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.
On September 25, 2013, HHS published a proposed rule that would establish the Basic Health Program, as required by section 1331 of the ACA. The Basic Health Program would provide states with the flexibility to establish a health benefits coverage program for low-income individuals who would otherwise be eligible to purchase coverage through the state’s Affordable Insurance Exchange/Health Insurance Marketplace). According to HHS, the Basic Health Program would complement and coordinate with enrollment in a qualified health plan through the Exchange, as well as with enrollment in Medicaid and CHIP. The proposed rule establishes the framework for Basic Health Program eligibility and enrollment, benefits, delivery of health care services, transfer of funds to participating states, and federal oversight. Comments on the proposal will be accepted until November 25, 2013.
On September 12, 2013, the House of Representatives approved H.R. 2775, the “No Subsidies Without Verification Act,” on a vote of 235 to 191. The bill would prevent ACA health insurance premium tax credits or cost-sharing reductions from being provided until the HHS OIG certifies that an effective program is in place to verify applicant income and coverage qualifications for these subsidies. While supporters maintain that the bill is needed because the Administration’s planned self-attestation and audit framework could allow fraudulent subsidy payments, the Administration strongly opposes the bill on grounds it would create unnecessary delays in obtaining affordable coverage and is unnecessary in light of the HHS verification system. The bill is unlikely to be considered by the Senate.
Recent Congressional hearings have addressed the following health policy issues:
- The House Energy and Commerce Committee has held hearings on Medicaid reform, implementation of the ACA, and reform of drug compounding regulations. An August 1 hearing entitled “PPACA Pulse Check” will feature testimony by CMS Administrator Marilyn Tavenner.
- The Senate Finance Committee held two hearings on health information technology, along with a hearing on repealing the SGR.
- The Senate Judiciary Committee examined “pay for delay” settlements between generic and brand-name drug companies.
- The House Ways and Means Committee held two hearings on the Administration’s delay of the ACA employer insurance mandate, and an August 1 hearing will focus on the status of ACA implementation. The House Education and the Workforce Committee also held a hearing on the ACA employer mandate delay.
- The House Oversight and Government Reform Committee and House Homeland Security Committee are holding a joint hearing on July 30 entitled on “Evaluating Privacy, Security, and Fraud Concerns with ObamaCare's Information Sharing Apparatus.”
- The Senate Budget Committee is holding a July 30, 2013 hearing on containing health care costs.
Obama Administration Announces Delay in Employer ACA "Shared Responsibility" Payments, Reporting Requirements until 2015
On July 2, 2013, the Obama Administration announced (via a web posting) that it is delaying the Affordable Care Act’s (ACA) employer “shared responsibility” payment obligation (commonly referred to as the “employer mandate”) until January 1, 2015. The “shared responsibility” payment requirement, originally scheduled to begin January 1, 2014, requires certain employers with 50 or more full-time or full-time equivalent employees to pay an excise tax if they do not offer health coverage (or if they offer health coverage that is unaffordable or does not provide minimum value) to their full-time employees and dependents. The Administration also is delaying certain mandatory reporting requirements for employers and health insurers under the ACA until January 1, 2015. For more information, see our Client Alert.
On June 19, 2013, CMS published a proposed rule that sets forth financial integrity and oversight standards for participants in ACA Affordable Insurance Exchanges/Marketplaces. Among other things, the rule addresses: oversight of premium stabilization programs; oversight provisions related to state Exchanges, such as those pertaining to financial integrity and maintenance of records; standards for states’ establishment of a Small Business Health Options Program (SHOP); agent and broker standards; minimum certification standards for Qualified Heath Plan issuers (including those pertaining to maintenance of records, compliance reviews, and sanctions); and handling of consumer complaints. According to a CMS press release, the “overarching goal of the proposed provisions is to safeguard federal funds and to protect consumers by ensuring that issuers, Marketplaces, and other entities comply with federal standards meant to ensure consumers have access to quality, affordable health insurance.” Comments will be accepted until July 19, 2013.
Obama Administration Credits ACA Rules with $3.9 Billion in Insurance Premium Savings, Rebates for 2012
On June 20, 2013, HHS announced that health insurance consumers will save a total of $3.9 billion under the ACA’s Medical Loss Ratio (MLR) rule in 2012, including $3.4 billion in the form of reduced premiums and $504 million in rebates rules. Under the ACA MLR provision, insurers must spend at least 80% of total premium dollars collected (85% in the large group market) on medical care and quality improvement or pay a rebate to their customers for the portion of the premium that exceeded the limit. For 2012, 8.5 million enrollees are set to receive average rebates of approximately $100 per family, which insurance companies must pay by August 1, 2013. Rebates can be paid in the form of: a rebate check in the mail; a lump-sum reimbursement to the credit or debit card that paid the premium; or a reduction in future premiums.
The Obama Administration is stepping up its outreach efforts in preparation for consumer enrollment for health coverage through the ACA Health Insurance Marketplace/Exchanges later this year. The Administration has re-focused its HealthCare.gov website to provide consumer information; by October, consumers will be able to create accounts, complete an online application, and shop for qualified health plans through the website. CMS also has established a 24-hours-a-day consumer call center (1-800-318-2596) to help individuals understand their insurance options and prepare for enrollment, which opens October 1, 2013.
The ACA’s Pre-Existing Condition Insurance Plan (PCIP) program is a temporary high-risk health insurance program for uninsured individuals who have been denied health insurance because of a pre-existing condition. While the PCIP was intended to serve as a “bridge” until Affordable Insurance Exchanges are operational in 2014, the Department of Health and Human Services (HHS) suspended acceptance of new enrollment applications earlier this year due to funding limitations. HHS has now determined that additional adjustments to PCIP provider payment rates are needed to ensure there is sufficient funding to cover currently-enrolled individuals until the program ends. Payment rates for covered services (with the exception of covered prescription drug, organ/tissue transplant, dialysis, and durable medical equipment benefits) will be capped at Medicare payment rates, with special rules when Medicare payment rates cannot be implemented. Facilities and providers also will be prohibited from “balance billing” enrollees in the federally-administered PCIP for the difference between the PCIP plan allowance and their charges to other patients for those covered services, effective for dates of service beginning on June 15, 2013. CMS will accept comments on the rule until July 22, 2013.
On May 8, the Department of Labor (DOL) issued guidance regarding the ACA requirement that employers provide notice to employees describing the coverage options available under Health Insurance Marketplaces/Exchanges. DOL also has released model notices to employees of coverage options. A Reed Smith summary of DOL’s guidance is available here.