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Implementing Health Reform: Beginning The Cadillac Tax Regulatory Conversation And Other ACA News (Updated)


February 24th, 2015

The Cadillac high-cost health plan excise tax, which goes into effect in 2018, is one of the last-to-be-implemented provisions of the Affordable Care Act (ACA). It was one of the most controversial provisions of the ACA, which contributed to its delayed effective date. But 2018 is now getting closer, and the Internal Revenue Services (IRS) is beginning a discussion about implementation of the Cadillac plan tax.

The Cadillac plan provision of the ACA will impose a 40 percent excise tax on the cost of employer-sponsored health plans when that cost exceeds certain thresholds. It is projected to be one of the biggest sources of revenue under the ACA; the Congressional Budget Office (CBO) in its 2015 Budget and Economic Outlook Report estimated that it would account for $149 billion in revenue between 2018 and 2225. Of this, however, only one quarter will come from the tax itself, while three quarters will come from increases in taxes on income as employers shift compensation from health benefits to taxable wages.

While the tax will affect few plans initially, it is likely to affect many more plans over time as the cost of health care continues to grow faster than inflation generally. The tax is expected to reduce health care expenditures by individuals, as it will drive employers to increase employee cost sharing as they cut the cost of coverage, and employees are likely to spend less on health care if they have to purchase it out-of-pocket rather than drawing on insurance coverage.

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Implementing Health Reform: Final 2016 Letter To Federal Exchange Issuers


February 22nd, 2015

Each year the Centers for Medicare and Medicaid Services (CMS) releases a letter to issuers (insurers) in the federally facilitated marketplace (FFM) setting out the ground rules for coverage through the FFM for the coming year.  A draft letter is published for comments, followed by the final letter.  The letter addresses insurers that issue qualified health plans (QHPs) in the FFM, including stand-alone dental plans (SADPs), and covers the small business (FF-SHOP) marketplace as well as the individual marketplace.

On December 19, 2014, CMS  published the draft 2016 letter which I covered here.  On February 20, 2015, CMS published the final letter to issuers in the federally facilitated marketplace.  Not surprisingly, since it  covers the third year of operation of the marketplace, the 2016 letter is quite similar to those of preceding years.   The letter is based on previously published rules governing QHPs and the marketplaces, as well as on the final 2016 Benefit and Payment Parameters Rule, covered here (CITE) and here (CITE), from which it incorporates many provisions.

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Implementing Health Reform: 2016 Benefit And Payment Final Rule, Insurance Provisions


February 22nd, 2015

On November 21, 2014, the Centers on Medicare and Medicaid Services of the Department of Health and Human Services released its final 2016 Benefit and Payment Parameter (BPP) Rule.  (Fact sheet here.)  My first post examined the provisions of this rule that relate to consumers and providers.  This post will analyze the parts of the rule that deal with the insurance market reforms; the reinsurance, risk adjustment, and risk corridor programs; health insurance rate review; and the individual and SHOP exchanges.

New Definitions Of ‘Plan’ And ‘State’

The regulation begins with a modified definition of the term “plan.”   The new definition defines a “plan” as the pairing of a set of health insurance benefits under a “product” with a particular cost-sharing structure, provider network, and service area.  A “product” is a set of plans sharing a network type (HMO, PPO, etc.), package of benefits, and service area.  Under this new definition, plans that differ in their cost-sharing structure (deductibles, copayments, or coinsurance) or provider networks are different plans, even if they are offered at the same metal tier.  Plan variations for different cost-sharing subsidy levels are not different plans under this definition.

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Implementing Health Reform: 2016 Benefit And Payment Final Rule, Consumer & Provider Provisions


February 22nd, 2015

On February 20, 2015, the Centers for Medicare and Medicaid Services (CMS) of the Department of Health and Human Services published its massive Notice of Benefit and Payment Parameters (BPP rule) for 2016 Final Rule, accompanied by a fact sheet.  This rule addresses a host of issues involving the continuing implementation of the Affordable Care Act for 2016.  A few provisions, however, affect the 2015 year as well and a number of provisions will not be implemented until 2017.

The BPP rule amends and updates existing rules; thus, it must be read in tandem with rules that have been promulgated earlier, which are catalogued in the preface to the rule.

CMS released also on February 20 its Final 2016 Letter to Issuers (Insurers) in the Federally-Facilitated Marketplace (FFM).   This letter sets the ground rules for insurer participation in the FFM for 2016 and covers many of the same topics covered by the BPP rule.

These documents are very lengthy and will be covered in three posts over the next few days.  This first post will focus on issues in the BPP rule that directly affect consumers.  The second post will focus more on issues that affect health plans.  The third post will examine the letter to issuers.

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Implementing Health Reform: Multi-State Plan Program; Benefits And Payment Rule, Letter To Issuers To Follow


February 20th, 2015

Late in the day on February 20, 2015, HHS issued its 476 page final 2016 Benefit and Payment Parameters Rule.   It also issued a lengthy final 2016 Letter to Issuers  and a fact sheet on the BPP rule.  These will govern health insurance coverage and the premium stabilization programs, as well as participation in the federally facilitated marketplace, for 2016.

More specifically, the BBP governs the premium stabilization programs; the cost-sharing reduction payment program; user fees for the Federally-facilitated Exchanges; the open enrollment period; the essential health benefits; qualified health plans; network adequacy; quality improvement strategies for qualified health plans; the SHOP program; guaranteed availability and renewability; minimum coverage; rate review; the medical loss ratio program; and other issues. The letter to issuers governs participation in the federally facilitated marketplace for 2016.

I will be reviewing the BPP rule and Letter to Issuers over the next few days and providing a series of posts on them; this post covers the amended Multi-State Plan Program (MSPP) rules issued earlier in the day.

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Implementing Health Reform: New Enrollment Opportunity For Those Subject To 2014 Penalty


February 20th, 2015

In our Health Affairs Blog post of November 7, 2014, Brian Haile and I recommended that the Department of Health and Human Services (HHS) create a special enrollment period to allow individuals who had to pay the individual responsibility penalty for being uninsured for 2014 to enroll in coverage for 2015 so that they would not have to pay a higher penalty for being uninsured for 2015. Other advocates subsequently joined in this call. On February 20, 2015, HHS announced that it is creating such a special enrollment period.

The special enrollment period will run from March 15 to April 30, 2015 and will allow individuals who live in states served by the federally facilitated marketplace website, Healthcare.gov, to enroll in coverage for 2015 if they:

  • Are not currently enrolled in coverage through the Federally Facilitated Marketplace (FFM) for 2015;
  • Attest that when they filed their 2014 tax return they paid the fee for not having coverage in 2014; and
  • Attest that “they first became aware of, or understood the implications of, the Shared Responsibility Payment after the end of open enrollment (February 15, 2014) in connection with preparing their 2014 taxes.”

Coverage will be effective on the first day of May for those who enroll by April 15 and the first day of June for those who enroll thereafter. Individuals who apply will have to pay the penalty for months they were uninsured in 2015 unless they otherwise qualify for an exemption. Centers for Medicare and Medicaid Services (CMS) has also launched a new online tool to help consumers determine who might otherwise be subject to the penalty to see if they are covered by another exemption.

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Implementing Health Reform: Preliminary 2015 Enrollment Numbers; Guidances


February 19th, 2015

As probably every reader of this blog knows by now, the Department of Health and Human Services released preliminary totals for plan selection for the 2015 open enrollment period on February 18, 2015. Over 1 million individuals enrolled through the federally facilitated marketplace in the final week, bringing the total enrolled in the FFM to 8.8 million, and the total enrolled through all marketplaces, federally facilitated and state-operated, to 11.4 million. Florida had by far the most enrollees in the FFM with 1.6 million, although Texas also had over a million enrollees.

The 11.4 million number includes up to 200,000 individuals who are being dropped from the rolls because they have not provided adequate documentation of immigration or citizenship status, but does not include up to 150,000 individuals who were “in line” when enrollment closed and who have up to February 22 to enroll. Although there will be some attrition over the next weeks of individuals who do not pay their premiums or find other coverage, HHS seems to have met its goal of 9.1 to 9.9 million effectuated enrollments.

Premium payment arrangements. The Internal Revenue Service continues to struggle with the question of how the Affordable Care Act affects various arrangements through which employers attempt to pay premiums for employees to purchase health insurance coverage in the individual market. The federal agencies have already issued four guidances on this issue over the past two years in January of 2013September of 2013November of 2014, and December of 2014.  On February 18, 2015, it released yet another guidance on this issue, this one focused on small employers.

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Implementing Health Reform: Open Enrollment Closes, But Doors Remain Ajar


February 16th, 2015

The 2015 open enrollment period is now closed, but the marketplace doors are still cracked open.  On February 15 and 16 the Centers for Medicare and Medicaid Services offered additional assistance for those not enrolled before February 16.

CMS has first addressed a very specific issue.  For a period of time on Saturday, February 14, some individuals applying for coverage at the federally facilitated marketplace (FFM) were unable to submit their applications because the FFM could not verify their income with the Internal Revenue Service.  This problem was promptly resolved, but CMS is reportedly reaching out to individuals who were unable to enroll during the period that enrollment was not possible and encouraging them to come back to the FFM and enroll.

The second guidance creates a special enrollment period for consumers “in line” on February 15, 2015.  The guidance acknowledges more generally that “certain circumstances across consumer enrollment channels (such as HealthCare.gov and the Marketplace call center) leading up to the February 15, 2015 deadline have kept some consumers from completing the enrollment process despite their efforts to meet the deadline.”

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Implementing Health Reform: Excepted Benefits, Employer Mandate, And Cost-Sharing Reduction Payments


February 15th, 2015

Three developments in the second week in February, 2015, remind us that implementation of the Affordable Care Act is a multi-department effort.

Supplemental Excepted Benefits

The first of these is a new guidance on “excepted benefits.”  The Affordable Care Act does not regulate excepted benefits — various categories of health-related benefits that are not traditional medical coverage.  Excepted benefits were excepted from the requirements of the 1996 Health Insurance Portability and Accountability under ERISA, the Internal Revenue Code, and the Public Health Services Act and continue to be excepted from the requirements of the Affordable Care Act.  The agencies that administer these laws, however, must define the scope of excepted benefits to clarify the benefits not subject to the ACA.  To that extent, therefore, they regulate those benefits.

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Implementing Health Reform: Enrollment Figures, Tax Forms, And More


February 13th, 2015

We are rapidly reaching the end of the 2015 open enrollment period, and the pace of enrollment seems to be picking up a bit. On February 11, 2015, the Centers for Medicare and Medicaid Services (CMS) released their enrollment snapshot for week twelve, covering the federally facilitated marketplace from January 31 to February 6.

During that time period, 275,676 individuals selected plans, bringing of enrollees in the federal exchange up to 7,749,375. The Department of Health and Human Services (HHS) reportedly announced on a press call on February 11, however, that 200,000 individuals will be dropped from enrollment in February for failure to satisfactorily document compliance with citizenship or residency requirements.

Enrollment is expected to continue to pick up during the final ten days of open enrollment, as it did last year. CMS has said that if an individual cannot get through at the call center or online on February 15, CMS will make sure that he or she can apply for coverage, but the agency has not announced any further relief nor any new special enrollment periods for 2015. I continue to urge CMS to provide a special enrollment period for people who were subject to the individual responsibility penalty for 2014 to allow them to avoid the penalty for 2015.

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Implementing Health Reform: President Obama’s FY 2016 Budget And The ACA


February 2nd, 2015

On February 2, 2015, President Obama released his FY 2016 budget, which includes funding for the Affordable Care Act.  The President’s budget, of course, is only on opening bid in negotiations that will proceed over the coming months until the government is finally funded for FY 2016.  Given the hostility of Congress to the Affordable Care Act, those negotiations will not be easy.  The budget does provide, however, some perspective on the funding that the administration believes will be necessary to fund continued ACA operation.

The President’s budget proposes a number of new health care initiatives, including funding for extending the CHIP program through 2019, expanding access to home and community-based services in Medicaid, reducing growth in payments for certain Medicare providers, raising the cost of Medicare coverage for higher-income  enrollees, authorizing HHS to negotiate drug prices for biologics and high-cost drugs in the Medicare Part D program,  speeding up the closing of the Part D doughnut hole, and continuing to move Medicare payments away from fee-for-service toward value-based payment.  For the core ACA health insurance access and affordability programs, the budget simply seeks full funding of the status quo.

ACA funding is divided among several agencies.  Funding for the premium tax credits and cost-sharing reduction payments is found in the Department of the Treasury, Internal Revenue Service budget.  The FY 2016 budget projects premium assistance tax credits to cost $39.164 billion and cost-sharing reduction payments to cost $6.215 billion.  This is classified as mandatory spending and thus does not require a separate appropriation.  Funding for enforcing the employer and individual responsibility provisions is not separately budgeted and is presumably found in the IRS general enforcement and operations support budgets.

Most categories of ACA insurance reform and affordability expenditures are covered, however, by the budget of the Centers for Medicare and Medicaid Services (CMS) within the Department of Health and Human Services (HHS).

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Implementing Health Reform: ACA-Related Tax Penalties Waived; High Court Turns Back Oklahoma AG (Open Enrollment, CO-OP UpDate)


January 27th, 2015

The Internal Revenue Serviceissued a Notice on January 26, 2015 stating that it intends to grant relief from certain penalties that could otherwise be imposed on individuals who have a balance due on their 2014 taxes because the amount that they received in advance premium tax credits exceeded the amount that they were actually due.  The penalties are those that would otherwise apply for late payment of a balance due and for underpayment of estimated taxes.  The relief only applies to individuals who meet certain requirements and only for 2014.

Section 6651(a)(2) of the Internal Revenue Code imposes a penalty for a failure to pay the amount of taxes owing on a tax return by the date it is due, which is usually April 15 of the following year.  It does not apply if the failure was due to a reasonable cause.  Section 6654(a) imposes a penalty for underpayment of estimated taxes, although it does not apply unless the underpayment exceeds certain limits and can be waived under certain circumstances.

Individuals who received advance premium tax credits during 2014 must reconcile these amounts with the premium tax credits they were actually owed.  In some instances this will result in an overpayment, which must be repaid to the IRS.  Absent the relief granted by this Notice, some of enrollees who received too much in premium tax credits might owe a penalty for failing to repay the overpayment by April 15 or for failing to have paid enough in estimated taxes to cover the amount due.

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Implementing Health Reform: FAQs On Taxes And The ACA (January 24 Update)


January 13th, 2015

In the next few days, consumers who enrolled in qualified health plans through the marketplaces in 2014 will begin receiving IRS form 1095-As from the marketplaces, be they the federally facilitated marketplaces (FFMs) or state-operated marketplaces.  The form 1095-A is the form that provides individuals who have enrolled in qualified health plans through the marketplaces the information they need to fill out form 8962, which in turn is the form enrollees will need to reconcile the advance premium tax credits (APTC) they received in 2014 with the premium tax credits they were actually entitled to.  The marketplace also reports the information on the 1095-A to the IRS.

On January 12, 2015, HHS released a series of frequently asked questions about the 1095-A at its REGTAP website, which are reviewed here. This post also briefly covers other ACA-related developments.

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Implementing Health Reform: Open Enrollment Progress For 2015 (Updated)


December 31st, 2014

On December 30, 2014, the Centers for Medicare and Medicaid Services released several reports on enrollment numbers covering the second marketplace enrollment period to date.  It released its first monthly ASPE (Assistant Secretary for Planning and Evaluation) report covering October 15 to November 15, 2014.   (press release here  )  The ASPE report for the first time includes some — very incomplete — information on enrollment in the state-operated exchanges.

CMS simultaneously released a snapshot report covering enrollment in the Federally Facilitated Marketplace (FFM) for the sixth week of open enrollment.

The bottom line is that the reports confirm what we all knew already: The first month of open enrollment is going much better than the early months of open enrollment last year.  As of December 26, 6,490,492 individuals had selected a plan through the FFM.  Only 96,446 selected a plan in Week 6, compared to 3.9 million in week 5, emphasizing again the importance of the December 15 deadline for January 1 coverage in driving enrollment.

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Implementing Health Reform: Proposed Changes To Summary Of Benefits And Coverage, Uniform Glossary (Updated)


December 23rd, 2014

On December 22, 2014 the Departments of Treasury, Labor, and Health and Human Services, stubbornly refusing to allow the rest of us to start our holidays, released a joint notice of proposed rulemaking to amend the Summary of Benefits and Coverage and Uniform Glossary rule (fact sheet).  In conjunction with the proposed rule, the Departments released a proposed updated Uniform Glossary and proposed updated summary of benefits and coverage (SBC) templates, SBC language, instructions, and coverage example narratives and calculators.  The changes proposed will be effective as of the first open enrollment period or plan year beginning on or after September 1, 2015.

The Affordable Care Act requires health insurers to offer to group health plans, and health insurers and group health plans to offer to their applicants and enrollees, SBCs that summarize the coverage offered by the insurer or plan, including coverage and limitations, through the use of a common SBC template.  The SBC allows potential groups and applicants to comparison shop among potential plans, but also helps enrollees to better understand the coverage offered and limitations and restrictions imposed by the plan in which they are enrolled.

The initial SBC rule, promulgated early in 2012, was the end product of a lengthy process and was based on the recommendations of a panel convened by the National Association of Insurance Commissioners.  Since the 2012 rule was issued, however, the agencies have released a stream of frequently asked questions modifying, clarifying, and conditioning the 2012 rules. (FAQs Parts VII, VIII, IX, X, XIV, and XIX) The proposed regulations and accompanying documents incorporate much of this interim guidance, and they update the 2012 rule to take account of the changes made in insurance markets by the 2014 reforms.

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Implementing Health Reform: Wraparound Coverage Excepted Benefits And Draft 2016 Letter To Issuers (Updated)


December 20th, 2014

In December 19, 2014, in what one hopes were their last major regulatory actions before the holidays, the Departments of Labor, Health and Human Services, and Treasury released a proposed rule on a new excepted benefit for wraparound coverage, while the Centers for Medicare and Medicaid Services released a Draft 2016 Letter to Issuers in the Federally Facilitated Marketplace.

This post will describe the wraparound coverage proposed rule.   It will be updated in the next day or two to analyze the letter to issuers (issuers being the Affordable Care Act word for insurers.)  I will note briefly, however, that the letter to issuers is very similar to the 2015 letter to issuers, with two major exceptions.  First, because open enrollment for 2016 begins on October 1, rather than November 15, as in 2015, the time frame for completing regulatory review begins earlier and is quite compressed.  Second, the 2016 letter picks up on a few new regulatory initiatives for 2016, such as attempts to provide more accurate provider directories and formulary information.  These changes will be explored more thoroughly in the update to this post.

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Implementing Health Reform: Enrollment And Reenrollment For 2015 (Updated)


December 16th, 2014

The December 15, 2014 deadline for reenrolling in qualified health plan (QHP) coverage to assure continuous coverage as of January 1, 2015 has come and gone.  Individuals who were enrolled through the federally facilitated marketplace (FFM) for 2014 but did not return to the marketplace to shop for 2015 plans will be passively reenrolled in their 2014 plan or in a plan similar to it.  The 2015 open enrollment period lasts through February 2015, and individuals can return to the FFM at any time before then to change plans.  But the change will not be effective for January 1.

A number of state-operated exchanges—including New York, Massachusetts, Idaho, Rhode Island, Washington, Minnesota, and California—have reportedly either extended the date by which individuals can enroll or reenroll and still have coverage effective January 1 or given individuals who had begun the enrollment process as of December 15 extra time to complete the process for January 1 coverage.  The FFM has not extended the deadline.

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Implementing Health Reform: Beneath The Hood Of The ‘Cromnibus’


December 12th, 2014

The “Consolidated and Further Continuing Appropriations Act, 2015” or “Cromnibus” legislation moving through Congress contains a number of provisions that relate to the implementation of the Affordable Care Act (ACA).

Risk Corridors

The provision that has been most widely noted so far requires the risk corridor program to be budget neutral for 2014. The risk corridor program moves funds from qualified health plans (QHPs) that have lower than anticipated allowable costs to those with higher than anticipated allowable costs. Section 1342 of the ACA, which creates the risk corridor program, contains no explicit appropriation.

A report issued earlier this year by the Government Accountability Office (GAO), which is the final authority on the legitimacy of government expenditures, determined that the continuing resolution for 2014 permitted the Centers for Medicare and Medicaid Services (CMS) to fund the risk corridor program for 2014 both from payments collected from plans with lower than anticipated costs, which were properly characterized as user fees, and from funds transferred from other CMS accounts. No risk corridor payments were in fact payable in 2014, however, as risk corridor payments will first be made in 2015 for 2014.

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Implementing Health Reform: Federal Exchange Reenrollment And More (Updated)


December 2nd, 2014

On December 1, 2014, the Centers for Medicare and Medicaid Services (CMS) released a Guidance for Issuers on 2015 Reenrollment in the Federally facilitated Marketplace (FFM).  This guidance sets out in great detail—with clarifying examples—the process which the FFM and insurers will use to send and receive enrollments and reenrollments for 2015, including the process that the FFM will use to communicate to an insurer when a 2014 enrollee selects a different insurer for 2015 coverage.  The guidance is primarily directed at insurers but should also be of interest to consumers and those who are assisting them.  It demonstrates, I believe, a much higher degree of planning and intentionality than was evident in the 2014 open enrollment period, when enrollment rules often seemed to be developed on the fly.

This post describes the reenrollment guidance, as well as initial enrollment figures for the FFM and other ACA-related developments.

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Implementing Health Reform: Minimum Essential Coverage And The Multi-State Plan


November 24th, 2014

Two earlier posts this past weekend analyzed the massive Department of Health and Human Services 2016 Benefit and Payment Parameter Proposed Rule, released on November 21.  Also on November 21, the Internal Revenue Service of the Department of the Treasury released a final rule on Minimum Essential Coverage and Other Rules Regarding the Shared Responsibility Payment for Individuals, while the Office of Personnel Management released proposed modifications to the multi-state plan (MSP) program rule.  This post explores these rules.

Minimum Essential Coverage

The ACA requires Americans to either maintain “minimum essential coverage” (MEC) or pay a tax.  There are a number of exceptions to the requirement, however, and the concept of MEC can become quite complicated.  The final rule published by the IRS provides guidance as to the meaning of MEC and the rules governing some of the exceptions.

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