October 6 Update: Iowa Files Second Supplement to 1332 Waiver Request
On October 5, 2017, Iowa filed a second supplement to its 1332 waiver request. One of the primary problems with the original proposal was that it seemed to eliminate the cost-sharing reductions that the ACA affords low-income enrollees and thus violated section 1332’s affordability requirement. An initial supplement added cost-sharing reductions for enrollees with incomes between 133 and 150 percent of the federal poverty level. The second supplement adds cost-sharing reductions for enrollees in the 150 to 200 percent range.
The cost-sharing reductions added back are not identical to those offered under the ACA. Total out-of-pocket expenses are capped at a lower level ($600 for an individual, $1,200 for a family) for the 133 to 150 percent of poverty group than under the ACA ($2,450 for an individual, $4,900 for a family). However. the actuarial value offered to enrollees in the 150 to 200 percent of poverty range is lower (83 percent) than what is offered under the ACA (84 percent), so the cost-sharing may be higher. Also, no cost-sharing reductions are offered to enrollees in the 200 to 250 percent of poverty range, who received 73 percent actuarial value plans with a maximum out of pocket of $5,850 for an individual and $11,700 for a family under the ACA. Also, there are no zero cost sharing plans offered to Native Americans, as there are under the ACA.
Iowa will reimburse insurers on a monthly basis for reducing cost-sharing, with end-of-year reconciliation to ensure that only actual costs are covered.
Iowa estimates that extending cost-sharing reductions will increase enrollment beyond the 22,000 increase it initially projected. Iowa estimates that the increased cost-sharing reduction payments will increase the cost of the waiver plan by $29 million, but projects that its proposal will be budget neutral on a per-member, per-month basis.
The prospects of the Iowa wavier at this point appear uncertain. The Washington Post reported on October 6, that President Trump has personally directed CMS Administrator Seema Verma to turn down the Iowa application. This appears to be part of a larger strategy to drive up premiums for ACA-compliant health plans to undermine the ACA. It is unclear whether this will end the Iowa waiver process, which in any event faced an unrealistic implementation schedule to be in place by the launch of the 2018 open enrollment period in less than a month.
October 5 Update: Citizenship And Immigration Status Verification
On October 4, 2017, CMS posted at its REGTAP.info website slides from an August 28, 2017 presentation on Marketplace Verification of Citizenship and Immigration Step 2 Overview. HealthCare.gov verifies citizenship and immigration status using the Systematic Alien Verification Entitlement Program (SAVE). Until recently, the marketplace used SAVE Step 1 through the data services hub, which verified citizenship or immigration status in real time during the application process. If verification through Step 1 was not possible, the consumer had to submit documentation to verify status.
As of August, HealthCare.gov is also using SAVE Step 2, which attempts to verify citizenship and immigration status where real time verification is not possible. SAVE Step 2 takes 3 to 5 days to complete. If SAVE Step 1 validation is not possible, the consumer will be informed that HealthCare.gov is still trying to verify citizenship or immigration status information. If verification is received through the Step 2 process the applicant will be sent a resolution notice, either by mailing or by posting on the applicant’s account. If Step 2 verification is not possible, the applicant will be so informed and asked to provide citizenship or immigration documentation within 95 days of enrollment eligibility (and be reminded up to three times).
Throughout a summer of intensely partisan efforts to repeal and replace parts of the Affordable Care Act, there have been flickers of bipartisanship, including a sustained effort by Senators Alexander (R-TN) and Murray (D-WA) and the Senate Health, Education, Labor, and Pensions Committee to find bipartisan consensus for a short-term market stabilization package. On October 3, 2017, another bipartisan effort emerged from another quarter. Senators Portman (R-OH) and Warner (D-VA) introduced a bill that is surprising in that it emerged out of nowhere (at least as far as I am aware) and addresses a problem that obviously needs a solution.
That problem is employer reporting under the ACA. The ACA imposes both an individual and an employer responsibility requirement. Individuals are required to have minimum essential coverage or pay a penalty, unless they qualify for an exemption. Large employers are required to provide minimum essential coverage to all full-time employees or pay a penalty if 1) they fail to do so and 2) at least one employee receives premium tax credits through the marketplace. Alternatively, large employers that offer minimum essential coverage but fail to offer full-time employees coverage that is affordable and has an actuarial value of 60 percent also face penalties for each full-time employee that receives premium tax credits.
To ensure compliance with the employer responsibility requirement and to assist verification of compliance with the individual responsibility requirement, the ACA requires large self-insured employers and insurers who cover employee benefit plans to file reporting forms annually with the Internal Revenue Service, and to annually provide full-time employees with statements regarding their coverage. These reports can also be used to verify whether individuals who apply for premium tax credits are in fact ineligible for affordable minimum-value coverage, which would disqualify them from assistance.
(The IRS has recently released the forms used for this reporting: the final 2017 1095-B insurer reporting and 1095-C large employer reporting forms, as well as the 1095-A reporting forms used by marketplaces to report individual coverage.)
These reporting requirements are quite burdensome for employers. They also are not very helpful for verifying advance premium tax credit (APTC) eligibility, as they are not filed until after the end of a year in which an employee received APTC.
Republican ACA repeal proposals considered through the 2017 budget reconciliation process would have repealed the employer responsibility penalty, but, presumably because of the Byrd Rule which limits the scope of budget reconciliation legislation, would not have repealed the reporting requirements. That can only be done through bipartisan legislation—hence the Portman/Warner proposal.
The bill would first require the Internal Revenue Service, in coordination with other federal agencies, to establish, effective January 1, 2019 a voluntary reporting program; this would permit an employer to, not later than 45 days before the start of their annual open enrollment period, voluntarily report to the IRS
- whether it is offering minimum essential coverage to its full-time employees (or to part-time employees, dependents, and spouses);
- whether the coverage meets ACA minimum value and affordability requirements;
- whether the employer reasonably expects to be liable for the employer responsibility penalty;
- the months for which coverage is available; and
- any waiting periods that apply to coverage.
The IRS would share the information gained through these reports with the exchanges and federal data hub, which could use it for determining eligibility for ATPC and cost-sharing reduction payments. The exchanges could follow up with employers if they needed additional information. Employers would provide updates to the data hub if the coverage they offered changed. Exchanges would also notify employers if any of their employees enrolled in coverage or dropped coverage during a year.
Employers that filed these prospective returns would be deemed to have met the reporting requirements of the ACA if they furnish each employee whose name has been provided by the exchange as having exchange coverage with a statement as to the coverage the employer had offered, and file a copy of that statement with the IRS. Employers could contract with third-party contractors to handle their filings.
The bill would give the IRS and HHS access to the National Directory of New Hires for purposes of premium tax credit and employer responsibility verification, and would give employees access to their employer’s taxpayer identification numbers.
The bill would allow employers to use names and birthdates of employee dependents for identification rather than taxpayer identification numbers. It would also allow employers and insurers to deliver statements electronically to employees who have previously consented to electronic delivery of information unless the consent was revoked.
House Commerce Committee Considers Abolishing IPAB, Cutting Prevention Fund
The House Energy and Commerce Committee is considering a number of pieces of health care legislation primarily affecting the CHIP and Medicare programs. A couple of these also relate to specific Affordable Care Act programs. One would repeal the still-unformed Independent Payment Advisory Board, which is designated by the ACA to make recommendation for cutting Medicare expenditures if projected expenditures for a future year exceed a specified threshold, an event that has not yet occurred. Another bill, which would fund the expired CHIP program for five years, would reduce to one month (or the period provided by state law) the current three-month grace period provided under the Affordable Care Act for enrollees who receive premium tax credits to catch up on late premium payments. It would also cut funding for the ACA’s Prevention and Public Health Fund by $6.35 billion over 10 years (a 57 percent cut).
Dayton Protests Cuts To Minnesota Basic Health Program
Finally, on October 3, 2017, Governor Mark Dayton of Minnesota released a letter to Donald Wright, Acting HHS Secretary, and Seema Verma, CMS Administrator, protesting the decision of HHS to cut Minnesota’s Basic Health Program funding by $369 million in granting its ACA 1332 waiver. The letter argues, as does an attached letter from the Governor’s general counsel, that nothing in the ACA prohibits Minnesota from receiving its full complement of Basic Health Program funding and that HHS should exercise its discretion to ensure that it does.