PPACA Impact and Opportunities : Health Care Lawyer & Attorney : Epstein Becker Green Law Firm : Insurance & Costs : Health Reform Musings Blog

By Gretchen Harders and Michelle Capezza

On May 8, 2013, the Employee Benefits Security Administration of the Department of Labor (the “DOL”) issued Technical Release 2013-02 (the “Release”) providing important guidance under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”) with regard to the requirement that employers provide notices to their employees of the existence of the Health Insurance Marketplace, generally referred to previously as the Exchange. These employee notices must be provided to existing employees no later than October 1, 2013. This deadline is intended to correspond to the open enrollment period for the Marketplace commencing October 1, 2013 for coverage through the Marketplace beginning January 1, 2014. The Release includes temporary guidance and two model employee notices of the Marketplace upon which employers may rely. The Release further provides an updated model election notice for group health plans for purposes of the continuation coverage provisions under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) to include information of the health coverage options offered to individuals through the Marketplace for comparative purposes.

Employee Notice of the Marketplace. The Affordable Care Act amended the Fair Labor Standards Act (“FLSA”) to require employers to issue employees a notice of the health coverage options available under the Marketplace. The FLSA requirement was required to have been satisfied on or before March 1, 2013; however, given the regulatory delays in establishing and approving the Marketplace, the DOL extended the deadline. The guidance under this Release is temporary through the applicability date of October 1, 2013, but may be relied upon until future guidance and regulations are issued.

Which employers are required to comply with the notice requirements?

Whether or not required to “pay or play” under the Affordable Care Act, all employers subject to the FLSA must provide the employee notice. The FLSA generally applies to employers that employ one or more employees and are engaged in or produce goods for interstate commerce. The FLSA also covers, among other things, hospitals, schools, institutions of higher education and federal, state and local government agencies. To determine whether an employer is subject to the FLSA, the DOL provides an internet assistance tool at http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp.

Which employees must receive the notice?

Employers must provide the employee notice to each employee whether or not the employee has part-time or full-time status. It does not matter whether the employee is enrolled or eligible to enroll in a group health plan. A separate notice is not required to dependents or other individuals who may become eligible for coverage under the plan, but are not employees.

What information must the notice provide?

The employee notice must contain the following information:

• The existence of the Marketplace;
• The contact information and description of services offered on the Marketplace;
• A statement that the individual may be eligible for a premium tax credit if the employee purchases a qualified plan on the Marketplace; and
• A statement that if the employee purchases a qualified plan on the Marketplace, the employee may lose the employer contribution to any health benefit plan offered by the employer and all or a portion of employer contributions may be excluded from federal income.

What are the DOL model notice(s)?

The DOL has provided two model employee notices available on its website, one for employers who do not offer a health plan and one for employers who offer a health plan to some or all employees. The Release provides that employers may use the model notice(s) provided the notice(s) include the information described above.

The model employee notice for employers who do not offer health coverage includes the information described above, as well as an explanation of the impact of the availability of employer health coverage on the employee’s eligibility for subsidies on the Marketplace. The model employee notice does not require the employer to provide specific contact information for the Marketplace in the state where the employee resides, but rather refers the employee to the http://www.healthcare.gov website for contact information for the Marketplace in the employee’s area. This model employee notice requires the employer to provide contact information for the employer, including the employer’s EIN. This is the information an employee will need to include in an application for a premium subsidy on a Marketplace.

The model employee notice for employers who do offer health coverage generally includes the same information as the model employee notice for employers who do not offer health coverage. This model employee notice does, however, require the employer to provide contact information to obtain more information about the employer’s health care coverage. The disclosure requires the employer to state whether the health care coverage is offered to all employees and, if not to all employees, a description of those employees eligible for health care coverage. It also requires the employer to state whether it offers dependent coverage and which dependents are eligible. Finally, the employer is required to disclose whether the health care coverage offered meets the minimum value standard and that the cost of coverage is intended to be affordable. The Department of Treasury and Internal Revenue Service recently issued proposed guidance to assist employees in assessing whether the coverage offered provides minimum value. See our prior blog post New Proposed guidance for Determining Whether Employer-Sponsored Health Plan Provides Minimum Value.

The model employee notice includes optional information that an employer may provide to the employee based on the Marketplace Employer Coverage Tool to better understand their coverage choices, including whether the employee is eligible in the next three months for employer coverage, whether the employer offers a health plan that meets the minimum value standard, the premium for employee-only coverage under the lowest-cost plan that meets the minimum value standard if the employee received the maximum discount for any tobacco cessation program, and what changes the employer will make for the next plan year. Although this information is optional, it may be to an employer’s benefit to demonstrate, where appropriate, that its plan is providing minimum value and is affordable.

When must the employee notice be provided and what are the acceptable delivery methods?

Current employees before October 1, 2013 must be provided with the notice no later than October 1, 2013. Beginning October 1, 2013, the employer must provide each new employee the notice at the time of hire, which will be considered timely provided in 2014 if provided within 14 days of the employee’s start date.

The employee notice must be provided free of charge in writing in a manner calculated to be understood by the average employee. The employee notice may be provided by first class mail or electronically if in accordance with the DOL’s electronic disclosure safe harbor.

COBRA Model Notice. Under COBRA, an individual who was covered by a group health plan the day before a qualifying event occurred may be eligible to elect COBRA continuation coverage. These qualified beneficiaries must be provided with an election notice within 14 day after the plan administrator receives notice of a qualifying event. The COBRA election notice is required to include specific information.

The DOL updated its model COBRA election notice to provide information about the Marketplace for the purposes of informing qualified beneficiaries that they may also be eligible for a premium tax credit to pay for coverage offered through the Marketplace. It also includes clarification on the limit on pre-existing conditions exclusions beginning in 2014. Such information is not specifically required under the Affordable Care Act and should have no impact on whether an employer is subject to the employer responsibility penalties if in fact a former employee obtains coverage on the Marketplace.

The Release provides that the use of the model COBRA election notice completed appropriately will be considered good faith compliance with the COBRA election requirements. The model COBRA election notice does not provide a specific deadline or compliance date. Employers may wish to review their existing COBRA election notices for changes relating to the Affordable Care Act.

Employers have long been waiting for specific guidance from the DOL on the employee notice requirements. Now that it is here, compliance should be addressed well before the October 1, 2013 deadline.

By Greta Ravitsky

I wrote the January 2013 edition of Take 5: Views You Can Use, a newsletter published by the Labor and Employment practice of Epstein Becker Green.

In it, I summarize five actions that employers should consider taking in 2013 as the DOL steps up its audit efforts under the leadership of the reenergized Obama administration:

1. Assess the Workforce
2. Choose Whether to “Pay” or to “Play”
3. Evaluate Existing Wellness Programs and/or Implement New Wellness Programs to Enhance Employees’ Health Profiles and to Avoid or Minimize the “Cadillac Tax”
4. Understand and Be Ready to Comply with New Tax-Related Changes and Requirements
5. Conduct Self-Audits to Ensure Compliance

The following is an excerpt:

With the U.S. presidential election behind us, it is clear that the Patient Protection and Affordable Care Act (“Affordable Care Act”) is likely here to stay, having survived a U.S. Supreme Court case challenge last June. While affected employers can avoid facing penalties until 2014 for not making health care coverage available to their workforce, the U.S. Department of Labor (“DOL”) has begun auditing employers’ group health plans for compliance with other requirements of the law that are already in effect. As the DOL steps up its audit efforts under the leadership of the reenergized Obama administration, below are five actions that employers should consider taking in 2013.

Read the full version on EBGlaw.com.

On Friday, November 30, Epstein Becker Green attorneys Frank C. Morris, Jr., and Adam C. Solander offered a one-hour webinar titled “The New Wellness Program Regulations, Part of a Webinar Series on the New ACA Implementation Regulations: Employer Impact.” The webinar discussed:

• the proposed regulations and the impact these regulations could have on your overall wellness strategy
• areas where employer comment is needed
• recent wellness litigation trends
• where EEOC fits in the picture

The audio recording and presentation slides for "The New Wellness Program Regulations" webinar are now available. Contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com, or Lisa Blackburn at 202/861-1887 or lblackburn@ebglaw.com, to obtain a password to download the files.

Epstein Becker Green is pleased to announce a webinar series for employers on the forthcoming rules and regulations implementing the Affordable Care Act ("ACA"). We expect the Administration to release a significant number of regulations in the near future which will directly impact employers.

EBG Health Care & Life Sciences and Labor & Employment practitioners, along with outside speakers, will provide in-depth analysis on proposed rules and regulations and how they will impact decisions that must be made by employers. The first webinar will take place on November 30.

Stay tuned for upcoming webinars on:

• Wellness Programs
• Exchange Implementation
• Shared Responsibility
• And others...

In addition to this blog, EBG's HEAL blog will also post regulatory developments.

Click here to register for the November 30th Wellness Programs Webinar

For additional Information, please contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com, or Lisa Blackburn at 202/861-1887 or lblackburn@ebglaw.com.

In addition to the work that states are doing (or purposefully not doing) to implement State Health Insurance Exchanges for operation in 2014, states have also been given the task of choosing a benchmark plan for purposes of defining the essential health benefits (“EHB”), a minimum package of benefits that must be offered by all insurance policies sold in the small group and individual markets beginning in 2014. 

Section 1302(b) of the Affordable Care Act directs the Secretary of Health and Human Services (the “Secretary”) to define the EHB. The scope of the EHB must equal the scope of benefits provided under a typical employer plan. Further, 10 broad categories of services must be covered in the EHB package.

Rather than setting a national standard for the EHB, in December 2011, the Centers for Medicare & Medicaid Services (“CMS”) issued a bulletin providing guidance to the states on CMS’s proposed regulatory approach for defining the EHB. Specifically, CMS is largely leaving the decision to the states to choose from one of 10 benchmark plans in the following four categories:

• The largest plan by enrollment in any of the three largest small group insurance products in the State’s small group market;
• Any of the largest three State employee health plans by enrollment;
• Any of the largest three federal employee health plans by enrollment; and
• The largest insured commercial non-Medicaid HMO operating in the state.

Many states have been actively assessing these benchmark options, given that the definition of what is included in the EHB will have a broad reaching impact in each state. In addition to the non-grandfathered plans in the individual and small group markets both inside and outside of the State Health Insurance Exchange, the EHB package also must be offered by Medicaid benchmark and benchmark-equivalent plans for newly-eligible Medicaid recipients, and Basic Health Programs (which are offered by states to people who are ineligible for Medicaid and who have incomes at or below 200 percent of poverty as an alternative to receiving premium credits to purchase coverage through an exchange).  Self-insured group health plans, health insurance coverage offered in the large group market, and grandfathered health plans are not required to cover the EHB.

States were encouraged to select a benchmark plan by the end of the third quarter of 2012. As of October 10, 2012, 24 states and the District of Columbia have made their selections, 12 states have issued letters to the Secretary stating that they are awaiting further federal guidance before making a decision, and the remaining 14 states are at various stages across the decision-making spectrum (from having done the analysis and will likely make a decision imminently to having done no discernible work towards making a decision at all). If a state does not select a benchmark plan, the largest small group plan by enrollment in the state will become the default benchmark plan. 

Of the 17 states (including DC) that chose small group plans as their benchmark, at least 10 of those states chose the largest small group plan by enrollment (the federal default benchmark). Three states have chosen a state employee health plan and four states have chosen the largest commercial non-Medicaid HMO plan. One state, Nebraska, has chosen a high deductible health savings plan, which the Governor characterizes as “the Nebraska Essential Health Benefits Plan” that provides “the absolute minimal coverage”.  At this time, no states have opted for a federal employee health plan. This is likely because states are required to defray the costs of state-mandated benefits that are in excess of the EHB, if they are not already included in the benchmark plan selected by the state. Since most small group plans are required to comply with state mandates to cover certain benefits (examples include coverage of certain immunizations, contraception, and treatment for autism), but federal employee health plans are not, it makes sense that states would choose state plans over federal plans to reduce their financial burden. However, allowing states to avoid paying for state-mandated benefits by choosing a benchmark plan that already includes them is intended to be a “two-year transitional policy” and will be revisited by CMS in 2016.

Despite good forward progress on selecting EHB benchmark plans, there are many questions that remain. For example: 

• When will CMS issue regulations providing states with the guidance they have requested? 
• Will CMS accept the benchmark plans that states have proposed, or will they make changes to them? 
• In what ways will individual insurers change particular benefits offered in the EHB benchmark plan but still remain “substantially equal” to the benchmark? 
• How will supplemental coverage for categories of services not included in the benchmark plan (such as habilitative services, mental health and substance abuse services, and pediatric oral and vision care) be integrated and priced by insurers? 
• How will dental benefit plans, which may be offered as a standalone benefit, be incorporated into an individual’s overall coverage? 
• After the first two years, will states have more flexibility to offer innovative plan designs to cover the EHB, instead of relying on the plan designs currently in place?

EBG counsels health plans and providers on the evolution of the definition of the EHB, and will continue to track developments in this area. For more information, contact the author at lyeung@ebglaw.com.

Most reasonably-well-informed citizens, and certainly everyone concerned with health care, is well aware that the Supreme Court concluded its most-recent term with the Chief Justice joining the Court’s so called “liberal” wing in National Federation of Independent Business v. Sibelius, in upholding essentially all of the Obama Administration’s Affordable Care Act (“ACA”), including its most controversial provision – the “individual mandate” --  not under the Commerce Clause, as its proponents argued, but under the tax power.  The Court’s majority also upheld, but limited, the controversial Medicaid expansion provision of the ACA. The expansion survives, but if a State declines to participate in the expansion, it can’t be constitutionally deprived of the federal Medicaid funding that it previously had received.

Victory proclamations and hand-wringing aside, one notes that the mere fact that the ACA  has passed judicial muster leaves open a myriad of milestones and questions. The Act, after all, runs on for hundreds of pages and most of them have nothing to do with the mandate or with the expansion of Medicaid. That said, Epstein Becker & Green is dedicating this blog to discussing the issues that are yet to be determined as the ACA regime goes forward.

The New Regime Already Has Begun: Many provisions of the ACA are already in effect including guaranteed access to insurance even if a person has a pre-existing condition, coverage for young adults, closing of the Medicare gap known as the "doughnut hole", small business tax credits and the imposition of a pharmaceutical manufacturer’s fee based on market share. This year saw the launch of Accountable Care Organizations, a part of the ACA that is intended to address quality and cost issues by allowing providers to organize and combine and then to share in savings achieved by meeting various performance targets.  Additional provisions will take effect through 2018, for example . . .

Hospital Value-Based Purchasing Program: Beginning on October 1, 2012, Medicare will implement a value-based purchasing program under which value-based incentive payments will be made in connection with discharges from hospitals that meet specified performance standards related to quality. Efficiency measures are to be added in 2014. Funding for these payments is to be generated through reducing Medicare IPPS payments to all hospitals (in an increasing amount each year), but all such reductions are returned to hospitals through incentive payments in the same year. The secretary will make the performance scores for hospitals on the measures publicly available. Also in 2012, there will be value-based purchasing demonstrations established for critical access hospitals and certain other hospitals excluded from the VBP program. The VBP program will require many regulations and the challenge to hospitals to maintain financial performance and efficiency will be great.

Hospital Readmissions Reduction Program: Also starting with discharges occurring on or after October 1, 2012, Medicare will reduce payments to hospitals (though some are exempted) that are determined to have an "excess readmissions ratio" as defined by the secretary. This is a complex provision that includes a formula for payment reductions that not only require substantial regulatory activity but likely will lead to controversy. 

And Beyond?: Certain knowledge about the ACA and the future will depend upon the outcome of the upcoming presidential and congressional elections and the determination of who will control the political agenda and the likely budget sequestration that will follow. For example, the “maintenance of effort” provisions of the law are already in effect. The question will be whether they stay in effect, or whether States are empowered to cut back on Medicaid and other eligibility. Litigation, which some consider our national sport, also is likely to test the many regulations that the Secretary must promulgate under the ACA.  Assuming that the ACA is not completely dismantled by the incoming Congress, and the probabilities do not favor that, much of the activity will be in the States. The primary concern will be the State’s difficulty (or, in some cases, inability) to afford even the modest increase in the State share of the Medicaid increase. We expect that almost every State ultimately will opt in but not until there are delays and administrative modifications negotiated with the federal government.  It is not unlikely that there will be caps on Medicaid expenditures imposed by State legislatures and the proliferation of Medicaid managed care programs, run on a capitated basis, to deal with the administration of the program to an increased eligible population.  Many are already asking whether the Supreme Court’s holding will allow a State to opt into the expanded Medicaid program but later to opt out while being guaranteed federal payments at the elevated level. We look forward to addressing that in future blog posts. The other State-based issue is that of the Exchanges. Some States are well along the way towards setting them up. Others have yet to begin. It is a certainty that there will be at least some federally administered exchanges which may likely become politically controversial as their proponents look to expand them into a quasi-public option.

Needless to say, there is plenty to talk and write about as the ACA moves forward. We look forward to discussing them and to hearing your comments and questions.

For more information, contact the author at sgerson@ebglaw.com.

by Lynn Shapiro Snyder and Shawn M. Gilman

Speculation abounds with respect to the decision that states will make on the issue of whether to expand Medicaid coverage under the Affordable Care Act, now that the Supreme Court of the United States has made the option to abstain a meaningful one. This health reform alert highlights some key factors that may influence a state's decision on whether to implement such an expansion.

Read the full alert here

Danielle Steele, a Summer Associate (not admitted to the practice of law) in Epstein Becker Green's Washington, DC, office, contributed significantly to the preparation of this alert.

This health reform alert is a revised version of an article published in the Aug. 22, 2012, issue of the Health Insurance Report, a publication of Bloomberg BNA, and is being reprinted here with permission.

by Jackie Selby and Jane L. Kuesel

As enacted in the Patient Protection and Affordable Care Act, states are required to have established operational health benefit exchanges by January 1, 2014, or the federal government will implement one for them. These exchanges will allow individuals and small businesses to buy health care coverage and are expected to add approximately 30 million currently uninsured persons to the health insurance market. Most of the health plans that will be offered on such exchanges will be managed care plans with networks of participating providers. Thus, the resulting new business will be covered by hospital, physician, and other provider participation agreements with such managed care plans.

Read the full alert here

by Joan A. Disler, Michelle Capezza, and Gretchen Harders

Now that the Supreme Court of the United States has upheld essentially all of the provisions of the Obama administration’s Affordable Care Act (“ACA”), employers are faced with looming deadlines to bring their group health plans into compliance with the ACA’s numerous new requirements. We have prepared for employers a timeline of the highlights of the upcoming deadlines for compliance with the ACA that apply to non-grandfathered group health plans.

Click here to access a copy of the timeline (PDF).

Stuart Gerson, a Member of the Firm in the Litigation and Health Care and Life Sciences practices at Epstein Becker Green, authored an article titled "The Supreme Court Has Decided, but Can America Afford the Affordable Care Act?"

Following is an excerpt:

By now, every American who pays any attention to the news is aware that on the last day of its now concluded term, the U.S. Supreme Court, with its June 28 decision in National Federation of Independent Business v. Sebelius, U.S., No. 11-393, 6/28/12, has upheld essentially all of the Obama Administration's Affordable Care Act (ACA), and did so through an unusual series of opinions, with Chief Justice John G. Roberts Jr. acting essentially as a majority of one. The two controlling holdings are neither unprecedented nor difficult to understand. How these holdings came to control, however, while sensible, was largely unpredicted and leaves interesting ramifications both for the Supreme Court and for the state of health care in the United States.

By a 5-4 majority, led by the chief justice (with Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan concurring separately), the court upheld the most controversial and essential provision of the Affordable Care Act—the ‘‘individual mandate''—not under the Commerce Clause, as its proponents primarily urged, but under the tax power—not as a requirement to buy health insurance, but as a tax if they don't.

Download the Full Article (PDF Format)

by Dale C. Van Demark

Not by much – but perhaps in a unique way.

The increased pace of hospital and health system merger activity we’ve seen in the marketplace has had little to do with the Patient Protection and Affordable Care Act (the “ACA”). Rather, broader market conditions, some of which are affected by the ACA, have been driving hospital market consolidation. The financial crisis, which negatively impacted many hospitals’ ability to raise capital or maintain their credit ratings, and the downturn in the broader economy, which resulted in fewer people seeking care, have created the primary incentive for hospital consolidation.

In addition, just as capital has become scarce and business has slowed, infrastructure upgrades are becoming critical. The push for “meaningful use” of information technology and increased emphasis on quality reporting are creating more and more budget demands. Further, staffing shortages and increasing government investigations have created more financial pressure.

Read the full post on the Hospital Deal Blog

On Monday, July 2, 2012, Epstein Becker Green conducted a webinar titled "Decision 2012: What's In, What's Out, and What's Next?" examining the monumental decision (PDF) issued by the Supreme Court of the United States on the Patient Protection and Affordable Care Act.

This webinar analyzed the decision and its implications for the states, the health care and life sciences industry, and employers. It also addressed potential congressional activity and the decision's impact on the presidential election.

Click here to view the recording of this webinar (WMV file)

by Stuart M. Gerson

The three days of arguments about the constitutionality of the Patient Protection and Affordable Care Act are complete. The Justices of the Supreme Court of the United States have conducted their post-argument conference and are now turning their attention to the drafting and the discussions that will lead to a majority opinion and, likely, several dissents and concurrences. The Court's decision should be issued before the end of June. Health care companies and employers, like the rest of the population, await the ultimate decision. However, there are several matters that can be identified in the short run.

Read the full alert here

by Jesse M. Caplan and Serra J. Schlanger

Since November 2011 the Center for Consumer Information & Insurance Oversight (“CCIIO”) in the Centers for Medicare & Medicaid Services has completed 22 reviews of health insurance premium rate increase filings in the individual and small group markets. Under the new federal rate review regulations, CCIIO has determined that six of the reviewed premium rate increases represented “unreasonable” increases while 16 of the rate increases were deemed “not unreasonable.”

This Implementing Health and Insurance Reform alert provides a summary and analysis of the completed federal rate review determinations to date. It also provides a link to Epstein Becker Green’s interactive National Health Insurance Rate Review Scorecard, which offers insurance carriers, lawyers, and other stakeholders an up-to-date resource on federal and state health insurance rate review programs, standards, and initiatives.

Read the full alert here

by Jason B. Caron, O. Benton Curtis III, Anjali N.C. Downs, and Jennifer K. Goodwin

Almost two years after the passage of the Patient Protection and Affordable Care Act (“ACA”), the Centers for Medicare & Medicaid Services (“CMS”) released a proposed rule regarding overpayments to providers and suppliers, as provided for under Section 6402(a) of the ACA. To date, regulators, courts, clients, and members of the bar have interpreted the requirements of Section 6402(a) in various ways. The proposed rule provides CMS's view on this matter, and, given that CMS is proposing a number of potentially onerous requirements with regard to investigating, reporting, and returning overpayments, stakeholders should consider submitting comments. This health reform alert provides an overview of CMS's proposed rule and its potentially burdensome implications.

Read the full alert here