Contradictory Rulings Ensure Chaos from Health Reform Law will Continue

Posted by on July 22, 2014 | Be the First to Comment

gavel and scalesConflicting U.S. court of appeals rulings issued today further muddy the waters over the future of the federal health reform law colloquially known as Obamacare.  The fight involves whether individuals enrolled in medical insurance through a federally-operated public health insurance exchange like HealthCare.gov are eligible for subsidies.  A panel of three judges for the federal Court of Appeals for the District of Columbia Circuit ruled 2-1 that subsidies are not available through federally-run exchanges, while a panel of three Fourth Circuit Court of Appeals judges unanimously reached the opposite conclusion.

Most states have opted for the federally run exchange as opposed to establishing their own exchange, which means the D.C. Court of Appeals ruling, if it stands, threatens to cripple Obamacare and adversely affect millions of Americans who have already received subsidies for coverage obtained through HealthCare.gov.

Today’s decisions turn on how federal regulators have interpreted the Tax Code section that makes subsidies available to individuals enrolled through “an Exchange established by the State. . . .”  Federal regulators concluded that a holistic reading of the legislation and legislative history compels them to interpret this phrase to mean that subsidies are available in the federally-run exchange in addition to state-run exchanges, under the theory that the federally-operated exchange is merely acting as an agent for those states that declined to establish their own exchange.

Individuals and business entities challenged the regulatory interpretation as overly broad, and argued that allowing subsidies through the federal exchange subjects them to undue penalties.  For example, the pay-or-play penalties applicable to certain businesses apply only if one or more full-time employees of the business receives a subsidy through an exchange.  If subsidies are not available through the federal exchange, then businesses may be able to avoid substantial penalties with respect to their full-time employees who obtain health insurance through the exchange.

It is unclear whether these arguments will make it before the Supreme Court.  The Obama administration has already announced its intent to ask the full D.C. Circuit Appeals Court to review and overturn today’s ruling by the court’s three-judge panel.  If that occurs, challengers will hope one of the other similar cases making their way to other courts of appeals will create a conflict and force the Supreme Court to hear their case.

In the meantime, with Congressional action unlikely, individuals and businesses are left to wait on additional guidance from regulators as to how subsidies and penalties will be calculated.  However, any such guidance is not likely to be issued until there is more clarity from the courts.

 

Tobacco Cessation Treatment and the ACA’s Preventive Care Mandate

Posted by on July 17, 2014 | Be the First to Comment

The Affordable Care Act (ACA) requires non-grandfathered healthcare plans to supply enrollees with a wide variety of preventive care benefits at no out-of-pocket cost. One preventive care mandate is counseling and intervention (apparently at the primary care level) regarding tobacco use.

183169636[1]A frequent question we receive is, “Does this intervention include smoking cessation drugs? Is the plan required to supply such drugs at no out-of-pocket cost to the enrollee?”

We have assumed the answer is “yes,” because the clinical guidelines on which the tobacco cessation intervention mandate is based allude to pharmacological intervention. Federal authorities have now clarified this point, in a recent series of FAQs related to the ACA, and reach the same conclusion. The relevant FAQ provides:

 [A] group health plan…[will] be in compliance with the requirement to cover tobacco use counseling and interventions, if, for example, the plan…covers without cost-sharing:

    1. Screening for tobacco use; and
    2. For those who use tobacco products, at least two tobacco cessation attempts per year.

 For this purpose, covering a cessation attempt includes coverage for:

    •  Four tobacco cessation counseling sessions of at least 10 minutes each (including telephone counseling, group counseling and individual counseling) without prior authorization; and
    • All Food and Drug Administration (FDA)-approved tobacco cessation medications (including both prescription and over-the-counter medications) for a 90-day treatment regimen when prescribed by a health care provider without prior authorization.

SCOTUS Decision Interests Many, Impacts Fewer

Posted by on June 30, 2014 | Be the First to Comment

Posted on behalf of Elizabeth Vollmar, J.D.

Supreme Court decisions about religious freedom and when life begins get attention even when raised by something as commonplace as health insurance. But for most employers that offer health insurance, the Supreme Court’s Hobby Lobby decision changes nothing – they already comply with the ACA’s contraception mandate andSupreme Court sign have no religious objections to doing so. (See our Alert for details of the Supreme Court’s decision that for-profit closely held corporations cannot be required to cover certain contraceptives under their health plans if doing so conflicts with sincerely held religious beliefs of the corporations’ owners.)

Some employers have been anxiously awaiting this decision and want to take immediate action to drop some or all contraceptive coverage from their health plans. Before doing so, however, employers may want to allow at least a few days for the dust to settle. 

  • The decision relates only to closely held companies – publicly traded companies and others that are not, essentially, family-owned businesses will not be able to avoid the mandate due to this ruling. The Supreme Court did not draw a clear line showing which companies are protected under this ruling.
  • Business owners who do not have a sincerely held religious conviction against contraception – or at least some forms of contraception – are not affected by this ruling. Establishing the existence of such a religious conviction may be difficult in some cases.
  • We expect that HHS will extend the opt-out procedure that applies to nonprofit religious organizations to closely held for-profit companies whose owners hold sincere religious beliefs that are in conflict with the mandate. We hope that HHS will let us know promptly whether this is the direction it intends to take.

CMS Offers Insight into Transitional Reinsurance Fee Payment Process

Posted by on June 25, 2014 | Be the First to Comment

On Friday, June 20, the Centers for Medicare and Medicaid Servicesbusinessman (CMS) conducted its first webcast on the mechanics of collecting and remitting the Transitional Reinsurance Fee (TRF) that will apply later this year.

The TRF is imposed upon insurers and sponsors of self-insured plans by the Affordable Care Act (ACA). It aims to collect $25 billion from insurers and employers over three years to create a backstop for insurers covering high-risk individuals through the public health insurance exchanges, or “marketplaces,” authorized by the ACA. For 2014, the tax is generally $63 per covered life ($5.25 per month). The TRF is payable by insurers on behalf of insured major medical plans and by employers (or other plan sponsors) on behalf of self-funded major medical plans. However, a third-party administrator (TPA) may, but is not required to, pay the fee on behalf of the self-insured plans it administers.   

As we discussed in an Alert in June, CMS indicated that an on-line process will be available at www.pay.gov to offer a “one-stop” resource for registration, submission of headcount and payment to CMS. Either the self-insured plan sponsor or the plan’s TPA can complete the reinsurance contribution process, including payment, on behalf of the self-funded plan.  Whichever entity does so will be required to complete these steps: 

  1. Register on pay.gov, so payment can be made when the time comes.
  2. Enter the plan’s enrollment data in a yet unveiled on-line form called the “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form.”
  3. Prior to the submission of the form:
    • Attach “supporting documentation.”
    • Attest to the accuracy of the information.
    • Schedule payment for early 2015.   

A TPA can register and provide one TRF submission for all of its clients. Alternatively, the TPA can register separately for each of its self-funded clients and separately submit for each client.   Whichever entity – employer or TPA – completes the registration and submission process will be the entity that will also make payment to CMS.

Will TPAs Coordinate Data Submission and Payment for Their Customers?

CMS has clearly indicated that TPAs are not required to coordinate the data collection, submission and payment on behalf of their customers. We hope that most TPAs (including insurers acting on behalf of self-insured plans pursuant to an “administrative services only” contract) will do so, but there are some steps in the TRF process that may cause TPAs trepidation, including attesting – likely under penalties of perjury – to the accuracy of the information they receive from the employer, and paying CMS on behalf of the plan. With respect to payment, the TPA will either have to pay the fee on behalf of the plan and then recoup it from the plan sponsor or, more likely, have the sponsor provide the TRF payment to the TPA in advance.     

Have Questions about TRF?

You can submit written questions to CMS via its training website. Answers to all questions submitted will be posted in the FAQ section of the CMS website. You also can learn more about the TRF process by attending future webcasts. The next one is scheduled for July 14.  

Postscript: Final Rules Allow Orientation Period in Conjunction with 90-Day Waiting Period

The federal agencies have issued final rules that allow an “orientation period” of up to one month to be applied before the start of a health plan waiting period. Recall that the ACA, as a general rule, limits health plan waiting periods to 90 days. The waiting period typically begins when the employee becomes eligible for coverage. Employers with waiting periods calling for coverage to begin on the “first of the month following 90 days” had already amended their plans to substitute “first of the month after 60 days.” The final rules, which leave the proposed waiting period regulation largely unchanged, could effectively allow an employer to get back to a “first of the month following 90 days” by installing a one-month orientation period before the beginning of a “first of the month following 60 days” waiting period. 

Lockton Comment:  Employers that use an orientation period before the start of a 90-day waiting period will still remain vulnerable to play-or-pay penalties if affordable, minimum value coverage is not offered to each new full-time employee by the first day of the fourth full calendar month of employment. For more information, please see the Spring 2014 edition of Compliance News.

Health Plan Identifiers: Procrastination Might Pay Off

Posted by on May 13, 2014 | Be the First to Comment

Posted on behalf of Elizabeth Vollmar, J.D.

Lately at Lockton we’ve been receiving questions about the HIPAA requirement that health plans obtain a health plan identifier (HPID) from the Department of Health and Human Services (HHS). Our Not now post itadvice, at least for now, is that clients should not rush out to get HPIDs for the health plans they sponsor. That’s because the HPID is tethered to a technical issue that HHS is actively analyzing, and there’s a chance HHS may excuse employers from the need to obtain HPIDs, or delay the deadline for doing so.

Even if employers remain saddled with the requirement to obtain HPIDs, the earliest deadline is Nov. 5, 2014, with small health plans having an additional year (see the discussion below about healthcare programs that qualify as “small plans”). Waiting until the deadline is closer before applying for an HPID may be to an employer’s advantage when it comes to completing HHS’ online application process.  The process is cumbersome, at best, and delaying a few months may give HHS time to streamline it and work out any bugs.

HHS’ current deliberations, coupled with the relatively long lead times for application, mean that procrastination may prove to be employers’ best HPID compliance strategy for the time being.

 What’s the Point of Getting an HPID?

One of HIPAA’s goals was to improve the efficiency of the health care system by encouraging electronic data interchange (EDI). To this end, HHS has issued extensive specifications regarding electronic transactions, including rules requiring medical providers to obtain unique identifiers for use when filing claims and conducting certain other electronic transactions. Now, HHS is requiring health plans to obtain unique identifiers.

Under HHS’ rules, each “controlling health plan” (CHP) is required to apply for and obtain an HPID. While the definition of a CHP is less than clear, it seems intended to include employer-sponsored health plans, whether insured or self-insured. That means the employer generally will be responsible for obtaining an HPID unless it has arranged for a third party to do so. Anecdotally, we’re hearing that some large insurers paying self-insured plans’ claims under “administrative services only” contracts do not intend to obtain HPIDs for their self-insured customers.

Given that employers usually have very little association with the claims payment process, it would make more sense to clarify or redefine CHP to include entities with claims processing responsibility (generally, insurers or TPAs), and exclude employer-sponsored health plans. We hope that something like this results from HHS’ deliberations, eliminating the need for employers to apply for HPIDs. We’ll continue to monitor the situation.

 What Qualifies as a Small Health Plan?

Because “small health plans” have been given an additional year to secure a HPID, it’s important to examine exactly what constitutes “small.” HHS defines a small health plan as a health plan with annual receipts of $5 million or less. The question is, what are “receipts” in the case of an employer-sponsored health plan?

While HHS has not provided a clear answer, the most reasonable interpretation is that premiums paid for coverage (on the part of both the employer and the employee) should be considered receipts in the case of an insured plan. For a self-insured plan, the amount the employer takes out of its general assets to pay claims and expenses should be considered receipts.

Keep in mind that “small health plan” refers to the ERISA plan that includes the health benefits. If an employer has bundled life, disability or other non-health benefits into a single ERISA plan with the health benefits, available guidance does not state whether all of these benefits or just the health benefits count toward annual receipts.  We are presuming that an employer in this situation may take into account only the health benefits provided under the ERISA plan but, without guidance, some uncertainty remains. The guidance also does not specify what year should be considered to determine annual receipts, but the last complete calendar year probably is not a bad choice.