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Healthcare Reform

Archive for the ‘Healthcare Reform’ Category

CAHU Submits Testimony to Single-Payer Commission

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Last month CAHU submitted testimony to “Healthy California for All,” California’s single-payer commission.

The “Healthy California for All” commission, launched by California Governor Newsom in December 2019, is developing “a plan for advancing progress toward achieving a healthcare delivery system for California that provides coverage and access through a unified financing system, including, but not limited to a single-payer financing system.”

CAHU’s testimony represents the collective experience and expertise of its membership of well over 2,000 California health insurance agents, brokers, and other healthcare professionals.

Summary of CAHU’s Testimony

Read CAHU’s testimony for the full details.

CAHU Testimony

 

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US Supreme Court Ruling Upholds The Affordable Care Act

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On June 17, 2021, the US Supreme Court declined to overturn the Affordable Care Act by a 7-2 vote, rejecting a lawsuit filed by a group of Republican state attorneys general claiming that a change made by Congress in 2017 had rendered the entire law unconstitutional.

It’s the third time since 2010 that the Affordable Care Act (ACA), known as Obamacare, has survived a challenge, allowing millions to keep their insurance coverage amid the coronavirus pandemic.

This decision reversed a lower court ruling finding the individual mandate unconstitutional. However, the court did not address the question of whether a key provision in the law was unconstitutional and whether the bulk of the law could stand without a provision that initially required most Americans to obtain insurance or pay a penalty. Instead, the court held the plaintiffs do not have standing in the case, or a legal right to bring the suit.

President Joe Biden tweeted that the decision is “a big win for the American people.” Health and Human Services Secretary Xavier Becerra, who helped write the law as a member of Congress and now is responsible for implementing it, said the decision “means that all Americans continue to have a right to access affordable care, free of discrimination. More than 133 million people with preexisting conditions, like cancer, asthma or diabetes, can have peace of mind knowing that the health protections they rely on are safe.”

Millions of Americans (including nearly 6 million Californians) gained health insurance coverage as a result of the ACA, President Barack Obama’s landmark law passed in 2010. Hundreds of millions more have had their health care and coverage affected by provisions as wide-ranging as changes in Medicare drug copayments, requirements for calorie counts on menus, a pathway for approval of generic copies of expensive biologic drugs, protections for people with preexisting conditions, and a ban on lifetime caps on coverage.

The ACA, has been the subject of unrelenting Republican opposition. But Congressional attempts to repeal it have failed as well. The latest challenge threatened to undo coverage gains under the law that helped drive down the uninsured rate to a record low. Since enacted 11 years ago, the law has gained popularity and reshaped virtually every corner of American healthcare.

Former President Barack Obama tweeted “This ruling reaffirms what we have long known to be true: the Affordable Care Act is here to stay.”

Additional Resources

 

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Many Californians Unaware of New California Individual Mandate

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A recent survey released by Covered California, “Californians’ Understanding of the Mandate to Have Health Coverage and the Awareness of Financial Help” found:

Many Californians, especially the uninsured, are unaware of the penalty.
Many Californians reported being unaware of the new requirement to have health coverage in 2020 or face a penalty, including a majority of the uninsured (56 percent).

Knowledge of the penalty increases the likelihood the uninsured will enroll.
Among the uninsured, once informed about the penalty, 64 percent said they were more likely to enroll in health insurance for 2020. This compares to only 46 percent of uninsured respondents who said they planned to have health coverage in 2020 when asked at the beginning of the survey.

Download The Complete Survey


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Major Healthcare Reform Decisions: Taxes Eliminated, Individual Mandate Deemed Unconstitutional

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Late last year there were two consequential health care reform decisions.

Cadillac Tax Repeal

President Trump in December signed legislation repealing the “Cadillac Tax” on high-cost health insurance plans.

The Cadillac Tax, part of the original ACA legislation, was originally scheduled to go into effect in 2018, and was subsequently repeatedly delayed. Always unpopular on both sides of the aisle, there is little chance of it being re-introduced anytime soon.

The signed legislation also included the repeal of two other unpopular ACA taxes: the Health Insurance Tax, HIT (repeal becoming effective in 2021), and the Medical Device Tax (repeal effective in 2020).

Individual Mandate Court Decision

In December, the federal Fifth Circuit Court of Appeals affirmed a lower court decision that the Individual Mandate was unconstitutional. The practical impact of the decision is unclear, as the appeals court handed the decision back to the lower court to assess the impact on other provisions of the Affordable Care Act. Health policy experts confidently predict that the whole issue is likely headed to the Supreme Court later this year, with a final decision not likely until 2021.

Impact

These decisions at the federal level will not have an impact anytime soon. However, the California Individual Mandate became effective January of this year.

Claremont has several HR Compliance partners who can help brokers and employers navigate the changing healthcare reform landscape. See the HR Compliance section on our partner page for company descriptions and contacts.

Questions?
Contact the small group experts at 800.696.4543 or info@claremontcompanies.com.

 

New Forms of Health Reimbursement Arrangements Coming in 2020

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The Trump administration, in 2017, charged the Departments of Labor, Treasury and Health and Human Services with the task of making health reimbursement arrangements (HRAs) a more useful tool for employers wanting to offer broader coverage options and specifically to allow HRAs to be used for nongroup coverage. On June 13, 2019, Labor, Treasury and Health and Human Services (the Departments) released a final rule expanding the use of HRAs (the New Rule). The New Rule, which takes effect January 1, 2020, created two new forms of HRA, an individual coverage HRA (ICHRA) and an excepted benefits HRA (EBHRA) and it introduced a number of new provisions and requirements to accompany them.

But wait, you might ask: haven’t employers been forbidden, at risk of severe penalty to the employer and tax consequences to the employee, from paying premiums for any form of an employee’s individual coverage (with the exception of the little-used Qualified Small Employer HRA)? You would be correct and now in the spirit of making HRAs a vehicle for more employer/employee choice, the New Rule overrides the old rule and what was once not permitted, is now encouraged.

Below is a summary of the key provisions of the New Rule and at the end a discussion of potential implications for the group market and the brokers who serve it.

The Individual Coverage HRA

There are quite a few moving parts to the ICHRA, including requirements for employers and tax credit and enrollment implications for employees. Here are the highlights (for details see the Resources section):

Offering to Employees or Classes of Employees

There are numerous provisions regarding which employees or classes of employees can be offered what coverage and what defines a class:

ICHRA Notice Requirements

The Excepted Benefits HRA

The EBHRA permits employers to pay for a wide range of premiums and expenses, including dental, vision, life, short-term plans and COBRA. Highlights:

Implications for the Group Market

The New Rule’s most impactful changes – giving employers the ability to pay, tax-exempt, an employee’s individual-market premiums and the establishment of a wide range of employee classes could have a major impact on the group market. The New Rule seems especially tailored to appeal to the small group market.

In 2017, the last year with full data, there were about 17 million individuals covered by small group plans (Kaiser Family Foundation). The Departments estimate that by 2029, 800,000 firms will offer ICHRAs and that 11.4 million individuals will participate in ICHRAs with about 7 million of those individuals coming from traditional group health plans. Assuming most (75% or 5 million) migrate from the small group market, that will create a 30% reduction in the small group market.

There are strong inertial forces that tend to slow the adoption of new rules like the New Rule. Employers and their advisors will need to understand these changes, compare their current offering with a potential new HRA offering not only as it impacts their bottom line, but as it impacts their employee’s perception of the benefit and then decide whether to jump into unfamiliar waters. If adoption of the QSEHRA, which has been available to small employers since 2017 is any indication, New Rule HRAs may be slow to catch on (to be sure though, the New Rule provides a much wider range of options for employers than the QSEHRA).

Finally, any discussion of the impact of the New Rule must consider how the broker will counsel his or her client. If the broker, as the primary benefits advisor for the small employer, is not supportive of a transition to ICHRAs, most employers will be hesitant to implement them. Brokers who serve their clients well, minimize the friction an employer encounters from the complex group benefits market. The many provisions and requirements that accompany the New Rule will add friction. It’s not clear if brokers will embrace ICHRAs and EBHRAs and if they are favorable, how they would be compensated. Trading the more lucrative group coverage commission for the minimal individual market commission could make ICHRAs an unprofitable proposition for brokers.

Perhaps to replace the group commission that would traditionally be paid by the carrier, brokers could change their revenue model for ICHRA business by generating income from three sources:

The New Rule goes into effect quickly, in less than six months. There will be a lot of publicity around ICHRAs and EBHRAs. Brokers who educate themselves and prepare to help their clients analyze this new alternative will be a step ahead.

Resources
Health Affairs Blog: Final Rule On Health Reimbursement Arrangements Could Shake Up Markets
Individual Coverage HRA and Excepted Benefits HRA: FAQs from the IRS

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AB 1611: Surprise Hospital Billing

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Despite having insurance, one in six Americans received a surprise bill for medical services in 2017, according to Kaiser Health News. The study published on June 20th found that nationally millions of emergency visits and hospital stays put people with large employer coverage at risk of receiving a surprise bill.

What is Balance or Surprise Billing?
Balance billing, otherwise known as “surprise medical billing,” occurs when 1) medical care, usually during an emergency, happens with an out-of-network physician or at an out-of-network hospital, or 2) medical care happens at an in-network hospital that unwittingly or unknowingly involved an out-of-network physician. In both instances, the patient’s insurance does not cover the full cost of care, leaving a balance in the medical bill. Hospitals or physicians then charge that balance to the patients, holding patients, rather than the insurers, responsible for the remainder of the cost in a balance bill. Since consumers often don’t know that a provider working at their network hospital or an emergency response entity is out-of-network, these large bills are often a surprise out-of-pocket bill and can be tens of thousands of dollars.

What Does AB 1611 Do?
To strike the practice of balance billing in emergency care, California legislators have put forth AB 1611 to prohibit a hospital from pursuing an insured patient for a bill over and above his or her regular co-pay or deductible charges for emergency and post-stabilization care. Second, the bill would limit the amount that non-contracted hospitals could charge for their fees to 150 percent of Medicare rates or the “average contracted rate” in the geographic area, whichever is higher.

Though the federal Affordable Care Act (ACA) does require health plans to cover out-of-network hospital emergency care at usual and customary rates (UCR), there are no specific standards as to what usual and customary should be. Often plans set their UCR much lower than what a hospital charges leaving patients open to liability for the remainder of the charges. AB 1611 would tidy up the surprise billing for Californians covered by federally regulated health plans and those with coverage regulated by the California Department of Insurance.

Third Party Payor 
AB 1611 defines “third party payor” as “any third party payor, including, but not limited to, a health maintenance organization, health care service plan, nonprofit hospital service plan, insurer, or preferred hospital organization, a county, or an employer that by statute or contract is required to cover emergency care.” However, AB 1611 would not apply to a Medi-Cal managed health care service plan or any other entity that enters into a contract with the State Department of Health Care Services. That said, DMHC does regulate Medi-Cal managed health care service plans and can prohibit balance billing for enrollees who are part of such a plan under 28 CCR §1300.71.39.

Other California Balance Billing Protections
California already has protections in place against surprise billing by individual doctors that are not chosen by members but out-of-network. However, the law does not currently apply to entire hospitals that are out-of-network.

Passed by the California Legislature in 2016, AB 72 focuses on the non-emergency scenarios that trigger balance billing. This enacted bill mandates that an insured patient shall “pay no more than the same cost sharing that the enrollee would pay for the same covered services received from a contracting individual health professional” if the patient is receiving nonemergency, covered services at an in-network hospital. In other words, an insured patient will not be billed out-of-network costs even if they are receiving nonemergency care from an out-of-network provider, as long as they are at an in-network hospital.

Support

Resources: Kaiser Health News, AB 1611 legislative information, and Health Access Fact Sheet.

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DOL Issues Guidance on New Rule AHPs

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On March 29, 2019, when Judge Bates of the Federal Court in the District of Columbia issued a decision invalidating the DOL’s new relaxed rules regarding AHPs (more on the ruling), it created uncertainty in the AHP market. Were AHPs established under the new rule still valid? Could they continue offering coverage to employers and employees insured under them? Could they continue to market and sell coverage?

The DOL and Department of Health and Human Services (HHS) provided much-needed clarity by announcing on April 29th that AHPs formed under the new rule:

So long as AHPs comply with this guidance, the DOL and HHS have said they will not take enforcement action.

In addition to these restrictions on existing, new-rule AHPs, the announcement made clear that:

This announcement from the DOL and HHS provides much-needed clarity on the impact of Judge Bates’ decision.

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New Association Health Plans Put on Hold

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On March 29, 2019, a District of Columbia judge sided with the attorneys general of twelve states who argued that major provisions in the Department of Labor’s (DOL) final rule on AHPs should be considered invalid since they conflict with either the Affordable Care Act (ACA) or ERISA.

The judge agreed that the final rule’s:

The effect of the judge’s ruling is to put a hold on the establishment of new AHPs and to cast doubt over the validity of AHPs established since the effective date of the final rule. The DOL can respond to this ruling by appealing it or by modifying the offending key provisions of the final rule to eliminate the judge’s concerns.

The judge’s ruling will be more widely felt in states other than California since the legislature in California outlawed the creation of new AHPs soon after the DOL issued its final rule.

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Attempting to Strike Down the ACA

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On March 25, 2019, the Trump administration’s Justice Department informed the Fifth Circuit court in Texas that it will no longer defend any part of the ACA in a lawsuit that seeks to invalidate the entire law (more about the lawsuit). Prior to this announcement the administration had defended all but a few provisions of the ACA. This is a sharp reversal but in line with President Trump’s desire to repeal the ACA. He was not successful doing so legislatively, even with Republican control of Congress. Now with the House of Representatives controlled by Democrats, the President’s chances of a legislative repeal are non-existent, so he is attempting to reach his goal through the courts.

It is likely that the Texas case, which is now on appeal, will make its way to the Supreme Court sometime in 2020, with a ruling expected in the summer of 2020. If successful, this lawsuit will dramatically change the landscape for healthcare markets, greatly reducing the role of the federal government.

Medicare-for-All
On the opposite end of the spectrum, there is a growing desire by progressive legislators to dramatically increase the role of the federal government in healthcare. “Medicare-for-All” has become the catch-phrase for a wide range of proposals by these legislators. The range is really wide. It includes everything from Senator Bernie Sanders’ Medicare for All Act, which is a draconian single-payer plan, to the relatively modest Medicare at 55 Act authored by Senator Stabenow, which would lower the Medicare-eligible age to 55 from 65.

The Kaiser Family Foundation has developed this “Compare Medicare-for-All and Public Plan Proposals” resource. It provides an easy-to-use method for comparing the key elements of each proposal.

While it is too early to know how the legal and legislative initiatives will play out, one thing is certain, we will be hearing much more about the ACA and these Medicare-for-All proposals in the coming year and as the 2020 election approaches. We’ll do our best to provide sources of information that help you explain our constantly-changing healthcare market to your clients.

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