Final Regulations Issued for Non-Discrimination in Health Programs

Section 1557 of the Patient Protection and Affordable Care Act (ACA) allows the Secretary of Health and Human Services (HHS) to issue regulations pertaining to non-discrimination. Earlier in May of 2016, the Secretary of HHS issued such regulations, which bans the denial of healthcare or health coverage to individuals on the basis of race, color, national origin, sex, age, or disability.

This final rule, the first federal civil rights law that broadly prohibits discrimination on the basis of sex, applies to any federally funded health plan. Although the law prohibits discrimination based upon sex, HHS failed to fully define certain issues, such as whether this covers discrimination based upon sexual orientation. However, HHS’s Office for Civil Rights (OCR), the agency tasked with enforcement, has stated an intention to review all claims in this area to determine whether the discrimination can be addressed under the regulations.

This rule will become effective on July 18, 2016, and will be enforced by OCR. Although OCR is tasked as a primary regulator, compliance burdens will fall to all entities covered by the new regulations, as well as individual citizens because the regulations include a private right of action for violations. Further details can be found at the following link.

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Moratorium on Health Insurance Tax

As part of the omnibus budget bill passed by Congress and signed by the President in December of 2015, Congress implemented several delays for pending taxes under the Patient Protection and Affordable Care Act (PPACA). These delays impact the medical device tax, the “Cadillac” tax on high-cost employer health plans, and tax on health insurers.

The tax on health insurers has been delayed for one year and this moratorium is aimed at reducing the potential premium increases to consumers. This delay is for the tax due in 2017, but will have no impact on either the amount or the timing of the tax due in 2018, for calendar year 2017. The “Cadillac” tax and the medical device tax were both delayed for two years.

The health insurance industry reported that the insurer tax could have forced the health insurers to raise premiums by 3% to 4% every year. However, this delay should temporarily help keep premiums relatively stable for those receiving plans from the health exchanges, employer-based insurance, and Medicare advantage plans.  The Centers for Medicaid and Medicare Services issued a Frequently Asked Questions Memorandum on the delay, which can be found at the following link:

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Final rule on Medicaid Prescription Drug Programs

In January of 2016, the Centers for Medicare and Medicaid Services (CMS) issued a final rule on covered outpatient drugs. The rule changes the Medicaid Drug Rebate Program by the Patient Protection and Affordable Care Act (PPACA) and the overall Medicaid drug reimbursement program.  These changes have several goals, including reducing the cost to the federal and state governments and improving beneficiary access to covered outpatient drugs.

CMS claims the changes implemented will help the government save money in the Medicaid Drug Rebate Program, which had been subject to sustainability issues. One key change in the final rule is a definition of the Average Manufacture Price, which in turn gets used to determine rebates and pharmacy reimbursements subject to the federal upper limit. Similarly, the changes to the federal upper limit formula will incentivize pharmacies to use certain generic drugs. The final rules clarify many of the ambiguous sections of the Medicaid Drug Rebate Program by the PPACA, including the manufacturer reporting requirements. The rule also aligns the pharmacy reimbursement system with the actual acquisition cost of the drug.

Overall, the new incentives and changes should improve the reimbursement system and help manage drug costs. This rule becomes effective April 1, 2016, although CMS is allowing comment for 60 days after publication on certain elements of the rule. The new rule can be found at the following link:

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IRS issues final regulations on employer sponsored health insurance

In December of 2015, the Internal Revenue Service (IRS) issued final regulations that addressed some of the questions pertaining to whether employer sponsored health insurance meets the Patient Protection and Affordable Care Act minimum value requirements.  Amongst a variety of miscellaneous items pertaining to minimum value, the final regulations clarify the impact of a health reimbursement arrangement (HRA) on affordability. The regulations also clarify some of the rules regarding eligibility for the health insurance premium tax credit.

Under the final regulations, the new amounts made available by an employer to an employee in a HRA that can be used to pay health insurance premiums, when the employer also offers qualifying health coverage, will be counted towards affordability. Similarly, if the new amounts are available to an employee in a HRA integrated with qualified employer coverage, and the new amount can only be used to reduce cost-sharing, that new amount will be counted for minimum value purposes.

The health insurance premium tax credit had rules finalized in the same regulations. One rule includes the eligibility of a household that has income from a child. The premium tax credit is based on household income and when a parent includes a child’s income on their income tax return for tax credit eligibility purposes, the amount used is the child’s modified adjusted gross income, not the gross income reported on the child’s tax return.

The final regulations also addressed the impact of wellness incentives on the health insurance premium tax credit. The regulations clarify that wellness incentives that reduce the cost of health insurance premiums to an employee will not be included in the calculation for minimum value or affordability, instead the regulations assume the employee will not qualify for the incentive. This rule has one exception, which is if the incentive is based on tobacco use. If so, the regulations assume that the employee will qualify for the incentive and the incentive can be used in the minimum value and affordability calculation. Thus, only tobacco use wellness incentives can be used in the minimum value and affordability calculation for purposes of premium tax credit eligibility.

Overall, a variety of miscellaneous rules regarding health insurance were finalized in the regulation. The entirety of the IRS regulation can be found at the following link:

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Physician Conflict of Interest Reporting Requirements

The Physician Payments Sunshine Act was adopted as part of the Patient Protection and Affordable Care Act in 2010. The act allows patients to know if their physician may have an outside motivation when providing care, such as incentives provided by medical product manufacturers. These incentives could include simple monetary payments or any type of transfer of valuable goods. By making this information public, the hope is to ensure that physicians make the best possible decisions for their patients, not their own personal interests.

The Act requires physicians to disclose to the Centers for Medicare and Medicaid Services (CMS) any payment or “transfer of value” made to the physician or teaching hospital by a medical product manufacturers. This Act also requires a group purchasing organization or medical manufacturer to disclose any physician ownership. The information is then published online for patients and others to research, with the first set of data published in 2014. Despite the initial publication, CMS withheld some information due to technical difficulties and the outcome of this publicity remains unclear. For 2015 and 2016, CMS implemented changes to the reporting process for physicians as a result of the first release.

Despite the lack of clarity surrounding the outcome of making this information public, some lawmakers are trying to expand the law to include nurse practitioners and others that have prescribing authority. However, at the current time, the law remains limited to physicians, medical product manufacturers, and group purchasing organizations. To view the information and search for physicians, please visit the following website:

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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.

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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.

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Nebraska Will Wait to Implement Health Care Exchanges

Governor Heineman recently said Nebraska will wait to set up a health care exchange until the U.S. Supreme Court rules on whether the Patient Protection and Affordable Care Act (the “Act”) is constitutional.  The health care exchanges are intended to offer health insurance to those currently without coverage.  While Nebraska is planning a program in case the Act is ruled constitutional, Governor Heineman said it does not make sense to build a formal proposal until the Court has decided.  The Act requires states to have a health care exchange plan certified by January of 2013.

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Small Business Health Relief Act designed to repeal pieces of Health Care legislation

A recent bill introduced to Congress includes provisions that, if passed, result in repeal of certain PPACA (“Patient Protection and Affordable Care Act”)  provisions.  The bill repeals certain requirements dealing with shared responsibility for employers and requiring employer reporting of health insurance coverage.  The bill allows reimbursement for over the counter medication by repealing the PPACA provision prohibiting the same. The bill broadens grandfathered coverage and elminates annual caps on health FSA benefits imposed by PPACA.  Developments will be provided in follow up posts.