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On December 5, 2016, the U.S. Court of Appeals for the D.C. Circuit issued an order to stay  the administration’s appeal of the district court decision in U.S. House of Representatives v. Burwell, a case challenging Cost-Sharing Reduction (“CSR”) payments to health insurance issuers under the Affordable Care Act (“ACA”) Section 1402. The district…

California recently enacted Assembly Bill 72 (“AB 72”) to target surprise medical bills from out-of-network professionals.  The new law applies to commercial plans licensed by the Department of Managed Health Care and the Department of Insurance.  AB 72 sets reimbursement rates for out-of-network professionals at in-network facilities at either the average contracted rate, or 125…

The Government Accountability Office (GAO), in a letter to members of Congress, found that the implementation of the Transitional Reinsurance Program by the U.S. Department of Health and Human Services (HHS) violates the Affordable Care Act.

The Transitional Reinsurance Program is one of three premium stabilization programs authorized by the Affordable Care Act (ACA),…

On August 18, 2016, CMS issued a request for information on “inappropriate steering of people eligible for Medicare or Medicaid into Marketplace plans” by third parties. CMS voiced concern over “anecdotal reports” that Medicaid or Medicare eligibles received premium and cost-sharing assistance from third parties so they could enroll in Marketplace plans, enabling providers to receive higher reimbursement rates. In November 2013, CMS had issued guidance discouraging third-party payment of premiums because it has the propensity to “skew the insurance risk pool and create an unlevel field in the Marketplaces.” Almost three years later, it appears that CMS has determined that more decisive action may be necessary.

In July, UnitedHealthcare filed suit against American Renal Associates LLC in the United States District Court for the Southern District of Florida (complaint), alleging ARA violated Florida’s deceptive and unfair trade practices act, fraud, unjust enrichment, conspiracy, and other causes of action. The suit alleges that ARA coordinated with the American Kidney Foundation to pay premiums of low-income enrollees to switch from government health care programs to private insurance coverage. The suit alleges that by steering enrollees from Medicaid and Medicare to private insurance, ARA was able to increase billing from about $300 to $4,000 for the same services. The complaint also alleges that ARA did not collect copayments or deductibles from the enrollees after covering their premiums for private insurance and so committed negligent misrepresentation and tortious interference with a contract by misrepresenting the charges of claims submitted to UnitedHealthcare.

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The “what will Congress do” news leads can now stop. The Supreme Court issued its decision in King v. Burwell and Congress does not need to fix anything because, by a vote of 6-3 in an opinion written by Chief Justice John Roberts, the Supreme Court held that the subsidy provisions of the ACA are not broken, and that individuals who purchase insurance through the Federal Exchange are eligible for ACA subsidies. In a nutshell, the Court held that the most reasonable reading of the ACA provision making credits available to individuals who purchased insurance on an exchange “established by the State” makes tax credits available to individuals who purchased insurance through the Federal Exchange. The decision delves deeply into health insurance policy concepts as well as the dark-art of statutory interpretation and the underlying chaotic legislative process to find, ultimately, that it was “implausible” that Congress intended to limit tax credits to individuals who purchased insurance through a State Exchange. See King, 576 U.S. __ (2015), slip op. at 17.

At the policy level, the Court clearly understood that the three main pieces of the ACA are “interlocking.” Id. at 1. Community rating and guaranteed issuance by insurers, and mandated purchase by individuals, are underpinned by subsidies for individuals who cannot afford what they have been told they must purchase. The Court discussed the health reform precedents in states like Massachusetts and New York at length, and even used the term “death spiral,” to make clear that it understood the carrot and stick approach embodied in the ACA. Id. at 15. Taking away the “carrot” – tax credits – that makes insurance affordable for large swathes of the population will make the scheme completely untenable in states that have not created an exchange, because too many people will fall out of the mandated purchase category by qualifying for an exemption where premiums would constitute too high a percentage of their income. This, in fact, was the premise of the lawsuit brought by challengers, who reside in Virginia, a state that has not created a State Exchange. Without access to the ACA’s tax credits, their income would be low enough that they would no longer be subject to the ACA’s mandated purchase provisions, which is what they sought.

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On March 4, 2015, The U.S. Government Accountability Office (GAO) released a report on the troubled rollout of Healthcare.gov. The GAO concluded that weak oversight by the federal Office of Management and Budget (OMB) may have contributed to the technology problems associated with the Healthcare.gov project. In one example of poor oversight, the GAO noted…

On September 2, 2014, the Centers for Medicare & Medicaid Services (CMS) announced a Final Rule specifying enrollment notice requirements and re-enrollment options for plans offered through the Exchange in 2015. Regarding notice requirements, the Final Rule states that consumers in the Exchange will receive notices from the marketplace before open enrollment begins that explain…

Last Thursday, state-based health insurance exchange executives gathered in Chicago to reflect on their experiences establishing their respective exchanges. While these executives were meeting, the full D.C. Circuit Court announced it would rehear the Halbig premium subsidy case and the Oregon exchange board met to discuss dismantling Cover Oregon and moving remaining functions to existing state agencies. As these recent events reflect, this is a period of great uncertainly on the state-based exchange front. As a result, state exchanges, the contractors that built those exchanges and plans participating in them need to be vigilant as to the risks and opportunities that lay ahead.

Northwestern University’s Kellogg School of Management convened a day-long symposium last week on state-based exchanges to discuss year one of operations, what went well, what did not, and lessons learned. During the panel presentations, exchange executives talked about revisiting previous discussions about how exchanges can drive delivery system reform. Some indicated that after focusing on the basics in the first year or two of operations, they are ready to revisit conversations about standardizing benefit packages and using the exchange to impact the health care delivery system. There was specific mention of modifying QHP standards to drive changes in the products offered on the exchange so those products advance ACOs and other delivery system reforms. Insurers participating in state-based exchanges should be on the lookout for future changes including exchanges selectively contracting with a limited number of health plans or using additional criteria to select plans offered on the exchange based on factors such as affordability, prevention and wellness efforts, provider contracting methods, efforts to reduce health disparities, patient access to health care, and other criteria aimed at improving the health delivery system.

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On July 16, 2014, the Consumer Information and Insurance Oversight (CCIIO) division of the Centers for Medicare & Medicaid Services (CMS) released an Enrollment Bulletin for the individual markets of Federally-facilitated Exchanges (FFEs) about grace periods for premium non-payment. The Bulletin addresses when grace periods related to terminations for premium non-payment fall across enrollment periods for the next benefit year. Issuers must provide a three-month grace period to Exchange enrollees who receive advance premium tax credits (APTCs), pay at least one month’s premium during the benefit year, and subsequently fail to pay their portion of the monthly premium. If the three-month grace period passes and the enrollee does not pay all outstanding premiums, the issuer must terminate the enrollee’s coverage, retroactive to the last day of the first month of the grace period. All other Exchange enrollees receive grace periods according to state law. The Bulletin explains the following for APTC recipients in FFEs:…
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The Obama Administration received mixed messages yesterday when two federal appellate courts issued contradictory rulings on whether tax credits are available for individuals to purchase health insurance from federally facilitated Exchanges operating in 36 states. The U.S. Court of Appeals for the D.C. Circuit delivered a stiff rebuke to the Obama Administration, issuing a 2-1…