All posts tagged HHS

Recently, the Department of the Treasury, Department of Labor (DOL), and Department of Health and Human Services (HHS) (collectively, the Departments) issued FAQs About Affordable Care Act Implementation Part 34 and Mental Health and Substance Use Disorder Parity Implementation.

The Departments’ FAQs cover two primary topics: tobacco cessation coverage and mental health / substance use disorder parity.

Tobacco Cessation Coverage

The Departments seek public comment by January 3, 2017, on tobacco cessation coverage. The Departments intend to clarify the items and services that must be provided without cost sharing to comply with the United States Preventive Services Task Force’s updated tobacco cessation interventions recommendation applicable to plan years or policy years beginning on or after September 22, 2016.

Mental Health / Substance Use Disorder Parity

Generally, the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) requires that the financial requirements and treatment limitations imposed on mental health and substance use disorder (MH/SUD) benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits.

A financial requirement (such as a copayment or coinsurance) or quantitative treatment limitation (such as a day or visit limit) is considered to apply to substantially all medical/surgical benefits in a classification if it applies to at least two-thirds of all medical/surgical benefits in the classification.

If it does not apply to at least two-thirds of medical/surgical benefits, it cannot be applied to MH/SUD benefits in that classification.

If it does apply to at least two-thirds of medical/surgical benefits, the level (such as 80 percent or 70 percent coinsurance) of the quantitative limit that may be applied to MH/SUD benefits in a classification may not be more restrictive than the predominant level that applies to medical/surgical benefits (defined as the level that applies to more than one-half of medical/surgical benefits subject to the limitation in the classification).

In performing these calculations, the determination of the portion of medical/surgical benefits subject to the quantitative limit is based on the dollar amount of all plan payments for medical/surgical benefits in the classification expected to be paid under the plan for the plan year. The MHPAEA regulations provide that “any reasonable method” may be used to determine the dollar amount of all plan payments for the substantially all and predominant analyses.

MHPAEA’s provisions and its regulations expressly provide that a plan or issuer must disclose the criteria for medical necessity determinations with respect to MH/SUD benefits to any current or potential participant, beneficiary, or contracting provider upon request and the reason for any denial of reimbursement or payment for services with respect to MH/SUD benefits to the participant or beneficiary.

However, the Departments recognize that additional information regarding medical/surgical benefits is necessary to perform the required MHPAEA analyses. According to the FAQs, the Department have continued to receive questions regarding disclosures related to the processes, strategies, evidentiary standards, and other factors used to apply a nonquantitative treatment limitation (NQTL) with respect to medical/surgical benefits and MH/SUD benefits under a plan. Also, the Departments have received requests to explore ways to encourage uniformity among state reviews of issuers’ compliance with the NQTL standards, including the use of model forms to report NQTL information.

To address these issues, the Departments seek public comment by January 3, 2017, on potential model forms that could be used by participants and their representatives to request information on various NQTLs. The Departments also seek public comment on the disclosure process for MH/SUD benefits and on steps that could improve state market conduct examinations or federal oversight of compliance by plans and issuers, or both.


By Danielle Capilla, Originally published by United Benefit Advisors – Read More

0826The Health Insurance Portability and Accountability Act (HIPAA) established national standards to secure and protect the privacy of health information. The Health Information Technology for Economic and Clinical Health Act (HITECH) requires the Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) to conduct audits of covered entities and business associates in order to ensure compliance with the HIPAA Privacy, Security, and Breach Notification Rules.

OCR initiated a pilot program in 2012 to assess the processes implemented by 115 covered entities to comply with HIPAA’s requirements. The pilot program was a three-step process: (1) initial protocol development, (2) test of these protocols by conducting 20 audits, and (3) full audit execution using revised protocol materials, which were completed by the end of December 2012.

OCR selected a pool of covered entities for audits that broadly represented a wide range of healthcare providers, health plans, and healthcare clearinghouses. Criteria to select entities to be audited included whether the entity was public or private, size of the entity, affiliation with other healthcare organizations, the type of entity and relationship to patient care, past and present interaction with OCR concerning HIPAA enforcement and breach notification, as well as geographic factors.

A wide range of covered entities were audited in Phase 1. The audit process began when selected entities received a notification letter from OCR notifying them of their selection and asking them to provide documentation of their privacy and security compliance efforts. Every audit included a site visit during which auditors interviewed key personnel and observed processes to determine compliance. Following the site visit, auditors developed a draft audit report which described how the audit was conducted, what the findings were, and what actions the covered entity took in response to those findings. The covered entity had the opportunity to remedy any compliance issues. The final report included the steps the entity took to resolve any compliance issues identified by the audit and it also described best practices.

OCR used the final audit to understand HIPAA compliance efforts and to determine the types of technical assistance that should be developed and the types of corrective action that are most effective. The technical assistance and best practices that OCR generated assisted covered entities and business associates in improving their efforts to keep health records safe and secure.

Originally published by United Benefit Advisors – Read More

Can Employers Assist Employees with Premiums for Individual Plans? | Ohio Employee Benefits

Categories: Employee Communication
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Posted by Carol Taylor

peopleOn November 6, 2014, the collective Departments of Health and Human Services (HHS), Labor (DOL) and the Treasury released three Frequently Asked Questions (FAQs) directed at employer payment plans for the purchase of individual insurance. While the departments had previously released several other pieces of guidance about these arrangements, this latest round exclaimed an emphatic no!

The other releases on the topic started well over a year ago. However, there are still agents and administrators that have insisted either Section 125 (Cafeteria Plans) or Section 105 (Reimbursement Arrangements) of the IRS code allowed employers to deduct premiums in a pretax manner or reimburse for individual premiums. Several of the administrators touting these plans even went as far as claiming they were so confident in their interpretation of the regulations, that they would pay any fines incurred because of their advice that these plans were compliant. This latest round of clarification was a resounding comply or pay fines.

Any employer payment that provides cash reimbursement for the purchase of an individual market policy is not compliant with the Patient Protection and Affordable Care Act (PPACA), whether the employer treats the money as pretax or post-tax to the employee. It is interesting to note that the latter provision has not been present in other regulatory releases, but is new with this round. While it is not clear at the moment how that would apply, a post-tax amount would put the insured in a precarious position, subject to fines and payback of subsidies on their own, since the additional income could lower the subsidy that they would otherwise qualify for, without the assistance from the employer.

Likewise, if a Section 105 reimbursement plan is set up for the purchase of individual policies, these plans are deemed noncompliant. The basis for this determination is the employer’s involvement of the plan, even though they may not have assisted the individual with their plan selection, they are still taking part by contributing cash for the policy purchase.

Another question delves into compensating employees that have a high claims risk to enroll in a Marketplace plan versus joining the group health plan offered by the employer. This scenario involves other factors that are prohibited, such as discriminating due to a health factor and eligibility rule discrimination. These plans also fail due to the employer-provided payment for purchase of an individual plan.

In all of these scenarios, since they would be deemed a group health plan, they would be subject to the market reforms such as unlimited lifetime maximum benefits, preventive care coverage at no cost share and other aspects of the law. This could also open the door for lawsuits against the employer if the individual policy failed to pay a claim for the insured.

The FAQs reference the fines that would apply in these instances under Section 4980D. In the May 2014 release from the IRS, they spelled out the excise fines as $100 per day, per employee or $36,500 annually. However, these fines are an excise tax in the amount of $100 per day with respect to each individual to whom such failure relates. So, if the employer were to contribute to dependents’ coverage, the fines would also be incurred for each dependent per day, in addition to the employee.

It is always best to get a plan into compliance as quickly as possible. With many of these having been put into place earlier this year, there is still time to correct at least part, but not all, of the issues. Speak with your tax counsel as quickly as possible to get your plans into compliance. Your local United Benefit Advisors office, with their vast compliance resources, can also assist you with these issues.

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HCR Update: IRS Posts Three Proposed Regulations Addressing Open Issues Under PPACA

Categories: Team K Blog
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On Nov. 20, 2012, the Department of Health and Human Services issued proposed rules that address:

All three rules are still in the “proposed” stage, which means that there may and likely will be changes when the final rules are issued. There is a 30-day comment period on the essential health benefits and market reforms rules, and a 60-day comment period on the wellness rule.

Nondiscriminatory Wellness Incentives

The proposed rule largely carries forward the rules that have been in effect since 2006. It reiterates that there are no limits on incentives that may be provided in a program that simply rewards participation, such as a program that reimburses the cost of a smoking cessation program, regardless whether the employee actually quits smoking. Programs that are results-based (now called “health contingent wellness programs”) still must meet five conditions (the program must be reasonably designed to promote health or prevent disease, provide a chance to qualify for the reward at least once a year, provide an alternative standard for those for whom it is unreasonably difficult due to a medical condition to satisfy the standard, describe the availability of the alternative standard in program materials, and cap the reward or penalty at a percentage of the total cost of coverage).

The proposed rule also:

  • Confirms that the maximum reward or penalty beginning with the 2014 plan year is 30 percent of the total cost of coverage (up from the current 20 percent limit)
  • Would provide an exception to the 30 percent maximum reward/penalty for tobacco use, and would instead allow a penalty of 50 percent of the total cost of coverage for smoking (to be consistent with the 1.5:1 surcharge that will be allowed in the exchange and small employer market plans for tobacco use)
  • Confirms that grandfathered plans would be allowed to use the increased 30 (or 50) percent reward/penalty beginning in 2014
  • Provides that the employer would have to locate and pay for the alternative standard program
  • Would prohibit limits on the number of times an employee could use an alternative standard (meaning, for example, that an employee would be eligible for the non-smoker discount if he continues to smoke, but participates in a smoking cessation program multiple times)

Essential Health Benefits (EHBs) and Actuarial Value

The proposed rule resolves an ambiguity in the law, and provides that the restrictions on cost sharing (i.e., maximum deductibles and out-of-pocket maximums) will not apply to self-funded and large employer plans. The proposed rule also:

  • Confirms that nongrandfathered plans in the exchanges and the small group market will be required to cover the 10 essential health benefits (ambulatory/outpatient, emergency, hospitalization, maternity and newborn care, mental health and substance use, prescription drugs, rehabilitative and habilitative services and devices — e.g., speech, physical and occupational therapy, laboratory services, preventive and wellness services and chronic disease management, and pediatric services, including pediatric dental and vision care) and meet the “metal” standards (provide an actuarial value of 60, 70, 80 or 90 percent)
  • Provides that states have 30 days from the date the proposed rule is published to elect the policy that will serve as their baseline for EHBs, and includes a list of state elections to date and the applicable default policy
  • Provides a method for supplementing the baseline plan’s benefits, if the baseline does not cover all 10 EHBs
  • Provides that other policies in the exchange and small group market must generally provide the same coverage within each EHB category as the baseline plan, but that they may substitute an actuarially equivalent benefit within a category
  • States that HHS will provide a calculator that must be used to determine actuarial value (with exceptions for unique plan designs); the proposed methodology for the calculator is provided in the proposed rule
  • Provides that a plan that is within 2 percent of the metal standard would be acceptable (so, for instance, a plan with an actuarial value of 68 percent – 72 percent would be considered a “silver” plan)
  • Provides that state mandates in effect as of Dec. 31, 2011, would be considered EHBs
  • Confirms that self-funded plans and those in the large employer market would not need to provide the 10 EHBs; instead, they must provide an actuarial benefit of at least 60 percent and provide coverage for hospital and emergency care, physician and mid-level practitioner care, pharmacy, and laboratory and imaging to be considered “minimum value”
  • States that HHS and the IRS will provide a minimum value calculator and safe harbor plan designs that self-funded and large group plans could use to determine whether the plan provides minimum value
  • Provides that current year employer contributions to a health savings account (HSA) or a health reimbursement arrangement (HRA) will be considered as part of the actuarial or minimum value calculation (essentially as a reduction of the deductible)

Market Reforms

While the wellness and EHB proposed rules reflect previously published regulations or bulletins, there is much that is new in the market reform proposed rule. The proposed rule reiterates PPACA’s limits on permissible premium variations for policies in the exchanges and individual and small group markets, providing that premiums may only vary based upon:

  • Age (with a maximum three to one ratio)
  • Tobacco use (with a maximum one and one-half to one ratio)
  • Geographic location, and
  • Family size

Other parts of the proposed rule call for a great deal of standardization in implementation of the reforms, including:

  • A proposal that rates be set by totaling rates that are calculated separately for each covered individual (although employers would be permitted to either use an average composite rate or a method that charges older employees and smokers the allowable surcharge when determining premium contributions)
  • A proposal that all carriers use one year age bands, with a prescribed age band table
  • A requirement that all individuals enrolled in nongrandfathered small group plans be considered one risk pool (all those in nongrandfathered individual policies would be in another risk pool, although a state could choose to merge the two pools); this means that different blocks could no longer be considered different risk pools
  • Allowing states to identify up to seven geographic regions for rating purposes, but requiring that any rating differences between the regions be actuarially justified
  • Allowing employer contribution and group participation requirements, to reduce adverse selection
  • Requiring that all rate increases be submitted to HHS