HHS Issues Proposed Notice of Benefit and Payment Parameters for 2015; Includes Carve-out for Certain Self-insured, Self-administered Plans
On November 25, 2013, the Department of Health and Human Services (HHS) released a Proposed Notice of Benefit and Payment Parameters for 2015 regarding the Affordable Care Act's Transitional Reinsurance Program (TRP) fee.
The Proposed Notice includes the previously announced carve-outs from the TRP fee for the 2015 and 2016 years for certain self-insured, "self-administered" plans. The Proposed Notice also defines "contributing entity" differently than in prior years as it relates to self-insured group health plans. Under the new definition, to be a contributing entity, a self-insured group health plan must use a third-party administrator in connection with claims processing, adjudication, or plan enrollment. Moreover, the Proposed Notice states that self-insured plans that do not use a third-party administrator for their core administrative processing functions would be excluded from the obligation to make reinsurance contributions. Finally, there is a $44 per capita fee for the 2015 benefit year.
HHS is seeking comment on the types of core administrative functions it should consider in determining whether a self-insured group health plan using a third party administrator is a contributing entity. HHS is also seeking comment on whether a self-insured plan must perform core administrative functions for all health care benefits or only certain benefits.
The full text of the Proposed Notice can be found here.
CMS Issues Standard Notices for Transitional Policy for Insurance Cancellations
On November 14, 2013, the Centers for Medicare and Medicaid Services of the Department of Health and Human Services (CMS) issued a letter to state insurance commissioners detailing the Administration's new "transitional policy" regarding non-grandfathered coverage in the small group and individual health insurance markets. Under the transitional policy, health insurance issuers may choose to continue coverage that would otherwise be terminated or cancelled—if permitted by applicable State authorities and subject to certain specific conditions.
One of the conditions that must be met under the transitional policy is that health insurance issuers send a notice to all individuals and small businesses that either received or will receive a cancellation or termination notice for the coverage. The notice must inform the recipients of: (1) any changes in the options available to them; (2) which of the specified market reforms would not be reflected in any coverage that continues; (3) their potential right to enroll in a Qualified Health Plan offered through a Health Insurance Marketplace and possibly qualify for financial assistance; (4) how to assess such coverage through a Marketplace; and (5) their right to enroll in health insurance coverage outside of a Marketplace that complies with the specified market reforms.
On November 21, 2013, CMS released three standard notices that must be used to satisfy the notice requirement. The first is the notice that must be sent to policyholders that have already been sent a cancellation notice for their existing coverage. The second is the notice that must be sent to policyholders that have not yet been sent a cancellation notice for their existing coverage. The third is standard language to be used when a health insurance issuer proceeds with the cancellation of the coverage in either the individual or small group health insurance markets. According to guidance released the same day, health insurance issuers may not modify or customize these notices. A state insurance regulator can develop its own notices as substitutes, but the revised notices must be approved by CMS. Once approved by CMS, the revised notices cannot be modified or customized by health insurance issuers. The notices must also be sent separately from any other plan material or correspondence.
Obama Administration Authorizes Renewal of Non-ACA Compliant Individual and Small Group Policies; State Regulatory Response Varies
On November 14, 2013, under increasing political pressure, President Obama announced that the Administration temporarily will allow insurers to renew some individual and small employer policies for 2014—even if these plans do not meet certain Affordable Care Act requirements, such as Essential Health Benefits. The new rules permit insurers, until October 1, 2014, to renew non-ACA-compliant individual and small-group policies. But insurers may exercise this option only to the extent that state regulators and state insurance law allows them to do so. Those insurers who allow renewal of non-ACA-compliant plans must inform enrollees about two points: first, insurers must identify which ACA protections are absent from the renewed plan; and second, insurers must provide information about their other options, including the availability of more expansive options on or off the marketplace and the availability of potential subsidies and Medicaid eligibility.
CMS released a letter to insurance commissioners explaining the policy in tandem with the President's announcement. State insurance regulators already have spoken out, showing differing viewpoints as to whether they will allow the renewals. Some regulators from California, Ohio, and Texas have indicated a willingness for insurers to renew their plans if they choose to do so. Maryland, Minnesota, and New York regulators issued statements that they were currently reviewing the President's proposal. And Oregon's and Washington's insurance commissioners announced that they would not allow insurers to renew their non-ACA-compliant individual and small-group policies.
The CMS letter to the insurance commissioners is available here. An article discussing statements of insurance commissioners in California, Washington, and Oregon is available here. Another article including statements from other regulators and insurers may be found here. We will continue to monitor this developing situation. For a more in-depth analysis of this guidance, please review the client alert available here.
CMS Issues Guidance on Internal Revenue Ruling 2013-17 re Same-Sex Marriage
In the wake of United States v. Windsor, the case in which the Supreme Court held the Defense of Marriage's (DOMA) prohibition on federal recognition of same-sex marriages unconstitutional, the Internal Revenue Service issued Internal Revenue Ruling 2013-17. The Ruling held that same-sex individuals who were married under state law would be considered married for federal tax purposes, but that those who are registered domestic partners would not. On September 27, 2013, the Centers for Medicare and Medicaid Services (CMS) issued guidance to clarify the impact of this Ruling on eligibility for advance payments of the premium tax credit and cost-sharing reductions in the Affordable Care Act’s Health Insurance Marketplaces (also known as exchanges).
Under CMS's guidance, same-sex married couples will be treated the same as opposite-sex married couples for purposes of the premium tax credit and cost-sharing reductions. However, states may elect not to recognize same-sex marriages for purposes of Medicaid and the Children's Health Insurance Program (CHIP), which could result in an eligibility gap for these individuals who live in states that do not recognize same-sex marriages for purposes of Medicaid and CHIP. The guidance states that the federally-facilitated exchanges will implement the guidance October 1, 2013 when open enrollment begins, but that state-based exchanges must implement the guidance "as soon as reasonably practicable."
CMS Publishes Proposed Rule on Basic Health Program
On September 25, 2013, the Centers for Medicare and Medicaid Services (CMS) published a proposed rule to establish the Basic Health Program pursuant to Section 1331 of the Affordable Care Act (ACA). The Basic Health Program aims at assisting individuals whose incomes exceed the threshold for Medicaid and similar programs, but who cannot afford to purchase coverage in the ACA’s Health Insurance Marketplaces (i.e., .individuals who have income levels between 133 to 200 percent of the federal poverty level). States that establish a Basic Health Program will receive federal funding equal to 95 percent of the amount of the premium tax credits and the cost sharing reductions that would have otherwise been provided to (or on behalf of) eligible individuals if these individuals enrolled in Qualified Health Plans through the Marketplaces.
The proposed rule would (1) establish requirements for certification of state-submitted Basic Health Program Blueprints (i.e., the operational plans states must submit) and state administration of the Basic Health Program consistent with that Blueprint; (2) establish eligibility and enrollment requirements for standard health plan coverage offered through the Basic Health Program; (3) establish requirements for the benefits covered by the standard health plans participating in the Basic Health Program; (4) provide for federal funding of certified state Basic Health Programs; (5) establish the purposes for which states can use such federal funding; (6) set parameters for enrollee financial participation; and (7) establish requirements for state and federal administration and oversight of Basic Health Program funds. Key provisions of the proposed rule include:
- Basic Health Program Blueprint: States that establish a Basic Health Program must submit a Blueprint for certification to CMS. The Blueprint must comprehensively set forth the manner in which states will implement the Basic Health Program, which is similar to the process CMS utilizes to approve state-run Marketplaces.
- Eligibility and Enrollment: Government agencies must make eligibility determinations according to criteria utilized by the Internal Revenue Service to determine advance premium tax credits and cost sharing reductions. Moreover, states may use either a defined open enrollment period—like the Marketplaces—or a continuous open enrollment model—like Medicaid. States must utilize a single, streamlined application and must coordinate with other programs (e.g., Medicaid) to ensure affordability.
- Standard Health Plans: Plans offered in the Basic Health Program must provide at least the essential health benefits required under the ACA.
- Enrollee Financial Obligations: Monthly premiums may not exceed the monthly premium for the “silver plan” on the Marketplaces (i.e., the second lowest cost plan on the exchanges. The cost-sharing standards would be consistent with those required in the Marketplaces.
- State Basic Health Program Trust Funds: Trust funds for the receipt of federal funds would be established. The proposed rule would also set forth the established parameters for use of these funds.
- Oversight: The proposed rule would establish state and federal oversight of the Basic Health Program independent audits and annual reports, among other things.
Comments to the proposed rule are due by November 25.
CMS Issues Proposed Rule Regarding ACA Exchanges' Financial Integrity and Oversight
On September 19, 2013, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule regarding financial integrity and oversight standards with respect to Affordable Care Act Insurance Exchanges.
As of January 1, 2014, Affordable Insurance Exchanges ("Exchanges") can make available private health insurance coverage for qualified individuals and employers. This proposed rule outlines standards for financial integrity and oversight for Exchanges, as well as for issuers in Federally-facilitated Exchanges (FFEs), and States. The rule also addresses the risk adjustment and transitional reinsurance programs. The proposed rule details accounting requirements for State-operated reinsurance and risk adjustment programs, and includes requirements relating to summary reports and external audits for such programs. Additionally, the proposed rule offers standards for special enrollment periods, survey vendors, issuer participation in an FFE, and States' operations of a Small Business Health Options Program (SHOP). CMS notes that, while the proposed rule would become effective in January 2014, CMS does not believe affected parties will have difficulty complying with the new provisions because most of the proposed requirements are based on existing standards within the private market, and were previously proposed and discussed in regulatory guidance.
OPM Issues Proposed Rule on Exchange-based Healthcare for Congress and Congressional Staffers
On August 7, 2013, the Office of Personnel Management (OPM) released a proposed rule on federal employee health benefits for members of Congress and congressional staff. The Affordable Care Act (ACA) contains a provision requiring Congress and their staff to obtain health insurance coverage via an Affordable Insurance Exchange or a health plan created by the ACA, instead of through the Federal Employee Health Benefits (FEHB) Program. The proposed rule implements this requirement, requiring Congress and its staff to obtain Exchange coverage beginning January 1, 2014. Under the proposed rule, Congress will designate which employees are eligible for FEHB coverage by October of the year before the coverage year, and this designation is effective for the entire calendar year that the employee works for that Member of Congress. The proposed rule is available here.
CCIIO Issues Marketplace FAQ on Consumer Income Verification
On August 5, 2013, the Centers for Consumer Information & Insurance Oversight (CCIIO) issued a new Question and Answer (Q&A) on whether Marketplaces will verify consumer income as part of the eligibility process for advance payment of premium tax credits and cost-sharing reductions. The Q&A explained that Marketplaces will verify this information via documentation submitted by each applicant for these benefits. Marketplaces will review tax filings and Social Security information to verify household income, as well as current wage information in many cases. The Q&A also clarified that CMS intends everyone applying for premium tax credits or cost-sharing reductions to submit this information in the Federally-facilitated Marketplace. The Question and Answer is available here.
CMS Issues Guidance on Alternative SHOP Applications
On August 9, 2013, the Centers for Medicare and Medicaid Services (CMS) released guidance on State Alternative Applications for Health Coverage through the Small Business Health Options Program (SHOP). Beginning October 1, 2013, the new SHOP marketplaces will use applications to determining eligibility for participation in SHOP and enrollment in qualified health plans through the SHOP. In May 2013, CMS released model applications for shop coverage, but state-based SHOPs may also use an alternative SHOP application as approved by CMS. This guidance provides background on the development process, review, and approval of alternative SHOP applications.
States may submit SHOP applications for approval, and the alternative applications must meet the general principles of the model applications by adhering to regulations implementing the Affordable Care Act. Some aspects of the application will require formal approval. But there are also a number of ways a state can adopt the model applications without formal approval as an alternative application. For example, states can add state SHOP program names and contact information to the application, change the visuals of the application for proper branding, add language to the privacy statement, or remove questions about text messaging. Moreover, no approval is required for some modifications that minimize consumer burden.
If the state application differs from the model application such that it requires approval, CMS will review the changes to ensure the application is consistent with the relevant statute and regulations. States' Marketplace Blueprint must indicate whether the state will use a model or an alternative application. Proposed alternative applications should submit a full copy of the alternative form and an analysis describing the key differences from the model form.
CMS may offer an expedited approval process for states and CMS will allow for conditional approval of an alternative application for 2014. The guidance explains the steps to attaining conditional approval as well as those needed to obtain full approval, which includes a demonstration that all applicable regulatory requirements are being met. States seeking to use alternative applications for 2014 can begin requesting conditional approval from CMS as of the release of this guidance.
The full text of the guidance can be found here.
Fourth Circuit Upholds Constitutionality of Both Individual and Employer Mandate
On July 11, 2013, the U.S. Court of Appeals for the Fourth Circuit, reconsidering a case in light of National Federal of Independent Business v. Sebelius, 132 S. Ct. 2566 (2012) (hereinafter NFIB), upheld the constitutionality of both the individual mandate and employer mandate of the Patient Protection and Affordable Care Act (ACA). In Liberty University v. Lew, the Court stated that the employer mandate was a valid exercise of Congress's authority under the Commerce Clause and its taxing power. Liberty University v. Lew, No. 10-2347, 2013 WL 3470532, at *15 (4th Cir. July 11, 2013). The Court also rejected religion-based challenges to both the individual and employer mandates under the ACA. Id. at 16.
Liberty University, a large employer, filed suit against the Secretary of the United States Treasury, seeking a declaration that the individual and employer mandates are invalid. Specifically, Liberty University alleged that the mandates exceeded Congress's Article I powers. The district court upheld the constitutionality of both mandates. On appeal, the Fourth Circuit held that the Anti-Injunction Act barred it from considering the claims and remanded the case back to the district court with instructions to dismiss for lack of jurisdiction. The Supreme Court granted the plaintiffs' petition for certiorari, vacated the Fourth Circuit's judgment, and remanded for further consideration in light of NFIB.
The Court first addressed two jurisdictional issues: (1) whether the Anti-Injunction Act (AIA) barred the plaintiff's claim; and (2) whether Liberty University had standing. The Court rejected the federal government's argument that Liberty's University's suit was barred by the AIA. In rejecting the federal government's AIA arguments, the Fourth Circuit relied on the text of 26 U.S.C. § 4980H, which it determined gave no indication that Congress intended the AIA to apply. Id. at **5-6 ("Because Congress initially and primarily refers to the exaction as an "assessable payment" and not a "tax," the statutory text suggests that Congress did not intend the exaction to be treated as a tax for purposes of the AIA.").
The Fourth Circuit then discussed the federal government's argument that Liberty University lacked standing to challenge the mandate because it was unlikely that the school would be penalized due to the fact that it already provides its employees with minimum essential coverage that may satisfy the employer mandate's affordability criteria. Id. at 6. The Court dismissed this argument stating that Liberty "need not show that it will be subject to an assessable payment to establish standing if it otherwise alleges facts that establish standing." Id. at 7. The Court went on to say that in this case, "Liberty alleges that the employer mandate and its ‘attendant burdensome regulations will . . . increase the cost of care' and ‘directly and negatively affect [it] by increasing the cost of providing health insurance coverage.'" Id.
Liberty University argued that the employer mandate exceeds Congress's commerce power because it compels employers to engage in particular conduct or purchase an unwanted product. The Court held that the employer mandate is a valid exercise of Congress's authority under the Commerce Clause because the mandate regulates employee compensation, which is both a term of employment that substantially affects interstate commerce and an activity that substantially affects worker's interstate mobility Id. at 8-10. Lastly, the Court applied the Supreme Court's "functional approach" in concluding that the employer mandate was also a valid exercise of Congress's taxing power. Id. at 12-13.
CMS Releases FAQ Regarding CCIIO Assessment Fees
On July 10, 2013, the Center for Medicare and Medicaid Services (CMS) released a "Frequently Asked Question" response regarding CCIIO assessment fees. The question asked "Can States collect assessment fees in their first year of Exchange operations for use in the second year of operations?" The response explained that States can decide to collect assessment fees in year one or two for operations. But the states must maintain appropriate processes and controls to properly utilize section 1311 grant funds. Moreover, States must meet the public disclosure requirements of section 1311(d)(7). The full text can be read here.
- HHS Issues Final Rule on Various Provisions of the Affordable Care Act
On July 5, 2013, the Department of Health and Human Services issued a final rule on various provisions of the Affordable Care Act, including essential health benefits in alternative benefit plans, eligibility notices, fair hearing and appeals processes, premiums and cost sharing, and eligibility verification by exchanges. In part, the final rule delays implementation of the HHS eligibility verification service for advance payments of premium tax credit and cost-sharing reductions past the first year of operations (2014), and it clarifies that the option to rely on HHS to perform the verification is effective for eligibility determinations that are effective on or after January 1, 2015. Please note, however, that HHS also states that it "plan[s] to continue working closely with Exchanges, and may propose regulatory amendments as necessary, to implement an increasingly effective verification process over time." Further, the final rule delays the date by which an exchange must implement sample-based review. With regard to eligibility determinations for advance payments of premium tax credit and cost-sharing reductions effective before January 1, 2015, the final rule provides that an exchange may accept the applicant's attestation regarding enrollment in an eligible employer-sponsored plan and eligibility for qualifying coverage in an eligible employer-sponsored plan for the benefit year in which coverage is requested, without further verification.
The full text of the final rule is available here.
- Final Rule on Coverage of Preventive Health Services Issued
On July 2, 2013, the Department of Health and Human Services (HHS) issued a final rule on coverage of certain preventive services under section 2713 of the Public Health Service Act, added by the Patient Protection and Affordable Care Act and incorporated into the Employment Retirement Income Security Act of 1975 and the Internal Revenue Code. Section 2713 requires coverage (without cost-sharing) of various preventive health services by group insurers. These services include women’s preventive health services and contraception, which is the focus of this final rule. This rule explains the process for religious employers and educational institutions to receive an exemption to the contraception coverage requirement. Religious organizations are nonprofit organizations and defined in the Internal Revenue Code. They may complete a self-certification form explaining their religious status and opposition to contraception. This allows them to exclude contraception from their health insurance coverage. Health insurance issuers of plans for these organizations must exclude contraception coverage from the group health insurance coverage and instead provide separate payments for contraceptive services. Issuers must also give notice to beneficiaries about the availability of separate payments for contraception and explain that the religious organization does not administer or fund contraceptive benefits itself.
The regulations also allow for financial support for contraception expenses for issuers of self-funded plans of exempt organizations. These issuers may pay a lowered Federally-facilitated Exchange user fee provided they give certain information to HHS, including their costs for contraceptive services for beneficiaries in health plans subject to the religious exemption. The final rule takes effect for plan years beginning on or after January 1, 2014, except for amendments to the religious employer exemption, which affect plan years beginning on or after August 1, 2014. The final rule can be found here.
On July 2, 2013, Treasury published a blog post announcing that the Affordable Care Act employer shared responsibility payments imposed by Internal Revenue Code (Code) section 4980H (also known as "pay or play") will not apply until 2015. It is also delaying until 2015 the mandatory reporting requirements for issuers and employers, as described in Code sections 6055 and 6056. ormal guidance regarding the delay will be published within the next week. Proposed rules on the reporting requirements are expected to be published this summer.
Click here for full text of the blog post is available at www.treasury.gov.
- CCIIO Issues FAQ on State Rate Review Grants
On June 6, 2013, the Center for Consumer Information and Insurance Oversight (CCIIO) published a new set of frequently asked questions about Cycle III of CMS's state rate review grant program. Through this program, CMS gives grants to states to support health insurance rate review and increase transparency in health care pricing. Rate review activities include approval and denial of rate increases and analysis of pricing data. Previously, only state insurance departments could apply for these grants, but in Cycle III, state health agencies, territory health agencies, and state universities may apply for funding. Generally, only one application per state is permitted. The FAQs also reiterate the statutory requirements for data centers and all rate review grant recipients. They also have criteria for Cycle II funding recipients to receive Cycle III funding. The FAQs may be found here.
- CMS Issues Final Rule Amending Regulations in the Small Business Health Options Program
The Centers for Medicare and Medicaid Services (CMS) issued a final rule on May 31. 2013, effective July 31, 2013, regarding the Small Business Health Options Program (SHOP) under the Affordable Care Act (ACA).
The ACA permits individuals and small businesses to purchase private health insurance through Health Insurance Marketplaces; section 1311(b)(1)(B) of the ACA provides that each state will have a SHOP to assist qualified employers in providing insurance options for employees. This final rule outlines standards for administering SHOP exchanges. The final rule amends existing regulations related to triggering events and enrollment periods for qualified employees and their dependents, implementing a transitional policy regarding employees' choice of health plans in the SHOP.
The Exchange Establishment Rule set standards for special enrollment periods for people enrolled in an individual market exchange provided that a special enrollment period is 60 days from the date of the triggering event. These provisions were also applicable to SHOPs. This final rule amends the special enrollment period for the SHOP to 30 days for most triggering events. This aligns with the enrollment periods for the group market established by HIPAA. The SHOP provisions are also aligned with HIPAA by creating a triggering event when employees or dependents who become eligible for premium assistance under Medicaid or the Children's Health Insurance Program (CHIP) or lose eligibility for Medicaid or CHIP. The employee or dependent would have a 60 day special enrollment period to select a qualified health provider.
The rule also instructs that, for plans beginning between January 1, 2014 and January 1, 2015, a SHOP will not be required to permit qualified employers to offer their qualified employees a choice of qualified health providers (QHP) at a single level of courage. But employers will have the option of doing so. This option will not apply to federally-facilitated SHOPs, which instead will allow employers to choose a single QHP from the choices available in the federally-facilitated SHOP to offer their qualified employees. This transitional policy is meant to provide more time to prepare for an employee choice model.
The full text of the rule can be read here.
- CMS Issues FAQ Guidance on Reporting Fixed Indemnity Policies
On May 30, 2013, the Centers for Medicare and Medicaid Services (CMS) issued a "Frequently Asked Questions" document regarding MLR Reporting Requirements. The new question addresses so-called "fixed indemnity" policies that fail to meet the criteria for fixed indemnity policies under the Affordable Care Act Implementation FAQs from January 2013. The question asked whether issuers of such plans must report the medical loss ratio experience of those plans to the Secretary for the 2012 reporting year. The CMS answered no. Issuers of such plans do not need to report the experience of those policies for 2012. Read the full text of the FAQ here.
- Medicare Advantage and Part D MLR Final Rule Issued
On May 20, 2013, the Centers for Medicare and Medicaid Services (CMS) released the final regulations on the Affordable Care Act's (ACA) medical loss ratio (MLR) requirements for Medicare Advantage and Medicare Prescription Drug Benefit Programs (PDP). The final MLR rule is largely identical to the proposed rule and generally tracks the requirements of the commercial insurance MLR rule. Under the final rule, Medicare Advantage Organizations (MAOs) and Part D sponsors must spend at least 85% of their contract revenue (including member premiums) on clinical services, prescription drugs, quality improving activities, and direct benefits to beneficiaries via reduced Part B premiums. The MLR is reported on a contract basis and calculated during a one-year contract period. The MLR rule will be effective January 1, 2014, and the first year of reporting will be 2015. Plans failing to meet MLR requirements for three or more consecutive contract years may be suspended from enrollment, and failing to meet the requirements for five consecutive contract years will result in termination of the contract. For additional detail on the Medicare Advantage and PDP MLR rule and its implications, please see the summary of the proposed rule here. The final rule is available here.
- FEHB Program Carrier Letter re Affordable Care Act (ACA) Medical Loss Ratios (MLR) in the Federal Employees Health Benefits (FEHB) Program
On April 10th, 2013, the U.S. Office of Personnel Management (OPM) Director of Healthcare and Insurance released an FEHB Program Carrier Letter outlining the ACA MLR procedures for FEHB insurance carriers and related entities. The Carrier Letter may be found here.
Under the ACA, all health insurance issuers—including FEHBP carriers—must submit MLR calculations to the Department of Health and Human Services (HHS) by June 1st. If an issuer does not satisfy the MLR requirements, that is, the percentage of premiums spent on reimbursement for clinical services and activities that improve health care quality does not meet the minimum standards for a given plan year, then it must issue rebates to policyholders by August 1st each year. OPM is the policyholder for FEHB plans.
Notice of MLR Calculation and Rebate to OPM
By June 1st, all FEHB carriers must provide notice to OPM's Office of the Actuary about whether their ACA MLR calculation shows they may owe a rebate to OPM. Carriers must include ACA MLR rebates from subcontractors or other legal entities providing services under the FEHB contract. Carriers should notify OPM through the 2014 Rating Proposal, which includes a question about MLR rebates. If a carrier owes an MLR rebate, it must follow the instructions on the ACA MLR Submission Template, attached to the Carrier Letter as Attachment A.
If a carrier owes an ACA MLR rebate to OPM, it must issue one check for each plan option that fails to meet the ACA MLR threshold. Carriers are responsible for coordinating with their contractors and subcontractors to ensure OPM receives the ACA MLR information and any rebates owed by August 1st.
Starting with the 2015 reporting of 2014 plan information, the ACA MLR filing date will change from June 1st to July 31st and the ACA MLR rebate date will change from August 1st to September 30th to accommodate the premium stabilization program. For the 2013 and 2014 reporting, the deadlines described above will apply.
Errors in MLR Calculations
If a carrier discovers an error in its ACA MLR calculation that results in a rebate owed to OPM after June 1st and before August 1st, the carrier must immediately alert the Office of the Actuary via email and follow the Attachment A instructions to submit its rebate. If a carrier discovers an ACA MLR calculation error after August 1st, it must follow the same procedure.
The Carrier Letter also contains a recommended cover letter for carriers to send to enrollees about how the ACA MLR rebate will apply to the FEHB program as Attachment B. Carriers are to send this letter along with the standard rebate notice to enrollees.
- HHS Issues Final Rule on the National Practitioner Data Bank
On April 5, 2013, the Department of Health and Human Services issued a final rule to revise governance regulations and expand the National Practitioner Data Bank (NPDB). The NPDB collects adverse licensure actions against physicians and dentists. These actions are typically reported by malpractice insurers, state medical and dental boards, professional societies, provider organizations, and health insurers.
Under the final rule:
The final rule revises existing regulations under sections 401-432 of the Health Care Quality Improvement Act of 1986 and section 1921 of the Social Security Act. Section 6403 of the Patient Protection and Affordable Care Act, the statutory authority for this regulatory action, was designed to eliminate duplicative data reporting and access requirements between the HIPDB and NPDB. The final rule becomes effective on May 6, 2013, and is available here.
- Provider organizations, medical/dental boards and other licensing bodies, Medicaid fraud control programs, state health agencies, quality improvement organizations, and certain law enforcement agencies have access to the practitioner data.
- Practitioners and provider organizations can search within the NPDB independently.
- HHS will transfer data from the Healthcare Integrity and Protection Data Bank (HIPDB) to the NPDB and cease operations of the HIPDB. Accordingly, regulations that previously implemented the HIPDB are removed, and become part of NPDB.
- CMS Responds to Technical Questions Regarding the Medical Loss Ratio Reporting and Rebate Requirements
The Centers for Medicare and Medicaid Services (CMS) released technical guidance regarding the medical loss ratio (MLR) requirements found in Section 2718 of the Public Health Service Act (PHS Act), as added by the Patient Protection and Affordable Care Act (Affordable Care Act or ACA). The bulletin from CMS provides guidance in the form of questions and answers on the following topics: ACA fees, aggregation of data, and closed blocks of business. Specifically, the technical guidance provides that:
The full bulletin can be found here.
- Health insurance issuers may exclude fees paid under the ACA, such as those under the risk adjustment program (§§ 1321(c)(1) and 1343), the Patient Centered Outcomes Research Institute (§ 6301), and the annual insurer fee (§ 9010), from premium in its MLR calculation;
- Health insurance issuers may account for different MLR standards (such as in state markets with MLRs that change over time) when aggregating multiple years of data in MLR and rebate calculations;
- CMS will not take enforcement action against health insurance issuers that fail to submit MLR reports if its only health insurance coverage is in grandfathered plans in small closed blocks of business (less than 1,000 life years nationwide) and subject to the provision of an attestation by the issuer's CEO and CFO that complies with the requirements set forth in this guidance; and
- A health insurance issuer may notify CMS that its only health insurance coverage is in grandfathered plans in small closed blocks of business by registering with the MLR module of CMS's Health Insurance Oversight System, completing the "company issuer association" form, and checking the "small closed blocks of business" box.
- CMS Releases Guidance on the Consumer Operated and Oriented Plan Program Contingency Fund
The Centers of Medicare and Medicaid Services (CMS) released guidance on the Consumer Operated and Oriented Plan (CO-OP) Program Contingency Fund created by the American Taxpayer Relief Act of 2012 (ATR Act). The ATR Act rescinds ninety percent of the unobligated funds appropriated by the Patient Protection and Affordable Care Act (Affordable Care Act or ACA) for CO-OP loans. The ATR Act then transfers the remaining ten percent of the funds to a new CO-OP contingency fund, and directs the Secretary of Health and Human Services (HHS) to use the contingency fund to provide assistance to current CO-OP loan recipients. But only existing CO-OP loan recipients are eligible for loans from the contingency fund. CMS no longer has the authority to loan funds to new borrowers. The full bulletin from CMS can be found here.
- Department of Labor Releases a Self-Compliance Tool for Part 7 of ERISA
The Department of Labor (DOL) released a self-compliance tool designed to assist those involved in operating a group health plan to understand the laws and related responsibilities found in the Affordable Care Act (ACA) provisions of Part 7 of ERISA. The tool is a self-questionnaire that includes informal explanations of the statutes and the most recent regulations and interpretations of the law. It also includes citations to the underlying legal provisions. The DOL's goal is to assist entities in compliance with the various ACA provisions that apply to group health plans and health insurance issuers that will soon become effective. The DOL tool can be found here.
- Patient Protection and Affordable Care Act; Exchange Functions: Standards for Navigators and Non-Navigator Assistance Personnel
On April 3, 2013, HHS release a proposed rule aimed at creating conflict of interest, training and certification, and meaningful access standards applicable to "Navigators" and "Non-Navigator assistance personnel" who assist individuals attempting to access the Affordable Insurance Exchanges established by the ACA. The proposed rule makes three principal changes:
- It prohibits states and Exchanges from prescribing licensing, certification, or other standards that would prevent application of title I of the ACA.
- It amends 45 C.F.R. § 155.210(d) to clarify that a Navigator cannot be an issuer of, or a subsidiary of an issuer of, stop loss insurance, and cannot receive any consideration, directly or indirectly, from an issuer of stop loss insurance in connection with the enrollment of any individuals or employees in a Qualified Health Plan (QHP) or a non-QHP.
Comments on HHS's proposed rule are due by 5:00 p.m. Eastern time on May 5, 2013. The text of the rule is available here.
- It adds a new provision at 45 C.F.R. 155.215 that would establish conflict-of-interest, training, and accessibility standards applicable to Navigators and non-Navigator assistance personnel in Federally-facilitated Exchanges, including State Partnership Exchanges.
- HHS Rule Guarantees Full Funding For Newly Eligible Medicaid Beneficiaries
On March 29, 2013, The Department of Health and Human Services (HHS) announced a final rule, effective January 1, 2014, that implements the provisions of the Affordable Care Act (ACA) relating to the Federal Medicaid Assistance Percentage (FMAP). The federal government will pay 100 percent of the costs of the "newly eligible" adult populations under states' Medicaid programs from 2014 through 2016. The federal government coverage will decrease to 90 percent by 2020, where it will remain permanently.
Not all individuals enrolled in the eligibility group described in certain portions of the ACA will be "newly eligible" for FMAP purposes. The rule defines "newly eligible" as: those not under age 19 or such higher age as the state elects, those not eligible for full benefits under the ACA, or those eligible but not enrolled for such benefits or coverage under a waiver through a plan that has capped or limited enrollment. There is also an increased FMAP for expenditures for childless nonpregnant individuals in the new adult eligibility group.
The rule also provides information to states expanding Medicaid, describing the method states will use to claim the available matching rate for Medicaid expenditures of individuals with incomes up to 133 percent of the poverty rate and who are "newly eligible" and enrolled in the new eligibility group. It further clarifies the availability of increased FMAP for adults who are not newly eligible for those states that had coverage expansion in effect prior to the enactment of the ACA.
HHS claims that the rule will provide more resources and flexibility for states to test ways of delivering Medicaid care, increase collaboration with states on audits that track down fraud, and specifically outline ways states can make Medicaid improvements without a waiver process.
The full text of the rule is available here.
- CMS, EBSA, and IRS Jointly Issue Proposed Rule on 90-Day Waiting Period Limitation and Technical Amendments to Certain Health Insurance Requirements Under the Affordable Care Act
On March 21, 2013, the Departments of the Treasury, Health and Human Services (HHS), and Labor jointly published a proposed rule implementing Public Health Service Act (PHSA) section 2708. PHSA section 2708 prohibits group health plans and health insurance issuers from requiring otherwise eligible employees or their dependents to wait more than 90 calendar days before their employer-sponsored coverage becomes effective. PHSA section 2708 does not require an employer to offer coverage to any particular employee or class of employees. Section 2708 applies to both grandfathered and non-grandfathered group health plans as well as group health insurance coverage for plan years starting on or after January 1, 2014. The full rule is available here. Comments are due by May 20, 2013.
Definition of "Waiting Period"
Some group health plans (both insured and self-insured) or health insurance issuers require a certain time period to pass before an otherwise eligible individual may receive health coverage. The proposed rule adopts the same definition of "waiting period" as the 2004 HIPAA regulations—meaning that a "waiting period" is the period that must pass before coverage of an employee or dependent who is otherwise eligible to enroll under the terms of the group health plan becomes effective. The proposed rule requires a group health plan or health insurance issuer offering group health insurance coverage to cap such a waiting period at 90 calendar days, beginning on the enrollment date and including all weekends and holidays. If, however, an employee has the option to elect coverage that becomes effective on a date that is within the 90-day period, then the coverage complies with the waiting period rules. This means that a group health plan or health insurance issuer does not violate the 90-day requirement simply because an individual chooses coverage beyond the end of that 90-day period, so long as coverage starting within the 90-day period is available.
Limitation on Eligibility Conditions
The proposed rule limits eligibility conditions based solely on the lapse of a time period to be permissible for no more than 90 days. Other conditions for eligibility are generally permissible, unless the condition is designed to avoid compliance with the 90-day waiting period restriction.
The proposed rule provides that, if a group health plan conditions eligibility on an employee regularly having a specified number of hours of service per period (or working full-time), and it cannot be determined that a newly-hired employee is reasonably expected to regularly work that number of hours per period (or work full-time), the plan may take a reasonable period of time to determine whether the employee meets the plan's eligibility condition, which may include a measurement period of no more than 12 months that begins on any date between the employee's start date and the first day of the first calendar month following the employee's start date, as provided for purposes of the employer shared responsibility requirements, commonly known as "pay or play."
In the case of employer cumulative hours-of-service requirements, the proposed rule provides that a plan's waiting period begins once the employee satisfies the cumulative hours-of-service, and it still may not exceed 90 days. The eligibility condition cannot have been designed to avoid compliance with the 90-day waiting period limitation, and it is not considered to be so designed if the cumulative hours-of-service requirement does not exceed 1,200 hours.
Issuers Entitled to Rely on Eligibility Information from Plan Sponsors
The proposed rule also allows health insurance issuers to rely on eligibility information given to them by employers (plan sponsors). An issuer will not violate the proposed rule in administering the 90-day waiting period maximum if:
- the issuer requires the plan sponsor to make a representation regarding the terms of eligibility conditions or waiting periods imposed by the sponsor before an individual is eligible for coverage under the plan terms;
- the issuer requires the plan sponsor to update this representation with any changes; and
- the issuer has no specific knowledge of the imposition of a waiting period that would exceed the permitted 90 days.
Technical Amendments Regarding OPM Review of Exchange Plans and Multi-State Plans
The proposed rule also provides technical amendments related to the Office of Personnel Management (OPM) nationally applicable external review process of insurance plans offered in the Affordable Insurance Exchanges, as established by the Affordable Care Act. The Affordable Care Act requires OPM to contract with private health insurance issuers to offer at least two multi-state plans (MSPs) on each Exchange in the fifty states and the District of Columbia. Group health plans and health insurance issuers must comply with either a State external review process or the Federal external review process under PHS Act section 2719, depending on whether the State external review process meets Federal regulatory requirements. The proposed rule states that MSPs will be subject to the Federal external review process, not the State process.
- CMS Issues Final Rule on the Requirements for Long-Term Care Facilities; Notice of Facility Closure
On March 19, 2013, CMS published a final rule in the Federal Register on the long-term care (LTC) facility closure notice requirements. The final rule adopts, with technical changes, the interim rule that CMS published on February 18, 2011.
In essence, the final rule places primary responsibility on individuals serving as administrators of a Skilled Nursing Facility (SNF) or Nursing Facility (NF) to timely report a facility's impending closure. The regulations also outline when Medicare and Medicaid reimbursement may be available during the closure process. The final rule is expected to allow for a smoother transition when a facility closes.
Under the final rule:
- Any individual who is the administrator of a LTC facility must provide written notice of the closure and the plan for the relocation of residents at least 60 days prior to the impending closure.
- If the Secretary terminates the facility's participation in Medicare or Medicaid, the administrator must give notice no later than the date the Secretary determines appropriate.
- CMS must impose sanctions on the administrator of an LTC facility for failure to provide proper notice to specified parties, including CMS, that the facility is about to close.
The final rule, which implements section 6113 of the Patient Protection and Affordable Care Act becomes effective on April 18, 2013. Click here to read the final rule.
- CMS Extends the Payment Adjustment for Low-Volume Hospitals and the Medicare-Dependent Hospital Program
The Centers for Medicare and Medicaid Services (CMS) released a notice scheduled to be published in the Federal Register on March 7, 2013 that would extend the payment adjustment for low-volume hospitals and to the Medicare-dependent hospital (MDH) program under the hospital inpatient prospective payment system (IPPS) for fiscal year (FY) 2013. This complies with Sections 605 and 606, respectively, of the American Taxpayer Relief Act of 2012 (ATRA), which extends the temporary payment policies put into effect for FY 2011 and FY 2012 by the Affordable Care Act. Because this notice does not constitute substantive agency rulemaking, there will be no comment period. The full notice can be found here.
- Treasury, IRS Release Proposed Rule Regarding Annual Health Insurer Fee
In the March 4, 2013 Federal Register, the Department of the Treasury and the Internal Revenue Service (IRS) published a Notice of Proposed Rulemaking (Proposed Rule) regarding the annual health insurer fee (Fee) under section 9010 of the Affordable Care Act (ACA), which generally imposes an annual fee on "covered entities" engaged in the business of providing "health insurance" with respect to "United States health risks, effective for calendar years beginning after December 31, 2013." The Proposed Rule provides helpful guidance with respect to numerous open issues relating to the Fee. Comments are due June 3, 2013, and a hearing will be held on June 21, 2013. Click to continue reading the full text.
- CMS Announces Medicare Advantage and Prescription Drug Program MLR Proposed Rule—Largely Follows Commercial MLR Rules
On February 15, 2013, CMS issued a proposed rule implementing the Affordable Care Act's (ACA) medical loss ratio requirement for Medicare Advantage and the Prescription Drug Program (PDP) as set forth in section 1103 of Title I, Subpart B of the Health Care and Education Reconciliation Act. The ACA requires Medicare Advantage Organizations (MAOs) and Part D sponsors (referring to stand-alone Part D, as opposed to MA-PD, contracts) to spend 85% of contract revenue (including any member premiums) on the provision of clinical services, prescription drugs, quality improving activities (as defined in the proposed rule) and direct benefits to beneficiaries via reduced Part B premiums. The MLR rule will be effective January 1, 2014. The proposed rule is scheduled for publication in the Federal Register on February 22, 2013, with comments due by April 23, 2013. Click to continue reading.
- CMS Explains the PPACA Exchange Record System
On February 6, 2013, the Centers for Medicare & Medicaid Services ("CMS") published a notice about how the new system of records, intended to support the new health insurance exchanges, will operate. A "system of records" is a group of any records under the control of a federal agency from which information about individuals is retrieved by name or other personal identifier. Read more.
- CMS Proposes Rule to Reform Unnecessary, Obsolete, or Excessively Burdensome Regulatory Requirements
On February 4, 2013, the Centers for Medicare & Medicaid Services (CMS) proposed a rule to reform Medicare regulations that CMS has identified as unnecessary, obsolete, or excessively burdensome on health care providers and suppliers. CMS claims that the rule will save the government nearly $676 million annually and $3.4 billion over five years. Among other things, the proposed rule would:
- Permit registered dieticians to order patient diets independently, without requiring the supervision or approval of a physician or other practitioner;
- Eliminate unnecessary requirements that ambulatory surgical centers must meet in order to provide radiological services; and
- Get rid of a redundant data submission requirement and an unnecessary survey process for transplant centers.
The proposed rule supports President Obama's call on federal agencies to modify and streamline regulations on business. The proposed rule is scheduled to be published in the February 7, 2013 Federal Register. Comments are due by 5 p.m. on April 8, 2013. The full rule is available here, and a press release regarding the proposed rule is available here.
HHS, Treasury, and DOL Propose Rule Regarding Coverage of Contraceptive Services Under the ACA
On February 1, 2013, the Department of Health and Human Services, the Department of the Treasury, and the Department of Labor (collectively, the "Departments") released a proposed rule regarding coverage of certain preventive health services mandated by the Patient Protection and Affordable Care Act (ACA). Section 2713 of the Public Health Service Act (PHSA), as added by the ACA, requires that non-grandfathered group health plans and health insurance issuers offering non-grandfathered or individual health insurance coverage provide benefits for certain preventive health services without the imposition of cost sharing. These services include preventive care and screenings for women as provided for in the comprehensive guidelines supported by the Health Resources and Services Administration (HRSA). The guidelines issued by HRSA include all FDA-approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity (collectively, "contraceptive services"), as prescribed by a health care provider.
The proposed rule builds on previous guidance allowing for the exemption from the contraceptive services requirement for group health plans established or maintained by religious employers (and group health insurance coverage provided in connection with such plans). Specifically, the proposed rule amends the criteria for the religious employer exemption to ensure that an otherwise exempt employer plan is not disqualified because the employer's purposes extend beyond the inculcation of religious values or because the employer serves or hires people of different religious faiths. It also establishes accommodations for health coverage established or maintained by eligible organizations, or arranged by eligible organizations that are religious institutions of higher education, with religious objections to contraceptive coverage.
The proposed rule is scheduled to be published in the February 6th Federal Register. Comments on the proposed rule are due no later than 60 days after the date of publication in the Federal Register. A link to the full rule can be found here.
- IRS Releases Proposed Rule and Notice of Public Hearing on Shared Responsibility Payment for Not Maintaining Minimum Essential Coverage
On January 30, 2013, the Internal Revenue Service released a proposed rule relating to the individual requirement to maintain minimum essential coverage, as established by the Patient Protection and Affordable Care Act. The proposed rule offers guidance regarding liability for the shared responsibility payment where a nonexempt individual does not maintain minimum essential coverage.
The proposed rule was published in the Federal Register on February 1, 2013. Comments on the proposed rule must be received by May 2, 2013. A public hearing has been scheduled for May 29, 2013. The proposed rule can be found here, and IRS Q&As issued with respect to the individual shared responsibility requirement can be found here.
- IRS Adopts Final Rule Regarding Health Insurance Premium Tax Credit Eligibility for "Related Individuals"
On January 30, 2013, the Internal Revenue Service released a final rule relating to the determination of whether individuals are eligible for a premium tax credit where they are eligible to enroll in eligible employer-sponsored coverage by reason of their relationship to an employee (Related Individuals). Specifically, the final rule provides guidance for determining whether such coverage is affordable for purposes of determining Related Individuals' eligibility for a premium tax credit. For taxable years beginning before January 1, 2015, an eligible employer-sponsored plan is affordable for Related Individuals for purposes of determining eligibility for a premium tax credit if the portion of the annual premium the employee must pay for self-only coverage does not exceed 9.5% of the taxpayer's household income.
The final rule was published in the Federal Register on February 1, 2013. The full rule can be found here.
- HHS Releases Proposed Rule to Implement Certain Exchange Functions
On January 30, 2013, the Department of Health and Human Services (HHS) released for public inspection a proposed rule that would implement certain functions of Affordable Insurance Exchanges (Exchanges), consistent with the Patient Protection and Affordable Care Act (ACA).
The proposed rule sets forth standards and processes pursuant to which an Exchange will determine eligibility for and grant certain exemptions from the ACA requirement that nonexempt individuals maintain coverage constituting "minimum essential coverage" or make a shared responsibility payment. The proposed rule also provides standards by which the Secretary of HHS, in coordination with the Secretary of the Treasury, may designate as minimum essential coverage certain types of coverage that are not statutorily designated as minimum essential coverage. It designates certain types of existing health coverage as minimum essential coverage, and it also provides substantive and procedural requirements that must be met in order for other types of coverage to be designated as minimum essential coverage.
The proposed rule was published in the Federal Register on February 1, 2013. Comments on the proposed rule are due by 5 p.m. on March 18, 2013. The full rule can be found here.
- CMS Issues Bulletin Clarifying Status of Employer Prescription Drug Coverage that Supplements Medicare Part D Coverage Provided Through an Employer Group Waiver Plan
On January 25, 2013, CMS issued a bulletin providing guidance on how the requirements of Title XXVII of the Public Health Service Act (PHS Act, Part 7 of the Employee Retirement Income Security Act (ERISA), and Chapter 100 of the Internal Revenue Code (collectively, "federal health coverage requirements") apply when a Medicare-authorized Employer Group Waiver Plan supplements standard Medicare Part D prescription drug coverage. First, retiree-only plans are exempt from the federal health coverage requirements. These plans include employment-based prescription drug plans (PDPs) and employment-based Medicare Advantage Prescription Drug plans (MA-PDs) that cover less than two current employees. Second, coverage through an insured Employer Group Waiver Plan that offers non-Medicare supplemental drug coverage as part of an MA-PD plan qualifies as an excepted benefit and is not subject to the federal health coverage requirements. Finally, coverage through a self-insured Employer Group Waiver Plan that offers non-Medicare supplemental drug coverage as part of an MA-PD plan is technically subject to the federal health coverage requirements. However, CMS, the Department of Labor, and the Department of the Treasury released an FAQ on January 24, 2013 that provides an enforcement safe harbor for such plans. This safe harbor FAQ can be found here. The CMS bulletin can be found here.
- CMS Releases Proposed Rule to Consolidate Eligibility, Notices, Appeals, and Cost-sharing Maximums for Medicaid, CHIP, and Exchanges
On January 14, 2013, the Centers for Medicare & Medicaid Services released a proposed rule, titled, Medicaid, Children's Health Insurance Programs, and Exchanges: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing. Click here to read our summary of the rule.