Regulatory Actions 2010

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  • 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, 2010, 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.

  • CCIIO Technical Guidance: Process for a State to Submit a Request for Adjustment to the Medical Loss Ratio Standard of PHS Act Section 2718 (December 17, 2010)

  • 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.