| Health Care Reform
November, 2011
The Health Care Reform legislation (the Patient Protection and Affordable Care Act, or “PPACA”) requires group health plans (including grandfathered plans) to prepare and issue to participants a four page (two sided) Summary of Benefits and Coverage (“SBC”) in a prescribed format incorporating a “uniform glossary.” Proposed regulations released in August provided a March 23, 2012 effective date for compliance with the SBC requirements, and invited comments on the proposed regulations. Based on those comments, the Departments of Labor, Treasury and Health and Human Services recently published an FAQ noting the above circumstances and postponing required compliance with the SBC rules until final regulations have been issued. Accordingly, compliance with the SBC rules has been postponed indefinitely for both subject plans (and their third party administrators) as well as health insurance carriers. The FAQ also advises that final SBC regulations, when issued, will provide interested parties “sufficient time” to comply.
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August,
2011
Health Care Reform legislation (the Patient Protection and Affordable Care Act, or “PPACA”) imposes additional claims processing requirements on subject group health plans and insurers. There are new claims notices, revised procedures and, for self-funded ERISA plans, a Federal external claims review requirement.
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April
2011
Health
care reform legislation, the Patient Protection and Affordable Care Act
(or “PPACA”), continues to evolve as the challenge to its
constitutionality winds through the courts.
In
a significant legislative development, the President recently signed a
bill that repeals the PPACA requirement for businesses to report all
purchases of goods and services from a single vendor of more than $600 in
a calendar year on IRS Form 1099-MISC. This
legislation eliminates a previously postponed requirement that had been
the target of advocacy groups as unduly burdensome for small business
owners. The reporting
requirement continues, as under pre-PPACA law, but applies only to payment
of rent for real estate, salaries and other forms of compensation for
services rendered.
More
recently, budget legislation which has been signed into law repeals the
PPACA “free choice” voucher program.
This program would have allowed lower income employees to receive
vouchers for the employer-paid portion of group health coverage under an
employer-sponsored plan. The
vouchers could be used to purchase an individual policy through the
state-run insurance exchanges that are scheduled to begin operating in
2014. The repeal reflects
concerns about an employer’s ability to identify employees who would be
eligible for the program, which was based on an employee’s household
income level.
Other
recent PPACA regulatory developments include:
·
Certain
PPACA provisions relating to the internal claims denial and appeal
procedure have been postponed in Technical Release 2011-01.
PPACA initially required compliance as of the first plan year
starting on or after September 23, 2010.
The recent postponement extends required compliance until the first
plan year on or after July 1, 2011 as to the issuance of a denial code and
its meaning in an adverse benefit determination, providing a description
of the internal and external claims review processes, and including a
“discussion” of the decision in any final internal benefits denial.
Other provisions are extended to plan years beginning on or after
January 1, 2012, and include a requirement to provide notices in a
“culturally and linguistically appropriate manner,” mandatory response
to “urgent” claims in 24 hours, strict employer adherence to all
internal claims and appeal processes as a condition for requiring
claimants to “exhaust” the claim and appeal processes before filing
suit, and automatic disclosure of diagnosis and treatment codes that are
currently available only on patient request.
None of the PPACA claims denial and appeal requirements apply to
grandfathered plans, and PPACA’s external review requirements are not
subject to the administrative postponement.
·
The
Department of Health and Human Services has proposed regulations
applicable for policy years beginning on or after January 1, 2012 that
would exempt student health plans from PPACA’s guaranteed availability
and guaranteed renewability requirements as well as PPACA’s prohibition
of annual benefit limits. The
proposed regulations treat insured student health plans as individual
plans, not as covered “group health plans,” because there is no
employment relationship.
·
The
Department of Labor has published Frequently Asked Questions and a Fact
Sheet offering guidance on the Nursing Mothers Law which is part of PPACA.
This provision has been effective since March 23, 2010, and
requires employers to provide nursing mothers private space and reasonable
break time to express breast milk for up to a one year period following
childbirth. The Department of
Labor guidance at www.dol.gov/whd/nursingmothers/
specifies that the private space cannot be a bathroom but also need not be
a dedicated space for nursing mothers.
Breaks are expected to be required two or three times per day on
the average and can be expected to last at least 15 or 20 minutes.
The Department of Labor guidance suggests that both nursing mothers
and employers should ask about appropriate arrangements and the nursing
mother’s interest to express breast milk at work.
Employers with fewer than 50 employees may be exempt from the law
if compliance would be unduly burdensome.
Recommendations: The
PPACA tinkering reflected in recent legislative and regulatory
developments clearly does not
indicate any material change in the PPACA approach to health care
delivery. Subject to any
holding by the Supreme Court that PPACA is unconstitutional, the
continuing legislative and regulatory adjustments merely pave the way for
full scale implementation. Employers,
HR staff and their service providers should take prudent steps towards
implementation based on the latest guidance and the best available
professional advice.
December
30, 2010
Nondiscrimination Rules Postponed
PPACA nondiscrimination rules for nongrandfathered, insured group health plans – and substantial penalties for not complying with the new rule – have been postponed by a recent notice issued jointly by the IRS, Department of Labor and Department of Health and Human Services (Notice 2011-1). The nondiscrimination rules are similar to those that currently apply to employer-funded health reimbursement arrangements, but provide stiffer penalties on employers with 50 or more employees and insurers who provide health plans that discriminate on the basis of benefits or eligibility. The target of the new rules includes arrangements that provide executives and other highly compensated employees with enhanced benefits or subsidized coverage. Compliance has been postponed for an indefinite period following the issuance of clarifying regulations, which will not happen for at least several months (the public comment period is open until March 11, 2011, and regulations will not be issued until public comments can be considered).
December
13, 2010
Health Care Reform Update: External Claims Review
There are a number of reasons an eligible group health plan may want to qualify as a “grandfathered” plan under the Patient Protection and Affordable Care Act (“PPACA”). One of the more burdensome requirements that can be avoided by perfecting grandfathered status is the implementation of a new claims and appeal procedure that applies to non-grandfathered plans. The new procedures include a requirement that subject plans provide an “external” review of denied claims. These new requirements apply as of the first plan year that begins on or after September 23, 2010 (that would be January 1, 2011 for calendar year plans).
Department of Labor guidance on the PPACA external review process provides compliance “safe harbors.” The alternative safe harbors are not the exclusive means of complying with the new external claims review requirement. Compliance is stated to be determined on a “case-by-case basis under a facts and circumstances analysis” to determine if the external review process is “independent and without bias.” However, the safe harbor options should be considered as a way of removing uncertainty, especially by larger plans with a significant number of claims appeals.
One safe harbor alternative requires self-insured plans to contract with at least three independent review organizations, or “ IROs,” and to rotate claims assignments among them in a manner that avoids any “bias” in their selection. The IROs must enter into a contract with the plan (or its third party administrator) that incorporates requirements set out in Department of Labor Technical Release 2010-01. Calendar year group health plans that select this safe harbor will need to act quickly to complete the required documentation by December 31, 2010.
**
November 11,
2010
The “grandfathered” plan rules allow group health plans in existence on March 23, 2010 to avoid certain requirements of the Health Care Reform legislation (“PPACA”). So, under Health Care Reform, “if you like your current plan, you can keep it.” One problem for the smaller plans that are usually fully insured is that initial guidance stated that a change in the plan’s health insurance company by itself would cause a plan to lose its gradfathered plan status. However, it became evident that this would keep grandfathered plans from shopping for less expensive coverage among competing insurance companies.
The PPACA regulatory agencies recently announced that this rule is being reconsidered. As stated in a recent FAQ on PPACA implementation, the regulators will “shortly address the circumstances under which grandfathered group health plans may change carriers without relinquishing their status as grandfathered health plans.” This may be government-speak for “we goofed, now we know it, and we’ll fix it when we get around to it.” In the meantime, fully insured plans that want to retain grandfathered plan status may want to shop carriers to try to get a better offer. Just make sure any plan design changes are permitted under the grandfathered plan rules
a(see http://benefitslawgroupofchicago.com/HTML/2010/health-care-reform-2010.htm
) .
**
October 22,
2010
The
controversial requirement that employers report the “aggregate cost”
of employer-provided group health coverage along with employee wages on
Form W-2 has been postponed. Initially effective for taxable years
beginning on or after January 1, 2011, a recent IRS notice advises that
this reporting requirement will not be mandatory for 2011. Future IRS
clarification of this reporting requirement is in the works, and we expect
that compliance for 2012 and subsequent tax years will be required.
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