On February 24, 2014, the Departments of HHS, Labor, and Treasury published final regulations that generally bar employer-sponsored group health plans and group health insurance issuers from imposing a health coverage waiting period of more than 90 days after an employee is otherwise eligible for coverage. Other conditions for eligibility are generally permissible, such as being in an eligible job classification, achieving job-related licensure requirements specified in the plan's terms, or satisfying a reasonable and bona fide employment-based orientation period. Note that the rules do not require coverage be offered to any particular individual or class of individuals, nor do they require any waiting period to be imposed). The 90-day waiting period limitation provisions apply to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015. A companion proposed rule would limit to one month the length of a bona fide employment-based orientation period for purposes of the waiting period rules. Comments on the proposed regulations will be accepted until April 25, 2014.
CMS has announced that in light of persistent problems individuals have had enrolling in qualified health plans (QHPs) through some state-run Marketplaces, it will now allow individuals to access premium tax credits and cost-sharing reductions on a retroactive basis in certain circumstances. Specifically, in guidance dated February 27, 2014, CMS states that if a Marketplace was unable to provide timely eligibility determinations during the initial open enrollment period for the 2014 coverage year, it may be considered an “exceptional circumstance” for individuals who were unable to enroll in a QHP as a result. In such cases, CMS will make available advance payments of the premium tax credit and advance payments of cost-sharing reductions on a retroactive basis once the Marketplace has determined that the individual is eligible for such assistance and the individual has enrolled in a QHP through the Marketplace. Notably, CMS also provides an individual in this exceptional circumstance who is enrolled in a QHP offered outside of the Marketplace when he or she receives a determination of eligibility will be treated as having been enrolled through the Marketplace since the initial enrollment date.
On February 4, 2014, CMS released draft operational and technical guidance to health insurance issuers that seek to offer Qualified Health Plans (QHPs) in a Federally-Facilitated Marketplace (FFM) and/or a Federally-Facilitated Small Business Health Options Program (FF-SHOP) in 2015 and beyond (unless superseded in future years by subsequent regulations or guidance). Among many other things, the draft guidance addresses: the certification process and standards for QHPs (including the rate review process and network adequacy standards); QHP performance and oversight policies; and various consumer protection requirements. CMS will accept comments on the policies set forth in the guidance (to the extent that they are not the subject of separate rulemaking processes) until February 25. 2014.
IRS Issues ACA Employer "Shared Responsibility" Guidance; Delays Compliance Deadlines for Certain Employers
On February 12, 2014, the Internal Revenue Service (IRS) published final regulations modifying the timeline under which certain employers will be required to make “shared responsibility” payments if they do not provide qualified health insurance for their full-time employees and dependents pursuant to the Affordable Care Act (ACA). Specifically, under a new “transition relief” policy, the IRS is delaying the shared responsibility payment obligation for employers with 50 to 99 full-time equivalent employees from 2015 until 2016, although such employers will have to submit reports regarding their employees’ coverage in 2015. In order to qualify for transition relief, employers must certify that they have not laid-off workers to drop below the 100 employee threshold and must not eliminate or materially reduce their coverage offerings. The regulations also provide that employers subject to the employer responsibility provisions in 2015 (i.e., employers with 100 or more full-time equivalent employees) must offer coverage to at least 70% of full-time employees to avoid a penalty, rather than 95% (the 95% threshold will take effect in 2016). The regulations also clarify whether certain types of employees or employees in certain occupations are considered full-time (such as volunteer firefighters and emergency responders, educational employees, and seasonal workers) and clarify other open questions from the prior proposed regulations.
GAO Report Confirms Insurance Coverage Prior to Medicare Linked to Better Health, Lower Program Spending
This post was written by Nancy Sheliga.
The Government Accountability Office (GAO) has released a report examining the effect of prior health insurance coverage on Medicare beneficiaries. The report specifically focuses on the health status, program spending, and use of services by Medicare beneficiaries with and without continuous health insurance coverage before Medicare enrollment. According to the GAO, Medicare beneficiaries with prior insurance initially used fewer or less costly medical services than those without prior insurance. Because the difference in total spending was the greatest during the first year in Medicare, the GAO hypothesizes that beneficiaries without prior continuous insurance may have had a pent-up demand for medical services in anticipation of coverage at age 65. In addition, the report finds that beneficiaries without prior continuous insurance have higher total and institutional outpatient spending but not higher spending for physician and other noninstitutional services, suggesting that they require more costly and intensive medical services or that they are continuing prior patterns of visiting hospitals more than physician offices. Finally, in line with previous research, the GAO found that beneficiaries with continuous health insurance coverage for approximately six years before enrolling in Medicare were more likely than those without prior continuous insurance to report being in good health during their first six years in Medicare.
CMS has published its proposed methodology and data sources necessary to determine federal payment amounts made to states that elect to establish a Basic Health Program (BHP) under the Affordable Care Act (ACA) to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Exchanges. The BHP, which will be available for states to implement effective January 1, 2015, is intended to make affordable health benefits coverage available for individuals under age 65 with household incomes between 133% and 200% of the federal poverty line who are not otherwise eligible for Medicaid, the Children’s Health Insurance Program, or affordable employer sponsored coverage. Comments will be accepted until January 22, 2014.
CMS has published an interim final rule with comment period that sets a December 23, 2013 deadline for individuals to select a qualified health plan through an Exchange for an effective coverage date of January 1, 2014, to conform to a previously-announced policy. The prior regulation imposed a December 15, 2013 deadline. State Exchanges may select a different deadline. The rule pertains to the individual market and Small Business Health Options Program in both the Federally-facilitated Exchanges and State Exchanges; it does not change the plan selection or premium payment dates for coverage offered outside of the Exchanges.
The Obama Administration has announced a “hardship” exemption for certain individuals who have been notified that their individual health insurance policies have been cancelled and will not be renewed. In such cases, if the individual believes that the plan options available in the ACA Health Insurance Marketplace/Exchange are more expensive then the cancelled health insurance policy, the individual will be eligible for a hardship exemption from the “shared responsibility” payment and will be able to enroll in catastrophic coverage, if available (catastrophic coverage plans previously were limited to individuals under age 30 meeting certain conditions).
On December 2, 2013, CMS published a proposed rule that would establish 2015 payment parameters and oversight provisions for federally-facilitated Health Insurance Exchanges under the ACA. The rule specifically addresses risk adjustment, reinsurance, and risk corridors programs; cost-sharing parameters and cost-sharing reductions; and user fees for federally-facilitated Exchanges. It also proposes additional standards for composite rating, privacy and security of personally-identifiable information, the annual open enrollment period for 2015, the actuarial value calculator, cost sharing for dental plans, the meaningful difference standard for qualified health plans offered through a federally-facilitated Exchange, patient safety standards for issuers of qualified health plans, and the Small Business Health Options Program. Comments will be accepted until December 26, 2013.
On November 15, 2013, the House of Representatives voted 261 to 157 to approve H.R. 3350, the “Keep Your Health Plan Act,” which would allow health plans available on the individual market as of January 1, 2013 to continue in 2014 without meeting new ACA plan standards. Continued enrollment in such a grandfathered policy would be considered to satisfy the ACA’s minimum essential coverage requirement, exempting the enrollee from the “shared responsibility” penalty under the ACA. . The Obama Administration has stated that the president would veto H.R. 3350 because it “rolls back the progress made by allowing insurers to continue to sell new plans that deploy practices such as not offering coverage for people with pre-existing conditions, charging women more than men, and continuing yearly caps on the amount of care that enrollees receive.” As previously reported, the Obama Administration has announced an alternative transition policy that would allow insurance issuers, subject to state insurance commissioners’ approval, to continue coverage that would otherwise be terminated or cancelled, and affected individuals and small businesses may choose to re-enroll in such coverage if the coverage was in effect on October 1, 2013 and the insurer meets certain conditions.
Congressional Panels Continue Focus on ACA Insurance Enrollment, Security, and Cost Issues, and Other Health Policy Topics
Congress continues to examine issues associated with enrollment in qualified health plans under Healthcare.gov. For instance:
- The House Science, Space, and Technology Committee held a hearing entitled “Is My Data on Healthcare.gov Secure?” (see).
- The Senate Small Business and Entrepreneurship Committee focused on “Affordable Care Act Implementation: Examining How to Achieve a Successful Rollout of the Small Business Exchanges”; and
- The House Oversight and Government Reform Committee has held hearings entitled “ObamaCare Implementation: Sticker Shock of Increased Premiums for Healthcare Coverage,” and “ObamaCare Implementation: High Costs, Few Choices for Rural America,” while on December 6 the panel has scheduled a hearing entitled “ObamaCare Implementation, The Broken Promise: If You Like Your Current Plan You Can Keep It.”
In other policy areas, the Senate Special Committee on Aging has scheduled a December 11 hearing on “Protecting Seniors From Medication Labeling Mistakes,” along with a December 18 hearing entitled “The Future of Long-Term Care Policy: Continuing the Conversation.” In addition, on November 20, the House Energy and Commerce Subcommittee on Health held a hearing on public health legislation. Specifically, the Subcommittee is considering the following bills: H.R.610, to provide for the establishment of the Tick-Borne Diseases Advisory Committee; H.R.669, to enhance awareness about unexpected sudden death in early life; H.R. 1098, to reauthorize certain traumatic brain injury and trauma research programs; H.R.2703, to provide liability protections for volunteer practitioners at community health centers; H.R.1281, to reauthorize newborn screening programs; draft legislation to reauthorize the poison center national toll-free number, national media campaign, and grant program; and draft legislation to reauthorize a controlled substance monitoring program.
President Obama announced on November 14, 2013 that HHS has adopted an administrative policy to allow insurers to continue to offer certain health insurance policies scheduled to be cancelled effective January 1, 2014 because of more stringent coverage requirements under the ACA. In short, under the“transitional” policy outlined in a letter to state insurance commissioners, health insurance issuers may choose to continue coverage that would otherwise be terminated or cancelled, and affected individuals and small businesses may choose to re-enroll in such coverage if the coverage was in effect on October 1, 2013 and the insurer meets certain conditions, including notification to the affected insureds regarding: (1) any changes in the options that are 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 access 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. State agencies responsible for enforcing the specific market reforms are “encouraged to adopt the same transitional policy.” The letter notes the risk corridor program should help ameliorate unanticipated changes in premium revenue for health insurers, although the Administration will consider additional regulatory changes to provide additional assistance. The policy applies to health insurance coverage that is renewed for a policy year starting between January 1, 2014, and October 1, 2014, but the Administration has left open the possibility of extending the transition policy. Despite this announcement, House Speaker John Boehner has indicated that the House will proceed with its scheduled vote tomorrow on H.R. 3350, the “Keep Your Health Plan Act.”
Congressional committees continue to focus on the experience of consumers and insurers since the HealthCare.gov insurance portal launched on October 1, along with potential issues related to the security of personal data transmitted through the site. For instance, House hearings this week include an Oversight and Government Reform Committee hearing on “ObamaCare Implementation: The Rollout of HealthCare.gov”; a Homeland Security Committee on “Cyber Side-Effects: How Secure is the Personal Information Entered into the Flawed Healthcare.gov?"; and an Energy and Commerce Committee hearing titled “Obamacare Implementation Problems: More than Just a Broken Website.” Next week, the Energy and Commerce Committee also will examine the security of the HealthCare.gov site.
In other policy areas, on November 14, the House Small Business Committee is holding a hearing on “Self-Insurance and Health Benefits: An Affordable Option for Small Business.” On November 15, the Energy and Commerce Subcommittee on Health will review the FDA’s implementation of the Food and Drug Administration Safety and Innovation Act, and on November 19 the panel will focus on federal regulation of mobile medical apps and other health software.
HHS has corrected technical and typographical errors in the March 11, 2013 HHS final rule establishing ACA health insurance benefit and payment parameters for 2014. The correcting amendment is effective November 6, 2013.
This post was written by Salvatore G. Rotella, Jr. and Debra A. McCurdy.
On November 13, 2013, the Departments of Health and Human Services (HHS), Labor, and the Treasury published a joint final rule implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The MHPAEA requires group health insurance plans to provide parity between mental health or substance use disorder benefits and medical/surgical benefits with respect to financial requirements (e.g., copayments and deductibles) and treatment limitations. The MHPAEA's statutory provisions generally were effective for plan years beginning after October 3, 2009. Interim final rules published February 2, 2010 generally became applicable for plan years beginning on or after July 1, 2010.
The November 13, 2013 final rule builds on the interim rule and additional clarifications subsequently issued by the Departments, and provides clarification of provisions intended to strengthen consumer protections. For instance, the final rule removes an interim final rule exception to the nonquantitative treatment limitations (NQTL) requirements ‘‘to the extent that recognized clinically appropriate standards of care may permit a difference.” The Departments note that while the regulations do not require plans and issuers to use the same NQTLs (e.g., medical management techniques like prior authorization) for both mental health and substance use disorder benefits and medical/surgical benefits, the processes, strategies, evidentiary standards, and other factors used to determine whether and to what extent a benefit is subject to an NQTL must be comparable to and applied no more stringently for mental health or substance use disorder benefits than for medical/surgical benefits. In addition, the final rule: clarifies the applicability of parity requirements to intermediate levels of care received in residential treatment or intensive outpatient settings; addresses the scope of the transparency required by health plans; and provides that plan or coverage restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services must comply with the NQTL parity standard. The November 13 final rule generally applies to plan years beginning on or after July 1, 2014; until then plans and issuers subject to MHPAEA must continue to comply with the interim final rules.
Note that the Affordable Care Act (ACA) separately includes mental health and substance use disorder services as an “essential health benefits” category that must be provided by health plans offered in the individual and small group markets beginning in 2014.
Obama Administration Aligns Health Exchange Enrollment Deadline and "Shared Responsibility" Penalty Trigger
CMS recently issued guidance to ensure that individuals who purchase insurance through the ACA Marketplace/Insurance Exchange near the end of the initial open enrollment period are not subject to a penalty for a break in insurance coverage. By way of background, beginning in 2014, the ACA requires every individual to maintain health coverage (known as minimum essential coverage), qualify for an exemption from the requirement to maintain minimum essential coverage (including an exemption for gaps in coverage of less than 3 months), or make a shared responsibility payment when filing a federal income tax return. For 2014, the shared responsibility payment/penalty equals the greater of 1% of annual income or $95 per person.
The initial open enrollment period in the Health Insurance Marketplace runs through March 31, 2014. Under the insurance enrollment rules, however, an individual who enrolls between February 16, 2014 and March 31, 2014 would have coverage effective as of April 1 or later – which could result in a break in coverage of 3 or more months and trigger the penalty if the individual does not qualify for another exemption. In guidance issued on October 28, 2013, CMS states that “HHS has determined that it would be unfair to require individuals in this situation to make a payment.” Consequently, HHS is establishing a “hardship exemption” from the shared responsibility payment if an individual enrolls in a plan through the Marketplace prior to the close of the initial open enrollment period. Additional detail will be provided in 2014 on how to claim this exemption.
On October 30, 2013, CMS published a final rule that sets forth financial integrity and oversight standards for participants in Affordable Care Act (ACA) Insurance Exchanges/Marketplaces. According to a CMS press release, these policies largely are unchanged from previous proposed rules and guidance documents. Among other things, the rule addresses: oversight of state-operated risk adjustment and reinsurance programs; oversight of advanced payments of the premium tax credit and cost-sharing reductions; monitoring standards related to various Marketplace activities; approval of vendors to administer enrollee satisfaction surveys; and amendments to definitions and standards related to market reform rules. The rule also amends and finalizes certain interim provisions set forth in a March 11, 2013 interim final rule regarding risk corridors and cost-sharing reduction reconciliation.
This post was written by Nancy Sheliga.
At the request of Senate Republican policymakers seeking a better understanding regarding the impact of supplemental coverage on overall Medicare spending, the Government Accountability Office (GAO) recently compared the health care expenditures of beneficiaries with only traditional fee-for-service (FFS) Medicare coverage to those of beneficiaries who have supplemental coverage from either private insurance companies (a.k.a., Medigap) or employer-sponsored plans. Based on a review of 2010 data, the GAO concluded that health care expenditures are higher for beneficiaries with supplemental coverage than for beneficiaries with FFS Medicare only. More specifically, both average Medicare spending and out-of-pocket expenses for beneficiaries with Medigap were significantly greater than for those with Medicare FFS coverage only. Within the FFS only group, those who are enrolled in Medicare's Part D prescription drug program spent considerably more on health care than those who are not enrolled in Part D.
While other research has found similar patterns, and Congressional policymakers have expressed concern that those with supplemental coverage may be less cost-conscious in their use of medical services, the GAO report also found that those with poorer health status and greater age have higher average health care expenditures in general. In addition, the GAO report references other past studies that have indicated that (1) characteristics such as health status and age may influence the decision to purchase supplemental coverage, possibly providing a partial explanation of the differences in expenditures, and (2) reducing supplemental coverage may cause some individuals to consider forgoing necessary services, possibly exacerbating their health care needs and perhaps increasing their long-term health care costs.
On October 1, 2013, the Affordable Care Act’s (ACA) long-awaited Health Insurance Marketplace was launched at www.healthcare.gov. As has been widely reported, many consumers experienced technical problems using the federal site to enroll in qualified health plans, which the Administration has largely chalked up to greater-than-expected demand and site capacity issues that are being addressed on an ongoing basis. On the other hand, critics including Republican lawmakers have argued that the Marketplace site’s glitches indicate the deeper problems with the enrollment system that should have been anticipated (and which they contend lend support to continued efforts to delay or repeal the ACA). The White House has confirmed that individuals are signing up through federal exchanges, but the Administration is not releasing enrollment statistics at this time, choosing instead to release enrollment data on a regular monthly basis starting in November. The Administration also has stressed that consumers have until December 15, 2013 to apply for coverage that starts January 1, 2014, and enrollment in the Marketplace is open until March 31, 2014. In a related development, the Centers for Medicare & Medicaid Services (CMS) has announced that while small businesses may view available plans being offered through the federally-facilitated Small Business Health Option Program (SHOP) Marketplace as of October 1, 2013, all functions (including enrollment) will not be available until November. Enrollment experiences at state Marketplaces reportedly vary, with some states such as California and New York announcing success in enrolling thousands of consumers, while other states reportedly are encountering technical problems that have hindered enrollment.