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.

Please join Epstein Becker Green’s Health Care & Life Sciences and Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on employers and their group health plans.

In less than a year, employers employing at least 50 full-time employees will be subject to the Employer Shared Responsibility provisions. Under these provisions, if employers do not offer health coverage or do not offer affordable health coverage that provides a minimum level of value to their full-time employees, they may be subject to a tax penalty under the proposed regulations just issued by the Internal Revenue Service.

During this program, Epstein Becker Green practitioners will:

• Review the basics of the Employer Shared Responsibility provisions and proposed regulations
• Define employer status under the proposed regulations
• Clarify the definition of "full-time" employees and dependents who must be offered coverage
• Discuss the determination of affordable and minimum value coverage
• Review employer liabilities and penalties

This is the third session in the Employer Affordable Care Act Webinar Series for employers on upcoming rules and regulations implementing the Affordable Care Act. Please stay tuned for upcoming webinars on:

• Exchange Implementation
• Essential Health Benefits
• Quality Reporting
• And others...

Epstein Becker Green Presenters:
Mark E. Lutes
Frank C. Morris, Jr.
Adam C. Solander

Wednesday, January 9, 2013
1:00 - 2:00 pm EST
10:00 - 11:00 am PST

Registration Is Complimentary and Webinar Space Is Limited

Don't Miss This Opportunity! To Register, please click here.

Contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com for more information. If you missed the first two webinars in the New ACA Implementation Regulation series, the audio recording and presentation slides are now available.

by Brandon C. Ge

In the months leading up to Election Day 2012, the pace of health reform implementation slowed considerably as the Obama administration held off on releasing regulations to avoid pre-election controversy. With the 2012 elections now in the books, health reform has scored two major victories: the re-election of President Barack Obama and the preservation of a Democratic majority in the Senate. Although the Affordable Care Act (ACA) is now safe from repeal, implementation still faces hurdles, such as state resistance, the fiscal cliff, and pending lawsuits challenging ACA’s contraception mandate.

Nonetheless, the administration has stormed ahead in recent weeks, issuing a torrent of regulations that will help determine operation of many key ACA provisions. These rules cover a bevy of health reform pieces, including:

• Health insurance market reforms;
• Employer wellness programs;
• Essential health benefits and actuarial values;
• Benefit and payment parameters; and
• The Multi-State Plan Program.

Health Insurance Market Reforms

On November 20, the U.S. Department of Health and Human Services (HHS) proposed a rule that implements several ACA provisions aimed at protecting consumers from discrimination and other abuses when purchasing health insurance. The rule generally prohibits health insurance issuers from denying coverage to individuals with pre-existing conditions. Moreover, insurers would only be allowed to vary premiums based on age, tobacco use, family size, and geography. The proposed rule also requires health insurance issuers to have a single statewide risk pool for each of their individual and small employer markets unless the state merges the individual and small group pools. In addition, the rule provides for enrollment in catastrophic plans and amends the rate review program.

Employer Wellness Programs

HHS, in conjunction with the Labor and Treasury departments, also proposed rules implementing and expanding employer wellness programs. The rules would apply to both grandfathered and non-grandfathered group health plans and would be effective for plan years starting on or after January 1, 2014. The proposed rules continue to support workplace wellness programs, including participatory wellness programs, which are generally available regardless of an individual’s health status. The rules also amend standards for non-discriminatory health-contingent wellness programs, which usually require individuals to meet a health-related standard to obtain a reward.

Essential Health Benefits and Actuarial Values

In addition, HHS proposed a rule on November 20 outlining standards related to coverage of essential health benefits and determination of actuarial value. The rule implements ACA’s requirement that health plans offered in the individual and small group markets, both inside and outside of health insurance exchanges, offer essential health benefits, a core package of items and services in at least ten categories:

• Ambulatory patient services;
• Emergency services;
• Hospitalization;
• Maternity and newborn care;
• Mental health and substance use disorder services;
• Prescription drugs;
• Rehabilitative and habilitative services and devices;
• Laboratory services;
• Preventive and wellness services and chronic disease management; and
• Pediatric services.

The proposed rule also provides that starting in 2014, non-grandfathered health plans in the individual and small group markets must meet certain actuarial values, which are calculated as the percentage of total average costs for covered benefits that a plan will cover. Actuarial values correspond with certain metal levels: 60 percent for bronze plans, 70 percent for silver plans, 80 percent for gold plans, and 90 percent for platinum plans. HHS would allow a de minimis variation of 2 percent from these values.

Benefit and Payment Parameters

On November 30, HHS released a proposed rule addressing several issues, including parameters for the three new premium stabilization programs—the permanent risk adjustment program and the transitional reinsurance and risk corridor programs. These programs aim to more evenly spread financial risk by providing payments to health insurance issuers that cover higher-risk populations. The proposed rule expands on the framework outlined in the final rule on health insurance premium stabilization programs, with much of the regulatory text devoted to technical descriptions of calculation methodologies for these programs.

The proposed rule also addresses several other issues:

• It provides more guidance on how the advance premium tax credit and cost-sharing reduction payment programs will operate.
• The rule proposes a monthly federal exchange user fee. Under the proposed rule, this fee would be 3.5 percent of monthly premiums, but HHS may adjust this rate to align with rates charged by state-based exchanges.
• It elucidates standards for the administration of Small Business Health Options Program (SHOP) exchanges.
• Lastly, the proposed rule amends regulations regarding medical loss ratio calculation.

The Multi-State Plan Program

Also on November 30, the Office of Personnel Management (OPM) released a proposed rule describing establishment of ACA’s Multi-State Plan Program (MSPP), which aims to promote competition in the insurance marketplace and give consumers more high-quality, affordable insurance choices. Under the program, OPM will contract with at least two health insurers to offer multi-state plans (MSPs), which are to be available on exchanges in all states and the District of Columbia by the fourth year of the issuer’s participation in the MSPP. MSPP issuers must offer at least two MSPs—one gold-level and one silver-level—in each exchange. In addition to requirements for MSPP issuers and MSPs, the proposed rule also describes standards for coordination between OPM, HHS, and states to approve rates, standards for rating, medical loss ratios, and MSPP issuers’ participation in the premium stabilization programs.

A Shift in Scope

These recent regulations evidence a shift in the scope of ACA implementation—the administration appears to be moving away from the big-picture issues and towards more of the operational specifics that have yet to be ironed out. Stakeholders should stay abreast of these developments as implementation marches on.

EBG counsels clients on ACA implementation requirements and will continue to track developments in the area. For more information, contact the author at bge@ebglaw.com.

Please join Epstein Becker Green’s Health Care & Life Sciences, Employee Benefits, and Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on employers and their group health plans and programs.

Since the Presidential election, The U.S. Department of Health and Human Services is moving quickly to implement the Affordable Care Act. Rules have been released in the past few weeks concerning participation in federal exchanges, discrimination based on pre-existing conditions, essential health benefit requirements, and expanded employment-based wellness. During this program, Epstein Becker Green practitioners will:

• Review the ACA implementation timeline
• Discuss the structure of the law and basic concepts affecting employers
• Discuss critical employer decision making and planning for 2014
• Review alternative plan design options available to employers

This is the second in the Employer Affordable Care Act Webinar Series for employers on upcoming rules and regulations implementing the Affordable Care Act. Please stay tuned for upcoming webinars on:

• Exchange Implementation
• Shared Responsibility
• Calculation of Full-time Employees
• Quality Reporting
• And others...

Presenters: Gretchen Harders, Frank C. Morris, Jr., and Adam C. Solander

Registration Is Complimentary and Seating Is Limited

Don't Miss This Opportunity!

To Register, please click here.

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

For additional Information, please contact Elizabeth Gannon at 202/861-1850 or egannon@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.

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

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 Stuart M. Gerson

By now, every American who pays any attention to the news is aware that the Supreme Court of the United States has upheld essentially all of the Obama administration's Affordable Care Act. We have posted a copy of the lengthy opinion, concurrence, and dissent on our website. For now, we should be focusing on what the case of National Federation of Independent Business v. Sebelius actually will cause to occur.

Read the full alert here

by Lynn Shapiro Snyder and Philo D. Hall

On March 12, 2012, the U.S. Department of Health and Human Services (“HHS”) released its final rule (“Final Rule”) implementing the new Affordable Health Insurance Exchanges (“Exchanges”) authorized under the Patient Protection and Affordable Care Act. These Exchanges are intended to establish and operate a “one-stop marketplace” in each state for individuals and small employers to obtain health insurance. While states, health issuers, and related vendors pour over all the details of the Final Rule, we thought it would be helpful to highlight 10 issues related to these Exchanges that would be of particular interest to health care providers. A significant portion of providers’ patient populations may be obtaining their health benefits coverage through one of these Exchanges.

Read the full alert here

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 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