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.

HCR-Update: IRS Delays W-2 Reporting; Self Funding Report

Highlights of recent regulations released by the IRS:

1. The regulations emphasize that the reported amounts are for employee information only and does not cause excludable employer-provided health care to become taxable. Separate legislation would need to be enacted for this to occur.
2.  Reporting is optional for the 2011 calendar year, but mandatory for many employers beginning with the 2012 calendar year (i.e., for W-2s produced in January 2013).
3. Employers who issue fewer than 250 W-2s for the 2011 calendar year (i.e., produced in January 2012), are exempt from the reporting requirement for at least the 2012 calendar year. Such employers will be required to report for future years if/when additional regulations are issued.
4. The cost of an employer-sponsored health plan is the amount to be reported. This includes any amounts contributed by the employer and the employee.
5. Amounts attributable to an HSA are not reported. The amount for the underlying QHDHP are reported.
6. The amount of any salary reduction election to a medical reimbursement FSA is not included. Any employer contribution to the medical FSA is included.
7. Plans that provide benefits generally limited to dental, vision, specified illness/disease or fixed indemnity reimbursements (typically hospital indemnity plans) are not included. This is the case even if the dental and vision are packaged with the medical if they are provided under a separate plan (i.e., not an integral part of the medical plan).
8. Fully insured plans can rely on the premium charged by the carrier in determining the amount to be reported.
9. Self-funded plans can rely on the COBRA costs they calculate at the beginning of each plan year, including any amounts the employer may contribute to the COBRA coverage.
10. For employees that are not enrolled in a health plan for the entire tax year an employer may use any reasonable, consistent method for calculating the pro-rata amount to be reported.

This is obviously not an exhaustive list of the regulations, nor does it constitute tax advice. Employers and employees should consult their own tax consultants for details regarding their specific situation.