October 18, 2017
Success has been elusive for Congressional Republicans trying to pass a bill that repeals and replaces the Patient Protection and Affordable Care Act (PPACA). Because of this, we expect to see the Trump Administration accelerate its efforts to alter the PPACA by eliminating or revising regulations. In recent weeks, the Administration has done just that, and we present several highlights in this Compliance Alert. The Gallagher Healthcare Reform Update discusses these in greater detail.
Executive Order Promoting Healthcare Choice and Competition
Although this E.O. does not by itself change any current regulations, it directs the Secretaries of Treasury, Labor, and Health and Human Services (HHS) to “consider proposing regulations or revising guidance” in several specific areas. It is likely we will see new regulations in 2018 in the following areas.
Association health plans (AHPs). Generally, the E.O.’s instructions are for the Department of Labor to make it easier for employers to band together in an association to self-insure or purchase insurance as a larger group. This idea is not new; it is regularly introduced in legislation in Congress. Some of have expressed concerns that such rules will allow AHPs to escape important state insurance regulations. This may endanger employers, and their employees, that may find AHPs attractive but are left in a lurch when a financially weak AHP fails.
Short-term, limited duration insurance (STLDI). STLDI is insurance offered on the individual market, generally for those who have a gap in coverage. STLDI is not offered on Exchanges because it does not meet PPACA coverage requirements. Final regulations limiting the permissible period for STLDI to three months were issued in October 2016. The E.O. directs the applicable federal agencies to expand the availability of STLDI. Employers can expect little impact from such changes.
Health reimbursement arrangements (HRAs). The bipartisan 21st Century Cures Act created a new category of HRAs called “Qualified Small Employer Health Reimbursement Accounts” (QSEHRAs). Targeted at employers with fewer than fifty employees, QSEHRAs have not seen much success because the administrative requirements seem overly burdensome. The E.O. seeks to increase the usability of HRAs, and the federal agencies may go beyond simply making QSEHRAs easier to implement. The E.O. also suggests allowing HRAs to be used in conjunction with nongroup coverage, which may lead to a relaxation of the PPACA’s HRA-integration requirements. Businesses that currently offer an HRA, or are interested in adding an HRA as a part of their overall employee benefits plan design, should watch developments closely.
“Contraceptive Mandate” Exemptions Rules
One of the more controversial issues arising from the PPACA regulations was the requirement that all FDA-approved contraceptives be included as a part of preventive care coverage. The Obama Administration developed an accommodation process, but some believed it was too limited. On October 6, 2017, the Treasury, Labor, and HHS Departments issued interim final rules, effective immediately, that expanded the categories of organizations that may claim an exemption from this requirement. The rules also expand the reasons for which an exemption may be claimed. If you are interested in an exemption, please contact your consultant to talk through the issues involved. Consumer protection organizations, women’s health organizations, and state attorneys general have already begun filing lawsuits.
Suspension of Cost-Sharing Reduction (CSR) Payments
On Thursday, October 12, HHS announced that the CSR payments it had been making to insurers “are prohibited unless and until a valid appropriation exists.” The day before, the Department of Justice issued an opinion to the effect that those CSR payments were not authorized via a proper Congressional appropriation of funds. Up to now, the federal government had made CSR payments to compensate insurers for reducing the deductibles, copayments, and similar cost-sharing means for certain individuals with Marketplace plans. Insurers are required by PPACA to offer CSR payments to eligible customers but now will not be reimbursed.
With these payments now stopped, the major concerns for employers will be (1) how this move will impact the rating in the small and large group markets and (2) whether they will see increased enrollment in their group plans with its attendant increased costs and possible risk exposure.
Gallagher Healthcare Reform Update is an excellent resource for information about these important developments. If you have any questions about these topics, please contact your consultant or client manager at (919) 403-1986.