The final days of February and the first day of March 2013 have seen a landslide of new Affordable Care Act implementation issuances. Perhaps the agencies decided to get all of their work done before sequester furloughs begin, or perhaps they have awakened to the sober realization that a lot of details need to be worked out before January 1, 2014. In any event, they have given us over 700 pages of regulatory and guidance material to dig through.
On March 1, 2013, the Department of Health and Human Services issued a final rule setting out the benefit and payment parameters that will be used for the risk-adjustment, reinsurance, and risk-corridor programs; cost-sharing reductions; user fees for the federal exchanges; advance premium tax credit payments; the federal exchange; and the medical-loss ratio program. HHS also issued an interim final rule adjusting final risk-corridor calculations and offering qualified health plans an alternative methodology for calculating cost-sharing reductions.
A third HHS issuance is a proposed rule amending existing Small Business Health Options Program (SHOP) regulations. Finally, on February 27, HHS published a Federal Marketplace Progress Fact Sheet offering a few more details about the federal exchange (now called the marketplace). A particularly useful feature of this fact sheet is a timeline for implementation of the federal exchange.
Other agencies have also been busy. The Internal Revenue Service released proposed regulations on March 1 implementing the annual fee imposed on insurers by section 9010 of the ACA. The Office of Personnel Management published a final rule governing the Multi-State Plan program. Finally, on February 28, 2013, the Department of Labor published final regulations implementing ACA provisions affecting Multiple Employer Welfare Arrangements (discussed below) as well as a checklist for health plans to use to gauge compliance with the ACA.
This post will address the proposed SHOP and final MEWA rules. Another post later on today or Saturday will discuss the multi-state plan rule. A final post later in the weekend will analyze the payment parameters rule. I will not in all likelihood address the 9010 fee rule.
The SHOP regulations. The proposed SHOP rule changes the earlier final Exchange Establishment Rule in several significant respects. First, it allows SHOP exchanges for their first year of operation (2014) to allow employers to choose a single group plan for their employees, rather than allowing employers to pick the metal level of plan (bronze, silver, gold, or platinum) and the employee to pick the plan. The proposed rule also provides that exchanges that take this approach need not provide employers with aggregated premiums for their employees for 2014. If all employees are in the single plan chosen by the employer, aggregation of premiums will not be necessary. The proposal further states that for 2014, the federally facilitated exchange (marketplace) will not offer employee choice or premium aggregation — employers will only be able to choose a single plan for their employees.
This delay will undoubtedly disappoint those who have seen employee choice as the primary benefit of the SHOP exchange. It also leaves unclear what advantage the SHOP exchange offers employers over the outside small-group market. Employers who qualify for the small-employer premium tax credit will still be able to qualify only through the exchange, but other employers are likely to find the SHOP exchange largely indistinguishable from the outside market. Looking at the Herculean tasks that the federal and state governments face in implementing the exchanges by 2014, however, HHS concluded that working out employee choice and premium aggregation were tasks that could wait another year.
Second, the proposed rule would change the length of time for special enrollment periods in the SHOP exchange from 60 days to 30 days. This would make special enrollment periods consistent with those that apply in the small-group market generally. If qualified employees or their dependents, however, lose eligibility for Medicaid or CHIP or become eligible for purchase of a SHOP plan through Medicaid or CHIP premium assistance payments, they would have a 60-day special enrollment period to select a QHP.
The MEWA regulations. The DOL rules implement ACA provisions affecting Multiple Employer Welfare Arrangements (MEWAs). MEWAs (which should not be confused with collectively-bargained multi-employer plans) are plans that offer medical benefits to the employees of two or more employers. MEWAs can provide affordable insurance to small employers; however, there is also a long history of fraudulent MEWAs that have left their enrollees and providers who had served them with millions of dollars in uncollectable debt, as Georgetown’s Mila Kofman related in her earlier post on the DOL’s proposed MEWA rules.
The final rules implement two ACA MEWA reforms. First, the final rules require all MEWAs without exception to file a form M-1 with the Department of Labor before they begin operation in a state and annually thereafter, as well as when they undergo material changes. MEWAs must also file annual 5500. Entities Claiming Exception from the MEWA requirements because they are established by collective bargaining agreements (ECEs) are only required to file M-1 forms for the first three years following their origination. The DOL also published a revised form M-1 and form 5500.
A second final rule implements the provisions of the ACA allowing the DOL to obtain ex parte cease and desist orders without notice or hearing where “it appears that the conduct of a MEWA is fraudulent, creates an immediate danger to the public safety or welfare, or is causng or can be reasonably expected to cause significant, imminent, and irreparable public injury.” A MEWA subject to such an order can contest it in an administrative hearing, but bears the burden of proof to show it was unnecessary.
The final rule also implements an ACA provision allowing the DOL to summarily seize plan assets to where it has cause to believe that the MEWA is “in a financially hazardous condition.” Ordinarily this would be done through judicial proceedings, but the DOL has authority to act first and obtain judicial authorization later if necessary to prevent the dissipation or concealment of plan assets.
Finally, provisions of the ACA that DOL did not need to implement by rule impose criminal penalties on persons who, in connection with marketing a MEWA, make false statements as to the financial condition or solvency of the plan, the benefits it provides, its regulatory status under laws governing collective bargaining, or its regulatory status regarding exemption from state regulation.