New IRS Guidance Clarifies Tax Treatment of HSAs

Health savings accounts (HSAs) are a useful tool for employees and employers because of their tax-favored status. The IRS has recently clarified that certain Affordable Care Act rules will not affect the tax treatment of HSAs.

An HSA must be paired with a high-deductible health plan (HDHP) to receive tax-favored treatment. The Affordable Care Act requires health plans to provide certain preventive services with no deductible or cost-sharing. There was some concern that this rule would result in loss of HDHP status with the effect of HSAs losing tax favorable treatment. The IRS, however, has indicated that HDHPs will not lose their status as HDHPs solely because they offer the preventive services required by the Affordable Care Act. Thus, HSAs will still be a strong, tax-favored tool for dealing with medical expenses.

© 2013 Parsonage Vandenack Williams LLC

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Nondiscriminatory Wellness Incentives

Federal agencies have issued final regulations for the Patient Protection and Affordable Care Act (PPACA).  Group health plans may not discriminate against individuals on the basis of health factors.  However, there is an exception to the nondiscrimination rules for wellness programs.  Wellness programs have been divided into two categories: (1) participatory wellness programs and (2) health-contingent wellness programs.

Participatory wellness programs must be set up to improve the health risk of all similarly situated individuals and not simply reward those who are already in good health.

Health contingent wellness programs must be designed to promote good health and prevent disease.  The program must not be overly burdensome, used to implicitly discriminate based on a health factor, and highly suspect in the method chosen.  The reward must allow a reasonable alternative standard, if it is unreasonably difficult because of an individual’s existing medical condition and it is medically inadvisable for an individual to attempt to satisfy the normal standard.  A plan does not need a specific reasonable alternative standard, but only the disclosure that one can be made available.

© 2013 Parsonage Vandenack Williams LLC

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Deadline for Patient Centered Outcomes Research (PCOR) Fee

July 31st is the deadline to pay Patient Centered Outcomes Research “PCOR” fees established under the Patient Protection and Affordable Care Act (“PPACA”),   This deadline applies to all health insurance plan sponsors and health care insurers for a plan year that ends after Sept. 30, 2012 and before Jan. 1, 2013. The fee is paid with Form 720. The IRS has recently posted an updated of such form and a payment voucher on the IRS website.

The fee will be used to fund research regarding clinical effectiveness relating to patient centered outcomes. This research institute conducts research to help assist patients, clinicians, purchasers, and policy-makers in making informed health decisions.

© 2013 Parsonage Vandenack Williams LLC

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HHS Waives Opt-in Deadline for Exchanges

States have been slow to buy into the state-run Exchange model. Exchanges—online health insurance portals—are a key part of the Affordable Care Act. They will allow consumers to learn more about insurance options, compare plans, and purchase coverage. HHS originally thought that many states would choose to manage their own Exchanges. However, many states have not opted in for a variety of reasons. In response, HHS has waived deadlines for states to announce their intention to adopt their own Exchanges.

The Affordable Care Act requires all states to have an Exchange by October 2013. If states choose not to manage their own, the federal government will manage the Exchange. To date, 17 states will administer their own Exchange. Prior estimates indicated that many more states would opt in. Because of this, the federal government may have to pay more to administer Exchanges than estimated.

© 2013 Parsonage Vandenack Williams LLC

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Final HIPAA/HITECH Rule Released

HHS has recently released final rules modifying HIPAA under the HITECH Act. The rules make several changes for both providers and business associates. First, the regulations expand the definition of business associate. Thus, businesses need to figure out whether they are now subject to HIPAA. Business associates may face up to $1.5 million in fines per year if they do not comply with the new rules.

Providers will have to make several changes as well. The new rules give providers less flexibility to decide when to report a breach and restrict when PHI can be used for marketing. Providers must provide patients with records in electronic form on request. Also, they must revise their Notices of Privacy Practices. If providers do not comply, they will face harsher fines and new enforcement tools. Providers should start revising their business associate agreements, NPPs, and other policies to comply by September 23.

© 2013 Parsonage Vandenack Williams LLC

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Congress Passes “Doc Fix”

Physicians can rest easy, at least for a while. On New Year’s Day, Congress passed a bill preventing certain Medicare cuts in 2013. This delay will come at the expense of future reimbursement rates for some providers. The fix will delay the previously expected 27% cut to physician rates until 2014. It will also temporarily prevent a 2% cut for all Medicare providers. However, other changes to reimbursement rates are still likely, and renegotiated cuts are still possible.

Several other provisions taking effect in 2013 and 2014 are also included in the bill. The bill delays another major reimbursement cut to rural physicians, ambulance services, low-volume hospitals, and others until 2014. However, effective April 1, 2013, reimbursement rates will be cut by 25% for certain therapy services. Reimbursement rates will also be cut for certain advanced imaging services in 2014. While the long-term effects of these provisions are unclear, Congress has delayed the worst for physicians for the time being.

© 2013 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com

State-based Healthcare Exchange Blueprint Deadline Extended

The President has announced that states will be allowed more time to provide plans for implementing healthcare exchanges under the Patient Protection and Affordable Care Act.  Under the Act, states must indicate whether they will create health insurance exchanges.  If a state does not opt to create an exchange, the federal government will supply health insurance to its citizens through a federal exchange.  At present, 20 states have adopted some sort of plan for a state healthcare exchange, 11 have opted not to create a state exchange, and the remainder are undecided.  The deadline to opt into the state healthcare exchange system remains November 16, 2012.

While states must still act promptly to determine whether they will participate, they now have additional time to plan for implementation.  Before the extension was granted, states would have been required to submit a Blueprint application, detailing implementation of the healthcare exchange, by November 16, 2012.  Now, however, Blueprints must be submitted by December 14, 2012.  Kathleen Sebelius, the Secretary of Health and Human Services, has indicated in a letter to state governors that the extension was granted to provide states with additional support in developing implementation plans.  However, some commentators argue that the extension was granted in response to the “wait-and-see” approach adopted by the states in light of the recent election.

© 2012 Parsonage Vandenack Williams LLC

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Governor Heineman Determines that Nebraska will have a Federal Healthcare Exchange

Governor Heineman announced that he has opted to have Nebraska adopt a Federal Healthcare Exchange.  In support  of his decision, Heineman pointed out that a State Healthcare Exchange would cost Nebraskans $470 million more than a Federal Healthcare Exchange.

Health care exchanges are mandated under the Patient Protection and Affordable Care Act.   A healthcare exchange is an organization in the health insurance market that is expected to ease the complications of shopping for coverage for consumers and small businesses.  Exchanges are expected to create a more organized and competitive market.  Exchanges will offer different health insurance  plans and will be organized  in a way that shows a clear comparison of available plan options based on price, benefits and services, and quality.  For individuals, a federal healthcare exchange will create a more efficient healthcare market while also making purchasing healthcare more affordable and understandable.

© 2012 Parsonage Vandenack Williams LLC

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Meaningful Use Stage 2 – Electronic Health Records and HIPAA

To satisfy the new Meaningful Use Stage 2 requirements, providers must furnish patients with electronic copies of their health information upon request.  Providers should ensure that their systems are able to timely meet these requests and to satisfy the requirements of the HIPAA Privacy Rule.  The Meaningful Use Stage 2 standard requires that more than 50 percent of patients who request electronic copies of their health information must be provided that information within three business days.

When providing electronic copies of health information, providers should keep in mind that electronic data may be furnished in any format.  For example, information could be provided via a patient portal, CD, USB drive, or the like.  Providers should update their HIPAA compliance plans to include provisions relating to electronic media accordingly.  As under the HIPAA Privacy Rule, providers may only charge a reasonable, cost-based fee for a copy of the information.  It is important to remember that providers may withhold certain types of information from a patient’s electronic copies of health information.  Since the types of health information that can be withheld from patients or third parties is subject to a higher confidentiality standard, providers also need to review their HIPAA compliance plans to ensure that appropriate protocols for electronic disclosure are in place.

© 2012 Parsonage Vandenack Williams LLC

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Meaningful Use Stage 2—New Core Objectives

Now that the Stage 2 meaningful use standards are available, health care providers should start planning to implement attestation requirements.  Providers cannot begin to attest until 2014.  However, providers should consider two factors that indicate the need to plan.  First, the requirements for both stages of attestation are now more rigorous than before, and providers will no longer be able to count exclusions toward their non-core objectives.  Second, the number of core objectives that providers must meet has significantly increased.

In particular, providers should plan to meet one of two new Stage 2 core objectives.  Eligible physicians must use secure electronic messaging to communicate with patients on relevant health information.  Eligible hospitals and critical access hospitals must use automatic medication tracking from order to administration using assistive technologies and an electronic medication administration record.  Providers should also keep in mind that many of the objectives that carry over from Stage 1 to Stage 2 have significantly higher thresholds.  To meet these thresholds, providers should consider the use of external audits and implementation planning to meet Stage 2 requirements in 2014.

© 2012 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com