Regulations and Guidance

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On April 6, the Centers for Medicare & Medicaid Services (“CMS”) released a proposed rule to implement the 2008 Mental Health Parity and Addiction Equity Act (“MHPAEA”) for coverage offered by Medicaid Managed Care Organizations (“MCOs”), Medicaid Alternative Benefit Plans (“ABPs”) and the Children’s Health Insurance Program (“CHIP”).  MHPAEA requires group health plans and health insurance issuers to ensure that financial requirements or treatment limitations applicable to mental health and substance-use disorder (“MH/SUD”) benefits are comparable to, and are applied no more stringently than, the same financial requirements or treatment limitations applied to medical and surgical (“M/S”) benefits.  Interim final regulations implementing MHPAEA for commercial plans were jointly issued by the Departments of Health and Human Services, Labor and the Treasury (collectively, the “Departments”) in February 2010, and final regulations were jointly issued by the Departments in November 2013 (hereinafter, the “Joint Regulations”).

Since the passage of the Mental Health Parity Act of 1996, parity mandates have been enacted that reach most types of health care coverage, although what is required by “parity” laws can vary greatly.  In 2001, the Federal Employees Health Benefits Program implemented parity for in-network mental health and substance use disorder benefits. MHPAEA was enacted in 2008 to extend the reach and scope of parity (to include, among other factors, substance-use disorder benefits) in large group coverage.  The Affordable Care Act’s Essential Health Benefits requirements now require most individual and small group coverage to include mental health and substance use disorder benefits, and these benefit must be provided in compliance with MHPAEA.  If finalized, this CMS proposed rule would further clarify the application of mental health parity requirements, in this case to Medicaid programs.Continue Reading CMS Proposed Rule Implements Mental-Health Parity Requirements for Medicaid Managed Care and CHIP Plans

In late 2014, Congress passed the Sunscreen Innovation Act (SIA) to speed the approval of innovative new sunscreen ingredients and formulations, many of which have long been available in Europe, Asia, and Latin America. While the SIA requires FDA to take concrete steps to more quickly review submissions regarding OTC sunscreen ingredients, the SIA does…

The last several weeks of 2014 brought with them a flurry of guidance from the Departments of Health and Human Services (“HHS”), Labor (“DOL”) and Treasury (collectively, the “Departments”) regarding group-health plan employee benefits issues, including issues under the Affordable Care Act (“ACA”), the Employee Retirement Income Security Act (“ERISA”) and the Mental Health Parity and Addiction Equity Act (“MHPAEA”). As we start into 2015, care should be taken not to overlook these important pieces of guidance that came in at years’ end:

1. No More “Skinny Plans”

On November 4, the Internal Revenue Service (“IRS”), in collaboration with HHS, issued guidance (Notice 2014-69) aimed at shutting the door on the use of so-called “skinny plans,” i.e., plans that provide “minimum value” within the meaning of the ACA, and which cover preventive services, but which exclude substantial hospitalization and/or physician services. (Some consultants have argued that such plans technically satisfied the ACA’s “minimum value” standard). The intent of such “skinny plans” is usually not to provide group health coverage, but to allow employers to partially or fully avoid application of any penalties under the ACA’s “pay or play” provisions (and a consequence of such actions is that employees covered under such “skinny plans” are generally ineligible for premium tax credits on ACA exchanges).

The IRS Notice unequivocally states that “plans that fail to provide substantial coverage for in-patient hospitalization services or physician services (or for both) . . . do not provide minimum value.” The Notice goes on to state that HHS and Treasury will amend the applicable regulations to incorporate this reading. The Notice gives limited grandfathering relief, protecting “skinny plans” adopted (through a binding written commitment) before November 4, 2014, but only as to plan years beginning on or before March 1, 2015 (regardless of such grandfathered coverage, employees offered affordable coverage under one of these plans can turn down such coverage and still be eligible for a premium tax credit on the exchanges). However, employers offering a “skinny plan” under this grandfathering provision must not state or imply that the plan precludes the employee from receiving a premium tax credit, and they must timely correct any disclosures to that effect that have previously been made.

2. Premium Reimbursement Plans

On November 6, the Departments issued additional FAQs (Part XXII) on ACA Implementation, specifically addressing premium reimbursement arrangements. The Departments clarified that an employer may not offer employees cash to reimburse the purchase of an individual market health policy, regardless of whether the cash is paid as taxable compensation or not. Any such reimbursement plan or arrangement would be considered by the Departments to be a “group health plan” within the meaning of ERISA and the Public Health Service Act (“PHSA”), and hence would be subject to the market reform provisions of the ACA. In keeping with prior guidance on integration of employer health care arrangements with individual coverage, the Departments stated that such a premium reimbursement plan fails to comply with the ACA’s market reforms because it could not be integrated with an individual market policy (and the reimbursement plan could not, on its own, satisfy the market reforms).Continue Reading HHS, Labor, and Treasury Issue Flurry of Rulemakings and Guidance on Employee Benefits to Close 2014 with a Bang

This week, the U.S. Office of Personnel Management (“OPM”) published three notices of proposed rulemaking (“NPRMs”) regarding the administration of the Federal Employees Health Benefits (“FEHB”) Program. The FEHB Program provides for coverage of federal employees and annuitants and their dependents. 5 U.S.C. § 8901, et seq. These three NPRMs address subrogation and reimbursement recovery, enrollment after termination of a plan or plan option, and rate setting for community-rated plans.

Subrogation and Reimbursement Recovery

OPM’s proposed rule on subrogation and reimbursement recovery would ensure that FEHB Program carriers may seek reimbursement or subrogation recoveries in all states. 80 Fed. Reg. 931 (Jan. 7, 2015) (available here). The supplementary materials to this regulation reiterate the position the government has consistently taken—“that a covered individual’s entitlement to FEHB benefits and benefit payments is conditioned upon, and limited by, a carrier’s entitlement to subrogation and reimbursement recoveries pursuant to a subrogation or reimbursement clause in the FEHB contract.” 80 Fed. Reg. at 931.

These regulations would add a new section, 5 C.F.R. § 890.106, to FEHB Act implementing regulations. Section 890.106 would do the following:

  • Require that all FEHB contracts provide for subrogation and reimbursement by carriers;
  • Condition Program benefits and benefit payments to covered individuals on the carriers’ rights to subrogation and reimbursement, and require FEHB brochures (official statements of benefits) to explain this condition;
  • Set forth the two requisite circumstances that trigger a carrier’s right to subrogation or reimbursement: receipt of benefits or benefit payments by a covered individual as a result of an illness or injury, and the individual’s recovery or right to recovery from a third party based on the same illness or injury;
  • State that a carrier’s claim for subrogation or reimbursement is not subject to OPM’s administrative disputed claims process outlined at 5 C.F.R. § 890.105; and
  • Establishes procedural rules for carriers’ recoveries.

Continue Reading OPM Proposes New FEHB Rules on Subrogation, Post Termination Enrollment, and Rate Setting for Community-Rated Plans

On December 17, 2014, the Centers for Medicare and Medicaid Services (CMS) published on its website a Frequently Asked Questions (FAQs) on its Quality Rating System (QRS) and Qualified Health Plan (QHP) Enrollee Experience Survey for QHPs on the insurance exchanges. Section 1311(c)(3) of the Affordable Care Act (ACA) requires CMS to develop a system…

On Monday, December 15, the Office of Personnel Management (OPM) published a notice of proposed rulemaking that would modify the framework within which OPM evaluates Federal Employees Health Benefits (FEHB) plan performance. For both experience-rated and community-rated plans, plan performance significantly impacts FEHB carriers’ profits. OPM describes the proposed framework as more consistent, objective, and transparent than the current framework. The proposed rule can be found here.

Currently, under the FEHB Acquisition Regulation (FEHBAR), OPM evaluates experience-rated plans and community-rated plans using different frameworks. Experience-rated plans are evaluated based on six categories of factors used to determine the amount of the service charge paid to the carrier: contractor performance, contract cost, federal socioeconomic programs, cost control, independent development, and capital investments. Community-rated plans are evaluated based on two performance elements that may lead to OPM withholding a percentage of plan premiums: customer service and contract compliance requirements.

Under the proposed framework, both experience-rated and community-rated plans would be evaluated using the same set of “profit analysis factors”—clinical quality, customer service, resource use, and contract oversight. The proposed regulatory text briefly describes each factor:

  1. Clinical quality would include elements like preventive care, chronic disease management, medication use, and behavioral health.
  2. Customer service would include communication, access, claims, and member experience.
  3. Resource use would include utilization management, administrative, and cost trends.
  4. Contract oversight would capture audit findings, fraud, waste, and abuse, responsiveness to OPM, benefits and network management, contract compliance, technology management, data security, and federal socioeconomic programs.

Continue Reading OPM Proposes Changes to Evaluation of FEHB Plan Performance

On November 26, 2014, the U.S. Department of Health and Human Services (HHS) released its proposed Notice of Benefit and Payment Parameters for 2016, also known as the “Payment Notice.” Now that HHS has completed the majority of its major rulemakings implementing the Affordable Care Act, the annual Payment Notice has become the recurring opportunity for HHS to modify Affordable Care Act (ACA) policy in a wide variety of subject areas. The 2016 Payment Notice touched on a number of policies, including essential health benefits (EHB), rate review, network adequacy and discriminatory benefit design, among others. Below is a summary of some of the key provisions of the 2016 Payment Notice.

Essential Health Benefits

Section 1302 of the ACA requires all non-grandfathered health plans in the individual and small group markets provide EHB to their beneficiaries. EHB are a comprehensive set of health care items and services. The Secretary of Health and Human Services defines the EHB to be covered; however, at a minimum, EHB must be equal in scope to the benefits covered by a typical employer plan and cover at least 10 general categories. The 2016 proposed Payment Notice would make several changes to the EHB regulations.
First, HHS proposes to establish a universal definition for one of these 10 general categories of care: habilitative services. Currently, issuers are required to match the habilitative services provided by the appropriate base-benchmark plan. When the base-benchmark plan does not offer habilitative services, the state in which the issuer is located may specify the services that are included in that category. If no definition is provided, however, the issuer is obligated to provide habilitative services benefits that are similar in scope, amount, and duration to benefits covered for rehabilitative services or to determine which services will be covered and report the determination to HHS. The proposed rule would alleviate this challenge for issuers by defining habilitative services as “health care services that help a person keep, learn, or improve skills and function for daily living.” Additionally, HHS proposes to remove the option for issuers to determine the scope of habilitative services under 45 C.F.R. § 156.110(c)(6).

Second, HHS wants to clarify that pediatric services should be provided until at least age 19. HHS proposes new language in 45 C.F.R. § 156.115(a) to clarify that coverage for pediatric services should be provided until at least the end of the plan year in which an enrollee turns 19.

Third, HHS proposes to give states the option of selecting a new 2014 plan to serve as their base-benchmark plan for the 2017 plan year. The proposed rule reinstates unintentionally deleted data submission requirements used to determine potential state benchmark plans.Continue Reading 2016 Payment Notice Proposed Rule: Potential Changes to EHBs, Rate Review, and Other ACA Tweaks

On October 15, 2014, the Centers for Medicare & Medicaid Services (“CMS”) launched a new accountable care organization (“ACO”) program that aims to encourage new Medicare Shared Savings Program (“MSSP”) ACOs in rural and underserved areas. The program, known as the ACO Investment Model, provides up to $114 million to as many as 75…