Health & Welfare Plans Newsletter

May 3, 2016

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[Official Guidance]

Text of CMS Guidance on Policy-Based Payments: Reversal of January 2016-April 2016 Adjustments in the May and June Payment Cycles (PDF)
Unnumbered document, dated May 2, 2016. "Consistent with the March 22, 2016 guidance, all issuers were transitioned to policy-based payments for the April, 2016 payment cycle, and CMS is ending adjustments to the calculated policy-based payment amount to the manual workbook submitted payment amount (except in cases of extreme (>25%) variation) in the May 2016 payment cycle. This guidance sets forth the approach CMS will take to smooth the cash-flow implications of this transition for issuers whose total adjustments for January through April were net-positive." (Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])  


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[Guidance Overview]

IRS Announces 2017 HSA/HDHP Limits (PDF)
"The IRS has released the health savings account and high-deductible health plan limits for 2017. The HSA annual contribution limit for self-only coverage increased over the 2016 limit, but the limits are otherwise unchanged." (Xerox HR Services)  

Businesses Are Opting for Freelancers to Dodge Health Care Fees
"According to a [recent] study ... [the ACA] is leading companies to hire more freelance workers rather than bring on more in-house staff.... Since 2016, health care fees including the tax penalty for having uninsured employees increased because of the act, causing 74 percent of companies to opt for freelance hires instead, the study says. In fact, 60 percent said they planned to hire more freelancers in place of full timers.... And though most companies agreed benefits were the key to attracting desirable employees, nearly one third of them are eliminating their benefit plans because of fees associated with the new health care policies." (Entrepreneur)  

34% of Employees at Midsize Firms Elect High Deductible Health Plans When Given the Choice
"[T]raditional health plans -- primarily PPOs -- dominate the mix for midsize employers (87 percent), but when given the choice, over one-third (34 percent) of employees selected an HDHP, with millennials over age 26 the most likely to opt in (40 percent). Forward thinking employers -- 13 percent -- now offer at least one high-deductible health plan (HDHP).... [R]egardless of health plan, employees are facing higher out-of-pocket costs, and with copays and coinsurance across both PPOs and HDHPs, the average family could spend nearly 40 percent more on health care in 2016 than food[.]" (Benefitfocus)  

Avoiding the Tragedy of the Commons in Health Care: Policy Options for Covering High-Cost Cures
"[The authors] discuss the risk that strategic behavior by health insurers could unravel the market for curative therapies for chronic diseases. Because the cost of these cures is front-loaded but the benefits accrue over time, insurers might attempt to delay treatment or avoid patients who require it, in the hope that they might change insurers. The authors discuss policy options to remedy this potential free-rider problem through alignment of incentives at the patient level, coordination among payers, and government intervention. They present a framework to analyze policy options and real-world case studies." (RAND Corporation)  


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Online SHOP Enrollment Transition Relief Extended, States Should Plan for 2019
"State-based Small Business Health Options Programs (SHOP) that have not yet provided online enrollment capabilities are permitted to use direct enrollment for plan years beginning in 2017 and 2018. CMS and the Center for Consumer Information & Insurance Oversight (CCIIO) is providing this extension as a transitional measure, available only to SHOPs that currently use direct enrollment." (Wolters Kluwer Law & Business)  

CIGNA Can't Avoid Providers' Claims in Database Lawsuit
"Out-of-network health-care providers have ERISA standing to continue with their lawsuit accusing Connecticut General Life Insurance Co. of using a manipulated database to determine their services fees, the U.S. Court of Appeals for the Third Circuit ruled.... [T]he providers argued that their assignments of benefits from participants included the right to sue under ERISA to recover those benefits. CIGNA argued that the assignments were insufficient to confer derivative standing to the providers.... In rejecting CIGNA's argument, the court noted that 'an assignment of the right to payment logically entails the right to sue for non-payment.' " [Franco v. Connecticut General Life Ins. Co. et al., Nos. 14-3395 and 14-3396 (3d Cir. May 2, 2016)] (Bloomberg BNA)  

Differing Impacts of Market Concentration on ACA Marketplace Premiums
"In New York, premium rates grew faster in areas with greater insurer concentration (i.e., less competition). In California, areas with less insurer competition had slower premium growth, which may be related to the state marketplace's use of selective contracting with a limited number of plans and direct negotiations with plans on premium rates.... In both California and New York, there was higher premium growth in markets with greater hospital concentration." (The Commonwealth Fund)  

TIGTA Report: IRS Verification of ACA Premium Tax Credit Claims During the 2015 Filing Season (PDF)
"TIGTA's analysis of more than 2.6 million tax returns with a [premium tax credit (PTC)] claim that were filed between January 20, 2015, and May 28, 2015 ... found that the IRS accurately determined the allowable PTC on more than 2.4 million (93 percent) returns. TIGTA is continuing to work with the IRS to determine the cause for calculation differences in 150,385 of the remaining 182,884 tax returns. Computer programming errors resulted in an incorrect computation of the allowable PTC for 27,827 tax returns." (Treasury Inspector General for Tax Administration [TIGTA})  

Medicare Pays Bonuses to 231 Hospitals with Lower Quality Because of Cheaper Costs
"[For] the federal fiscal year that ended in September 2015 spending counted for 20 percent of a hospital's score in determining whether a hospital would get a bonus, penalty or regular payment. Under this formula, hospitals with Medicare spending below the median hospital were able to qualify for bonuses even though their quality measures were below the median.... CMS said it would consider revising the program for future years so that hospitals scoring below the national median for quality would not receive a bonus." (Kaiser Health News)  

[Opinion]

Another Exciting Day in Washington: Legislators Take Aim at Healthcare
"Republicans are preparing to issue five position papers to spell out their legislative agenda and priorities. One of these concerns healthcare. Speaker Ryan is pushing to finally create a Republican plan to deal with the ACA. We were told the plan would promote health savings accounts, encourage innovation, and protect the doctor-patient relationship. It will also embrace technology and electronic health records. Now the bad news: in place of the Cadillac Tax, this plan will likely contain a cap on the employer exclusion." (Frenkel Benefits)  

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