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Tax-Exempt Status For Nonprofit Hospitals Under The ACA: Where Are The Final Treasury/IRS Rules?


October 23rd, 2014

Months have now stretched into years, and there still remains no sign of final Treasury/IRS regulations interpreting the Affordable Care Act (ACA)’s provisions covering the expanded obligations of nonprofit hospitals that seek tax-exempt status under §501(c)(3) of the Internal Revenue Code.

The ACA amendments do not depend on formal agency policy to take effect. Nonetheless, Congress directed the Treasury Secretary to issue regulations and guidance necessary to carry out the reforms (26 U.S.C. §501(r)(7)). To this end, two important sets of proposed rules were issued: the first in June, 2012; and the second, in April 2013. While an informative IRS website lists various proposed rules and guidelines important to nonprofit hospitals, final rules seem to have performed a disappearing act.

Apparently recognizing the problems created by its delays, the agency has gone so far as to issue a special Notice letting nonprofit hospitals (and presumably the public) know that they can rely on its proposed rules. But this assurance overlooks the fact that the proposed rules themselves contained crucial areas in which final agency policy has not yet been adopted.

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Health Affairs Web First: Noneconomic Damage Caps Reduced Medical Malpractice Payments, With Varied Effects


October 22nd, 2014

With the 2014 election weeks away, a provision of California’s Proposition 46, raising the cap on medical malpractice payments for noneconomic damages, has been in the news. This provision would increase the payment cap from $250,000 to $1.1 million. A new study, being released today by Health Affairs as a Web First, sheds light on the potential effect of this proposition.

Study authors Seth A. Seabury, Eric Helland, and Anupam B. Jena looked at the impact of medical malpractice reforms on the average size of malpractice payments in several physician specialties and compared how the effects differed according to the size of the cap. It found that caps reduced the average payments by 15 percent compared to no cap—and a $250,000 cap reduced average payments by 20 percent.

On the other hand, a less restrictive $500,000 cap had no significant effect. The authors also found specialty variations, with the largest impact involving pediatricians and the smallest for claims of surgical subspecialties and ophthalmologists.

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Implementing Health Reform: The Qualified Health Plan Federal Exchange Participation Agreement And More


October 21st, 2014

CMS continues to put the pieces into place that are needed for the launch of the 2015 coverage year.  On October 16, 2014, the Centers for Medicare and Medicaid Services released at its REGTAP.info website the certification agreement and privacy and security agreement that qualified health plan (QHP) insurers must sign with CMS to access the federally facilitated exchange (FFE), the federally facilitated SHOP (FF-SHOP), and CMS Data Services Hub.  The agreement focuses primarily on obligations that the QHP insurer undertakes to protect personally identifiable information and to ensure secure communications with CMS, although it also addresses the effective date and termination of the agreement and a few other issues.  Most of the terms of the agreement are unremarkable, and this post will only comment on a few.

QHP insurers undertake under the agreement to protect personally identifiable information and to ensure secure communications with CMS in conformity with applicable laws, regulations, and standards.  They must also ensure that their contractors and downstream entities comply with these requirements.  QHP insurers agree to report any personally identifiable information incidents or breaches to CMS within 72 to 96 hours.  This is a far cry from the one-hour breach reporting requirement proposed by CMS last year but never finalized, but perhaps recognizes the difficult of identifying and assessing a security breach.

The agreement expressly recognizes that QHP insurers have developed their products based on the assumption that advance premium tax credits and cost-sharing reduction payments will be available through the marketplace and that QHP insurers could have cause to terminate the agreement if this assumption ceases to be valid.  This could be interpreted as a reference to the Halbig/King litigation which currently threatens the availability of tax credits and cost-sharing reduction payments through the FFE, but could also have been included in recognition of the likely Republican takeover of the Senate and the possibility that the Republicans may accomplish through budget reconciliation or otherwise their longstanding goal of repealing the ACA.  As the agreement is renewable from year to year, this clause may contemplate contingencies in the indefinite as well as the near future

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Enrolling College Students In Health Insurance: Lessons From California (Part 2)


October 21st, 2014

Editor’s note: As we approach the beginning of the second open enrollment period under the Affordable Care Act, Walter Zelman describes an effort he led during last year’s initial open enrollment period to enroll students in the California State University (CSU) system in coverage. Part 1 of this post provided background on the CSU system and the enrollment effort, the CSU Health Insurance Education Project, as well as a discussion of what worked well. Part 2, below, addresses what worked less well, as well as project results, lessons and policy implications, and next steps.

In addition to Zelman, authors of this post include Wendy Lee, now in a Masters of Public Health Program at Johns Hopkins; Natasha Buransombati, now in a graduate program in Nursing and Public Health at the University of Seattle in Washington; and Carla Bracamonte, now in an MPH program at California State University, Fullerton. As CSU students, Lee and Buransombati served as regional coordinators for HIEP and Bracamonte served as a coordinator, CSU Los Angeles.

IV.  What Worked Less Well

Assessments as to what did not work must be rendered with caution. In most cases lack of success may have been due to lack of emphasis or time, to the relative inexperience of student educators, or the failure of project leaders to follow-up aggressively with CSU or administrative personnel.

Campus groups, social media, and web pages

Most striking and disappointing, was the difficulty in engaging campus groups. Many seemed supportive of the mission. But, in the end, most were unable to commit time and resources to the project, even after repeated engagement by project representatives. Most campus groups had specific goals and agendas, and promoting insurance coverage to students was not one of them. More time or resources might have produced more campus organization support, but these were not available.

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The $500 Billion Medicare Slowdown: A Story About Part D


October 21st, 2014

A great deal of analysis has been published on the causes of the health care spending slowdown system-wide — including in the pages of Health Affairs. Much attention in particular has focused on the remarkable slowdown in Medicare spending over the past few years, and rightfully so: Spending per beneficiary actually shrank (!) by one percent this year (or grew only one percent if one removes the effects of temporary policy changes).

Yet the disproportionate role played by prescription drug spending (or Part D) has seemingly escaped notice. Despite constituting barely more than 10 percent of Medicare spending, our analysis shows that Part D has accounted for over 60 percent of the slowdown in Medicare benefits since 2011 (beyond the sequestration contained in the 2011 Budget Control Act).

Through April of this year, the last time the Congressional Budget Office (CBO) released detailed estimates of Medicare spending, CBO has lowered its projections of total spending on Medicare benefits from 2012 through 2021 by $370 billion, excluding sequestration savings. The $225 billion of that decline accounted for by Part D represents an astounding 24 percent of Part D spending. (By starting in 2011, this analysis excludes the direct impact of various spending reductions in the Affordable Care Act (ACA), although it could still reflect some ACA savings to the extent that the Medicare reforms have controlled costs better than originally anticipated.) Additionally, sequestration is responsible for $75 billion of reduced spending, and increased recoveries of improper payments amount to $85 billion, bringing the total ten-year Medicare savings to $530 billion.

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Resources Don’t Solve Design Flaws


October 21st, 2014

The first three sessions of a conference I recently attended tackled some complex and important questions: How do we extend health insurance to people such as migrant and informal workers who don’t fit neatly into mainstream coverage programs? As we increase our investment in primary care, how do we assure that the performance of the primary care system is at the highest possible level? What types of evidence should we use as we make decisions in a dynamic health care system with limited opportunities for “gold standard” randomized controlled trials?

These are excellent questions, and they were perfect topics for a cutting-edge conference discussing the challenges facing the U.S. health care system.

But this conference was not about the U.S. health care system. These were opening “satellite” sessions at the Third Global Symposium on Health Systems Research held in Cape Town, South Africa.

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Enrolling College Students In Health Insurance: Lessons From California (Part 1)


October 20th, 2014

Editor’s note: As we approach the beginning of the second open enrollment period under the Affordable Care Act, Walter Zelman describes an effort he led during last year’s initial open enrollment period to enroll students in the California State University system in coverage. Part 1 below provides background on the CSU system and the enrollment effort, the CSU Health Insurance Education Project, as well as a discussion of what went well. Part 2, which will appear tomorrow, addresses what did not go so well, as well as project results, lessons and policy implications, and next steps.

In addition to Zelman, authors of this post include Wendy Lee, now in a Masters of Public Health Program at Johns Hopkins; Natasha Buransombati, now in a graduate program in Nursing and Public Health at the University of Seattle in Washington; and Carla Bracamonte, now in an MPH program at California State University, Fullerton. As CSU students, Lee and Buransombati served as regional coordinators for HIEP and Bracamonte served as a coordinator, CSU Los Angeles.

The California State University (CSU) system is the largest public university system in the nation, as well as one of the most diverse. The CSU Health Insurance Education Project (HIEP) received a $1.25 million grant to educate students in the CSU system about the Affordable Care Act and health coverage options through California’s new marketplace, Covered California. A pre-open enrollment, multi-campus poll found that approximately 25-30 percent of CSU students were uninsured, primarily because they could not afford insurance.

The project placed student educators on the CSU’s 15 largest campus. Over a seven-month period they gave approximately 1500 classroom presentations, and conducted 70 forums and 300 enrollment events. University administrators sent out over 1 million emails to CSU students. Project strategy emphasized a focus on affordability, the need for insurance (accidents happen), and the simplicity of the enrollment process.

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Teaching Health Centers: An Attainable, Near-Term Pathway To Expand Graduate Medical Education


October 17th, 2014

Stakeholders in Graduate Medical Education (GME) and members of Congress eagerly anticipated the long delayed but recently released Institute of Medicine (IOM) GME report. While perceptively characterizing the defects in our GME system, recommendations of the report generated substantial controversy among participants at a recent GME forum hosted by Health Affairs. The IOM proposed limited and gradual changes in Medicare GME financing, but the lack of support for GME expansion was not well received by some.

At present there are multiple legislative GME proposals, but none has gained broad support among the various stakeholders. Congressional committees responsible for GME funding view this lack of consensus among GME stakeholders as a major obstacle.

We describe a near-term and attainable pathway to expand GME that could gain consensus among these stakeholders. This approach would sustain and expand Teaching Health Centers (THCs), a recent initiative that directly funds community-based GME sponsoring institutions to train residents in primary care specialties, dentistry and psychiatry. We further propose selectively expanding GME to meet primary care and other demonstrable specialty needs within communities, and building in evaluations to measure effectiveness of innovative training models.

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Implementing Health Reform: Renewing Coverage For 2015


October 16th, 2014

On October 15, 2014, the Centers for Medicare and Medicaid Services (CMS) announced, with a month to go before the 2015 open enrollment begins on November 15, that it is beginning to send out notices to enrollees in the federally facilitated marketplace (FFM), explaining to them how to renew their coverage for 2015.

CMS is urging consumers to come back to the marketplace as it opens on November 15 to update their 2015 application and to make sure they are enrolled in the qualified health plan (QHP) that best meets their financial situation and health needs for 2015. The procedure outlined in the announcement is that set out in the FFM redetermination guidance issued in June. State-operated exchanges are also, presumably, beginning to inform their enrollees regarding their own 2015 redetermination processes.

Redetermination Notice

FFM Consumers will receive one of six notices. Consumers who visited the marketplace in 2014 and were determined eligible for coverage but who did not enroll, are being sent a notice urging them to return to the marketplace and enroll when the open enrollment period begins. Consumers who enrolled for 2014 but have not been receiving tax credits either because they were not eligible, did not apply, or were determined eligible for tax credits but declined assistance, are urged to return to the marketplace and reenroll in coverage.

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Implementing Health Reform: Reference Pricing And Network Adequacy


October 12th, 2014

On October 10, 2014, the Departments of Labor, Treasury, and Health and Human Services issued a frequently asked question (FAQ) regarding the use of reference-based pricing in non-grandfathered large group employer plans.  Although the issue the FAQ addresses specifically is the use of reference pricing, the FAQ is remarkable insofar as it is the first departmental guidance that I am aware of that addresses the use of networks by self-insured ERISA plans.

Network adequacy is an issue that has long been addressed in the nongroup and insured group market in many states by state insurance law.  The ACA also requires qualified health plans, and arguably any individual and small group plan subject to the essential health benefits requirements, to have adequate provider networks.  Special rules implementing ACA section 2719A of the ACA limit cost-sharing for out-of-network coverage for emergency services.

The departments also stated in an earlier FAQ that cost sharing cannot be applied by any non-grandfathered health plan for preventive services provided by out-of-network providers if the services are not available in network.   But I am unaware of the departments otherwise attempting previously to regulate group health plan network requirements, at least under the ACA.

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The Latest Health Wonk Review


October 10th, 2014

At Managed Care Matters, Joe Paduda provides this week’s edition of the Health Wonk Review. Joe’s post is an interesting read and includes a Health Affairs Blog post on from Suzanne Delbanco on results from the National Scorecard on Payment Reform.

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A Patient Advocate’s Perspective On Paying For Value


October 9th, 2014

When patient-centered outcomes research “is used well, it can be a powerful tool in making medical care better informed, without limiting patients’ and providers’ choices.” That was the promise that I, and many others, held out with creation of the Patient-Centered Outcomes Research Institute (PCORI) in 2010. Will PCORI achieve this goal? It is increasingly clear that evolving “value-based” payment models in health care, accelerated via the Affordable Care Act (ACA), will play a central role in how that question gets answered.

The movement to place greater financial risk on providers in an effort to pay for value rather than volume will have the effect of fundamentally changing the way health care providers interact with patients. But the question in value-based payment remains: value to whom? The answer should be, of course, value to the patient. And the answer will be, intrinsically, shaped by application of evidence.

While I applaud efforts to improve and advance our health care system through payment and delivery reforms, I am also mindful that such value-based payment systems must be built upon the foundation of “patient-centeredness.” Indeed, lawmakers and policy experts have long agreed that a “patient-centered healthcare system” is the Holy Grail of bipartisan health care reform. Yet despite significant progress in advancing patient-centeredness in our health system, much more work remains to be done.

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Drug Discount Analysis Misses The Mark


October 8th, 2014

Rena Conti and Peter Bach’s analysis of disproportionate share (DSH) hospitals in the 340B drug discount program — published in the October issue of Health Affairs — neglects an essential point: compared to non-340B DSH hospitals, 340B DSH hospitals provide over twice as much care to Medicaid and low-income Medicare patients, and almost twice as much uncompensated care. 340B DSH hospitals across the board provide high levels of uncompensated care. For these and other reasons enumerated below, the article does not support the criticism that 340B DSH hospitals are no longer serving vulnerable patients.

First, Conti and Bach misconstrue the 340B program’s intent. 340B is not – and never was – a direct assistance program for the poor. According to the Government Accountability Office, “The 340B program allows certain providers within the U.S. health care safety-net to stretch federal resources to reach more eligible patients and provide more comprehensive services, and we found that the covered entities we interviewed reported using it for these purposes.”

For example, 340B savings help The Henry Ford Hospital fund four oncology clinics and related services in Detroit and surrounding townships. The program is also enabling Henry Ford to hire pharmacists and nurses to follow up with their patients to ensure they are taking their medicines properly and that the treatment is effective.

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Reminder: Health Affairs Briefing: Specialty Pharmaceuticals


October 3rd, 2014

We live in an era of specialty pharmaceuticals — drugs typically used to treat chronic, serious or life threatening conditions such as cancer, rheumatoid arthritis, growth hormone deficiency, and multiple sclerosis.  Their cost is often much higher than traditional drugs, and they are set to account for more than half of all drug spending by the end of this decade.

The October 2014 edition of Health Affairs, “Specialty Pharmaceutical Spending and Policy,” contains a cluster of articles examining the host of issues related to specialty pharmaceuticals: from the promise they hold for curing or managing chronic diseases, to the risk they pose for exacerbating health care costs and disparities, and the challenges they present for policymakers striving to balance both.

Please join us on Tuesday, October 7, for a briefing on the October issue moderated by Health Affairs Editor-in-Chief Alan Weil.

WHEN: 
Tuesday, October 7, 2014
9:00 a.m. – 11:30 a.m.

WHERE: 
Hyatt Regency Capitol Hill
400 New Jersey Avenue, NW
Washington, DC, Lower Level

REGISTER NOW!

Follow Live Tweets from the briefing @Health_Affairs, and join in the conversation with #HA_SpecialtyDrugs.

Health Affairs is grateful to CVS Health for its financial support of the issue and event.

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New Health Policy Brief: The Physician Payments Sunshine Act


October 3rd, 2014

A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation (RWJF) looks at a section of the Affordable Care Act (ACA), known as the Physician Payments Sunshine Act (PPSA). The PPSA
spells out how medical product manufacturers are required to disclose to the Centers for Medicare and Medicaid Services (CMS) any payments or other transfers of value made to physicians or teaching hospitals as well as physician ownership or investment interests in certain manufacturers or group-purchasing organizations.

These data, which have been collected since August 2013, were published for the first time earlier this week in a publicly searchable database and will be updated annually. There is a long history of financial relationships between physicians and medical product manufacturers, which can include anything from free meals to consulting, speaker fees, and direct research funding. This health policy brief looks at the PPSA and its impact on physician-manufacturer relationships.

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The VA Post-Scandal: New Law And New Leadership


October 2nd, 2014

Editor’s note: For more on this topic, see the Health Affairs Blog posts from Theodore Stefos and James Burgess and Jonathan Bush

In the wake of the recent scandals in the Department of Veterans Affairs (VA), new leadership was installed with former Procter & Gamble CEO Robert McDonald confirmed as Secretary by Congress on July 29 and the Veterans Access, Choice and Accountability Act of 2014 became law on August 7. The Act, fashioned with VA cooperation and described as a VA overhaul, provides resources for the Veterans Health Administration (VHA), demands greater accountability and transparency and introduces the ability of certain VHA enrollees to choose private health care.

The Act’s bipartisan support and the rapidity of its design and passage (perhaps a model of productive legislative discussions) reflect strong support in the country for veterans. As the new law and new VA leadership pass the one-month mark of the two-year window to the end of this administration, the focus will be on how effectively VA implements the law and makes other strides.

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Vets Deserve The Right To Shop For Care


October 2nd, 2014

Editor’s note: For more on this topic, see the Health Affairs Blog post from Theodore Stefos and James Burgess, and stay tuned for an upcoming blog post from Joel Kupersmith. 

As former Procter & Gamble CEO Robert McDonald steps in to lead the Department of Veterans Affairs (VA), it’s difficult not to think about the thousands of physicians across the U.S. who are chomping at the bit to contribute to the fix. Even before his recently confirmed appointment, McDonald said his focus would be on getting veterans the benefits and care they deserve. This customer-focused approach and his appointment in general have been greeted with rare bipartisan praise and unanimous passing. However, as the saying goes, the devil is in the details.

According to reports, tens of thousands of veterans have been waiting three months or longer for an initial appointment. Three months? Data from athenahealth’s national, cloud-based network of more than 55,000 health providers representing approximately 57 million patient records, recently found that the median wait time for a primary care visit for a new patient last year was about three days; non-well-visit wait times averaged around one day.

The point is that veterans have been waiting far longer for appointments than the general population at a time when the health care provider ecosystem – whether hospital or practice – outside the VA often struggles to fill beds and open slots. Seemingly, there are providers nationwide who would be eager to care for these vets and benefit from their business. For new VA Secretary Robert McDonald, a renowned consumer-goods leader, this supply and demand scenario nearly solves itself.

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An Interview With George Halvorson: The Kaiser Permanente Renaissance, And Health Reform’s Unfinished Business


September 30th, 2014

For decades, health policymakers considered Kaiser Permanente the lode star of delivery system reform.  Yet by the end of 1999, the nation’s oldest and largest group model HMO had experienced almost three years of significant operating losses, the first in the plan’s history. It was struggling to implement a functional electronic health record, and had a reputation for inconsistent customer service.  But most seriously, it faced deep divisions between management and the leadership of its powerful Permanente Federation, which represents Kaiser’s more than 17,000 physicians, over both strategic direction and operations of the plan.

Against this backdrop, Kaiser surprised the health plan community by announcing in March 2002 the selection of a non-physician, George Halvorson, as its new CEO.  Halvorson had spent most of his career in the Twin Cities, most recently as CEO of HealthPartners, a successful mixed model health plan.  Halvorson’s reputation was as a product innovator; he not only developed a prototype of the consumer-directed health plan in the mid-1990’s, but also population health improvement objectives for its membership, both firsts in the industry.

During his twelve year tenure as CEO, Halvorson not only guided the plan to solid profitability, but added a million members in California, its largest market, despite a devastating recession and a national retreat of commercial HMO membership.  He invested over $6 billion in computerized patient care systems and population health management infrastructure, healed the breach with Kaiser’s physicians, and markedly increased its consumer satisfaction scores, earning 5 STAR ratings under Medicare Advantage.  He left the organization at the end of 2013 with more than $53 billion in revenues and more than $19 billion in reserves and investments.

This interview covers Halvorson’s time at Kaiser, his views of health reform, including the unfinished reform agenda, and his public health activism.  It was conducted by Jeff Goldsmith, a veteran health industry analyst, and Associate Professor of Public Health Sciences at the University of Virginia.  Jeff is a member of the editorial board of Health Affairs.

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The Payment Reform Landscape: Value-Oriented Payment Jumps, And Yet …


September 30th, 2014

Today, Catalyst for Payment Reform (CPR) unveiled some potentially exciting news: Our 2014 National Scorecard on Payment Reform tells us 40 percent of commercial sector payments to doctors and hospitals now flow through value-oriented payment methods, defined as payment methods designed to improve quality and reduce waste.  This is a dramatic increase since 2013 when the figure was just 11 percent.

Traditional fee-for-service, where we pay for every test and procedure regardless of its value, may rapidly be becoming a relic.  While the Scorecard findings are not wholly representative of health plans across the United States, they are directionally sound and allow us to measure progress toward value-oriented payment in the commercial sector.  (Scorecard findings are based on data representing almost 65 percent of commercial health plans across the country.)

On the face of it, this is thrilling news for CPR, especially since our organizational goal is that at least 20 percent of payments to doctors and hospitals will flow through methods proven to improve value by the year 2020.  But we are not closing up shop just yet.  The proliferation of value-based payment arrangements only matters if they succeed at reducing costs and improving the quality of care. And for many value-oriented payment models, we still don’t have the evidence.

We also remain a bit circumspect because only about half of the value-oriented payments (out of that 40 percent figure) put providers at some financial risk if they fail to improve care or spend over budget.  To employers and others helping to foot the bill for health care, many new payment methods often feel like “cost plus arrangements.”  Instead, purchasers would like to see risk sharing across payers and providers.

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Implementing Health Reform: Excepted Benefits Final Rule


September 29th, 2014

Congress adopted Title I of the Affordable Care Act to increase access to health coverage for individuals by reforming employer group health coverage and health insurance offered to individuals and groups, requiring large employers to offer their employees affordable minimum health coverage or pay a penalty, imposing a penalty on individuals who can afford health coverage but fail to obtain it, and offering advance premium tax credits through the exchanges to individuals who cannot otherwise afford to purchase health coverage.

Coverage has long been available both through groups and for individuals that provides some health-related benefits but is neither a group health plan nor insured health coverage, as those terms are defined in the ACA.  These benefits were originally labeled by the Health Insurance Portability and Accountability Act (HIPAA) of 1996 as “excepted benefits,” because they are excepted from the forms of benefits regulated initially by HIPAA and now by the ACA.

On September 26, 2014 the Internal Revenue Service, Department of Labor, and the Centers for Medicare and Medicaid Services (“the agencies”) issued regulations expanding access to excepted benefits through insured and self-insured groups.

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