Final Individual Mandate Rules Issued

HHS issued a final rule, Exchange Functions: Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions (CMS-9958-F), which sets forth the “shared responsibility” requirements that individuals obtain ‘minimum essential coverage” (MEC) or be subject to a “shared responsibility payment” assessed by the Internal Revenue Service (IRS). Exemptions allowed under the rule (e.g. for individuals offered coverage that is “unaffordable”, for individuals who would be Medicaid eligible in states not expanding Medicaid under the PPACA, for individuals not offered MEC by their employer, and for other case-by-case hardships) will result in an estimated 24 million individuals choosing to forego health coverage. For purposes of the rule, the definition of MEC includes the following statutory categories: employer-sponsored coverage (including COBRA coverage and retiree coverage); coverage purchased in the individual market; Medicare Part A coverage; Medicaid coverage; CHIP coverage; some types of veterans health coverage; the TRICARE health care program for members of the military; coverage for Peace Corps volunteers; and the non-appropriated fund health benefit program of the Department of Defense; and the following non-statutory categories: Medicare Advantage plans; refugee medical assistance; self-funded student health coverage with plan years beginning in 2013; and other categories that may be designated by HHS. The agency also released “Guidance on Hardship Exemption Criteria and Special Enrollment Periods, which will be applied under the federally facilitated marketplaces operating in the 33 states electing not to establish their own exchange. Exemptions from the shared responsibility payment for uninsured individuals otherwise eligible under the Federally-facilitated Exchanges (FFE) include: persons with household income below the tax filing threshold; those who cannot afford coverage; individuals who experience a hardship, a short coverage gap, are incarcerated, or are not lawfully present; and members in a health care sharing ministry or in certain religious sects. The IRS/Treasury also released related guidance on the determination of individual eligibility for premium tax credits when health coverage is obtained in a state health insurance exchange or the federal FFE (whether the tax credits under the FFE are lawful is still being contested by congressional Republicans and other parties). The IRS also proposed rules requiring health insurance marketplaces to report certain information (e.g. personal identifiers, plan chosen and related premiums, etc.) to the IRS with respect to the premium tax credits for which an individual may be eligible (i.e. when income is 100-400% of the federal poverty level). The IRS also released additional guidance providing transitional relief from the shared responsibility payment for individuals in plans with plan years ending in 2014.

CMS Rules on Privacy

As reported above, Republicans have raised concerns regarding the possible breach of identity and medical information in connection with health insurance exchanges and their navigators. In this connection, CMS has issued proposed rules that federally facilitated exchanges (FFEs), state exchanges and non-exchange entities associated with FFEs and state exchanges should have written policies and procedures for handling and reporting data breaches, including the means by which they would protect the privacy and security of consumers’ personally identifiable information. Comments are due by July 19th.

Final Coverage Rules on Contraception Services

The IRS, Department of Labor and HHS issued final rules which require health insurers to cover certain contraception services with no cost sharing. The agencies said that the rules provide for an “accommodation” for nonprofit religious organizations, such as hospitals and universities affiliated with religious groups that object to contraceptive coverage. While such organizations would not have to contract or pay for such coverage, the insurer must include such coverage at no cost in the policy issued. For self-insured plans, the nonprofit religious organization must provide notice to its third party administrator that it objects to contraceptive coverage and the administrator must then notify plan participants that it is providing separate no-cost contraceptive coverage. A “religious employer” as defined under the Internal Revenue Code, such as a church, is exempt from the mandate.

Doc Fix Markup in House Set for July

Republicans on the House Energy and Commerce (E&C) Committee Republicans released a new draft of legislation designed to replace the current Medicare physician payment “sustainable growth rate” (SGR) formulation. Health Subcommittee Chairman Joe Pitts said the intent is to deal with the problem now, first in a July markup, and to avoid having to continually make annual fixes. In general, the proposal would replace the current system with an enhanced fee-for-service system, while allowing providers to opt out and participate in alternative payment models that would be first evaluated by HHS contractors via 3-year demonstration programs. House Ways and Means Chairman Dave Camp (R-MI) called the E&C draft an important step and said he would work with the other committee to make a long-term solution a reality. It is expected that the committees will develop a means to offset the $139 billion ten-year cost of the legislation before it reaches the House floor.

House Energy and Commerce Health Legislative Agenda

The House Energy and Commerce Health Subcommittee Chairman Joe Pitts (R-PA) announced at a Friday hearing that the subcommittee will likely take up another set of three health bills this summer, either individually or en block. H.R. 1416 would target sequestration by eliminating such cuts from applying to Medicare’s reimbursement of Part B physician-administered drugs, including cancer drugs. The bill sponsor, Rep. Renee Ellmers (R-NC), said the cuts were an “unintended consequence” of the Budget Control Act (BCA), but Democrats said that it only illustrates the need to eliminate sequestration entirely. H.R. 1428 is legislation that would provide Medicare coverage for immunosuppressive drugs for kidney transplant recipients beyond the 36 months allowed under current law. Witnesses said there is no rationale for the limit and said removing the limit could help contain the costs, including re-transplantation, that transplant recipients incur when they cannot afford to continue House/Senate Hearings Focus on Medicare Reformsmanufacturers extend to wholesalers in the calculation of a drug’s average sales price (ASP).

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