register, also slated for November 2, 2011.
- IOM Issues Report, Essential Health Benefits: Balancing Coverage and Costs
The Patient Protection and Affordable Care Act ("ACA") requires that healthcare benefits offered to individuals and small groups include a package of "essential health benefits" (EHB). The ACA provides some parameters and guidance for what EHB should include, but stops well short of defining EHB. On October 7, 2011, the Institute of Medicine (IOM) issued a 314-page report that undertakes to answer the question, "How, exactly, should one go about deciding what to include as essential in a health insurance plan?" That is, the IOM report describes how the federal government should go about defining EHB. The chief concern relating to EHB's definition, as the report's preface notes, is that "[i]f the package of benefits is too narrow, health insurance might be meaningless; if it is too broad, insurance might become too expensive."
The IOM panel made two key decisions that framed the rest of the defining process. First, it decided that a "typical employer" should be a small rather than a large employer, and made a small employer's business profile basic to the cost criteria for definitions of EHB. And second, the panel opted for a definition of "essential" that establishes a set of basic requirements and that does not encompass every service included in the 10 statutorily mandated service categories or every service included in a typical employer plan.
These antecedent definitions make up much of the platform on which the panel rests Chapter 5, "Defining the EHB," which spells out steps for arriving at a definition in Recommendation 1:
By May 1, 2012, the Secretary should establish an initial essential health benefits (EHB) package guided by a national average premium target.
- The starting point in establishing the initial EHB package should be the scope of benefits and design provided under a typical small employer plan in today's market. To specify the initial EHB package, this scope of benefits should then be modified to reflect
- The 10 general categories specified in Section 1302(b)(1) of the Affordable Care Act (ACA); and
- The criteria specified in this report for the content of specific elements and aggregate EHB package (see Summary Figure S-2).
- Once a preliminary EHB list is developed as described in (A), the package should be adjusted so that the expected national average premium for a silver plan with the EHB package is actuarially equivalent to the average premium that would have been paid by small employers in 2014 for a comparable population with a typical benefit design.
- The Secretary should sponsor a public deliberative process to assist in determining how the adjustments to the EHB package should be made.
- Initial guidance by the Secretary on the contents of the EHB package should list standard benefit inclusions and exclusions at a level of specificity at least comparable to current best practice in the private and public insurance market.
Other salient points in the IOM report include a discussion of how to define "medical necessity" (Chapter 5), a recommendation that HHS establish a research framework for collecting and analyzing data in order to evaluate EHB implementation (Chapter 7), and support for potential waivers from the federally defined EHB to states whose alternative EHB definitions are consistent with the ACA and with the criteria specified in IOM's report (Chapter 8).
- CMS issues regulatory reduction guidance. On October 18, 2011, CMS issued three new rulemakings, all with a purpose of regulatory reduction and the elimination of burdensome and unnecessary regulations. The rulemakings include:
- Final rule on Medicare Changes to the Ambulatory Surgical Centers Patients Rights Conditions for Coverage. This rule "revises the ambulatory surgical centers (ASCs) conditions for coverage (CfC) to allow patient rights information to be provided to the patient, the patient's representative, or the patient's surrogate prior to the start of the surgical procedure."
- Proposed rules on Reform of Hospital and Critical Access Hospital Conditions of Participation for both Medicare and Medicaid.
- Proposed rules on Regulatory Provisions to Promote Program Efficiency, Transparency, and Burden Reduction. This proposed rule targets regulatory areas for reduction and revision, including but not limited to conditions for coverage for end-stage renal disease facilities, conditions for coverage for ambulatory surgical centers, revocation and deactivation of Medicare enrollment and billing privileges rules, intermediate care facilities for the intellectually disabled, obsolete provisions related to claims determinations and appeals, the ambulatory surgical center infection control program, e-prescribing, physical and occupational therapist qualifications, and organ donation.
All three rulemakings are slated for publication in the Federal Register on October 24, 2011.
- The Institute of Medicine has released a report at the request of the Department of Health and Human Services regarding criteria and methods to develop an essential benefits package. An October 6 news release issued concurrently with the report states that essential benefits should be based on what small businesses typically offer. Click here for news release; click here for the "Report in Brief."
- CMS issues proposed rule to revise Medicare Parts C and D regulations. On October 3, 2011, the Centers for Medicare & Medicaid Services (CMS) released on the Federal Register's Electronic Public Inspection Desk a new proposed rule designed to implement revisions to the Medicare Advantage (MA) program (Part C) and prescription drug benefit program (Part D) regulations. The revisions address a number of goals, namely: "to implement new statutory requirements; strengthen beneficiary protections; exclude plan participants that perform poorly; improve program efficiencies; and clarify program requirements." In addition, CMS is considering revisions to the long term care facility conditions of participation requirements for pharmacy services. Comments on the proposed rule will be due 60 days after publication in the Federal Register, which has been slated for Tuesday, Oct. 11. Among the revisions considered, highlights include:
- Implementation of Affordable Care Act with regard to the consolidation of prior guidance on the Coverage Gap Discount Program and implementation of Pharmacy Benefit Manager reporting requirements under Part D;
- Implementation of MIPPA provision related to benzodiazepines and barbiturates as Part D drugs;
- Provisions for beneficiary reinstatement into cost plans when good cause for failure to pay premiums can be established;
- Provision of uniform ID cards for MA plan enrollees and guidance related to the determination of creditable coverage for the retiree drug subsidy;
- A process for Independent Review Entity (IRE) reconsideration of Part D coverage determinations;
- Procedures and standards for the exclusion of poor performers in the Parts C and D programs;
- Measures to reduce costs, including the elimination of the requirement to purchase print advertising announcing non-renewal of cost contractors, implementation of hospital-acquired conditions and present-on-admission indicator policy for MA plans, changes to rules regarding agent/broker compensation, and cost-sharing associated with trial fills of prescription drugs;
- And further codification and clarification of prior guidance under Parts C and D.
The proposed rule can currently be accessed at
http://www.ofr.gov/(X(1)S(is5yva5m3jhuty0is3ye3wr0))/OFRUpload/OFRData/2011-25844_PI.pdf
- OMB to review rule on Medicare Shared Savings Program: Accountable Care Organizations. On October 6, 2011, OMB received for review a CMS final rule designed to implement provisions of PPACA related to Medicare payments to providers and suppliers participating in Accountable Care Organizations (ACOs). The new rules will enable such providers and suppliers to receive traditional Medicare fee-for-service payments under Parts A and B, and to become eligible for other payments based on applicable quality and savings standards. OMB's announcement of its review of this rule can be found at
http://www.reginfo.gov/public/do/eoDetails?rrid=120976.
- Comment period for Exchange guidance extended to Oct. 31, 2011. HHS has announced the extension of the comment period for both the proposed rule implementing the Affordable Insurance Exchange program and also the proposed rule implementing standards for States and insurance issuers related to reinsurance, risk adjustment, and risk corridors. Further information can be found at
http://www.gpo.gov/fdsys/pkg/FR-2011-09-30/pdf/2011-25202.pdf.
- CMS issues information request related to PPACA state "Basic Health Program" option. On September 9, 2011, CMS issued on the Public Inspection desk a notice seeking information related to a state's option to establish a Basic Health Program under PPACA § 1331, rather than provide health coverage through the Affordable Insurance Exchange program. In addition to detailing PPACA provisions related to this program, the information request solicits responses to specific questions targeted at informing CMS's process of developing standards for the establishment and operation of a state Basic Health Program. Comments responses to the information collection request are due by 5 p.m. 45 days after publication in the Federal Register, which is slated for Sept. 14, 2011. Click here to access the notice [PDF].
- CMS issues final rule amending definitions of "individual market" and "small group market." On September 6, 2011, a CMS final rule on rate increase disclosure and review and definitions of "individual market" and "small group market" was published in the Federal Register. This final rule amends a May 23, 2011 final rule in light of comments received and amends the definitions of "individual market" and "small group market" for rate review purposes "to include coverage sold to individuals and small groups through associations even if the State does not include such coverage in its definitions of individual and small group market." In addition, the rule also includes updates to standards related to disclosure of unreasonable premium increases. This rule goes into effect on Nov. 1, 2011, click here to access [PDF].
- CMS issues notice regarding Bundled Payments for Care Improvement Initiative applications. On August 25, 2011, CMS posted in the Federal Register a notice requesting applications for the Bundled Payments for Care Improvement initiative. This initiative has been established to explore "episode-based payment for acute care and associated post-acute care, using both retrospective and prospective bundled payment methods." Letters of intent are due by Sept. 22 for Model 1, and by Nov. 4 for Models 2 through 4. Click here to access the notice [PDF].
- Summary of Benefits and Coverage guidance issued by CMS. On August 22, 2011, HHS, IRS, and EBSA jointly published in the Federal Register new guidance related to disclosure of summary of benefits and coverage information for group health plans and health insurance coverage in the group and individual markets pursuant to PPACA. Comments on this rulemaking are due by Oct. 21, 2011. The Federal Register version of this proposed rule can be accessed by clicking here [PDF]. In addition to the proposed rule, further related guidance has been released by EBSA. Such guidance includes a Summary of Benefits and Coverage (SBC) template, a sample completed SBC, instructions for SBC completion for both group health plans and individual health insurance coverage, a guide for coverage examples calculations, a glossary, and "Why this matters" guidance. These items may be found on the EBSA website.
- IRS issues guidance on annual fee for branded prescription drug manufacturing and importing. On August 15, 2011, the IRS issued new guidance related to provisions of PPACA enacting an annual fee for entities engaged in the manufacturing or importing of branded prescription drugs. The new guidance was issued in the form of both temporary regulations and a proposed rule. Both rulemakings are slated for publication in the Federal Register on August 18, 2011. Comments on the proposed rule and requests for public hearing are due within 90 days of publication in the Federal Register. For further information, please see the proposed rule and temporary regulations respectively at http://www.ofr.gov/(X(1)S(ow5tjt4nfy0zvsoy1qlevlz0))/OFRUpload/OFRData/2011-21012_PI.pdf and http://www.ofr.gov/(X(1)S(ow5tjt4nfy0zvsoy1qlevlz0))/OFRUpload/OFRData/2011-21011_PI.pdf.
- Agencies release second round of "Affordable Insurance Exchange" guidance. On August 12, 2011, several rulemakings were released related to the insurance exchange program enacted under PPACA. The first of these is an HHS proposed rule on exchange functions in the individual market, eligibility rules, and standards for employer participation in the SHOP program for small businesses. CMS also released a proposed rule implementing PPACA provisions related to Medicaid eligibility, aiming to promote better coordination of Medicaid and CHIP with the insurance exchange program. Finally, an IRS proposed rule lays out requirements related to the premium tax credit available to individuals participating in the exchange program. Comments on all three rulemakings are due within 75 days of publication in the Federal Register, slated for August 17, 2011. These three rulemakings can be found respectively on the Public Inspection Desk at http://www.ofr.gov/(X(1)S(lwak1ttnrjnkvcry12v1rtaz))/OFRUpload/OFRData/2011-20776_PI.pdf, http://www.ofr.gov/(X(1)S(lwak1ttnrjnkvcry12v1rtaz))/inspection.aspx?AspxAutoDetectCookieSupport=1, and http://www.ofr.gov/(X(1)S(lwak1ttnrjnkvcry12v1rtaz))/OFRUpload/OFRData/2011-20728_PI.pdf. Concurrent with the new exchange guidance, HHS has also announced new recipients of its Exchange Establishment grants. Further information about this announcement is available at http://www.healthcare.gov/news/factsheets/exchanges05232011a.html.
- Preventive care guidance and rulemakings issued. On August 1, 2011, new guidance and regulations related to preventive care, promulgated under PPACA, were issued by the responsible federal agencies. Specifically, the Internal Revenue Service (IRS), jointly with the Employee Benefits Security Administration (EBSA) and Health and Human Services Department (HHS), released an amendment to the interim final regulations implementing the rules for group health plans and health insurance issuers relating to coverage of preventive services under PPACA. This amendment was published in the Federal Register on August 3, 2011, with comments are due by September 30. This rulemaking can be accessed directly at http://www.gpo.gov/fdsys/pkg/FR-2011-08-03/pdf/2011-19684.pdf. Along with this amendment, the IRS issued a separate notice of proposed rulemaking, adopting by cross reference the language of the above joint amendment. This notice of proposed rulemaking is likewise available at http://www.gpo.gov/fdsys/pkg/FR-2011-08-03/pdf/2011-19685.pdf. Under the concurrent guidance issued by the Health Resources and Services Administration (HRSA), coverage for women's preventive services will be required of all new health plans, beginning August 1, 2012, at no additional cost to the patient. More information about the HRSA guidelines and PPACA's provisions on preventive care can be found at http://www.hhs.gov/news/press/2011pres/08/20110801b.html.
- CCIIO announces grant opportunity. The CMS Center for Consumer Information & Insurance Oversight (CCIIO) website has posted a link to the announcement of a grant opportunity available to participants in the Consumer Operated and Oriented Plan (CO-OP) program. The CO-OP program is designed to increase competition in the insurance market by encouraging the creation of private, non-profit consumer-based health insurance plans. Click here for further information about the grant and the application process. Voluntary letters of intent to apply for funding are requested as soon as possible, and first round applications are due October 17, 2011.
- OMB receives interim rule on preventive services for review. On July 28, 2011, OMB received for regulatory review a CMS interim final rule on preventive services under PPACA. Further information can be found at http://www.reginfo.gov/public/do/eoDetails?rrid=120717.
- PPACA-related information collection requests issued by CMS. Two information collection requests were published in the July 29, 2011 Federal Register, both concerning aspects of PPACA.
- The first has a number of components. First, it would extend reporting requirements for programs established under PPACA to provide consumer assistance in resolving problems related to health coverage. Second, it seeks to create a database to store and track consumer inquiries to the agency on health coverage issues. Third, it would revise the existing information collection related to cooperative agreements to support state-operated insurance exchange programs. Comments are due 30 days after publication in the Federal Register. The notice may be found online at http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19260.pdf.
- The second concerns a nationwide survey of health insurers to better understand the effect of PPACA insurance market reforms on premiums and coverage for certain benefits. Comments are due in 30 days. It may be found at http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19211.pdf.
- Corrections issued for interim final rules on group health plan internal claims and appeals and external review processes. On July 26, 2011, corrections to interim final rules jointly issued by the Internal Revenue Service, Employee Benefits Security Administration, and Department of Health and Human Services were published in the Federal Register. The corrections can be accessed through http://www.gpo.gov/fdsys/pkg/FR-2011-07-26/pdf/2011-18820.pdf.
- OMB receives proposed rules from CMS for regulatory review. On July 26, OMB received for review two additional proposed rules being promulgated under PPACA. The first proposed rule, concerning "Uniform Explanation of Benefits, Coverage Facts, and Standardized Definitions," addresses standards applicable to group health plans and health insurance issuers in providing coverage and benefits information, as well as sets forth standard definitions of terms used in policies. Further information may be found at http://www.reginfo.gov/public/do/eoDetails?rrid=120696. The second proposed rule addresses aspects of the "Affordable Insurance Exchanges," including provisions on individual eligibility requirements and standards for verification of employer-sponsored health coverage, employer appeals, and employer SHOP participation. Additional information is available at http://www.reginfo.gov/public/do/eoDetails?rrid=120695.
- CMS issues proposed rule on Consumer Operated and Oriented Plans (CO-OP) program. On July 20, 2011, the proposed rule on the CO-OP program was published in the Federal Register. This program involves the creation of private, non-profit consumer-based health insurance plans, designed to elevate competition in the insurance market. Comments are due by September 16, 2011. The proposed rule can be found in its entirety at http://www.gpo.gov/fdsys/pkg/FR-2011-07-20/pdf/2011-18342.pdf.
- CMS issues proposed rule on payment policies under the physician fee schedule and other revisions to Medicare Part B for CY 2012. The July 19, 2011 issue of the Federal Register published a proposed rule on various changes to payment policies, reflecting changing practices and new requirements under PPACA. Comments are due by August 30, 2011. The proposed rule may be accessed at http://www.gpo.gov/fdsys/pkg/FR-2011-07-19/pdf/2011-16972.pdf.
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CMS issues proposed rule revising payment systems for hospital outpatient care and ambulatory surgical centers and proposing other Medicare changes. This CMS proposed rule was published in the July 18, 2011 issue of the Federal Register. In addition to payment system revisions, the proposed rule seeks to revise Hospital Outpatient Quality Reporting Program requirements, ASC Quality Reporting System Requirements, Hospital Inpatient Value-Based Purchasing Program provisions, Medicare Electronic Health Record Incentive Program requirements, exceptions to physician self-referral rules, and patient notification requirements. Comments are due August 30, 2011. This proposed rule can be accessed at http://www.gpo.gov/fdsys/pkg/FR-2011-07-18/pdf/2011-16949.pdf.
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Department of Health and Human Services releases Affordable Insurance Exchange proposed regulations. A set of two proposed rules governing a host of requirements for implementation of Affordable Insurance Exchanges was released by the Department of Health & Human Services on July 11, 2011. The exchange program is a key component of the health law reforms promulgated under PPACA. Together, the new proposed rules provide guidance for the operation of the anticipated exchange program, which aims to create a competitive marketplace for information about and purchase of affordable private health insurance by individuals and small businesses. The exchange program is currently set to go into effect on January 1, 2014. The proposed regulations separately address a number of issues regarding program requirements and implementation:
- The first proposed rule sets forth core federal standards for creation and operation of exchanges on a state-by-state basis. In addition, the proposed rule addresses requirements for employer participation in the Small Business Health Options Program (SHOP) and establishes certification requirements for health plan participation in the exchange program. As a general matter, the proposed rule aims to promote flexibility for states in choosing how to design and implement exchange programs under the regulations. Comments are due 75 days after publication in the Federal Register, which is slated for July 15. Click here to view the proposed rule online.
- The second proposed rule focuses on premium rate stabilization and sets forth standards for both states and health plans for achieving this goal. Specifically, the proposed state-based reinsurance program is designed to adjust for uncertain risks by making payments in the individual market where costs are particularly high. In addition, a temporary federal risk corridor program aims to limit both issuer losses and gains. Finally, a state-based risk adjustment program will make payment to health insurers with especially high-risk beneficiaries. Comments on this proposed rule are also due 75 days after publication in the Federal Register, set for July 15. Click here to view the proposed rule online.
- CMS issues proposed rule revising policy on clinical diagnostic laboratory tests. On June 29, 2011, the Centers for Medicare & Medicaid Services released a proposed rule retracting earlier policy under the Medicare 2011 Physician Fee Schedule final rule. Under the new proposed rule, a signature from a physician or qualified non-physician practitioner is no longer required for requisition for clinical diagnostic laboratory tests paid under the Clinical Laboratory Fee Schedule. Comments on the proposed rule are due 60 days from the date of issuance. Click here to access the proposed rule [PDF].
- HHS issues notice of availability of proposed data collection standards for race, ethnicity, primary language, sex, and disability status. On June 29, 2011, the Department of Health and Human Services ("HHS") issued a notice pursuant to the Affordable Care Act proposing new draft standards for HHS data collections. According to a concurrently issued press release, the new standards will aid the Department in better understanding health disparities across various characteristics. Comments on the notice are due August 1, 2011. Click here to access the notice [PDF].
- Amendment to 2010 interim final rule on internal claims and appeals and external review processes under Affordable Care Act issued. On June 22, 2011, the Internal Revenue Service ("IRS"), Employee Benefits Security Administration ("EBSA"), and Department of Health and Human Services ("HHS") jointly issued an amendment to a 2010 interim final rule on appeals procedures under the Affordable Care Act. The amendments to the 2010 regulations under the new interim rule address:
- Expedited notification of benefit determinations involving urgent care;
- Notice requirements for internal claims and appeals;
- Deemed exhaustion of internal claims and appeals processes;
- Form and manner of notice for internal claims and appeals;
- The duration of the transition period for State external review processes;
- Scope of the Federal External Review Process;
- Clarification regarding requirement that external review decision be binding; and
- Other technical guidance.
In light of the amendment, additional technical guidance has been published by the involved agencies. The amendment was published in the June 24, 2011 issue of the Federal Register, click here to access [PDF]. Comments are due by July 25, 2011.
- Planning and Establishment of Consumer Operated and Oriented Plan Program; Request for Comments Regarding Provisions of Consumer Operated and Oriented Plan Program, Office of Consumer Information and Insurance Oversight (Feb 2, 2011) - HHS's OCCIO requests comments regarding regulatory implementation of section 1322 of PPACA prior to rulemaking. Section 1322 of PPACA requires the Secretary to establish the Consumer Operated and Oriented Plan ("CO-OP") program to foster the creation of "qualified nonprofit health insurance issuers" that will offer qualified health plans in the individual and small group markets. Under the CO-OP program, the Secretary will make loans to assist in funding start-up costs for qualified nonprofit issuers and will award grants to assist such issuers in meeting State solvency requirements. Comments are due by March 4, 2011.
- HHS publishes mini-med plan waivers. The Office of Consumer Information and Insurance Oversight has posted a summary and list of waivers it has granted through January 26, 2011 for mini-med health plans that do not provide the scope of coverage required under PPACA's three year phase out of mini-med plans. By 2014, health plans will be required to phase out annual dollar limits on benefits.
- Delay of PPACA Nondiscrimination Provisions Applicable to Insured Group Health Plans, IRS (Jan. 10, 2011) – PPACA, as amended, establishes certain nondiscrimination rules that prohibit insured group health plans, in part, from discriminating in favor of highly compensated individuals. The IRS issued Notice 2011-1 ("Notice") in order to delay the application of PPACA's nondiscrimination rules to insured group health plans until further guidance is issued at an unspecified later date. Specifically, the Notice states that the Treasury Department and the IRS, as well as the Departments of Labor and Health and Human Services, have determined that compliance with these requirements should not be required (and thus, any sanctions for failure to comply do not apply) until after regulations or other administrative guidance of general applicability have been issued.
The Notice also solicits public comment on numerous issues, including what information should be included in future guidance on the topic. Comments are due no later than March 11, 2011.
- Corrections to the Medical Loss Ratio Interim Final Rule. The HHS Office of Consumer Information and Insurance Oversight has published "technical corrections" to the interim final rule that appeared in the December 1, 2010 Federal Register implementing medical loss ratio requirements under the Patient Protection and Affordable Care Act.
- Information Collection for Early Retiree Reinsurance Program, HHS Office of Consumer Information and Insurance Oversight (Dec. 23, 2010) -- HHS published an information collection notice for the PPACA Early Retiree Reinsurance Program in the Federal Register outlining information requirements anticipated for the new program under which employers who submit documentation of actual costs of health care benefits can receive federal reinsurance subsidieis under section 1102 of PPACA and 45 CFR part 149.
- Rate Increase Disclosure and Review, HHS Office of Consumer Information and Insurance Oversight (OCIIO) (December 23, 2010) – HHS published its notice of proposed rulemaking (NPRM) to implement rules for health insurance issuers regarding the disclosure and review of unreasonable premium increases under revised section 2794 of the Public Health Service Act. The proposed rule would establish a rate review program to ensure that all rate increases that meet or exceed an established threshold are reviewed by a State or HHS to determine whether the rate increases are unreasonable.
- Affordable Care Act Implementation FAQs Part 5, Dept. of Labor, HHS, Dept. of Treasury (December 22, 2010) – HHS has posted a fifth iteration of PPACA implementation FAQs on its website. These recently issued FAQs address both the implementation of PPACA's market reform provisions, as well as the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Specifically, the fifteen questions in the fifth set of FAQs touch upon the following: (1) value-based insurance design in connection with preventive care benefits; (2) automatic enrollment in health plans; (3) disclosure under Public Health Service Act section 2715(d)(4); (4) dependent coverage of children to age 26; (5) preexisting condition exclusions for children in the individual market; (6) grandfathered health plans; (7) MHPAEA; and (8) nondiscrimination based on a health factor and wellness programs.
All five PPACA implementation FAQs are available here.
- IRS Delays Implementation of PPACA's Extension of Nondiscrimination Rules to Insured Plans
On December 22, the Internal Revenue Service ("IRS"), with the approval of the Departments of Treasury, Labor and Health and Human Services, announced that insured health plans will not be required to comply with the Patient Protection and Affordable Care Act ("PPACA") provision extending nondiscrimination rules to insured plans until after regulations or other administrative guidance of general applicability has been issued. Section 2716 of the Public Health Service Act, added by PPACA, provides that insured group health plans must satisfy certain specific nondiscrimination requirements contained in the Internal Revenue Code ("Code"), as well as "rules similar to the rules contained in" other provisions of the same requirements. Prior to PPACA, these nondiscrimination rules applied only to self-insured group health plans. The IRS acknowledged that there were "fundamental concerns" about the ability of plans to comply with PPACA Section 2716 without guidance, particularly on the question of what the term "rules similar" would entail, and so a delay in implementation was required. The IRS stated that they "anticipate" that any such guidance will not apply until plan years beginning a specified period after issuance of the guidance. The IRS requested further comments on what such guidance should contain, and included a list of specific implementation questions, with all comments due by March 11, 2011.
- Health Insurance Issuers Implementing Medical Loss Ratio (MLR) Requirements under the Patient Protection and Affordable Care Act, Office of Consumer Information and Insurance Oversight, HHS (Nov. 22, 2010): The Department of Health and Human Services ("HHS") has released an interim final rule on health insurer medical loss ratios under PPACA. The interim regulation certifies the draft rule proposed by the National Association of Insurance Commissioners this past October.
Substantively, the interim regulation requires health insurers in the individual and small group market to spend 80 percent of consumers' premiums on direct care for patients and efforts to improve health care quality. Insurers in the large group market are required to spend 85 percent of consumers' premiums. Beginning in 2012, if insurers fail to meet the ratio requirements, they will be required to provide a rebate to their customers by August 1 each year. The rule also expressly allows for a State to require a higher medical loss ratio than that required under the interim regulation.
Insurers must also submit an annual report to HHS, which will be made available to consumers, explaining the company's ratio of incurred loss to earned premium and the nature of the incurred loss. Specifically, insurers are required to report "all of the elements of revenue and expenditures that will be needed to calculate the amount of rebates." To that end, the report must include the amount of premium revenue received, the reimbursement amount for clinical services provided to enrollees under the health insurance plan, the amount spent on activities that improve health care quality for enrollees, the amount spent on all other "non-claims" costs, and the amount spent on Federal and State taxes and licensing or regulatory fees.
A fact sheet entitled "Medical Loss Ratio: Getting Your Money's Worth on Health Insurance" has been posted on Healthcare.gov and can be accessed here. This interim final regulation is effective January 1, 2011; comments are due no later than 60 days after the regulation's publication in the Federal register, which is currently set for December 1, 2010.
- Medicare Program; Request for Information Regarding Accountable Care Organizations and the Medicare Shared Savings Program, CMS (November 17, 2010) – CMS has published a request for comments to aid with its development of rulemaking for the establishment of the Shared Savings Program. The Shared Savings Program is authorized under section 3022 of PPACA, which promotes the formation and operation of accountable care organizations (ACOs). Additionally, CMS is seeking information to help develop potential payment and service delivery models that complement the Shared Savings Program for testing by the Center for Medicare and Medicaid Innovation (CMMI) – a new department within CMS that was established by PPACA. Comments are due by December 3, 2010.
- Affordable Care Act Implementation FAQs, Dept. of Labor, HHS, Dept. of Treasury (October 28, 2010) – HHS has posted a fourth iteration of PPACA implementation FAQs on its website. These recently issued FAQs address the implementation of PPACA's market reform provisions. Specifically, the three questions in the fourth set of FAQs touch upon (1) grandfathered health plans' compliance with disclosure requirements relating to statements in plan materials disclosing that the plan believes it is a grandfathered plan under PPACA; (2) the eligibility of an insurance policy for grandfathered status where the insurance policy existed prior to March 23, 2010 with an option, but individual's can elect the option after March 23, 2010 and the election of the option results in a cost-sharing amount in excess of the limits under the grandfather rule; and (3) whether a certain type of health plan violates the lifetime dollar limit on "essential health benefits."
All four PPACA implementation FAQs are available here.
- Draft Regulation for Uniform Definitions and Standardized Methodologies for Calculation of the Medical Loss Ratio for Plan Years 2011, 2012 and 2013 per Section 2718 (b) of the Public Health Service Act, National Association of Insurance Commissioners (Oct. 14, 2010) – Thirteen state regulators of the NAIC have approved a draft regulation entitled "Patient Protection and Affordable Care Act Medical Loss Ratio Regulation." The draft regulation will be subject to a vote by the entire NAIC during their Fall National Meeting which will take place between October 18 to October 21. If approved at the meeting, HHS will then have to certify the regulation in order for it to take effect.
The NAIC continues to receive letters suggesting how the final medical loss ratio should work. On October 14, Senator John Rockefeller, chairman of the Senate Committee on Commerce, Science and Transportation, sent a letter to NAIC urging the NAIC to reject any last minute efforts by insurers advocating for allowing the national, rather than state level, aggregation of large group medical loss ratio data when applying the medical loss ratio requirements.
In relation to the establishment of the regulatory provisions governing medical loss ratios, the NAIC sent a letter on October 13 to the Secretary of HHS expressing the need for a transitional period for health insurance companies to comply with the medical loss ratio limits in order to prevent the destabilization of markets in certain states. AHIP had sent the NAIC a letter on the same day also recommending, amongst other things, a transition strategy to address the implementation of the medical loss ratio requirements.
- Interim Relief with Respect to Form W-2 Reporting of the Cost of Coverage of Group Health Insurance Under § 6051(a)(14), IRS (October 12, 2010) – The IRS has announced that employers will not need to report the cost of coverage under an employer-sponsored group health plan in 2011. If an employer would like to report this information, the draft W-2 form includes the necessary codes for employers to provide this cost information. The IRS also announced that it will provide related guidance later this year.
Additional information from the IRS relating to PPACA's tax provisions can be found here.
- FAQs About the Affordable Care Act Implementation Part II, Dept. of Labor, HHS, Dept. of Treasury – As a follow-up to the "FAQs" posted by the Department of Labor (DOL) on September 20, 2010, the DOL has jointly released a second set of "FAQs." The questions and answers included in this second installment relate to grandfathered health plans, dental and vision benefits, rescissions, preventive health services, and a clarification relating to policy year and effective date for individual health insurance policies. The DOL explains that "the ongoing guidance the Departments are providing reflects our approach to implementation, which emphasizes assisting (rather than imposing penalties on) plans…."
- Memorandum on the Deadlines for the Secretary of Health and Human Services in the Patient Protection and Affordable Care Act from Enactment to January 1, 2011; Congressional Research Service (Oct. 1, 2010) – The Congressional Research Service has drafted a memorandum on the deadlines specific to the Secretary of HHS in PPACA through January 1, 2011. The memorandum largely consists of a table of the relevant requirements in PPACA along with the corresponding public actions taken by the Secretary through September 23, 2010. The introduction to the memo cautions that actions taken by the Secretary through September 23, 2010, but that were not the subject of public notification in the Federal Register or on agency websites, would not be included in the table.
- Questions and Answers on Enrollment of Children Under 19 Under the New Policy That Prohibits Pre-Existing Condition Exclusions, HHS (Sept. 24, 2010) – The Department of Health and Human Services has posted guidance on its website relating to the June 28, 2010 interim final regulations that prohibit new group health plans and health insurance issuers in both the group and individual markets from imposing pre-existing condition exclusions on children under 19 for the first plan year (in the individual market, policy year) beginning on or after September 23, 2010. The guidance provides seven questions and answers that address, in part, what types of health plans and insurance issuers are affected by the regulations, whether enrollment for children under 19 can be limited to certain time periods, and what types of actions can be implemented to mitigate adverse selection concerns. The webpage also includes two letters from the Secretary of HHS to America's Health Insurance Plans and to Blue Cross and Blue Shield Association responding to concerns of adverse selection.
- Medicare, Medicaid, and Children's Health Insurance Programs; Additional Screening Requirements, Application Fees, Temporary Enrollment Moratoria, Payment Suspensions and Compliance Plans for Providers and Suppliers, CMS (Sept. 23, 2010) – Citing to numerous provisions in the Patient Protection and Affordable Care Act, as amended, the proposed rule seeks to establish several new requirements to limit fraud and abuse, e.g.,
- screening procedures for providers and suppliers under Medicare, Medicaid, and CHIP programs that would vary in degree based on the risk of fraud, waste, and abuse and may include such screening procedures as criminal background checks and fingerprinting;
- an application fee each "institutional provider of medical or other items or services or supplier" that would be used to cover the cost of screening as well as other program integrity efforts;
- temporary moratoria that may be imposed in six month increments in situations where necessary to prevent or combat fraud, waste, and abuse under Medicare, Medicaid, and CHIP programs such as (1) highly disproportionate number of providers or suppliers in a category relative to the number of beneficiaries or a rapid increase in enrollment applications within a category with respect to a particular provider or supplier type or particular geographic area; (2) a State has imposed a moratorium on enrollment in a particular geographic area or on a particular provider of supplier type; or (3) CMS, in consultation with the HHS OIG or the DOJ identifies a significant potential for fraud, waste or abuse in the Medicare program in a particular geographic area or on a particular provider of supplier type;
- guidance for States regarding procedures to terminate providers if terminated by Medicare or another state's Medicaid plan or CHIP;
- provides an approach and requests comments on the provisions of PPACA that require providers and suppliers to establish compliance programs; and
- requirements for suspension of payments pending a "credible allegation of fraud" in both the Medicare and Medicaid programs. The definition of "credible allegation of fraud" would include "an allegation from any source, including but not limited to fraud hotline complaints, claims data mining, patterns identified through provider audits, civil false claims cases, and law enforcement investigations." Allegations would be considered to be credible if they have an "indicia of reliability."
Comments are due by November 16, 2010.
- The Federal Trade Commission, the Centers for Medicare & Medicaid Services (CMS), and the Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) have announced that they will be holding a public workshop regarding legal issues relating to Accountable Care Organizations (ACOs) on October 5, 2010. ACOs are integrated health care delivery systems designed to lower costs and improve quality by allowing physicians to work in groups and receive payments for shared savings.
A variety of legal regimes—such as the antitrust laws, the physician self-referral prohibition, the Federal anti-kickback statute, and the civil monetary penalty (CMP) law—will apply to ACOs, and the agencies seek to explore how these laws will affect ACOs. The stated goals of the workshop will be (1) to assess how the variety of possible ACO structures in different health care markets could affect the prices and the quality of health care services; (2) to determine whether and, if so, how the requirements of the laws mentioned above could or should be addressed in the regulations that CMS is developing for the Medicare Shared Savings Program; and (3) to evaluate whether and, if so, to what extent any safe harbors, exceptions, exemptions, or waivers from the applicable laws may be warranted.
The agencies intend to address these goals by holding several moderated panel discussions. The FTC will hold two morning sessions that will explore the antitrust issues associated with ACOs. The first will address circumstances under which collaboration among independent health care providers in an ACO permits member providers to engage in joint price negotiations with private payers without running the risk of engaging in illegal price fixing under the antitrust laws. The second session will explore ways to encourage formation of multiple ACOs among otherwise independent providers so that competition among ACOs in any given geographic market will drive improved quality and affordability of health care. CMS and OIG will also have a panel discussion as well as a listening session regarding how ACOs will interact with the physician self-referral prohibition, the anti-kickback statute, and the CMP law.
In preparation for these discussions, the agencies are seeking public comment on topics such as: (1) the intersection of the various business models envisioned for ACOs with both the antitrust laws and the fraud and abuse laws; (2) the types of contractual and financial relationships under existing or planned ACOs that might trigger or implicate the antitrust laws, the physician self-referral prohibition, the anti-kickback statute, and the CMP law; (3) whether the public believes that the incentive payments or shared savings to ACOs, or the distribution of these payments to the physicians or other providers and suppliers in the ACO, would trigger or implicate the physician self-referral prohibition, the anti-kickback statute, and/or the CMP law; and (4) any potential impediments, including the inadequacy of current safe harbors, to the success of ACOs as presently constrained by the various laws.
- IRS Issues Guidance Explaining 2011 Changes to Flexible Spending Arrangements, (Sept. 3, 2010) – The IRS issued a notice providing guidance on § 9003 of the Patient Protection and Affordable Care Act. Section 9003 revised the definition of medical expenses in employer-provided accident and health plans including flexible spending arrangements (FSAs) and health reimbursement arrangements (HRAs) and the definition of qualified medical expenses in Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (Archer MSAs). Purchases made after January 1, 2011 for over-the-counter-drugs can only be reimbursed from such accounts with a prescription. However, insulin, durable medical devices, eye glasses, and contact lenses may still be reimbursed from such accounts without a prescription so long as such items meet the definition of "medical care" in § 213(d)(1) of the Internal Revenue Code.
- Availability of Interim Procedures for Federal External Review and Model Notices Relating to Internal Claims and Appeals and External Review Under the Patient Protection and Affordable Care Act; Notice, IRS, Dept. of the Treasury; Employee Benefits Security Admin., Dept. of Labor; Office of Consumer Information and Insurance Oversight, HHS (August 26, 2010) – On July 23, 2010, the Departments published interim final regulations implementing the Public Health Service ("PHS") Act §2719, as added by PPACA. Those regulations address plans and issuers in States that do not have an applicable State external review process, and they address when plans and issuers must comply with an applicable State external review process and when plans and issuers must comply with the Federal external review process.
This Notice provides and announces the availability of additional guidance in relation to the Federal external review process as well as the publication of model notices that can be used to satisfy the disclosure requirements under the interim regulations. In particular, this notice details two ways for non-grandfathered self-insured plans that are not subject to a State external review process to satisfy an interim enforcement safe harbor. This notice also announces the future publication of the requirements of an interim enforcement safe harbor for issuers in the individual market and the small and large group health insurance markets at http://www.hhs.gov/ociio/. Additionally, this notice provides that model language for the following types of notices will be posted at http://www.dol.gov/ebsa and http://www.hhs.gov/ociio/: 1) a notice of adverse benefit determination; 2) a notice of final internal adverse benefit determination; and 3) a notice of final external review decision.
- NAIC Approved Form for MLR Financial Reporting Requirements (Aug. 17, 2010) — The National Association of Insurance Commissioners (NAIC) Executive Committee/Plenary approved final implementation of the Medical Loss Ratio (MLR) Blanks Proposal to implement a provision of the Patient Protection and Affordable Care Act (PPACA). Blanks are the actual forms submitted by insurance companies to report financial information to state regulators. Regulators will then review this data to calculate MLR and any rebate required under the new federal law.
- Planning and Establishment of State-Level Exchanges, Office of Consumer Information and Oversight, HHS (August 3, 2010) (request for comments regarding Exchange-related provisions in Title I of PPACA) – HHS is soliciting comments on a series of questions regarding state insurance Exchange implementation. Notably for insurers, HHS requests comments on the factors Exchanges should consider in reviewing justifications for premium increases from insurers seeking certification ass as qualified health plans. Other questions focus on certification of Qualified Health Plan s ("QHPs"), such as what factors would be most imprtant important in establishing standards for rating of health plans, how Exchanges can help consuemrs consumers understand the quality and cost implications of plan choices, whether Medicare Advantage plan rating measures would be appropriate for QHPs, how much flexibility would be desireable desirable for state specific requirements above minimum Federal quality or threshold requirments requirements, and what payment structures or other strategies could be used by plans to improve practices by plan providers. Other topics on which comments are sought include premium reating rating areas, improving the consumer expeire9ience experience with the Exhanges Exchanges, participation of small employers in the Exchange, and establishment of risk adjustment, reinsurance and risk corridors. HHS asks for comments on the progress states are making in planning for the Exchanges and required resources for Exchange development, on implementation tasks and milestones for tracking state progress, on the desirability of uniformity across states in aspects of exchange operation, and on the kind of systems state exchanges will need for data reporting, payment flow, tracking spending, providing transparency, and facilitating audits, and whether there would be benefit from a federal IT solution for Exchange operations. Questions also address how the Federal government should go about setting up an Exchange to be available in states that do not set up their own. HHS also asks about Exchange eligibility and enrollment, including coordinating enrollment between Medicaid, CHIP and the Exchanges. Comments are requested by October 4, 2010.
- Pre-Existing Condition Insurance Plan Program, Office of Consumer Information and Oversight, HHS (July 30, 2010) -- Section 1101 of the Patient Protection and Affordable Care Act ("PPACA") requires the establishment of a temporary high risk health insurance pool program to provide affordable health insurance coverage to uninsured individuals with pre-existing conditions. Theses regulations set forth guidelines with respect to the administration, eligibility, and benefits, amongst other things, of these Pre-Existing Condition Insurance Plans or "PCIPs" that the Federal government will administer either directly or through contracts with States or non-profit entities.
The following is required for an individual to be eligible to enroll in a PCIP: (1) Is a citizen or national of the United States or is lawfully present in the United States as determined in accordance with section 1411 of the Affordable Care Act; (2) has not been covered under creditable coverage, as defined in section 2701(c)(1) of the Public Health Service Act as of the date of enactment, during the 6-month period prior to the date on which he or she is applying for coverage through the PCIP; and (3) has a pre-existing condition, as determined in a manner consistent with guidance issued by the Secretary. We further provide in § 152.14(a)(4) that an individual must be a resident of a State that falls within the service area of a PCIP.
The benefits and excluded services under the PCIPs will parallel the coverage under the Federal Employees Health Benefits Plan.
Interim final rule effective on July 30, 2010; Comment period open until September 28, 2010.
- Questions and Answers on Enrollment of Children Under 19 Under the New Policy That Prohibits Pre-Existing Condition Exclusions, Office of Consumer Information and Insurance Oversight, HHS (July 27, 2010) – This set of Q&As assist health insurance issuers with implementation of the new requirement, addressed in interim final regulations published on June 28, 2010, that children under 19 may not be denied coverage because of a pre-existing condition for policy years beginning on or after September 23, 2010. The guidance permits restriction of enrollment to annual open enrollment periods, when permitted by state law. It also discourages states from using federal Medicaid or CHIP funds as "premium assistance" to pay for individual health insurance for children with pre-existing conditions as a way of transferring risk for these children to the private marketplace. Also, "child-only" insurance plans may be grandfathered from the pre-existing condition bar.
- Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Internal Claims and Appeals and External Review Processes Under PPACA, IRS, Dept. of the Treasury; Employee Benefits Security Admin., Dept. of Labor; Office of Consumer Information and Insurance Oversight, HHS (July 23, 2010) – The Patient Protection and Affordable Care Act ("PPACA") added section 2719 of the Public Health Service ("PHS") Act, and these regulations implement section 2719. With the exception of grandfathered plans (see section 1251 of PPACA), these regulations set forth certain processes that group health plans must incorporate relating to internal claims and appeals, and these regulations provide that individual health issuers must initially incorporate the internal claims and appeals processes set forth in applicable State law with any necessary updates to bring such processes in accord with standards established by HHS. Additionally, these regulations provide rules for determining whether a State or Federal external review process is applicable as well as guidance regarding each process. Interim final regulations effective September 21, 2010; Comment period open until September 21, 2010.
- Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under PPACA, IRS, Dept. of the Treasury; Employee Benefits Security Admin., Dept. of Labor; Office of Consumer Information and Insurance Oversight, HHS (July 19, 2010) – The Patient Protection and Affordable Care Act added section 2713 of the Public Health Service ("PHS") Act, and these regulations implement section 2713. These implementing regulations require that both a group health plan and a health insurance issuer offering group or individual health insurance coverage provide certain preventive benefits without the imposition of cost-sharing requirements (such as co-payment, coinsurance, or deductible) when the benefits are provided by an insurer's in-network providers. More information with respect to what preventive benefits are required to be covered can be found here. Interim final regulations effective September 17, 2010; Comment period open until September 17, 2010.
- Patient Protection and Affordable Care Act: Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections, Final Rule and Proposed Rule, IRS, Employee Benefits Security Admin., HHS (June 28, 2010) – The Patient Protection and Affordable Care Act as amended adds sections 2701 through 2719A to the Public Health Service Act, and these regulations, collectively being referred to by the Government as the "Patient Bill of Rights," implement several of these provisions. Generally, the rules established through these regulations will apply to most plans on or after September 23, 2010.
These new rules include, in part and with some exception such as with "grandfathered" plans: a) a prohibition on preexisting condition exclusions for enrollees under 19 and then for all enrollees regardless of age beginning January 1, 2014; b) impose restrictions on health plan annual dollar-value coverage limits; c) a prohibition on rescission of coverage except in instances of fraud or an intentional misrepresentation of a material fact; and d) other patient protections including an enrollee's ability to choose any participating primary care provider as the enrollee's primary care physician and the ability for an enrollee to seek and receive emergency services without prior authorization if enrolled in a plan that provides coverage for emergency services..
The Government has also released a brief fact sheet highlighting portions of these regulation. Interim final regulations effective August 27, 2010; Comment period open until August 27, 2010.
- Medicare Program; Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2011: CMS (June 25, 2010) – This proposed regulation implements numerous sections of the Patient Protection and Affordable Care Act. A list of the provisions implemented by this regulation can be accessed here. Section 4104 is among the provisions implemented by these regulations and requires Medicare to cover 100% of the costs for certain preventive services such as the initial preventative physical examination, annual wellness visits, and various screening tests. The proposed regulation also implements Section 5501 which increases payments to providers for primary care services. Comment period open until 60 days after the date the regulation is published in the Federal Register.
>>Court Decisions
- 11th Circuit Ruling On PPACA Constitutionality. The Eleventh Circuit Court of Appeals has ruled that the PPACA health reform law's individual mandate is unconstitutional, but that the mandate provision is "severable" from the rest of the law, so no other part of the law is struck down. The court also rejected the challenge by state attorneys general to the expanded coverage mandates imposed on states electing to participate in the Medicaid program.
- Florida federal court issues order to stay declaratory judgment against health reform law. On March 3, 2011 Federal District Judge Vinson issued an order that will stay his prior ruling that the individual coverage mandate of PPACA is unconstitutional and that the entire law is therefore invalid, in response to a motion for clarification by the federal government. The judge conditioned the stay upon the government filing an appeal of his declaratory judgment ruling within seven days of his March 3 order and seeking an expedited appellate review, either in the Court of Appeals or in the Supreme Court.
- Mississippi Federal Court Dismisses Suit Challenging PPACA's Minimum Essential Coverage Provision on Jurisdictional Grounds, (Feb. 3, 2011) – The District Court for the Southern District of Mississippi dismissed a lawsuit brought by Mississippi's Lieutenant Governor along with ten individuals residing in Mississippi who do not have health insurance. The lawsuit challenged the constitutionality of the "minimum essential coverage" provision, or individual mandate, in PPACA. Specifically, Plaintiffs alleged that the minimum essential coverage provision: 1) exceeds the power granted to Congress by the Commerce Clause of Article I of the United States Constitution; 2) constitutes an unconstitutional taking pursuant to the Fifth Amendment to the United States Constitution; 3) violates substantive due process rights guaranteed by the Fifth and Fourteenth Amendments; and 4) violates the Tenth Amendment. Additionally, the Plaintiffs further contend that the tax penalty is an unconstitutional capitation or direct tax.
The Plaintiffs argued, in part, that they had standing to bring the claims they asserted, and therefore the Court had jurisdiction to hear the lawsuit, because the minimum essential coverage provision (1) constitutes a concrete threat of injury insofar as it will force them to purchase health insurance or be subject to a financial penalty, and (2) the provision will force them to manage their financial affairs to prepare for the provision's requirements. In response, the Defendants filed a motion to dismiss the lawsuit claiming that the Court did not have jurisdiction to hear the case, because the Plaintiffs did not have standing to bring the suit.
In ruling on the Defendants' motion to dismiss, the Court agreed with the Defendants jurisdictional challenge and found that the Plaintiffs' lacked standing to challenge the minimum essential coverage provision, because the allegations in the Plaintiffs' complaint were insufficient to show a "certainly impending" injury. For example, the Court explained that the ten private individuals did not sufficiently allege that (1) the minimum coverage provision would apply to them and (2) that they would incur the tax penalty for non-compliance in the event the provision would apply to them. However, because the Plaintiffs' complaint was dismissed without prejudice, the Plaintiffs may amend their complaint and file it again within 30 days from the date of the opinion.
- The United States District Court for the Northern District of Florida Declares the Patient Protection and Affordable Care Act Unconstitutional. (January 31, 2011) – The United States District Court for the Northern District of Florida ruled on a suit brought by the Florida Attorney General and joined by twenty-five other states, among others, challenging the constitutionality of PPACA. While numerous challenges to the law's constitutionality were brought, the Court specifically ruled on Plaintiffs' claims alleging (1) that PPACA violates the Spending Clause and principles of federalism under the Ninth and Tenth Amendments to the extent that the law expands the Medicaid program to cover certain new classes of individuals and render the states responsible for the actual provision of health services thereunder, and (2) that Section 1501 of PPACA, commonly known as the Minimum Essential Coverage Provision or the Individual Mandate Provision, exceeds Congress's authority under the Commerce Clause.
After finding that the Medicaid expansion complained of by the Plaintiffs did not violate the Constitution, the Court declared the Individual Mandate provision unconstitutional as Congress lacked the authority to enact the provision under the Commerce clause. The Court's conclusion is in align with the Eastern District of Virginia's ruling on December 13, 2010, but in conflict with the Eastern District of Michigan's and the Western District of Virginia's rulings in October and November of last year.
However, unlike the Eastern District of Virginia, the Court here found that the Individual Mandate Provision was inextricably tied to the entire legislation, and therefore, could not be severed. In particular, the Court concluded:
[N]otwithstanding the fact that many of the provisions in the Act can stand independently without the individual mandate (as a technical and practical matter), it is reasonably "evident"… that the individual mandate was an essential and indispensable part of the health reform efforts, and that Congress did not believe other parts of the Act could (or it would want them to) survive independently. I must conclude that the individual mandate and the remaining provisions are all inextricably bound together in purpose and must stand or fall as a single unit. As a result, the Florida Court has declared that the entire Act is unconstitutional and, therefore, void.
- The United States District Court for the Eastern District of Virginia Issued a Declaratory Judgment Today Finding PPACA's Minimum Essential Coverage Provision Exceeds the Constitutional Boundaries of Congressional Power. The Attorney General of Virginia brought suit on behalf of the Commonwealth of Virginia challenging the constitutionality of Section 1501 of PPACA, commonly known as the Minimum Essential Coverage Provision or the Individual Mandate. This provision requires that every United States citizen, unless specifically excepted, maintain a minimum level of health insurance coverage for each month beginning in 2014, or the individual will have to pay a penalty.
The Court found that the penalty operated, in fact, as a penalty rather than a tax necessitating that Congress's authority to enact the penalty would have to be tied to a valid exercise of the Commerce Clause and the associated Necessary and Proper Clause, rather than the General Welfare Clause. However, the Court found that Congress had lacked the power under the Commerce Clause "to compel an individual to involuntarily engage in a private commercial transaction, as contemplated by the Minimum Essential Coverage Provision." The Court went on to state that this dispute "is not simply about regulating the business of insurance—or crafting a scheme of universal health insurance coverage—it's about an individual's right to choose to participate."
The Court ordered that Section 1501 be severed from the remainder of PPACA, but declined to issue an injunction. The ruling does not address any of the remaining PPACA provisions. The issue will now go up on appeal.
- Michigan court upholds PPACA "Individual Mandate". A Michigan federal district court judge on October 7, 2010 denied an injunction and dismissed the plaintiffs' challenge to the "Individual Mandate" under the Patient Protection and Affordable Care Act ("PPACA"). The plaintiffs were a "public interest" law firm acting on behalf of its members and four individuals who asserted they do not have private health insurance and object to "being compelled to purchase heatlh care coverage". They claimed that they were being forced by the Individual Mandate to direct into saving for health insurance to be purchased in 2014 monies they would now be spendig in other preferred ways, even though the mandate and its penalties only become effective in 2014 and that Congress lacked the power to regulate "inactivity" – i.e., not buying health insurance. The court ruled that the plaintiffs did have standing and that the case was sufficiently "ripe" for resolution. On the merits, though, the court upheld Congress's power under the Constitution's interstate commerce clause to impose the penalty under PPACA for violation of the Individual Mandate to have health insurance. The court observed that the plaintiffs' "inaction" as regards purchase of health insurance effectively meant that they would purchase health care services in some other way, since they would no doubt be at some point participants in the health care services market. The federal government could regulate that choice, the court said, given the impact those choices can have on the operation of the health care marketplace. Because it upheld the law on interstate commerce clause grounds, it did not reach the separate argument by the government that the mandate penalty was enforceable under the federal government's separate taxing authority.
- The United States District Court for the Northern District of Florida denied the Department of Health & Human Services ("HHS") motion to dismiss this action against the PPACA with respect to the individual mandate and the state coercion count. In this case, the plaintiffs contended that the PPACA violates the Constitution in the following ways: (1) the individual mandate and concomitant penalty exceed Congress's authority under the Commerce Clause and violate the Ninth and Tenth Amendments; (2) the individual mandate and penalty violate substantive due process under the Fifth Amendment; (3) "alternatively," if the penalty imposed for failing to comply with the individual mandate is a tax, it is an unconstitutional capitation or direct tax; (4) the PPACA coerces and commandeers the states with respect to Medicaid by altering and expanding the program in violation of Article I and the Ninth and Tenth Amendments; (5) it coerces and commandeers with respect to the health benefit exchanges in violation of Article I and the Ninth and Tenth Amendments; and (6) the employer mandate interferes with the states' sovereignty in violation of Article I and the Ninth and Tenth Amendments.
First, the court determined that the individual mandate penalty was not a "tax" and, thus, HHS could not rely on Congress's taxing authority under the General Welfare Clause to justify the penalty. Second, the court held that HHS's jurisdictional challenges fail. The court then turned to the plaintiff's arguments for failure to state a claim upon which relief could be granted under Federal Rule of Civil Procedure 12(b)(6). In Count VI, the plaintiffs objected to PPACA's employer mandate, which requires the states, as large employers, to offer and automatically enroll state employees in federally-approved insurance plans or face substantial penalties. The court found that because the employer mandate regulates the states as participants in the national labor market the same way as it does private employers, and because the Supreme Court has held that adversely affecting the state fisc does not interfere with state sovereignty, the employer mandate does not violate the Constitution as a matter of law. In Count V, the plaintiffs claimed that the creation of health benefit exchanges, which states may create and operate, is really not a choice because the PPACA forces them to operate the exchanges under threat, in violation of the Ninth and Tenth Amendments. The court held that because the health benefit exchanges are voluntary and do not compel states to regulate the private conduct of their citizens, the PPACA gives the states a choice and is a type of "cooperative federalism." In Count III, the plaintiffs objected to the individual mandate penalty as an unconstitutional capitation or direct tax. The court found that Congress did not intend the individual mandate penalty to be a tax so it dismissed this count as moot. In Count II, the plaintiffs alleged that the individual mandate violates their rights to substantive due process under the Fifth Amendment. The court also dismissed this count because there was a "rational basis" for justifying the individual mandate.
In Count IV, the state plaintiffs objected to the fundamental changes in the nature and scope of the Medicaid program. Specifically, the state plaintiffs claimed that the drastic expansion would force them to "run [their] budgets off a cliff." In light of the current state of the law, the judge found that there was little support for the plaintiffs" coercion theory, but the law did not necessarily preclude this argument. The court acknowledged that the plaintiffs are placed in an extremely difficult situation of either accepting sweeping changes to Medicaid or being withdrawn from the system entirely. Finally, in Count I, the plaintiffs challenged the individual mandate as exceeding Congress's power under the Commerce Clause. The court held that the plaintiffs had stated a plausible cause of action, as the government "has never required people to buy any good or service as a condition of lawful residence in the United States."
>>Requests for Proposal and Grant Offerings
- Solicitation for State Proposals to Operate Qualified High Risk Pools, Department of Health & Human Services (April 2, 2010)
- Solicitation for Federal High Risk Pool Third Party Administrator, Department of Health & Human Services |
- Affordable Care Act (ACA) School-Based Health Centers Capital Program, Health Services and Resources Administration (June 30, 2010) (funding opportunity)
- Affordable Care Act (ACA) Nursing Assistant and Home Health Aide Program, Health Services and Resources Administration (June 18, 2010) (funding opportunity)
- Affordable Care Act (ACA) Nurse Managed Health Clinics, Health Services and Resources Administration (June 17, 2010) (funding opportunity)
- Affordable Care Act: State Health Care Workforce Planning Grants, Health Services and Resources Administration (June 17, 2010) (funding opportunity)
- ACA: Expansion of Physician Assistant Training Program, HRSA (June 17, 2010) (fuindng opportunity)
- Affordable Care Act: Personal and Home Care Aide State Training Program, HRSA (June 17, 2010) (funding opportunity)
- Affordable Care Act (ACA) Maternal, Infant and Early Childhood Home Visiting Program (June 10, 2010) (funding opportunity)
>>Additional Health Care Reform Resources
- "Risk Sharing Among Plans Under the Affordable Care Act's Reinsurance, Risk Corridor, Risk Adjustment Programs," Bloomberg BNA Health Insurance Report, Vol. 18, No. 18 (May 2, 2012). Author: Brian J. O'Sullivan.
- Upcoming Rules Pursuant to the Patient Protection and Affordable Care Act, Congressional Research Service (January 13, 2011)
- Health Care Reform Regulations Arrive – Now What? What You Need to Know Right Now About Health Care Reform Regulations (So Far) - Crowell & Moring Labor & Employment Law Alert, June 30, 2010
- "The Early Retiree Reinsurance Program: $5 Billion Will Last About Two Years," Notes, Vol. 31, No. 7- ebri.org, Employee Benefit Research Institute (July 2010). Author: Paul Fronstin.
- Testimony of: Lewis Morris, Chief Counsel, Office of Inspector General, U.S. Department of Health & Human Services - House Committee on Ways and Means, Subcommittee on Health and Oversight (June 15, 2010)
- Health Insurance Market Reforms under PPACA: The Future is Now, Christine Rinn, HOOPS presentation (April 26, 2010)
- The Reformed New World of Health Insurance Exchanges, Arthur Lerner, HOOPS presentation (April 26, 2010)
- Attacks on Health Reform and Developing Litigation Issues, Chris Flynn and Jeff Poston, HOOPS presentation (April 26, 2010)
- Health Care Reform Law: Implications for Insurers and Health Plans, Arthur Lerner, AHLA Health Care Reform Law conference (May 12, 2010)
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