PPACA Impact and Opportunities

Affordable Care Act: Important Deadline for Employee Notices of the Health Insurance Marketplace (Exchange) Due October 1, 2013

Epstein Becker & Green, P.C. — Fri, 10 May 2013 08:02:50 -0800

By Gretchen Harders and Michelle Capezza

On May 8, 2013, the Employee Benefits Security Administration of the Department of Labor (the “DOL”) issued Technical Release 2013-02 (the “Release”) providing important guidance under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”) with regard to the requirement that employers provide notices to their employees of the existence of the Health Insurance Marketplace, generally referred to previously as the Exchange. These employee notices must be provided to existing employees no later than October 1, 2013. This deadline is intended to correspond to the open enrollment period for the Marketplace commencing October 1, 2013 for coverage through the Marketplace beginning January 1, 2014. The Release includes temporary guidance and two model employee notices of the Marketplace upon which employers may rely. The Release further provides an updated model election notice for group health plans for purposes of the continuation coverage provisions under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) to include information of the health coverage options offered to individuals through the Marketplace for comparative purposes.

Employee Notice of the Marketplace. The Affordable Care Act amended the Fair Labor Standards Act (“FLSA”) to require employers to issue employees a notice of the health coverage options available under the Marketplace. The FLSA requirement was required to have been satisfied on or before March 1, 2013; however, given the regulatory delays in establishing and approving the Marketplace, the DOL extended the deadline. The guidance under this Release is temporary through the applicability date of October 1, 2013, but may be relied upon until future guidance and regulations are issued.

Which employers are required to comply with the notice requirements?

Whether or not required to “pay or play” under the Affordable Care Act, all employers subject to the FLSA must provide the employee notice. The FLSA generally applies to employers that employ one or more employees and are engaged in or produce goods for interstate commerce. The FLSA also covers, among other things, hospitals, schools, institutions of higher education and federal, state and local government agencies. To determine whether an employer is subject to the FLSA, the DOL provides an internet assistance tool at http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp.

Which employees must receive the notice?

Employers must provide the employee notice to each employee whether or not the employee has part-time or full-time status. It does not matter whether the employee is enrolled or eligible to enroll in a group health plan. A separate notice is not required to dependents or other individuals who may become eligible for coverage under the plan, but are not employees.

What information must the notice provide?

The employee notice must contain the following information:

The existence of the Marketplace;
The contact information and description of services offered on the Marketplace;
A statement that the individual may be eligible for a premium tax credit if the employee purchases a qualified plan on the Marketplace; and
A statement that if the employee purchases a qualified plan on the Marketplace, the employee may lose the employer contribution to any health benefit plan offered by the employer and all or a portion of employer contributions may be excluded from federal income.

What are the DOL model notice(s)?

The DOL has provided two model employee notices available on its website, one for employers who do not offer a health plan and one for employers who offer a health plan to some or all employees. The Release provides that employers may use the model notice(s) provided the notice(s) include the information described above.

The model employee notice for employers who do not offer health coverage includes the information described above, as well as an explanation of the impact of the availability of employer health coverage on the employee’s eligibility for subsidies on the Marketplace. The model employee notice does not require the employer to provide specific contact information for the Marketplace in the state where the employee resides, but rather refers the employee to the http://www.healthcare.gov website for contact information for the Marketplace in the employee’s area. This model employee notice requires the employer to provide contact information for the employer, including the employer’s EIN. This is the information an employee will need to include in an application for a premium subsidy on a Marketplace.

The model employee notice for employers who do offer health coverage generally includes the same information as the model employee notice for employers who do not offer health coverage. This model employee notice does, however, require the employer to provide contact information to obtain more information about the employer’s health care coverage. The disclosure requires the employer to state whether the health care coverage is offered to all employees and, if not to all employees, a description of those employees eligible for health care coverage. It also requires the employer to state whether it offers dependent coverage and which dependents are eligible. Finally, the employer is required to disclose whether the health care coverage offered meets the minimum value standard and that the cost of coverage is intended to be affordable. The Department of Treasury and Internal Revenue Service recently issued proposed guidance to assist employees in assessing whether the coverage offered provides minimum value. See our prior blog post New Proposed guidance for Determining Whether Employer-Sponsored Health Plan Provides Minimum Value.

The model employee notice includes optional information that an employer may provide to the employee based on the Marketplace Employer Coverage Tool to better understand their coverage choices, including whether the employee is eligible in the next three months for employer coverage, whether the employer offers a health plan that meets the minimum value standard, the premium for employee-only coverage under the lowest-cost plan that meets the minimum value standard if the employee received the maximum discount for any tobacco cessation program, and what changes the employer will make for the next plan year. Although this information is optional, it may be to an employer’s benefit to demonstrate, where appropriate, that its plan is providing minimum value and is affordable.

When must the employee notice be provided and what are the acceptable delivery methods?

Current employees before October 1, 2013 must be provided with the notice no later than October 1, 2013. Beginning October 1, 2013, the employer must provide each new employee the notice at the time of hire, which will be considered timely provided in 2014 if provided within 14 days of the employee’s start date.

The employee notice must be provided free of charge in writing in a manner calculated to be understood by the average employee. The employee notice may be provided by first class mail or electronically if in accordance with the DOL’s electronic disclosure safe harbor.

COBRA Model Notice. Under COBRA, an individual who was covered by a group health plan the day before a qualifying event occurred may be eligible to elect COBRA continuation coverage. These qualified beneficiaries must be provided with an election notice within 14 day after the plan administrator receives notice of a qualifying event. The COBRA election notice is required to include specific information.

The DOL updated its model COBRA election notice to provide information about the Marketplace for the purposes of informing qualified beneficiaries that they may also be eligible for a premium tax credit to pay for coverage offered through the Marketplace. It also includes clarification on the limit on pre-existing conditions exclusions beginning in 2014. Such information is not specifically required under the Affordable Care Act and should have no impact on whether an employer is subject to the employer responsibility penalties if in fact a former employee obtains coverage on the Marketplace.

The Release provides that the use of the model COBRA election notice completed appropriately will be considered good faith compliance with the COBRA election requirements. The model COBRA election notice does not provide a specific deadline or compliance date. Employers may wish to review their existing COBRA election notices for changes relating to the Affordable Care Act.

Employers have long been waiting for specific guidance from the DOL on the employee notice requirements. Now that it is here, compliance should be addressed well before the October 1, 2013 deadline.

Client Alert: OIG Issues Updated Guidelines for Evaluating State False Claims Acts: Is More State Litigation on the Horizon?

Epstein Becker & Green, P.C. — Thu, 04 Apr 2013 06:42:26 -0800

Our colleagues at Epstein Becker Green have issued a client alert: "OIG Issues Updated Guidelines for Evaluating State False Claims Acts: Is More State Litigation on the Horizon?," by George B. Breen, Wendy C. Goldstein, and Daniel C. Fundakowski.

Following is an excerpt:

On March 15, 2013, the U.S. Department of Health and Human Services’ Office of Inspector General (“OIG”) released the Updated OIG Guidelines for Evaluating State False Claims Acts (“2013 Guidelines), which replaces the original version released in 2006.

The 2013 Guidelines describe OIG’s methodology for determining whether a state’s Medicaid false claims law satisfies the four requirements in Section 1909(b) of the Social Security Act (“Act”) that are necessary to qualify for a 10-percentage-point increase in the state share of Medicaid-related false claims recoveries. While Section 1909 of the Act does not require a state to enact false claims act legislation, only states that have enacted a qualifying law will be eligible for the 10-percentage-point increase in its share of Medicaid false claims recoveries.

Unquestionably, these recent changes have expanded provider liability under the federal False Claim Act, making it easier for relators to bring cases against health care providers, who may now be facing a more rigid regulatory regime. This recognition, coupled with a financial incentive, may spur state efforts to re-tool false claims statutes to comply with Section 1909 of the Act. Attendant with increased interest in Medicaid false claims actions will inevitably come increased compliance scrutiny. Accordingly, assessing compliance programs to ensure conformity with state payor programs is advised.

Read the full alert here.

Client Alert: Federally Facilitated Exchanges Are Almost Ready

Epstein Becker & Green, P.C. — Mon, 01 Apr 2013 07:51:20 -0800

Our colleagues at Epstein Becker Green have issued a client alert: "Federally Facilitated Exchanges Are Almost Ready," by Linda V. Tiano.

Following is an excerpt:

On March 1, 2013, the Center for Consumer Information and Insurance Oversight ("CCIIO") and the Centers for Medicare & Medicaid Services ("CMS") released lengthy and detailed draft guidance regarding the federally facilitated exchanges ("FFEs") that will operate in the 26 states that have chosen not to establish their own exchange or partner with CMS. Although the guidance was issued in draft form, CCIIO and CMS allowed only two weeks for the public to submit comments and, as described in this alert, CMS intends to start accepting issuer applications to the FFEs on April 1, 2013. As such, it seems unlikely that the guidance will be materially revised.

Read the full alert here.

Client Alert: HIPAA Omnibus Rule's Impact on Notices of Privacy Practices

Epstein Becker & Green, P.C. — Wed, 13 Mar 2013 13:10:32 -0800

Our colleagues at Epstein Becker Green have issued a client alert: "HIPAA Omnibus Rule's Impact on Notices of Privacy Practices," by Patricia M. Wagner, Brandon C. Ge, and Alaap B. Shah.

Following is an excerpt:

This health reform alert summarizes the key changes to the Notice of Privacy Practices ("NPP") requirements in the revised Health Insurance Portability and Accountability Act ("HIPAA") regulations (the "Omnibus Rule") as well as what covered entities need to do to be compliant. Because many covered entities may have modified their NPPs based on the Notice of Proposed Rulemaking issued on July 14, 2010 ("NPRM"), this alert also details the similarities and differences between the NPRM and the Omnibus Rule related to NPPs. In addition, Table 1 of this alert provides a quick summary of the NPRM proposals adopted—or not adopted—by the Omnibus Rule.

As covered entities work toward compliance, they should keep in mind that the Omnibus Rule becomes effective on March 26, 2013, but the deadline for compliance is September 23, 2013.

Read the full alert here.

Client Alert: U.S. Supreme Court Opinion Addresses Availability of State-Action Antitrust Immunity

Epstein Becker & Green, P.C. — Fri, 01 Mar 2013 14:28:13 -0800

Our colleagues at Epstein Becker Green have issued a client alert: "U.S. Supreme Court Opinion Addresses Availability of State-Action Antitrust Immunity," by Patricia M. Wagner, Ross K. Friedberg, and Daniel C. Fundakowski.

Following is an excerpt:

On February 19, 2013, in FTC v. Phoebe Putney Health System, Inc., a case that highlights vigorous enforcement activities by the Federal Trade Commission (“FTC”) in the health care arena, the Supreme Court of the United States issued a unanimous opinion (“Opinion”) that overturned a ruling by the U.S. Court of Appeals for the Eleventh Circuit and limited the invocation of the state-action doctrine where state laws grant government authorities general corporate powers. This new decision supports the FTC’s position that it has the authority to pursue a challenge to the hospital acquisition at issue in the case. Although the Opinion addressed the specific legislative powers granted to a hospital authority under state legislation, the Opinion will likely impact judicial interpretation of other state legislation that purports to provide parties with immunity from the federal antitrust laws, such as state hospital cooperation acts, and similar types of legislation being created to allow cooperation and integration of hospital and provider systems.

Read the full alert here.

Client Alert: Key Compliance Actions for the New HIPAA Privacy Regulations

Epstein Becker & Green, P.C. — Wed, 20 Feb 2013 12:08:36 -0800

Our colleagues at Epstein Becker Green have issued a client alert: "Key Compliance Actions for the New HIPAA Privacy Regulations," by Patricia M. Wagner, Pamela D. Tyner, and Leah A. Roffman.

Following is an excerpt:

As noted in previous Epstein Becker Green health reform alerts, on January 25, 2013, the long-awaited final omnibus rule (“Omnibus Rule”) issued by the U.S. Department of Health and Human Services was published in the Federal Register. The Omnibus Rule makes sweeping changes to the privacy and security regulations under the Health Insurance Portability and Accountability Act (“HIPAA”).

In light of the Omnibus Rule’s new requirements, business associates and covered entities should strongly consider reviewing their existing HIPAA privacy and security practices, including compliance policies and business associate agreements. While the Omnibus Rule takes effect on March 26, 2013, affected parties have until September 23, 2013, to come into compliance with most of its provisions. This alert reviews several of the regulatory changes and suggests action items to facilitate compliance with the new requirements.

Read the full alert here

Client Alert: CMS Issues Final Regulations on Federal "Sunshine" Law for Manufacturers and GPOs

Epstein Becker & Green, P.C. — Tue, 19 Feb 2013 15:40:07 -0800

Our colleagues at Epstein Becker Green have issued a client alert: "CMS Issues Final Regulations on Federal 'Sunshine' Law for Manufacturers and GPOs," by Amy K. Dow, Wendy C. Goldstein, Kim Tyrrell-Knott, Sarah K. diFrancesca, David C. Gibbons, Daniel G. Gottlieb, and Natasha F. Thoren.

Following is an excerpt:

On February 1, 2013, the Centers for Medicare & Medicaid Services issued long-awaited final regulations with a lengthy preamble relevant to Section 6002 of the Patient Protection and Affordable Care Act, also known as the “Physician Payment Sunshine Act.” This health reform alert provides an overview of the final regulations relevant to applicable manufacturers and group purchasing organizations (“GPOs”) and includes “key considerations” for applicable manufacturers and GPOs to contemplate as they prepare to implement the regulations.

Read the full alert here

Client Alert: New York Issues "Invitation to Participate in the New York Health Benefit Exchange"

Epstein Becker & Green, P.C. — Wed, 13 Feb 2013 14:05:35 -0800

Our Epstein Becker Green colleagues Jane L. Kuesel, Jackie Selby, and Linda V. Tiano have released a client alert titled "New York Issues 'Invitation to Participate in the New York Health Benefit Exchange,' Clarifying Application Process and State Requirements."

The alert describes a number of the more significant requirements by New York on applicants that want to become eligible for certification as a Qualified Health Plan and to participate in the New York Exchange, as well as applicable time frames and processes.

Following is an excerpt:

The New York Department of Health’s Office of the New York Health Benefit Exchange issued the long-awaited “Invitation to Participate in the New York Health Benefit Exchange” (the “Invitation”) on January 31, 2013. The Invitation clarifies and summarizes the requirements for applicants to be qualified as eligible for certification as a qualified health plan, which permits them to be offered on the New York Health Benefit Exchange. Some of the more interesting and helpful features of the Invitation are summarized below. The full Invitation can be found online, along with a number of related attachments.

Read the full alert here.

Overview of Modifications to the HIPAA Privacy, Security, and Enforcement Rules

Epstein Becker & Green, P.C. — Tue, 22 Jan 2013 07:53:09 -0800

Our colleagues Mark E. Lutes, Robert J. Hudock, and Patricia M. Wagner have issued an alert on modifications to the HIPAA privacy, security, and enforcement rules. Following is an excerpt:

On January 17, 2013, the Department of Health and Human Services released the highly anticipated, 563 page, Health Insurance Portability and Accountability Act (“HIPAA”) regulations (the “Final Rule”) that have been delayed for over 3 years. The Final Rule will be published in the Federal Register on January 25, 2013. The Final Rule addresses many of the compliance issues and unanswered questions facing covered entities and business associates. The effective date of the Final Rule is March 26, 2013--with a compliance date (for most provisions) by September 23, 2013 (there is an additional grace period for certain provisions). Epstein Becker Green is preparing an in-depth analysis of the Final Rule which will be forthcoming. In the meantime, below is a high level summary of the significant changes included in the Final Rule. Read the full alert here.

Note that Ms. Wagner and Mr. Hudock will host a free webinar on this topic, titled "The Final Omnibus HIPAA Rule," on January 24, at 12:00 p.m. EST.

Five Actions Employers Should Consider Taking to Comply with the Affordable Care Act

Epstein Becker & Green, P.C. — Thu, 17 Jan 2013 09:11:45 -0800

By Greta Ravitsky

I wrote the January 2013 edition of Take 5: Views You Can Use, a newsletter published by the Labor and Employment practice of Epstein Becker Green.

In it, I summarize five actions that employers should consider taking in 2013 as the DOL steps up its audit efforts under the leadership of the reenergized Obama administration:

Assess the Workforce
Choose Whether to “Pay” or to “Play”
Evaluate Existing Wellness Programs and/or Implement New Wellness Programs to Enhance Employees’ Health Profiles and to Avoid or Minimize the “Cadillac Tax”
Understand and Be Ready to Comply with New Tax-Related Changes and Requirements
Conduct Self-Audits to Ensure Compliance

The following is an excerpt:

With the U.S. presidential election behind us, it is clear that the Patient Protection and Affordable Care Act (“Affordable Care Act”) is likely here to stay, having survived a U.S. Supreme Court case challenge last June. While affected employers can avoid facing penalties until 2014 for not making health care coverage available to their workforce, the U.S. Department of Labor (“DOL”) has begun auditing employers’ group health plans for compliance with other requirements of the law that are already in effect. As the DOL steps up its audit efforts under the leadership of the reenergized Obama administration, below are five actions that employers should consider taking in 2013.

Read the full version on EBGlaw.com.

Affordable Care Act Webinar, January 9 - To Pay or To Play: An Analysis of the Shared Responsibility Rules

Epstein Becker & Green, P.C. — Thu, 03 Jan 2013 17:44:55 -0800

Please join Epstein Becker Green’s Health Care & Life Sciences and Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on employers and their group health plans.

In less than a year, employers employing at least 50 full-time employees will be subject to the Employer Shared Responsibility provisions. Under these provisions, if employers do not offer health coverage or do not offer affordable health coverage that provides a minimum level of value to their full-time employees, they may be subject to a tax penalty under the proposed regulations just issued by the Internal Revenue Service.

During this program, Epstein Becker Green practitioners will:

Review the basics of the Employer Shared Responsibility provisions and proposed regulations
Define employer status under the proposed regulations
Clarify the definition of "full-time" employees and dependents who must be offered coverage
Discuss the determination of affordable and minimum value coverage
Review employer liabilities and penalties

This is the third session in the Employer Affordable Care Act Webinar Series for employers on upcoming rules and regulations implementing the Affordable Care Act. Please stay tuned for upcoming webinars on:

Exchange Implementation
Essential Health Benefits
Quality Reporting
And others...

Epstein Becker Green Presenters:
Mark E. Lutes
Frank C. Morris, Jr.
Adam C. Solander

Wednesday, January 9, 2013
1:00 - 2:00 pm EST
10:00 - 11:00 am PST

Registration Is Complimentary and Webinar Space Is Limited

Don't Miss This Opportunity! To Register, please click here.

Contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com for more information. If you missed the first two webinars in the New ACA Implementation Regulation series, the audio recording and presentation slides are now available.

Post-Election Health Reform Implementation

Epstein Becker & Green, P.C. — Mon, 17 Dec 2012 08:53:36 -0800

by Brandon C. Ge

In the months leading up to Election Day 2012, the pace of health reform implementation slowed considerably as the Obama administration held off on releasing regulations to avoid pre-election controversy. With the 2012 elections now in the books, health reform has scored two major victories: the re-election of President Barack Obama and the preservation of a Democratic majority in the Senate. Although the Affordable Care Act (ACA) is now safe from repeal, implementation still faces hurdles, such as state resistance, the fiscal cliff, and pending lawsuits challenging ACA’s contraception mandate.

Nonetheless, the administration has stormed ahead in recent weeks, issuing a torrent of regulations that will help determine operation of many key ACA provisions. These rules cover a bevy of health reform pieces, including:

Health insurance market reforms;
Employer wellness programs;
Essential health benefits and actuarial values;
Benefit and payment parameters; and
The Multi-State Plan Program.

Health Insurance Market Reforms

On November 20, the U.S. Department of Health and Human Services (HHS) proposed a rule that implements several ACA provisions aimed at protecting consumers from discrimination and other abuses when purchasing health insurance. The rule generally prohibits health insurance issuers from denying coverage to individuals with pre-existing conditions. Moreover, insurers would only be allowed to vary premiums based on age, tobacco use, family size, and geography. The proposed rule also requires health insurance issuers to have a single statewide risk pool for each of their individual and small employer markets unless the state merges the individual and small group pools. In addition, the rule provides for enrollment in catastrophic plans and amends the rate review program.

Employer Wellness Programs

HHS, in conjunction with the Labor and Treasury departments, also proposed rules implementing and expanding employer wellness programs. The rules would apply to both grandfathered and non-grandfathered group health plans and would be effective for plan years starting on or after January 1, 2014. The proposed rules continue to support workplace wellness programs, including participatory wellness programs, which are generally available regardless of an individual’s health status. The rules also amend standards for non-discriminatory health-contingent wellness programs, which usually require individuals to meet a health-related standard to obtain a reward.

Essential Health Benefits and Actuarial Values

In addition, HHS proposed a rule on November 20 outlining standards related to coverage of essential health benefits and determination of actuarial value. The rule implements ACA’s requirement that health plans offered in the individual and small group markets, both inside and outside of health insurance exchanges, offer essential health benefits, a core package of items and services in at least ten categories:

Ambulatory patient services;
Emergency services;
Hospitalization;
Maternity and newborn care;
Mental health and substance use disorder services;
Prescription drugs;
Rehabilitative and habilitative services and devices;
Laboratory services;
Preventive and wellness services and chronic disease management; and
Pediatric services.

The proposed rule also provides that starting in 2014, non-grandfathered health plans in the individual and small group markets must meet certain actuarial values, which are calculated as the percentage of total average costs for covered benefits that a plan will cover. Actuarial values correspond with certain metal levels: 60 percent for bronze plans, 70 percent for silver plans, 80 percent for gold plans, and 90 percent for platinum plans. HHS would allow a de minimis variation of 2 percent from these values.

Benefit and Payment Parameters

On November 30, HHS released a proposed rule addressing several issues, including parameters for the three new premium stabilization programs—the permanent risk adjustment program and the transitional reinsurance and risk corridor programs. These programs aim to more evenly spread financial risk by providing payments to health insurance issuers that cover higher-risk populations. The proposed rule expands on the framework outlined in the final rule on health insurance premium stabilization programs, with much of the regulatory text devoted to technical descriptions of calculation methodologies for these programs.

The proposed rule also addresses several other issues:

It provides more guidance on how the advance premium tax credit and cost-sharing reduction payment programs will operate.
The rule proposes a monthly federal exchange user fee. Under the proposed rule, this fee would be 3.5 percent of monthly premiums, but HHS may adjust this rate to align with rates charged by state-based exchanges.
It elucidates standards for the administration of Small Business Health Options Program (SHOP) exchanges.
Lastly, the proposed rule amends regulations regarding medical loss ratio calculation.

The Multi-State Plan Program

Also on November 30, the Office of Personnel Management (OPM) released a proposed rule describing establishment of ACA’s Multi-State Plan Program (MSPP), which aims to promote competition in the insurance marketplace and give consumers more high-quality, affordable insurance choices. Under the program, OPM will contract with at least two health insurers to offer multi-state plans (MSPs), which are to be available on exchanges in all states and the District of Columbia by the fourth year of the issuer’s participation in the MSPP. MSPP issuers must offer at least two MSPs—one gold-level and one silver-level—in each exchange. In addition to requirements for MSPP issuers and MSPs, the proposed rule also describes standards for coordination between OPM, HHS, and states to approve rates, standards for rating, medical loss ratios, and MSPP issuers’ participation in the premium stabilization programs.

A Shift in Scope

These recent regulations evidence a shift in the scope of ACA implementation—the administration appears to be moving away from the big-picture issues and towards more of the operational specifics that have yet to be ironed out. Stakeholders should stay abreast of these developments as implementation marches on.

EBG counsels clients on ACA implementation requirements and will continue to track developments in the area. For more information, contact the author at bge@ebglaw.com.

ACA Webinar, Dec. 18: What Employers Need to Know Now!

Epstein Becker & Green, P.C. — Fri, 14 Dec 2012 07:16:18 -0800

Please join Epstein Becker Green’s Health Care & Life Sciences, Employee Benefits, and Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on employers and their group health plans and programs.

Since the Presidential election, The U.S. Department of Health and Human Services is moving quickly to implement the Affordable Care Act. Rules have been released in the past few weeks concerning participation in federal exchanges, discrimination based on pre-existing conditions, essential health benefit requirements, and expanded employment-based wellness. During this program, Epstein Becker Green practitioners will:

Review the ACA implementation timeline
Discuss the structure of the law and basic concepts affecting employers
Discuss critical employer decision making and planning for 2014
Review alternative plan design options available to employers

This is the second in the Employer Affordable Care Act Webinar Series for employers on upcoming rules and regulations implementing the Affordable Care Act. Please stay tuned for upcoming webinars on:

Exchange Implementation
Shared Responsibility
Calculation of Full-time Employees
Quality Reporting
And others...

Presenters: Gretchen Harders, Frank C. Morris, Jr., and Adam C. Solander

Registration Is Complimentary and Seating Is Limited

Don't Miss This Opportunity!

To Register, please click here.

In addition to this blog, EBG's HEAL blog will also post ACA regulatory developments.

For additional Information, please contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com.

Webinar Recording: The New Wellness Program Regulations

Epstein Becker & Green, P.C. — Mon, 03 Dec 2012 12:22:52 -0800

On Friday, November 30, Epstein Becker Green attorneys Frank C. Morris, Jr., and Adam C. Solander offered a one-hour webinar titled “The New Wellness Program Regulations, Part of a Webinar Series on the New ACA Implementation Regulations: Employer Impact.” The webinar discussed:

the proposed regulations and the impact these regulations could have on your overall wellness strategy
areas where employer comment is needed
recent wellness litigation trends
where EEOC fits in the picture

The audio recording and presentation slides for "The New Wellness Program Regulations" webinar are now available. Contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com, or Lisa Blackburn at 202/861-1887 or lblackburn@ebglaw.com, to obtain a password to download the files.

The New ACA Implementation Regulations: Employer Impact (a Webinar Series)

Epstein Becker & Green, P.C. — Wed, 21 Nov 2012 12:35:36 -0800

Epstein Becker Green is pleased to announce a webinar series for employers on the forthcoming rules and regulations implementing the Affordable Care Act ("ACA"). We expect the Administration to release a significant number of regulations in the near future which will directly impact employers.

EBG Health Care & Life Sciences and Labor & Employment practitioners, along with outside speakers, will provide in-depth analysis on proposed rules and regulations and how they will impact decisions that must be made by employers. The first webinar will take place on November 30.

Stay tuned for upcoming webinars on:

Wellness Programs
Exchange Implementation
Shared Responsibility
And others...

In addition to this blog, EBG's HEAL blog will also post regulatory developments.

Click here to register for the November 30th Wellness Programs Webinar

For additional Information, please contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com, or Lisa Blackburn at 202/861-1887 or lblackburn@ebglaw.com.

State Progress Defining What It Means to Be an "Essential Health Benefit"

Lesley R. Yeung — Mon, 22 Oct 2012 07:22:39 -0800

In addition to the work that states are doing (or purposefully not doing) to implement State Health Insurance Exchanges for operation in 2014, states have also been given the task of choosing a benchmark plan for purposes of defining the essential health benefits (“EHB”), a minimum package of benefits that must be offered by all insurance policies sold in the small group and individual markets beginning in 2014.

Section 1302(b) of the Affordable Care Act directs the Secretary of Health and Human Services (the “Secretary”) to define the EHB. The scope of the EHB must equal the scope of benefits provided under a typical employer plan. Further, 10 broad categories of services must be covered in the EHB package.

Rather than setting a national standard for the EHB, in December 2011, the Centers for Medicare & Medicaid Services (“CMS”) issued a bulletin providing guidance to the states on CMS’s proposed regulatory approach for defining the EHB. Specifically, CMS is largely leaving the decision to the states to choose from one of 10 benchmark plans in the following four categories:

The largest plan by enrollment in any of the three largest small group insurance products in the State’s small group market;
Any of the largest three State employee health plans by enrollment;
Any of the largest three federal employee health plans by enrollment; and
The largest insured commercial non-Medicaid HMO operating in the state.

Many states have been actively assessing these benchmark options, given that the definition of what is included in the EHB will have a broad reaching impact in each state. In addition to the non-grandfathered plans in the individual and small group markets both inside and outside of the State Health Insurance Exchange, the EHB package also must be offered by Medicaid benchmark and benchmark-equivalent plans for newly-eligible Medicaid recipients, and Basic Health Programs (which are offered by states to people who are ineligible for Medicaid and who have incomes at or below 200 percent of poverty as an alternative to receiving premium credits to purchase coverage through an exchange). Self-insured group health plans, health insurance coverage offered in the large group market, and grandfathered health plans are not required to cover the EHB.

States were encouraged to select a benchmark plan by the end of the third quarter of 2012. As of October 10, 2012, 24 states and the District of Columbia have made their selections, 12 states have issued letters to the Secretary stating that they are awaiting further federal guidance before making a decision, and the remaining 14 states are at various stages across the decision-making spectrum (from having done the analysis and will likely make a decision imminently to having done no discernible work towards making a decision at all). If a state does not select a benchmark plan, the largest small group plan by enrollment in the state will become the default benchmark plan.

Of the 17 states (including DC) that chose small group plans as their benchmark, at least 10 of those states chose the largest small group plan by enrollment (the federal default benchmark). Three states have chosen a state employee health plan and four states have chosen the largest commercial non-Medicaid HMO plan. One state, Nebraska, has chosen a high deductible health savings plan, which the Governor characterizes as “the Nebraska Essential Health Benefits Plan” that provides “the absolute minimal coverage”. At this time, no states have opted for a federal employee health plan. This is likely because states are required to defray the costs of state-mandated benefits that are in excess of the EHB, if they are not already included in the benchmark plan selected by the state. Since most small group plans are required to comply with state mandates to cover certain benefits (examples include coverage of certain immunizations, contraception, and treatment for autism), but federal employee health plans are not, it makes sense that states would choose state plans over federal plans to reduce their financial burden. However, allowing states to avoid paying for state-mandated benefits by choosing a benchmark plan that already includes them is intended to be a “two-year transitional policy” and will be revisited by CMS in 2016.

Despite good forward progress on selecting EHB benchmark plans, there are many questions that remain. For example:

When will CMS issue regulations providing states with the guidance they have requested?
Will CMS accept the benchmark plans that states have proposed, or will they make changes to them?
In what ways will individual insurers change particular benefits offered in the EHB benchmark plan but still remain “substantially equal” to the benchmark?
How will supplemental coverage for categories of services not included in the benchmark plan (such as habilitative services, mental health and substance abuse services, and pediatric oral and vision care) be integrated and priced by insurers?
How will dental benefit plans, which may be offered as a standalone benefit, be incorporated into an individual’s overall coverage?
After the first two years, will states have more flexibility to offer innovative plan designs to cover the EHB, instead of relying on the plan designs currently in place?

EBG counsels health plans and providers on the evolution of the definition of the EHB, and will continue to track developments in this area. For more information, contact the author at lyeung@ebglaw.com.

The Known Unknowns of Exchange Implementation

Philo D. Hall — Wed, 10 Oct 2012 05:27:02 -0800

This autumn, health insurance exchange ("Exchange") implementation issues can be characterized as either meeting impending deadlines or waiting on necessary federal guidance. We will shortly experience a cascade of developments on federal Exchange guidance and state implementation through the remainder of 2012.

State Options

Exchanges are intended to operate a "one-stop marketplace" in each state for individuals and small employers to obtain health insurance. The Exchanges also have the responsibility of setting standards for participating qualified health plans (“QHPs”). States are given the option of establishing their own State-Based Exchange; coordinating with the U.S. Department of Health and Human Services (“HHS”) to establish a Partnership Exchange; or declining to establish any exchange, in which case HHS will establish and run a federally-facilitated exchange (“FFE”) in the state.

Fast Approaching Deadlines

States have until November 16, 2012 to submit a complete proposal to operate a State-Based Exchange in plan year 2014. A state proposal will be approved by HHS no later than January 1, 2013. HHS may issue a conditional approval at that time if it appears that a state has made significant progress towards implementation and its Exchange is likely to be operational in 2014.

Operating in the 2014 plan year requires being ready for open enrollment in October 2013 and plan contracting with network providers before then. This means a very busy 2013 preparing for the inaugural exchange plan year.

The pressures may be greatest on plans, providers, and state regulators in those 25 states that have not yet decided whether to establish a State-Based Exchange. As noted in a recent report on Exchange implementation by PricewaterhouseCoopers Health Research Institute, “the pace of state exchange planning . . . poses challenges for insurance companies that are evaluating which markets to enter or exit.”

Still Awaiting Guidance

States, in turn, face difficulty in evaluating Exchange options before the November 16 deadline because promised information from the federal government is still forthcoming. This difficulty has been articulated by

September 12, 2012 testimony by Pennsylvania Insurance Commissioner Michael Consedine before the House of Representatives Ways and Means Committee
A September 24, 2012 letter from Sen. Orrin Hatch, ranking member of the Senate Finance Committee, and
A September 27, 2012 letter from Gov. Bob McDonnell, Chair of the Republican Governors Association.

A final regulation addressing many Exchange implementation issues was released in March of this year, brief guidance on FFEs was released in May, and a template “Blueprint” was released in August to aide states in submitting proposals to HHS for state-run exchanges. Yet-to-be released information includes the following:

Expanded guidance on FFEs, including detailing state responsibilities, costs, and any management reimbursement
FFE guidance clarifying how many FFEs will be established and what flexibility they will have to meet unique state needs
Proposed and final regulations defining required essential health benefits for QHPs
Final standards for Multi-State Plans
Quality standards for Exchanges
Details on the conditional approval process for State-Based Exchanges

Stay Tuned

Reasons for the delay in guidance may vary, but it is unlikely that we will see significant state exchange announcements or further HHS guidance until after the November 6 election. After that point, stay tuned to this blog as the pace of Exchange implementation accelerates into 2013.

In addition to tracking these and other PPACA regulatory developments, EBG counsels plans and providers on the arrangements necessary to participate in Exchanges. For more information, contact the author at phall@ebglaw.com.

Musings on the MLR

Jesse M. Caplan — Thu, 04 Oct 2012 08:42:44 -0800

As we ended the summer of 2012, the Obama administration touted one of the more popular aspects of the Affordable Care Act – the requirement that health insurers spend at least 80 cents of every premium dollar on medical care and health care quality (85 cents for large employer groups purchasing health insurance), and if they do not, requiring these insurers to rebate the difference back to subscribers or their employers. According to the Administration, the “80/20 Rule” or the “Medical Loss Ratio (MLR) Rule,” as it alternately known, resulted in 12.8 million Americans receiving directly or indirectly more than $1.1 billion in health insurance rebates this past August. The 80/20 Rule sets this national minimum MLR standard that can only be lowered by a state’s insurance commissioner applying for, and receiving, a waiver from HHS. To receive a waiver, the state has to demonstrate that the application of the 80 percent threshold may destabilize the individual market. These waivers have been hard to come by – at least 18 states and territories have sought HHS approval to permit their insurers to spend below the 80 percent threshold on medical care and quality in the individual and/or small group markets (and therefore to spend more than 20 percent for administrative expenses and profits). Yet HHS has only approved six of these waivers, and most at levels, and for durations, different than requested by the state. On the flip side, states that want to impose a higher MLR threshold – like Massachusetts at 90 percent, and New York at 82 percent -- have done so without federal approval.

Meanwhile, this past month, House Republicans have advanced legislation that would give states the authority to adjust the MLR down in the individual and small group markets in their state without federal approval, thereby giving insurers greater flexibility to spend more on administrative expenses, and to earn higher profits. House Bill 1206 is primarily designed to allow insurers to count broker fees as “medical expenses” in their MLR calculation, a policy choice that continues to be hotly debated between the broker industry and consumer advocates. But buried in the bill is a provision that would require the Secretary of HHS to “defer to the State’s findings and determinations regarding destabilization” of their individual and small group markets in justifying lower MLR thresholds. The bill has over 200 sponsors, bipartisan support, and was recently approved by the House Energy and Commerce Subcommittee.

What is particularly interesting in following the proposed tweaking of the MLR Rule is that there appears to be an acknowledgment by lawmakers on both sides of the aisle, and many stakeholders across the health care spectrum, that some minimum MLR requirement on insurers makes sound public policy. But does it?

Not necessarily. As recently posted by David Kestenbaum on NPR’s Planet Money Blog, “as is sometimes the case, what is popular with the people is not so popular with economists.” Kestenbaum spoke with six health care economists, and he claims that none thought the MLR would do much good, “and several thought it could be harmful.” In particular, he cites Jonathan Gruber, an MIT economist who helped write the ACA, as opposing the idea of a minimum MLR requirement, and indicating that “the rule has the potential to do exactly the wrong thing — to drive up the cost of health care.” Here are a couple of my own thoughts on some of the problems with relying on a minimum national MLR requirement as opposed to addressing health care costs directly:

It assumes there are no competitive health insurance markets – in competitive insurance markets (like in Massachusetts), competitive forces provide the incentives that drive insurers to offer consumers the highest quality products at the lowest possible premium rates. Massachusetts insurers are consistently the highest quality insurance plans in the country (as ranked by the NCQA), while having among the lowest administrative costs and margins. This has been the case even before Massachusetts lawmakers recently required these insurers to meet a 90 percent MLR for 2012 and 2013 – by far the most stringent threshold in the country. Ironically, some of the states with the least competitive insurance markets (the ones that, arguably, would benefit from a more stringent MLR requirement), are those states that received waivers from HHS that allow their insurers to meet lower MLR thresholds.
It penalizes the most efficient insurance carriers – in a competitive market (without an MLR requirement), if an insurer is able to reduce medical expenses below targets, it is rewarded with additional margin that it can invest in innovation and infrastructure, making it an even more competitive and efficient market participant. But under the MLR Rule, it must give that money back. As one insurance executive has observed, the MLR Rule gives plans the incentive to spend money on staff and systems that could reduce medical expenses and improve quality, but little incentive to actually achieve those savings and quality improvements.

Of course, many stakeholders and policy makers believe health insurance markets are far from competitive, and argue that the MLR requirement – which is essentially a form of rate regulation – is necessary to force insurers to become more efficient. They may be right – in the short term. But in the long term, as Professor Gruber observed, the MLR requirement may prove counter-productive in the fight to reduce actual health care costs.

EBG counsels insurance carriers on MLR compliance as well as ACA implementation requirements. For more information, contact the author at jcaplan@ebglaw.com.

The Sunshine Act Also Rises: One More Chance for Medical Device Manufacturers to Prepare

Robert E. Wanerman — Fri, 14 Sep 2012 05:44:06 -0800

The Physician Payment Sunshine Act, which was incorporated into Section 6002 of the Affordable Care Act, requires pharmaceutical, medical device, biological and medical supply manufacturers to file annual reports on payments to physicians and teaching hospitals. Despite the requirement in the law that manufacturers submit their first report in March 2013 disclosing payments made during 2012, two events have pushed back that obligation or taken the sting out of noncompliance.

First, although Centers for Medicare & Medicaid Services (CMS) was required to publish standards for reporting information and making that information available online to the public, it has yet to publish final regulations. As recently as May 2012, it posted a blog notice on its website announcing that manufacturers will not be required to start collecting data until January 1, 2013. The reason given for the delay was that it simply needed time to sort through the over 300 comments that were received.

The second event that should be good news to manufacturers comes from Vermont. Vermont, along with eight other states and the District of Columbia, already have laws requiring manufacturers to report payments to physicians as well as financial penalties for failing to submit reports. Even though the Sunshine Act supersedes those state laws, any part of a state law that contains different or broader reporting requirements than the federal law remains in effect. However, since CMS has not published its regulations, answering that question may be more difficult than it appears at first. The good news is that the Vermont Attorney General has offered a limited amnesty to manufacturers of medical devices and biologics (but not pharmaceuticals) who did not report during any period between July 1, 2009 and December 31, 2011. The reprieve waives the penalties, but not registration fees or penalties under other state laws. While a complete report is not required immediately, the offer is for a limited time only and is good through October 1, 2012. Any inquiries should be sent to the Vermont Attorney General’s office at prescribedproducts@atg.state.vt.us.

For more information, contact the author at rwanerman@ebglaw.com.

The ACA Is Constitutional, but What's Next?

Stuart M. Gerson — Thu, 06 Sep 2012 11:13:45 -0800

Most reasonably-well-informed citizens, and certainly everyone concerned with health care, is well aware that the Supreme Court concluded its most-recent term with the Chief Justice joining the Court’s so called “liberal” wing in National Federation of Independent Business v. Sibelius, in upholding essentially all of the Obama Administration’s Affordable Care Act (“ACA”), including its most controversial provision – the “individual mandate” -- not under the Commerce Clause, as its proponents argued, but under the tax power. The Court’s majority also upheld, but limited, the controversial Medicaid expansion provision of the ACA. The expansion survives, but if a State declines to participate in the expansion, it can’t be constitutionally deprived of the federal Medicaid funding that it previously had received.

Victory proclamations and hand-wringing aside, one notes that the mere fact that the ACA has passed judicial muster leaves open a myriad of milestones and questions. The Act, after all, runs on for hundreds of pages and most of them have nothing to do with the mandate or with the expansion of Medicaid. That said, Epstein Becker & Green is dedicating this blog to discussing the issues that are yet to be determined as the ACA regime goes forward.

The New Regime Already Has Begun: Many provisions of the ACA are already in effect including guaranteed access to insurance even if a person has a pre-existing condition, coverage for young adults, closing of the Medicare gap known as the "doughnut hole", small business tax credits and the imposition of a pharmaceutical manufacturer’s fee based on market share. This year saw the launch of Accountable Care Organizations, a part of the ACA that is intended to address quality and cost issues by allowing providers to organize and combine and then to share in savings achieved by meeting various performance targets. Additional provisions will take effect through 2018, for example . . .

Hospital Value-Based Purchasing Program: Beginning on October 1, 2012, Medicare will implement a value-based purchasing program under which value-based incentive payments will be made in connection with discharges from hospitals that meet specified performance standards related to quality. Efficiency measures are to be added in 2014. Funding for these payments is to be generated through reducing Medicare IPPS payments to all hospitals (in an increasing amount each year), but all such reductions are returned to hospitals through incentive payments in the same year. The secretary will make the performance scores for hospitals on the measures publicly available. Also in 2012, there will be value-based purchasing demonstrations established for critical access hospitals and certain other hospitals excluded from the VBP program. The VBP program will require many regulations and the challenge to hospitals to maintain financial performance and efficiency will be great.

Hospital Readmissions Reduction Program: Also starting with discharges occurring on or after October 1, 2012, Medicare will reduce payments to hospitals (though some are exempted) that are determined to have an "excess readmissions ratio" as defined by the secretary. This is a complex provision that includes a formula for payment reductions that not only require substantial regulatory activity but likely will lead to controversy.

And Beyond?: Certain knowledge about the ACA and the future will depend upon the outcome of the upcoming presidential and congressional elections and the determination of who will control the political agenda and the likely budget sequestration that will follow. For example, the “maintenance of effort” provisions of the law are already in effect. The question will be whether they stay in effect, or whether States are empowered to cut back on Medicaid and other eligibility. Litigation, which some consider our national sport, also is likely to test the many regulations that the Secretary must promulgate under the ACA. Assuming that the ACA is not completely dismantled by the incoming Congress, and the probabilities do not favor that, much of the activity will be in the States. The primary concern will be the State’s difficulty (or, in some cases, inability) to afford even the modest increase in the State share of the Medicaid increase. We expect that almost every State ultimately will opt in but not until there are delays and administrative modifications negotiated with the federal government. It is not unlikely that there will be caps on Medicaid expenditures imposed by State legislatures and the proliferation of Medicaid managed care programs, run on a capitated basis, to deal with the administration of the program to an increased eligible population. Many are already asking whether the Supreme Court’s holding will allow a State to opt into the expanded Medicaid program but later to opt out while being guaranteed federal payments at the elevated level. We look forward to addressing that in future blog posts. The other State-based issue is that of the Exchanges. Some States are well along the way towards setting them up. Others have yet to begin. It is a certainty that there will be at least some federally administered exchanges which may likely become politically controversial as their proponents look to expand them into a quasi-public option.

Needless to say, there is plenty to talk and write about as the ACA moves forward. We look forward to discussing them and to hearing your comments and questions.

For more information, contact the author at sgerson@ebglaw.com.