Friday, July 29, 2016

The 2015 Healthcare Cost Totals Are In

Cost per person:
  • Medicare $12,000
  • Nat Ave $10,000
  • Medicaid $8,000
  • Private Insurers $5,400
The private number is lower than you might think it would be because it covers many children (while Medicare, for example, covers only seniors) and it does not include what private citizens pay in co-pays, deductibles and coinsurance. 


Four Common Mistakes that Employers are Making with PPACA

1) Failing to classify a new employee with one of four the four permitted labels: a part-time employee, a variable hour employee, a seasonal employee, or a full-time employee.

2) Failing to have a policy that explains the employer's look back measurement method; including a description of how the employer is classifying its new employees.  This policy needs to be consistent with the employer’s eligibility conditions discussed in the employer’s SPD.

3) Inaccurate code combinations on line 14, 15, and 16 of Form 1095-C.  There were 200 potential code combinations for line 14, 15, and 16.  However, of the 200 potential code combinations only 49 were theoretically possible. Certain code combinations clearly could not be used together without forcing an error in submission.

4) Having all of the proper procedures and policies in place but failing to timely offer coverage to an employee.

For the full article and a 5th common mistake see this story from Healthcare Attorneys, P.C.

Thursday, July 28, 2016

EEOC: New Sample Notice for Employer-Sponsored Wellness Programs

From the EEOC:
New rules published on May 17, 2016, under the Americans with Disabilities Act (ADA) require employers that offer wellness programs that collect employee health information to provide a notice to employees informing them what information will be collected, how it will be used, who will receive it, and what will be done to keep it confidential. The EEOC has published the sample notice below to help employers comply with the ADA:
Notice Regarding Wellness Program
[Name of wellness program] is a voluntary wellness program available to all employees. The program is administered according to federal rules permitting employer-sponsored wellness programs that seek to improve employee health or prevent disease, including the Americans with Disabilities Act of 1990, the Genetic Information Nondiscrimination Act of 2008, and the Health Insurance Portability and Accountability Act, as applicable, among others. If you choose to participate in the wellness program you will be asked to complete a voluntary health risk assessment or "HRA" that asks a series of questions about your health-related activities and behaviors and whether you have or had certain medical conditions (e.g., cancer, diabetes, or heart disease). You will also be asked to complete a biometric screening, which will include a blood test for [be specific about the conditions for which blood will be tested.] You are not required to complete the HRA or to participate in the blood test or other medical examinations.
However, employees who choose to participate in the wellness program will receive an incentive of [indicate the incentive] for [specify criteria]. Although you are not required to complete the HRA or participate in the biometric screening, only employees who do so will receive [the incentive].
Additional incentives of up to [indicate the additional incentives] may be available for employees who participate in certain health-related activities [specify activities, if any] or achieve certain health outcomes [specify particular health outcomes to be achieved, if any]. If you are unable to participate in any of the health-related activities or achieve any of the health outcomes required to earn an incentive, you may be entitled to a reasonable accommodation or an alternative standard. You may request a reasonable accommodation or an alternative standard by contacting [name] at [contact information].
The information from your HRA and the results from your biometric screening will be used to provide you with information to help you understand your current health and potential risks, and may also be used to offer you services through the wellness program, such as [indicate services that may be offered]. You also are encouraged to share your results or concerns with your own doctor.
Protections from Disclosure of Medical Information
We are required by law to maintain the privacy and security of your personally identifiable health information. Although the wellness program and [name of employer] may use aggregate information it collects to design a program based on identified health risks in the workplace, [name of wellness program] will never disclose any of your personal information either publicly or to the employer, except as necessary to respond to a request from you for a reasonable accommodation needed to participate in the wellness program, or as expressly permitted by law. Medical information that personally identifies you that is provided in connection with the wellness program will not be provided to your supervisors or managers and may never be used to make decisions regarding your employment.
Your health information will not be sold, exchanged, transferred, or otherwise disclosed except to the extent permitted by law to carry out specific activities related to the wellness program, and you will not be asked or required to waive the confidentiality of your health information as a condition of participating in the wellness program or receiving an incentive. Anyone who receives your information for purposes of providing you services as part of the wellness program will abide by the same confidentiality requirements. The only individual(s) who will receive your personally identifiable health information is (are) [indicate who will receive information such as "a registered nurse," "a doctor," or "a health coach"] in order to provide you with services under the wellness program.
In addition, all medical information obtained through the wellness program will be maintained separate from your personnel records, information stored electronically will be encrypted, and no information you provide as part of the wellness program will be used in making any employment decision. [Specify any other or additional confidentiality protections if applicable.] Appropriate precautions will be taken to avoid any data breach, and in the event a data breach occurs involving information you provide in connection with the wellness program, we will notify you immediately.
You may not be discriminated against in employment because of the medical information you provide as part of participating in the wellness program, nor may you be subjected to retaliation if you choose not to participate.
If you have questions or concerns regarding this notice, or about protections against discrimination and retaliation, please contact [insert name of appropriate contact] at [contact information].

Wednesday, July 27, 2016

Court: HHS Lacked Authority to Demand More of Fixed Indemnity Insurers than PPACA Required

A recent federal appeals court has held that because HHS lacked authority to demand more of fixed indemnity providers than Congress required, HHS is prohibited from regulating how consumers use fixed indemnity health insurance or other "excepted benefits" products.  SourceCentral United Life Insurance v. Burwell, Health and Human Services.  

Here is how our friend Allison Bell summarized the issue over at Life Health Pro:
... A three-judge panel at the District of Columbia U.S. Court of Appeals has ruled in favor Central United Life Insurance Company, which is a unit of the Houston-based Manhattan Life Group, and Senior Security Benefits of White Settlement, Texas. ... 
The companies sued HHS, HHS Secretary Sylvia Mathews Burwell and other Obama administration plaintiffs over a May 2014 HHS effort to keep consumers from buying fixed indemnity health insurance unless they could show that they already had “minimum essential coverage,” or what the government classifies as solid major medical coverage, and were using the indemnity insurance to fill in any gaps left by the minimum essential coverage. 
An indemnity insurance policy pays a policyholder a fixed amount of cash when the policyholder has a covered experience, such as entering the hospital, or needing a major operation. 
Before ACA major medical coverage rules started to take effect, many consumers who were unable or unwilling to pay for major medical coverage, or unable to qualify to buy major medical coverage, used indemnity insurance as an alternative to major medical coverage
Since the ACA rules took effect, regulators have tried to encourage consumers to shift to use of major medical coverage, in part because of concerns about the quality of the coverage provided by the indemnity policies and other major medical alternatives. 
Regulators and major medical issuers also have concerns about the possibility that healthy consumers who are unable to qualify for substantial ACA major medical insurance premium subsidies, or who are unaware of the existence of the subsidies, may use the alternative products in place of major medical coverage. If large numbers of healthy consumers use alternative products in place of major medical coverage, that could drive up the ratio of claims to premium revenue in the major medical market and push major medical costs higher.
A district court judge in Texas sided with Central United Life and Senior Security Benefits. In September 2015, the judge granted an injunction prohibiting HHS from requiring fixed indemnity insurance buyers to have minimum essential coverage. 
The D.C. Circuit panel has upheld the injunction. ... 
[The Court held that] HHS tried to keep consumers from using stand-alone fixed indemnity insurance as a substitute for minimum essential coverage. 
The Public Health Service Act requires an "excepted benefit" to be separate from an employer's group health plan, Brown writes.
“HHS’s attempt to regulate consumers under a provision directed at providers confirms the agency’s rule was an act of amendment, not interpretation,” Brown writes. ... 
Brown says the "excepted benefits" definition rules regulate the insurance providers, not the insurance users, and that HHS has no statutory right to require the users to coordinate their excepted benefits products with their major medical coverage. 
Because the HHS secretary was adding to the ACA, the courts have no obligation to defer to the secretary’s authority with regard to fixed indemnity insurance, Brown writes. ...

Tuesday, July 26, 2016

Just How Much Do Those Newly Covered PPACA Enrollees Cost?

From Devon Herrick at NCPA:
Obamacare enrollees are about 22 percent more costly than people covered through employer plans. ...
But at least Medicaid expansion is cheap. Right? No, not really. As recently as fiscal year 2011, Medicaid covered adults cost $3,247 per individual while children cost only $2,463. However, a new report from the U.S. Department of Health and Human Services found Medicaid expansion enrollees are 50 percent more expensive than originally projected. New Medicaid expansion enrollees’ costs were $6,366 in 2015.

Because Healthcare Costs Are Too High, California Decided to Increase Insurers' Administration ... and Costs

Trying to argue for smaller government, increased competition and free market solutions in California is tantamount to standing on the beach and arguing against the tide.  In the latest edition of Utopian idealism run amok, Senator Leno has added an administrative burden and cost onto insurers - in an effort to reduce costs.

A new set of California laws amended and added a slew of Health and Safety and Insurance Codes to create a byzantine process for reviewing annual increases to health plan premiums in the large group market. 

The law requires health plans to let large groups know whether a proposed rate change is higher or lower than the average rate increase for individual plans available through Covered California, and is higher or lower than the average rate increase for individual plans negotiated by the California Public Employees’ Retirement System (CalPERS).  This notice requirement is effective for groups renewing June 1, 2016, and after, as specified by regulatory guidance from the California Department of Managed Health Care. 

On its face, especially with what I've described so far, this appears to be a great idea.  Let's force insurers to tell clients if and when they are gouging them. In fact, just about every single governmental intervention is accompanied with a nobel intent.  It is overwhelmingly in the execution that things break down and become meaningless or unwieldy.  

At the bottom of this post, I quote much of this new set of laws so that you can see just how detailed, bureaucratic and overwhelming a good idea can become.  Clearly, insurers are going to have to invest more time, energy, expertise and money into the creation of these new notices.  And I can assure you, the vast majority of policyholders will push them aside or give them a cursory glance. 

At the core, what are we doing here?  We are undertaking more administrative cost to be baked into our premiums so that an insurer can tell us if our increase is larger than Covered California or CalPERS'.  Great.  I can do that with a 20 second Google search.  But instead, lets waste tens of thousands, burn more paper and heap more administration onto healthplans.  

The best part is that the overwhelming majority of large groups (to which this law applies) will have already had their broker negotiate their renewal and will have begun implementing that renewal long before this 60-day notice arrives.  In the large group market, we are finalizing next year's renewal rates 120 to about 75 days prior to the renewal date depending on just how large that employer is. 

At least now, our politicians can boast that they've done something to bolster transparency and help bring insurance costs down ... while our premiums inflate to cover their great ideas.  

SB 546, Leno. Health care coverage: rate review. 
Existing law, the federal Patient Protection and Affordable Care Act (PPACA), requires the United States Secretary of Health and Human Services to establish a process for the annual review of unreasonable increases in premiums for health insurance coverage in which health insurance issuers submit to the secretary and the relevant state a justification for an unreasonable premium increase prior to implementation of the increase. The PPACA imposes an excise tax on a provider of applicable employer-sponsored health care coverage, if the aggregate cost of that coverage provided to an employee exceeds a specified dollar limit. 
Existing state law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. 
Existing law requires a health care service plan or health insurer in the individual, small group, or large group markets to file rate information with the Department of Managed Health Care or the Department of Insurance. For large group plan contracts and policies, existing law requires a plan or insurer to file rate information with the respective department at least 60 days prior to implementing an unreasonable rate increase, as defined in PPACA. Existing law requires the plan or insurer to also disclose specified aggregate data with that rate filing. Existing law authorizes the respective department to review those filings, to report to the Legislature at least quarterly on all unreasonable rate filings, and to post on its Internet Web site a decision that an unreasonable rate increase is not justified or that a rate filing contains inaccurate information. Existing law requires prior notice, as specified, of changes to premium rates or coverage in order for those changes to be effective. 
This bill would add to the existing rate information requirement to further require large group health care service plans and health insurers to file with the respective department the weighted average rate increase for all large group benefit designs during the 12-month period ending January 1 of the following calendar year. The bill would require the notice of changes to premium rates or coverage for large group health plans and insurance policies to provide additional information regarding whether the rate change is greater than average rate increases approved by the California Health Benefit Exchange or by the Board of Administration of the Public Employees’ Retirement System, or would be subject to the excise tax described above. The bill would require the plan or insurer to file additional aggregate rate information with the respective department on or before October 1, 2016, and annually thereafter. The bill would require the respective department to conduct a public meeting regarding large group rate changes. The bill would require these meetings to occur annually after the respective department has reviewed the large group rate information required to be submitted annually by the plan or insurer, as specified. The bill would authorize a health care service plan or health insurer that exclusively contracts with no more than 2 medical groups to provide or arrange for professional medical services for enrollees or insureds to meet this requirement by disclosing its actual trend experience for the prior year using benefit categories that are the same or similar to those used by other plans or health insurers.
Because a willful violation of the bill’s requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. 
This bill would provide that no reimbursement is required by this act for a specified reason.  
SECTION 1. Section 1374.21 of the Health and Safety Code is amended to read: 
1374.21. (a) (1) A change in premium rates or changes in coverage stated in a group health care service plan contract shall not become effective unless the plan has delivered in writing a notice indicating the change or changes at least 60 days prior to the contract renewal effective date.
(2) The notice delivered pursuant to paragraph (1) for large group health plans shall also include the following information:
(A) Whether the rate proposed to be in effect is greater than the average rate increase for individual market products negotiated by the California Health Benefit Exchange for the most recent calendar year for which the rates are final.
(B) Whether the rate proposed to be in effect is greater than the average rate increase negotiated by the Board of Administration of the Public Employees’ Retirement System for the most recent calendar year for which the rates are final.
(C) Whether the rate change includes any portion of the excise tax paid by the health plan.
(b) A health care service plan that declines to offer coverage to or denies enrollment for a large group applying for coverage shall, at the time of the denial of coverage, provide the applicant with the specific reason or reasons for the decision in writing, in clear, easily understandable language.
SEC. 2. Section 1385.045 is added to the Health and Safety Code, to read: 
1385.045. (a) For large group health care service plan contracts, each health plan shall file with the department the weighted average rate increase for all large group benefit designs during the 12-month period ending January 1 of the following calendar year. The average shall be weighted by the number of enrollees in each large group benefit design in the plan’s large group market and adjusted to the most commonly sold large group benefit design by enrollment during the 12-month period. For the purposes of this section, the large group benefit design includes, but is not limited to, benefits such as basic health care services and prescription drugs. The large group benefit design shall not include cost sharing, including, but not limited to, deductibles, copays, and coinsurance.
(b) (1) A plan shall also submit any other information required pursuant to any regulation adopted by the department to comply with this article.
(2) The department shall conduct an annual public meeting regarding large group rates within three months of posting the aggregate information described in this section in order to permit a public discussion of the reasons for the changes in the rates, benefits, and cost sharing in the large group market. The meeting shall be held in either the Los Angeles area or the San Francisco Bay area.
(c) A health care service plan subject to subdivision (a) shall also disclose the following for the aggregate rate information for the large group market submitted under this section:
(1) For rates effective during the 12-month period ending January 1 of the following year, number and percentage of rate changes reviewed by the following:
(A) Plan year.
(B) Segment type, including whether the rate is community rated, in whole or in part.
(C) Product type.
(D) Number of enrollees.
(E) The number of products sold that have materially different benefits, cost sharing, or other elements of benefit design.
(2) For rates effective during the 12-month period ending January 1 of the following year, any factors affecting the base rate, and the actuarial basis for those factors, including all of the following:
(A) Geographic region.
(B) Age, including age rating factors.
(C) Occupation.
(D) Industry.
(E) Health status factors, including, but not limited to, experience and utilization.
(F) Employee, and employee and dependents, including a description of the family composition used.
(G) Enrollees’ share of premiums.
(H) Enrollees’ cost sharing.
(I) Covered benefits in addition to basic health care services, as defined in Section 1345, and other benefits mandated under this article.
(J) Which market segment, if any, is fully experience rated and which market segment, if any, is in part experience rated and in part community rated.
(K) Any other factor that affects the rate that is not otherwise specified.
(3) (A) The plan’s overall annual medical trend factor assumptions for all benefits and by aggregate benefit category, including hospital inpatient, hospital outpatient, physician services, prescription drugs and other ancillary services, laboratory, and radiology for the applicable 12-month period ending January 1 of the following year. A health plan that exclusively contracts with no more than two medical groups in the state to provide or arrange for professional medical services for the enrollees of the plan shall instead disclose the amount of its actual trend experience for the prior contract year by aggregate benefit category, using benefit categories, to the maximum extent possible, that are the same as, or similar to, those used by other plans.
(B) The amount of the projected trend separately attributable to the use of services, price inflation, and fees and risk for annual plan contract trends by aggregate benefit category, including hospital inpatient, hospital outpatient, physician services, prescription drugs and other ancillary services, laboratory, and radiology. A health plan that exclusively contracts with no more than two medical groups in the state to provide or arrange for professional medical services for the enrollees of the plan shall instead disclose the amount of its actual trend experience for the prior contract year by aggregate benefit category, using benefit categories that are, to the maximum extent possible, the same or similar to those used by other plans.
(C) A comparison of the aggregate per enrollee per month costs and rate of changes over the last five years for each of the following:
(i) Premiums.
(ii) Claims costs, if any.
(iii) Administrative expenses.
(iv) Taxes and fees.
(D) Any changes in enrollee cost sharing over the prior year associated with the submitted rate information, including both of the following:
(i) Actual copays, coinsurance, deductibles, annual out of pocket maximums, and any other cost sharing by the benefit categories determined by the department.
(ii) Any aggregate changes in enrollee cost sharing over the prior years as measured by the weighted average actuarial value, weighted by the number of enrollees.
(E) Any changes in enrollee benefits over the prior year, including a description of benefits added or eliminated, as well as any aggregate changes, as measured as a percentage of the aggregate claims costs, listed by the categories determined by the department.
(F) Any cost containment and quality improvement efforts since the plan’s prior year’s information pursuant to this section for the same category of health benefit plan. To the extent possible, the plan shall describe any significant new health care cost containment and quality improvement efforts and provide an estimate of potential savings together with an estimated cost or savings for the projection period.
(G) The number of products covered by the information that incurred the excise tax paid by the health plan.
(d) The information required pursuant to this section shall be submitted to the department on or before October 1, 2016, and on or before October 1 annually thereafter. Information submitted pursuant to this section is subject to Section 1385.07.
SEC. 5. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

Monday, July 25, 2016

Obamacare Premiums on the Rise

Humana and UHC Running from Obamacare Exchanges

  • Humana, one of the nation’s top health insurers, is pulling out of ObamaCare plans in all but a handful of states after a year of nearly $1 billion in losses.
  • UnitedHealth Group, announced earlier this year that it would be pulling out of most ObamaCare marketplaces, citing its own financial losses. 
  • In an earnings report released Thursday, Humana underscored the sharp declines in healthcare premiums from the exchanges. It expects to pull in between $750 million and $1 billion in premiums this year, compared to $3.4 billion projected over the last year.
Full story from the Hill.

Saturday, July 23, 2016

IRS Proposes Additional Regulations Clarifying Handling of 'Opt-Out' or 'Cash-in-Lieu' Programs Under PPACA

On July 8, 2016, the IRS issued new proposed regulations addressing the treatment of employer provided opt-out or cash-in-lieu payments to employees who elect not to take employer sponsored health plans and how those programs impact PPACA's affordability tests.  In prior posts we've discussed how the IRS has decided that any cash-in-lieu payment would be added to the amount an employee is required to pay for individual coverage, thereby making it more difficult for employers to offer Affordable plans under the law.  See Providing Cash-In-Lieu of Benefits Really Should Be Phased Out Under PPACA and IRS Confirms That Your "Opt-Out" or "Cash-in-Lieu" Program Must be Added to Employee Contributions for some of our past coverage on this topic.

In sum, this was the IRS' logic in deciding to generally add cash-in-lieu awards to an employee contribution amount in decoding Affordability under PPACA:
If an employer makes an opt-out payment available to an employee, the choice between cash and health coverage presented by the opt-out arrangement is analogous to the cash-or-coverage choice presented by the option to pay for coverage by salary reduction. In both cases, the employee may purchase the employer-sponsored coverage only at the price of forgoing a specified amount of cash compensation that the employee would otherwise receive – salary, in the case of a salary reduction, or an equal amount of other compensation, in the case of an opt-out payment. Therefore, the economic cost to the employee of the employer sponsored coverage is the same under both arrangements. Accordingly, the employee’s required contribution generally should be determined similarly regardless of the type of payment that an employee must forgo. 
Source: Pages 19-20 of Internal Revenue Service Proposed Rulemaking  26 CFR Parts 1 and 301.

The proposed regulations are helpful in that they expound upon "conditional" opt-out payments and how those payments may be disregarded in determining plan affordability under the ACA.  The IRS now reasons that:
In an effort to provide a workable rule that balances ... competing [Affordability] concerns, the proposed regulations provide that amounts made available under conditional opt-out arrangements are disregarded in determining the required contribution if the arrangement satisfies certain conditions (an “eligible opt-out arrangement”), but otherwise the amounts are taken into account. 
Source: Page 25 of Internal Revenue Service Proposed Rulemaking  26 CFR Parts 1 and 301.

A "Conditional Opt-Out Payment" is one the conditions the employer award upon proof that the employee seeking the award is covered by another group (note that an individual plan does not count) health plan. See Footnote 1.

This is how the proposed regulations were summarized over at Franczek Radelet P.C.:
As discussed in a prior alert, late last year in Notice 2015-87 the IRS confirmed that the value of opt-out payments where the only requirement is for the employee to decline coverage (“unconditional opt-out payments”) should be counted as part of an employee’s premium payment in determining whether the employer satisfies the affordability provisions of the ACA’s employer mandate. However, Notice 2015-87 also stated that the IRS might issue proposed regulations addressing treatment of opt-out payments that are conditioned not just on the employee declining coverage but also on satisfying an additional condition (such as proving that the employee has other coverage) (“conditional opt-out payments”). 
The new proposed regulations confirm that unconditional opt-out payments will be treated as increasing the employee’s required premium payment under the ACA’s employer mandate. For employers who offered unconditional opt-out payments prior to December 16, 2015, the value of the payments can be disregarded for ACA affordability purposes until final regulations are issued. There is also temporary relief for employers that are party to a collective bargaining agreement which was in effect prior to December 16, 2015 ... [more on that here.]  
Conversely, for conditional opt-out payments, the IRS proposed regulations provide that the value of the opt-out payments can be disregarded in determining the employee’s cost, if the arrangement is an “eligible opt-out arrangement.” An “eligible opt-out arrangement” is one that conditions the opt-out payment on 
(1) the employee declining employer-sponsored coverage and 
(2) the employee providing reasonable evidence that the employee and all other individuals for whom the employee expects to claim a personal exemption deduction have minimum essential coverage (other than coverage in the individual market, whether or not obtained through an ACA marketplace exchange). 
Even where an employer receives reasonable evidence of alternative coverage, if the employer knows or has reason to know that the employee or other members of the employee’s family do not (or will not) have coverage, then the employer cannot pay the opt-out payment. Proof of coverage must be provided to the employer at least annually. Based on these requirements, eligible opt-out arrangements will primarily be those that require the employee to provide proof of coverage through a spouse’s employer sponsored group health plan. 
The proposed regulations are open for comments for 60 days....

Footnote 1: While this proposed rule does open the window back up to continue or begin cash-in-lieu programs, I still recommend you move away from that at your company.  This does not change any of the additional legal concerns we addressed in "Providing Cash-In-Lieu of Benefits Really Should Be Phased Out Under PPACA".

Additionally, look what this does to your HR/Benefits team.  You must now not only verify that the person has other coverage; but you must verify that it is group (not just individual) coverage.  That is not necessarily easy to do.  Often times insurers will still assign a "group" number to an individual card so as to align the insured's internal records with other records the insurer keeps.  This effectively turns your HR staff into the "cash in lieu police" while angering employees who don't understand why they are not getting an award for an individual plan, etc.  Time after time in my career I see employers taking a black eye for byzantine regulations that confuse employees.  This will be another of those areas for employers who wish to continue cash-in-lieu awards.

Footnote 2: I use cash-in-lieu and opt-out awards interchangeably in this post.

What to do about Incorrect Taxpayer Identification Numbers and Error Messages from the IRS When Filing Your PPACA Reporting

A workable solution from Health Care Attorneys PC
One common error an employer received from the Affordable Care Act Information Return system (AIR system) when submitting a packet of Form 1095-Cs was an error reporting that a Form 1095-C was submitted with an incorrect taxpayer identification number (TIN). The error code displayed when this occurs is AIRTN500 which signifies an individual name and TIN does not match the IRS database. Unfortunately, the IRS software does not currently tell the employer which TIN (or TINs) is causing the error message rather the AIR system only tells the employer the UniqueRecordId that is causing the TIN error (each Form 1095-C has its own UniqueRecordId). Consequently, an employer will need to at a minimum verify and correct, if necessary, the name and TIN for each individual included on the Form 1095-C. The purpose of this article is to provide some background on the verification process and to offer a solution which should reduce an employer’s solicitation obligations.
Full article.  

Wednesday, July 20, 2016

Cancer Tops Stop-Loss Reimbursements, Sun Life Study

From Business Insurance:
... Sun Life paid out $618 million in stop-loss reimbursements between 2012 and 2015 — 26.6% to total stop-loss claims — for cancers, including malignant neoplasms, like breast and brain cancer, and blood cancers, such as leukemia, lymphoma and multiple myeloma, according to the report.  
Cancer claims reimbursement rose to 28% of total stop-loss claims reimbursements in 2015 from 24.3% in 2012, the report showed. ... 
The report also showed that 45% of the 20 highest cost intravenous medications in 2015 were used to treat cancer. ... 
Transplants were the sixth highest-cost condition during the four-year period, up from No. 11 in Sun Life’s previous survey, which looked at the costliest conditions between 2011 and 2014. Transplants, including kidney, liver, lung, bone marrow and stem cell, represented $62.2 million in stop-loss claims payments between 2012 and 2015, or 2.7% of the total reimbursements. 
The average charge for a transplant during the four-year period was more than $253,000, according to the report. ... 
Though just 2% of stop-loss claimants hit the million-dollar reimbursement mark, those claimants account for 18.5% of total stop-loss claims reimbursements, according to Sun Life. ...

Employers Not Permitted to Ask Employees to 'Plan Nice', NLRB Ruling

This is from Christian Schappel writing over at HR Morning:
After a union cried foul about some of T-Mobiles policies, the NLRB dug into the telecommunication company’s employee handbook and rules. 
And to no one’s surprise, the NLRB didn’t like what it saw. 
For example, it said this policy was illegal:
“[T-Mobile] expects all employees to behave in a professional manner that promotes efficiency, productivity, and cooperation. Employees are expected to maintain a positive work environment by communicating in a manner that is conducive to effective working relationships with internal and external customers, clients, co-workers, and management.” 
What’s wrong with essentially telling employees to “play nice” like this? 
According to the NLRB, the rule violated the National Labor Relations Act (NLRA), which says employees must be free to engage in “concerted activities” — like discussions around working conditions. 
It said T-Mobile employees could construe the clause as restricting controversial discussions — including those about unions and organized labor — because T-Mobile might not view such discussions as “positive.”... 
Other common policies the NLRB has axed recently include:

Tuesday, July 19, 2016

Covered California Health Plan Rates To Jump 13.2 Percent In 2017

From Kaiser Health News:
California’s Obamacare premiums will jump 13.2 percent on average next year, a sharp increase that is likely to reverberate nationwide in an election year.
The increase, announced by the Covered California exchange Tuesday, ends the state’s two-year respite from double-digit rate hikes.
The announcement comes as major insurers around the country seek even bigger rate increases for open enrollment this fall, and the presidential candidates clash over the future of President Obama’s landmark health law. ...
Last week, consulting firm Avalere Health found that the average rate increase being sought for widely sold silver plans was 11 percent across 14 states. But consumers could limit the increase by choosing one of the lower-cost silver plans, which are set to go up only 8 percent. ...
Peter Lee, executive director of Covered California, said prices for 2017 reflect the rising cost of care, not efforts by insurers to increase their profits.
“Under the new rules of the Affordable Care Act, insurers face strict limits on the amount of profit they can make selling health insurance,” Lee said. “We can be confident their rate increases are directly linked to health care costs, not administration or profit, which averaged 1.5 percent across our contracted plans.”
Two federal programs that have helped health insurers offset costly medical claims and cover sick patients in general end this year. They were intended as a temporary cushion for insurers who are now required to accept all applicants regardless of their medical histories. ...
Insurers have also complained about lax rules for special enrollment outside the designated signup period that have allowed some people to game the system by waiting until they need care to enroll . Those people tend to generate more claims and higher costs, insurers say. Federal and state officials say they have tightened the rules to address these complaints. ...

Monday, July 18, 2016

Healthcare Spending to Grow 5.8% Per Year for Next Ten Years, CMS Analysis

  • According to the Centers for Medicare and Medicaid (who regularly lowball the estimate) medical spending is projected to grow from 2015-2025 at an average rate of 5.8 percent per year.  
  • Health spending is projected to grow 1.3 percentage points faster than Gross Domestic Product (GDP) per year over this period; as a result, the health share of GDP is expected to rise from 17.5 percent in 2014 to 20.1 percent by 2025.
  • Given the ACA’s coverage expansions and premium subsidies together with population aging, federal, state and local governments are projected to finance 47 percent of national health spending by 2025 (from 45 percent in 2014).

Wednesday, July 6, 2016

Obamacare Insurers Want Taxpayers to Provide Them the Profits to Which They Feel Entitled - So They Are Suing the Gov't

This is one of the better and most readable summaries I've seen on the issue of the Reinsurance and Risk Adjustment Programs ("insurer bailouts").  

From the Fiscal Times:
Insurers helped cheerlead the creation of Obamacare, with plenty of encouragement – and pressure – from Democrats and the Obama administration. As long as the Affordable Care Act included an individual mandate that forced Americans to buy its product, insurers offered political cover for the government takeover of the individual-plan marketplaces. With the prospect of tens of millions of new customers forced into the market for comprehensive health-insurance plans, whether they needed that coverage or not, underwriters saw potential for a massive windfall of profits.  
Six years later, those dreams have failed to materialize. Now some insurers want taxpayers to provide them the profits to which they feel entitled -- not through superior products and services, but through lawsuits. 
Earlier this month, Blue Cross Blue Shield of North Carolina joined a growing list of insurers suing the Department of Health and Human Services for more subsidies from the risk-corridor program. Congress set up the program to indemnify insurers who took losses in the first three years of Obamacare with funds generated from taxes on “excess profits” from some insurers. The point of the program was to allow insurers to use the first few years to grasp the utilization cycle and to scale premiums accordingly. 
As with most of the ACA’s plans, this soon went awry. Utilization rates went off the charts, in large part because younger and healthier consumers balked at buying comprehensive coverage with deductibles so high as to guarantee that they would see no benefit from them. The predicted large windfall from “excess profit” taxes never materialized, but the losses requiring indemnification went far beyond expectations. 
In response, HHS started shifting funds appropriated by Congress to the risk-corridor program, which would have resulted in an almost-unlimited bailout of the insurers. Senator Marco Rubio led a fight in Congress to bar use of any appropriated funds for risk-corridor subsidies, which the White House was forced to accept as part of a budget deal. As a result, HHS can only divvy up the revenues from taxes received through the ACA, and that leaves insurers holding the bag. 
They now are suing HHS to recoup the promised subsidies, but HHS has its hands tied, and courts are highly unlikely to have authority to force Congress to appropriate more funds. In fact, the Centers for Medicare and Medicaid Services formally responded by telling insurers that they have no requirement to offer payment until the fall of 2017, at the end of the risk-corridor program. 
That response highlights the existential issue for both insurers and Obamacare. The volatility and risk was supposed to have receded by now. After three full years of utilization and risk-pool management, ACA advocates insisted that the markets would stabilize, and premiums would come under control. Instead, premiums look set for another round of big hikes for the fourth year of the program. 
Consumers seeking to comply with the individual mandate will see premiums increase on some plans from large insurers by as much as 30 percent in Oregon, 32 percent in New Mexico, 38 percent in Pennsylvania, and 65 percent in Georgia. 
Thus far, insurers still claim to have confidence in the ACA model – at least, those who have not pulled out of their markets altogether. However, massive annual premium increases four years into the program demonstrate the instability and unpredictability of the Obamacare model, and a new study from Mercatus explains why. 
The claims costs for qualified health plans (QHPs) within the Obamacare markets far outstripped those from non-QHP individual plan customers grandfathered on their existing plans – by 93 percent. They also outstripped costs in group QHP plans by 24 percent. In order to break even without reinsurance subsidies (separate from the risk-corridor indemnification funds), premiums would need to have been 31 percent higher on average for individual QHPs. 
The main problem was that younger and healthier people opted out of the markets, skewing the risk pools toward consumers with much higher utilization rates – as Obamacare opponents predicted all along. With another round of sky-high premium increases coming, that problem will only get worse, the study predicts. 
“[H]igher premiums will further reduce the attractiveness of individual QHPs to younger and healthier enrollees, resulting in a market that will appeal primarily to lower-income individuals who receive large subsidies and to people with expensive health conditions,” it concludes. “To avoid such an outcome, it is increasingly likely that the individual insurance market changes made by the ACA will have to be revised or reversed.”  
Galen Institute senior fellow Doug Badger, one of the study’s co-authors, wonders how long insurers will continue to publicly support Obamacare. In an interview with me this week, Badger noted how critical that political cover is for the White House, but predicted it won’t last – because the system itself is unsustainable, and no one knows this more than the insurers themselves, even if they remain reluctant to voice that conclusion. Until they speak up, however, the Obama administration can keep up their happy talk while insurers quietly exit these markets, an act that should be speaking volumes all on its own. ...  

Insurers Raking in Billions of Dollars Obamacare Bailout Dollars

Some insurers are receiving a massive payday from a government reinsurance program meant to help stabilize premiums and protect insurers from losses under the health care law. 
The government will pay out $7.8 billion in reimbursements to 497 health insurers under the transitional reinsurance program, according to data released Thursday by the Centers for Medicare & Medicaid Services. 
That's a little more than half of what health insurers requested — $14.3 billion — for the 2015 year, the second year of the three-year transitional reinsurance program. 
Last year, CMS paid out 100% of insurer's 2014 claims. This year, claims will be paid at a 55.1% coinsurance rate, CMS said. 
The temporary program is designed to encourage health insurers to participate in the individual insurance market by reducing uncertainty about the health status of enrollees. It is meant to transfer funds to health insurers saddled with high-cost members. 
Some insurers, particularly Blue Cross and Blue Shield Association insurers, received gigantic payouts. Richardson, Texas-based Blue Cross and Blue Shield of Texas will receive the largest payout of $636.7 million, followed by Thousand Oaks, California-based Blue Cross of California at $325.0 million, and Chicago-based Blue Cross and Blue Shield of Illinois at $283.5 million.
The reinsurance program is funded by a $44 per-participant fee paid by health insurers and self-insured employers. That fee will decrease to $27 per participant for 2016. 
CMS said it collected $5.5 billion in reinsurance contributions for 2015, with about $1 billion more scheduled to be collected on or before Nov. 15. In addition, $1.7 billion in excess reinsurance contributions from 2014 were set aside to be used for 2015 payments.
CMS also released data for its permanent risk adjustment program, another program established by the Affordable Care Act that transfers payments to health insurers that attract high-risk patients from those with low-risk enrollees.
A total 817 insurers participated in the risk adjustment program for 2015. ...

IRS Update: ACA Information Returns May Continue To Be Filed After June 30, 2016

If you are an applicable large employer, self-insured employer, or other health coverage provider, the deadline to electronically file ACA information returns with the IRS is midnight ET on June 30, 2016.  The ACA Information Returns (AIR) system will remain up and running after the deadline.  If you are not able to submit all required ACA information returns by June 30, 2016, please complete the filing of your returns after the deadline.

It is important to note the following:
  • The AIR system will continue to accept information returns filed after June 30, 2016. In addition, you can still complete required system testing after June 30, 2016.
  • If any of your transmissions or submissions was rejected by the AIR system, you have 60 days from the date of rejection to submit a replacement and have the rejected submission treated as timely filed. 
  • If you submitted and received “Accepted with Errors” messages, you may continue to submit corrections after June 30, 2016. 
The IRS is aware that some filers are still in the process of completing their 2015 tax year filings.  As is the case for other information returns, penalties may be associated with the submission of the ACA information returns for failure to timely file required returns.  As the IRS has publicly stated in various forums in recent months, filers of Forms 1094-B, 1095-B, 1094-C and 1095-C that miss the June 30, 2016, due date will not generally be assessed late filing penalties under section 6721 if the reporting entity has made legitimate efforts to register with the AIR system and to file its information returns, and it continues to make such efforts and completes the process as soon as possible.   In addition, consistent with existing information reporting rules, filers that are assessed penalties may still meet the criteria for a reasonable cause waiver from the penalties.

If you are not an electronic filer and you missed the May 31, 2016, paper filing deadline for ACA information returns, you should also complete the filing of your paper returns as soon as possible.

Source: IRS.

Tuesday, July 5, 2016

HHS Wins One Obamacare Case and Loses Another

From the Washington Post:
Friday, the U.S. Court of Appeals for the D.C. Circuit released two opinions in Patient Protection and Affordable Care Act (PPACA) cases. In one case, the federal government prevailed. In the other, it did not. Both opinions were unanimous and (in my opinion) likely correct. The two cases are also further confirmation that Obamacare litigation is far from over. To the contrary, for reasons I explained here, the PPACA created a perfect storm for ongoing litigation. 
In the first case, West Virginia v. Department of Health and Human Services, a unanimous panel concluded that the state of West Virginia lacks Article III standing to challenge the Obama administration’s decision to waive some of the PPACA’s requirements governing minimum coverage requirements. This litigation responds to the Obama administration’s response to outrage over insurance plan cancellations — cancellations that were politically problematic because they revealed that the president’s promise that “if you like your health insurance plan, you can keep it” was a lie. (Indeed, it was Politifact’s “Lie of the Year” for 2013.) ...