High Court declines to speed up reform challenge

This week the Supreme Court denied a request to review a State of Virginia challenge to the ACA before the 4th Circuit Court of Appeals has the opportunity to hear and rule on the case (Virginia, Ex. Rel. Cuccinelli v. Sebelius, Sec. of HHS, cert. denied, S. Ct. 10-1014).

In December 2010, a district court in Virginia ruled the ACA was unconstitutional (Commonwealth of Virginia v. Kathleen Sebelius, No. 3:10CV188-HEH). That case was appealed, but subsequently Virginia Attorney General Ken Cuccinelli asked the Supreme Court to hear the case immediately.

The April 25 denial was expected, because the Supreme Court rarely allows a case to skip the appellate courts. This is the second time the High Court has declined to accelerate an ACA challenge.

Arguments are scheduled to be heard in the Fourth Circuit case on May 10, along with oral arguments in another Virginia case in which the ACA was declared constitutional (Liberty University v. U.S., Case No. 6:10-cv-00015-nkm).

Lineup of cases. In addition to the two Virginia cases, three other courts have ruled on the constitutionality of the ACA itself.

Employers: ACA will increase costs

Eighty-five percent of employers expect the Affordable Care Act to lead to an increase in per-employee benefits costs, according to research from Deloitte and the International Society of Certified Employee Benefit Specialists (ISCEBS). Not surprisingly, 63% of employers said that they are mainly focused on controlling total health care costs.

"Wait and see." Two-thirds of employers said they are not making any changes to their benefit plans at this point due to the ACA, which signals that employers are using a "wait and see" approach towards health reform, Deloitte/ISCEBS noted. Seventy-three percent of respondents indicated they expect to reevaluate their benefits packages over the next 12 months in light of health reform changes. However, only 9% of employers indicated that they plan to drop employer-sponsored coverage because of health reform.

Top priorities. While "health reform costs" remained the number one priority among employers for the second year in a row (and for six out of the last seven years), "the willingness of employees to take on greater cost sharing" moved into the number two spot for 2011, according to Deloitte/ISCEBS. Sixty-two percent of employers indicated that they have considered increasing cost-sharing for active employee plans over the past 12 months, while another 30% said that they will consider increasing employee cost sharing for active employee plans over the next 12 months.

The survey was conducted in January 2011 and was completed by 242 participants online.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Reports on reform coming your way

Health reform watchers know that the 2011 budget deal signed by President Obama on April 15 stripped the free choice voucher provisions from the ACA.

Observers may not know, however, that a lesser known provision in the budget act ensures that they've got a whole lot of reading to look forward to in the coming months. (For you extra wonky types: the provision is Act Sec. 1856 of P.L. 112-10.)

Why? Congress has mandated the production of two waves of federal agency reports on the cost or efficacy of various ACA provisions. The first wave is due to hit around June 15 (60 days after enactment) with the second wave to follow around July 15 (90 days after enactment).

Extra scrutiny. Which ACA provisions merited extra scrutiny in the eyes of the (Republican?) members of Congress who asked for these reports? Here's the list:

--Implementation contractors. The GAO must provide a list of contractors (including how much they're getting paid) hired by HHS and other agencies to implement ACA provisions.
--Requests for annual limit waivers. The GAO must also conduct an audit of the requests for waiver of the annual limit requirements of PHSA Sec. 2711(a).
--Premium costs. CMS's Chief Actuary must prepare a report that estimates the impact of the guaranteed issue, guaranteed renewal, and community rating requirements in the Act over a 10-year period beginning in 2014. Will more people see a decrease in premium costs, or an increase?
--Comparative effectiveness research funding. The GAO must also audit funds spent for comparative effectiveness research by the Agency for Healthcare Research and Quality, the National Institutes of Health and other agencies.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Parents take note- HHS is educating your kids on their health coverage rights

It's common knowledge that many employers and insurers are concerned upcoming Affordable Care Act (ACA) deadlines, but some parents out there might be getting a little nervous, too. Those moms and dads who weren't planning to cover health insurance costs for their kids, perhaps because of the extra cost, may feel that the Department of Health and Human Services (HHS) is breathing down their necks a bit.

This is because the website http://www.healthcare.gov/ has a message for the nation's teenagers and young adults, advising them that they can be covered on their parents' insurance until age 26. It also has a link to a Facebook site, at www.facebook.com/youngadultcoverage. The Facebook site advises students, both in writing and through a video by Kalpen Modi of the White House Office of Public Engagement to ask their parents what their insurance company is, and to call the insurer to ask what their parents have to do to get them coverage. They are then advised to follow up with their parents.

Moms and dads may as well get used to the idea of paying for their kids' insurance, though, because, although coverage for dependents isn't mandatory at the moment, starting in 2014, parents will be required by law to cover their dependents on their health insurance, or pay a penalty. Code Sec. 5000A, as added by the ACA, will mandates payment of the greater of a flat dollar amount or an applicable percentage of income by parents who fail to obtain coverage for dependents, unless their plan has grandfather status and the dependents have coverage available from their employer. The amounts will increase in 2015.

State health care exchanges reflect politics as usual

Leaders of states across the land are anxious to establish their own health care exchanges, but their reasons for wanting to do so certainly vary. Many would like to get their hands on available federal funding as soon as possible, and others, conversely, want to give the appearance that they are avoiding compliance with the ACA for as long as possible.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Oklahoma governor Mary Fallin initially accepted a $54 million  federal “Early Innovator Grant” but then turned it down, perhaps bowing to pressure from fellow Republicans. Fallin has now announced that her state will establish a “Health Insurance Private Enterprise Network” in order to prevent the establishment of a federal health care exchange.  According to Fallin’s website, the state’s new exchange will be based on a concept by the conservative Heritage Foundation and legislation passed by the Oklahoma Legislature in 2009. On her website, Oklahoma Senate President Pro Tempore Brian Bingman is quoted as saying  “This private enterprise network not only offers the people of Oklahoma more options when buying insurance, it will serve as a defensive strategy that protects Oklahoma from the federal health care law. 

It remains to be seen how well Oklahoma will handle its exchange. Some other states’ recent actions on the health care front have, so far, been questionable. The Georgia legislature recently passed H.B. 47, which would permit the sale in Georgia of health insurance policies that have been approved in other sates. The reasoning of Georgia’s Republican party is that allowing the sale of health insurance across state lines will drive down costs and promote competitive pricing.

Others aren’t so sure. Georgia has a rather strict set of standards for health insurers, which includes mammogram coverage and 48-hour hospital stays for new mothers and babies. Policies sold across state lines would presumably not be subject to those standards. It would be safe to assume that Georgia employers will opt for cheaper out-of-state coverage for their employees.  You have to wonder, what were Georgia’s Republicans thinking when they enacted  this provision? Under the ACA, preventive services recommended by the United States Preventative Services Task Force, such as mammograms and colonoscopies, will be covered, free of charge. So, it's a good thing Georgians have ACA implementation to look forward to, because, if left up to Georgia state legislators, those services might not be covered.

Michigan has come up with a reasonable effort to establish an exchange, mostly to try to phase in coverage for uninsured citizens with pre-existing conditions until full coverage is available under the ACA in 2014. Its new system is called HIP Michigan, but the prices listed at http://www.hipmichigan.com/ seem quite steep. It’s hard to understand how the average low-income uninsured individual or family could afford the new coverage. For example, according to the HIP Michigan website, the State of Michigan estimates that an average 49 year-old’s total monthly medical costs can be expected to be approximately $1,056.56, so, the state reasons, the monthly premium under the HIP plan of $211.80, plus a $3,500 annual deductible is a relative bargain. It’s hard to image too many low-income households will be able to come up with that kind of money, however. And, the $211.80 figure is for the cheapest plan offered. Two other plans, for a 49-year old, run $252.06 and $350.08 per month.

Democrats finally gear up to sell ACA with Know Your Care and Protect Your Care

A group of Democratic heavyweights, including Massachusetts governor Deval Patrick (D-Mass.), announced last week the creation of two groups organized to promote the Pension Protection and Affordable Care Act (ACA). According to the website knowyourcare.org, "Know Your Care is a 501c3 organization dedicated to educating the American people about the Affordable Care Act’s life-saving consumer and patient protections that are already benefitting millions of Americans and will benefit millions more in the coming years as additional provisions are implemented." Protect Your Care will be a grassroots lobbying effort to protect health care reform from repeal.

The Know Your Care site so far has relatively little information, but connects readers to HealthCare.gov, as does protectyourcare.org, which also has a few personal interest stories.

Some House Members Would Eliminate Funds For Prevention

On April 14, the House of Representative passed, by a vote of 236-183, H.R. 1217, which would repeal the Prevention and Public Health Fund established by the Affordable Care Act (ACA).

Rep. Joseph Pits (Pa.), who introduced the bill, said during debate on the measure, “We have created a slush fund from which the Secretary can spend without any congressional oversight or approval. No one here can tell us how this funding will be used next year or five or ten or 20 or 50 years from now. We can’t predict how the money will be spent—and worse, we can’t even influence it.”

Rep. Henry Waxman (Cal.) defended the fund: “Terminating the prevention fund is not only extremely shortsighted; it will also prove to be fiscally irresponsible. The return on this kind of upfront investment—targeted resources to help keep people healthy for as long as possible—will over time save precious health care dollars.”

The Fund, included in ACA Sec. 4002, provides for expanded and sustained national investment in prevention and public health programs to improve health and help restrain the rate of growth in private and public sector health care costs.

Under ACA Sec. 4002 funds were allocated in the following ways for 2010 and 2011:

Type of Allocation 2010 2011
Community Prevention $76 million $298 million
Clinical Prevention $50 million $182 million
Public Health
Infrastructure
and Training $343 million $137 million
Research and Tracking $31 million $133 million

For the past few years, major employers have been investing in disease prevention and wellness for their employees as a health care cost reduction measure. Apparently, members of the U.S. House of Representatives don't consider prevention a sound investment for the nation.

Budget Cuts Hit Two Health Reform Provisions

The 2011 continuing budget resolution, agreed to in broad terms by Congress this past weekend, would end two programs funded by the Affordable Care Act, according to a summary of H.R. 34, the Fiscal Year 2011 Continuing Resolution released by Rep. Hal Rogers (Ky.), the chairman of the House Appropriations Committee.

Congress is expected to vote on the specific budget reductions this week.

A reported $2.2 billion cut would be made in the Consumer Operated and Oriented Plan (CO-OP) program, under which grants and loans may be made to assist in the creation (or expansion) of qualified nonprofit health insurance issuers under ACA Sec. 1322. These nonprofits are designed to offer qualified health plans in the individual and small group markets (ACA Sec. 1322(a)). The nonprofits would compete with for-profit insurers for business in the individual and small group markets. This $2.2 billion cut appears to support instead those who want to reduce government "interference" in private, for-profit business.

The resolution also would eliminate the free choice voucher program (ACA Sec. 10108), under which employees who are exempt from the individual mandate but who do not qualify for premium subsidies are eligible for a voucher equal to the amount the employer would have spent on individual or family coverage. An employer could deduct for the amount of any free choice voucher provided, which is treated as an amount paid for compensation for personal services actually rendered.

Evidence of ACA opponents methodically carving away at the law? Will any leader stop the destruction?

ACA Medicare Provisions Improve Benefits, Spend

Just before a budget agreement was reached between the White House and Congress, Wisconsin Rep. Paul Ryan, chairman of the House’s Budget Committee, released his budget proposal, The Path to Prosperity: Restoring America’s Promise, which would convert the Medicare program into a voucher program for future beneficiaries to purchase private health insurance.

Meanwhile, the Centers for Medicare & Medicaid Services has released 2012 policies for Medicare health and drug plans implementing provisions of the Patient Protection and Affordable Care Act (ACA) that are related to the Medicare Advantage (MA, or Part C) and Prescription Drug Benefit (Part D, or PDP) Programs. The final rule includes provisions to raise revenues, curtail spending, and protect beneficiairies.

CMS estimates that implementing all the proposals in the final rule will result in net savings to the Medicare program of about $76 billion for fiscal years 2011 through 2016. Most of these savings are due to the ACA’s reforms to MA payments.

Key ACA provisions implemented in the final rule would achieve the following results:

• Limit to original (fee-for-service) Medicare levels cost-sharing under MA plans for specified services (administration of chemotherapy services, renal (kidney) dialysis services, and skilled nursing care).
• Prohibit MA plans from charging cost-sharing for in-network preventive services for which there is no cost sharing under original Medicare.
• Implement the new requirement that higher income Part D beneficiaries pay an Income Related Monthly Adjustment Amount.
• Implement statutory changes to close the Part D coverage gap (the “donut hole”).

Provider participation requirements would achieve the following results:

• Prohibit Part C and D program participation by MA organizations and Part D sponsors whose owners or directors served in a similar capacity with another organization that terminated its Medicare contract within the previous two years.
• Require that Part C and Part D organizations (1) use physicians or other appropriate health care professionals with sufficient medical and other expertise, including knowledge of the Medicare program, to review organization determinations involving medical necessity, and (2) employ a medical director who is responsible for ensuring the clinical accuracy of all organization determinations and appeals involving medical necessity.

To strengthen beneficiary protections, CMS is authorized to require MA plans to periodically mail enrollees an explanation of benefits for their medical benefits. This will help ensure that beneficiaries receive regular updates on their health care use and out-of-pocket costs so that they can better evaluate their options for health care coverage.

To enable CMS to limit Part C and D program participation to stronger applicants and to remove consistently poor performers, CMS will set requirements for those plans’ fiscal solvency. For plans that lack a minimum 14 months of performance history, CMS will deny a new application or service area expansion due to insufficient information to determine the plan’s capacity to comply with the requirements of the Part C or Part D programs.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Congress votes to repeal health reform law’s 1099 reporting requirement

The Senate passed, by a vote of 87 to 12, H.R. 4, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011. The bill, already passed by the U.S. House of Representatives, repeals Form 1099 reporting requirements included in the Patient Protection and Affordable Care Act (ACA). This is the first amendment to the ACA since its passage in March 2010.

Menu, vending machine calorie labeling regs proposed under health reform

Soon, it'll likely be easier to know calorie counts for items in vending machines and at chain restaurants and other retail food establishments. The U.S. Food and Drug Administration (FDA) has issued two proposed regulations regarding calorie labeling on menus and menu boards in chain restaurants, retail food establishments, and vending machines. The proposals were issued in light of 2010 federal health reform legislation, the Patient Protection and Affordable Care Act, which requires the disclosure of calorie and other nutrition information in certain food establishments and for certain foods sold in vending machines.

IRS issues guidance on informational reporting of health coverage under ACA

The IRS has issued interim guidance to employers on informational reporting on each employee's annual Form W-2 of the cost of the health insurance coverage they sponsor for employees.

According to the IRS, this new reporting to employees is for their information only, to inform them of the cost of their health coverage. It does not cause excludable employer-provided health coverage to become taxable. Employer-provided health coverage continues to be excludable from an employee's income, and is not taxable.

Availability Of Early Retiree Reinsurance Program Ends In May 2011

Hidden in a mini-tsunami of recent regulatory guidance on health reform (see Regulation Alert below), is a notice scheduled to be published in the April 5 Federal Register that acknowledges the clear success of the Early Retiree Reinsurance Program (ERRP):

The Centers for Medicare & Medicaid Services (CMS) will stop accepting applications for the ERRP on May 5, 2011. CMS has projected the availability of program funding based on the rate at which appropriated funds are currently being used to reimburse plan sponsors, and the agency has concluded that a sufficient number of applications have been approved to exhaust the program funding. Critics of health reform likely will point to the end of the program as another signal of failure, despite the following: