Monday, December 26, 2011
Tuesday, December 13, 2011
CLASS Act repeal sponsor teams up with pro-reform Dem on alternative
Boustany has twice introduced similar legislation in previous Congresses.Co-sponsoring the bill could be a risky move politically for Neal, because it gives Republicans cover to claim that they're offering alternatives to the healthcare reform law.
I feel very strongly that we should repeal CLASS, Boustany told The Hill on Monday, but we need to put things in place or start something in motion to improve prospects for people to buy long-term-care insurance.Boustany acknowledged this week that his repeal legislation wouldn't get a floor vote this year, but vowed to aggressively push for it in 2012.
The CLASS Act would have created a voluntary payroll deduction program administered by HHS. It has been on ice since September, when Secretary Kathleen Sebelius said in September that the Obama administration couldn't make it sustainable at this time.
Friday, December 9, 2011
Interview with The Advocate on the MLR requirements and its effect on Agents!
12/9/11
I will be meeting with Ted Griggs from the Advocate for his story on the MLR requirement and its effect on Agents and Brokers. More to come...
Wednesday, November 30, 2011
CMS Launches New Website! www.Medicaid.gov
Next week CMS will launch a new website, "www.Medicaid.gov". The site was
created as a resource to help relevant stakeholders understand the program.
created as a resource to help relevant stakeholders understand the program.
The website will contain information on the Medicaid program state by
state.It will have information on the state plan amendments, eligibility
requirements, and covered populations currently in place. The site will follow
the program as it evolves to 2014.
Sunday, November 20, 2011
Individual Louisiana Blue Cross Members to Get One-Time Credit
Individual Blue Cross Members to Get One-time Credit
Our efforts to affect healthcare costs, as well as those of
our members in this block of business, have paid off. As a result, we are giving
a one-time premium credit for each individual Blue Max, BlueSaver, Blue Value, Blue
Select and conversion policy contract.
HMO Louisiana, VIP and CSD policies will not receive this credit. The credit amount is $100 on each single contract and $145 on each multi-person or family contract. It will be reflected on the member’s next bill, unless the monthly premium is less than the credit amount. In that case, the member will not receive another bill until an amount is due.
Those who pay by bank draft will simply see a reduced amount drafted from their accounts. Some members are already seeing this reduced bank draft amount today. Those who pay quarterly or further in advance will see the credit on their next invoice.
This particular block of business is performing better than expected thanks to our members’ efforts to take charge of their healthcare and improve their health. They are buying generic drugs, getting flu shots and other preventive screenings and making sure they go to network doctors. These steps toward health and wellness have helped to stretch our members’ premium dollars even farther.
Blue Cross and Blue Shield of Louisiana did our part by streamlining administrative costs, negotiating the best possible contracts with doctors, hospitals and other healthcare providers, and fighting fraud and abuse.
As a private, mutually held company, Blue Cross has always made decisions based on the best interests of our customers. We know the money we manage is theirs, and we take that responsibility very seriously.
Our efforts to affect healthcare costs, as well as those of
our members in this block of business, have paid off. As a result, we are giving
a one-time premium credit for each individual Blue Max, BlueSaver, Blue Value, Blue
Select and conversion policy contract.
HMO Louisiana, VIP and CSD policies will not receive this credit. The credit amount is $100 on each single contract and $145 on each multi-person or family contract. It will be reflected on the member’s next bill, unless the monthly premium is less than the credit amount. In that case, the member will not receive another bill until an amount is due.
Those who pay by bank draft will simply see a reduced amount drafted from their accounts. Some members are already seeing this reduced bank draft amount today. Those who pay quarterly or further in advance will see the credit on their next invoice.
This particular block of business is performing better than expected thanks to our members’ efforts to take charge of their healthcare and improve their health. They are buying generic drugs, getting flu shots and other preventive screenings and making sure they go to network doctors. These steps toward health and wellness have helped to stretch our members’ premium dollars even farther.
Blue Cross and Blue Shield of Louisiana did our part by streamlining administrative costs, negotiating the best possible contracts with doctors, hospitals and other healthcare providers, and fighting fraud and abuse.
As a private, mutually held company, Blue Cross has always made decisions based on the best interests of our customers. We know the money we manage is theirs, and we take that responsibility very seriously.
Monday, November 14, 2011
Supreme Court to Rule on PPACA!
Nov 14, 2011
At 10 a.m. today, the Supreme Court issued its orders for the upcoming 2012 term, which includes the details of how the oral arguments related to the health law will shape up.
CNN: "The U.S. Supreme Court will hear a challenge to
President Barack Obama's sweeping health care reform law, the court announced
Monday" (11/14).
Bloomberg: "The justices today said they will consider whether
Congress exceeded its authority by requiring all Americans to either acquire
insurance by 2014 or pay a penalty. The court will wield unprecedented influence
over the presidential election campaign, with a decision in the case likely in
late June, months before the election" (Stohr, 11/14).
The Washington Post: "The Supreme Court said Monday it will
hear a challenge to the health-care overhaul act passed in 2010, with a decision
on President Obama’s most controversial domestic achievement likely to come in
the summer of his reelection campaign. Opponents have called the massive new
law, with its central mandate that almost all Americans have health insurance by
2014 or pay a penalty, an unprecedented expansion of the national government.
The administration says it is confident the act will be upheld as a valid
exercise of federal power, just as Social Security and the Civil Rights Act were
found to be constitutional" (Barnes, 11/14).
The New York Times: "The court’s decision to step in had been
expected, but Monday’s order answered many questions about just how the case
would proceed. Indeed, it offered a roadmap toward a ruling that will help
define the legacy of the Supreme Court under Chief Justice John G. Roberts Jr."
(Liptak, 11/14).
The Associated Press: "The justices announced they will hear
more than five hours of arguments from lawyers on the constitutionality of a
provision at the heart of the law, the requirement that individuals buy health
insurance starting in 2014 or pay a penalty, and other related questions about
the act. The White House said 'we are pleased that the court has agreed to hear
this case'" (Holland, 11/14).
The Wall Street Journal: "The case raises several issues, but
chief among them is this: Did Congress exceed its constitutional powers when it
required most individuals to carry health insurance or pay a penalty? The court
is expected to hear oral arguments in March, with a decision expected by the end
of June. That timeline means the court will rule on President Barack Obama's
signature legislative achievement during the thick of the 2012 presidential
campaign" (Kendall, 11/14).
Los Angeles Times: "The justices said they would rule on the
constitutional challenge to the entire law brought by top Republican officials
from 26 states who contend the Democratic-controlled Congress overstepped its
authority in passing the measure. ... In agreeing to hear the cases, the court
said it will decide four questions that have arisen: Is it constitutional for
Congress to require all persons to have health insurance by 2014? If this
provision is struck down, can it be 'severed' from the law or must the entire
statute fall? Is it unfair to the states to force them to pay the extra cost of
expanding the Medicaid program? Finally, should a decision be put off until 2015
when the first taxpayers pay a penalty?" (Savage, 11/14).
The Hill: "The justices also will determine whether a separate
federal law bars them from reaching a decision on the mandate before it takes
effect. People can’t challenge a tax before they have to pay it, and the Obama
administration has defended the mandate by invoking Congress's taxing power. But
it has also said the court should bypass procedural issues and rule directly on
the mandate. Two federal courts of appeals have said the mandate is
constitutional under Congress’s authority to regulate interstate commerce. One
has ruled the law unconstitutional, and one said it could not reach a decision
on the mandate because of the aforementioned tax law" (Baker, 11/14).
Earlier today, news outlets reported on some of the key issues and moving
parts that will be in play if and when the high court hears pending health
law appeals.
Los Angeles Times: A Buoyed Health Care Law Reaches Supreme
CourtAfter a year and a half of legal skirmishing, President Obama's
embattled health care law has arrived at the Supreme Court riding a surprising
winning streak and carrying a constitutional stamp of approval from prominent
conservative judges. … The Supreme Court is expected to announce as soon as
Monday that it will hear the Florida case, the largest and broadest challenge to
the Patient Protection and Affordable Care Act (Savage and Levey, 11/13).
The New York Times: Supreme Court Memo: Health Law Puts Focus
On Limits Of Federal PowerIf the federal government can require people to
purchase health insurance, what else can it force them to do? More to the point,
what can't the government compel citizens to do? Those questions have been the
toughest ones for the Obama administration's lawyers to answer in court
appearances around the country over the past six months. And they are likely to
emerge again if, as expected, the Supreme Court, as early as Monday, agrees to
be the final arbiter of the challenge to President Obama's signature health care
initiative (Liptak, 11/13).
The Washington Post: The High Court: What Does Supreme Court
Decision On Social Security Mean For Health Care Act? Today, there are
unmistakable comparisons to the court's action on the Social Security Act of
1935 as the current justices consider whether to accept a constitutional
challenge of the 2010 Affordable Care Act. A decision could come as early as
Monday morning (Barnes, 11/13).
Friday, November 11, 2011
HHS application process for exchange to take 211 hours!
States and territories seeking to establish a health insurance exchange, funded under the Affordable Care Act, will be required to submit an application for approval during the fall of 2012, the Department of Health and Human Services has announced.
In a notice available now and being published Nov. 10, HHS estimates the application will take an average of 211 hours to complete. States and territories must demonstrate operational readiness through virtual and on-site reviews.
"Given the innovative nature of exchanges and the statutorily-prescribed relationship between the HHS Secretary and states in their development and operation, it is critical that the Secretary work closely with states to provide necessary guidance and technical assistance to ensure that states can meet the prescribed timelines, federal requirements and goals of the statute," according to the notice.
Monday, November 7, 2011
In implementing health reform, governors are turning to unilateral action
In implementing health reform, governors are turning to
unilateral action
By Sarah Kliff,
Published: November 1
A few parts of the health reform law require states to amend their Joles, David AP Gov. Mark Dayton (D) used an executive order to implement the health reform law in Minnesota. existing laws to reform their insurance markets. For instance, most states need to pass new laws to
participate in the health exchanges that will launch in 2014.
Usually, this requires the legislature. But those efforts have often run into political opposition. In 2011, more than a dozen state-level, exchange bills failed. That’s why governors are increasingly taking unilateral action: Earlier this week, Minnesota Gov. Mark Dayton, a Democrat, issued an
executive order to allow his state to continue planning for putting the health reform law into action. Republicans in the state legislature had blocked an exchange bill, leaving it to die in committee.
Minnesota Commerce Commissioner Mike Rothman told the state's public radio station that the executive order would allow the state to "develop and plan an exchange.”
By my count, governors in five states -- Alabama, Georgia, Indiana, Rhode Island and now Minnesota-- have used executive orders to move forward on the law. And when you count states
that have pursued grant money through their executive branch, that number rises to 15, according to the National Conference of State Legislatures. That includes all the medium-blue states on this map (click through for an interactive version):
that have pursued grant money through their executive branch, that number rises to 15, according to the National Conference of State Legislatures. That includes all the medium-blue states on this map (click through for an interactive version):
Dayton is actually a bit of an anomaly: It’s mostly Republican governors who have used executive action to move forward on implementing the law. Republican legislatures that oppose the health reform law have stymied some states’ efforts toward implementation. That leaves governors with an uneasy choice: Implement a law they don’t like or watch the federal government come in and do the job itself. Georgia’s Nathan Deal and Indiana’s Mitch Daniels have landed on the latter option, issuing executive orders to allow their states to avoid federal intervention. These executive orders likely don’t allow for full implementation of the law. Most of those states will eventually need new legislative authority to continue planning. But, in the meantime, the executive orders serve an important role:
They give the states liberty to plan and pursue funding for a health exchange. If the Supreme Court rules the reform law constitutional, more are likely to take a second look at implementing the law themselves. At that point, all the groundwork being laid now via executive order could prove crucial in such a decision.
© The Washington Post Company
Tuesday, September 6, 2011
South Carolina Passes On Health Exchange Grants
September 5, 2011
(Reuters) - South Carolina does not want any more federal money to set up an insurance exchange, the state's health regulator said on Thursday, citing fears about the strings attached to the funds.
South Carolina joins a handful of other Republican states rejecting millions of dollars in federal grants tied to insurance exchanges that are a key aspect of the Affordable Care Act, the Obama administration's healthcare overhaul.
The exchanges are envisioned as open marketplaces for competing insurance plans where uninsured people and small businesses can band together to negotiate cheaper rates.
"State agencies have a very bad habit of chasing any money that comes to them ... pursuing the money instead of pursuing their visions and their goals," said Tony Keck, who heads South Carolina's Health and Human Services Department.
"We're not planning on taking any further money for the exchanges," he told Reuters. "We are worried that the federal government seems to be saying that states should become the back office managers for the private insurance market and we're not sure that's a good use for the state resources."
States face a January 1, 2013, deadline to submit detailed plans for the exchanges or the U.S. Health and Human Services Department will come in and build them itself.
Whether run by states, HHS or a combination of the two, the exchanges have to be up and running by 2014, according to the law passed last year.
With deadlines looming there is concern about a smooth and timely roll-out of the healthcare reform, especially as many Republican governors want to block the new law supported largely by Democratic lawmakers.
The HHS has awarded states $1 million planning grants to research exchange options and the administration is now sending out applications for establishment grants, which South Carolina plans to skip.
Seven states received much larger amounts of federal funding to establish prototype exchanges other governments could use as a model. Two of those states, Oklahoma and Kansas, have since returned the money.
But even though Republican Governor Nikki Haley "remains an equal opportunity opponent of ObamaCare," according to her spokesman, South Carolina officials say it is too soon to tell what the state will do about the exchange plan. But like other states whose executive branches adamantly oppose Obama's reforms, the work on an exchange quietly continues in South Carolina
The state has created a planning committee that is holding a meeting on Thursday and, using the $1 million federal grant, will continue to analyze various structures South Carolina can adopt before or after 2014.
The committee is getting background briefings from industry consultants and is working on a final report to be sent to Haley and state lawmakers by the end of October, said Gary Thibault, program manager for the exchange planning grant.
Among the options being weighed by South Carolina is a plan to seek help from the private sector to create a separate -- and perhaps cheaper -- exchange that would satisfy the state's public health goals.
"Our question is ... why does the federal government have to bankroll all of this, especially when there are private solutions ... that are already out there running millions of employees' insurance in exchanges?" Keck said.
He says the state is taking a "wait-and-see approach" and is eager for more details from HHS on how the government expects the exchanges to work.
"The (federal) dollars really bother me," Keck said. "It comes with strings attached and then, all of a sudden, their agenda is your agenda."
Local newspaper The State first reported Governor Haley's plan to refuse more federal funding. Neither Haley's office nor the state's health department have issued any official statements on the decision.
(Editing by Andre Grenon)
© Thomson Reuters 2009 All rights reserved
© 2011 InsuranceBroadcasting and SourceMedia, Inc. All Rights Reserved.
SourceMedia is an Investcorp company. Use, duplication, or sale of this service, or data contained herein, except as described in the Subscription Agreement, is strictly prohibited.
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Friday, September 2, 2011
Private Health Insurance: Early Experiences Implementing New Medical Loss Ratio Requirements
GAO-11-711 July 29, 2011
Highlights Page (PDF) Full Report (PDF, 28 pages) Accessible Text
Summary
To help ensure that Americans receive value for their premium dollars, the Patient Protection and Affordable Care Act (PPACA) established minimum "medical loss ratio" (MLR) standards for health insurers. The MLR is a basic financial indicator, traditionally referring to the percentage of premiums spent on medical claims. The PPACA MLR is defined differently from the traditional MLR. Beginning in 2011, insurers must meet minimum MLR requirements or pay rebates to enrollees. While insurers' first set of data subject to the MLR requirements will be for 2011, and is not due until June 2012, insurers prepared preliminary PPACA MLR data for 2010. GAO examined: (1) what can be learned from the traditional MLR data reported by health insurers prior to PPACA; (2) what factors might affect the MLRs that insurers will report under PPACA; and (3) what changes in business practices, if any, have insurers made or planned to make in response to the PPACA MLR requirements. GAO analyzed premiums, claims, and traditional MLR data for nearly all insurers for 2006- 2009 and interviewed a judgmental sample of seven insurers--selected to provide a range based on their size, profit status, and the number of states in which they operated--about their experiences using the PPACA MLR definition.
From 2006 through 2009, traditional MLRs on average generally exceeded PPACA MLR standards. This is even without the additional components in the new PPACA MLR that will generally increase MLRs. However, traditional MLRs also varied among insurers. Traditional MLRs within the individual market varied more than those within the small and large group markets, and a larger proportion of individual market insurers generally had lower MLRs. Additionally, traditional MLRs varied more among smaller insurers than among larger insurers in all three markets. Some components of the PPACA MLR requirements may mitigate the implications of some of these variations. The insurers GAO interviewed said their PPACA MLRs will be affected by changes in the MLR formula and their ability to provide more precise data in 2011 and beyond. Most of these insurers reported that the deduction of taxes and fees in the PPACA MLR formula would contribute to the largest change in their 2010 MLRs. Including expenses for activities to improve health care quality was also cited as a factor affecting insurers' MLRs but to a lesser extent. In addition, because insurers had limited time to respond to HHS's interim final rule on PPACA MLRs, which was published in late 2010, they said that their 2010 MLRs were based in part on best estimates. Insurers said they expect their ability to provide more precise PPACA MLR data will improve in 2011 and beyond. Most of the insurers GAO interviewed were reducing brokers' commissions and making adjustments to premiums, as well as making changes to other business practices, in response to the PPACA MLR requirements. Almost all of the insurers said they had decreased or planned to decrease commissions to brokers in an effort to increase their MLRs. Insurers varied on how the PPACA MLR requirements might affect their decisions to implement activities to improve health care quality. While one insurer said that their decision to implement new activities would be affected by whether or not an activity could be included as a quality improvement activity in the PPACA MLR formula, other insurers said that the PPACA MLR requirements are not a factor in such decisions. Insurers also differed on how the PPACA MLR requirement may affect where they do business. One insurer said that they have considered exiting the individual market in some states in which they did not expect to meet the PPACA MLR requirements, while several other insurers said that the PPACA MLR requirements will not affect where they do business. In commenting on a draft of this report, the Department of Health and Human Services (HHS) said that the MLR provision will increase transparency in the insurance market and value for consumers' premiums.
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Association Sales of Insurance Subject To Rate Reviews Under Amended Final Rule
By Sara Hansard
Association sales of health insurance to individuals and small groups will be subject to rate reviews under an amended final rule issued Sept. 1 by the Department of Health and Human Services.
Association sales will be covered under the amended rule even if states in which the policies are sold do not regulate them as individual or small group sales, according to the rule, which will be published in the Sept. 6 Federal Register.
In many states, a significant portion of individual and small group health insurance is sold through associations, HHS said in a fact sheet accompanying the rule.
“This coverage is sold and delivered in the same manner as the individual and small group coverage not sold through an association,” the fact sheet said. Some insurers sell a large portion of their business through associations, such as travel clubs, that may be used to sell insurance outside the authority of state laws pertaining to individual and small group plans, it said.
“The only real difference is that the association exists as a quasi-employer group; but in reality the enrollees do not work for the association,” HHS said. The amended rule “closes this significant loophole, levels the playing field between issuers, and assures that all insurers in the individual and small group markets nationwide receive the benefit of rate review.”
The Patient Protection and Affordable Care Act requires HHS to conduct annual reviews of “unreasonable” health insurance rate increases. Insurers are required under the law to submit justifications to HHS and states before increases held to be unreasonable are implemented, and the justifications will be posted on an HHS website, http://www.healthcare.gov.
On May 19, HHS finalized its rate review regulation requiring annual rate increases of 10 percent or more for individual and small group plans to be reviewed by state or federal officials (98 HCDR, 5/20/11). The regulation took effect Sept. 1. It does not apply to “grandfathered” health insurance plans that were in effect when PPACA was enacted in 2010, and it does not apply to plans that are self-funded by employers.
HHS Official Heralds Rate Reviews
At a telephone press conference Sept. 1, Steve Larsen, director of the HHS Center for Consumer Information and Insurance Oversight, heralded the beginning of the rate review process, saying it will bring “an unprecedented level of scrutiny and transparency to health insurance rate increases.”
Since 1999, the cost of health insurance has “skyrocketed” 131 percent for a family of four, Larsen said. “A central principle behind the Affordable Care Act is we have to reduce health insurance inflation for families and businesses,” he said. The new rules “will shine a light on proposed double-digit increases in health insurance rates.”
Over the past year, HHS distributed $48 million under PPACA to help states, the District of Columbia, and U.S. territories strengthen their rate review processes, and in February the agency announced a second round of funding for rate reviews, worth $200 million. As part of the second round of grants, HHS is providing $27.5 million in additional payments to states that seek authority to approve or deny rates.
Since PPACA was enacted, 11 states have gained prior approval authority over rate increases, leaving more than 30 states with the power, Larsen said. “Even in those areas in states where it is not yet possible to deny or reduce a rate increase, we believe the power of transparency and review will be a force for change for the benefit of consumers and individuals and small businesses,” he said. Faced with the possibility that a rate increase will be publicly highlighted, insurers “will take special care to ensure that the rate is reasonable and based on reasonable assumptions.”
Consumer Rep Applauds Amendment
Washington and Lee University School of Law Professor Timothy Jost, who serves as a consumer representative to the National Association of Insurance Commissioners, told BNA that the amended rule makes it clear that association plans will come under rate review, as well as all other PPACA regulations pertaining to individuals and small groups.
“They're taking the position this always has been the rule with respect to all other reforms, and they're merely extending the rule to rate reforms,” he said. “It clarifies a huge issue that was a gaping loophole in the Affordable Care Act.”
Associations have often taken the position that their health insurance sales are typically large group sales, Jost said. Treating association-sold plans as large group plans means they would not be subject to rate reviews, essential health benefit requirements that plans must meet, risk adjustment rules, and requirements limiting how much plans can charge for older people compared with younger customers, Jost said. Those requirements apply only to small group and individual plans under PPACA.
Jost also said that, without the rule clarification, there was a greater danger that associations could sell catastrophic plans outside of exchanges targeted primarily at healthy customers. Customers who later experienced medical problems then could leave the catastrophic plans and buy coverage through insurance exchange markets that will be set up in all states in 2014 under PPACA, he said.
“There was the possibility here of seriously undermining the exchanges,” he said. “People could just camp outside the exchanges until they got sick and then head off to the exchange.” Such “adverse selection” could lead to higher prices for plans sold in the exchanges, since the exchange plans could end up covering a disproportionately higher share of sick people.
Industry Stresses Cost Control
America's Health Insurance Plans, which represents about 1,300 health insurance companies covering about 200 million people, posted commentary on its “blog” website arguing that rate reviews “will not control health care cost growth.”
“The current approach to health care cost-containment will neither make health care more affordable for working families and small employers, nor put the system on a sustainable path,” AHIP said in the posting. “Highly publicized provisions such as premium rate review may make for good sound bites, but literally do nothing to address the soaring cost of medical care,” it said.
Premium costs are a reflection of the underlying cost of medical care in local markets, AHIP said. According to National Health Expenditures data from the Centers for Medicare & Medicaid Services, the growth in health care premiums directly tracked the growth in benefits between 2000 and 2009, AHIP said.
State mandates for richer benefits, the “outdated” fee-for-service system that “rewards volume over value,” high-priced new treatments, provider consolidation, and medical liability that leads to providers practicing defensive medicine have contributed to high costs, AHIP said.
AHIP also cited estimates from consulting firm Milliman that found that cost shifting to private insurance from Medicare and Medicaid, which often fails to reimburse doctors and hospitals for their costs, increases premiums by $1,788 per year for families, more than 10 percent of total premiums.
“As scrutiny of premiums grows, policymakers are beginning to recognize the far-reaching implications that premium review can have,” AHIP said, citing the withdrawal of legislation this week in the California Legislature that would have given the state rate-setting authority.
“The legislature was deluged with an outpouring of opposition from public retirees, doctors, hospitals, and others who recognized that rate review would lead to arbitrary cuts in reimbursements and access, regardless of the quality of care provided and patient outcomes,” AHIP said. “California is illustrative.
States are far better suited to review premiums because they have the experience, infrastructure, and local market knowledge needed to ensure consumer protection and health plan solvency. The federal government has no comparable expertise.”
The amended final rule is at http://op.bna.com/hl.nsf/r?Open=bbrk-8laln4.
U.S. requires health insurers to publicly justify big rate hikes
Under a new rule, insurers must post on their websites explanations of premium increases of 10% or more and submit them to state and federal regulators.
By Noam N. Levey, Los Angeles Times
September 2, 2011
Reporting from Washington
http://www.latimes.com/health/la-fi-health-insurance-20110902,0,7950538.story
Health insurers will have to start publicly justifying big rate hikes, according to a new requirement of the federal healthcare law that is meant to put pressure on insurance companies to hold down skyrocketing premiums.
The new rule, which went into effect Thursday, will mandate that insurers post on their websites explanations of premium increases exceeding 10% and submit the hikes to state and federal regulators, who also will post them starting this year.
"For far too long, families and small employers have been at the mercy of insurance rate increases that often put coverage out of their reach," Health and Human Services Secretary Kathleen Sebelius said in a statement. "Rate review will shed a bright light on the industry's behavior and drive market competition to lower costs."
The rule does not give state and federal regulators new authority to block rate hikes, however, even if government officials find the increases to be unjustified.
Some states already have such power, and several particularly aggressive states, such as Oregon and Rhode Island, routinely make insurers lower their rate increases after determining that proposed hikes are unjustified.
Even in less activist states, some regulators have been beefing up oversight of insurance companies with the help of federal grant money made available by the healthcare law President Obama signed last year.
But to the chagrin of consumer advocates, 30 states — including California — still do not have authority to block rate hikes in both the individual and small group markets, according to a 2010 survey by the nonprofit Kaiser Family Foundation.
"Disclosure alone will never be enough to prevent health insurers from charging unreasonable insurance premiums. To protect consumers, regulators must have the power to review and reject excessive rates," said Carmen Balber, Washington director for California-based Consumer Watchdog.
The insurance industry, long a powerhouse in state capitols nationwide, has vigorously fought efforts to give regulators enhanced authority, saying it is unnecessary.
This week, an effort in California to give state regulators greater authority collapsed in the Legislature.
On Thursday, America's Health Insurance Plans, the industry's lobbying arm in Washington, reiterated its opposition to stricter oversight, suggesting that insurance premiums are "a reflection of the underlying cost of medical care in a local market."
The Obama administration plans to rely on state insurance regulators to scrutinize insurance rates.
But federal regulators will handle insurance oversight in states where the administration has determined that state supervision is inadequate, including Alabama, Arizona, Louisiana, Missouri, Montana, Pennsylvania, Virginia and Wyoming.
The administration plans to work with states to set individual state-by-state thresholds for rate hikes that will require public explanation from insurance companies.
LEGAL AND FEDERAL HEALTH CARE REFORM AND MEDICAID LEGISLATION UPDATE, August 29th to September 2nd, 2011
Rules AND REQUESTS FOR COMMENTS Announced or PUBLISHED: August 29th to September 2nd, 2011
Group Health Plans and Health Insurance Issuers: Rules Relating to Internal Claims and Appeals and External Review Processes; Correction
26 CFR Part 54
Employee Benefits Security Administration
Department of Labor
29 CFR Part 2590
Department of Health and Human Services
Published on: August 29, 2011
Effective Date: July 22, 2011
Correction of amendment to interim final rules with request for comments
This rule corrects certain technical errors in the June 24, 2011 amendment to the interim final rule “Group Health Plans and Health Insurance Issuers: Rules Relating to Internal Claims and Appeals and External Review Processes.”
Medicare Program; Medicare Advantage and Prescription Drug Benefit Programs; Final Rule
42 CFR Parts 417, 422, and 423
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Published on: September 1, 2011
Effective Date: October 31, 2011
Final Rule
This final rule revises regulations to the Medicare Advantage program, the prescription drug program, and section 1876 cost plans, including cost-sharing for dual eligible enrollees in the Medicare Advantage program.
Rate Increase Disclosure and Review: Definitions of “Individual Market” and “Small Group Market”
45 CFR Part 154
Center for Consumer Information and Insurance Oversight
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Released on: September 1, 2011
Published on: September 6, 2011
Effective Date: November 1, 2011
Final Rule
This final rule amends a May 23, 2011 final rule entitled “Rate Increase Disclosure and Review.” This amends the definitions of “individual market” and “small group market” that apply for rate review purposes to include individual and small group coverage through associations. It also updates health insurance standards for issuers regarding disclosure and review of unreasonable premium increases (those annual rate increases of ten percent or more).
Federal Legislation Update: August 29th to September 2nd, 2011
None (Congress is in recess)
COURT DEVELOPMENTS: August 29th to September 2nd, 2011
Bryant v. Holder
On August 29th, Judge Keith Starrett of the Southern District of Mississippi determined that the private plaintiffs had standing to challenge certain provisions of the Affordable Care Act (ACA). However, it stated that Mississippi Lt. Governor, Phil Bryant did not have standing to challenge the individual mandate. The court also determined that the private plaintiffs have standing to claim that the minimum coverage provision violates their right to privacy.
Congressional Hearings AND MARKUPS: August 29th to September 2nd, 2011
None (Congress is in recess)
By Sara Hansard
Association sales of health insurance to individuals and small groups will be subject to rate reviews under an amended final rule issued Sept. 1 by the Department of Health and Human Services.
Association sales will be covered under the amended rule even if states in which the policies are sold do not regulate them as individual or small group sales, according to the rule, which will be published in the Sept. 6 Federal Register.
In many states, a significant portion of individual and small group health insurance is sold through associations, HHS said in a fact sheet accompanying the rule.
“This coverage is sold and delivered in the same manner as the individual and small group coverage not sold through an association,” the fact sheet said. Some insurers sell a large portion of their business through associations, such as travel clubs, that may be used to sell insurance outside the authority of state laws pertaining to individual and small group plans, it said.
“The only real difference is that the association exists as a quasi-employer group; but in reality the enrollees do not work for the association,” HHS said. The amended rule “closes this significant loophole, levels the playing field between issuers, and assures that all insurers in the individual and small group markets nationwide receive the benefit of rate review.”
The Patient Protection and Affordable Care Act requires HHS to conduct annual reviews of “unreasonable” health insurance rate increases. Insurers are required under the law to submit justifications to HHS and states before increases held to be unreasonable are implemented, and the justifications will be posted on an HHS website, http://www.healthcare.gov.
On May 19, HHS finalized its rate review regulation requiring annual rate increases of 10 percent or more for individual and small group plans to be reviewed by state or federal officials (98 HCDR, 5/20/11). The regulation took effect Sept. 1. It does not apply to “grandfathered” health insurance plans that were in effect when PPACA was enacted in 2010, and it does not apply to plans that are self-funded by employers.
HHS Official Heralds Rate Reviews
At a telephone press conference Sept. 1, Steve Larsen, director of the HHS Center for Consumer Information and Insurance Oversight, heralded the beginning of the rate review process, saying it will bring “an unprecedented level of scrutiny and transparency to health insurance rate increases.”
Since 1999, the cost of health insurance has “skyrocketed” 131 percent for a family of four, Larsen said. “A central principle behind the Affordable Care Act is we have to reduce health insurance inflation for families and businesses,” he said. The new rules “will shine a light on proposed double-digit increases in health insurance rates.”
Over the past year, HHS distributed $48 million under PPACA to help states, the District of Columbia, and U.S. territories strengthen their rate review processes, and in February the agency announced a second round of funding for rate reviews, worth $200 million. As part of the second round of grants, HHS is providing $27.5 million in additional payments to states that seek authority to approve or deny rates.
Since PPACA was enacted, 11 states have gained prior approval authority over rate increases, leaving more than 30 states with the power, Larsen said. “Even in those areas in states where it is not yet possible to deny or reduce a rate increase, we believe the power of transparency and review will be a force for change for the benefit of consumers and individuals and small businesses,” he said. Faced with the possibility that a rate increase will be publicly highlighted, insurers “will take special care to ensure that the rate is reasonable and based on reasonable assumptions.”
Consumer Rep Applauds Amendment
Washington and Lee University School of Law Professor Timothy Jost, who serves as a consumer representative to the National Association of Insurance Commissioners, told BNA that the amended rule makes it clear that association plans will come under rate review, as well as all other PPACA regulations pertaining to individuals and small groups.
“They're taking the position this always has been the rule with respect to all other reforms, and they're merely extending the rule to rate reforms,” he said. “It clarifies a huge issue that was a gaping loophole in the Affordable Care Act.”
Associations have often taken the position that their health insurance sales are typically large group sales, Jost said. Treating association-sold plans as large group plans means they would not be subject to rate reviews, essential health benefit requirements that plans must meet, risk adjustment rules, and requirements limiting how much plans can charge for older people compared with younger customers, Jost said. Those requirements apply only to small group and individual plans under PPACA.
Jost also said that, without the rule clarification, there was a greater danger that associations could sell catastrophic plans outside of exchanges targeted primarily at healthy customers. Customers who later experienced medical problems then could leave the catastrophic plans and buy coverage through insurance exchange markets that will be set up in all states in 2014 under PPACA, he said.
“There was the possibility here of seriously undermining the exchanges,” he said. “People could just camp outside the exchanges until they got sick and then head off to the exchange.” Such “adverse selection” could lead to higher prices for plans sold in the exchanges, since the exchange plans could end up covering a disproportionately higher share of sick people.
Industry Stresses Cost Control
America's Health Insurance Plans, which represents about 1,300 health insurance companies covering about 200 million people, posted commentary on its “blog” website arguing that rate reviews “will not control health care cost growth.”
“The current approach to health care cost-containment will neither make health care more affordable for working families and small employers, nor put the system on a sustainable path,” AHIP said in the posting. “Highly publicized provisions such as premium rate review may make for good sound bites, but literally do nothing to address the soaring cost of medical care,” it said.
Premium costs are a reflection of the underlying cost of medical care in local markets, AHIP said. According to National Health Expenditures data from the Centers for Medicare & Medicaid Services, the growth in health care premiums directly tracked the growth in benefits between 2000 and 2009, AHIP said.
State mandates for richer benefits, the “outdated” fee-for-service system that “rewards volume over value,” high-priced new treatments, provider consolidation, and medical liability that leads to providers practicing defensive medicine have contributed to high costs, AHIP said.
AHIP also cited estimates from consulting firm Milliman that found that cost shifting to private insurance from Medicare and Medicaid, which often fails to reimburse doctors and hospitals for their costs, increases premiums by $1,788 per year for families, more than 10 percent of total premiums.
“As scrutiny of premiums grows, policymakers are beginning to recognize the far-reaching implications that premium review can have,” AHIP said, citing the withdrawal of legislation this week in the California Legislature that would have given the state rate-setting authority.
“The legislature was deluged with an outpouring of opposition from public retirees, doctors, hospitals, and others who recognized that rate review would lead to arbitrary cuts in reimbursements and access, regardless of the quality of care provided and patient outcomes,” AHIP said. “California is illustrative.
States are far better suited to review premiums because they have the experience, infrastructure, and local market knowledge needed to ensure consumer protection and health plan solvency. The federal government has no comparable expertise.”
The amended final rule is at http://op.bna.com/hl.nsf/r?Open=bbrk-8laln4.
U.S. requires health insurers to publicly justify big rate hikes
Under a new rule, insurers must post on their websites explanations of premium increases of 10% or more and submit them to state and federal regulators.
By Noam N. Levey, Los Angeles Times
September 2, 2011
Reporting from Washington
http://www.latimes.com/health/la-fi-health-insurance-20110902,0,7950538.story
Health insurers will have to start publicly justifying big rate hikes, according to a new requirement of the federal healthcare law that is meant to put pressure on insurance companies to hold down skyrocketing premiums.
The new rule, which went into effect Thursday, will mandate that insurers post on their websites explanations of premium increases exceeding 10% and submit the hikes to state and federal regulators, who also will post them starting this year.
"For far too long, families and small employers have been at the mercy of insurance rate increases that often put coverage out of their reach," Health and Human Services Secretary Kathleen Sebelius said in a statement. "Rate review will shed a bright light on the industry's behavior and drive market competition to lower costs."
The rule does not give state and federal regulators new authority to block rate hikes, however, even if government officials find the increases to be unjustified.
Some states already have such power, and several particularly aggressive states, such as Oregon and Rhode Island, routinely make insurers lower their rate increases after determining that proposed hikes are unjustified.
Even in less activist states, some regulators have been beefing up oversight of insurance companies with the help of federal grant money made available by the healthcare law President Obama signed last year.
But to the chagrin of consumer advocates, 30 states — including California — still do not have authority to block rate hikes in both the individual and small group markets, according to a 2010 survey by the nonprofit Kaiser Family Foundation.
"Disclosure alone will never be enough to prevent health insurers from charging unreasonable insurance premiums. To protect consumers, regulators must have the power to review and reject excessive rates," said Carmen Balber, Washington director for California-based Consumer Watchdog.
The insurance industry, long a powerhouse in state capitols nationwide, has vigorously fought efforts to give regulators enhanced authority, saying it is unnecessary.
This week, an effort in California to give state regulators greater authority collapsed in the Legislature.
On Thursday, America's Health Insurance Plans, the industry's lobbying arm in Washington, reiterated its opposition to stricter oversight, suggesting that insurance premiums are "a reflection of the underlying cost of medical care in a local market."
The Obama administration plans to rely on state insurance regulators to scrutinize insurance rates.
But federal regulators will handle insurance oversight in states where the administration has determined that state supervision is inadequate, including Alabama, Arizona, Louisiana, Missouri, Montana, Pennsylvania, Virginia and Wyoming.
The administration plans to work with states to set individual state-by-state thresholds for rate hikes that will require public explanation from insurance companies.
LEGAL AND FEDERAL HEALTH CARE REFORM AND MEDICAID LEGISLATION UPDATE, August 29th to September 2nd, 2011
Rules AND REQUESTS FOR COMMENTS Announced or PUBLISHED: August 29th to September 2nd, 2011
Group Health Plans and Health Insurance Issuers: Rules Relating to Internal Claims and Appeals and External Review Processes; Correction
26 CFR Part 54
Employee Benefits Security Administration
Department of Labor
29 CFR Part 2590
Department of Health and Human Services
Published on: August 29, 2011
Effective Date: July 22, 2011
Correction of amendment to interim final rules with request for comments
This rule corrects certain technical errors in the June 24, 2011 amendment to the interim final rule “Group Health Plans and Health Insurance Issuers: Rules Relating to Internal Claims and Appeals and External Review Processes.”
Medicare Program; Medicare Advantage and Prescription Drug Benefit Programs; Final Rule
42 CFR Parts 417, 422, and 423
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Published on: September 1, 2011
Effective Date: October 31, 2011
Final Rule
This final rule revises regulations to the Medicare Advantage program, the prescription drug program, and section 1876 cost plans, including cost-sharing for dual eligible enrollees in the Medicare Advantage program.
Rate Increase Disclosure and Review: Definitions of “Individual Market” and “Small Group Market”
45 CFR Part 154
Center for Consumer Information and Insurance Oversight
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Released on: September 1, 2011
Published on: September 6, 2011
Effective Date: November 1, 2011
Final Rule
This final rule amends a May 23, 2011 final rule entitled “Rate Increase Disclosure and Review.” This amends the definitions of “individual market” and “small group market” that apply for rate review purposes to include individual and small group coverage through associations. It also updates health insurance standards for issuers regarding disclosure and review of unreasonable premium increases (those annual rate increases of ten percent or more).
Federal Legislation Update: August 29th to September 2nd, 2011
None (Congress is in recess)
COURT DEVELOPMENTS: August 29th to September 2nd, 2011
Bryant v. Holder
On August 29th, Judge Keith Starrett of the Southern District of Mississippi determined that the private plaintiffs had standing to challenge certain provisions of the Affordable Care Act (ACA). However, it stated that Mississippi Lt. Governor, Phil Bryant did not have standing to challenge the individual mandate. The court also determined that the private plaintiffs have standing to claim that the minimum coverage provision violates their right to privacy.
Congressional Hearings AND MARKUPS: August 29th to September 2nd, 2011
None (Congress is in recess)
Wednesday, August 24, 2011
States May Get a Second Chance to set up their Exchange
HELENA, Mont. (AP) — The Obama administration said Tuesday that states that have not adopted their own insurance exchanges may get a second chance to avoid getting one run solely by the federal government.
Only 11 states have fully embraced the idea of taking federal money to set up their own state-run insurance exchange, a U.S. Department of Health and Human Services official said Tuesday. The exchange, a key part of Obama's health care overhaul, is designed to help uninsured people buy coverage from a choice of plans with federal tax credits.
But states that have been slow to accept the idea, or outright rejected it in resistance to the law, will have another chance.
U.S. Department of Health and Human Services officials told Montana legislators Tuesday that the agency is working on a new partnership model to let state agencies help run the exchange — perhaps without the need for legislative authorization.
Marguerite Salazar, a regional director of the Department of Health and Human Services, said the proposal for the partnership is new within the past two months. State agencies are being invited to Washington D.C. next month to discuss it.
"I think it is going to be the option for states that are nervous about a full-fledged exchange," she said in an interview.
Montana is one of many states that have so far refused to pass a law authorizing a state-level insurance exchange, paid for by the federal government. Like some other states, Montana's legislature does not likely meet again soon enough to authorize an exchange prior to the January 2014 implementation.
And under the health care law, the federal government will impose its version of the exchange on states that don't set up their own.
Republican-led states have been particularly resistant to the idea as many of those legislatures have worked to undermine the federal law.
Texas for instance, led by Gov. Rick Perry who is now a leading GOP contender to challenge Obama, also blocked moves to lay the groundwork for expanded coverage under the federal law that many Republicans hope will be thrown out by the courts.
Perry, who has made total repeal of "Obamacare" a top campaign promise, has however signaled he may use executive authority in Texas to carry out the exchange in order to avoid one run by the federal bureaucracy.
In Montana, Republican legislators who currently hold commanding majorities may be convinced to eventually change their mind about the exchange in order to avoid a federally mandated version, one GOP lawmaker said.
"I think there may be enough mainstream Republicans that realize the more input Montana has on our own exchange will be a great benefit to the citizens of the state," said Republican state Rep. Tom Berry, who lives in the conservative eastern Montana town of Roundup.
Berry chairs an interim committee of Montana lawmakers who were discussing the state's options Tuesday with the federal officials in the wake of the full legislature's rejection of the exchange earlier this year.
The Montana lawmakers were told Health and Human Services may also let them later take over a federally run exchange after it is designed over the next two years.
In the interim, Berry said he likes the sound of the new, undefined proposal from the federal government for a partnership that lets the state craft an exchange run by the feds.
In Montana, Democrats run the executive branches overseeing health care and insurance. They may be more likely to accept the federal offer for a partnership.
Republicans on the panel quizzed the Health and Human Services officials over which part of the state government would be allowed to obligate the state into the partnership.
"That is undecided. I think this is an area where we may want to allow for a certain amount of state authority," said Amanda Cowley, acting director in the agency's state exchange division. "It will be set by the secretary of HHS in guidance or regulation."
Only 11 states have fully embraced the idea of taking federal money to set up their own state-run insurance exchange, a U.S. Department of Health and Human Services official said Tuesday. The exchange, a key part of Obama's health care overhaul, is designed to help uninsured people buy coverage from a choice of plans with federal tax credits.
But states that have been slow to accept the idea, or outright rejected it in resistance to the law, will have another chance.
U.S. Department of Health and Human Services officials told Montana legislators Tuesday that the agency is working on a new partnership model to let state agencies help run the exchange — perhaps without the need for legislative authorization.
Marguerite Salazar, a regional director of the Department of Health and Human Services, said the proposal for the partnership is new within the past two months. State agencies are being invited to Washington D.C. next month to discuss it.
"I think it is going to be the option for states that are nervous about a full-fledged exchange," she said in an interview.
Montana is one of many states that have so far refused to pass a law authorizing a state-level insurance exchange, paid for by the federal government. Like some other states, Montana's legislature does not likely meet again soon enough to authorize an exchange prior to the January 2014 implementation.
And under the health care law, the federal government will impose its version of the exchange on states that don't set up their own.
Republican-led states have been particularly resistant to the idea as many of those legislatures have worked to undermine the federal law.
Texas for instance, led by Gov. Rick Perry who is now a leading GOP contender to challenge Obama, also blocked moves to lay the groundwork for expanded coverage under the federal law that many Republicans hope will be thrown out by the courts.
Perry, who has made total repeal of "Obamacare" a top campaign promise, has however signaled he may use executive authority in Texas to carry out the exchange in order to avoid one run by the federal bureaucracy.
In Montana, Republican legislators who currently hold commanding majorities may be convinced to eventually change their mind about the exchange in order to avoid a federally mandated version, one GOP lawmaker said.
"I think there may be enough mainstream Republicans that realize the more input Montana has on our own exchange will be a great benefit to the citizens of the state," said Republican state Rep. Tom Berry, who lives in the conservative eastern Montana town of Roundup.
Berry chairs an interim committee of Montana lawmakers who were discussing the state's options Tuesday with the federal officials in the wake of the full legislature's rejection of the exchange earlier this year.
The Montana lawmakers were told Health and Human Services may also let them later take over a federally run exchange after it is designed over the next two years.
In the interim, Berry said he likes the sound of the new, undefined proposal from the federal government for a partnership that lets the state craft an exchange run by the feds.
In Montana, Democrats run the executive branches overseeing health care and insurance. They may be more likely to accept the federal offer for a partnership.
Republicans on the panel quizzed the Health and Human Services officials over which part of the state government would be allowed to obligate the state into the partnership.
"That is undecided. I think this is an area where we may want to allow for a certain amount of state authority," said Amanda Cowley, acting director in the agency's state exchange division. "It will be set by the secretary of HHS in guidance or regulation."
Tuesday, August 23, 2011
PPACA Tax Provisions
IRS.Gov
Affordable Care Act Tax Provisions
The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that take effect this year and more that will be implemented during the next several years. The following is a list of provisions now in effect; additional information will be added to this page as it becomes available.
Health Insurance Premium Tax Credit
Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. Exchanges will operate in every state and the District of Columbia. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums. On Aug.12, 2011, the IRS issued proposed regulations that describe who will be eligible to receive the premium tax credit and how to compute the credit. The proposed regulations also describe how to reconcile any advance credit payments for health benefits purchased through an Exchange with the final credit amount. The proposed regulations provide numerous examples, solicit written comments and provide a notice of public hearing. Comments must be submitted by Oct. 31, 2011.
The portion of the law that will allow eligible individuals to use tax credits to purchase health coverage through an Exchange is not effective until 2014.
Exchanges will offer individuals a choice of health plans that meet certain benefit and cost standards. The Department of Health and Human Services (HHS) administers the requirements for the Exchanges and the health plans they offer..
Small Business Health Care Tax Credit
This new credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. Learn more by browsing our page on the Small Business Health Care Tax Credit for Small Employers.
Changes to Flexible Spending Arrangements
Effective Jan. 1, 2011, the cost of an over-the-counter medicine or drug cannot be reimbursed from Flexible Spending Arrangements or health reimbursement arrangements unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan. A similar rule goes into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs). Employers and employees should take these changes into account as they make health benefit decisions for 2011.
For more information, see news release IR-2010-95, Notice 2010-59, Revenue Ruling 2010-23 and our questions and answers.
FSA and HRA participants can continue using debit cards to buy prescribed over-the-counter medicines, if requirements are met. For more information, see news release IR-2010-128 and Notice 2011-5.
IRS partners can spread the word to their clients with the help of a Health Plan Changes flyer and a drop-in article, Does your Healthcare Program need a checkup?
Health Coverage for Older Children
Health coverage for an employee's children under 27 years of age is now generally tax-free to the employee. This expanded health care tax benefit applies to various work place and retiree health plans. These changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit. This also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return. Learn more by reading our news release or this notice.
Excise Tax on Indoor Tanning Services — First Quarterly Payment Was Due Nov. 1, 2010
A 10-percent excise tax on indoor UV tanning services went into effect on July 1, 2010. The first payment of the tax was due Monday, Nov. 1. Payments are made along with Form 720, Quarterly Federal Excise Tax Return. The tax doesn't apply to phototherapy services performed by a licensed medical professional on his or her premises. There's also an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee. For more information on the tax and how it will be administered, see the Indoor Tanning Services Tax Center.
Employer-Provided Health Coverage — Not Taxable; Reporting is Voluntary for All Employers for 2011 and Small Employers for 2012
Starting in tax year 2011, the Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. To give employers more time to update their payroll systems, Notice 2010-69, issued last fall, made this requirement optional for all employers in 2011. IRS Notice 2011-28 provided further relief for smaller employers filing fewer than 250 W-2 forms by making the reporting requirement optional for them at least for 2012 and continuing this optional treatment for smaller employers until further guidance is issued. Notice 2011-28 also includes information on how to report, what coverage to include and how to determine the cost of the coverage.
The 2011 Form W-2 is available for viewing on IRS.gov. This is the W-2 that most employees will receive in early 2012. The form includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan.
This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income, and it is not taxable.
For more information, see the 2011 Form W-2, IR-2011-31, Notice 2010-69, Notice 2011-28 and our IRS YouTube video and frequently asked questions.
Adoption Credit
The Affordable Care Act raises the maximum adoption credit to $13,170 per child, up from $12,150 in 2009. It also makes the credit refundable, meaning that eligible taxpayers can get it even if they owe no tax for that year. In general, the credit is based on the reasonable and necessary expenses related to a legal adoption, including adoption fees, court costs, attorney’s fees and travel expenses. Income limits and other special rules apply. In addition to filling out Form 8839, Qualified Adoption Expenses (see instructions), eligible taxpayers must include with their 2010 tax returns one or more adoption-related documents to avoid slowing down a refund.
For other information, see our news release, tax tip, questions and answers, flyer, Notice 2010-66, Revenue Procedure 2010-31 and Revenue Procedure 2010-35.
Medicare Shared Savings Program
The Affordable Care Act establishes a Medicare shared savings program (MSSP) which encourages Accountable Care Organizations (ACOs) to facilitate cooperation among providers to improve the quality of care provided to Medicare beneficiaries and reduce unnecessary costs. More information can be found in Notice 2011-20, which solicits written comments regarding what additional guidance, if any, is needed for tax-exempt organizations participating in the MSSP through an ACO. This guidance also addresses the participation of tax-exempt organizations in non-MSSP activities through ACOs. Comments must be submitted by May 31, 2011. Additional information on the MSSP is available on the Department of Health and Human Services website.
Qualified Therapeutic Discovery Project Program
This program was designed to provide tax credits and grants to small firms that show significant potential to produce new and cost-saving therapies, support U.S. jobs and increase U.S. competitiveness. Applicants were required to have their research projects certified as eligible for the credit or grant. IRS guidance describes the application process.
Submission of certification applications began June 21, 2010, and applications had to be postmarked no later than July 21, 2010, to be considered for the program. Applications that were postmarked by July 21, 2010, were reviewed by both the Department of Health and Human Services (HHS) and the IRS. All applicants were notified by letter dated October 29, 2010, advising whether or not the application for certification was approved. For those applications that were approved, the letter also provided the amount of the grant to be awarded or the tax credit the applicant was eligible to take.
The IRS published the names of the applicants whose projects were approved as required by law. Listings of results are available by state.
Learn more by reading the IRS news release, the news release issued by the U.S. Department of the Treasury, the page on the HHS website and our questions and answers.
Group Health Plan Requirements
The Affordable Care Act establishes a number of new requirements for group health plans. Interim guidance on changes to the nondiscrimination requirements for group health plans can be found in Notice 2011-1, which provides that employers will not be subject to penalties until after additional guidance is issued. Other information on requirements is available on the websites of the Departments of Health and Human Services and Labor and in additional guidance.
Tax-Exempt 501(c)(29) Qualified Nonprofit Health Insurance Issuers
The Affordable Care Act requires the Department of Health and Human Services (HHS) to establish the Consumer Operated and Oriented Plan program (CO-OP program). It also provides for tax exemption under section 501(c)(29) for recipients of CO-OP grants and loans that meet additional requirements. IRS Notice 2011-23 outlines the requirements for tax exemption under under section 501(c)(29) and solicits written comments regarding these requirements as well as the application process. Comments must be submitted by May 27, 2011.
An overview of the CO-OP program is available on the Department of Health and Human Services website.
Medicare Part D Coverage Gap “donut hole” Rebate
The Affordable Care Act provides a one-time $250 rebate in 2010 to assist Medicare Part D recipients who have reached their Medicare drug plan’s coverage gap. This payment is not taxable. This payment is not made by the IRS. More information can be found at www.medicare.gov.
Additional Requirements for Tax-Exempt Hospitals
The Affordable Care Act adds requirements in the Internal Revenue Code that tax-exempt hospitals must meet to maintain their tax-exempt status. IRS Notice 2010-39 and Notice 2011-52 described the new requirements and solicited public comments. Due to changes to IRS forms and systems to reflect the additional requirements for charitable hospitals, the start of the 2010 filing season for hospital organizations is delayed. Tax-exempt organizations that are required to file Form 990, Schedule H (Hospitals), may not file their 2010 Forms 990 before July 1, 2011. Furthermore, IRS Announcement 2011-37 advises hospital organizations that Part V, Section B of Schedule H is optional for the 2010 tax year. The 2010 Form 990 and Schedule H include new questions relating to the new requirements that are in effect for tax years beginning after March 23, 2010, addressing the financial assistance, emergency medical care, billing and collection policies and charges for medical care.
Annual Fee on Branded Prescription Pharmaceutical Manufacturers and Importers
The Affordable Care Act created an annual fee payable beginning in 2011 by certain manufacturers and importers of brand name pharmaceuticals. On Aug. 15, 2011, the IRS issued temporary regulations and a notice of proposed rulemaking on the branded prescription drug fee. The temporary regulations describe the rules related to the fee, including how it is computed and how it is paid. The notice of proposed rulemaking solicits comments regarding these rules.
For additional information and guidance previously issued, see Notice 2010-71, Notice 2011-9, Revenue Procedure 2011-24 and Notice 2011-46.
Modification of Section 833 Treatment of Certain Health Organizations
The Affordable Care Act amended section 833 of the Code, which provides special rules for the taxation of Blue Cross and Blue Shield organizations and certain other organizations that provide health insurance. IRS Notice 2010-79 provides transitional relief and interim guidance on the computation of an organization’s taxpayer’s Medical Loss Ratio for purposes of section 833, the consequences of nonapplication and changes in accounting method. Notice 2011-04 provides additional information and the procedures for qualifying organizations to obtain automatic consent to change its method of accounting for unearned premiums. Notice 2011-51
Limitation on Deduction for Compensation Paid by Certain Health Insurance Providers
The Affordable Care Act amended section 162(m) of the Code to limit the compensation deduction available to certain health insurance providers. The amendment goes into effect for taxable years beginning after Dec. 31, 2012, but may affect deferred compensation attributable to services performed in a taxable year beginning after Dec. 31, 2009. Initial guidance on the application of this provision can be found in Notice 2011-2, which also solicits comments on the application of the amended provision.
Employer Shared Responsibility Payment
Starting in 2014, certain employers must offer health coverage to their full-time employees or a shared responsibility payment may apply. More information and a request for comments on approaches to determining who is a full-time employee for purposes of this new provision are in Notice 2011-36. Learn more by reading our news release.
Patient-Centered Outcomes Research Institute
The Affordable Care Act establishes the Patient-Centered Outcomes Research Institute and that the institute be funded by the Patient-Centered Outcomes Research Trust Fund. The institute will assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing clinical effectiveness research. The Trust Fund is to be funded in part by fees to be paid by issuers of health insurance policies and sponsors of self-insured health plans. IRS Notice 2011-35 requests comments regarding how the fees to fund the institute should be calculated and paid, including several possible rules and safe harbors.
Affordable Care Act Tax Provisions
The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that take effect this year and more that will be implemented during the next several years. The following is a list of provisions now in effect; additional information will be added to this page as it becomes available.
Health Insurance Premium Tax Credit
Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. Exchanges will operate in every state and the District of Columbia. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums. On Aug.12, 2011, the IRS issued proposed regulations that describe who will be eligible to receive the premium tax credit and how to compute the credit. The proposed regulations also describe how to reconcile any advance credit payments for health benefits purchased through an Exchange with the final credit amount. The proposed regulations provide numerous examples, solicit written comments and provide a notice of public hearing. Comments must be submitted by Oct. 31, 2011.
The portion of the law that will allow eligible individuals to use tax credits to purchase health coverage through an Exchange is not effective until 2014.
Exchanges will offer individuals a choice of health plans that meet certain benefit and cost standards. The Department of Health and Human Services (HHS) administers the requirements for the Exchanges and the health plans they offer..
Small Business Health Care Tax Credit
This new credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. Learn more by browsing our page on the Small Business Health Care Tax Credit for Small Employers.
Changes to Flexible Spending Arrangements
Effective Jan. 1, 2011, the cost of an over-the-counter medicine or drug cannot be reimbursed from Flexible Spending Arrangements or health reimbursement arrangements unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan. A similar rule goes into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs). Employers and employees should take these changes into account as they make health benefit decisions for 2011.
For more information, see news release IR-2010-95, Notice 2010-59, Revenue Ruling 2010-23 and our questions and answers.
FSA and HRA participants can continue using debit cards to buy prescribed over-the-counter medicines, if requirements are met. For more information, see news release IR-2010-128 and Notice 2011-5.
IRS partners can spread the word to their clients with the help of a Health Plan Changes flyer and a drop-in article, Does your Healthcare Program need a checkup?
Health Coverage for Older Children
Health coverage for an employee's children under 27 years of age is now generally tax-free to the employee. This expanded health care tax benefit applies to various work place and retiree health plans. These changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit. This also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return. Learn more by reading our news release or this notice.
Excise Tax on Indoor Tanning Services — First Quarterly Payment Was Due Nov. 1, 2010
A 10-percent excise tax on indoor UV tanning services went into effect on July 1, 2010. The first payment of the tax was due Monday, Nov. 1. Payments are made along with Form 720, Quarterly Federal Excise Tax Return. The tax doesn't apply to phototherapy services performed by a licensed medical professional on his or her premises. There's also an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee. For more information on the tax and how it will be administered, see the Indoor Tanning Services Tax Center.
Employer-Provided Health Coverage — Not Taxable; Reporting is Voluntary for All Employers for 2011 and Small Employers for 2012
Starting in tax year 2011, the Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. To give employers more time to update their payroll systems, Notice 2010-69, issued last fall, made this requirement optional for all employers in 2011. IRS Notice 2011-28 provided further relief for smaller employers filing fewer than 250 W-2 forms by making the reporting requirement optional for them at least for 2012 and continuing this optional treatment for smaller employers until further guidance is issued. Notice 2011-28 also includes information on how to report, what coverage to include and how to determine the cost of the coverage.
The 2011 Form W-2 is available for viewing on IRS.gov. This is the W-2 that most employees will receive in early 2012. The form includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan.
This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income, and it is not taxable.
For more information, see the 2011 Form W-2, IR-2011-31, Notice 2010-69, Notice 2011-28 and our IRS YouTube video and frequently asked questions.
Adoption Credit
The Affordable Care Act raises the maximum adoption credit to $13,170 per child, up from $12,150 in 2009. It also makes the credit refundable, meaning that eligible taxpayers can get it even if they owe no tax for that year. In general, the credit is based on the reasonable and necessary expenses related to a legal adoption, including adoption fees, court costs, attorney’s fees and travel expenses. Income limits and other special rules apply. In addition to filling out Form 8839, Qualified Adoption Expenses (see instructions), eligible taxpayers must include with their 2010 tax returns one or more adoption-related documents to avoid slowing down a refund.
For other information, see our news release, tax tip, questions and answers, flyer, Notice 2010-66, Revenue Procedure 2010-31 and Revenue Procedure 2010-35.
Medicare Shared Savings Program
The Affordable Care Act establishes a Medicare shared savings program (MSSP) which encourages Accountable Care Organizations (ACOs) to facilitate cooperation among providers to improve the quality of care provided to Medicare beneficiaries and reduce unnecessary costs. More information can be found in Notice 2011-20, which solicits written comments regarding what additional guidance, if any, is needed for tax-exempt organizations participating in the MSSP through an ACO. This guidance also addresses the participation of tax-exempt organizations in non-MSSP activities through ACOs. Comments must be submitted by May 31, 2011. Additional information on the MSSP is available on the Department of Health and Human Services website.
Qualified Therapeutic Discovery Project Program
This program was designed to provide tax credits and grants to small firms that show significant potential to produce new and cost-saving therapies, support U.S. jobs and increase U.S. competitiveness. Applicants were required to have their research projects certified as eligible for the credit or grant. IRS guidance describes the application process.
Submission of certification applications began June 21, 2010, and applications had to be postmarked no later than July 21, 2010, to be considered for the program. Applications that were postmarked by July 21, 2010, were reviewed by both the Department of Health and Human Services (HHS) and the IRS. All applicants were notified by letter dated October 29, 2010, advising whether or not the application for certification was approved. For those applications that were approved, the letter also provided the amount of the grant to be awarded or the tax credit the applicant was eligible to take.
The IRS published the names of the applicants whose projects were approved as required by law. Listings of results are available by state.
Learn more by reading the IRS news release, the news release issued by the U.S. Department of the Treasury, the page on the HHS website and our questions and answers.
Group Health Plan Requirements
The Affordable Care Act establishes a number of new requirements for group health plans. Interim guidance on changes to the nondiscrimination requirements for group health plans can be found in Notice 2011-1, which provides that employers will not be subject to penalties until after additional guidance is issued. Other information on requirements is available on the websites of the Departments of Health and Human Services and Labor and in additional guidance.
Tax-Exempt 501(c)(29) Qualified Nonprofit Health Insurance Issuers
The Affordable Care Act requires the Department of Health and Human Services (HHS) to establish the Consumer Operated and Oriented Plan program (CO-OP program). It also provides for tax exemption under section 501(c)(29) for recipients of CO-OP grants and loans that meet additional requirements. IRS Notice 2011-23 outlines the requirements for tax exemption under under section 501(c)(29) and solicits written comments regarding these requirements as well as the application process. Comments must be submitted by May 27, 2011.
An overview of the CO-OP program is available on the Department of Health and Human Services website.
Medicare Part D Coverage Gap “donut hole” Rebate
The Affordable Care Act provides a one-time $250 rebate in 2010 to assist Medicare Part D recipients who have reached their Medicare drug plan’s coverage gap. This payment is not taxable. This payment is not made by the IRS. More information can be found at www.medicare.gov.
Additional Requirements for Tax-Exempt Hospitals
The Affordable Care Act adds requirements in the Internal Revenue Code that tax-exempt hospitals must meet to maintain their tax-exempt status. IRS Notice 2010-39 and Notice 2011-52 described the new requirements and solicited public comments. Due to changes to IRS forms and systems to reflect the additional requirements for charitable hospitals, the start of the 2010 filing season for hospital organizations is delayed. Tax-exempt organizations that are required to file Form 990, Schedule H (Hospitals), may not file their 2010 Forms 990 before July 1, 2011. Furthermore, IRS Announcement 2011-37 advises hospital organizations that Part V, Section B of Schedule H is optional for the 2010 tax year. The 2010 Form 990 and Schedule H include new questions relating to the new requirements that are in effect for tax years beginning after March 23, 2010, addressing the financial assistance, emergency medical care, billing and collection policies and charges for medical care.
Annual Fee on Branded Prescription Pharmaceutical Manufacturers and Importers
The Affordable Care Act created an annual fee payable beginning in 2011 by certain manufacturers and importers of brand name pharmaceuticals. On Aug. 15, 2011, the IRS issued temporary regulations and a notice of proposed rulemaking on the branded prescription drug fee. The temporary regulations describe the rules related to the fee, including how it is computed and how it is paid. The notice of proposed rulemaking solicits comments regarding these rules.
For additional information and guidance previously issued, see Notice 2010-71, Notice 2011-9, Revenue Procedure 2011-24 and Notice 2011-46.
Modification of Section 833 Treatment of Certain Health Organizations
The Affordable Care Act amended section 833 of the Code, which provides special rules for the taxation of Blue Cross and Blue Shield organizations and certain other organizations that provide health insurance. IRS Notice 2010-79 provides transitional relief and interim guidance on the computation of an organization’s taxpayer’s Medical Loss Ratio for purposes of section 833, the consequences of nonapplication and changes in accounting method. Notice 2011-04 provides additional information and the procedures for qualifying organizations to obtain automatic consent to change its method of accounting for unearned premiums. Notice 2011-51
Limitation on Deduction for Compensation Paid by Certain Health Insurance Providers
The Affordable Care Act amended section 162(m) of the Code to limit the compensation deduction available to certain health insurance providers. The amendment goes into effect for taxable years beginning after Dec. 31, 2012, but may affect deferred compensation attributable to services performed in a taxable year beginning after Dec. 31, 2009. Initial guidance on the application of this provision can be found in Notice 2011-2, which also solicits comments on the application of the amended provision.
Employer Shared Responsibility Payment
Starting in 2014, certain employers must offer health coverage to their full-time employees or a shared responsibility payment may apply. More information and a request for comments on approaches to determining who is a full-time employee for purposes of this new provision are in Notice 2011-36. Learn more by reading our news release.
Patient-Centered Outcomes Research Institute
The Affordable Care Act establishes the Patient-Centered Outcomes Research Institute and that the institute be funded by the Patient-Centered Outcomes Research Trust Fund. The institute will assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing clinical effectiveness research. The Trust Fund is to be funded in part by fees to be paid by issuers of health insurance policies and sponsors of self-insured health plans. IRS Notice 2011-35 requests comments regarding how the fees to fund the institute should be calculated and paid, including several possible rules and safe harbors.
Friday, August 19, 2011
No Money to Pay for Federal Exchanges
Announcing...
HHS exchange may require creativity
By: J. Lester Feder
While sorting out the policy kinks in setting up a federal exchange, HHS must tackle another problem: There is no money to pay for it.
A quirk in the Affordable Care Act is that while it gives HHS the authority to create a federal exchange for states that don’t set up their own, it doesn’t actually provide any funding to do so. By contrast, the law appropriates essentially unlimited sums for helping states create their own exchanges.
The lack of funding for a federal exchange complicates what is already a difficult task. HHS will likely be operating exchanges in states like Louisiana and Florida that oppose the ACA on principle and have said they will not comply with the exchange provisions. But HHS also will likely be responsible for several other states that may want to set up exchanges, but will be unable to enact laws and set up the infrastructure under the short time frame specified by the law.
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.
“It’s very clear that [the HHS] secretary should ‘use such sums as may be necessary’” for supporting states in creating their exchanges, but it’s “sort of silent” on the federal fallback exchange, said Jon Kingsdale, the founding director of the Massachusetts Connector, who is advising HHS on the creation of the federal exchange.
“What you’d have to do is probably get creative about the financing,” perhaps enticing contractors to do development for free in the expectation that they would get paid once the exchange started collecting fees, Kingsdale said.
The CCIIO will also face the challenge of paying for the functions of state exchanges, such as the infrastructure for doing risk adjustment, which it has indicated it will be willing to pick up under “partnership” arrangements with the states. HHS proposed the partnerships in draft regulations in order to create an alternative to an all-federal exchange in a state that's unable to meet all of the requirements on time.
The general pot of money that the ACA makes available for implementation is surprisingly small, given that it is ushering in a series of new regulations covering a sector that accounts for a major chunk of the American economy. It only appropriates $1 billion for all federal administrative costs.
“Everyone expects that billion dollars not to be adequate,” said Edwin Park of the Center on Budget and Policy Priorities, which would make it necessary for HHS to find ways to draw on regular appropriations.
“You’d presume some mix of that billion dollars and regular appropriations” would provide the funding for setting up the federal exchange, he said.
HHS has distributed a quarter of the $1 billion in implementation funds, according to written answers that department Secretary Kathleen Sebelius submitted in March to questions from the House Energy and Commerce Committee. The department did not respond to a request for up-to-date numbers by deadline.
Tevi Troy, who functioned as HHS's chief operating officer in the George W. Bush administration as the department’s deputy secretary, explained that although Congress might try to restrain Sebelius’s efforts to use funds for priorities it opposes, there are many accounting tools at her disposal.
“Money is fungible, and implementation is a priority for the administration,” Troy said.
One option is to “tap” one program’s funds to pay for another. During his time at HHS, Troy said, a meeting would be held annually to sort through the taps on various programs to make sure the administration’s priorities got funded. Another option widely cited is to “detail” employees from one program to work on another.
The decision to move CCIIO inside of CMS also makes it easier to fund the office’s work, say those familiar with HHS budgeting, because the CMS budget has fewer line items earmarking funding and it has one of the largest budgets within the department.
“CMS was often one of the big dogs” in the reallocation of resources because of its size, Troy said.
CMS did not respond to questions about funding for the federal exchange by deadline. “We continue to work with all states to establish Affordable Insurance Exchanges for all Americans and are confident that we are on track,” CMS spokesman Brian Cook said in an email. “More than half the states have taken action to date, and many others are working diligently on the approach that best suits their local needs and markets.”
Thursday, August 18, 2011
Wall Street Journal Reports Insurance Companies must do in 4 pages what HHS did in 132 pages!
Announcing...Soon after HHS releases "132 pages" of proposed regulations for the Summary of Benefits, The Wall Street Journal reports that the "4 page summary of benefits" required in PPACA will be released Wednesday. Really...... Ronnell
U.S. NEWS
AUGUST 17, 2011
Health-Plan Buyers Get a
Look Under the Hood
By ANNA WILDE MATHEWS And JANET ADAMY
Consumers shopping for health insurance will soon get a peek at a new standard form—akin to the nutrition label on food products—that will lay out the details of each policy, from deductibles to how much it might cost to have a baby.
Associated Press
Don Berwick, head of the Centers for Medicare and Medicaid Services, will help unveil the plan Wednesday.
Federal regulators are expected to unveil the proposed summary form, part of the health-care overhaul law, on Wednesday, and the requirement is supposed to take effect next March.
"Now, every consumer will have clear, easy-to-read, and concise information that tells them what they need to know," said Erin Shields, spokeswoman for the Department of Health and Human Services. Officials including Don Berwick, administrator of the Centers for Medicare and Medicaid Services, are scheduled to announce the proposal.
Currently, states mandate certain disclosures from health insurers, but they vary by state. The information often comes as part of a document known as the certificate of coverage or evidence of coverage, which can run to dozens of densely written pages and is often supplied only after a consumer has signed up for a policy. Employers offering coverage typically provide materials to their workers, but these also don't follow any common national format.
"It's very inconsistent," said Karen Pollitz, a senior fellow at the nonpartisan Kaiser Family Foundation and a former Health and Human Services official.
The proposed new summary is expected to closely follow a draft version from a committee convened by the National Association of Insurance Commissioners, people with knowledge of the matter said. Health and Human Services is expected to finalize the form after a public comment period.
Insurers said they were concerned about the potential cost and administrative burden of the new requirement, particularly if they have to create different iterations of the form for every possible plan design a consumer could explore and for every single employer.
"Some plans would be providing tens of thousands of versions of this document," said a spokesman for America's Health Insurance Plans, an industry group.
The summary form has often been compared to the food-nutrition label, though it is substantially longer, and at six pages the draft offers considerable detail. For instance, it would not only tell consumers their overall deductibles, or the amount they must pay before coverage kicks in, but would also explain deductibles for specific categories, such as drug coverage. In addition to flagging the limit on a consumer's out-of-pocket expenses, the form would lay out which expenses don't count toward that limit.
A list of medical events and associated services, such as home health care and emergency transportation, would likely be shown along with the consumer's costs for each. The summary would also explain the consumer's possible expenses for three common situations: having a baby, treating breast cancer and managing diabetes.
The form would likely be given to people shopping for plans, before they are locked into a selection, by means including insurance agents, email, or websites where policies are sold. Under the health law, it is also supposed to be supplied to workers with employer coverage, when they sign up for plans as new hires or during open enrollment. However, regulators are likely to ask for comment on whether alternative equivalent documents might be acceptable for big employers, people with knowledge of the matter said.
"It would be a big deal to consumers, because they will have a standard way of receiving information," said Amir Mostafaie, director of quality and training at eHealth Inc., parent company of the online insurance marketplace eHealthInsurance.com.
Research has shown consumers are often confused about the details of their insurance. In a McKinsey & Co. survey of consumers, 72% agreed that health plans are sometimes so complicated it is difficult to understand what is covered or what services cost, according to the consulting firm, which polled around 11,000 people under age 65 late last year and early in 2011. In addition, 57% said that they found the process of choosing health insurance overwhelming.
For insurers, the new form would likely have the biggest sales impact in the individual insurance market, which is expected to grow substantially after 2014, when most of the health-care overhaul takes effect. Already, companies are increasingly focused on how to craft marketing and brand-promotion efforts that will resonate with consumers.
"It's not an industry that has been consumer-centric," said Raj Bal, a former executive at insurer WellPoint Inc. who is now an industry consultant. Once it is in effect, the form will likely help shape plan designs and promotion.
Write to Anna Wilde Mathews at anna.mathews@wsj.com and Janet Adamy at janet.adamy@wsj.com
U.S. NEWS
AUGUST 17, 2011
Health-Plan Buyers Get a
Look Under the Hood
By ANNA WILDE MATHEWS And JANET ADAMY
Consumers shopping for health insurance will soon get a peek at a new standard form—akin to the nutrition label on food products—that will lay out the details of each policy, from deductibles to how much it might cost to have a baby.
Associated Press
Don Berwick, head of the Centers for Medicare and Medicaid Services, will help unveil the plan Wednesday.
Federal regulators are expected to unveil the proposed summary form, part of the health-care overhaul law, on Wednesday, and the requirement is supposed to take effect next March.
"Now, every consumer will have clear, easy-to-read, and concise information that tells them what they need to know," said Erin Shields, spokeswoman for the Department of Health and Human Services. Officials including Don Berwick, administrator of the Centers for Medicare and Medicaid Services, are scheduled to announce the proposal.
Currently, states mandate certain disclosures from health insurers, but they vary by state. The information often comes as part of a document known as the certificate of coverage or evidence of coverage, which can run to dozens of densely written pages and is often supplied only after a consumer has signed up for a policy. Employers offering coverage typically provide materials to their workers, but these also don't follow any common national format.
"It's very inconsistent," said Karen Pollitz, a senior fellow at the nonpartisan Kaiser Family Foundation and a former Health and Human Services official.
The proposed new summary is expected to closely follow a draft version from a committee convened by the National Association of Insurance Commissioners, people with knowledge of the matter said. Health and Human Services is expected to finalize the form after a public comment period.
Insurers said they were concerned about the potential cost and administrative burden of the new requirement, particularly if they have to create different iterations of the form for every possible plan design a consumer could explore and for every single employer.
"Some plans would be providing tens of thousands of versions of this document," said a spokesman for America's Health Insurance Plans, an industry group.
The summary form has often been compared to the food-nutrition label, though it is substantially longer, and at six pages the draft offers considerable detail. For instance, it would not only tell consumers their overall deductibles, or the amount they must pay before coverage kicks in, but would also explain deductibles for specific categories, such as drug coverage. In addition to flagging the limit on a consumer's out-of-pocket expenses, the form would lay out which expenses don't count toward that limit.
A list of medical events and associated services, such as home health care and emergency transportation, would likely be shown along with the consumer's costs for each. The summary would also explain the consumer's possible expenses for three common situations: having a baby, treating breast cancer and managing diabetes.
The form would likely be given to people shopping for plans, before they are locked into a selection, by means including insurance agents, email, or websites where policies are sold. Under the health law, it is also supposed to be supplied to workers with employer coverage, when they sign up for plans as new hires or during open enrollment. However, regulators are likely to ask for comment on whether alternative equivalent documents might be acceptable for big employers, people with knowledge of the matter said.
"It would be a big deal to consumers, because they will have a standard way of receiving information," said Amir Mostafaie, director of quality and training at eHealth Inc., parent company of the online insurance marketplace eHealthInsurance.com.
Research has shown consumers are often confused about the details of their insurance. In a McKinsey & Co. survey of consumers, 72% agreed that health plans are sometimes so complicated it is difficult to understand what is covered or what services cost, according to the consulting firm, which polled around 11,000 people under age 65 late last year and early in 2011. In addition, 57% said that they found the process of choosing health insurance overwhelming.
For insurers, the new form would likely have the biggest sales impact in the individual insurance market, which is expected to grow substantially after 2014, when most of the health-care overhaul takes effect. Already, companies are increasingly focused on how to craft marketing and brand-promotion efforts that will resonate with consumers.
"It's not an industry that has been consumer-centric," said Raj Bal, a former executive at insurer WellPoint Inc. who is now an industry consultant. Once it is in effect, the form will likely help shape plan designs and promotion.
Write to Anna Wilde Mathews at anna.mathews@wsj.com and Janet Adamy at janet.adamy@wsj.com
Wednesday, August 17, 2011
HHS Releases Proposed Regulations on Summary of Benefits!
News Release
FOR IMMEDIATE RELEASE
August 17, 2011
Contact: HHS Press Office
(202) 690-6343
New Affordable Care Act Policy Helps Consumers Better Understand and Compare Benefits and Coverage
Today, the Departments of Health and Human Services (HHS), Labor, and the Treasury proposed new rules under the Affordable Care Act that will enable consumers to easily understand their health coverage and determine the best health insurance options for themselves and their families. Likewise, these proposed rules will assist employers in finding the best coverage for their business and their employees. Under the proposed rules announced today, health insurers and group health plans will provide consumers with clear, consistent and comparable information about their health plan benefits and coverage. The new forms, scheduled to be available in 2012, will be a critical resource for more than 180 million health insurance consumers with private health insurance coverage.
“Today, many consumers don’t have easy access to information in plain English to help them understand the differences in the coverage and benefits provided by different health plans,” said HHS Secretary Kathleen Sebelius. “Thanks to the Affordable Care Act, that will change.”
“Workers and their families needclear and understandable information regarding their health coverage," said Secretary of Labor Hilda L. Solis. "Today's proposal is a common-sense step that will help workers quickly and easily compare different coverage options, in order to make more informed decisions."
The rules proposed today will enable consumers both to more easily understand the coverage they already have and, when purchasing new coverage, to make apples-to-apples comparisons of available options. Specifically, the proposed regulations would ensure consumers have access to two forms that will help them understand and evaluate their health insurance choices, including:
•An easy to understand Summary of Benefits and Coverage; and
•A uniform glossary of terms commonly used in health insurance coverage, such as “deductible” and “co-pay”.
All health plans and issuers will provide a Summary of Benefits and Coverage, along with a uniform glossary of terms, to shoppers and enrollees upon request and before they buy coverage. Often, health plans and issuers only provide selective details on the plan or policy before it’s purchased, giving consumers a limited understanding of what they are buying. The proposed rules give consumers straightforward, standardized information on their choices upfront, helping them understand the key features of the policy or plan and allowing them to make a more informed decision. The summary will use a uniform glossary to replace the jargon that makes it impossible to compare plans or figure out what is covered. Health plans and issuers must also provide notice at least 60 days before any significant modification is made in the plan or coverage during the plan or policy year.
This Summary of Benefits and Coverage will include a new, standardized health plan or policy comparison tool for consumers known as “Coverage Examples,” much like the Nutrition Facts label required for packaged foods. The Coverage Examples would illustrate what proportion of care expenses a health insurance policy or plan would cover for three common benefits scenarios—having a baby, treating breast cancer, and managing diabetes. Additional scenarios may be added in the future. The examples will help consumers understand and compare their share of the costs of care under a particular policy or plan, and see how valuable the health plan will be at times when they need the coverage.
The proposed rules benefit from the public process led by the National Association of Insurance Commissioners (NAIC) and a working group composed of stakeholders. These stakeholders include representatives of health insurance-related consumer advocacy organizations, health insurers, health care professionals, patient advocates including those representing individuals with limited English proficiency, and other qualified individuals. During its process, the working group met monthly, invited public input, and conducted consumer testing of the language and forms. Today’s proposed regulations adopt the recommendations submitted by the NAIC after that process, and request comments on how the forms can be improved.
More information about the proposed regulation is available at: http://www.healthcare.gov/news/factsheets/labels08172011a.html.
To view the proposed template for the Summary of Benefits and Coverage, visit: http://www.healthcare.gov/news/factsheets/labels08172011b.pdf
To view the Notice of Proposed Rulemaking or learn how to submit public comment, visit: http://www.gpoaccess.gov/fr/
Other technical information is available at: http://cciio.cms.gov/
###
FOR IMMEDIATE RELEASE
August 17, 2011
Contact: HHS Press Office
(202) 690-6343
New Affordable Care Act Policy Helps Consumers Better Understand and Compare Benefits and Coverage
Today, the Departments of Health and Human Services (HHS), Labor, and the Treasury proposed new rules under the Affordable Care Act that will enable consumers to easily understand their health coverage and determine the best health insurance options for themselves and their families. Likewise, these proposed rules will assist employers in finding the best coverage for their business and their employees. Under the proposed rules announced today, health insurers and group health plans will provide consumers with clear, consistent and comparable information about their health plan benefits and coverage. The new forms, scheduled to be available in 2012, will be a critical resource for more than 180 million health insurance consumers with private health insurance coverage.
“Today, many consumers don’t have easy access to information in plain English to help them understand the differences in the coverage and benefits provided by different health plans,” said HHS Secretary Kathleen Sebelius. “Thanks to the Affordable Care Act, that will change.”
“Workers and their families needclear and understandable information regarding their health coverage," said Secretary of Labor Hilda L. Solis. "Today's proposal is a common-sense step that will help workers quickly and easily compare different coverage options, in order to make more informed decisions."
The rules proposed today will enable consumers both to more easily understand the coverage they already have and, when purchasing new coverage, to make apples-to-apples comparisons of available options. Specifically, the proposed regulations would ensure consumers have access to two forms that will help them understand and evaluate their health insurance choices, including:
•An easy to understand Summary of Benefits and Coverage; and
•A uniform glossary of terms commonly used in health insurance coverage, such as “deductible” and “co-pay”.
All health plans and issuers will provide a Summary of Benefits and Coverage, along with a uniform glossary of terms, to shoppers and enrollees upon request and before they buy coverage. Often, health plans and issuers only provide selective details on the plan or policy before it’s purchased, giving consumers a limited understanding of what they are buying. The proposed rules give consumers straightforward, standardized information on their choices upfront, helping them understand the key features of the policy or plan and allowing them to make a more informed decision. The summary will use a uniform glossary to replace the jargon that makes it impossible to compare plans or figure out what is covered. Health plans and issuers must also provide notice at least 60 days before any significant modification is made in the plan or coverage during the plan or policy year.
This Summary of Benefits and Coverage will include a new, standardized health plan or policy comparison tool for consumers known as “Coverage Examples,” much like the Nutrition Facts label required for packaged foods. The Coverage Examples would illustrate what proportion of care expenses a health insurance policy or plan would cover for three common benefits scenarios—having a baby, treating breast cancer, and managing diabetes. Additional scenarios may be added in the future. The examples will help consumers understand and compare their share of the costs of care under a particular policy or plan, and see how valuable the health plan will be at times when they need the coverage.
The proposed rules benefit from the public process led by the National Association of Insurance Commissioners (NAIC) and a working group composed of stakeholders. These stakeholders include representatives of health insurance-related consumer advocacy organizations, health insurers, health care professionals, patient advocates including those representing individuals with limited English proficiency, and other qualified individuals. During its process, the working group met monthly, invited public input, and conducted consumer testing of the language and forms. Today’s proposed regulations adopt the recommendations submitted by the NAIC after that process, and request comments on how the forms can be improved.
More information about the proposed regulation is available at: http://www.healthcare.gov/news/factsheets/labels08172011a.html.
To view the proposed template for the Summary of Benefits and Coverage, visit: http://www.healthcare.gov/news/factsheets/labels08172011b.pdf
To view the Notice of Proposed Rulemaking or learn how to submit public comment, visit: http://www.gpoaccess.gov/fr/
Other technical information is available at: http://cciio.cms.gov/
###
Monday, August 8, 2011
Women's Preventative Services Rule Issued Under Health Care Reform
By Sara Hansard
Rules requiring new health insurance plans to cover women's preventive health services without charging copayments, coinsurance, or deductibles were issued jointly Aug. 1 by three agencies that are implementing the health care reform law.
The Department of Health and Human Services' Centers for Medicare & Medicaid Services, the Department of Labor's Employee Benefits Security Administration, and the Department of the Treasury's Internal Revenue Service issued an interim final rule adopting guidelines recommended July 19 by the Institute of Medicine (19 HCPR 1167, 7/25/11).
The interim final rule was published in the Aug. 3 Federal Register (76 Fed. Reg. 46621), but the effective date of the rule is Aug. 1, when it was released. Comments on the interim final rule are due Sept. 30.
The IRS also issued a separate proposed rule which would amend excise tax regulations. Comments on the IRS proposed rule, also published in the Aug. 3 Federal Register (76 Fed. Reg. 46677), are due Oct. 3.
In a telephone press briefing with reporters, HHS Secretary Kathleen Sebelius called the guidelines “historic,” saying they will “help women get the preventive care they need to stay healthy.”
Group and individual health insurance policies with plan years beginning on or after Aug. 1, 2012, will have to cover a wide range of preventive services without requiring cost-sharing payments, including contraception, well-woman visits, breastfeeding supplies and support, domestic violence screening, screening for gestational diabetes, human papillomavirus DNA testing for women 30 years and older, sexually transmitted infection counseling, and human immunodeficiency virus screening and counseling.
“This kind of care can prevent illness and improve health,” Sebelius said. “But for too long, too many Americans have gone without it, in many cases because it cost too much,” she said. A recent study found that each year more than half of women avoid or delay key preventive care because of cost, which hurts public health and drives up health care costs, she said. As one example, she said it is estimated that if 90 percent of mothers were able to breast-feed in the first six months, it would save the lives of 1,000 infants and save the health care system $13 billion each year.
The Patient Protection and Affordable Care Act requires plans begun after the law was enacted in 2010 to cover preventive services for men and women without requiring policyholders to make cost-sharing payments, and rules were issued in 2010 for that requirement.
The interim final rule issued Aug. 1 implements a provision of PPACA requiring that preventive services specifically for women be covered without cost sharing. Previously, preventive services for women had been recommended one by one or as part of guidelines for men as well, HHS said.
“Grandfathered” plans that began before PPACA was enacted and that meet HHS criteria for not making many changes are not required to meet the preventive service requirements.
‘Millions’ of People Will Be Affected
Howard Koh, HHS assistant secretary for health, said during the press briefing that “millions of people will be positively affected” by the rules. “This puts forward a national standard for the first time and will have broad impact,” he said.
Some 88 million people will be in nongrandfathered plans by 2013, of which about 34 million will be women ages 18 to 64, he said. “New plans are being created all the time,” Koh said.
The administration also released an amendment allowing religious institutions that offer insurance to their employees the choice of whether to cover contraception. HHS said this provision is based on “the most common accommodation for churches available in the majority [18] of the 28 states” that already require insurance companies to cover contraception. The agency asked for comments on this provision.
Sebelius said the guidelines “reflect common sense,” and they bring “fairness to the health insurance market for women.” Birth control is the most common drug prescribed to women ages 18 to 44, she said. Not covering it “would be like not covering flu shots or any of the other basic preventive services that millions of Americans count on every day.”
Women have unique medical needs, and are more likely than men to suffer from some serious illnesses, such as diabetes, Koh said. On average, women need to use more preventive services than men, yet women typically earn lower incomes than men and are often less able to pay, he said. As a result, they are more likely to forgo some services because of cost, he said.
Plans may use reasonable medical management to help define the nature of the covered service, and plans have the flexibility to control costs and promote efficiency by such methods as imposing cost-sharing payments for branded drugs if a generic version is available and safe, HHS said.
Small Increase in Premiums
Mayra Alvarez, director of public health policy in HHS's Office of Health Reform, said during the briefing that HHS believes the rules will result in a “very small increase” in premiums since most employer plans already cover the services.
But America's Health Insurance Plans, which represents about 1,300 insurers covering about 200 million people, issued a statement from President and Chief Executive Officer Karen Ignagni saying that the preventive care coverage recommendations “would increase the number of unnecessary physician office visits and raise the cost of coverage.”
While Koh said that the IOM recommendations adopted in the interim final rule are based “on the best available science and data,” Ignagni said the IOM recommendations “would broaden the scope of mandated preventive services beyond existing evidence-based guidelines, suspend current cost-sharing arrangements for certain services, and encourage consumers to obtain a prescription for routine supplies that are currently purchased over the counter. Exceeding current evidence-based guidelines sets a troubling precedent for the IOM's future coverage recommendations, including the essential health benefits that will significantly impact the affordability of coverage and the cost to taxpayers.”
Under PPACA HHS is to release rules later this year on “essential health benefits” that health insurers must cover.
Consumer Groups Applaud Rule
Health care consumer groups applauded the interim final rule. “Investing in these essential services makes good health and economic sense,” Families USA Executive Director Ron Pollack said in a statement.
But Debra Ness, president of the National Partnership for Women & Families, said in a statement that, while the group supports much of the interim final rule, it is “disappointed that the administration is considering a refusal clause that would allow some employers to refuse to provide their employees with coverage for contraception.” The clause is “unnecessary and potentially harmful,” and was not recommended by the IOM, she said.
Both Koh and Alvarez indicated that the administration hopes to make preventive care coverage more uniform for private as well as public health plans. The women's preventive interim final rule pertains to new commercial plans, “but we are working very hard to improve prevention throughout the country regardless of the source of insurance,” Koh said, noting that some PPACA prevention provisions affect both Medicare and Medicaid. “We are moving steadily toward creating a true system of prevention for the country,” he said.
The interim final rule issued by CMS, EBSA and the IRS is at http://www.gpo.gov/fdsys/pkg/FR-2011-08-03/pdf/2011-19684.pdf.
The IRS proposed rule is at http://www.gpo.gov/fdsys/pkg/FR-2011-08-03/pdf/2011-19685.pdf.
Monday, August 1, 2011
The Facts about Upcoming New Benefits in Medicare
MEDICARE is an essential health care program for people age 65 and older, people with certain disabilities, and people with End-Stage Renal Disease.
Recently, President Bush and Congress worked together to pass a new law to bring people with
Medicare more choices in health care coverage and better health care benefits.
Medicare more choices in health care coverage and better health care benefits.
This new law preserves and strengthens the current Medicare program, adds important new prescription drug and preventive benefits, and provides extra help to people with low incomes.
You will still be able to choose doctors, hospitals and pharmacies.
You will still be able to choose doctors, hospitals and pharmacies.
If you are happy with the Medicare coverage you have, you can keep it. Or, you can choose to enroll in new options described below. No matter what you decide, you are still in the Medicare
program.
program.
Drug Discount Cards Start in 2004
Medicare-Approved Drug Discount Cards will be available in 2004 to help you save on prescription drugs. Medicare will contract with private companies to offer new drug discount cards until a Medicare prescription drug benefit starts in 2006. A discount card with Medicare’s seal of approval can help you save 10–25% on prescription drugs.
You can enroll beginning as early as May 2004 and continuing through December 31, 2005. Enrolling is your choice. Medicare will send you information soon with details about how to enroll.
People in the greatest need will have the greatest help available to them. If your income is no more than $12,569 for a single person, or no more than $16,862 for a married couple, you might qualify for a $600 credit on your discount card to help pay for your prescription drugs. These income limits change every year. Different rules may apply if you live in Puerto Rico or a U.S. territory. (You can’t qualify for the $600 if you already have drug coverage from Medicaid, TRICARE for Life or an employer group health plan.)
Also new in 2004, Medicare Advantage is the new name for Medicare + Choice plans. Medicare Advantage rules and payments are improved to give you more health plan choices and
better benefits. Plan choices might have improved already in your area. To find out more, call 1-800-MEDICARE (1-800-633-4227).
New Preventive Benefits will be covered, including:
■ A one-time initial wellness physical exam within 6 months of the day you first enroll in Medicare Part B.
■ Screening blood tests for early detection of cardiovascular (heart) diseases.
■ Diabetes screening tests for people with Medicare at risk of getting diabetes.
These benefits add to the preventive services that Medicare already covers, such as cancer screenings, bone mass measurements and vaccinations.
Prescription Drug Plans Start in 2006
Prescription Drug Benefits will be added to Medicare in 2006. All people with Medicare will be able to enroll in plans that cover prescription drugs. Plans might vary, but in general, this
is how they will work:
■ You will choose a prescription drug plan and pay a premium of
about $35 a month.
■ You will pay the first $250 (called a “deductible”).
■ Medicare then will pay 75% of costs between $250 and $2,250 in drug spending. You will pay only 25% of these costs.
■ You will pay 100% of the drug costs above $2,250 until you
reach $3,600 in out-of-pocket spending.
reach $3,600 in out-of-pocket spending.
■ Medicare will pay about 95% of the costs after you have spent $3,600.
Some prescription drug plans may have additional options to help you pay the out-of-pocket costs.
Extra Help Will be Available for people with low incomes and limited assets. Most significantly, people with Medicare in the greatest need, who have incomes below a certain limit
won’t have to pay the premiums or deductible for prescription drugs. The income limits will be set in 2005. If you qualify, you will only pay a small co-payment for each prescription you need.
Other people with low incomes and limited assets will get help paying the premiums and deductible. The amount they pay for each prescription will be limited.
Medicare Advantage plan choices will be expanded to include regional preferred provider organization plans (PPOs). Regional PPOs will help more people with Medicare have multiple choices for Medicare health coverage, no matter where they live. PPOs can help you save money by choosing from doctors and providers on a plan’s “preferred” list, but usually don’t require you to get a referral. PPOs are among the most common and popular plans right now for working Americans.
All of these options are voluntary. You can choose to remain in the traditional Medicare plan you have today.
For the latest information about Medicare, visit www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.
To get a copy of this information in Spanish, call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. Para una copia en español, llame gratis al 1-800-MEDICARE (1-800-633-4227). Los usuarios de TTY deben llamar al 1-877-486-2048.
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