By: Erin M. Hussey, Esq.
By now, most Americans, especially those in the healthcare industry and proponents of the ACA, are aware of the December 14, 2018 decision in Texas v. United States by Judge O’Connor of the Northern District Court of Texas. This decision shook the healthcare industry as it ruled that the individual mandate was unconstitutional and not severable from the rest of the Affordable Care Act (“ACA”), thus concluding that the ACA itself is unconstitutional.
More recently on January 3, 2019, the House filed a motion to intervene, and detailed that they have a “unique institutional interest in participating in this litigation to defend the ACA.” This motion was to intervene in separate claims that were made by the plaintiff states which were not ruled on in the December 14th decision. However, on January 7, 2019, the House filed a second motion to intervene which, if granted, would allow the House to defend the ACA alongside the intervenor states. The House argues that they have the right to defend the constitutionality of federal laws when the Attorney General or the Department of Justice (“DOJ”) do not.
However, this process will be slowed down as the government shutdown continues. The shutdown, which began on December 22, 2018, is interfering with the DOJ’s ability to meet the deadline to file their opposition to the House's motion. As a result, the DOJ asked the Fifth Circuit to pause all briefings since they will be unable to prepare their motion as Justice attorneys cannot work during the shutdown. On January 11, 2019, the Fifth Circuit issued an order, signed by Judge Leslie Southwick, granting the DOJ’s request to temporarily pause the case. While this shouldn't have a deep impact on the case, it presents just one example of many of how the government shutdown is impacting the country.
By: Jen McCormick, Esq.
Coverage of contraceptives for women and the availability of a religious or moral exemption (or an accommodation) has been hotly debated recently – particularly due to a new Trump administration rule. Specifically, this rule would expand the pool of employers eligible to opt-out of providing birth control for women based on religious objections. The rule was set to take effect January 1, 2019, but judges in California and Pennsylvania recently blocked these rules from taking effect.
Last week a California judge granted a request for a preliminary injunction for California, Connecticut, Delaware, Hawaii, Illinois, Maryland, Minnesota, New York, North Carolina, Rhone Island, Vermont, Virginia, Washington and DC. This week (on Monday) a Pennsylvania judge took the next step and issued a nationwide hold on these rules.
Many entities and individuals have strong opinions on this topic, but for how (or whether) the rules may impact businesses we’ll have to wait and see. In the meantime, employers should pay attention and understand the current rules regarding religious exemptions and accommodations.
On the verge of a potential government shutdown, the Equal Employment Opportunity Commission (“EEOC”) was quick to issue final rules December 19th on the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”). Issuing final rules at the end of the year is not a new trend, but the unique situation is that the final rules are vacating current provisions on wellness program incentives. With an effective date of January 1, 2019, we are left with less guidance than we had on December 18th.
By way of background, in 2016 the American Association of Retired Persons (“AARP”) sued the EEOC claiming that the EEOC’s wellness incentive rules, for wellness programs that implicate the ADA and GINA, were coercive and not truly voluntary. A wellness program would implicate the ADA if medical examinations or disability-related inquiries were involved (i.e., biometric screenings), and a wellness program would implicate GINA if there were inquiries about genetic information. Before recent events, the EEOC’s ADA and GINA rules capped the wellness program incentive at 30%.
In a 2017 opinion, the judge determined that the EEOC had never defined the term voluntary thus the court found that the EEOC "failed to adequately explain" the 30% maximum and how a plan can still be considered voluntary with that incentive. The EEOC was directed to re-write their workplace wellness rules related to incentives for an effective date of January 1, 2019 or the old rules would be vacated. Obviously the EEOC did not re-write the ADA and GINA incentive-related rules as they have now been vacated effective January 1, 2019. However, the EEOC had indicated at their Fall 2018 Unified Agenda of Federal Regulatory and Deregulatory Actions, that they intend to issue new regulations in June 2019.
In order to ensure compliance until new rules are issued, the quick solutions are to remove medical testing, questions about genetics, and lower the amount of the incentive (though it is unclear what amount will truly be considered voluntary). While frustrating to say the least, this limbo situation for employers and plans is more of the same uncertainty that we have been dealing with for the past eight years. Employers that choose not to make changes should be aware of the compliance risks they may face due to the lack of rules.
*Please note: the above-mentioned EEOC wellness rules are separate from the Health Insurance Portability and Accountability Act (“HIPAA”) and the Affordable Care Act (“ACA”) wellness rules and the above ruling has no effect on these rules.
By: Jon Jablon, Esq.
Plan sponsors of self-funded health plans have a lot to think about. From deciding which services to cover to making tough claims determinations, there are lots of moving parts to consider and be mindful of. Plans that utilize reference-based pricing are in the same boat, of course, except they have added even more moving parts to their benefits programs.
As many plans that use reference-based pricing are aware, some claims need to be settled with providers to eradicate balance-billing. A claim initially paid at 150% of Medicare may need to be ultimately paid at 200%, for instance, pursuant to a signed negotiation between the health plan and the medical provider. Fast-forward two months later, to when the plan receives notice from its stop-loss carrier that the carrier is only considering 150% of Medicare to be payable on the claim, and the extra 50% of Medicare (which can be a significant amount!) is excluded.
When the plan asks why it isn’t receiving its full reimbursement, the carrier quotes its stop-loss policy and the plan document. The former provides that the carrier will only reimburse what is considered Usual and Customary – and the latter provides that Usual and Customary is defined as 150% of Medicare, by the Plan Document’s own wording. The carrier’s liability, therefore, is limited to 150% of Medicare. The plan’s has chosen to pay more than that. Even though it’s for a very good cause, the stop-loss insurer may deny that excess payment amount. In this example, there is a “gap” between the plan document and stop-loss policy such that the plan has paid a higher rate than what the carrier is obligated to pay.
For this reason, it is so incredibly important for plans that are using reference-based pricing to talk to their stop-loss carriers. Some carriers will say “we don’t care – your SPD says 150%, so we’ll reimburse 150%,” but other carriers will say “we understand that reference-based pricing saves us money, and we understand that it’s not always as simple as paying 150% and walking away – so we’ll work with you in terms of reimbursement.” Other carriers still will agree to place a cap on reimbursements higher than what’s written in the Plan Document; in other words, if the plan provides that it’ll pay 150% of Medicare, the carrier may agree to reimburse settlements up to 200% of Medicare, if applicable and if necessary.
There are lots of options for how a stop-loss carrier might react to reference-based pricing, and the only way to find out is to have a conversation. If you don’t ask, you’ll never know (until it’s too late, that is).
Moral of the story? If you’re going to adopt reference-based pricing – whether full network replacement, carve-outs, out-of-network only, or any other type – put stop-loss high up on the laundry list of considerations.
By: Brady Bizarro, Esq.
We have been covering Texas v. United States since the case was filed in February of this year. The suit, brought by 18 state attorneys general and 2 Republican governors, represented the most serious threat to the Affordable Care Act (“ACA”) since the GOP’s efforts to repeal the healthcare law failed last summer. On Friday, Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas ruled that the entire ACA is unconstitutional since Congress eliminated the individual mandate in a 2017 tax bill. His decision has rattled the markets, Democratic political leaders, advocacy groups, and the broader healthcare industry. After taking a closer look at this ruling, however, we agree with the many legal experts who have concluded that this ruling is not as earth shattering as the headlines make it appear.
First, Judge O’Connor’s ruling did not block enforcement of the ACA. All of the existing provisions of the ACA with which employers, fully insured plans, and self-funded plans must comply are still in effect. This decision has no effect whatsoever on plan design, on cost containment, on employee incentives, or on regulatory compliance. A quick check of Healthcare.gov reveals that federal officials have even added this reassuring message: “Court’s decision does not affect 2019 enrollment coverage.”
Second, a spokeswoman for the California attorney general has already confirmed that the 16 states (and D.C.) that defended the law will appeal this ruling to the Fifth Circuit Court of Appeals in New Orleans. That means there is a chance that this decision could be overturned before the case reaches the Supreme Court. That possibility brings us to our third point; that legal scholars across the ideological spectrum have found the legal arguments made by the plaintiffs in this case to be remarkably unpersuasive. To understand why, let us break down the court’s opinion (which sided with those arguments).
Judge O’Connor’s opinion had two major elements. First, he contended that since Congress reduced the ACA’s individual mandate penalty to $0, the mandate to purchase insurance must be invalidated. Then, he argued that since the individual mandate is essential to and inseverable from the remainder of the ACA, the entire healthcare law must be struck down. This issue of “severability,” or whether one provision of a law can be severed without invalidating the entire law, is key.
When the ACA was passed in 2010, the bill contained a requirement that all Americans purchase health insurance or pay a penalty. The Supreme Court ruled in 2012 that this requirement, known as the individual mandate, was a legitimate exercise of Congress’s constitutional authority to tax. Nothing in the original 2010 bill spoke to the severability of the individual mandate. Importantly, however, Congress did in 2017 when it eliminated the individual mandate in the Tax Cuts and Jobs Act (“TCJA”) of 2017 and preserved the rest of the ACA. Judge O’Connor’s explanation for this fact is that the 2017 Congress was unable to repeal the individual mandate because of budget rules and it therefore had no intent with respect to the individual mandate’s severability. In fact, Judge O’Connor spends most of his 55-page opinion attempting to discern the intent of the 2010 Congress instead of interpreting this later legislative act.
The political response to this ruling has been rather expressive. One prominent Democratic senator remarked, “This is a five alarm fire – Republicans just blew up our healthcare system.” Indeed, we could go on at length about the consequences if this ruling were to stand; the impact on employer-sponsored plans, the effect on those with pre-existing conditions, the potential loss of health insurance coverage for millions of individuals, and the end of the Medicaid expansion. Yet, based on the response from the legal community and our own legal analysis, our position is that this decision rests on shaky ground. This decision also goes much further than even the Trump administration had wanted. In short, we should all hold our collective horses and conduct business as usual for the time being.
By: Ron E. Peck, Esq.
A friend and ally in the health benefits industry recently asked me if I had an up to date listing of the most costly health care expenses paid by health plans in 2018. I didn’t; so on a whim I brought up my handy dandy search engine and typed in: “the most costly health care expenses paid by health plans in 2018.” You know what the top results were? “Cost of Employer Health Coverage to Rise in 2019” … “Health Insurance: Premiums and Increases” … “How to Find Affordable Health Insurance in 2018” … and other, similar articles focused on what individuals will pay in premium (and in some instances, even dissecting co-pays, deductibles, and co-insurance). The common thread? They are all about participant out-of-pocket expenses. I didn’t ask how much it costs to obtain insurance. I asked how much it costs to obtain an appendectomy!
This is just a most recent example of an issue that sticks in my craw like no other, and reminds me of something I wrote years ago. Check this article out: https://moneyinc.com/affordable-health-insurance-is-not-affordable-health-care/.
“… too many people are confusing the term ‘health care’ with ‘health insurance.’ … Health care – meaning the actual act of caring for someone’s health – is necessary for survival. Health insurance – meaning a method by which we pay for health care – is just that; merely a means to pay for health care. Yet, a few years ago (2009 to be precise), a report posted by the American Journal of Public Health indicated that nearly 45,000 deaths are annually associated with a ‘lack of health insurance’ and that uninsured, working-age Americans have a forty percent higher risk of death than those with private insurance. The knee-jerk reaction to this news is likely (and likely was) to rush to provide health insurance to as many people as possible. Indeed, according to this report, health insurance saves lives. Furthermore, one could argue, if saving lives is health care, and health insurance saves lives, then health insurance is health care, and your author has proven himself wrong.… As stated before, however, health insurance is a method by which we pay for health care. It stands to reason, therefore, that it is not a lack of health insurance that kills people, but rather, it is a lack of means by which to pay for health care that kills people. This, then, leads us to a logical conclusion; the problem is not that we don’t have insurance … the problem is that we can’t pay for health care without insurance. This, then, leads to the next logical thought: why is health care so expensive?”
Go back and re-read the first paragraph of this blog post. Sadly, I fear my words published two years ago apply as much today as ever. Enjoy this blast from the past for Throwback Thursday, and let me know if you think we’ve advanced at all since then.
By: Krista J. Maschinot, Esq.
If you are an applicable large employer (ALE), the Internal Revenue Service (IRS) could possibly be sending a Letter 226J notice your way. Will you be ready to respond accurately within 30 days of receipt if needed?
We discussed in a recent blog post that IRS enforcement of the Employer Shared Responsibility Provision of the Affordable Care Act (ACA) is very real and ALEs should be prepared as such.
There are two types of ESRP penalties that the IRS will assess based upon the information the ALE provided on Forms 1094-C and 1095-C:
§4980H(A) – Assessed when an employer fails to offer minimum essential coverage to enough of its full time employees §4980H(B) – Assessed when an employee enrolls in the Marketplace and qualifies for the premium tax credit because the employer failed to offer affordable coverage
We recommend comprehensively reading and reviewing the information provided in the Letter 226J as to the reasoning for ESRP penalties and ensuring that this matches up with your internal documentation. This review is particularly significant because it will help you determine whether you have made an administrative/filing oversight or if there are larger compliance issues to deal with.
There are common mistakes to be aware of based on how Forms 1094-C and 1095-C were filled out that could trigger a Letter 226J. An ALE could, for instance, forget to check the “Section 4980H Transition Relief” box (Box C of line 22) on Form 1094-C. It may also fail to correctly code Line 14 of Form 1095-C regarding offer of coverage based on months offered coverage, as opposed to months of actual coverage. These types of errors are easy enough to make, but it is important to identify that they have been made prior to responding to the IRS. The monetary penalties will be assessed much differently based on filing mistake rather than actual ESRP non-compliance.
On November 28th, CVS Health closed on its acquisition of Aetna in a $69 billion merger. CVS Health and Aetna announced this deal in December 2017 and received preliminary approval from the Department of Justice in October. This merger will combine CVS’ pharmacies and Aetna’s insurance business, but it remains to be seen whether this merger will only benefit the companies themselves or if it will truly create positive change for patients as consumers of healthcare.
CVS Health President and Chief Executive Officer Larry J. Merlo, detailed the following regarding the company’s objectives: “our combined company will have a community focus, engaging consumers with the care they need when and where they need it, will simplify a complicated system and will help people achieve better health at a lower cost.” In addition, CVS Health not only stressed the importance of patients as consumers, but the role of pharmacists and primary care physicians given the increased access to data. The combined companies will have the ability to deliver data at the pharmacy level and the pharmacists would know recent medical history of patients. Merlo also detailed the following: “By fully integrating Aetna's medical information and analytics with CVS Health’s pharmacy data, we can develop new ways to engage consumers in their total health and wellness through personal contacts and deeper collaboration with their primary care physicians.” CVS Health further commented that the use of technology will also help to achieve these objectives.
CVS will start to test stores in 2019 with added health services, focusing mainly on the management of chronic diseases. Some examples of services being added include the expansion of services at MinuteClinic, nutritional and behavioral counseling, and digital apps. CVS Health and Aetna will also focus on offering new preventive health screenings in communities that are identified as high-risk for certain health conditions. Additionally, CVS Health is developing medical cost reduction programs to “improve medication adherence and avoid hospital readmissions and unnecessary emergency room visits.”
Establishing localized and accessible healthcare, simplifying the process for consumers, and lowering costs are all positive and meaningful objectives that CVS Health and Aetna are seeking to accomplish. The changes within CVS stores will certainly be on the healthcare industry’s radar in 2019 to determine whether these objectives will be achieved and if this merger will prove positive for patients, pharmacists, and primary care physicians.
Sources:
https://cvshealth.com/newsroom/press-releases/cvs-health-completes-acquisition-of-aetna-marking-the-start-of-transforming-the-consumer-health-experience
https://www.cnbc.com/2018/11/28/cvs-creates-new-health-care-giant-as-69-billion-aetna-merger-closes.html
Reference-based pricing is one of the most mysterious self-funding structures out there. At its core, it’s a simple enough idea: the plan changes what it pays for non-contracted claims. At its most basic level, it’s a way to redefine the traditional notion of U&C; generally, RBP plans base payment on some percentage of the Medicare rate. Guess what, though? If your plan defines U&C based on a database such as FairHealth (for instance), that’s a form of RBP too!
RBP isn’t a structure with a well-defined set of rules. Different plans, TPAs, and vendors do things very differently. The common denominator is that pricing for claims isn’t based on billed charges or an arbitrary percentage off billed charges, but an objective metric based on the value of services. If the plan considers rates set by a popular database to be indicative of the value of services, then that’s the reference upon which prices are based (there’s the R, the B, and the P!).
While of course there are practical differences between popular databases and Medicare, the easiest example being differences in the actual amounts generated), the major conceptual difference is that providers are generally more likely to accept rates generated by popular databases as payment in full than to accept Medicare rates as payment in full from the same payors. Even though the majority of hospitals do accept Medicare, the prevailing opinion among hospitals is that Medicare rates are essentially thrust onto them in a contract that they sign out of necessity (since many hospitals would lose a large percentage of their business if they didn’t accept Medicare). While payors may consider Medicare rates or a percentage above them to be reasonable, the majority of hospitals tend to disagree – at least at first.
When a health plan accesses the FairHealth database (again, just for example) to obtain pricing, there is often no patient advocacy needed, since many providers access the same database or consider those rates to be generally accepted – but to contrast that to Medicare-based pricing, a plan paying Medicare rates is much more likely to need some sort of advocacy since Medicare rates are not nearly as widely-accepted by providers. Patient advocacy is one of the must-haves in “traditional” RBP, which typically uses Medicare rates.
The morals of this story: (1) you may already be using RBP without realizing it! And (2) make sure your RBP program has patient advocacy, if necessary. If your chosen RBP payment methodology doesn’t need patient advocacy, then your RBP experience will probably be a bit simpler – but if you do need it, don’t skimp on it.
By: Patrick Ouellette, Esq.
Amid broader health policy discussions around the Affordable Care Act (ACA), the Trump Administration recently, and somewhat quietly, released new final rules that would expand the scope of the ACA contraceptive mandate exemption to potentially include more types of employers. The two rules are “Exemptions for Religious Beliefs” (CMS-9940-F2), aimed at large, publicly traded companies, and “Exemptions for Moral Convictions” (CMS-9925-F), which is geared toward nonprofit organizations and small businesses.
The intent of these rules was to extend the availability of the exemption to employers that, if they do not necessarily have sincerely held religious beliefs, can use “moral convictions” to oppose services covered by the ACA’s contraceptive mandate protections. If these rules sounds familiar, they should because the Department of Health and Human Services (HHS) released interim versions in October 2017 that were meant to accomplish the same goals. The most recent iteration of the rules were meant to be final, as they will take effect 60 days after their publication in The Federal Register, or in January 2019. Interestingly HHS estimated that the exemptions “should affect no more than approximately 200 employers with religious or moral objections, with many entities not being affected because they were already permitted not to cover contraceptives under the previous rules, or are protected by permanent court injunctions.”
Employers that have been closely monitoring HHS contraceptive mandate enforcement since 2017 and waiting to determine whether they qualified for religious exemptions would now have more a more concrete legal basis after the rules are published to make a contraceptive coverage decision either way. However, as my colleague Kelly Dempsey cautioned in January 2018, employers and TPAs should be wary of the litany of states that have already sued the Trump administration over the 2017 rules and the potential for more lawsuits against the administration.
As it stands now, the states that have sued include Pennsylvania, California, Washington, and Massachusetts. Delaware, Maryland, New York and Virginia joined California in its suit. The California and Pennsylvania attorneys general suits resulted in federal judges granting nationwide injunctions against the 2017 proposed rules, but both are currently under appeal. There will likely be more litigation in response to CMS-9940-F2 and CMS-9925-F; the new rules have also drawn scrutiny from groups such as the American Civil Liberties Union.