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  • BC Network
    Wednesday, November 16, 2016

    CC000596In the latest round of ACA and Mental Health Parity FAQs (part 34, if you’re counting at home), the triumvirate agencies addressed tobacco cessation, medication assisted treatment for heroin (like methadone maintenance), and other mental health parity issues.

    Big Tobacco.  The US Preventive Services Task Force (USPSTF) updated its recommendation regarding tobacco cessation on September 22, 2015. Under the Affordable Care Act preventive care rules, group health plans have to cover items and services under the recommendation without cost sharing for plan years that begin September 22, 2016.  For calendar year plans, that’s the plan year starting January 1, 2017.

    The new recommendation requires detailed behavioral interventions.  It also describes the seven FDA-approved medications now available for treating tobacco use.  The question that the agencies are grappling with is how to apply the updated recommendation.

    Much like a college sophomore pulling an all-nighter on a term paper before the deadline, the agencies are just now asking for comments on this issue.   Plan sponsors who currently cover tobacco cessation should review Q&A 1 closely and consider providing comments to the email address marketform@cms.hhs.gov.  Comments are due by January 3, 2017.  The guidance does not say this, but the implication is that until a revised set of rules is issued, the existing guidance on tobacco cessation seems to control.

    Nonquantitative Treatment Limitations. Under applicable mental health parity rules, group health plans generally cannot impose “nonquantitative treatment limitations” (NQTLs) that are more stringent for mental health and substance use disorder (MH/SUD) benefits than they are for medical/surgical benefits.  “Nonquantitative” includes items like medical necessity criteria, step-therapy/fail-first policies, formulary design, etc.  By their very nature, these items are (to use a technical legal term) squishy.

    Importantly for plan sponsors, the agencies gave examples of impermissible NQTLs in Q&As 4 and 5. In Q&A 4, they describe a plan that requires an in-person examination as part of getting pre-authorized for inpatient mental health treatment, but does preauthorization over the phone for medical benefits.  The agencies say this does not work.

    Additionally, Q&A 5 addresses a situation where a plan implements a step therapy protocol that requires intensive outpatient therapy before inpatient treatment is approved for substance use disorder treatment. The plan requires similar step therapy for comparable medical/surgical benefits.  So far, so good.  However, in the Q&A, intensive outpatient therapy centers are not geographically convenient to the participant, while similar first step treatments are convenient for medical surgical benefits.  Under these facts, applying the step therapy protocol to the participant is not permitted.  The upshot, from the Q&A, is that plan sponsors might have to waive such protocols in similar situations.  This particular interpretation will not be enforced before March 1, 2017.

    Substantially All Analysis. To be able to apply a financial requirement (e.g. copayment) or quantitative treatment limitation (e.g. maximum number of visits) to a MH/SUD benefit, a plan must look at the amount spent under the plan for similar medical surgical benefits (e.g. in-patient, in-network or prescription drugs, as just two examples). Among other requirements, the financial requirement or treatment limitation must apply to “substantially all” (defined as at least two-thirds) of similar medical/surgical benefits.

    The details of that calculation are beyond the scope of this post, but Q&A 3 sets out some ground rules. First, if actual plan-level data is available and is credible, that data should be used.  Second, if an appropriately experienced actuary determines that plan-level data will not work, then other “reasonable” data may be used.  This includes data from similarly-structured plans with similar demographics.  To the extent possible, claims data should be customized to the particular group health plan.

    This means that, when conducting this analysis, plan sponsors should question the data their providers are using. If it is not plan-specific data, other more general data sets (such as data for an insurer’s similar products that it sells) may not be sufficient.  Additionally, general claims data that may be available from other sources is probably insufficient on its own to conduct these analyses.

    Medication Assisted Treatment. The agencies previously clarified the MHPAEA applies to medication assisted treatment of opioid use disorder (e.g., methadone). Q&As 6 and 7 provide examples of more stringent NQTLs and are fairly straightforward. Q&A 8 addresses a situation where a plan says that it follows nationally-recognized treatment guidelines for prescription drugs, but then deviates from those guidelines.  The agencies say a mere deviation by a plan’s pharmacy and therapeutics (P&T) committee, for example, from national guidelines can be permissible.  However, the P&T committee’s work will be evaluated under the mental health parity rules, such as by taking into account whether the committee has sufficient MH/SUD expertise.  Like we said, it’s squishy.

    Court-Ordered Treatment. Q&A 9 specifically addresses whether plans or issuers may exclude court-ordered treatment for mental health or substance use disorders. You guessed it — a plan or issuer may not exclude court-ordered treatment for MH/SUD if it does not have a similar limitation for medical/surgical benefits. However, a plan can apply medically necessary criteria to court-ordered treatment.

    The Bottom Line.  The bottom line of all this guidance is that plan sponsors may need to take a harder look at how their third party administrators apply their plan rules.  Given the lack of real concrete guidance, there’s a fair amount of room for second guessing by the government.  Therefore, plan sponsors should document any decisions carefully and retain that documentation.

    Wednesday, November 9, 2016

    Now that the historic election between the two most unpopular candidates in recent memory has been called for Donald Trump, the questions (of which there are many) now facing the President-Elect and the rest of us are how a President Trump will govern.  One of his campaign promises (and a favorite Republican talking point) was the repeal of the Affordable Care Act and replacing it with something else.  (Its recent premium hikes were even cited by his campaign manager as a reason voters would choose him.)  So is that going to happen?

    At this point, we cannot know for sure (and given the beating that prognosticators took this election cycle, we’re not sure we want to guess).  However, we can identify a few hurdles that might make it harder.

    Republicans Need a Plan First.  One of the major hurdles is Republicans themselves have yet to completely agree on a coherent alternative.  Speaker Ryan released a thumbnail sketch of a proposal in June which looked more like “pick and choose” than “repeal and replace.”  However, it is often said the devil is in the details and that will certainly prove true here.

    And Then They Have to Agree On It. The other challenge is getting enough Republican votes to get the plan through (and maybe some Democratic ones as well).  As of now, the GOP is still projected to retain majorities in both the House and Senate.  However, some races are still too close to call and, at least at the moment, it looks like their majorities will be smaller than they were coming out of the 2014 mid-term elections.  Particularly in the House, this means the Freedom Caucus could have a stronger voice and prevent consensus on a Republican plan.  And then there’s the question of whether Congress and the President can agree on any plan as well.

    The Democrats Could Also Filibuster. Given that Democrats have been resistant to sweeping ACA changes proposed by Republicans, they could filibuster any legislation that makes its way to the Senate.  The Republicans, as of now, are projected only to have a simple majority in the Senate, and well less than the 60 votes needed to shut down a filibuster (which will be true even if the remaining races are all called their way).

    There are other hurdles, but these are the obvious political ones that stand in the way of an ACA repeal and replace strategy.

    That’s not to say, however, that Trump can do nothing.  He will appoint the heads of Treasury, Labor, and Health and Human Services and will likely get his appointees confirmed with relative ease, given Republican control of the Senate.  Those appointees will have the authority to write any remaining rules and a chance to rewrite existing rules.  That said, regulatory changes will be somewhat constrained by the existing statutory framework and concerns about insurance market disruption.  However, because Congress has largely given over the authority to interpret the laws to the Executive Branch, President Trump’s appointees may be able to take wider latitude than you would think to rewrite existing rules.

    For now, plan sponsors should continue with compliance as they always have.  Nothing of significance is likely to change between now and President Trump’s inauguration in January.  Even after that, it will take some time (and some political maneuvering) for any huge changes to get implemented.

    Update 11/10/16: Some readers have asked whether the Republicans could use the reconciliation process in the Senate (which bypasses the filibuster and only requires a simple majority of 51 Senators) to achieve their goals.  The good lawyerly answer is “yes and no.”  Reconciliation actions have to have a budgetary impact, so a full repeal and replacement is not really possible using that process.  However, Republicans could strip out several aspects of the act (like the play or pay employer mandate or the premium tax credits for individual insurance) through that process, effectively making the law unworkable.  It wouldn’t be a full repeal and replacement, but it might do enough damage to the law bring the possibility of a repeal and replacement to the table.

    Wednesday, September 7, 2016

    Regulations and RulesAs promised in Notice 2015-68, the IRS has proposed clarifications to the regulations under IRC Section 6055 relating to information reporting rules for minimal essential coverage providers.  These rules affect employers sponsoring self-funded health plans or self-funded health reimbursement arrangements (HRAs) that coordinate with insured plans.  These proposed regulations also address how employers and others solicit taxpayer identification numbers (TINs) to facilitate this reporting.  These rules only impact employers and others who report on the B-series forms (1094-B and 1095-B).  They do not change the reporting or solicitation rules for the C-series forms (1094-C and 1095-C).

    Reporting Requirements for Employers Providing Multiple Types of Health Coverage

    Information reporting is generally required of every person who provides minimum essential health coverage to an individual. However, in some cases, this reporting would be duplicative, such as where an individual is covered under a major medical plan and an HRA.  Some employers and insurers complained that the existing rules preventing this duplication were confusing.  The proposed regulations seek to clarify the rules on duplicate reporting.

    One change is that an entity that covers an individual in more than one plan or program must only report for one of the plans or programs. Therefore, if an employer has both a self-funded health plan and an HRA that covers only the same people who are enrolled in the self-funded plan, then reporting is only required for the self-funded plan.

    Additionally, if an employer offers an insured plan, but then also offers an HRA to employees enrolled in that insured plan, reporting on the HRA is not required. Here, the insurer would be required to report on the insured plan, so the IRS would already be notified that the employee has health coverage and the HRA reporting would be unnecessary.

    On the other hand, if an employer offers an HRA to employees who are enrolled in their spouses’ employer’s plan, then the employer would have to report on employees covered by the HRA. These arrangements are not very common, but they do exist.  This reporting still seems duplicative, but it seems that the IRS made this change to simplify the rules.  Of course, this “simplification” just results in additional reporting for employers with these arrangements.

    TIN Solicitation Rules

    Under the reporting rules, coverage providers have to solicit TINs (which include social security numbers) if they are not provided by the employees. This is because the TINs appear on the reporting forms for every individual covered under the arrangement.  There were preexisting rules for soliciting TINs that we wrote about previously.  However, in response to concerns that the TIN solicitation rules were designed primarily to apply to financial relationships rather than Code Section 6055 information reporting, the proposed regulations provide specific TIN solicitation rules for Section 6055 reporting.  These changes do not apply to the reporting on the C-series forms, so they will only apply to employers sponsoring self-funded plans and other coverage providers, but not to employers offering insured plans, for example.  The existing rules timed the requests for TINs off of when an account is “open.” Under these rules, one solicitation generally occurs at the time the account is opened and then there are two annual solicitations after that if the TIN is not obtained.

    These new rules include specifying the timing of when an account is considered “open” for purposes of Section 6055 reporting and when the two annual TIN solicitations must occur. The proposed regulations provide that, for the purpose of Section 6055 reporting, an account is considered “opened” on the date the filer receives a substantially complete application for new coverage or to add an individual to existing coverage.  This could be before the coverage is actually effective or after (in the case of retroactive coverage, such as due to certain HIPAA special enrollment event).  As such, health coverage providers may satisfy the requirement for initial solicitation by requesting enrollees’ TINs as part of the application for coverage.

    The proposed regulations also specify the timing of the first and second annual TIN solicitations. Under these regulations, the first annual solicitation must be made no later than seventy-five days after the date on which the account was “opened” or, if coverage is retroactive, no later than the seventh-fifth day after the determination of retroactive coverage is made.  Basically, this would be within 75 days after the application for coverage (or the time that application is approved, in the case of retroactive coverage).  The second annual solicitation must be made by December 31 of the year following the year the account is “opened”.

    To provide relief with respect to individuals already enrolled in coverage, if an individual was enrolled in coverage on any day before July 29, 2016, then the account is considered “opened” on July 29, 2016. Accordingly, employers have satisfied the initial solicitation requirement so long as TINs were requested as part of the application for coverage or at any other point prior to July 29, 2016.  The deadlines for the first annual solicitation can then be made within 75 days after July 29 (or by October 12, 2016) and the second annual solicitation can be made by December 31, 2017.

    Reliance and Proposed Applicable Date

    These regulations are generally proposed to apply for taxable years ending after December 31, 2015. Employers may rely on these proposed regulations (and Notice 2015-68) until final regulations are published.

    Friday, August 19, 2016

    FormLast month, the IRS issued proposed changes to the ACA reporting and disclosure forms for 2016. As a reminder, Forms 1094-B and 1095-B are used by insurance providers to report on the number of individuals enrolled in health care coverage during a tax year, while Forms 1094-C and 1095-C are used by Applicable Large Employers (“ALEs”) to report on the health insurance coverage which they must offer to all their full-time employees during a tax year. We previously discussed the forms in depth here, here and here.

    The drafts are subject to change, but we have provided some highlights of the proposed changes below.

    Form 1094-C

    • Line 22, Box B is now “Reserved.” The Qualifying Offer Method Transition Relief was only available for 2015 coverage and is not applicable for 2016.
    • “Section 4980H” has been inserted before “Full-Time Employee Count for ALE Member” in Part III, column B in an apparent attempt to distinguish a “full-time employee” for ACA purposes from a “full-time employee” as defined in the plans and policies of an ALE.

    Form 1095-B

    • Line 9 is now “Reserved.” On the 2015 version of the form, this line was to report the Small Business Health Options Program (SHOP) Marketplace identifier, if applicable, but should have been left blank according to the 2015 instructions.
    • The draft instructions provide that an individual who has received employer-sponsored coverage (i) may report such coverage on Form 1095-C (Part III) instead of Form 1095-B, (ii) does not have to fill in the information even if the individual had employer-sponsored health coverage during the year, and (iii) does not have to return the form to the employer or coverage provider.
    • Form 1094-B remains unchanged for now.

    Form 1095-C

    • Two new codes, 1J and 1K, have been added to line 14 to report on conditional offers of coverage to an employee’s spouse.
    • The language “Do not attach to your return. Keep for your records.” was inserted under the title of the form to alert individuals that they should not submit the forms to the IRS.
    Tuesday, August 9, 2016

    ACA Blue HighlightThe Affordable Care Act exchanges/marketplaces are required to notify employers of any employees who have been determined eligible for advance payments of the premium tax credit or cost-sharing reductions (i.e., subsidy) and enrolled in a qualified health plan through the exchange.

    A few weeks ago the U.S. Department of Health and Human Services (HHS) began issuing these notices to employers for 2016. If you received such a notice, this means that at the time of applying for health care coverage through the exchange, the employee indicated that:

    • you made no offer of health coverage;
    • you offered health coverage, but it either wasn’t affordable or didn’t offer minimum value; or
    • he or she was unable to enroll in the health coverage due to a waiting period.

    Now, receipt of such a notice does not mean that you are liable for the play-or-pay employer mandate penalty. In fact, HHS is required to notify all employers, whether or not they are subject to the employer mandate, so small employers (i.e., less than a total of 50 full-time employee and full-time equivalents) have also received notices. The subsidy eligibility determination by an exchange and the IRS penalty assessment are entirely separate programs.

    Employers do not have to appeal a determination of an employee’s eligibility for a subsidy and the grounds for an appeal are limited. As described in the HHS exchange subsidy notice, an employer should consider appealing if there is reason to believe the employee’s receipt of a subsidy is wrong.  Therefore, an employer can only really appeal if the coverage it offered was affordable and provided minimum value or if the employee actually enrolled in the coverage.  More information about appeals for the federally-facilitated exchanges (and the eight state exchanges utilizing the same appeal form as the federally-facilitated exchanges) is available here.   For example, if the employee was offered affordable, minimum value coverage, the employee is actually enrolled in the employer’s plan.

    If an appeal is appropriate, some employers may decide to submit an appeal in an effort to correct any misinformation and to potentially “head off” the imposition of the pay-or-play penalty tax by the IRS.  Other employers may view an appeal as a way to help employees avoid an unexpected tax liability at year-end since any advanced premium tax credit that was erroneously received must be repaid.  Regardless of the employer’s reason for appealing, the impacted employee may construe such action as adversarial.  To minimize any potential resentment, an employer should consider notifying a current employee that it plans to submit an appeal and explain the potential adverse tax consequences to the employee if the employee receives a subsidy that he or she is not entitled to.

    The IRS is not expected to start assessing play-or-pay penalties until after its receipt of employees’ individual tax returns for 2016 and employer information returns (i.e., Forms 1094-C and 1095-C). Since the details of the IRS penalty assessment and appeal processes have yet to be revealed, there is no guarantee that successfully appealing the HHS subsidy determination will automatically avoid the imposition of the penalty tax by the IRS. However, if you are an applicable large employer, the HHS appeal process affords you an opportunity to establish an administrative record of the correct facts.  In addition, the information you submit as part of the HHS appeal process will likely be the same information and documents that will be necessary to challenge any IRS assessment of a play-or-pay penalty tax.

    In some cases, an employer may choose not to appeal. Additionally, in other cases, the individual may have provided incorrect information to the exchange, but not of a type that an employer can appeal.  For example, an individual may state that he or she was an employee of the employer, when in fact, he or she was an independent contractor. Employers who opt not to appeal the subsidy determination or for whom an appeal is not appropriate should consider gathering and retaining the necessary documentation showing why the individual was not offered coverage.  That way, it will be readily accessible in the event the IRS subsequently seeks to impose the penalty tax.

    Additional information on the subsidy notice program for the federally-facilitated exchanges is available here.

    Friday, August 5, 2016

    BC PillsIn Zubik v. Burwell, the justices vacated and remanded six federal appellate judgements on whether an accommodation (described below) for employers with religious objections to providing coverage for some or all contraception under the Affordable Care Act’s (ACA) preventive services coverage mandate violated the Religious Freedom Restoration Act (RFRA).  The Court took no position on the merits and stated that the parties should have the opportunity to find an approach that accommodates the petitioners’ religious exercise and ensures that women covered by the petitioners’ health plans receive full coverage for preventive care.   Essentially, as the Court awaits confirmation of a 9th justice they decided to kick the can down the proverbial road.

    Enter the Departments of Health and Human Services (HHS), Labor, and Treasury, the agencies responsible for implementation of the ACA. On July 21, 2016, they released a “request for information” (RFI) intended to provide all interested stakeholders an opportunity to comment on several specific issues raised by the supplemental briefing and Supreme Court decision in Zubik v. Burwell.  Broadly, the RFI asks for suggestions on ways to further accommodate objections by religious non-profits to furnishing their employees coverage for some or all contraceptive services in their health plans.

    Under the current accommodation, employers that object to providing contraceptives to their employees for religious reasons may either:

    1. Self-certify their objection (EBSA Form 700) to their insurer or third-party administrator, or
    2. Inform HHS of their objection and identify their insurer or third-party administrator so the government can authorize the insurer or third-party administrator to provide coverage.

    The petitioners argued that the accommodation made them parties to the provision of the objectionable contraceptive services and burdened their religious exercise in violation of RFRA.

    The RFI seeks comments in three general areas:

    1. The procedure for invoking the accommodation, including whether using a particular form , stating that the employer is objecting on religious grounds, or giving a notice in writing raises any objections under RFRA.
    2. Procedures for insured plans,  including whether the alternative procedure suggested by petitioners in their supplemental brief (upon a request for a plan without coverage for the objectionable contraceptives, the insurer would be required to provide the coverage separately) would resolve the issues under RFRA, what impact the approach would have on women’s ability to receive contraceptive coverage seamlessly, whether the approach raises issues under state insurance law, are there any other procedures that would not raise issues under RFRA.
    3. Procedures for self-insured plans, which both the government and the petitioners agree were not addressed in the Court’s order. Including whether there are reasonable means under existing law to ensure that women covered by self-insured plans can receive contraceptive coverage and whether there are alternative methods for a third party administrator to provide the coverage without raising issues under RFRA.

    Responses to the RFI are due by September 20, 2016. Although HHS asserts that the current accommodation remains consistent with RFRA, responses for this RFI may support objecting employers’ claims that new regulations need to be proposed.  Of course, there is always a possibility the RFI will not result in any movement and litigation will return again to the Supreme Court for resolution (by that time surely with a 9th justice).

    Monday, July 11, 2016

    PenaltyThe Department of Labor (DOL), along with several other federal agencies, recently released adjusted penalty amounts for various violations. The amounts had not been adjusted since 2003, so there was some catching up to do, as required by legislation passed late last year.

    These new penalty amounts apply to penalties assessed after August 1, 2016 for violations that occurred after November 2, 2015 (which was when the legislation was passed). Therefore, while the penalty amounts aren’t effective yet, they will be very soon and they will apply to violations that may have already occurred.  Additionally, per the legislation, these amounts will be subject to annual adjustment going forward, so they will keep going up.

    The DOL released a Fact Sheet with all the updated penalty amounts under ERISA.  A few of the highlights are:

    General Penalties

    • For a failure to file a 5500, the penalty will be $2,063 per day (up from $1,100).
    • If you don’t provide documents and information requested by the DOL, the penalty will be $147 per day (up from $110), up to a maximum penalty of $1,472 per request (up from $1,100).
    • A failure to provide reports to certain former participants or failure to maintain records to determine their benefits is now $28 per employee (up from $10).

    Pension and Retirement

    • A failure to provide a blackout notice will be subject to a $131 per day penalty (up from $100).
    • A failure to provide participants a notice of benefit restrictions under an underfunded pension plan under 436 of the tax code will cost $1,632 per day (up from $1,000).
    • A payment in violation of those restrictions will be $15,909 per distribution (up from $10,000).
    • A failure of a multiemployer plan to provide plan documents and other information or to provide an estimate of withdrawal liability will be $1,632 per day (up from $1,000).
    • A failure to provide notice of an automatic contribution arrangement required under Section 514(e)(3) of ERISA will also be $1,632 per day (also up from $1,000).

    Health and Welfare

    • Employers who fail to give employees their required CHIP notices will be subject to a $110 per day penalty ($100, currently).
    • Failing to give State Medicaid & CHIP agencies information on an employee’s health coverage will also cost $110 per day (again, up from $100).
    • Health plan violations of the Genetic Information Nondiscrimination Act will also go up to $110 per day from $100. Additionally, the following minimums and maximums for GINA violations also go up:
      • minimum penalty for de minimis failures not corrected prior to receiving a notice from DOL: $2,745 (formerly $2,500)
      • minimum penalty for GINA failures that are not de minimis and are not corrected prior to receiving a notice from the DOL: $16,473 (up from $15,000)
      • cap on unintentional GINA failures: $549,095 (up from $500,000)
    • Failure to provide the Affordable Care Act’s Summary of Benefits and Coverage is now $1,087 per failure (up from $1000).

    The above penalty amounts are usually maximums (the penalties are “up to” those amounts), which means the DOL has the discretion to assess a smaller penalty. Employers and plans should be mindful of these and the other penalty increases described in the fact sheet.  These increased penalties give the DOL additional incentive to pursue violations and assess penalties.  They also give the DOL greater negotiating leverage in any investigation.  For these reasons, it pays to be aware of the various compliance obligations (and any associated timing requirements) and make sure your plans’ operations are consistent with those obligations.

    Tuesday, April 26, 2016

    Question Mark ManOn April 20, the “Big Three” agencies (DOL, Treasury/IRS, and HHS) released another set of FAQs (the 31st, for those of you counting at home). Consistent with earlier FAQs, the new FAQs cover a broad range of items under the Affordable Care Act, Mental Health Parity and Addiction Equity Act, and Women’s Health Cancer Rights Act. The authors are admittedly curious about how “Frequently” some of these questions are really asked, but we will deal with all of them in brief form below.

    1. Bowel Preparation Medication – For those getting a colonoscopy, there is good news. (No, you still have to go.) But the ACA FAQs now say that medications prescribed by your doctor to get you ready for the procedure should be covered by your plan without cost sharing. Plans that were not already covering these at the first dollar will need to start.

    2. Contraceptives – As a reminder, plans are required to cover at least one item or service in all the FDA-approved contraceptive methods. However, the FAQs also hearkened back to earlier FAQs reminding sponsors that they could use medical management techniques to cover some versions of an item (such as a generic drug) without cost sharing while imposing cost sharing on more expensive alternatives (like a brand name drug). However, plans must have an exception for anyone whose provider determines that the less expensive item would be medically inappropriate. None of this is news. However, the FAQs did acknowledge that plans can have a standard form for requesting these kinds of exceptions. They referred issuers and plan sponsors to a Medicare Part D form as a starting point. While the Medicare Part D form is a useful starting point, it would likely need significant customization for anyone to use it properly for these purposes.

    3. No Summer Recess for Rescission Rules – As most people know by now, ACA prohibits almost all retroactive cancellations of coverage. The FAQs confirm that school teachers who have annual contracts that end in the summer cannot have their coverage retroactively cancelled to the end of the school year (unless one of the limited circumstances for allowing rescissions applies, of course).

    4. Disclosure of the Calculation of Out-of-Network Payments is Now Required – The ACA requires that plans generally provide a certain level of payment for out-of-network emergency services that is designed to approximate what the plan pays for in-network emergency services. The regulations provide three methods a plan may choose from to determine the minimum it has to pay. Out-of-network providers are permitted to balance bill above that. The FAQs confirm that plans are required to disclose how they reached the out-of-network payment amount within 30 days of a request by a participant or dependent and as part of any claims review.   The penalties associated with failing to provide such information on request (up to $110/day) are steep. Additionally, failing to strictly follow the claims procedures can allow a participant or dependent to bypass the process and go straight to court or external review. Given these consequences, insurers and plan sponsors should make sure they have processes in place to provide this information.

    5. Clinical Trial Coverage Clarifications – The FAQs confirm that “routine patient costs” that must be covered as part of a clinical trial essentially include items the plan would cover outside the clinical trial. So, if the plan would cover chemotherapy for a cancer patient, the plan must cover the treatment if the patient is receiving it as part of a clinical trial for a nausea medication, for example. In addition, if the participant or dependent experiences complications as a result of the clinical trial, any treatment of those complications must also be covered on the same basis that the treatment would be covered for individuals not in the clinical trial.

    6. MOOPing Up After Reference-Based Pricing – Non-grandfathered plans that use a reference-based pricing structure are generally required to make sure that participants and dependents have access to quality providers that will accept that price as payment in full. However, the FAQs say that if a plan does not provide adequate access to quality providers, then any payment a participant or dependent makes above the reference price has to be counted toward the maximum out-of-pocket limit that the participant or dependent pays.

    7. Mental Health Parity and Addiction Equity Analysis Must be Plan-by-Plan – The Mental Health Parity and Addiction Equity Act (MHPAEA) tries to put mental health and substance abuse benefits on par with medical/surgical benefits by providing that the cost-sharing and other types of treatment limitations must be the same across particular categories of benefits. Where these types of limitations vary, the MHPAEA rules look at the “predominant” financial requirement that applies to “substantially all” medical/surgical benefits in a particular category. For purposes of determining which limitations are “predominant” and apply to “substantially all” the benefits, the rules generally require that a plan look at the dollars spent by the plan on those benefits. In other words, the determination is not based on how many types of services a particular cost-sharing requirement or limitation (like a copayment) applies to, but how much money is spent on the various services. These types of analysis require looking at claims experiences. The FAQs confirm that an issuer may not look at its book of business to make these determinations. Instead, the determinations must be made plan-by-plan. As a practical matter, most plans that provide mental health and substance abuse benefits try to apply as uniform of levels of cost sharing and treatment limitations as they can to help simplify this analysis.

    8. Playbook for Authorized Representatives Requesting Information about MHPAEA Coverage – The FAQs also provide a list of items that a provider may request in an effort to determine a plan’s compliance with the MHPAEA provisions or in trying to secure treatment for an individual. Plan sponsors and issuers would be well-advised to peruse the FAQs to look at the types of documents since these will likely find their way into a form document request that plan sponsors and issuers are likely to see. The FAQs also list items that the agencies say a plan must provide. Plans and issuers should review their processes to determine if all the relevant information is being provided in response to these types of requests.

    While not relevant for group plan sponsors, the FAQs also confirm that individuals applying for individual market coverage are required to receive a copy of the medical necessity determination the issuer uses for mental health and substance abuse benefits on request.

    9. Going to the MAT – The FAQs confirm that Medication Assisted Treatment (MAT) for opiod use disorder (think: methadone maintenance) is a substance use disorder benefit that is subject to the MHPAEA limitations on cost-sharing, etc. described above.

    10. Nipple/Areola Reconstruction Coverage Required to Be Covered – Under the Women’s Health Cancer Rights Act, health plans and health insurance coverage must cover post-mastectomy reconstruction services. The FAQs confirm that this includes reconstruction of the nipple and areola, including repigmentation.

    Friday, April 1, 2016

    Hullabaloo: noun: a commotion, a fuss.

    In recent years, almost every change to health care has caused a hullabaloo. Today, we thought you might enjoy reading about a few recent and proposed changes that, although important, have not caused quite the uproar to which we have become accustomed.

    The Department of Health and Human Services has finalized the annual in-network out-of-pocket maximums for non-grandfathered health plans for 2017:

    An enrollee in self-only coverage may not pay more than $6,850 for essential health benefits in 2016; for 2017, that number has increased to $7,150.

    An enrollee in any coverage other than self-only may not pay more than $13,700 for essential health benefits in 2016; for 2017, that number has increased to $14,300.

    Section 1411 of the Patient Protection and Affordable Care Act requires federally facilitated marketplaces (but not state facilitated marketplaces) to provide notice to employers when it is determined that an employee is eligible to receive a subsidy. The final rule, however, only requires these marketplaces to provide notice to employers when an employee actually enrolls in coverage.

    And, the Departments of Labor, Health and Human Services, and the Treasury will be working together to finalize the updated requirements of the Summary of Benefits and Coverage (SBC) after the comment period closes March 28, 2016. The proposed changes to the SBC include a revised template, instructions, and an updated uniform glossary (see here). The new SBC requirements must be satisfied by the first day of the first open enrollment period for plan years beginning on or after April 1, 2017 (or, the first day of the first plan year beginning on or after April 1, 2017 if the plan does not use an open enrollment period).

    The next health care hullabaloo may be just around the corner. For now, enjoy the calm!

    Wednesday, March 2, 2016

    ThinkstockPhotos-122516159A few weeks ago, the President released his proposed budget for the fiscal year 2017. As usual, it is dense. However, the President has suggested some changes to employee benefits that are worth noting. While they are unlikely to get too much traction in an election year, it is useful to keep them in mind as various bills wind their way through Congress to see what the President might support.

    • Auto-IRAs. Stop us if you’ve heard this one before. The proposal would require every employer with more than 10 employees that does not offer a retirement plan to automatically enroll workers in an IRA. No employer contribution would be required and, of course, individuals could choose not to contribute. (In case you’ve forgotten, we’ve seen this before.)
    • Tax Credits for Retirement Plans. Employers with 100 or fewer employees who “offer” an auto-IRA (note the euphemistic phrasing in light of the first proposal) would be eligible for a tax credit up to $4,500. The existing startup credit for new retirement plans would also be tripled. Small employers who have a plan, but add automatic enrollment would also be eligible for a $1,500 tax credit.
    • Change in Eligibility for Part-Timers. The budget would require part-time workers who work 500 hours per year for three consecutive years to be made eligible for a retirement plan.
    • Spending Money to Help Save Money. The President proposes to set aside $6.5 million to encourage State-based retirement plans for private sector workers.
    • Opening Up MEPs. To help level the playing field with the State-run plans, the budget proposes to remove the requirement that employers have a common bond to participate in a multiple employer plan (MEP). This is a proposal that has already been floated by Sen. Orrin Hatch, so there’s some possibility that, even in an election year, this might get passed (probably, if not mostly, because it would be hard for anyone to have a vote for open MEPs used against them on the campaign trail given that so few outside the retirement space even know what they are).
    • More Leakage For Long-Term Unemployed. The budget also proposes to allow long-term unemployed individuals to withdraw up to $50,000 per year for two years from tax-favored accounts. This proposal, if implemented, would be interesting to study empirically. Obviously, it would lead to more leakage from retirement plans, but would people be more apt to contribute knowing that they could withdraw if they really needed to do so?
    • Double-tax of Retirement Benefits? In what appears to be a repeat of a prior proposal, page 50 of the budget summary states that the value of “Other Tax Preferences” (not specified) would be limited to 28 percent. This would seem to describe the President’s proposal from prior years that to the tax benefit of retirement plan contributions (among other items). However, such a proposal is, in our view, counter-intuitive given the other proposals to expand retirement access.
    • Cadillac Tax Would Get a Tune-Up. The ACA tax on high-cost coverage would change the thresholds that determine when the tax applies. Currently, there is one threshold for self-only coverage and another for coverage other than self-only coverage. The budget would propose to change the thresholds to the higher of those amounts or the average premium for a gold plan in the ACA Marketplace in each state. This is designed to help address geographic variations in the cost of coverage. There is also a mention in the summary of making it easier for employers with flexible spending arrangements to calculate the tax, but it is not clear what form that would take.
    • Miscellaneous. In the budget tables, there are also a few benefits items, such as:
      • Expanding and simplifying the small employer tax credit for employer contributions to health insurance (page 148).
      • Simplifying the required minimum distribution rules (page 152).
      • Taxing carried interests / profits interests as ordinary income (page 153).
      • Requiring non-spousal beneficiaries of deceased IRA owners and retirement plan participants to take inherited distributions over no more than five years (page 153).
      • Capping the total accrual of tax-favored retirement benefits (which seems like another repeat of prior proposals – page 153).
      • Limiting Roth conversions to pre-tax dollars (page 153).
      • Eliminating the deduction for dividends on stock in ESOPs of publicly-traded companies (page 153).
      • Repealing the exclusion of net unrealized appreciation for certain distributions of employer securities from qualified retirement plans (page 153).

    A summary of these changes from the Administration is available here (along with a few other items).  More on the overall budget is available here. Do you have additional details, other information, or a point of view on these proposals? Post it in the comments!