Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

On May 3, 2013, the Internal Revenue Service (IRS) published proposed regulations implementing the ACA’s health insurance premium tax credit, as amended by subsequent legislation. These proposed regulations affect individuals who enroll in qualified health plans through Affordable Insurance Exchanges (Exchanges) and claim the premium tax credit, and Exchanges that make qualified health plans available to individuals and employers. The proposed regulations also address determinations of whether health coverage under an eligible employer-sponsored plan provides minimum value. Comments and requests for a public hearing will be accepted until July 2, 2013. These regulations are proposed to apply for taxable years ending after December 31, 2013, and taxpayers may apply the proposed regulations for taxable years ending before January 1, 2015.

In separate document published May 13, 2013, the IRS proposed regulations that provide guidance to Blue Cross and Blue Shield organizations, and certain other health care organizations, on computing and applying the medical loss ratio added to the Internal Revenue Code by the ACA, applicable to tax years beginning after December 31, 2013). Comments on the regulations will be accepted until August 12, 2013, and a September 17, 2013 public hearing has been scheduled on the regulations.

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The ACA established the Early Retiree Reinsurance Program (ERRP) as a temporary program to reimburse employer and union sponsors of participating employment-based plans for a portion of the cost of health benefits for early retirees and their spouses, surviving spouses, and dependents. CMS has published a notice that sets forth termination dates for several operational processes in preparation for the January 1, 2014 ERRP program sunset date. These operational processes include: the submission of changes to information in a plan sponsor’s ERRP application; the reporting of plan sponsor change of ownership; the submission of reimbursement requests; the reporting and correction of data inaccuracies; and the request for reopenings of reimbursement determinations. The notice is effective April 19, 2013.

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Earlier this month, the Senate Finance Committee held a hearing on the nomination of Marilyn Tavenner to be CMS Administrator. The Senate Health, Education, Labor, and Pensions (HELP) Committee approved the Mental Health Awareness and Improvement Act, legislation that reauthorizes and amends programs administered by both HHS and the Department of Education related to awareness, prevention, and early identification of mental health conditions. The HELP Committee also held a hearing on the effect of guaranteed issue and new insurance rating rules. A House Ways and Means Committee hearing focused on details of the President’s FY 2014 budget proposals for HHS programs. The House Energy and Commerce Committee held hearings on the ACA’s Pre-Existing Condition Insurance Program, reauthorization of FDA animal drug user fees, and “Challenges of Traditional Medicare's Benefit Design.” The Energy and Commerce Committee also plans an April 16 hearing on the fungal meningitis outbreak and whether it could have been prevented, along with an April 18 hearing on the Administration’s HHS budget proposal.

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All private health insurers in the individual and small group markets must submit data to the HealthCare.gov Plan Finder, an online portal created to help consumers compare health insurance coverage options. According to a recent OIG report, "Oversight of Private Health Insurance Submissions to the HealthCare.gov Plan Finder," while most private insurers reported data to the Plan Finder, the OIG found inconsistent data displayed for a sample of products and plans. The OIG also identified gaps in CMS’s oversight of compliance with reporting requirements, such as a lack of targeted follow-up with insurers that did not report detailed pricing and benefit information. The OIG recommends that CMS: implement procedures to identify and pursue insurers that do not submit required data; require each private insurer’s Chief Executive Officer or Chief Financial Officer to certify to the completeness of data submitted to the Plan Finder; and take certain other steps to ensure the accuracy of Plan Finder data and the availability of plans identified on Plan Finder.. CMS generally concurred with the recommendations. 

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On March 21, 2013, the Internal Revenue Service, Employee Benefits Security Administration, and CMS published proposed rules providing that a group health plan (or health insurance issuer offering group health insurance coverage) may not apply any waiting period that exceeds 90 days, in conformance with the ACA. Under the proposed regulations, waiting period would be defined as the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective. The rules also would amend certain existing insurance market requirements, including preexisting condition limitations and other portability provisions added by the Health Insurance Portability and Accountability Act of 1996 (HIPAA), in light of the ACA’s market reform protections. The proposed regulations generally would apply to plan years beginning on or after January 1, 2014. Comments will be accepted until May 20, 2013. 
 

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In case you missed them, Reed Smith attorneys have recently prepared the following Client Alerts on major regulatory issues:

• “CMS Physician Payment "Sunshine" Final Rule -- Overview and Analysis”;
• “ACA Affordable Insurance Exchanges and Qualified Health Plans”; and  
• “The HITECH Final Rule: New Privacy/Security Rules of the Road Finally Here.” 

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On February 25, 2013, the Department of Health and Human Services (HHS) published a final rule to implement key provisions of the Affordable Care Act (ACA) related to essential health benefits, (EHBs), calculation of actuarial value (AV), and accreditation standards. By way of background, the ACA requires health plans offered in the individual and small group markets -- in and out of new Affordable Insurance Exchanges (Exchanges) -- to offer a core package of “essential health benefits” beginning in 2014. The EHB package must include items and services in at least the 10 broad categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services (including behavioral health treatment); prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services (including oral/vision care). EHB must be comparable to benefits offered by a “typical employer plan.” Under the final rule, EHBs will be defined based on a state-specific benchmark plan, with several options for selection of a benchmark plan. HHS also provides a framework for supplementing the benchmark plan if it is missing any of the statutory benefit categories, and includes safeguards to prevent benefit designs that could discriminate against certain enrollees. In addition, HHS adopted a specific standard for prescription drug coverage, under which an EHB package must cover at least the same number of drugs in each United States Pharmacopeia (USP) category and class as are covered by the benchmark plan for the given state, but in no event less than one drug in every USP category and class.

The final rule also establishes how AV will be calculated under the ACA to facilitate consumer comparisons of plans with similar levels of coverage. The AVs (or percentage of costs the plans cover) will vary by “metal level” – 60% for a bronze plan, 70% for a silver plan, 80% for a gold plan, and 90% for a platinum plan. Also, certain individuals will be eligible to purchase catastrophic-only coverage, and low-income individuals will be entitled to purchase “silver plan variations” with subsidized cost-sharing resulting in AVs of 73%, 87% or 94%. HHS allows a plan to qualify for a particular metal level if its AV is within 2 percentage points of the standard (1 percentage point for silver plan variations). In addition, the final rule adopts a timeline for when issuers offering coverage in Exchanges must become accredited and an application process for accrediting entities seeking to be recognized to accredit issuers offering coverage in any Exchange.  An HHS fact sheet regarding the rule is posted here. 

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HHS published a final rule on March 11, 2013 to establish additional regulatory requirements regarding ACA health insurance provisions that go into effect in 2014. Specifically, the rule provides detailed standards for the permanent risk adjustment methodology, a transitional reinsurance program, and a temporary risk corridors program from 2014 to 2016, which are intended to stabilize premiums as new consumer protections take effect in 2014. In addition, the rule clarifies the administration of advance payments of the premium tax credit and certain cost-sharing reductions. The rule also implements user fees for health insurance issuers participating in a federally-facilitated Exchange, and amends medical loss ratio (MLR) program rules to require issuers include premium stabilization amounts in MLR and rebate calculations. Moreover, the rule establishes a number of standards for the Small Business Health Options Program (SHOP), which will allow small employers to offer employees a variety of qualified health plans. HHS also published a separate proposed rule on March 11 outlining a transitional policy for certain operations of the SHOP designed to ensure market stability in 2014 and conform SHOP enrollment periods to those in the broader group health insurance market. Comments on the proposed rule will be accepted until April 1, 2013. Finally, HHS also issued an interim final rule with comment period to build on the final benefit and payment parameters for 2014. The interim final rule aligns risk corridors calculations with the single risk pool provision, and sets standards permitting issuers of qualified health plans to use an alternate methodology to calculate the value of certain cost-sharing reductions. Comments will be accepted until April 30, 2013.

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On February 27, 2013, HHS published a final rule to implement ACA provisions related to fair health insurance premiums, guaranteed insurance availability and renewability, statewide insurance risk pools, enrollment in catastrophic plans, and insurance rate reviews. Among other things, the final rule: (1) allows health insurance issuers to vary premiums for health insurance coverage in the individual and small group markets only based on family size, geography, and age and tobacco use within limits; (2) directs health insurance issuers to offer coverage to and accept every employer or individual who applies for coverage in the group and individual market, with certain exceptions; (3) directs health insurance issuers to renew/continue coverage in the group and individual market, with certain exceptions; (4) codifies the requirement that issuers maintain a single risk pool for the individual market and a single risk pool for the small group market (unless a state merges the markets into a single risk pool); (5) outlines standards for enrollment in catastrophic plans for young adults and people who cannot otherwise afford health insurance; and (6) revises the timeline for states to propose state-specific thresholds for rate review and approval by CMS. The provisions of the rule generally apply to health insurance coverage for plan or policy years beginning on or after January 1, 2014, with certain exceptions. An HHS press release is posted here. 
 

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Several agencies besides HHS have recently issued regulations on ACA various provisions, including the following:

• The Occupational Safety and Health Administration (OSHA) has published an interim final rule with comment period that protects employees against retaliation by an employer for reporting alleged violations of various insurance provisions under Title I of the Act or for receiving a tax credit or cost-sharing reduction as a result of participating in an Exchange. The interim final rule is effective February 27, 2013; comments will be accepted through April 29, 2013. OSHA also has released a fact sheet about filing whistleblower complaints under the Affordable Care Act.
• The Internal Revenue Service published proposed regulations on March 4, 2013 implementing the ACA’s annual fee on covered entities engaged in the business of providing health insurance. The IRS estimates that the aggregate fee amount for all covered entities will be $8 billion for calendar year 2014, increasing thereafter. A public hearing on the proposal is scheduled for June 21, 2013.
• The Office of Personnel Management (OPM) published a final rule on March 11 setting forth requirements for multistate insurance plans that will be offered on state health insurance exchanges beginning in January 2014. Under the ACA, health insurance issuers will offer at least two multi-State plans (MSPs) on each of the Exchanges through contracts with OPM.

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On February 1, 2013, CMS and the Internal Revenue Service (IRS) published two proposed regulations to address the requirement to maintain minimum essential coverage under the Affordable Care Act (ACA). By way of background, the ACA requires every individual to have basic health insurance coverage (known as minimum essential coverage), qualify for an exemption, or make a “shared responsibility” payment when filing a federal income tax return, beginning in 2014. Individuals do not have to make a shared responsibility payment if coverage is unaffordable, if they spend less than three consecutive months without coverage, or if they qualify for an exemption for reasons such as hardship, religious beliefs, or other statutorily-exempt category. The proposed regulations outline the circumstances under which these exemptions from shared responsibility payments would apply, along with the procedure by which individuals would receive certificates of exemption. In addition, the proposed regulations specify certain coverage that would be designated as minimum essential coverage, including the substantive and procedural requirements that other types of individual coverage must fulfill in order to be certified as minimum essential coverage. CMS will accept comments on its proposed rule until March 18, 2013. The IRS is accepting comments on its shared responsibility payments proposed regulations until May 2, 2013, and an IRS public hearing on the proposed regulations is scheduled for May 29, 2013.

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On February 6, 2013, HHS, together with the Departments of Treasury and Labor, published a proposed rule that would modify the Administration’s policy on the extent to which group health plans established by certain religious employers must cover contraceptive services. The policy, which responds to comments received in response to a proposed rulemaking (ANPRM) published on March 21, 2012, is intended to “provide women contraceptive coverage without cost sharing, while taking into account religious objections to contraceptive services by certain religious organizations.” In short, the rule would simplify the definition of a “religious employer” as it relates to contraceptive coverage to provide that an otherwise exempt 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. The proposed rule also would establish 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. Affected plan participants would receive contraceptive coverage through separate individual health insurance policies, without cost sharing or additional premiums; the mechanisms for this coverage varies based on the type of plan. Comments will be accepted until April 8, 2013.

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On January 22, 2013, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule designed to provide states with additional flexibility in administering their Medicaid, Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) Exchange programs. Among many other things, the rule would enhance the ability of states to coordinate eligibility determinations, appeals processes, beneficiary notifications, and other related administrative procedures for these health programs. The proposed rule also would give states more options with regard to benefits, through policies on the use of benchmark and benchmark-equivalent plans (now known as Alternative Benefit Plans) for newly-eligible low-income adults, and the relationship between Alternative Benefit Plans and Essential Health Benefits under the ACA. In addition, CMS proposes a series of changes to Medicaid premium and cost-sharing requirements to enhance state flexibility, including updating maximum allowable cost-sharing levels and consolidating and streamlining all Medicaid premium and cost sharing rules. The proposed rule also would allow states to establish higher cost sharing for non-preferred drugs and for non-emergency use of emergency departments. The rule also addresses a number of other related policies, including: streamlining eligibility categories; simplifying the citizenship documentation process; and establishing procedures for Exchanges to verify access to employer-sponsored coverage. Note that while the proposed rule states that comments are due February 13, 2013, CMS subsequently issued a correction notice extending the comment period until February 21, 2013.

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This post was written by Allison Warden Sizemore and Debra McCurdy.

On January 2, 2013, the Internal Revenue Service (IRS) published a notice of proposed rulemaking and notice of public hearing regarding implementation of an ACA “shared responsibility” provision that requires certain large employers (generally 50 full-time employees and full-time equivalents) to offer minimum essential health coverage to their full-time employees and dependents or pay a penalty, beginning in 2014. The proposal addresses, among other things, rules for: determining status as an applicable large employer; determining full-time employee status; determining whether an employer is subject excise tax; evaluating affordability and minimum value of coverage; and the administration and assessment of penalties. Comments on the proposed regulations are due by March 18, 2013. The IRS also provided notice of an April 23, 2013 public hearing on the proposed regulations. The IRS has posted additional information regarding the proposed rulemaking. 

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On December 6, 2012, the IRS published final regulations implementing fees on issuers of certain health insurance policies and plan sponsors of certain self-insured health plans to fund the Patient-Centered Outcomes Research Trust Fund. The Trust Fund supports the Patient-Centered Outcomes Research Institute (PCORI), which was established by the ACA to assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing clinical effectiveness research. The fees, which will be based on the average number of lives covered under the policy for the year and the applicable dollar amount in effect for the policy year, will apply to policy and plan years ending on or after October 1, 2012, and before October 1, 2019.

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The Department of Health and Human Services (HHS) published a proposed rule on December 7, 2012 to establish additional regulatory requirements regarding ACA health insurance provisions that go into effect in 2014. The proposed rule would establish a risk adjustment methodology, a transitional reinsurance program, and a temporary risk corridors program from 2014 to 2016. In addition, the proposed rule would clarify the administration of advance payments of the premium tax credit and certain cost-sharing reductions. HHS also proposes user fees for health insurance issuers participating in a federally-facilitated Affordable Insurance Exchange (Exchange). Comments will be accepted until December 31, 2012.

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The Office of Personnel Management (OPM) published a proposed regulation on December 5, 2012 to establish rules for the ACA Multi-State Plan Program (MSPP). In order to promote competition and choice in the insurance marketplace, the ACA MSPP provisions require OPM to enter into contracts with private health insurance issuers to provide at least two multi-state plans (MSPs) to be offered on Exchanges. Among other things, the proposed rule addresses standards for: qualifications of issuers that seek to participate in the MSPP; the framework for OPM coordination with states and HHS with regard to rates, medical loss ratios, and the MSPP issuer’s participation in reinsurance, risk adjustment, and risk corridor programs; the application and contracting process; how OPM will monitor contract performance; and enrollee appeal standards. As authorized under the ACA, an MSPP issuer may phase in the states in which it offers coverage over four years according to a prescribed schedule, but it must offer MSPs on Exchanges in all states and the District of Columbia by the fourth year in which it participates in the MSPP. Comments will be accepted until January 4, 2013.

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On December 10, 2012, CMS issued guidance to states on state-based and federally-facilitated Affordable Insurance Exchanges, market reforms and Medicaid. The frequently-asked questions document is available here.

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On September 20, 2012, the House Energy and Commerce Committee approved by voice vote H.R. 1063, the Strengthening Medicare and Repaying Taxpayers (SMART) Act. The legislation would make a series of procedural changes to MSP rules intended to “speed up the process of returning money to the Medicare Trust Fund while reducing costly legal barriers for both large and small employers.” The panel also approved on a 16-14 vote H.R. 1206, the Access to Professional Health Insurance Advisors Act. The legislation would amend the Affordable Care Act’s (ACA) health insurance medical loss ratio (MLR) rules to exclude from the calculation of the MLR certain commissions paid to independent insurance brokers and agents. H.R. 1206 also would require HHS to defer to a state's determinations as to whether enforcing the MLR requirement will destabilize their respective individual or small group health insurance markets. Neither bill has been considered by the full House to date.

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According to the Department of Health and Human Services’ (HHS) 2012 Annual Rate Review Report, an ACA provision requiring insurance companies to justify rate increases above a certain threshold has slowed the rate of premium growth, resulting in $1 billion in consumer savings. A separate ACA medical loss ratio provision that limits insurance company spending on administrative costs has resulted in $1.1 billion in rebates to consumers, HHS announced. 

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