Employer Compliance Alert! Union Backed Election Rule Changes

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NATIONAL LABOR RELATIONS BOARD PASSES LIMITED VERSION OF UNION-BACKED ELECTION RULE CHANGES

On November 30, during a closely-watched session, National Labor Relations Board Chairman Mark Pearce and Member Craig Becker voted to proceed with preparation of a final rule modifying the Board's election procedures to speed up the process in certain circumstances.  Member Brian Hayes, the only Republican Board member, opposed the majority's effort as a mistake that would "ultimately cause harm to the agency and the constituencies we serve." The changes that ultimately were passed represent a substantially more limited version of what initially had been proposed by the Board's majority and are summarized as follows: Elimination of pre-election appeals to the Board from the actions of the Regional Director on an election petition, providing instead only for a single, discretionary appeal of pre-election and post-election issues after the votes are cast.  An appeal to the Board prior to the election is limited to issues that otherwise would escape Board review if not raised prior to the election.    Express direction that a pre-election hearing is to determine only whether a question concerning representation exists, and that the hearing officer has authority to limit evidence taken at the hearing where the evidence does not have relevance to a genuine issue of fact material to that issue.  This means that questions of individual voter eligibility (as opposed to appropriate bargaining unit composition) will be litigated after the election, as opposed to before.  Also, the hearing officer may decline requests of parties to submit post-hearing briefs, which right previously was guaranteed by the Board's rules. Elimination of the current requirement that the vote may not be held sooner than 25 days after the Board's Regional Director issues a Direction of Election.  As a result, some elections likely will be held sooner after the Direction of Election than was previously the case. The new rules were passed notwithstanding substantial criticism from the business community and others who viewed this move as an attempt by labor-friendly Board members to speed up the election process prior to the end of Member Becker's recess appointment that ends on December 31.  As a result of the criticism and the threat by Member Hayes to resign, which move would have left the Board with two members and would have divested the Board from authority to conduct its business, the majority watered down the original proposal, eliminating the following proposed changes: The requirement that a hearing be held within seven days of the filing of a union's representation petition. Allowing the union's petition to be filed electronically, rather than the current practice requiring filing by hand or regular mail. The requirement that the employer prepare and file a comprehensive "statement of position" on the union's election petition no later than the date of the hearing, together with the requirement that any issues not raised by the employer in its statement are waived by the employer and may not be raised later. The requirement that unions be given employees' email addresses and telephone numbers prior to the election. The requirement that the voter eligibility list ("Excelsior list") be given to the union within two work days of the Direction of Election, instead of the current rule allowing for seven work days. These additional proposals remain open to future debate and adoption by the Board.  However, with the impending expiration of Member Becker's recess appointment, the question of whether these additional proposals stand a chance of passing remains unclear. The Board will draft a final rule codifying the adopted changes. The final rule is intended to be issued prior to the expiration of Member Becker's term. Opponents of the changes are working to block even the more limited the changes via legislation (the Workforce Democracy and Fairness Act, H.R. 3094), and potentially through judicial action. Even though the new rule will have less impact on employers than the originally proposed rule, the new rule still substantially shortens the period from filing of the petition to the date of election from the current Board election target of 42 days.  Elections almost certainly will be held more quickly. The actual period will be determined by the circumstances of each case. The fact that elections will be held more quickly underscores the need of employers to remain constantly vigilant regarding potential union organizing efforts in order to address such efforts at the earliest possible opportunity.

Health Care Reform Update: Benefits Summary Deadline Delayed

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Employer Health Care Reform Law Communication Mandate Delayed
Employers have more time to comply with rules dictated by the health care reform law that will require them to revamp how they communicate and explain their health care plans.  In a notice published Nov. 17, the Department of Labor (DOL) said the reporting requirements would not go into effect until after final rules are published.   "It is anticipated that the...final regulations, once issued, will include an applicability date that gives group health plans and health insurance issuers sufficient time to comply," the Labor Department said.

At the time the proposed rules were issued by the Health and Human Services (HHS), Labor and Treasury departments, federal regulators said they would go into effect on March 23, 2012.  Among other things, the proposed rules would require employers to provide employees with an "easy-to-understand" summary of benefits and coverage (SBC) and, upon request, a glossary of commonly used health care coverage terms, such as deductible and copay.  Plus, the summary of benefits and coverage would have to include the portion of expenses a health care plan would cover in each of three situations: having a baby, treating breast cancer and managing diabetes.

Agencies Issue FAQs on Health Care Reform's SBC Requirement and on Mental Health Parity Implementation
The DOL, HHS, and IRS have jointly issued a new set of frequently asked questions (Part VII) addressing health care reform's summary of benefits and coverage (SBC) requirement plus mental health parity implementation (MHPAEA).   This new FAQ seems to confirm that the final regulations may be significantly different from the proposals and suggests that there may be relief as to the applicability date as well.  While no one can predict exactly what the final requirements will be and although general preparation for future compliance probably remains advisable, relying too closely on current proposals may not be the best use of time and resources. 

Also, plan sponsors and their advisors will want to study the mental health parity FAQs closely.  The agencies characterize these as "clarifying FAQs" and stress that they will continue to investigate complaints regarding the MHPAEA requirements and will take enforcement action for violations to ensure compliance (these requirements took effect with plan years beginning on or after July 1, 2010).

The full text is available at http://www.dol.gov/ebsa/faqs/faq-aca7.html.

Health Care Reform Update: Tax Credits; NAIC Broker Vote; Supreme Court's Plans

Small Business Tax Credit Finds Few Claimants
On Nov. 7, the Treasury's Inspector General for Tax Administration released a report regarding the small business tax credit.  The preliminary evidence is now in, and the results show that despite IRS efforts to inform 4.4 million taxpayers who could potentially qualify for the credit, the volume of claims for the credit has been extraordinarily low. As of mid-May 2011, the IRS reported that slightly more than 228,000 taxpayers had claimed the credit for a total amount of more than $278 million.  While some additional returns can be expected to continue to come in until the extension deadlines later this year, the Congressional Budget Office estimate that taxpayers would claim up to $2 billion in FY 2010 will be off by more than 500 percent.
The report cites the following reasons for the low take-up rate:

• The legislation concerning which taxpayers qualify for the credit and how to calculate the credit amount is complex.
• There are multiple steps to calculate the credit, and seven worksheets (http://www.irs.gov/pub/irs-pdf/i8941.pdf) must be completed in association with claiming the credit.
• The rules themselves are complex, making it difficult for taxpayers to follow.
• The credit is new so there's risk of errors or irregularities occurring when the credit is claimed or processed, as both taxpayers and IRS employees will need to acquaint themselves with the rules.
• The credit is refundable to tax-exempt taxpayers, which is a high-risk factor for erroneous refunds. 
• The IRS had to complete new programming to accommodate the new Form 8941 and identify potential compliance risks.
• Taxpayers have been slow to claim the credit, and both taxpayers and tax practitioners are making mistakes on Form 8941.
• Some claims contained errors or were incomplete.

The full report is available at http://www.treasury.gov/tigta/auditreports/2011reports/201140103fr.pdf.

NAIC to Vote on Agent and Broker Resolution on Nov. 22
The National Association of Insurance Commissioners (NAIC) announced its Plenary Committee will meet on Nov. 22 at 4 p.m. EST to vote on a proposed resolution, titled "Resolution Urging the U.S. Department of Health and Human Services to Take Action to Ensure Continued Consumer Access to Professional Health Insurance Producers." 
The measure calls on Congress to "expeditiously consider legislation amending the MLR provisions of the PPACA in order to preserve consumer access to agents and brokers."  It also asks HHS to "take whatever immediate actions are available to the Department to mitigate the adverse effects the MLR rule is having on the ability of insurance producers to serve the demands and needs of consumers and to more appropriately classify independent producer compensation in the final PPACA MLR rule."
The resolution has been sponsored by the insurance commissioners of 22 states: Alabama, Arkansas, Delaware, Florida, Georgia, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Tennessee, Utah and Wisconsin.  NAHU has asked all members to encourage insurance commissioners in the other 28 states to support this measure. 

Supreme Court Will Hear PPACA Challenge This Spring
The U.S Supreme Court granted a writ of certiorari in the challenge that 26 states and the National Federation of Independent Businesses (NFIB) have raised against the Obama administration regarding the constitutionality of the Patient Protection and Affordable Care Act (PPACA).  Monday's announcement sets the stage for oral arguments by March and the potential for a decision in late June.  When setting the scope of its hearing on the case, the Supreme Court allowed for five and a half hours of oral arguments.  For the Supreme Court, this is a unprecedented amount of time. 
The information released by the court regarding their consideration is significant because it gives a number of key clues as to how the case will progress in the months going forward. 

• Even though the justices discussed five appeal challenges to PPACA (and are slated to consider a sixth challenge by the Commonwealth of Virginia next week), they decided to only grant certiorari to the 26-state/NFIB challenge.  This case was previously heard by the United States Court of Appeals for the 11th Circuit, in Atlanta, which has thus far been the only appeals court to declare the individual mandate provisions of PPACA unconstitutional.  However, the 11th Circuit declined to strike down the rest of PPACA as the plaintiffs requested, even though the law does not contain a "severability clause."  The 11th Circuit also upheld the law's expansion of the Medicaid program, rejecting the state's contention that that it also exceeded congressional authority.
• The court has agreed to hear arguments about not only the mandate, but also the law's Medicaid expansion, and whether or not certain provisions of the law, like the individual mandate, may be "severed" from the rest of it.  It's the contention of the NFIB and the states that if one provision is struck down, the entire law must be as well because the measure does not contain a "severability clause," and even the Obama administration has said publicly that it is "absolutely intertwined" with at least the insurance market reform provisions of the measure that make all policies guarantee issue and bar the consideration of preexisting conditions from 2014 on forward. 

The justices will also hear at least an hour of arguments as to whether a federal tax law, the Anti-Injunction Act, should apply in this case.  The Anti-Injunction Act prevents court action on a tax until it actually takes effect. The individual mandate penalties do not take effect until 2014, so if the court finds that the law applies, it would prevent review of the mandate until at least 2014.  However, in defending the constitutionality of the individual mandate up until this point, the Obama administration has repeatedly argued that the penalties are just that--penalties--and not a tax, so the commerce clause of the Constitution should not apply.  It would be hard for them to change their argument now and support a delay on a mandate ruling until 2014.

Health Care Reform Update: Marriage & Taxes

Thanks to our partners at UBA, we are able to provide you with the latest in Health Care Reform Updates: 

Health Law May Undermine Marriage

The health reform law could undermine marriage because once people tie the knot, they may no longer be eligible for tax incentives for insurance.  The law links the tax credit to household income, so two people whose combined income goes above a certain level will not be able to get a tax credit if they are married and file together.  But if they get divorced or stay single they might, individually, be eligible for a premium credit.  Giving people pause about marriage could be a big "unintended consequence" of the law.

Under the law, families as well as individuals can qualify for subsidies on a sliding scale, up to 400 percent of the poverty level.  The proposed rule issued by the administration disqualifies a family from claiming the credit if either spouse is offered an insurance plan at work with an out-of-pocket premium less than 9.5 percent of household income for self-only coverage.

The proposed rule on tax credits is somewhat unclear on the issue of affordability for families with employer-sponsored insurance.  It could be interpreted to mean that if only one spouse receives insurance through his or her employer, the family could be forced to choose between: 

• a divorce and tax credits
• buying individual insurance without a premium subsidy, or
• paying a penalty and forgoing insurance.

Some experts believe HHS may issue further guidance about family affordability, but this would have consequences too: More people obtaining tax credits would drive up the overall cost of the law.

Lawmakers Urge IRS To Change Proposed Health Law Subsidies Rule

On Friday, 24 lawmakers sent a letter to the Commissioner of Internal Revenue pointing to the specific language in the health law (PL 111-148, PL 111-152) that says the tax credits would go to individuals who are enrolled in "an exchange established by the state."  The lawmakers say that the proposed rule "expands individuals' eligibility for tax credits beyond PPACA's explicit text to individuals enrolled in qualified health plans who reside in states in which the federal government has established an exchange."  They ask the commissioner "to amend the proposed rule's language to be consistent with the letter of the health law."

Health Care Reform Update: Co-Op Answers & ERRP Appeals

CMS Answers Questions on Consumer Operated and Oriented Plan Program The Center for Consumer Information and Insurance Oversight (CCIIO) of the Centers for Medicare and Medicaid Services (CMS) on Oct. 6 published a list of frequently asked questions and answers (FAQ) pertaining to the Consumer Operated and Oriented Plan (CO-OP) program, adding to a another FAQ published on Sept 7.

Among the topics the FAQs cover is clarification that after receiving Letters of Intent (LOI) to apply for CO-OP loans, CMS does not anticipate to publicly post the names or locations of organizations filing such LOIs. However, LOI applicants should remember that all materials submitted to CMS are subject to the Freedom of Information of Act (FOIA) and any FOIA request will be examined against exceptions such as trade secrets outlined in the Department's FOIA regulation. The CMS has stated that applicants may access the Department's FOIA guidelines at http://www.hhs.gov/foia/45cfr5.html.

Whether or not approval will be available for start-up loan modifications necessary to satisfy the capital requirements associated with unexpected rapid growth or high enrollment, the CMS states that applicants should estimate their funding needs as accurately as possible in the business plan submitted as a part of the application, and should not assume that loan modifications will be available to provide additional funding.

CMS also has stated that an organization may not partner with an existing health insurance issuer to develop a CO-OP, since, under the PPACA, if an organization is a health insurance issuer that existed on July 16, 2009, a related entity, or any predecessor of either, that organization is not eligible for loans under the CO-OP program and cannot become a CO-OP. Also, a third-party administrator (TPA) may not develop a CO-OP unless the TPA was also a licensed health insurance issuer on July 16, 2009.

Whether or not an existing nonprofit entity has to form a separate entity to apply for funds and become a CO-OP, the CMS reiterated that, first, as a statutory requirement under the ACA, a health insurance issuer that was in existence on July 16, 2009 cannot sponsor a CO-OP. Under the proposed rule, the applicant must be the entity that will eventually become a CO-OP. Unless the sponsor wants to become a CO-OP, it should form a separate entity.

Finally, the CMS stated that a CO-OP can be founded by a consumer-run nonprofit self-insured multiple employer welfare arrangement (MEWA) that does not have an insurance license, but that is currently licensed in its domiciliary state as a nonprofit, self-funded MEWA, because entities not licensed as issuers on July 16, 2009, may apply.

HHS Issues Guidance on Appeals Process for Early Retiree Reinsurance Program
The Department of Health and Human Services (HHS) has issued guidance regarding how plan sponsors participating in the Early Retiree Reinsurance Program (ERRP) would submit a request for appeal of an adverse reimbursement determination, and how the appeals process works.

Definition of adverse reimbursement determination

• An adverse reimbursement determination is a determination constituting a complete or partial denial of a reimbursement request.
• This includes a determination regarding whether a given individual whom the sponsor has submitted to the Centers for Medicare and Medicaid Services (CMS) as an early retiree in advance of a reimbursement request satisfies the substantive criteria for being an early retiree for the entire time period claimed by the sponsor or whether a claim submitted in advance of a reimbursement request is for a health benefit, as defined by the ERRP statute, regulation, and other ERRP guidance.

Appealable determinations are ones that CMS makes based on the plan sponsor's submissions to CMS. A plan sponsor may not appeal a reimbursement determination on the ground that:

• it neglected to include a given item or service in its reimbursement request; 
• it misstated data with respect to a given item or service; or
• CMS could not process an Early Retiree List, Summary Claim Data, a Claim List, or a reimbursement request due to the fact that it was not submitted in the correct manner or format.

The ERRP statute and regulations do not permit plan sponsors:

• to appeal CMS determinations to deny an ERRP application
• to refuse to accept an application for processing, or
• to terminate approval of an application.

The denial of an application, the refusal to accept an application, or the termination of an application approval are related to whether a plan sponsor may participate in the program, not a determination about reimbursement for participating plan sponsors.

Request for appeal

The ERRP regulations state that a sponsor has 15 calendar days from the date of receipt of an adverse reimbursement determination to submit an appeal. The 15-calendar day period does not begin to run until the sponsor receives the relevant email that notifies the plan sponsor about the adverse reimbursement determination. That email will describe the 15 calendar-day time limit for submitting an appeal.

Documentation to submit

A request for appeal must specify the findings or conclusions with which the plan sponsor disagrees and the reason(s) for the disagreement(s). In submitting a request for appeal, a plan sponsor should include all information and data necessary for the HHS Departmental Appeals Board to evaluate the request and CMS to respond to the appeal, including:

• a copy of the email notifying the plan sponsor about the adverse reimbursement determination
• the amount of reimbursement at issue
• the application ID number
• plan year
• information about the items and services at issue including dates of service, and
• information about the individuals to whom the items or services were provided

Because the Appeals Board is independent of CMS:

• the plan sponsor should not assume that the Appeals Board would have information that the plan sponsor submitted to CMS, such as the plan sponsor's Claim List
• the plan sponsor also may submit supporting documentation not previously submitted to CMS
• the plan sponsor should not submit any documentation that is related to individuals, items or services not previously included in the Early Retiree List or Claim List, to the extent the adverse reimbursement determination being appealed is directly related to the response files sent with respect to those lists

How and where to submit documentation

If a plan sponsor wishes to submit its request for appeal and/or supporting documentation electronically, the plan sponsor should call the Appeals Board at 202.565.0208 as soon as possible before the applicable deadline to ascertain whether the Board is able to accept the submission electronically and to obtain any instructions for submission. Any electronic submissions must be made using the DAB web portal. Requests for appeal and supporting documentation must be mailed to the Department of Health and Human Services Departmental Appeals Board, MS 6127 Appellate Division 330 Independence Ave., S.W. Cohen Building - Room G-644 Washington, D.C. 20201.

Health Care Reform Update: Lab Rules; ERRP; Wellpoint Purchase

Our partners at UBA have helped us to bring you this week's latest in the Health Care Reform Updates:

U.S. Plan Would Boost Access to Lab Results

The Obama administration proposed a new rule that would allow patients to have direct access to electronic medical records, including lab results without waiting to hear them from a doctor. At present, patients can only obtain lab results if their physicians provide authorization, or if they reside in a few states which allow such access.

The rules proposed by the Department of Health and Human Services are part of a broader effort to give patients greater access to medical data electronically so they can become more engaged in their care. They would replace a confusing patchwork of state laws and privacy statutes and affect more than 6 billion lab tests a year.

CMS Issues Changes to Claims Submissions for Early Retiree Reinsurance Program
The Centers for Medicare and Medicaid Services (CMS) has announced several changes to improve and streamline the process of submitting claims data for Early Retirement Reinsurance Program (ERRP) reimbursement requests.

On Monday, Oct. 3, 2011, CMS will begin providing specific, claim line-level feedback to sponsors who submit claim lists through a new, fully automated review system.

• Given this expedited feedback, all claim lists submitted on or after Oct. 3 must be error-free (it must pass the automated review) in order for the plan sponsor to be able to submit a reimbursement request, and then be approved for payment.
• If a claim list is determined to be invalid as a result of the automated review and cancelled from the system, the sponsor may resubmit a corrected claim list.
• Similarly, before the automated processing system becomes effective in October 2011, Claim lists and reimbursement requests that have errors will be cancelled from the system, and plan sponsors may resubmit them.

To provide plan sponsors with sufficient time to prepare for this level of review, the deadline for plan sponsors to submit error-free claim lists in support of reimbursements received based on a summary of aggregated claims has been extended from Dec. 31, 2011, to March 30, 2012.

Finally, CMS is granting sponsors additional flexibility in submitting detailed claims information, offering options on some elements while maintaining fiscal integrity. Plan sponsors should refer to the updated claim list layouts provided on http://www.errp.gov/  for guidance on how to supply required data, and to the questions and answers provided below.

Plan sponsors that have questions or additional information should contact the ERRP Center at http://www.errp.gov/contact_us.shtml 

For more information, visit:

http://www.errp.gov/newspages/20110912-cms-claim-list-update.shtml.



WellPoint Buys Insurance Exchange to Compete With State-Run Health Markets
WellPoint and two nonprofit health insurers purchased a 78 percent stake today in Bloom Health, a closely held benefits company in Minneapolis, for an undisclosed sum. Bloom is a two-year-old online private health-insurance exchange that offers a menu of health plans to about 20,000 workers at almost 50 companies.

Private exchanges compete for employers with the U.S. state-run marketplaces set to open in 2014 under President Barack Obama's health care overhaul. Using a private exchange such as Bloom would limit an employer's costs and provide consistency compared with separate state-run exchanges, each with their own regulations.

A study by New York-based consulting firm McKinsey & Co. said that as many as one-third of U.S. companies are considering giving up employer-sponsored health plans. Instead, they would send their workers to state-run exchanges for coverage, paying a federally mandated fine.

Under the Bloom model, companies pay employees a fixed amount to cover a portion of their health care coverage and workers provide the rest based on the plans they select. The Bloom exchange allows employers to maintain their tax deduction on the money paid annually into an employee's health reimbursement account to help cover the cost of insurance. It also allows workers to pick a plan that suits their health care needs and how much they are willing to spend.

The idea of the private health care exchange and its defined contribution model is similar to the trend in retirement benefits in which employers have been abandoning defined benefit pension plans for the relative financial safety of a 401(k) that allows companies to control how much they spend.

WellPoint's partners in the Bloom purchase are Chicago- based Health Care Services Corp., which operates former Blue Cross plans in Texas, Illinois, New Mexico and Oklahoma, and Blue Cross Blue Shield of Michigan.

It now will be able to offer employers choices of health plans in the 19 states where Bloom operates, which represent about 60 percent of the U.S. population. The objective of Bloom's new owners is to be in all 50 states in the next year.

Extend Health Inc. of San Mateo, California is currently the largest private exchange covering 300,000 participants. Its customers include Union Pacific Corp. in Omaha, Nebraska, and U.S. automakers Ford Motor Co., General Motors Co. and Chrysler Group LLC.

NLRA Posting Released

The new, required "Right to Unionize" posting has been released. Click here to find 2 different layouts that you can print and post for your employees!

http://myemail.constantcontact.com/NLRA-Posting-Released.html?soid=1103281895770&aid=8XeI3nZ_BTM

HCR Update: Rate Review; Pre-existing Conditions; MLR

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Health Reform's Rate Review Begins; Final Rule Is Amended
The Center for Consumer Information and Insurance Oversight (CCIIO) has amended a final rule regarding the rate review program required by the Patient Protection and Affordable Care Act (PPACA). On Sept. 1, 2011, state-federal review of health insurance rate increases began under the final rule, and health insurers seeking to increase their rates by 10 percent or more must submit their request to state or federal reviewers to determine whether they are reasonable or not.

The amendment to the May 2011 final rule amends the definitions of individual and small group markets (the effective date of the amendment is Nov. 1, 2011), as follows:

• The definition of small group market includes coverage that would be regulated as small group market coverage if it were not sold through an association.
• The definition of individual market also includes coverage that would be regulated as individual market coverage if it were not sold through an association.
• This approach follows the definition under which an association itself will only be considered to be a group health plan if it complies with and is regulated under ERISA.

Most reviews will be conducted by the individual states, but in six states (Alabama, Arizona, Louisiana, Missouri, Montana and Wyoming) the Department of Health and Human Services (HHS) will conduct all of the reviews and in two more, (Pennsylvania and Virginia) the federal government will review group market rates.

However, it is possible that with the extension of the rate review provisions to association health plans, the federal government's authority in rate review may grow even stronger. HHS now needs to certify which states it feels are competent to review AHP plan rates. Even if a state has been deemed to have a sufficient review process for traditional individual and group products, it still may not pass muster concerning association plans. The AHP provisions of the rate review requirements begin on Nov. 1, so HHS has until then to determine who will be the ultimate authority on their pricing.

Another New GAO Report Highlights the Slow Start of the Federal Pre-existing Condition Insurance Plan
The General Accounting Office (GAO) released a report last week on the Federal Pre-existing Condition Insurance Plan (PCIP) that analyzes the program to-date and breaks down data by state. It includes enrollment information, cost-sharing breakdowns, premium prices and eligibility criteria.

When PPACA was being developed, the Congressional Budget Office estimated that it could serve up to 5 million Americans between 2010 and 2014. As of April 30, 2011, actual enrollment totaled 21,500 (about 15,800 in the state-run PCIPs and about 5,700 in the federally run PCIP). Due to the low enrollment numbers (0.43 percent of the number expected), only about 2 percent of the $5 billion allotted for PCIP has been spent so far.

The full report can be found at: http://www.gao.gov/new.items/d11662.pdf.

Average Medical Loss Ratios Exceeded Health Reform Standards
From 2006 through 2009, traditional medical loss ratios (MLRs) in the small group and large employer markets on average generally exceeded the loss ratio standards established under the Patient Protection and Affordable Care Act (PPACA) standards. According to a recent report from the General Accountability Office, these results came even without the additional components in the PPACA that generally will increase MLRs.

The loss ratio formula specified in PPACA differs from the way MLRs have traditionally been defined.

• The traditional MLR is generally calculated by dividing an insurer's medical care claims by premiums.
• In the PPACA MLR formula, the numerator includes insurers expenses for activities that improve health care quality such as patient-centered education and counseling, care coordination, and wellness assessments in addition to claims.
• Further, the denominator of the PPACA MLR subtracts from insurers premiums all federal taxes and state taxes and licensing or regulatory fees.

Under the PPACA, if minimum loss ratio standards are not maintained, rebates must be provided to health plan participants. From 2006 through 2009, insurers traditional MLR averages generally exceeded the PPACA MLR standards: 80 percent for the small group markets and 85 percent for the large group market (see table below).

Average Traditional MLRs by Market for Insurers, 2006-2009

         Small group market        Large group market

Year      (N)       Mean             (N)      Mean

2006      281      79.5%           316      84.9%

2007      290       81.0              319      87.3

2008      287       80.6              311      87.3

2009      312       83.1               340     88.8

The average traditional MLRs reported for 2006 through 2009 were also relatively stable. Since traditional MLRs were calculated differently than they will be under the PPACA requirements, it is difficult to predict, based on these data, what insurers MLRs would have been using the PPACA formula, or to predict the MLRs that insurers will report in the future, according to the GAO.

The report, "Private Health Insurance: Early Experiences Implementing New Medical Loss Ratio Requirements," is available at: http://www.gao.gov/products/GAO-11-711.

Employer Compliance Alert!

NEW RULE REQUIRES NON-UNION EMPLOYERS TO NOTIFY EMPLOYEES OF THEIR RIGHT TO UNIONIZE

The National Labor Relations Board (NLRB) has just issued a final rule obligating the vast majority of private sector employers to notify employees of their rights under the National Labor Relations Act (NLRA). The purpose of the notice is to inform employees of their rights to organize, form, join or assist a union; to bargain collectively with their employer; and to discuss their wages, benefits, and other terms and conditions of employment with their co-workers or a union. The new rule covers not only union workplaces, but also non-union workplaces.

The rule will pose new challenges for non-union employers and make it harder for all employers to defend themselves against allegations of unfair labor practices. For example, an employer’s failure to properly comply with the rule will toll the six-month statute of limitations period for filing a charge against the employer for unfair labor practices. An employer’s knowing violation of the rule can also be used against the employer as evidence of unlawful motive in anti-union discrimination and other unfair labor practice litigation.

Employers should take immediate steps to determine whether they are subject to the rule. Covered employers must be in full compliance by November 14, 2011. Human resource professionals, executives, and supervisors should be trained on how to properly respond to employees’ questions about their NLRA rights, as well as how to properly address union-related activities in the workplace.

The notice of rights that employers must post under the new rule is not yet available, but employers should periodically check the NLRB website for additional details.

Health Care Reform Update: HRA Limits; Federal Exchanges; Health Care Survey

Thanks to our partners at UBA for supplying us with our most recent Health Care Reform Update:


CCIIO Exempts HRAs From Applying for Annual Limit Waivers
The U.S. Center for Consumer Information and Insurance Oversight (CCIIO) has issued guidance with respect to the application of the existing annual limit waiver criteria to Health Reimbursement Arrangements (HRAs). This supplemental guidance exempts HRAs that are subject to the restricted annual limits as a class from having to apply individually for an annual limit waiver.

An HRA in effect prior to Sept. 23, 2010 is exempt from applying for an annual limit waiver for plan years beginning on or after Sept. 23, 2010 but before Jan. 1, 2014. These HRAs still must comply with the record retention and Annual Notice requirements to participants and subscribers set forth in the supplemental guidance issued on June 17, 2011.

The guidance can be found at: http://cciio.cms.gov/resources/files/final_hra_guidance_20110819.pdf.

HHS's Big Problem with the Federal Fallback Exchange
When the Department of Health and Human Services (HHS) released the first regulation providing guidance to the states on forming a health benefit exchange in July, one thing many health policy wonks noticed right away is that it contained no specifics on how a federal fallback exchange might work. Finally, last week a Politico report shed some light as to why HHS might be so reticent with the details.

HHS has virtually unlimited funding to help states create their own exchanges, but a quirk in the Patient Protection and Affordable Care Act (PPACA) is that it did not appropriate any funds to HHS for the federal government to develop its own infrastructure to fulfill the PPACA requirement to create and operate exchanges in all the states that do not establish their own. According to Politico, "A federal exchange will have the same authority states do to impose fees on insurance sold through the exchange once it is open for business. But there is no money coming in until people start purchasing insurance, and there is a great deal of work to be done to prepare to open the doors of federal exchanges."

Buck Releases HCR Impact Survey of Health Care Organizations
Some of the key findings from a newly released Buck Consultants national survey of healthcare organizations regarding the impact of health care reform:

• 79 percent of the survey respondents indicated that reform will increase health care costs in the country (with 43 percent indicating that costs will increase significantly); only 20 percent believe it will reduce costs.
• More than 70 percent believe the hospital industry and employer benefit plans will be worse off.
• 48 percent believe their families will be worse off, and only 21 percent believe they will be better off.
• 41 percent believe quality will decrease nationally, while 39 percent think quality will improve.
• 45 percent believe patients will be worse off versus 44 percent who believe they will be better off.
• 60 percent believe the country will be worse off because of health care reform, while 34 percent think it will be better off.
• 72 percent think health care reform will adversely affect employer health plans.
• 57 percent of the respondents lost grandfathering for some or all plans in 2011, and we anticipate that nearly 100 percent of employer plans will lose grandfathering by 2014.
• The primary reason (65 percent) for loss of grandfathering was that plan design changes were implemented with plan savings that exceeded the additional cost of complying with the health care reform requirements
• 75 percent expect cost increases of 1 percent or more due to reform in 2011.
• 58 percent expect higher costs due to reform in 2014.
• 71 percent expect higher employer costs due to reform long term.
• More than 90 percent of the survey respondents anticipate passing on some or all of these additional costs to employees through higher employee contributions or reduced coverage.

A full copy of the survey results may be downloaded free of charge by registering at http://www.bucksurveys.com/.

Health Care Reform Update: Federal PCIP Broker Registration & HCR Affordability Test

We have teamed up with our partners at United Benefit Advisors to bring you the most recent Health Care Reform update:

Federal PCIP Broker Registration Process Open

In May, the Obama administration announced that the high-risk pool program created by PPACA would begin paying agents and brokers for successfully enrolling eligible people into the PCIP program this fall. The PCIP referral program is only open to the 23 states where the federal government runs the PPACA high-risk pool program. HHS will begin paying the $100 flat enrollment fee September 1.

Agents and brokers who wish to become involved can now register. To qualify to participate in the PCIP program, you must:

• be an insurance broker in good standing in your state,
• have your license confirmed through the NIPR database,
• have a valid federal tax identification number (FTIN) or social security number (SSN), 
• agree to accept payments through EFT, and
• submit a completed EFT form for electronic payment.

IRS to issue new health care reform law affordability test
The Internal Revenue Service said it will develop new rules that will make it easier for employers to determine if their health care plans are "affordable" and exempt from a stiff financial penalty mandated by the health care reform law. That notice is expected to be published in the Aug. 17 Federal Register.

In rules proposed Friday that were welcomed by employers, the IRS said it will develop a safe harbor in which coverage would be considered affordable so long as the premium contribution for single coverage did not exceed 9.5% of employees' W-2 wages, instead of employees' household income (which employers generally do not know). The IRS also affirmed that the 9.5% affordability test is to be applied only on single coverage, allowing employers to charge higher amounts for family coverage.

Contraceptives and ACA

On Monday, August 1st, HHS released an amendment to the ACA preventive services regulations that focuses on women’s health issues. They have indicated that non-grandfathered health plans need to provide the following items at no cost-sharing to the patient:

• Well-woman visits
• Contraception
• Screening and counseling for AIDS, HPV, sexually transmitted infections, gestational diabetes and domestic violence
• Breastfeeding supplies and counseling

Plans provided by religious institutions can be granted a waiver of these requirements if they conflict with the religious beliefs of the employer.

The regulations also allow that if a generic equivalent is available, plans can apply copays and/or deductibles to non-generic supplies.

It’s difficult to estimate the financial impact of these changes until the marketplace develops a reaction, but it’s clear that the regulations, like any benefit mandate, will have an initial cost increase. Long-term, overall costs are expected to decrease as fewer unplanned pregnancies, early detection of adverse infections and domestic situations, as well healthier newborns should emerge as positive results.

It’s important to recognize these requirements are to be effective with plan years starting on or after August 2, 2012. Carriers and plan sponsors will need to adapt their systems and processes during the next year to accommodate these changes, but we shouldn’t expect a lot of details to materialize on these changes for the next few months. As these decisions are communicated to TrueNorth, we’ll be sure to keep you informed.

Let us know if you have any questions on this.

TrueNorth Benefits Team
319.364.5193

HCR Update: Preventive Services; ERRP; Claims Review

We have partnered with our friends at UBA to bring you the latest Health Care Reform updates:


IOM Issues Recommendations for Required Preventive Services
A new report from the Institute of Medicine (IOM) recommends that eight preventive health services for women be added to the services that health plans will cover at no cost to patients under Public Health Service Act Sec. 2713, as added by the Patient Protection and Affordable Care Act of 2010 (PPACA).

At the HHS's request, an IOM committee identified critical gaps in preventive services for women, as well as measures that will further ensure women's health and well-being. The recommendations are based on a review of existing guidelines and an assessment of the evidence on the effectiveness of different preventive services. The committee identified diseases and conditions that are more common or more serious in women than in men or for which women experience different outcomes or benefit from different interventions.

The report suggests the following additional services:

• screening for gestational diabetes;
• human papillomavirus (HPV) testing as part of cervical cancer screening for women who are older than age 30;
• counseling on sexually transmitted infections;
• counseling and screening for HIV;
• contraceptive methods and counseling to prevent unintended pregnancies;
• lactation counseling and equipment to promote breastfeeding;
• screening and counseling to detect and prevent interpersonal and domestic violence; and
• yearly well-woman preventive care visits to obtain recommended preventive services.

For more information, visit http://www.iom.edu/Reports/2011/Clinical-Preventive-Services-for-Women-Closing-the-Gaps.aspx.

New Guidance Available for Early Retirement Reinsurance Program
The Centers for Medicare and Medicaid Services has published supplemental program guidance and has updated existing program guidance under the Early Retiree Reinsurance Program (ERRP).

The supplemental guidance further clarifies ERRP reimbursement policy by identifying certain International Classification of Diseases, Ninth Revision (ICD-9) diagnosis codes that are not acceptable as principal diagnosis codes and procedure codes that are not acceptable under Medicare. Therefore, medical items and services associated with ERRP claims that include any such diagnosis codes as a principal diagnosis code or procedure codes will not be credited toward the ERRP cost threshold and will not be reimbursed. The guidance related to the ICD-9 codes applies to every reimbursement request, regardless of whether the reimbursement request was initially submitted before or after the publication of the guidance, July 18, 2011.

CMS has also updated existing program guidance, Claims Ineligible for Reimbursement under the Early Retiree Reinsurance Program. CMS has incorporated additional excluded Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) codes to this guidance document.

• These codes have also been added to the downloadable CSV file on the Regulations and Guidance page at http://www.errp.gov/.
• The additional ineligible procedures are listed at http://www.errp.gov/download/ERRP_Additional_Ineligible_Procedures_and_Diagnoses.pdf

EBSA Issues Amendments to Interim Final Rules and Model Notices on Internal Claims and Appeals and External Review Processes
The U.S. Department of Labor, Department of Treasury and Department of Health and Human Services released a correction of amendment to interim final rules with request for comments. The full text is available at http://www.gpo.gov/fdsys/pkg/FR-2011-07-26/pdf/2011-18820.pdf.

The amendment to the interim final rule is effective July 22, 2011. Public comments on the amendment to the regulations must be submitted on or before July 25, 2011.

The agencies also released additional guidance and revised model notices related to the amended interim final rules.

• Technical Release 2011-02
• Revised Model Notice of Adverse Benefit Determination
• Revised Model Notice of Final Internal Adverse Benefit Determination
• Revised Model Notice of Final External Review Decision

Health Care Reform Update: State Exchanges

Thanks to our partners at UBA, we are able to provide you the latest in Health Care Reform Updates:

Health Exchange Risk Programs Would Protect Insurers and Consumers

Health and Human Services Department officials have coupled the health exchange regulation released on Monday with another proposed rule designed to minimize the impact of covering sick, expensive patients on insurance companies. The federal government proposed to give insurers higher payments for patients whose claims cost more than average so insurers don't have an incentive to avoid covering high-cost patients.

The 103-page regulation includes three components that would encourage insurers to cover high-risk policy holders just as they would those who are healthy:

• A permanent risk adjustment formula that would pay insurers higher rates for sicker patients, such as those with chronic conditions. The adjustment would apply to those in the individual and small group markets inside and outside of the exchanges.
• A three-year reinsurance program that would establish a nonprofit entity to handle temporary payments for insurers that cover patients with high medical claims in the individual market.
• A three-year risk corridor program that would give insurers inside the exchanges more certainty by limiting losses and gains. Insurers whose claims are at least 3 percent higher than projected would get more federal funding, while those whose costs are at least 3 percent less than projected would get fewer federal dollars.

The first component, the risk adjustment program, is the only one of the three components that is permanent. Payments will essentially transfer money from plans that cover mostly low-cost individuals to those whose enrollees have higher costs. The federal government or the states would calculate the payment formulas.

The reinsurance and risk corridor programs were made temporary because lawmakers felt that over time, more people would enter the new exchange program, insurers would have a better understanding of the risks of covering enrollees, and the market would mature.

The law requires that each state establish a reinsurance program to "help stabilize premiums for coverage in the individual market during the first three years of exchange operation," which are 2014-16. The money will come from all insurance plans and third-party administrators of self-insured group plans which will contribute funds to a nonprofit that will dole out additional money to insurers who have higher claims. Any insurance company in a state's individual market that was not grandfathered under the law -- including plans outside of the exchange -- could be eligible for the higher reimbursements. The law calls for states to collectively assess and disperse a total of $10 billion in 2014, $6 billion in 2015 and $4 billion in 2016 for reinsurance in addition to collecting other funds from insurers such as $2 billion in 2014-15 and $1 billion in 2016 for the general treasury.

The risk corridor program, which will be administered by the federal government instead of the states, would apply to insurers in the exchange's individual and small group markets during the first three years that the exchange is operating.

The three mechanisms are intended to help smooth the transition and provide more stability in the marketplace for insurers who end up with more sick people, or sicker people, than other insurers as well as for insurers who might not be able to predict their risk in the first couple of years. Risk corridors also could cap the profits of some insurers.

States could choose to change the details of reinsurance or risk adjustment from those set out by the federal standards. Any state that decides to make changes would need to publish a notice at least one year before the benefit year begins, and by March in the calendar year before the effective date.

The public has been given 75 days to comment on the proposal.

Milliman Identifies Key Questions That Will Drive the Creation of State Healthcare Insurance Exchanges
Milliman, Inc., today identified a series of considerations for states, health plans, and employers as they look toward the 2014 state exchange implementation deadline set forward in the Patient Protection and Affordable Care Act (PPACA) and reiterated in regulations issued by Health & Human Services on July 11. "The possibility that exchanges could serve a larger role in the rate review process introduces questions about interaction between state insurance departments and exchanges. Perhaps most importantly from an actuarial perspective, we are still awaiting regulations on essential benefits and other key aspects of pricing, which will be pivotal in dictating the design of plans in the exchange."

Some of the questions that still remain include:

• How firm is the deadline? Exchanges are supposed to be established by the open enrollment period that begins on Oct. 1, 2013. However, the regulations indicate that some states could miss the 2013 deadline and then receive regular or conditional approval for an exchange in subsequent years.
• How will essential benefit regulations shake out? Many of the plan design and cost considerations that will influence the insurance policies sold through an exchange begin with the question of which benefits are offered and at what level. The exact nature of insurance policies sold through exchanges will remain vague until these regulations are introduced.
• What rating role will be played by exchanges? The exchange regulations suggest that exchanges may have a larger role in the rate review process, on top of a full review currently performed by state departments of insurance. Is there redundancy and, if so, how will that redundancy be reconciled?
• Yet another complexity involves methodologies used for rating individuals versus rating families. The discussion in the exchange regulations is not conclusive and leaves open a variety of different approaches that may allow flexibility or may just foment confusion.
• What about smaller insurers? The regulations indicate that health plans sold through the exchange can no longer determine their own geographic area, which introduces a new rating wrinkle. The same areas must be used within and outside of the exchanges. What should a health plan do if a state introduces a geographic area that is larger than the area served by a health plan?
• How will federal exchanges operate? The federal government will create an exchange for any state that does not create its own exchange by the deadline, but the federal exchange concept remains undefined.
• Who will pay for federal exchanges? Will federal exchanges need to be financially self-sufficient, as is the case with state-run exchanges?
• What should we expect from "Navigators"? Navigators are entities intended to help consumers make insurance purchasing decisions in the exchange. To date, little detail on Navigators exists.
• The regulations help by clarifying that Navigators must be in place by the exchange's first open enrollment period on Oct. 1, 2013.
• The proposed rules now require that an exchange include two types of entities as Navigators.
• The proposed rules ensure that a community-based or consumer-focused group will fill one of these slots.
• Navigators will need to demonstrate an existing relationship to consumers before appointment.
• Brokers and agents may act as Navigators as long as they are not receiving compensation from a qualified health plan.
• How will exchanges interact with CO-OPs? PPACA allows for the creation of Consumer Operated and Oriented Plans (CO-OPs), but details of these plans are still unclear because CO-OP regulations are still pending. CO-OPs in theory will be sold on exchanges but they have some unique requirements; how will this interaction take place?
• What does success look like? The criteria for determining the success of an exchange are still unclear. Presumably there will be milestones for measuring such criteria, but these too are undefined.
• The regulations also do not get into quality measurement, though quality will likely feed success criteria; forthcoming regulations will pick up on the quality topic.

These details will have to come into focus before states can establish the proper exchange governance framework, before health plans can begin to establish their approach to rating and before employers can make purchasing decisions. To add additional complexity, the answers to some of these questions may vary from one state to another or otherwise be influenced by local dynamics, including the existing regulatory environments in each state and geographic cost variation.

HCR Update: External Claims & Appeals; Workplace Health Funds

We have worked with our partners at UBA to provide you the most recent Health Care Reform Update:

EBSA Issues Amendments to Interim Final Rules and Model Notices on Internal Claims and Appeals and External Review Processes

The U.S. Employee Benefit Security Administration (EBSA) and Department of Health and Human Services (HHS) issued amendments to the Interim Final Rules implementing the requirements regarding internal claims and appeals and external review processes for group health plans and health insurance coverage in the group and individual markets under provisions of the Patient Protection and Affordable Care Act (PPACA).

These rules are intended to respond to feedback from stakeholders on the interim final regulations and to assist plans and issuers in coming into full compliance with the law through an orderly implementation process. Public comments on the amendment to the regulations are requested and must be submitted within 30 days.

The amendments focus primarily on six issues:

• Expedited notification of benefit determinations involving urgent care
• Additional notice requirements with respect to notice of adverse benefit determinations or final internal adverse benefit determination
• Deemed exhaustion of internal claims and appeals processes
• Providing notices in a culturally and linguistically appropriate manner
• Duration of transition period for State external review processes
• Scope of the Federal External Review Process

Some highlights:

Urgent care decisions
One change involves the amount of time health care plan enrollees have to be notified of an urgent care coverage decision.

• Last year, regulators said enrollees would have to be notified of an urgent care decision within 24 hours of receipt of a claim.
• But in a joint amendment to the 2010 regulations published in Friday's Federal Register, the Health and Human Services, Labor and Treasury Departments said they will allow plans to make notification of coverage decisions within 72 hours, closely following a Labor Department rule. Regulators, though, noted that the 72-hour limit is a maximum "and that in cases where a decision must be made more quickly based on the medical exigencies involved, the requirement remains that the decision should be made sooner than 72 hours after the receipt of the claim," according to the rules published in Fridays' Federal Register.

Notifications in languages besides English
The latest rules also amend a requirement that notices of available and external claims appeal processes and review be provided in a "culturally and linguistically appropriate manner."

• Under the previous rules, the requirement to provide notices in a language other than English was based on the percentage of plan enrollees who were literate in a common non-English language. For plans that cover more than 100 participants, the threshold was 10 percent of plan participants, or 500 participants, whichever was less.
• Under the latest rules, the requirement applies if at least 10 percent of the population residing in a county where an employer's health care plan enrollees reside are literate in the same non-English language. Currently, 255 U.S. counties meet this standard, including 78 of which are in Puerto Rico, according to the rules.

 The agencies also released additional guidance and revised model notices related to the amended interim final rules.

• Technical Release 2011-02 
• Revised Model Notice of Adverse Benefit Determination
• Revised Model Notice of Final Internal Adverse Benefit Determination
• Revised Model Notice of Final External Review Decision
• Updated List of Consumer Assistance Programs, as of May 23, 2011

$10 Million in Affordable Care Act Funds to Help Create Workplace Health Programs
The U.S. Department of Health and Human Services announced today the availability of $10 million to establish and evaluate comprehensive workplace health promotion programs across the nation to improve the health of American workers and their families. The initiative, with funds from the Affordable Care Act's Prevention and Public Health Fund, is aimed at improving workplace environments so that they support healthy lifestyles and reduce risk factors for chronic diseases like heart disease, cancer, stroke, and diabetes.

Funds will be awarded through a competitive contract to an organization with the expertise and capacity to work with groups of employers across the nation to develop and expand workplace health programs in small and large worksites. Participating companies will educate employees about good health practices and establish work environments that promote physical activity and proper nutrition and discourage tobacco use -- the key lifestyle behaviors that reduce employees' risk for chronic disease.

Project funds will support evidence-based initiatives to build worksite capacity and improve workplace culture in support of health. Examples of such strategies include establishing tobacco-free campus policies, promoting flextime to allow employees to be more physically active, and offering more healthy food choices in worksite cafeterias and vending machines. A core principle of the initiative is to maximize employee engagement in designing and implementing the programs so they have the greatest chances of success.

Organizations interested in submitting proposals for the Comprehensive Health Programs to Address Physical Activity, Nutrition, and Tobacco Use in the Workplace can find more information at www.fbo.gov. The application deadline is Aug. 8, 2011. A separate funding opportunity is available for a national evaluation of the initiative and can also be found at www.fbo.gov.

HCR Update: PCIP; Quality of Care

Here is the latest Health Care Reform Update, brought to you with the help of our partners at UBA:

HHS Announces Lower PCIP Premiums

The federal government announced on May 31 that they will increase subsidies to premiums in the Pre-Existing Condition Insurance Program (PCIP) in another effort to spur enrollment. The added subsidies, which will begin July 1, will result in premiums being reduced by up to 40 percent in 17 of the 23 states and D.C. which have the program administered by the federal government. (For example, the monthly premium for a person older than 55 in Florida will be $234.) The remaining 27 states, which each run their own plans, will be able to reduce premiums as well.

In addition, people who would like to enroll in the program no longer need to provide a letter from an insurance company denying them coverage. Starting July 1, 2011, program applicants can simply provide a letter from a doctor, physician assistant, or nurse practitioner dated within the past 12 months stating that they have or, at any time in the past, had a medical condition, disability, or illness. HHS officials cannot waive other eligibility requirements that are spelled out in the statute, such as a rule that people must be without insurance for six months before qualifying for the risk pool.

This announcement comes as enrollment in the Pre-Existing Condition Insurance Plan continues to lag far behind expectations. To date, only 18,000 Americans have signed up for the PCIP. Officials initially said it would reach over one million enrollees by the time the program is phased out in 2014, when it will become illegal for insurance companies to discriminate against the sick. $5 billion in funding for the program was included in PPACA legislation passed in March 2010.

Major New Effort to Give Consumers and Employers Better Information About Quality of Care
The Centers for Medicare & Medicaid Services (CMS) proposed rules that will allow organizations that meet certain qualifications access to patient-protected Medicare data to produce public reports on physicians, hospitals and other health care providers. These reports will combine private sector claims data with Medicare claims data to identify which hospitals and doctors provide the highest quality, cost-effective care.

This new program would provide for the following activities:

• CMS would provide standardized extracts of Medicare claims data from Parts A, B, and D to qualified entities.
• The data can only be used to evaluate provider and supplier performance and to generate public reports detailing the results.
• The data provided to the qualified entity will cover one or more specified geographic area(s).
• The qualified entity would pay a fee that covers CMS' cost of making the data available.
• To receive the Medicare claims data, qualified entities would need to have claims data from other sources.
• To prevent mistakes, qualified entities must share the reports confidentially with providers and suppliers prior to their public release, which gives providers and suppliers an opportunity to review the reports and provide necessary corrections.
• Publicly released reports would contain aggregated information only, meaning that no individual patient/beneficiary data would be shared or be available.
• During the application process, qualified entities would need to demonstrate their capabilities to govern the access, use, and security of Medicare claims data.
• Qualified entities would be subject to strict security and privacy processes.
• CMS would continually monitor qualified entities, and entities that do not follow these procedures risk sanctions, including termination from the program.

This initiative will be based on quality measures that hospitals have been reporting to the Hospital Inpatient Quality Reporting Program since 2004, and that information is posted on the Hospital Compare website. CMS will invest up to $1 billion to help drive these changes.

The proposed rule is on display at the Office of the Federal Register HERE. Comments are welcome on this set of proposed rules.

New Rules for Child Only Policies in Iowa

Federal Healthcare Reform legislation passed in 2010 requires insurance companies to allow children under age 19 to enroll in a plan regardless of health status, claims history, or geographic status. A child only policy can be a good option for some families when traditional family coverage is not practical. But today you cannot buy a child only health insurance policy anywhere in the state of Iowa.


The Iowa Insurance Division (IID) issued a new Administrative Rule that requires all individual health insurance carriers doing business in Iowa to offer coverage to individuals under age 19 during an annual open enrollment period of July 1 through August 14 each year. Applications received during the open enrollment period will be offered coverage on a guaranteed-issue basis, regardless of past or present medical conditions. It’s important to note that insurance companies can charge a higher premium based on health status.

TrueNorth recommends that parents consider applying for a child only policy if:

• A child has past or ongoing medical conditions that made it difficult (or even impossible) to obtain insurance coverage, or
• Providing coverage for a healthy child through an employer plan is a financial burden for the family.

**Note that if an employee is contributing premium dollars for their dependents’ coverage on a pre-tax basis (through a Section 125 plan), there may be limitations regarding if/when a dependent may be dropped from the plan.

TrueNorth has specialists that are experts in the individual health markets, including child only health plans. If you think you might benefit from placing your child under such a policy, please feel free to contact:

Tana Studt, RHU at (319) 739-1414 or
Ted Messer, CLU, ChFC, LUTCF at (319) 739-1421.

HCR Update: Medicare Notices; HIPAA Rules

CMS Makes Changes to Medicare Part D Creditable Coverage Notice Requirement
Organizations and "entities" that provide prescription drug coverage to Medicare Part D eligible individuals must annually notify these individuals whether the drug coverage they have is creditable or noncreditable.

The Centers for Medicare & Medicaid Services (CMS) has made two changes to this requirement:

• CMS has issued new model disclosure notices that are to be used after April 1, 2011. The model notices, in both English and Spanish, can be found on the CMS website.
• Because the Patient Protection and Affordable Care Act (PPACA) changed the Medicare enrollment period, beginning in 2011, the disclosure notice must now be sent to participants a month earlier. In the past, the Medicare enrollment period was Nov. 15 through Dec. 31, and the notice had to be given out by Nov. 15. PPACA changes the enrollment period to Oct. 15 through Dec. 7. Accordingly, creditable coverage notices must be sent by Oct. 15.

HHS Releases Proposed Rule on HIPAA Privacy Rule Accounting of Disclosures Under HITECH Act
The Department of Health and Human Services (HHS) released a proposed rule to modify the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule's standard for accounting of disclosures of protected health information.

The proposed rule, in part, implements statutory requirements under the Health Information Technology for Economic and Clinical Health Act (HITECH Act) to require covered entities and business associates to account for electronic disclosures of protected health information to carry out treatment, payment and health care operations.

HHS proposes to expand the accounting provisions to provide individuals with the right to receive an access report indicating who has accessed electronic protected health information. Also proposed are changes to accounting requirements to improve workability and effectiveness. Comments are due on or before Aug. 1, 2011.

HCR Update: MLR Guidance; Insurance Rate Rules

We have worked with our partners at UBA to provide you with the latest Health Care Reform Update:

Technical Guidance Issued Regarding Medical Loss Ratio Requirements

On May 13, 2011, HHS issued a bulletin which provided technical guidance regarding Medical Loss Ratio requirements for insurers.

This Bulletin contains seventeen Q&As on the following topics regarding the MLR Interim Final Rule:

• Definition of Small Employer;
• Mini-Med Plan MLR Reporting;
• Expatriate Plan MLR Reporting;
• Reimbursement for Clinical Services Provided to Enrollees (Incurred Claims);
• Third-Party Vendor Payments;
• Activities that Improve Health Care Quality; and
• A State Request for Adjustment to the MLR Standard.

The entire text can be found HERE.

HHS Issues Final Rules On Health Insurance Rate Reviews
Under new rules issued by the Obama Administration, health insurers will be "required to justify annual premium increases of 10 percent or more to state regulators." The regulations were contained in a 94-page document released on May 19.

"Starting in September 2012, the federal government will set a separate threshold for each state, reflecting trends in insurance and health care costs." Federal officials "acknowledged that they did not have the authority to block rates that were found to be unjustified," but they noted that many states already have that authority.

Moreover, the federal government is "providing $250 million to states to strengthen their capacity," although a few states opposed to the federal health care law "have turned down the money."

HCR Update: Wellness Ruling, Full-Time Threshold; Value-Based Purchasing

Here is the latest Health Care Reform Update, brought to you with the help of our partners at UBA:

Important Legal Ruling for Employer-Sponsored Wellness Plans

In a decision filed April 11, the Southern District of Florida granted an employer health plan's motion for summary judgment in a case where the health plan's wellness program was charged with violating the Americans with Disabilities Act (ADA). The case, Seff v. Broward County, is important because it has never been clear whether wellness programs and health risk assessments that otherwise comply with the HIPAA wellness rules (particularly those that are mandatory or involve penalties) are also compliant with ADA.

The Equal Employment Opportunity Commission (EEOC), which administers the ADA, has questioned whether mandatory wellness programs or those that include penalties for noncompliance (as opposed to a reward for participation) would be permitted under this provision. However, the EEOC has not issued formal guidance. In this case, the court found that the ADA prohibition does not apply to a wellness program offered by an employer health plan where the program meets the ADA's safe harbor for bona fide benefit plans.

Importantly, the court did not address whether the county wellness program was "voluntary" under EEOC standards. Applicable regulations define a voluntary wellness program as one that neither requires employees to participate nor penalizes employees for non-participation. The EEOC has informally suggested that a wellness program may not be voluntary if the program includes a mandatory health risk assessment or a punitive trigger, but since the court did not address this, it remains an undecided issue.

Treasury Plan Would Help Determine Full-Time Workers for Health Cover
The U.S. Treasury Department unveiled potential approaches Tuesday to what constitutes a full-time employee as it pertains to the health care reform law requirement that employers offer full-time employees coverage or pay a penalty if they do not.

Under one approach suggested by Treasury in Notice 2011-36:

• An employer would calculate each employee's full-time status by looking back "at a defined period of not less than three but not more than 12 consecutive calendar months" to determine if the employee worked an average of 30 hours per work during this "measurement" period
• If the employee met the 30-hour standard by that measurement, the individual would be considered a full-time employee during a subsequent "stability" period, regardless of the number of hours the employee worked during that subsequent period.
• For an employee determined to be a full-time employee during the measurement period, the stability period would be at least six consecutive months after the measurement period
• If an employee were determined not to be full-time during the measurement period, the employer would be allowed to exclude the individual in calculating its full-time employees during a stability period

The Treasury Department said it is asking for public comment on determining whether an employee meets the 30-hour threshold. Comments are due June 17 and can be emailed to Notice.comments@irscounsel.treas.gov.. Notice 2011-36 should be included in the subject line.

CMS Implements Medicare Value-Based Purchasing for Hospitals
A new initiative launched by the Department of Health and Human Services (HHS) will reward hospitals for the quality of care they provide to people with Medicare and help reduce health care costs. Authorized by the Patient Protection and Affordable Care Act (PPACA), the Hospital Value-Based Purchasing program for the first time changes how Medicare pays health care providers and facilities--3,500 hospitals across the country will be paid for inpatient acute care services based on care quality, not just the quantity of the services they provide. The final rule establishing the Hospital Value-Based Purchasing Program will be published in the May 6 Federal Register; the proposed rule was published on Jan. 13.

In fiscal year 2013 (beginning on Oct. 1, 2012), an estimated $850 million will be allocated to hospitals based on their overall performance on a set of quality measures that have been proven to improve clinical processes of care and patient satisfaction. This funding will be taken from what Medicare otherwise would have spent, and the size of the fund will gradually increase over time, resulting in a shift from payments based on volume to payments based on performance.

The better a hospital does on its quality measures, the greater the reward it will receive from Medicare.

PPACA FAQs; Senate Votes to Repeal 1099 Reporting

From TrueNorth and our partners at UBA, we are happy to provide you with the latest Health Care Reform Update:

PPACA FAQs released on the Grandfathered Plan Rules:
The Employee Benefits Security Administration (EBSA) has released a sixth set of frequently asked questions (FAQs) about the Patient Protection and Affordable Care Act (PPACA). Specifically, they address:


• the anti-abuse rule;

• changing cost sharing for newly-generic drugs

• no cost sharing for preventive services under a value-based health care initiative,

retiree health care, and

• the timing of the relinquishment of grandfather status.

The full FAQ can be found here: http://www.dol.gov/ebsa/faqs/faq-aca6.html  

U.S. Senate Votes to Repeal 1099 Reporting Requirement
Bowing to pressure from business groups worried about an avalanche of paperwork, the U.S. Senate voted 87-12 Tuesday to pass legislation that repeals a requirement for businesses and landlords to file a Form 1099 document with the IRS for purchases of goods and services exceeding $600 a year. The legislation earlier was passed by the House of Representatives and now goes to President Barack Obama, who is expected to sign it into law.

The bill adjusts the health insurance tax subsidies to be given to middle-income people under the health care law. It would require anyone who receives excessive tax subsidies for health insurance to pay back a greater share than currently required under the law. Some Democrats argued that the payback provision for excessive subsidies would discourage individuals and small businesses from complying with the law's requirement that they obtain health insurance.