What services are covered with no or limited cost sharing?

The Patient Protection and Affordable Care Act requires most health insurance plans to cover with no cost sharing: preventive services for women, including FDA-approved forms of contraception, checkups, and certain screenings; preventive services and immunization; and essential health benefits (cost-sharing is limited and provides a specified level of coverage based on the actuarial value of essential health benefits provided for under the plan).

Blue Cross Blue Shield of Michigan and Blue Care Network already provided many of these services with little or no cost sharing prior to passage of PPACA. The limited cost sharing requirement does not apply to grandfathered plans.

Is cost sharing applicable on and off the Exchange?

Regardless of market segment, whether the plan is offered on or off Exchange, and irrespective of whether the plan is self-funded or insured, health plans must limit certain cost-sharing.

Cost sharing requirements:

• In 2014, non-grandfathered individual and group coverage is prohibited from imposing annual out-of-pocket maximums on essential health benefits that exceed the out-of-pocket maximum threshold that applies to HSA-compatible high-deductible health plans. For reference, in 2013 these amounts will be $6,250 for an individual and $12,500 for coverage other than self only.
• In 2015 and beyond, the out-of-pocket thresholds on essential health benefits are indexed to the rate of premium growth for the average per capita premium in the U.S. The indexing applies to the maximum out-of-pocket cost sharing on essential health benefits for self-only coverage, with any increases that are not a multiple of $50 rounded down to the next lowest multiple of $50. The amount for self-only coverage is then doubled to calculate the maximum out-of-pocket on essential health benefits for coverage other than self only.
• In 2014, non-grandfathered group health plans are prohibited from imposing a deductible greater than $2,000 for self only coverage, or $4,000 for coverage other than self only (adjusted annually thereafter in the same manner as the indexing for maximum out-of-pocket cost sharing on essential health benefits described above).
  • For small group health plans, the deductible limits must be applied in a manner that does not affect the actuarial value of any plan.

Are Indian Health Services subject to cost sharing?

The PPACA provides that a Qualified Health Plan may not impose any cost-sharing on an Indian for services furnished directly by the Indian Health Service, an Indian tribe, tribal Organization, or Urban Indian Organization, or through referral under contract health services. This special cost sharing rule for Indians applies regardless of an Indian's income or metal plan level.

What is BCBSM doing?

BCBSM has decided to participate in Michigan's exchange as a strategy to ensure future market share in the environment where potential coverage shift exists and new entrants are expected due to subsidization and cost sharing credits. BCBSM must make system changes and amend vendor agreements to ensure that it can comply with the maximum out-of-pocket requirements. Currently, pharmacy benefits are often carved out of group coverage and administered apart from the medical coverage, with different out-of-pocket and deductible accumulators.

It is unclear at this time if the maximum out-of-pocket limit applies to both in- and out-of-network coverage. The expectation is that the OOP and deductible requirements only apply to in-network coverage, but this is not clear in the PPACA .

Where can I find more information?

For more information, please go to the healthcare.gov.

The reinsurance fee will be used to fund the transitional reinsurance program that will subsidize non-grandfathered individual market plans (on and off the Exchange) for at least three years, beginning in 2014.

Who pays this fee?

Health insurance issuers will pay on behalf of fully insured coverage, and third-party administrators will pay for self-insured group health plans.

How is the fee calculated?

The fee will be determined on a per-capita basis. HHS will determine a national per-capita contribution rate, which will be announced in future notices on benefit and payment parameters. States cannot change this national contribution rate, though they can collect additional funds.

When will HHS begin collecting the reinsurance fee?

Beginning with the initial payment that is due Jan. 15, 2014, the reinsurance fee will be collected on a quarterly basis.

How will the collected funds be distributed to each state?

The reinsurance fee will be allocated to states based on the residency of the beneficiaries. For example, this means that BCBSM payments of this fee for its members of group health plans that live outside of Michigan will be allocated to those other states’ reinsurance funds.

Are there any types of plans excluded from the reinsurance fee?

The reinsurance fee does not apply to:

• Medicare
• Medicaid
• Excepted benefits, such as standalone dental and vision and certain limited or supplemental benefits
• Federal and certain state high risk pools

What is the state’s role in the collection and allocation of this fee?

States with a reinsurance program have the option of collecting reinsurance contributions directly for fully insured covered enrollees, or deferring to HHS to collect this fee. A state is eligible to establish a reinsurance program regardless of whether the state establishes an Exchange.

For 2014 benefit year contributions, states must notify HHS by Dec. 1, 2012 if the state would like to directly collect reinsurance contributions from fully insured plans. For subsequent benefit years, states must notify HHS by Sept. 1 of the calendar year that is two years prior to the benefit year (e.g., Sept. 1, 2013 for the 2015 benefit year).

HHS will collect contribution funds from self-insured plans and third-party administrators on their behalf, whether or not a state elects to establish a reinsurance program.

Depending on whether the state or the federal government directly collects this fee, can the amount of the reinsurance fee change?

Yes. If a state is running its reinsurance program and decides to collect the funds directly, it may determine that additional funds are needed to support the reinsurance payments or to fund the administrative expenses of the reinsurance program, then additional fees may be collected.

If the state is running its own reinsurance program, but has chosen to have HHS collect the reinsurance fees, HHS will only collect additional funds for the state’s reinsurance administrative costs. States would have to separately collect for additional reinsurance payments, if needed.

If HHS is administering the reinsurance program, it will collect funds for the reinsurance program and its administrative costs, but it will not request additional funds for reinsurance payments.

How does a plan become eligible for reinsurance payments?

A health insurance issuer of a non-grandfathered individual market plan becomes eligible for reinsurance payments when its claims costs for an individual enrollee’s covered benefits in a benefit year exceed the attachment point. The attachment point will be reflected in the annual notice of benefit and payment parameters developed by HHS or the state, depending on which entity is operating the reinsurance program.

Where can I find more information?

For more information, please go to the Federal Register 45 CFR Part 153 (PDF).

The general qualifications and requirements for a non-profit organization to qualify for the temporary enforcement safe harbor are described in a previous Reform Alert.

There are several updates in the most recent bulletin:

• The safe harbor is available to nonprofit groups with religious objections to some, but not all contraceptive methods. If from February 10, 2012 and onward, a group consistently did not cover all or the same subset of the contraceptive coverage required under the Affordable Care Act, it can qualify for the safe harbor.
  
  For example, a non-profit organization that on and after February 10 consistently covered FDA-approved contraceptive methods (but not sterilization procedures) can qualify for the safe harbor.
• If a religious non-profit organization covered contraceptives on February 10, but still wants to qualify for the safe harbor, it must certify that it took some action before February 10 to try to exclude or limit contraceptive coverage because of its religious beliefs, but that the plan covered contraceptives on February 10, despite such action. Organizations are not required to describe that action, and the reissued bulletin does not provide examples.
• Non-profit organizations that are uncertain whether they qualify for the religious employer exemption may invoke the safe harbor without prejudice. Thus, invoking the temporary enforcement safe harbor would not preclude the organization from later invoking the exemption, if eligible.
  
  Please note that this pertains to groups that are uncertain of whether they qualify for an exemption — as opposed to a safe harbor — and does not apply to a group that does not know if it qualifies for either the exemption or safe harbor.

The reissued bulletin does not require organizations that have already completed the certification or issued the notice from the February 10 bulletin to recertify or reissue the notice.

Where can I find more information?

For more information, please go to the Center for Consumer Information and Insurance Oversight's bulletin from August 15 (PDF).

Can you clarify how this affects employees with health FSAs?

The $2,500 limit is employee-specific in two general ways:

1. Each employee's contributions to a health FSA are limited to $2,500. This means the amount does not increase based on the number of dependents, family members, or other beneficiaries that may be eligible to pay for medical expenses using this account.
2. If each spouse has access to a health FSA through their respective employer, then each spouse may contribute up to $2,500 to their respective health FSA.

Additionally, the limit is employer specific. For example, if an individual has access to multiple cafeteria plans that offer salary reduction elections to a health FSA through different employers (and the employers are not part of the same controlled group), then the individual can contribute up to $2,500 to each health FSA.

What types of employer contributions count towards the $2,500 limit?
If the employee can choose to convert an employer's contributions into cash or treat them as a taxable benefit, then the employer contribution is treated as a salary reduction contribution. Therefore, this counts toward the $2,500 cap.

What does not count towards the limit?
Non-elective employer contributions to a health FSA (such as "flex credits") do not count toward the $2,500 cap.

Can an employer change cafeteria plan years without affecting the health FSA requirements?
Cafeteria plan years can only be changed for a valid business purpose. If the principal reason for changing a plan year is to delay applying the $2,500 limit, the change in plan year will be considered void. Then, the plan year will revert to what was in effect before the change.

Where can I find more information?
For more information, please go to the IRS Notice 2012-40.(PDF)

The Affordable Care Act requires that every state must implement a health insurance Exchange by Jan. 1, 2014. If a state does not establish a state-based Exchange, the federal government will run the Exchange on behalf of the state. The state could still decide to apply for a formal state-federal partnership model for the Exchange. Michigan is required to inform the federal government of its intent by Nov. 16, 2012.

BCBSM has taken this information into consideration as it plans for PPACA provisions around the Exchange.

Click for more information on the Exchange.

The following are specific criteria that will determine if an individual is qualified:

• Citizenship, status as a national, or lawful presence in the U.S. for the entire period for which enrollment is sought.
• Residency, which is defined (as in Medicaid) as being physically present in the state with either 1) an intent to reside or 2) a job commitment or be seeking employment in the state.
• Incarceration disqualifies an individual from Exchange eligibility.

If an individual asks for financial assistance in obtaining health care coverage, the Exchange is responsible for determining or assessing:

• Medicaid eligibility
• CHIP eligibility, as well as eligibility for the Basic Health Program if one operates in the Exchange service area.
• Primary tax payers’ eligibility for an advance payment of premium tax credits.
• Eligibility for cost-share subsidy.

Are there different eligibility standards for Indians?

The Exchange is required to determine whether an Indian applicant is eligible for special cost-sharing reductions.

If an Indian meets the criteria below, all services must be provided to the individual with no cost sharing.

• Has household income that does not exceed 300 percent FPL, and
• Enrolls in a QHP.

Further, the Exchange must verify attestation of Indian status using federally permissible documentation, supplemented by additional documentation approved by HHS, as well as information supplied by the individual.

How will the premium tax credit be administered?

When the Exchange determines an individual’s eligibility for advanced payment of premium tax credits, HHS notifies Treasury, and Treasury makes advance payments directly to the issuer of the QHP selected by the individual. The Exchange simultaneously provides information to the QHP issuer, HHS and employer (if applicable, the Exchange notifies the applicant’s employer that the applicant is receiving a premium tax credit for individual market coverage on an Exchange).

Exchanges can choose to have HHS make eligibility determinations for the premium tax credit and cost-sharing reductions.

Enrollees must generally report changes affecting eligibility within 30 days.

If actual eligibility for premium tax credits varies from advanced payment of premium tax credits, the individual will reconcile with the IRS through the individual’s tax return filing. Exchanges, HHS and QHP issuers are not involved in this reconciliation process.

What is the employer’s role for participating on the SHOP Exchange?

An employer participating in a SHOP Exchange must provide its employees with information about selecting and enrolling in a QHP. The SHOP Exchange will provide a uniform application and enrollment timeline for qualified employers and qualified employees to make benefit selections and provide required information to determine eligibility. Since the enrollment effective date for the SHOP may vary by employer, the uniform timeline will apply working backward from the coverage effective date.

Employers are also responsible for providing information to the Exchange about changes to an employee’s eligibility to purchase coverage through the employer.

How will the Exchange handle information discrepancies?

The Exchange must verify information through electronic data sources. In cases of inconsistencies with information the individual attests to and information available to the Exchange, the individual will generally have 90 days to resolve the inconsistency.

Where can I find more information?

For more information please see the Final Rule in the Federal Register at 45 CFR 155, Subpart D and 45 CFR 157.

This regulation discusses:

• Eligibility determinations for the premium tax credit
• Calculation of premium tax credit amounts
• Reconciliation process between advanced premium tax credits received and final tax credit determinations

Who is eligible for this individual premium tax credit?

The following criteria apply for determining if a taxpayer is eligible for an individual market premium tax credit:

• In general, household income must be between 100 percent and 400 percent of the Federal Poverty Level.
• Cannot have access to minimum essential coverage, other than individual market coverage:
  • Minimum essential coverage is defined as any coverage in the individual, small group or large group markets, Medicare, Medicaid, CHIP, TRICARE, veterans' health care and Peace Corps coverage, and any other coverage the Departments of Health and Human Services and IRS deem minimum essential coverage in future regulations.
  • There is an exception to this rule if coverage offered by an employer either does not meet a minimum value test (at least 60 percent actuarial value) or an affordability test (the employee share of the premium for self-only coverage cannot exceed 9.5 percent of household income).
• Credit only applies to coverage months for an individual market QHP purchased through an Affordable Care Act Exchange.
• Married couples must file a joint tax return.
• Those receiving advance premium tax credits are required to file a tax return for the taxable year in which the advanced payment is received.
• Must be a legal resident.
• Cannot be incarcerated.
• An individual cannot be an "applicable taxpayer" if the individual can be claimed as a dependent by another taxpayer
• Taxpayer's share of the premium for the coverage month must be paid in full by the taxpayer's tax filing date.

What is the value of a premium tax credit?

The value of the premium tax credit is a function of the following values as they apply to the taxpayer: benchmark premium, household income, the "applicable percentage," and the premium cost of the selected QHP (applicable in certain circumstances).

The value of the premium tax credit is the minimum of:

• The cost of the selected QHP

– or –
• (adjusted monthly benchmark premiumⁱ) – ((household incomeⁱⁱ * applicable percentage)/12ⁱⁱⁱ).

Tax credit amounts are determined based on annual income calculations, but the actual credit amount is determined and distributed on a monthly basis.

How does an individual receive the tax credit?

After an individual's eligibility has been determined, an Exchange customer may elect to receive the tax credit in advance. The customer can receive the amount the Exchange has approved or can choose to receive a lower amount. For example, if the Exchange estimates eligibility of $1,000, the customer could accept the $1,000 in advance (divvied up on a monthly basis). Or the customer could choose a smaller amount, such as $800.

Does an individual receive the credit directly?

No. The monthly advance credit payment is remitted from the IRS to the QHP issuer. Then, the QHP issuer charges the customer the balance of the monthly premium.

How has the IRS said that the premium tax credits are reconciled?

As noted above, those who receive a premium tax credit will have to file a tax return and reconcile any advance payment of tax credits with actual tax credit eligibility.

Married taxpayers are required to file a joint tax return in order to be eligible for the premium tax credit. There is an exception if one spouse is properly filing as the "head of the household" and the other spouse files as married filing separately.

Will the IRS provide further guidance on other special rules for taxpayers filing joint returns?

The IRS is considering special rules to address circumstances in which domestic abuse, abandonment, or similar circumstances create obstacles for taxpayers trying to file joint returns. The IRS is seeking comments regarding required documentation, the credit calculation processes under these situations, and anti-abuse rules.

What if marital or income status changes?

If a taxpayer's household income is higher than anticipated, or if tax or family status changes in a way that reduces the value of the premium tax credit from what was anticipated, the actual value of the premium tax credit may be less than what was received in advance.

In this situation, the taxpayer will face an increased tax liability (through a reduced tax refund or an increased tax payment). In the final rule, the IRS has significantly changed the manner in which marriage during a taxable year is considered for purposes of reconciliation, diminishing the likelihood of a "marriage penalty" with respect to this tax credit.

If a taxpayer's income for a taxable year is less than 400% FPL, then under current federal guidance, any increased tax liability is capped according to the follow table:

If household income decreases or tax or family status changes in a way that increases the value of the premium tax credit relative to what was received in advance, then the taxpayer's tax liability will decrease (through an increased tax refund or decreased tax payment).

How are premium tax credits distributed among family members?

Premium tax credits only apply to those individuals in a family that are eligible for the tax credits. If a family purchases family coverage on an Exchange, but not all members of the family are eligible for premium tax credits, then the benchmark premium is determined relative to the number of family members who are eligible. Then, only the cost of premiums allocable to those family members can receive a subsidy.

Does COBRA need to be exhausted?

The IRS clarifies that taxpayers do not need to exhaust COBRA or any other continuation coverage before securing eligibility for premium tax credits.

Where can I find more information?

For more information, please visit the Federal Register, 26 CFR Parts 1 and 602 (PDF)

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

• Includes essential community providers
• Maintains a network that is sufficient in number and types of providers
• All services will be accessible without unreasonable delay*

In addition, a QHP issuer must make its provider directory available for online publication on the Exchange, as well as to potential enrollees in hard copy upon request.

What data is required in the provider directory?

The Department of Health and Human Services expects provider directories to include the following information on each provider:

• Licensure or credentials
• Specialty
• Contact information including institutional affiliation

The Exchange may establish additional data elements that QHP issuers must include. Further, the Exchange has discretion regarding the inclusion of non-physician providers in a provider directory. If included, the directory should identify the services the provider is contracted to perform by displaying such providers only when consumers search for specific services.

HHS encourages Exchanges to consolidate QHP provider directories, although it is not required.

Provider directories must meet all of the general standards for Exchange notices, including accommodations for individuals with limited English proficiency and/or disabilities.

What if a provider is no longer accepting new patients?

Provider directories must identify providers that are not accepting new patients.

How will provider directories be updated?

The Exchange final rule does not include guidelines on how often a provider directory must be updated. Rather, the rule suggests Exchanges consider a balance between consumer choice and the burden on issuers to comply.

What is an essential community provider?

Essential community providers are providers who serve predominately low-income, medically underserved individuals, including, but not limited to, FQHCs, urban Indian organizations, and public or non-profit community hospitals.

Section 156.235 of the Exchange final rule states a QHP issuer must have a sufficient number and geographic distribution of essential community providers, where available, to ensure reasonable and timely access to a broad range of providers for low-income, medically underserved individuals in the QHP's service area.

Are Mental Health and Substance Abuse services included?

Mental health and substance abuse services were specifically included to recognize that essential health benefits will create additional demand for these services, and QHP issuers will be required to provide sufficient access.

How will Essential Community Providers be reimbursed?

The Exchange final rule does not establish specific payment rates for essential community providers. Rather, the rule states a QHP issuer is not required to contract with an essential community provider if such provider refuses to accept the issuer's generally applicable payment rate (at a minimum, the rate offered to similarly situated providers who are not essential community providers).

Contracting with Indian Providers?

To make it easier for QHP issuers to contract with Indian providers, HHS intends to develop a template for contracting purposes. While use of the template will not be mandated, Exchanges could elect to direct QHP issuers to use the Standard Indian Addendum when contracting with Indian providers.

What is BCBSM doing?

BCBSM will need to ensure its QHPs meet all network adequacy requirements, including the inclusion of essential community providers. BCBSM will be required to develop and provide a provider directory to the Exchange for its QHPs.

BCBSM will continue to monitor the provisions and will update as needed.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

Beginning with plan years starting on or after January 1, 2014, the Affordable Care Act will require non-grandfathered individual and small group market plans offered on and off the Exchange to provide coverage at specific actuarial value categories.

How are actuarial value categories defined?

Categories are defined by the average share of total health spending on essential benefits paid for by the plan. The ACA identifies specific actuarial value categories as "metal levels" specified as bronze, silver, gold and platinum. Bronze plans have the least generous cost coverage, and platinum plans have the most generous cost coverage.

Coverage levels are as follows:

• Bronze = 60 percent of the actuarial value with respect to essential benefits
• Silver = 70 percent of the actuarial value with respect to essential benefits
• Gold = 80 percent of the actuarial value with respect to essential benefits
• Platinum = 90 percent of the actuarial value with respect to essential benefits

Benefits and services not included in the definition of essential benefits will not be included in the actuarial value calculation. The ACA provides 10 statutory essential health benefit categories:

• Ambulatory patient services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance use disorder services, including behavioral health treatment
• Prescription drugs
• Rehabilitative and habilitative services and devices
• Laboratory services
• Preventive and wellness and chronic disease management
• Pediatric service, including oral and vision care

HHS is charged with developing guidelines to provide for a de minimis variation in the actuarial valuations used in determining the level of coverage of a plan to account for differences in actuarial estimates. HHS proposed allowing for an actuarial value de minimis variation of 2%. For example, a gold plan [80% actuarial value] could have an actuarial value of 78% to 82%.

States will have the option to use a national standard population, or to develop their own standard population based on state claims data. States would also have the option to modify the national standard population using demographic and other adjustors in accordance with sound actuarial practices.

For group health plans, employer contributions to a health savings account will be included in the actuarial value determination. HSA contributions paid directly by the individual would not count towards actuarial value.

Employer contributions to a health reimbursement arrangement also impact actuarial value. Per IRS rules, employees cannot contribute to an HRA.

HHS intends to develop a standard calculator that would be publicly available for issuers to use to determine the actuarial value of their products. The actuarial value calculator developed by HHS would allow for issuers to input cost-sharing factors in order to determine the actuarial value of a product.

According the HHS guidance, the factors that impact actuarial value the most include:

deductible, coinsurance, maximum out-of-pocket, and, to a lesser extent, specific cost sharing on ER visits, inpatient admissions, pharmacy benefits, laboratory services, and diagnostic imaging.

Plans with the same actuarial value will rarely have the same plan design. In the context of the ACA, actuarial value is determined as if the plan were provided to a standard population, without regard to the population that actually receives benefits from the plan.

By 2014, all small group and individual BCBSM plans sold on and off the Exchange must incorporate the actuarial value requirements.

Additional guidance is pending.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

What is accreditation?
As a component of the QHP certification necessary in order for a QHP to operate on an Exchange, a health plan must be accredited. Accreditation is a process by which an impartial organization reviews a company's operations to ensure the company is conducting business in a manner consistent with standards set by the Affordable Care Act.

The preamble to the proposed rule states HHS considered recognition of both the National Committee for Quality Assurance and URAC¹ as accrediting entities. The recognition of NCQA and URAC as approved accrediting entities is effective until it is rescinded or the interim phase one process is replaced by future rulemaking.

In order to be recognized as an accrediting entity by HHS, an accrediting entity must provide HHS its current accreditation processes to demonstrate the process meets all requirements necessary to perform QHP accreditation. Initial submission of such documentation will be made at a time frame specified by HHS. An accrediting entity must submit any proposed changes or updates to its accreditation and measurement processes to HHS with 60 days notice prior to implementation.

At this time, Blue Cross Blue Shield of Michigan is pursuing NCQA accreditation. BCN has been NCQA accredited for several years.

What should we expect to see in phase two?
The proposed rule provides an initial indication of what to expect in future rulemaking regarding phase two of the recognition of accrediting entities, including:

• Application procedure;
• Standards for recognition;
• A criteria-based review of applications;
• Public participation; and
• Public notice of recognition.

Will there be separate accreditation determinations for each product?
Yes. The rule proposes that recognized accrediting entities provide separate accreditation determinations for each product type offered by a QHP issuer in each Exchange (i.e., Exchange HMO, Exchange POS, and Exchange PPO).

What are the Standards for Clinical Quality Measures?
Recognized accrediting entities must include a clinical quality measure set in their accreditation standards for health plans. The quality measure set must:

• Span a breadth of conditions and domains, including, but not limited to, preventive care, mental health/substance abuse, chronic care, and acute care;
• Include measures applicable to adults and children;
• Align with the priorities of the National Strategy for Quality Improvement in Health Care issued by HHS in 2011;
• Only include measures that are either developed or adopted by a voluntary consensus standards setting body, or, where appropriate measures are unavailable, are in common use for health plan quality measurement and meet health plan industry standards; and
• Be evidence-based.

Will data be shared between Accrediting Entities and Exchanges?
A QHP issuer is required to authorize the entity that accredits its QHPs to release to the Exchange and HHS certain materials related to QHP accreditation. Such information would be provided to the Exchange during the annual certification period or as changes occur throughout the coverage year.

Where can I find more information?
At this time, HHS is soliciting comments on the proposed rule and hopes to receive comments regarding:

• Data requirements;
• Whether or not there are other accrediting entities that currently meet or would meet the statutory requirements this year;
• Comments on this level of accreditation, in addition to circumstances in which exceptions should be made to the accreditation determination being made at the product type level; and
• Comments to inform future rulemaking.

Blue Cross Blue Shield of Michigan will continue to monitor regulations and updates will be provided as soon as they become available.

Click here for more information on the proposed rule

¹ Formerly known as the Utilization Review Accreditation Commission until 1996.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

Now that the U.S. Supreme Court has clarified the constitutionality of the Patient Protection and Affordable Care Act, Blue Cross Blue Shield will continue to lead Michigan's health insurers in implementing changes necessary to have a well-functioning health insurance market in place for Michigan consumers by Oct. 1, 2013. That is when the health exchange is scheduled to be open for people to enroll in coverage.

"In many ways, Blue Cross serves as the model for the system created by the federal health reform law," said Daniel J. Loepp, BCBSM president and CEO. "Our long history of guaranteeing high-quality, community-rated coverage to all who apply, regardless of medical condition, gives the Blues a deserved reputation as a place of strength and stability for health care consumers. Our history also gives us a responsibility to ensure that Michigan's people, employers and health care providers are ready for the future. We will be redoubling our efforts to ensure that Michigan is informed and ready for a new health insurance marketplace with new rules and standards for coverage."

Since the day the federal health reform law went into effect, BCBSM has implemented changes to its business operations and benefit designs to comply with new federal guidelines, prepare for doing business on the state's health exchange and continue to improve business for stakeholders. BCBSM will continue working with state and federal policymakers, as well as the health care industry in Michigan, to prepare for a new marketplace.

"Blue Cross has been tireless in our efforts to ensure our business is ready for reform and our stakeholders are informed," said Kirk Roy, BCBSM vice president for its Office of National Health Reform. "Michigan has some work to do to construct its exchange and build a consistent regulatory framework underneath it to serve consumers. Blue Cross has advised on those efforts and will continue to offer our expertise to policymakers as we work together to construct a system that serves Michigan consumers with a choice of high-quality, affordable health insurance products to meet their unique needs."

BCBSM will take the following steps to promote affordable coverage:

• Serve as a trusted advisor to consumers and stakeholders who have questions.
• Modify and introduce innovative health plans that meet federal guidelines around essential benefits and actuarial value.
• Explore ways to make health plans more affordable so that those without insurance can purchase coverage.
• Help people without coverage understand the subsidies they may qualify for, how to use them on the exchange and how they may, in certain cases, be eligible for Medicaid under expanded federal income criteria.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The Comparative Effectiveness Fee applies to plan or policy years ending in federal fiscal years 2013 through 2019 (Oct. 1, 2012 through Sept. 30, 2019). For plan or policy years ending on or after Oct. 1, 2012 and before Oct. 1, 2013, the fee is $1 multiplied by the average number of covered lives. For plan or policy years ending on or after Oct. 1, 2013 and before Oct. 1, 2014, the fee will increase to $2 per covered life. The fee remains at $2 (indexed to increases in national health spending) through its conclusion with plan or policy years ending between Oct. 1, 2018 and Sept. 30, 2019.

General information on the fee

How will the funds be used?

This annual fee will support the Patient Centered Outcomes Research Institute ("PCORI"). The institute will use these funds to support research initiatives comparing the effectiveness, benefits, and potential risks of different treatment options that may impact health outcomes.

Who pays this fee to the IRS?

For fully insured business, health insurance issuers pay the fee. Plan sponsors (usually the employer) pay the fee for self-insured business.

When will the first fee payment be due?

This depends on when the last day of the plan or policy year will be. The fee must be paid and filed with the IRS by July 31 of the calendar year immediately following the last day of the plan or policy year.

Therefore, for any plan or policy years ending between Oct. 1, 2012 and Dec. 31, 2012, the first fee payment will be due by July 31, 2013.

If a member is covered under multiple plans, does the plan sponsor count them once for each policy they have?

Under the proposed rule, multiple self-funded plans may be treated as a single plan for purposes of the fee calculation to avoid counting members more than once.

When do issuers and plan sponsors stop paying this fee?

The fee terminates with plan or policy years ending in federal fiscal year 2019.

General calculation methods for the fee

How is the fee calculated?

It is calculated by multiplying the average number of "covered lives" in a plan or policy year by the "applicable dollar amount."

There are different calculations of "covered lives" for fully insured versus self-insured business. The "applicable dollar amount" also changes depending on when a plan or policy year ends.

What is the "applicable dollar amount?"

The dollar amount depends on when the plan or policy year ends.

1. For plan or policy years ending on or after Oct. 1, 2012, and before Oct. 1, 2013 (fiscal year 2013), the applicable dollar amount is $1.
2. For plan or policy years ending on or after Oct. 1, 2013, and before Oct. 1, 2014 (fiscal year 2014), the applicable dollar amount is $2.
3. For plan or policy years ending on or after Oct. 1, 2014 and before Oct. 1, 2019 (plan or policy years ending during fiscal year 2015-2019), the $2 applicable dollar amount is indexed annually to growth in national health spending as determined by Centers for Medicare and Medicaid Services' per capita National Health Expenditure data.

Calculation methods and rules for fully insured business

What is the calculation of "covered lives" for fully insured business?

One calculation method must be chosen among four different options of calculating covered lives:

1. Actual count method: For each policy, calculate the sum of lives covered for each day of the policy year and divide by the number of days in the policy year.
2. Snapshot method: For each policy, the sum total number of lives covered on one date in each quarter of the policy year (or an equal number of dates for each quarter) divided by the total number of dates on which a count was made.
3. Member months method: The average number of lives covered under all policies in effect for a calendar year is determined by taking the "member months" that are reported on the National Association of Insurance Commissioner's Supplemental Health Care Exhibit and dividing this number by 12.
4. State form method: Same calculation as the member months method, but used in states where NAIC forms are not filed but where the state uses a form that reports covered lives in the same manner.

If the issuer selects the member months or state form methods, the issuer must continue to use that method for every policy year for which the fee applies.

If the issuer chooses the actual count or snapshot methods, the issuer may switch among those two options (e.g., from actual to snapshot or vice versa), but must use the same method for all policy years with the same tax remittance date. For example, the issuer must pick the same method for all plan or policy years ending in calendar year 2013, for the comparative effectiveness fee due to the IRS by July 31, 2014.

If issuers decide to use the actual count or snapshot methods, are there any special rules for calculating the first year's fees for fully insured business?

Yes. For plan or policy years beginning before May 12, 2012 and ending on or after Oct. 1, 2012, covered lives is calculated using a partial policy year and extrapolating covered lives for the full plan or policy year.

If issuers decide to use the member months or state form method, are there any special rules for calculating the fees for fully insured business?

Yes. For issuers using the member months or state form method, there are special rules for calculating this fee during the first and last year.

If the fee is paid by July 31, 2013 (for the 2012 calendar year experience), the average number of lives equals the average number of lives reported on the NAIC Supplemental Health Care Exhibit or state form (as described under the question about the calculation methods for fully insured business) multiplied by 1/4.

For fees paid by July 31, 2020 (for the 2019 calendar year experience), the average number of lives equals the average number of lives reported on the NAIC SHCE or state form multiplied by 3/4.

Calculation methods and rules for self insured business

What is the calculation of "covered lives" for self insured business?

Self-insured plan sponsors must use the same method of calculating the average number of covered lives throughout the duration of the plan year, but may change methods from one plan year to the next.

Plan sponsors must choose one calculation method from the following three options:

1. Actual count method: Calculate the sum of the lives covered for each day of the plan year and divide that sum by the number of days in the plan year.
2. Snapshot method: Add the totals of lives covered on one date in each quarter (or an equal number of dates for each quarter) and divide the total by the number of dates on which a count was made.
1. Snapshot count method: The number of lives covered on a date may be determined as equal to either the sum of the actual number of lives covered on the dates, or
2. Snapshot factor method: The sum of (1) the number of participants with self-only coverage on that date, plus (2) the number of participants with coverage other than self-only coverage on the date multiplied by 2.35
3. Form 5500 method: covered lives determined using plan participants reported on Form 5500.
   1. If the plan only provides self-only coverage, covered lives equals the number of plan participants at the beginning and end of the plan year, divided by two.
   2. If coverage other than self-only is provided, the plan sponsor determines covered lives by adding the number of plan participants at the beginning and end of the plan year.

Are there any special rules for calculating the first year's fee for self-insured plan sponsors?

Yes. For plan years beginning before July 11, 2012, and ending on or after Oct. 1, 2012, a plan sponsor may determine the average number of covered lives using any reasonable method.

Payment of the fee

How will health insurance issuers and plan sponsors pay this fee?

Issuers and plan sponsors will be required to fill out and submit a specific tax return form to pay and report this comparative effectiveness fee. The IRS is proposing to use Form 720 (paper or electronic version) for this reporting. While Form 720 is labeled "Quarterly Federal Excise Tax Return", the comparative effectiveness fee reporting and payment remittance will occur on an annual basis.

Why does Form 720 refer to quarterly tax returns when this is an annual fee?

Before this ACA requirement to pay and report this comparative effectiveness fee to the IRS, other excise taxes were paid and reported on a quarterly basis using Form 720. The IRS is currently updating the instructions for Form 720 to provide issuers and plan sponsors with more details on the payment and reporting process for the annual comparative effectiveness fee.

What if my plan or policy year ends sometime in 2013? When do I pay this fee?

For any plan or policy years ending in 2013, the fee will have to be paid by July 31, 2014.

If I am an employer with a self-funded health plan and I have my own fiscal year, when do I need to pay this fee?

The employer's fiscal year is irrelevant in determining when the fee payment is due. Payments are only determined by the end date of the plan or policy year relative to the federal fiscal year.

Will there be any updates to this proposed rule on this fee? How will the regulatory updates affect fee payment or effective dates?

Though this is a proposed rule, the IRS has stated it should be treated as federal guidance until any further updates are made. If future guidance is more stringent, the future guidance will be applied without a retroactive effect.

Impacts on retiree-only and grandfathered plans

What about "retiree-only" plans?

Although retiree-only plans are exempt from most of the ACA mandates, the comparative effectiveness fee does apply to covered lives in retiree-only plans. Among the plans specifically subject to the comparative effectiveness fee are plans established or maintained for the benefit of former employees (such as retirees).

Does the comparative effectiveness fee apply to grandfathered plans?

Yes. A plan which is otherwise subject to the fee is not exempt from the fee because of its grandfather status.

Exceptions

Is there any covered life to which the fee would not apply?

Yes. There are several exclusions where the fees imposed do not apply to any covered life enrolled in certain fully insured or self insured coverage, including, but not limited to:

• Excepted benefits, such as standalone dental, standalone vision, and Medigap
• Stop loss or indemnity reinsurance policies
• Medicare (including Medicare Advantage and Part D)
• Medicaid
• State Children's Health Insurance Program

Additional resources

Where can I find more information?

For more general information on the comparative effectiveness fee, visit HealthCare.gov
or IRS.gov. To access the proposed rule by the IRS, visit the Federal Register. For more information on the Patient-Centered Outcomes Research Institute and the research initiatives it may fund, go to the PCORI website.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The Department of Health and Human Services released a final rule on Exchanges on March 12, 2012. The rule codified that Exchanges must allow limited scope dental benefit plans to be offered through the Exchange, so long as the plan covers at least the pediatric dental essential benefit. The final rule clarified that stand-alone dental plans offered through an Exchange must offer the pediatric dental essential benefits without annual or lifetime dollar limits.

Exchanges will also be responsible for developing the certification standards that dental plans must adhere to.

All qualified health plans, and all individual and small group market health insurance, either on or off the Exchange, must provide essential health benefits*. While the Affordable Care Act defines pediatric oral care as an essential benefit, more guidance is needed on what types of services are included in pediatric oral care.

Stand-alone dental benefits can be offered through Exchanges if:

• The stand-alone dental plan covers the pediatric oral care essential benefit AND
• The stand-alone dental plan qualifies as a limited scope dental benefit per the excepted benefits rules**.

QHPs operating under the Exchange do not have to offer the pediatric dental essential benefit as long as there is at least one stand-alone dental plan on the Exchange that offers the pediatric dental essential benefit.

Cost-sharing reductions for lower income beneficiaries do not apply to stand-alone dental plans. However, the ACA stipulates that premium tax credits apply to the portion of stand-alone dental plans that qualify as essential benefits. The ACA states that if an individual who is eligible for premium tax credits chooses a stand-alone dental plan that covers the pediatric dental essential benefits, the portion of the dental premium that is allocable to the pediatric dental essential benefits must be considered part of the premium to which the individual's premium tax credit applies. However, it is unclear how this will work in practice. It is also unclear how employees purchasing coverage through a SHOP Exchange will apply employer contributions to pediatric dental coverage.

HHS indicated that future guidance will give more detail on how pediatric dental benefits should interact with adult dental coverage. Blue Cross Blue Shield of Michigan will continue to monitor regulations and updates will be provided as soon as they become available.

* Adult dental is not considered an essential benefit.

** Dental benefits that qualify as limited scope dental are considered "excepted benefits" in federal rules, and have not been subject to health insurance reforms, including, but not limited to, the elimination of lifetime and annual limits, and the expansion of coverage to dependent children up to age 26.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

Section 1302 of the Affordable Care Act states that any qualified health plan offered on the Exchange at any metal level of coverage must also be offered as a corresponding child-only plan at the same metal level of coverage. For all plans BCBSM offers on the Exchange, BCBSM will also have to create a separate child-only option.

Issuers participating on the Exchange must offer at a minimum one gold and one silver plan on the Exchange, and therefore all issuers participating on the Exchange must offer, at minimum, one gold and one silver child-only plan on the Exchange.

What is included in a child-only plan?

Child-only plans must include the essential benefits and are tied to the same actuarial value categories as other plans on the Exchange. It is unclear what benefits constitute the essential health benefits at this time and we expect the state of Michigan to make a decision regarding essential benefits sometime in the fall of 2012. Blue Cross Blue Shield of Michigan will continue to monitor regulations and updates will be provided as soon as they become available.

Who qualifies for child-only policies?

Individuals who have not attained the age of 21 at the beginning of the plan year are eligible for child-only plans. However, according to the definition of "qualifying child," for purpose of determining tax dependency, a taxpayer cannot include children age 19 through 20 in determination of the taxpayer's premium tax credit eligibility, unless the 19- or 20-year-old fits the criteria for tax dependent status (example, the child is a student).

What about tax credits?

Premium tax credits are available to taxpayers who purchase coverage on behalf of a qualifying dependent child. A dependent child is defined in the IRS code as:

• A child of the taxpayer or descendent of such child or the brother, sister, stepbrother, or stepsister of the taxpayer or a descendent of any such relative; and
• Has the same principal place of abode as the taxpayer for more than half of the year; and
• Has not turned 19 by the end of the calendar year, is a student who has not turned 24 but the end of the calendar year, or is permanently and totally disabled; and
• Has not provided over one-half of his or her own support for the calendar year; and
• Has not filed a joint return with his or her spouse.

The ACA specifies that the parent who claims the child on their tax return is responsible for providing that child with coverage. In some cases, this may not correspond with child or medical support orders.

Where can I find more information?

For more information, please see Section 1302 of the Affordable Care Act.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

What are the notable changes from the proposed rule?

There are a significant number of important changes from the October 2011 proposed rule.

HHS is no longer requiring that states run their own reinsurance program in order to run a state-based Exchange. States also no longer need to announce user fees to issuers prior to the start of the plan year–HHS indicated that it wanted to give states more flexibility regarding fee assessment and notification. When a state seeks to make changes to its state-based Exchange, HHS has up to 90 days to approve or reject the changes to its Exchange Blueprint (the new name for the documentation states must file with HHS to receive state Exchange approval).

What has changed for Individual market Exchange enrollment periods?

The final rule changed initial open enrollment from Oct. 1, 2013 - Feb. 28, 2014 to Oct. 1, 2013 - March 31, 2014 and moved the initial coverage effective dates such that, now:

• If enroll on or before Dec. 15, coverage effective Jan. 1
• If enrolled Dec. 16 to Jan. 15, coverage effective Feb. 1
• If enrolled Jan. 16 to Feb. 15, coverage effective March 1
• If enrolled Feb. 16 to March 15, coverage effective April 1
• If enrolled March 16 to March 31, coverage effective May 1.

States may elect an earlier effective date than those listed above, but only if all qualified health plan issuers agree. Annual open enrollment period in subsequent years remains October 15 to December 7, with coverage effective January 1.

What about Special enrollment periods?

The final rule removes the requirement in the proposed rule that would have restricted recipients of a special enrollment period to selecting a QHP in the same metal level.

Are there any changes to SHOP?

HHS re-asserts that in order to be on the SHOP an employer must have at least one common law employee. This means that sole proprietors, 2 percent S-corporation shareholders and certain family members of sole proprietors or 2 percent S-corporation shareholders are not included in employee count. If a business does not have a common law employee it cannot constitute a group health plan and therefore cannot purchase coverage in the small group market. In these situations, Exchange coverage must be purchased on the individual market.

The proposed rule specifically excluded the SHOP from the requirement to provide a premium calculator that applies to the individual market Exchange. The final rule removes this exclusion and requires the SHOP to provide a premium calculator that compares the price of available QHPs after the application of any employer contribution.

Did QHP standards change?

QHP certification standards are generally the same as in the proposed rule.

New language requires QHP issuers to ensure that the provider network of each QHP maintains a network that is sufficient in number and types of providers, including providers that specialize in mental health and substance abuse services. The rule includes an alternate standard for a QHP issuer that provides a majority of covered professional services through physicians employed by the issuer through a single contracted medical group, such as through a staff-model HMO. To ensure compliance, these QHP issuers must have a sufficient number and geographic distribution of employed providers and hospital facilities to ensure reasonable and timely access to such providers.

Any changes to Dental plans?

The final rule makes sure the Exchange doesn't overload a single dental insurance issuer by adding a "sufficient capacity" provision. The Exchange must consider the collective capacity of stand-alone dental plans during certification to ensure sufficient access to pediatric dental coverage.

The Exchange may allow standalone dental plans to be offered independently or in conjunction with a QHP. The rule clarifies that standalone dental plans offered through an Exchange must offer the pediatric dental essential benefits without annual or lifetime dollar limits. If standalone dental options that cover the pediatric dental essential benefits are available on the Exchange, then a health insurance product does not need to cover pediatric dental essential benefits in order to receive QHP certification.

Are there special rules for multi-state plans or CO-OPs?

The Exchange must recognize the ACA established multi-state plans and plans offered by issuers through the Consumer Operated and Oriented Plan program. Multi-state plans are exempt from many Exchange certification standards. HHS notes that OPM is required to ensure that multi-state plans adhere to QHP certification standards, so HHS finds it redundant to require each Exchange to certify the OPM-contracted plans. For many requirements, the final rule explicitly provides that, rather than the Exchange, OPM will review whether the multi-state plans are achieving the appropriate standard.

Who is eligible?

Rules are similar to those in the proposed rule, however, the final rule no longer permits eligibility based on intent to reside in an Exchange service area. Additionally, a new provision specifies that when multiple tax households are covered on a single policy, the Exchange will apply cost-sharing reductions such that the lowest level of cost-sharing reductions will be provided to the combined households (the household with the highest FPL determines cost sharing eligibility).

An interim final rule requires Exchanges to "determine eligibility promptly and without undue delay." Notification of eligibility determinations must now be made in writing.

Does the final rule change the roles for Navigators/agents?

Navigators

The final rule establishes that at least one Navigator entity must be a community-and-consumer-focused non-profit group. At least one navigator must also come from one of eight prescribed categories. Navigators are prohibited from receiving direct compensation from issuers for enrollment in plans inside or outside of the Exchange. Additionally, a Navigator must not be a health insurance issuer, a subsidiary of a health insurance issuer, or an association that includes members of, or lobbies on behalf of the insurance industry.

The Exchange must develop a set of training standards to ensure expertise in the needs of underserved and vulnerable populations, eligibility and enrollment rules, the range of QHP options and insurance affordability plans, and privacy and security standards.

Agents

The final rule establishes participation standards for agents and brokers to facilitate QHP selection through the agent's or broker's website. In these cases, the agent's or broker's website must:

• Provide consumers the ability to view all QHPs offered through the Exchange;
• Not provide financial incentives, such as rebates or giveaways;
• Display all QHP data provided by the Exchange;
• Provide consumers with the ability to withdraw from the process and use the Exchange website at any time.

The final rule expands its regulations on agents and brokers with the inclusion of language outlining how an agent or broker may assist an individual in enrolling on the Exchange as well as requirements for an agreement between an agent/broker and the Exchange before the agent/broker may assist individuals in enrollment.

Where can I find more information?

For more information, please visit healthcare.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The guidance provides clarification on the employer shared responsibility fee, automatic enrollment and the 90-day limit on waiting period requirements.

Below are some common questions to help better understand this announcement:

Employer shared responsibility

What are the general requirements for employer shared responsibility?

As part of the employer mandate, any employer with 50 or more full-time equivalent employees will have to pay a fee to the Internal Revenue Service if any full-time employee receives a premium tax credit or cost-sharing reduction payment via an individual market Exchange.

A full-time employee can receive this premium tax credit or cost-sharing reduction payment if:

• the employer does not offer its full-time employees and their dependents the opportunity to enroll in coverage under an employer-sponsored health plan, or
• the employer offers the opportunity for full-time employees and their dependents to enroll in an eligible employer-sponsored health plan, but the plan is either unaffordable or does not provide the federally required minimum value of coverage.

What does the additional guidance clarify about the employer shared responsibility requirement?

In calculating the affordability of an employer-sponsored health plan, the employee's wages reported on a W-2 tax form can be used to calculate this affordability.

The federal government also plans to propose regulations to clarify the employer shared responsibility fee and the definition of a full-time employee. For more details on the agency's intentions for proposed regulations, go to the Department of Labor's website or HealthCare.gov.

Automatic enrollment

What are the general requirements of automatic enrollment?

Automatic enrollment requires certain employers to automatically enroll its new employees in one of its employer-sponsored health plans, and these employers should continue enrolling current employees. Employers' automatic enrollment processes should include providing their employees with adequate notice and opportunity to decide not to enroll in the designated health plan.

What size employer has to meet the requirements for automatic enrollment?

An employer with more than 200 full-time employees that also offers enrollment in one or more health benefits plans will have to meet the requirements for automatic enrollment.

What does the additional guidance clarify about the automatic enrollment requirement?

The Department of Labor has decided the regulations for automatic enrollment will not be ready by 2014, so there is no clear effective date at this time. Employers will not be expected to meet these requirements until regulations are provided. The effective date will be no earlier than 2015.

90-day limit on waiting periods

What are the general requirements for the 90-day limitation on waiting periods?

For plan years beginning on or after January 1, 2014, a group health plan or group health insurance issuer cannot apply any waiting period that exceeds 90 days for employees eligible to participate in the group health plan.

What does the additional guidance clarify about the 90-day limitation on waiting periods for group health plans?

The restriction on waiting periods does not imply that employers have to offer coverage to all types of employees. Please note the following examples:

• Employers will still be allowed to offer coverage to full-time employees but not to part-time employees. If an employee went from part-time to full-time, the 90-day period would begin when the employee becomes eligible for coverage.
• For example, a part-time employee hired on Jan. 1, may be determined to be ineligible for coverage. Once that employee transitioned to full-time beginning March 1, the waiting period for this newly hired full-time employee's benefits cannot exceed the date of June 1 (90 days after being newly hired).

Where can I get more information on employer shared responsibility, automatic enrollment, and the 90-day limitation on waiting periods?

Additional information is available on the Department of Labor's website or HealthCare.gov..

The information in this document is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

Reimbursement requests that are received after the funding has been exhausted will be placed on hold in the order the requests are received. These requests will be held in case more funds become available when any overpayments previously given to plan sponsors are returned. To assess if any overpayments were made, the Centers for Medicare and Medicaid Services will begin an audit process. Those sponsors who are not using the funds according to the Affordable Care Act's requirements will be expected to return their funds to the agency. Below are some common questions in response to this announcement:

While CMS is estimating that the $5 billion has been depleted, when are the funds for reimbursement under the ERRP going to be exhausted completely?

A date is unknown at this time, but the Centers for Medicare and Medicaid Services will continue to disburse the reimbursement payments until all available funds are used.

What should I do if I am a Plan Sponsor that recently submitted a reimbursement request?

You will be notified by an email from the ERRP explaining that reimbursement requests have been placed on hold, and future payments will depend on the availability of funds. These funds may become available when any overpayments that were previously made to plan sponsors are returned.

If you receive this notification email from the ERRP, you can call the ERRP Contact Center at 1-877-574-ERRP (1-877-574-3777), or visit the ERRP website, to get the latest information on your position on the waitlist of held reimbursement requests.

For those plan sponsors that have already received or will receive ERRP funds, is there anything I need to continue doing?

Yes. For each plan year that a sponsor has been reimbursed with ERRP funds, the sponsor must submit a full-replacement Claim List with no errors and an associated reimbursement request by April 27, 2012. If a submission of these two documents (an error-free Claim List and corresponding reimbursement request) is not completed, then Centers for Medicare and Medicaid Services will begin the process to collect the funds that had been previously paid to the plan sponsor.

Plan sponsors are also expected to use the ERRP funds they have received or will receive by Dec. 31, 2014.

What can all plan sponsors do in the meantime?

Plan sponsors should ensure the ERRP program has the sponsor's most up-to-date information for the following:

• Plan's responses to any application questions,
• Contact information for the Authorized Representative, Account Manager, and Designee, and
• Bank account information

If a sponsor has found any inaccuracies or changes to previous application data, contact the ERRP Contact Center to find out how to correct this information.

Where can I find more information?

For more details on the ERRP, go to the ERRP website. To find more information on payments made to plan sponsors in Michigan, read the latest ERRP Reimbursement Update report (PDF).

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

On Jan. 20, 2012, HHS announced that it would allow some groups to delay their compliance with the contraceptive services mandate. Nonprofit employers who, based on religious beliefs, do not currently provide contraceptive coverage in their insurance plan, will be provided an additional year, until Aug. 1, 2013, to comply with the new regulation. This additional year, which is referred to as a temporary enforcement safe harbor, is available to religiously-affiliated groups, such as hospitals, charities and universities that currently do not provide contraceptive services, and allows them more time and flexibility to adapt to the new rule. Employers must certify that they qualify for the delayed implementation. In addition, these employers must provide notice to employees informing them that contraceptive services are available at certain sites, including community health centers, public clinics and hospitals with income-based support.

Please note, those employers that meet the tax code's narrow definition of religious employer will be allowed an exemption from the contraceptive mandate.

Recently, the federal government issued final regulations regarding contraceptive methods and counseling. These regulations acknowledge the safe harbor and note that while it is in place, the government will work with stakeholders to develop an alternative mechanism to allow employees of non-exempted religious employers to access contraceptive coverage from their carrier without cost sharing.

This intention has not been finalized, and important details were not described in the federal government's announcement, so it is unclear when and if these future regulations will impact Blue Cross Blue Shield of Michigan and Blue Care Network.

Blue Cross Blue Shield of Michigan and Blue Care Network will continue to monitor the regulations to determine how to best assist our group customers. Updates will be provided as soon as they become available.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The Internal Revenue Service has issued additional guidance modifying previous requirements under the Affordable Care Act for informational reporting, asking employers to provide employees with their cost of employer sponsored health care on W-2 forms.

This modified requirement applies to federal, state, and local governmental agencies, but it does not apply to federally recognized Indian tribal governments. Until further direction is provided, the W-2 reporting requirement will not apply to tribally chartered corporations owned by federally recognized Indian tribal governments.

Employers are not required to include the cost of health coverage under an employee assistance program, wellness program, or on-site medical clinic if the employer does not charge a premium for COBRA coverage for a qualifying beneficiary.

An employer can still voluntarily choose to include the coverage cost on W-2 forms for an employee assistance program, wellness program, on-site medical clinic, or the cost of coverage under a health reimbursement arrangement.

If an employer reported on certain excepted benefits on a pre-tax basis under a cafeteria plan, which may include disease- or illness-specific coverage and indemnity insurance coverage, then the employer must include this in the W-2 reporting.

Blue Cross Blue Shield of Michigan will continue to monitor activity on W-2 reporting requirements and provide updates as they become available.

More information on W-2 reporting requirements is on the Internal Revenue Service website.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

As communicated in the Nov. 29, 2011 alert, these documents aim to help consumers understand their health coverage options and aid employers in finding the best coverage for their employees. Health insurers and group health plans must provide consumers with a Summary of Benefits and Coverage, a Coverage Example, and a Uniform Glossary of commonly used terms in health insurance.

Below is a summary of the some of the significant changes from the August 2011 proposed regulations:

• Effective date: The final regulations revised the effective date for health insurance issuers and group health plans to provide the SBCs from March 23, 2012, to the following:
• For disclosures to group health plans, and to individuals and dependents in the individual market, these requirements are applicable to health insurance issuers beginning on Sept. 23, 2012.
• For disclosures to participants or beneficiaries who enroll or re-enroll through an open enrollment period, effective first day of the first open enrollment period that begins on or after Sept. 23, 2012.
• For participants or beneficiaries who enroll in coverage other than through an open enrollment period (including newly eligible and special enrollment periods), effective first day of the first plan year that begins on or after Sept. 23, 2012.

• Delivery Timeframes: The final regulations revised the timeframes for health insurance issuers and group health plans to issue the SBCs:
• An insurer or group health plan must make the SBC available on paper or electronically to shoppers, applicants, enrollees, and upon request within seven business days.
• Enrollees who qualify for a special enrollment period must be provided the SBC no later than 90 days from enrollment (consistent with ERISA).
• In the case of renewal or reissuance, if written application is required for renewal, the SBC must be provided no later than the date the materials are distributed. For automatic renewals or reissuance of coverage, the SBC must be available 30 days prior to the first day of the new policy or plan year. However, with respect to insured coverage, in situations in which the SBC cannot be provided within this timeframe because, for instance, the issuer and the purchaser have not yet finalized the terms of coverage for the new policy year, the SBC must be provided as soon as practicable, but in no event later than seven business days after the issuance of the policy, certificate, or contract of insurance, or the receipt of written confirmation of intent to renew, whichever is earlier.

• Template: The SBC template no longer includes premium or cost of coverage. In addition, there is some flexibility for plans (for example tiered networks) that do not fit into the template/instructions. Employers and insurers in the group market are allowed to combine the SBC with other consumer materials as long as the SBC is displayed at the beginning of the materials. For the individual market, the SBC must be provided as a stand-alone document.

• Language: The SBC must be provided in a culturally and linguistically appropriate manner. HHS will provide written translations of the SBC template, sample language, and uniform glossary in Spanish, Tagalog, Chinese and Navajo and may make these materials available in other languages.

Blue Cross Blue Shield of Michigan is continuing to analyze the final rules and accompanying materials and will provide additional updates.

A press release and other related documents are available on the HHS website.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

All insured non-grandfathered individual and small group market coverage (offered on or off the Exchange) must provide essential health benefits, which must include at least the following 10 categories:

• Ambulatory patient services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance use disorder services, including behavioral health treatment
• Prescription drugs
• Rehabilitative and habilitative services and devices
• Laboratory services
• Preventive and wellness and chronic disease management
• Pediatric service, including oral and vision care

HHS intends to propose use of the benchmark option to give states the flexibility to choose a plan that is similar to a typical small employer plan in the state. The agency believes that by doing so, states will be able to account for state-specific needs.

States would be able to choose one of the following benchmark health insurance plans:

• One of the three largest small group plans in the state by enrollment
• One of the three largest state employee health plans by enrollment
• One of the three largest federal employee health plan options by enrollment
• The largest HMO plan offered in the state's commercial market by enrollment

Health plans also would have flexibility to adjust benefits, including both the specific services covered and any quantitative limits, provided they continue to offer coverage for all 10 essential health benefits categories that are "substantially equal" to the benchmark plan.

In the transitional years of 2014 and 2015, if a state chooses a benchmark subject to state mandates, such as a small group market plan, the benchmark must include the mandates in the state essential health benefits package.

Additionally, under the currently proposed approach, a state could also select a benchmark, such as a Federal Employees Health Benefits Plan, which may not include all of the state's benefit mandates. In that case, the state would be required to cover the cost of the mandates outside of the state's essential health benefits package. If the benchmark plan does not include all 10 categories, it is recommended other benchmark options could provide possible guidance on coverage of a missing category.

As proposed, if a state does not select one benchmark plan among these options, HHS will default to the small group plan with the largest enrollment in the state as the state's benchmark plan.

Blue Cross Blue Shield of Michigan will continue to monitor activity on essential health benefits and provide updates as they become available.

For more information, please view the Essential Health Benefits:HHS Informational Bulletin

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

On Dec. 2, 2011 the Department of Health and Human Services issued a final rule on medical loss ratio determination and rebate payments for 2011-2013. The MLR reporting and rebate process will increase insurance companies' transparency and assist consumers with purchasing plans that provide better value for their money by requiring insurance companies to publicly report how they spend premium dollars. Insurance companies have to spend at least 80 percent of the premium dollars they collect on medical care and quality improvement activities in the individual and small group markets; and at least 85 percent in the large group market. MLR reports for 2011 calendar year experience must be submitted to HHS by June 1, 2012. Insurance companies must report the following in each state it does business:

• Total earned premiums
• Total reimbursement for clinical services
• Total spending on activities to improve quality
• Total spending on all other non-claims costs excluding federal and state taxes and fees

These reports will be posted publicly by HHS so residents of every state will have information on the value of health plans offered by different insurance companies in their state.

Insurance companies not meeting a medical loss ratio standard will be required to provide rebates to their consumers beginning in 2012 (if a rebate amount is owed for 2011 experience, it must be paid by Aug. 1, 2012). The final rule addresses technical issues in the way health insurance issuers calculate and report their MLR, as well as how rebates are distributed:

• For rebates owed in the group markets, health plans generally pay rebates to the employer, not to the employees. Employers must follow Department of Labor and HHS rules regarding use of rebates.
• ICD-10 conversion costs of up to 0.3 percent of an issuer's earned premium may be considered quality improvement activities for the 2012 and 2013 MLR reporting years, if the expense otherwise meets the criteria for QI activities.
• Community benefit: For issuers with community benefit expenditures, the issuer may deduct from earned premiums the higher of 1) the amount paid in state premium tax or 2) actual community benefit expenditures, up to the highest premium tax rate that applies to any issuer in the state.

HHS also requested comment on a proposal for a new notice requirement to ensure all consumers receive information on either the amount of their rebate or their insurer's MLR.

Finally, HHS announced Dec. 19, 2011 that it has rejected Michigan's individual market MLR waiver request. The Office of Financial and Insurance Regulation had asked for the 80 percent requirement to be phased in from 2011-2014, but HHS issued a full denial stating:

"Michigan's application makes it clear that:

1. Most issuers are either profitable or adjusting business models to reach the 80 percent standard, suggesting no intent to exit.
2. All issuers with 2010 medical loss ratios below 80 percent indicated that they are taking steps to meet the standard.
3. Michigan is a large, relatively competitive market, with guaranteed issue by Blue Cross Blue Shield and HMOs.

"For these reasons, HHS has determined that no adjustment to the medical loss ratio standard in Michigan is necessary. This determination will ensure consumers receive a better value for their premium dollar." To read more please see the HHS fact sheet.

Blue Cross Blue Shield of Michigan will continue to monitor the regulation to determine what changes are needed to current processes.

More information on MLR can be found at www.healthcare.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

Exemption from individual mandate penalty

Native Americans are exempt from the individual mandate penalty for failure to comply with the shared responsibility requirement to maintain minimum essential coverage. The Exchange must verify Native American status and must certify Native Americans as qualifying for the individual mandate exemption.

Special enrollment period

A Native American may enroll in a qualified health plan or change from one QHP to another one time per month.

Tribes and organizations

The Exchange may permit Indian tribes, tribal organizations and urban Indian organizations to pay QHP premiums on behalf of qualified individuals, subject to terms and conditions determined by the Exchange. Each Exchange must consult regularly, on an ongoing basis with federally recognized tribes located within the Exchange's geographic area. Indian tribes, tribal organizations, and urban Indian organizations may be eligible to serve as navigators.

Cost-sharing subsidies

The Affordable Care Act and Exchange proposed regulations specify that a QHP issuer may not impose any cost sharing on a Native American who has household income at or below 300 percent of the federal poverty level and is enrolled in a QHP on the individual market Exchange at any metal level of coverage. HHS will pay the QHP issuer the amount necessary to reflect the required increase in actuarial value.

Special cost-sharing rule regardless of income

If a Native American is enrolled in a QHP, a QHP may not impose any cost-sharing for services provided by the Indian Health Service directly, an Indian tribe, tribal organization, urban Indian organization or through referral for contract health services. This provision applies regardless of the individual's income or metal level of coverage.

Blue Cross Blue Shield of Michigan will continue to monitor the provisions and will update as needed.

For more information, please go to healthcare.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The proposed regulations ensure that consumers have access to two documents that will help them understand their health insurance choices upfront and in plain English, including:

• A straightforward, standardized "Summary of Benefits and Coverage" presented in a culturally and linguistically appropriate manner.
• A "Uniform Glossary" of terms commonly used in health insurance, such as "deductible" and "copay."

Under the proposed rules, an insurer or group health plan must make the "Summary of Benefits and Coverage" available on paper or electronically to applicants, enrollees, policyholders, certificate holders, group health plans, and shoppers. The "Uniform Glossary" must also be made available upon request on paper or provided electronically.

• A consumer or enrollee can request a copy of the "Summary of Benefits and Coverage" and must provide it within seven days of receiving the request.
• Enrollees who qualify for a special enrollment period must be provided the SBC within seven days of receipt of their request.
• In the case of renewal or reissuance, if written application is required for renewal, the "Summary of Benefits and Coverage" must be provided no later than the date the materials are distributed. For automatic renewals or reissuance of coverage, the "Summary of Benefits and Coverage" must be available 30 days prior to the first day of the new policy or plan year.

The proposed regulation was open to public comments until Oct. 21, 2011, at which time modifications may be made prior to the issuance of final regulations.

The agencies are currently reviewing public and industry comments to the proposed rules. Final regulations are expected to be issued sometime in 2012. The final regulations will likely contain modifications to the proposed rules and will set out the agencies' detailed standards for content and appearance as well as the requirements relating to who must distribute the documents, to whom they must be distributed and when.

In the FAQs found on the U.S. Department of Labor's website regarding implementation, the department acknowledges the many comments were received addressing implementation issues, and notes that it is striving to issue a final rule as soon as possible. It clearly states that until the final rule is effective, insurance carriers and health plans will not be required to comply with the provisions of Section 2715.

Finally, the department anticipates that the final rule, which is a joint proposal from HHS, Labor and Treasury, will provide insurers and health plans with sufficient time to enable them to come into compliance with the final rule's requirements.

Blue Cross Blue Shield of Michigan will continue to monitor the regulation to determine if any changes are needed to current processes.

More information can be found at healthcare.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

Requirements

The availability of OPM multi-state plans will provide consumers with options that are identical, or nearly identical, in multiple state exchanges. As a result, for example, the OPM coverage option purchased in another state could also be available for purchase in Michigan, which could be a desirable feature when individuals move to another state. At least two plans must be made available in each exchange. At least one plan will be issued by a non-profit entity, and at least one must not cover elective abortions.

Contracted plans must meet multiple requirements:

• Licensed in each state and subject to all requirements of state law
• Meets all insurance reform requirements under the ACA
• Meets all essential health benefit requirements
• Offers bronze, silver, gold, and catastrophic plans in each state
• Meets qualified health plan requirements

Contracts

The Office of Personnel Management may contract with these plans without using a competitive bidding process. Contracts are issued for a one-year period but may be made automatically renewable, provided neither the plan or OPM terminates the contract. The Department of Health and Human Services has authority to appropriate funds for the program.

Multi-state plans contracted by OPM are automatically considered to be exchange-certified qualified health plans. The OPM director may prohibit a plan from being offered that is not in the best interest of consumers.

To be contracted, health insurers will negotiate over issues including medical loss ratio, profit margin, premiums, and any criterion that the OPM director feels to be in the best interest of enrollees.

For each contracted entity, their participation may be phased in so that they gradually offer coverage in all states. For the first contract year, coverage must be offered in 60 percent of states (30 states), for the second contract year, coverage must be offered in 70 percent of states (35 states), for the third contract year, coverage must be offered in 85 percent of states (43 states), and in the fourth contract year coverage must be offered in all states.

Governing Body

The multi-state plans will be governed by an advisory board created by OPM and consisting of plan enrollees or their representatives. Congress is authorized to appropriate funds necessary to carry out this section of the law.

The reform law states that health insurers are not required to comply with certain provisions of federal or state law if multi-state plans are not required to comply with those provisions. For example, the provisions include requirements regarding automatic renewal of health plan coverage, the ban on pre-existing condition exclusions, appeals rights, and health insurer solvency and licensure requirements.

Statutory language expressly permits the Blue Cross Blue Shield Association to collectively compete for this contract. BCBSM is currently evaluating whether to pursue a contract, with many decisions contingent upon future rulemaking.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

Physicians Health Plan of Mid-Michigan has contracted directly with HHS to administer "Health Insurance Program for Michigan," the state's PCIP. Michigan's Office of Financial and Insurance Regulation has regulatory oversight of the program.

HIP Michigan provides health insurance coverage for Michigan residents of all ages who qualify for the program, and is available on a first-come, first-served basis, until funding runs out. HIP Michigan will not deny any applicant coverage or benefits because of health status. To ease eligibility, HIP Michigan will accept applications with certified provider documentation of a medical condition within the last 12 months.

The program ends Dec. 31, 2013, when similar coverage will be available through health insurance exchanges.

On Sept. 16, HHS approved Michigan's request to reduce monthly premiums by 10 percent and ease the process to document a pre-existing condition beginning Oct. 1.

To qualify for HIP Michigan, you must:

• Be a resident of Michigan
• Be a U.S. citizen or lawfully present in the United States
• Have been denied coverage due to health conditions or been offered coverage with a rider excluding certain health conditions within the past six months or have a documented medical condition present within the last 12 months
• Have been uninsured (not had credible coverage) for six months prior to submitting your application

Nation wide, PCIPs established by the ACA have 33,958 participants as of Aug. 31. There were 493 enrollees in HIP Michigan as of Aug. 31, and enrollment has gradually increased between May and September of this year. Michigan hopes to provide coverage for up to 3,500 residents for a limited time, based on the availability of federal funding.

For more information, please visit:

• healthcare.gov
• pcip.gov
• The Health Insurance Program for Michigan's FAQ site
• The United States Government Accountability Report (PDF)

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The IOM recommendations are only advisory in nature and do not have the authority of federal regulation. The Department of Health and Human Services is expected to release a proposed rule on essential benefits in 2012.

In November 2010, HHS asked the IOM to recommend criteria and methodology for defining essential benefits.

The Institute of Medicine's report makes recommendations to realize two key goals:

1. Providing coverage for a wide range of health care needs
2. Ensuring the affordability of coverage

The report recommends that unless costs are taken into account in designing the essential benefits, individuals and small businesses will find the plans increasingly unaffordable, and the Affordable Care Act will not achieve its coverage expansion goals.

Instead of listing specific services that should be covered, the report makes the following recommendations:

• To keep plans affordable, HHS should determine the approximate cost of a silver-equivalent small employer plan in 2014 and ensure that the cost of essential benefits does not exceed this amount.
• To update the benefit package, the Institute recommends establishing a new National Benefits Advisory Council - an independent, nonpartisan committee staffed by HHS and comprised of a diverse group of stakeholders.
• State mandated benefits should not be automatically included as essential benefits, but rather should be evaluated in the same way as other potential benefits - based on medical effectiveness, safety, relative value compared to alternative options and protecting the most vulnerable.
• States should have flexibility to develop alternatives to the federal essential benefits.

The ACA specifies that at a minimum, essential benefits must include:

• Ambulatory patient services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance use disorder services, including behavioral health treatment
• Prescription drugs
• Rehabilitative and habilitative services and devices
• Laboratory services
• Preventive and wellness services and chronic disease management
• Pediatric services, including oral and vision care.

The Institute of Medicine report is available through the group's website.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The Obama administration has announced that it will not implement the CLASS Act, a long-term care insurance program created by the Affordable Care Act, because it is financially unsustainable.

The program, which was intended for people with chronic illnesses or severe disabilities, was known as Community Living Assistance Services and Supports. The program was intended for people with severe disabilities who wanted to live in the community, though benefits could also have been used to help pay for nursing home care or assisted living.

By statute, it would have been entirely self-financed, with premiums paid by workers through voluntary payroll deductions and no federal subsidy. Premiums were supposed to have ensured the solvency of the program over 75 years. It would have provided a basic lifetime benefit on average of $50 a day in the event of illness or disability, to be used to pay for even nonmedical needs, such as making a house wheelchair-accessible or hiring a home caregiver to assist with basic tasks.

Since the program was designed to receive no federal funding, and participants were required to pay premiums for five years before receiving benefits, the Congressional Budget Office had previously scored the CLASS Act as saving 86 billion over the 10-year budget window. However, the statutory requirement that the program had to be solvent over a 75 year window proved unworkable. In order to set premiums high enough to ensure sustainability, the program would have priced out younger, healthier individuals, likely resulting in a risk spiral requiring ever higher premiums.

The Department of Health and Human Services advised it will not be working further to implement the CLASS Act. The administration and Congress should "continue to explore all of the options to address the critical long-term care needs of Americans," wrote Kathy Greenlee, assistant secretary for HHS.

Despite this change, long term care remains an important issue. While some 70 percent of people over age 65 will require some type of long-term care during their lifetime, most people have little to no knowledge of the significant impact the demands of long-term care can have on their physical, emotional and financial health. Long-Term Care Awareness Month provides families with a great opportunity to learn about the resources and products available to plan for their future long-term care needs and protect their financial security.

LifeSecure Insurance Company, in partnership with the Michigan Governor's Office, designates November as LTCAM in Michigan in order to raise awareness of proper long-term care planning and the importance of finding solutions that work best for families. For more information, please visit www.longtermcare.gov. LifeSecure is an independent company that provides long-term care coverage.

For more information on CLASS, please visit healthcare.gov. View the report sent to Congress.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

State exchanges must establish a uniform timeline for a QHP issuer that is not already accredited to receive accreditation. HHS will provide standards for recognizing accrediting agencies in future rulemaking.

Exchanges will only be open to QHPs, but QHPs may be sold off the exchange. In order to be certified, QHPs must meet minimum standards. (The federal government has released a proposed rule, which includes the following items that are also outlined in the ACA.):

• Must provide the following information to the exchange in plain language: Claims payment policies and practices; periodic financial disclosures; data on enrollment; data on disenrollment; data on the number of claims that are denied; data on rating practices; information on cost-sharing and payments with respect to any out-of-network coverage; and information on enrollee rights under Title I of the ACA.
• Must make available the amount of enrollee cost sharing under the individual's plan in a timely manner upon request of the individual. At a minimum, such information must be made available through a website and such other means for individuals without access to the internet.
• Must provide the summary of benefits and uniform coverage summaries prior to the start of the open enrollment period.
• Must adhere to network adequacy standards established by the state exchange.
• Must make its provider directory available to the exchange for publication online and to potential enrollees in hard copy upon request.
• Must reconcile enrollment files no less than once a month with the exchange.
• Required to provide HHS with information on the distribution of prescription drugs, pharmacy benefit management activities, the collection of rebates and other monies in conducting these activities, and costs incurred to provide those drugs.
• Prohibited from employing marketing tactics that discourage the enrollment of individuals with significant health needs. Compliance with state laws and regulations regarding marketing practices is a proposed certification standard for qualified health plan issuers.
• Must supply the exchange annually with information on rates, covered benefits and cost-sharing requirements. HHS intends to apply rate review standards similar to the "unreasonable" rate review reporting standards for all rate increase requests on the exchanges.

Rules related to qualified health plans and dental coverage

Exchanges must allow limited dental benefit plans to be offered through the exchange, as long as the plan covers at least the pediatric dental essential health benefit and qualifies as "standalone dental" coverage, meaning it is not included as part of a medical plan.

• The exchange may allow standalone dental plans to be offered independently or in conjunction with a QHP.
• If a standalone dental coverage option is available on the exchange that covers the pediatric dental essential health benefit, health plans cannot be denied QHP status on the basis of not offering the pediatric dental essential health benefit.

It is unclear how premium tax credits and cost sharing subsidies will be distributed between a QHP and a standalone dental plan that covers the pediatric dental essential benefits.

Rules related to QHPs and abortion coverage

The ACA prohibits the use of public funds (premium tax credits or cost sharing subsidies) to pay for non-excepted abortions per the Hyde Amendment criteria. QHPs offered on an exchange that offer non-excepted abortion coverage are required to establish separate riders for abortion coverage and implement a strict funding segregation.

For more information, visit healthcare.gov

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

Risk adjustment

Beginning in 2014, the Affordable Care Act provides for a program of risk adjustment, a process that uses a member's medical diagnosis and demographic information to estimate spending on health care services, on non-grandfathered individual and small group coverage. The risk adjustment program aims to level the playing field by stabilizing benefit premiums, forcing plans to compete on price, quality and service.

HHS, together with the states, will establish criteria to be used in determining the average actuarial risk score for each health insurance issuer in the individual and small group markets, both on and off the health insurance exchange. The risk adjustment system will determine an average risk for each state. Issuers with aggregate risk that is greater than the average for the state will be compensated by issuers with aggregate risk that is less than the average for the state.

While a state may choose to allow HHS to administer its risk adjustment program, a state can also opt to use an approved alternative if it has also elected to operate its own exchange. Significant requirements are placed on states to ensure privacy of protected health information. Issuers must submit all data requested, including but not limited to, claims and encounter data, enrollment and demographic information, and prescription drug utilization data.

Reinsurance

The ACA requires the establishment of a transitional reinsurance program in each state to help stabilize premiums for coverage in the individual market during at least the first three years of the exchange. Transitional reinsurance applies to non-grandfathered, individual market coverage available on and off the exchange from 2014-2016, though states have the option to extend the program to 2017 or 2018, if funds remain.

A state that chooses to run its own exchange must also establish an entity to operate the transitional reinsurance program in the state. If a state does not run its own exchange, it may still elect to run the reinsurance program, or it can defer to the federal government.

The reinsurance program creates an attachment-point reinsurance system, but the proposed rule does not establish the attachment point, reinsurance rate or cap. Future federal regulations will suggest what these values should be, though states that are running the reinsurance program will have the option of choosing their own attachment point, reinsurance rate or cap.

The early retiree reinsurance program, established by the ACA, is an example of an attachment point reinsurance system. In the early retiree reinsurance program, the federal government covers 80 percent of approved claims costs between $15,000 and $90,000. In this setup, $15,000 is the attachment point, 80 percent is the reinsurance rate and $90,000 is the cap. Like the early retiree reinsurance program, the transitional reinsurance program would allow an individual to submit reinsurance claims as soon as those costs exceed the attachment point.

The transitional reinsurance will serve to subsidize the individual market and reduce prices significantly. However, as the transitional reinsurance program phases out, the cost of premiums in the individual market will likely increase. The funding collected nationally for the reinsurance program decreases from $10 billion in 2014 to $6 billion in 2015 and $4 billion in 2016. Since states have the option to hold onto reinsurance funds and use them in 2017 and 2018, the subsidy will disappear completely sometime between 2017 and 2019, depending on state decisions. Each year that the subsidy decreases, there will likely be a related increase in individual market premiums due to the loss of subsidy.

To fund the transitional reinsurance system, health insurance issuers and self-insured group health plans will pay an assessment based on market share. Federal regulation will establish a contribution rate, which will effectively serve as a premium tax rate for fully insured business and a claims tax rate for self-insured business.

Risk corridors

The temporary risk corridor is a federally administered program that offers a third layer of protection for health plan issuers by allowing them to share the risk for allowable costs with the federal government from 2014 through 2016. The goal is to mitigate uncertainty and pricing risk for issuers and ensure a robust, competitive marketplace in 2014.

Risk corridor transfers

In essence, the risk corridor system will compare actual claims costs to predicted claims costs. The predicted amount is referred to as a "target amount" in the ACA and is based in part off the premiums that are charged to customers. The actual cost is referred to as "allowable cost," which must meet certain criteria. In a risk corridor system, a plan with allowable cost that exceeds the target amount is considered to have been underpriced, due to underestimating the expected claims experience of enrollees. Plans with allowable cost that is less than the target amount, are thought to have been overpriced-if they would have correctly predicted (targeted) the claims experience of their enrollees, then premium prices would have been lower, and the target amount would have lined up with the actual, allowable cost. Thus, plans with allowable costs in excess of 103 percent of their target amount will receive payment from HHS, while plans with allowable costs less than 97 percent of target must pay the federal government a portion of their excess margins. The level of risk or gain sharing varies based on the difference from the target.

The ACA requires that risk adjusters, risk corridors and reinsurance be in place in the market no later than January 2014. Both states and issuers will have to implement significant changes in order to execute these three risk mitigation mechanisms.

For more information please go to: HealthCare.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

Work is underway to design and implement the exchanges. The proposed regulations lay out a timeframe under which states must submit their applications to the federal government. In order to be fully operational on Jan. 1, 2014, Michigan must receive approval from HHS by Jan. 1, 2013. Michigan must submit a plan and undergo a business readiness assessment ensuring that its entire geographic area is covered by one or more exchanges, and must notify HHS and receive approval for any changes. If a state is not running its own exchange, HHS will step in and run the exchange in that state.

If Michigan is not completely ready by Jan. 1, 2013, but is still aiming to have a fully operational state-run exchange by Jan. 1, 2014, HHS may issue a conditional approval. Alternatively, Michigan may seek approval to begin operations on Jan. 1, 2015, or on Jan. 1 of a subsequent year. States must receive HHS approval at least 12 months prior to the proposed effective date of a state-run exchange, and must be able to transition to a state-operated exchange if the exchange is initially federally operated. If a state does not expect that it can run all of the exchange functions itself, states can enter into a partnership with HHS or other states to help administer the exchange or can rely completely on the federal fall back. Federal funds are available for states that are working to implement an exchange, but no federal funding will be provided after Jan. 1, 2015.

Exchanges must be a governmental agency or a non-profit entity established by the state. The HHS-proposed rule envisions exchanges having governing boards consisting of health experts, including representatives from health insurance issuers. The exchange must regularly consult with certain stakeholders including health insurance issuers.

The following are requirements of the exchange:

• Must accept applications directly from an applicant, an authorized representative of an applicant, or someone acting responsibly for an applicant.
• Must allow application filing via an Internet portal, a call center, by mail and in person.
• Must provide consumer support, including a toll-free call center, website with comparison tools, and personalized calculator to determine subsidies and cost of coverage.

Small Business Health Options Program Exchange - Employer options

In order to purchase coverage on the SHOP Exchange, an employer must be a small employer and must offer coverage to all its full-time employees. Small employer must be defined as one to 100 employees beginning 2016; prior to 2016, states can limit to the small employer definition to one to 50 employees. If the employer chooses to offer coverage to employees based on the employee's primary worksite, rather than the employer's principal place of business, the SHOP exchange must allow the employer to offer coverage to those employees whose primary worksite is in the SHOP's service area.

SHOP Exchange - Employee choice

The SHOP exchange must allow a qualified employer to select a metal level of coverage (bronze, silver, gold or platinum), in which all health plans sold at that level of coverage on the exchange are available to the employer's qualified employees. The SHOP exchanges have the option of permitting employers to make one or more health plans available through other means.

For example, the SHOP exchange could allow employers to have the option of picking a single plan for their employees, to pick from several specific plans at one or more metal levels, or to pick from any plan available on the exchange.

Navigators

Navigators minimum duties include: maintain expertise in eligibility, enrollment, and program specifications; conduct education activities to raise awareness about the exchange; provide information in a fair, accurate and impartial manner; facilitate enrollment; provide referrals for any enrollee with a grievance; and provide information in a culturally and linguistically appropriate manner.

• Navigators will be paid by the exchange.
• Navigators cannot receive a commission for sales of coverage on an exchange.
• However, at state discretion, navigators may be able to receive commissions from health insurance issuers for sales of products off the exchange.
• The state or exchange may enforce existing and establish new standards or licensing requirements tailored to navigators.
• Navigators performing Medicaid and CHIP administrative functions may claim federal funding for a share of expenditures incurred.

Agents and Brokers

• States have the option to permit agents or brokers to assist qualified individuals, qualified employers, or qualified employees with enrollment on an exchange.
• States have the option to allow agents and brokers to assist individuals with applications for advance payments of the premium tax credit and cost-sharing reductions.
• The exchange may provide agent and broker information on its website.

The proposed regulation is open to public comments until Oct. 31, 2011 at which time modifications may be made prior to the issuance of final regulations. Blue Cross Blue Shield of Michigan will continue to monitor the regulation.

For more information about insurance exchanges, visit HealthCare.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

Note: This reform alert is an update of a previously published alert, Employers must offer minimum essential coverage or face penalties, but IRS to loosen ‘play or pay’ requirement.

Larger employers that don’t offer minimum essential health coverage to full-time workers may face penalties under health care reform if any full-time employees receive a government premium credit or subsidy to buy their own insurance through an exchange.

The so-called employer mandate and the health insurance exchanges both go into effect in 2014 under the Patient Protection and Affordable Care Act.

The penalties generally apply to all employers with 50 or more full-time equivalent employees. An employer with at least 50 FTEs that provides access to coverage but fails to meet certain requirements, outlined below, may also be subject to a penalty.

Minimum essential coverage generally includes any coverage offered in the small or large group markets. Excepted benefits, such as limited-scope dental or vision offered under a separate policy, certificate or contract of insurance and Medicare supplemental plans, do not qualify.

Penalties explained

Starting in 2014, large employers that don’t offer coverage face a penalty of $2,000 per full-time employee (excluding the first 30) if at least one FTE receives a government subsidy to buy coverage on an exchange. This is sometimes referred to as the "play or pay" penalty.

Employers that offer coverage to employees may still face a "free rider" penalty if the coverage offered is deemed unaffordable or low in value.

If an employer offers coverage, but a full-time employee receives a premium credit subsidy through an exchange, the employer must pay an assessment equal to the lesser of:

• $3,000 for each employee that receives a subsidy
• $2,000 for each full-time employee after the first 30

The monetary penalties listed above are annual figures and may be pro-rated to the number of months for which the penalty applies.

Who’s eligible for a subsidy?

Employees who are offered coverage from their employer could be eligible for subsidies on the exchange if they don’t qualify for Medicaid or other programs, are not enrolled in their employer’s coverage and meet either of the following conditions:

• The employee’s share of the premium exceeds 9.5 percent of their household income
• The plan pays for less than 60 percent on average of covered health care expenses (e.g. coverage offered does not have at least a 60 percent actuarial value).

After 2014, penalty amounts are indexed by a premium adjustment percentage for the calendar year.

However, the IRS has signaled it would be making the 2014 employer "play or pay" compliance requirement easier for employers.

Responding to concerns that employers will have difficulty knowing the household incomes of their employees, the IRS has indicated that under guidance to be issued later this year, employers would not be liable for a penalty if the cost of self-only coverage does not exceed 9.5 percent of the employee’s current W-2 wages from the employer — even if the employee must pay more than that for dependent coverage.

The Congressional Budget Office expects the penalties to generate $52 billion toward the overall cost of health reform by 2019.

For more information, visit HealthCare.gov

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The U.S. Department of Health and Human Services has announced a $700 million funding opportunity to help build and expand health centers.

The funding comes from the Affordable Care Act and is intended to help build, expand and improve community health centers while also providing jobs in the communities nationwide.

The funding opportunity includes $600 million for existing health centers for longer-term expansion projects and $100 million for existing health centers' shorter-term facilities improvements.

Applications for each funding opportunity are due by Oct. 12, 2011.

For more information, visit healthcare.gov. For a grant application, visit grants.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

New rules issued by the Department of Health and Human Services offer states guidance and flexibility on how to structure their exchanges, which aim to increase competition among insurance plans and bring about more affordable options.

The idea behind the exchanges is to make it easier for consumers to:

• Compare health plans based on price, benefits, cost-sharing and quality
• Get answers to questions about coverage options
• Find out whether they're eligible for private insurance tax credits or cost-sharing reductions, or for health programs like Medicaid or the Children's Health Insurance Program that make coverage more affordable
• Enroll in a plan

Generally, individuals would be eligible for subsidies to use on the exchange if their incomes are between 138 and 400 percent of the federal poverty level — between roughly $15,000 and $44,000 for individuals or $31,000 and $89,000 for a family of four in 2011. Subsidies are not available to individuals with access to other minimum essential coverage, such as Medicare, Medicaid, Children's Health Insurance Program or coverage offered through an employer.

However, individuals who get their coverage through an employer can qualify for subsidies if the coverage isn't of sufficient quality or it meets certain benchmarks as too costly.

Small businesses also will be eligible for a tax credit for coverage they purchase for employees through an exchange.

In Michigan, stakeholder workgroups organized by the Michigan Public Health Institute met earlier this year. MPHI recently presented the work groups' recommendations to the state, including a recommendation to create a single state exchange.

For more information, see our Q&A (PDF), or see the resources available at healthcare.gov:

• Blog
• Press release
• Exchange Regulation Overview
• Affordable Insurance Exchange Basics
• Small Business Fact Sheet
• States Fact Sheet
• Reinsurance, Risk Corridors and Risk Adjustment Fact Sheet
• Health Plans Fact Sheet
• Questions and Answers

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The penalty phases up to full implementation in 2016 and is indexed by inflation in following years. The penalties listed below are divided by 12 to calculate each monthly penalty for lacking coverage and are the greater of:

• 2014: $95 per person (capped at $285 per family) or 1 percent of household income
• 2015: $325 (capped at $975) or 2 percent of household income
• 2016: $695 (capped at $2,085) or 2.5 percent of household income
• 2017 and beyond: The $695 penalty is indexed for a cost-of-living adjustment and must be rounded to the next lowest multiple of $50. For families, the flat-dollar penalty is capped at three times the indexed value for an individual. For example, if in 2017 the penalty is $700, the capped amount would be $2,100. As in 2016, the individual mandate penalty is the greater of the flat-dollar amount or 2.5 percent of household income

Individuals under the provision will be required to have minimum essential coverage, which generally includes any coverage offered in the individual or small or large group markets and includes Medicare, Medicaid, Children's Health Insurance Program, military benefits and Peace Corps coverage.

Medicare supplemental plans and excepted benefits, such as limited-scope dental or vision offered under a separate policy, certificate or contract of insurance, do not qualify.

In 2016, the Congressional Budget Office estimates that 32 million people will have health coverage who otherwise would not have received it under pre-ACA law. However, about 21 million nonelderly Americans will still be uninsured in 2016, with most of them not subject to the individual mandate penalty. Exclusions will be allowed for people who cannot afford coverage, certain religious conscience exemptions, illegal immigrants and people who are incarcerated.

About 4 million people are projected to pay a penalty for being uninsured in 2016. The CBO and Joint Committee on Taxation estimate that collections will total about $4 billion per year from 2017 to 2019.

Modeled after a similar mandate in effect in Massachusetts, the individual mandate is based on the premise that expanding coverage to more Americans will spread costs more equally and lower average costs in the insurance pool, since there would be fewer uninsured people whose health care costs are borne by people who have health insurance.

This provision has been at the heart of legal challenges filed by several state governments. Lower federal courts have so far nearly split over the constitutionality of the individual mandate, and the only federal appellate court that has reviewed the issue to date has upheld the mandate.

Review by the U.S. Supreme Court has been requested.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The U.S. Department of Health and Human Services has released guidelines amending the preventive services Interim Final Rules to require coverage of women's preventive services, including well-woman visits, support for breastfeeding supplies and counseling, counseling for sexually transmitted infections, contraceptive methods and screening for gestational diabetes, HPV, HIV and domestic violence.

The guidelines include a religious exemption from covering contraceptive services.

BCBSM is currently reviewing these guidelines and further communications will be forthcoming.

Click for details and frequency guidelines.

More information can be found at HealthCare.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

Recipients of this money will create and support a national network of employer-run health programs for small and large businesses. These programs will include:

• Tobacco-free campus policies
• Health risk assessments
• Lifestyle counseling and coaching
• Flextime to promote physical activity during the workday
• Healthy food options in cafeterias and vending machines

The application deadline for this grant is Aug. 8, 2011.

Click here for more information on how to apply.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

If CCIIO determines that a state has an "effective rate review program" that includes certain disclosure and transparency requirements, then CCIIO will adopt a state's determination of whether a rate increase is "unreasonable." If a state is deemed not to have an effective program, rate increases that exceed the federal threshold will be reviewed by CCIIO to determine if the rate increase is "unreasonable." Michigan's review process has been deemed effective.

On July 6, CCIIO released a list of states with review processes deemed "effective," but this determination can be re-evaluated as changes are made in each state.

As of July 1, 2011:

• 43 states, the District of Columbia and one U.S. territory have effective rate review in at least one insurance market (includes Michigan)
• 40 states, the District of Columbia and the U.S. Virgin Islands have effective review for all insurance markets and issuers (includes Michigan)
• In three states, the federal government will partner with the state to conduct reviews
• In seven states and four U.S. territories, the federal government will conduct reviews

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The National Prevention Strategy focuses on disease prevention rather than supporting a health care system focused on treating illness as one way to further the Affordable Care Act’s goals of lowering costs, improving quality of care and expanding access. The initiative calls for the cooperation of everyone, from the government down to employers and individuals, in helping to create a healthier nation.

The initiative, created by the National Prevention, Health Promotion, and Public Health Council, offers recommendations across four broad strategic areas:

• Creating healthy and safe communities. As one example, the plan recommends that employers adopt policies to encourage physical activity by employees and reduce pollution, such as ride-share incentives or workplace flexibility policies.
• Expanding preventive services in clinical and community settings. Expanding efforts like diabetes prevention programs to more underserved groups as one way to improve health and lower costs.
• Empowering people to make healthy choices. Encouraging policies and programs to make healthy options the easy and affordable choice.
• Eliminating health disparities. Having health care professionals train and hire more qualified staff from underrepresented racial and ethnic minority groups, or people with disabilities, as one way to eliminate disparities.

In an effort to achieve these goals the strategy has chosen seven areas of priority to focus on:

• Healthy eating
• Active living
• Mental and emotional well-being
• Reproductive and sexual health
• Tobacco free living
• Preventing drug abuse and excessive alcohol use
• Injury and violence-free living

The administration says it’s already working on a number of efforts that support the goals laid out in the National Prevention Strategy, including the Let’s Move! Initiative targeting obesity, the Neighborhood Revitalization Initiative to transform distressed neighborhoods and an executive order to ramp up federal hiring of people with disabilities.

Click here to download a PDF version of the full report.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

The Elder Justice Act authorizes $777 million over four years to support various state and community efforts to fight elder abuse. State Adult Protective Services agencies are allocated $400 million in federal funds, with an additional $100 million in state demonstration grants to improve the agencies. Forensic centers, state survey agencies and long-term care job-training and recruitment efforts would also receive funding.

Congress has yet to appropriate the funding.

Two separate entities will be responsible for reporting and putting the Elder Justice Act into affect:

1. The Elder Justice Coordinating Council will make recommendations to the Department of Health and Human Services on coordinating the activities of federal, state, local and private agencies in regards to preventing elder abuse. The council will report every two years on recommendations and accomplishments.
2. The Advisory Board on Elder Abuse, Neglect and Exploitation will submit both short and long-term multidisciplinary strategies within 18 months to further the field of elder justice. This 27-member board will also make annual recommendations to the Elder Justice Coordinating Council.

A study by the National Institute of Justice found that 11 percent of elders reported experiencing at least one form of mistreatment during the past year. The problem is expected to worsen as the ranks of the populations of Americans above the age of 65 swell in the coming years.

This article was originally published by Blue Cross Blue Shield of Michigan health reform.

For insured coverage, the health insurance issuer pays the fee. For self-funded customers, the plan sponsor (usually the employer) pays this fee.

The dollar amount of the fee will vary depending on the fiscal year in which a plan or policy year ends.

• For plan or policy years ending in fiscal 2013, the fee will be equal to $1 multiplied by the average number of covered lives.
• For plan or policy years ending in fiscal 2014, the fee will be $2 per average number of covered lives.
• For fiscal years 2015 through 2019, the $2 fee is indexed to the growth in national health spending as measured by the Centers for Medicare and Medicaid Services’ per-capita National Health Expenditure data. In current law, this fee terminates at the end of fiscal 2019.

It is not yet clear when the Internal Revenue Service will first assess insurers and plan sponsors for the amount owed, or when payments will be due to the IRS.

Exceptions from this fee include the following types of health coverage: Medicare, Medicaid, State Children’s Health Insurance Program, TRICARE and other military coverage, Indian tribe medical care programs, and excepted benefits (including stand-alone dental and vision, Medigap, and several other types of benefits).

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Rate increases meeting threshold subject to government review

Starting with rates filed Sept. 1, 2011 (or for States which do not require filing, for rates effective on or after Sept. 11, 2011), insurers seeking rate increases of 10 percent or more are required to publicly disclose the proposed increases and the justification for them. Such increases will be subject to state or federal review to determine whether they are unreasonable. States with effective rate review systems will conduct the reviews and must meet certain requirements set forth by HHS, which will decide by July 1 whether states are qualified to conduct the reviews.

Starting Sept. 1, 2012, the 10 percent threshold will be replaced with a state-specific threshold jointly developed by HHS and individual states.

An easy-to-understand form explaining the proposed increases will also be made publicly available. To strengthen consumer transparency, states must also provide an opportunity for public comments.

HHS does not have the right to deny rate increases under this regulation, only the right to review increases and determine what is reasonable or unreasonable.

For more details, please visit www.HealthCare.gov

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Rate increases meeting threshold subject to government review

2011

Tax on non-qualifying health spending accounts (HSAs):

• The tax on non-qualifying HSA withdrawals increases from 10 to 20 percent beginning in 2011.

2012

W2 forms:

Click here for the latest information on W-2 reporting.

Communication and standardization:

• Prior to early 2012, federal regulations will develop standardized processes and formats for compiling and communicating benefits, plan changes and rights.

2013

Exchange notification:

• Employees must be notified of the existence of their state health care exchange and eligibility for potential premium credit by March 1, 2013

Flexible spending accounts (FSAs):

• In 2013, flexible spending contributions are limited to $2,500. In 2011, over-the-counter drugs must be prescribed to use FSA.

Long term care program enrollment:

• In 2013, employees may be auto-enrolled in a new federal long-term care plan called the Community Living Assistance Services and Supports (CLASS) program. The department of Health and Human Services has yet to provide details about eligibility, benefits and administration of the CLASS program.

The repeal, effective April 15, represents a significant change in the requirements for employers who offer minimum essential coverage to their employees. Employers would have been required to offer vouchers beginning in 2014 to certain employees whose cost of coverage exceeded 8 percent but did not exceed 9.8 percent of household income. The voucher could have been used to purchase coverage on a state health insurance exchange.

The free-choice voucher repeal does not eliminate the penalty some employers may face if they do not offer an "affordable" employer-sponsored group health plan to full-time employees beginning in 2014.

For more information, visit HealthCare.gov

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Free-choice vouchers repealed

1. Report payments for services of more than $600 made to corporations
2. Report purchases of goods of more than $600 to all payees (corporate and non-corporate).

This mandate would have taken effect in 2012.

To recoup the revenue lost by eliminating the reporting requirement, the Small Business Paperwork Mandate Elimination Act of 2011 changed the repayment requirements for individuals who receive subsidies to purchase coverage on the exchange beginning in 2014. Recipients will now be expected to repay a larger portion of the subsidy if their household income increases.

For more information, click here.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Form 1099 tax-reporting requirement for businesses repealed

The newly named Center for Consumer Information and Insurance Oversight (CCIIO) will be working within the Centers for Medicare and Medicaid Services. It previously was housed under the Department of Health and Human Services.

The unit will be leading many of the changes being made under the Patient Protection and Affordable Care Act. Its role will be to:

• Establish and enforce various standards for the health insurance market
• Provide consumers with information about health coverage options through an Internet portal and other communications
• Conduct the external appeals process for states that do not have such systems in place
• Implement and enforce the new rules for medical loss ratio standards and the insurance premium rate review process
• Direct the Pre-Existing Condition Insurance Plan program, the Early Retiree Reinsurance program and the Consumer Operated and Oriented Plan program
• Develop and implement standards for state-based health insurance exchanges while maintaining the federal exchange

Click here for more information about CCIIO.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Government office aims to help consumers navigate health care reform

An ACO is a patient-centered organization where groups of providers partner to manage and coordinate the care of Medicare beneficiaries.

Under the proposal, the Medicare Shared Savings Program would reward ACOs that demonstrate improved quality of care and lower growth in health care costs by sharing in some portion of the cost savings achieved.. The new program is expected to begin Jan. 1, 2012 and would apply only to Medicare fee-for-service beneficiaries, not to Medicare Advantage or private insurance members. Patient and provider participation is voluntary.

The Medicare Shared Savings Program would offer shared savings payments and other incentives to groups of providers that work together to coordinate patient care across a variety of settings, such as physician’s offices, hospitals and long-term care facilities. In order to qualify for shared savings payments, the ACOs would have to meet high quality standards to ensure that patients have better health outcomes and are satisfied with the care received.

The proposed program links the amount of shared savings an ACO may receive to 65 quality measures across five domains of individual and population health:

• Patient and caregiver experience of care
• Coordination of care
• Patient safety
• Preventive health
• At-risk population or frail and elderly health

During the first year of the program, quality performance data would be used only for informational purposes. Performance measures are expected to affect the amount of shared savings during the second and third years.

Risk sharing

In addition to sharing in a portion of any savings, all ACOs are expected to eventually assume risk for losses. The proposal sets two tracks based on the readiness of the ACO:

• One-sided model. Under this model, ACOs do not assume a downside risk until the third year of the three-year contract and, as a result, would receive a lower percentage share of the savings.
• Two-sided model. ACOs would assume the downside risk for losses immediately, but in return, they would be eligible for a higher share of any savings.

The role of beneficiaries

The rule proposes to assign beneficiaries retrospectively to ACOs, based on where beneficiaries previously received the majority of their primary care services. Assignment to an ACO, however, does not limit beneficiaries’ rights to visit any provider they choose; ACOs cannot limit them to certain providers, use utilization management or require prior authorization.

Providers who participate in an ACO would be required to notify beneficiaries that:

• They are participating in an ACO.
• Their claims data may be shared with CMS
• The ACO may be eligible for shared savings, or responsible for losses, based on its performance.

The beneficiary may choose to continue with the provider and ACO or seek care from an unaffiliated provider. Beneficiaries could also opt out of the data sharing arrangement, which would prohibit the ACO from receiving claims data about the beneficiary from CMS.

How providers can participate

Providers must form or join an Accountable Care Organization and apply to CMS (existing ACOs are not automatically accepted). If accepted, the ACO must agree to serve at least 5,000 Medicare patients and sign an agreement to participate in the program for three years.

Each ACO must have certain IT infrastructure in place to collect and evaluate data, and at least 50 percent of all participating primary care providers must become “meaningful electronic health record users” by the start of year two. ACOs also have to establish a governing body representing providers, suppliers and Medicare beneficiaries. They would be responsible for routine self-assessment, monitoring and reporting of the care delivered.

CMS estimates that between 1.5 million and 4 million Medicare beneficiaries will align with a participating ACO, helping to save between $170 million and $960 million during the first three years of the program.

This program is a proposed rule that may change significantly before final regulations are released. CMS will consider comments during a 60-day public comment period that concludes June 6. More information is available from both the CMS and HealthCare.gov sites.

In conjunction with the proposed rule, the Federal Trade Commission and the Department of Justice have proposed their own policy for enforcing antitrust provisions for ACOs and will take comments from the public until May 31.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Medicare proposal would use Accountable Care Organizations to improve quality, rein in costs

Employers are not required to report the cost of coverage on interim W-2s requested by employees before the end of the calendar year.

When calculating and reporting the cost of coverage, the following information should be included:

• Cost of coverage paid by the employee and by the employer, including the cost of dependent coverage. If an employee adds or removes a dependent during the calendar year, the cost change must be reflected on the W-2.
• Dental and vision benefits if integrated with the medical benefits. The cost of dental and vision coverage should not be included if dental and vision are offered under a separate certificate, or if the employee is allowed to opt out of coverage and is required to pay part of the cost of coverage.
• Amount of employer’s contribution to flexible spending accounts (FSAs)

There are benefits that should not be included in reporting the cost of coverage, including:

• Contributions to health savings accounts (HSAs), Archer medical savings accounts (MSAs), or health reimbursement arrangements (HRAs)
• All indemnity policies offered by the employer.

Employers will not need to report the value of health benefits provided to retirees, if the employer is not otherwise required to issue the individual a W-2 form.

The W-2 does not need to include the cost of benefits if the employee’s only applicable benefits are received through a multiemployer plan*.

Employers may select among three options in calculating the cost of coverage to report on W-2s:

1. COBRA applicable premium method. Use the COBRA premium cost.
2. Premium charged method. Employers reporting cost of coverage for employees under insured plans may calculate the reportable cost using the premium charged by the insurer.
3. Modified COBRA premium method. If the employer subsidizes the cost of COBRA coverage, it can use a reasonable good faith estimate of the COBRA premium; or, if the current year COBRA premium is equal to a prior year COBRA rate, the prior year COBRA rate can be used to report the cost of coverage in the current year.

If an employee terminates their coverage anytime during the calendar year and elects COBRA or other coverage, the employer can choose to either report the cost of coverage for the active status period, or for both active status and COBRA periods.

Future guidance may change these requirements and exceptions, and we will provide updated information when more details are available. Click here for the IRS notice providing further details on these reporting requirements.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. W-2 reporting requirements expanded for some employers

Rate increases meeting this threshold will be published on the Department of Health and Human Services website. Additionally, rate increases that the government deems “unreasonable” must be published on the health insurance company’s website.

Threshold

The proposed regulation does not define a threshold that deems a proposed rate to be “unreasonable”. However, the proposed rate increase will be subject to review if the weighted average rate increase for all enrollees in a product in the previous 12 months meets or exceeds 10 percent.

Health insurance companies proposing rate increases that meet or exceed the threshold must submit a preliminary justification to the State and to the Department of Health and Human Services.

State impact

The government will work with states to determine if they have an effective rate review process in place.

States that have an effective rate review process in place will use existing State law to determine what rates are unreasonable, and states will review the rate increases.

For states that do not have an effective review process, the federal government will conduct the review to determine if the rates are unreasonable until an effective process is established at the state level. A rate will be deemed unreasonable if it is excessive, unjustified or unfairly discriminatory.

If a health insurer chooses to implement a rate increase deemed unreasonable, the insurer must submit a final justification to the Department of Health and Human Services. Additionally, the insurer must post the preliminary justification, state or federal final determination that the rate increase is unreasonable, and the insurer’s final justification prominently on the insurer’s website. This information must remain public on the insurer’s website for not less than three years.

The final regulations have not been released; therefore it is uncertain as to what will constitute an effective rate review process. Currently, Blue Cross Blue Shield of Michigan must file and receive approval from the State Insurance Commissioner for all individual rates and group rating systems under Public Act 350.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Rate increases meeting threshold subject to government review

As previously communicated in a Reform Alert, the health care reform law distinguishes between health plans that existed prior to the March 23, 2010, law enactment date and those that come into existence afterward. Individual and group health plans already in existence prior to enactment are referred to as "grandfathered" plans, and new health plans (or plans which have been materially modified after March 23, 2010) are referred to as "non-grandfathered" plans. This distinction is important because grandfathered health plans are, in some cases, exempt from certain reform requirements.

Like previously issued frequently asked questions, the newly-released FAQs aim to help people understand and benefit from the new law. Four of the more commonly asked questions are included below. Click here to read the entire FAQ.

What are considered “bona fide employment-based reasons” for eliminating a benefit package that will not impact the grandfathered status of the other benefit packages?

While not exclusive, the reasons include:

• When a benefit package is being eliminated because the issuer is exiting the market;
• When a benefit package is being eliminated because the issuer no longer offers the product to the employer (for example, because the employer no longer satisfies the issuer's minimum participation requirement);
• When low or declining participation by plan participants in the benefit package makes it impractical for the plan sponsor to continue to offer the benefit package;
• When a benefit package is eliminated from a multiemployer plan as agreed upon as part of the collective bargaining process; or
• When a benefit package is eliminated for any reason and multiple benefit packages covering a significant portion of other employees remain available to the employees being transferred.

What happens to the grandfathered status of my plan when changes are made to the formulary due to the release of generic drugs where my plan’s cost-sharing level is based on whether the drug has a generic alternative and as a result of the newly available generic drug the cost sharing for the brand-name increases?

For example, if, as of March 23, 2010, the terms of the plan included prescription drug benefits with different cost-sharing divided into tiers as follows:

• Tier 1 includes generic drugs only;
• Tier 2 includes brand name drugs with no generic available;
• Tier 3 includes brand name drugs with a generic available in Tier 1; and
• Tier 4 includes IV chemotherapy drugs.

A drug was previously classified in Tier 2 as a brand name drug with no generic available. However, a generic alternative for the drug has just been released and is added to the formulary. Since the generic is now available, the plan moves the brand name drug into Tier 3 and adds the generic to Tier 1. This movement of the brand name drug into a higher cost-sharing tier does not cause the plan to relinquish grandfather status

When changing a plan’s benefits, when does the plan become non-grandfathered?

Example 1:

A plan operating on a calendar plan year is considering an amendment to plan terms that will exceed the thresholds described in paragraph (g)(1) of the interim final regulations and cause it to relinquish grandfather status. If the plan sponsor decides to adopt this amendment on July 1, 2011, and the change becomes effective for the plan year beginning on January 1, 2012, at what point in time does the plan relinquish grandfather status?

A plan or coverage will cease to be a grandfathered health plan when an amendment to plan terms, which exceeds the thresholds described in paragraph (g)(1) of the interim final regulations, becomes effective – regardless of when the amendment is adopted. Therefore, in this example, the plan would cease to be a grandfathered health plan on January 1, 2012, the first day of the first plan year for which the change is effective.

Example 2:

A plan operating on a calendar plan year is considering an amendment to plan terms that will cause it to relinquish grandfather status, but wants the amendment to become effective before the first day of the next plan year. If the plan sponsor decides to make this amendment effective on July 1, 2011, does the plan relinquish grandfather status in the middle of the plan year?

Yes. A plan or coverage will cease to be a grandfathered health plan when a plan amendment becomes effective. Therefore, if a plan sponsor chooses to make an amendment to plan terms effective in the middle of a plan year, the plan will cease to be a grandfathered health plan at that time.

If a plan sponsor wishes to avoid relinquishing grandfathered status in the middle of a plan year, any changes that will cause a plan or coverage to relinquish grandfather status should be made effective the first day of a plan year that begins after the change is adopted.

A plan covers both retirees and active employees and is subject to the market reform requirements of the Affordable Care Act. For retirees, the employer that sponsors the plan contributes $300 per year multiplied by the individual's years of service for the employer, capped at $10,000 per year. As the cost of coverage increases over time, how is it determined whether the employer's contribution rate has decreased for purposes of maintaining grandfather status?

In this example, the employer makes contributions based on a formula. Accordingly, the plan will cease to be a grandfathered health plan if the employer decreases its contribution rate towards the cost of coverage by more than five percent below the contribution rate on March 23, 2010. If the formula does not change, the employer is not considered to have reduced its contribution rate, regardless of any increase in the total cost of coverage. However, if the dollar amount that is multiplied by years of service decreases by more than five percent (or if the $10,000 maximum employer contribution cap decreases by more than five percent), the plan will cease to be a grandfathered health plan.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Additional information released regarding grandfathered group health plans

The so-called employer mandate and the health insurance exchanges both go into effect in 2014 under the Patient Protection and Affordable Care Act.

The penalties generally apply to all employers with 50 or more full-time equivalent employees. An employer with at least 50 FTEs that provides access to coverage but fails to meet certain requirements, outlined below, may also be subject to a penalty.

Minimum essential coverage generally includes any coverage offered in the small or large group markets. Excepted benefits, such as limited-scope dental or vision offered under a separate policy, certificate or contract of insurance and Medicare supplemental plans, do not qualify.

Penalties explained

Starting in 2014, large employers that don’t offer coverage face a penalty of $2,000 per full-time employee (excluding the first 30) if at least one FTE receives a government subsidy to buy coverage on an exchange. This is sometimes referred to as the “play or pay” penalty.

Employers that offer coverage to employees may still face a “free rider” penalty if the coverage offered is deemed unaffordable or low in value.

If an employer offers coverage, but a full-time employee receives a premium credit subsidy through an exchange, the employer must pay an assessment equal to the lesser of:

• $3,000 for each employee that receives a subsidy
• $2,000 for each full-time employee after the first 30

The monetary penalties listed above are annual figures and may be pro-rated to the number of months for which the penalty applies.

Who’s eligible for a subsidy?

Employees who are offered coverage from their employer could be eligible for subsidies on the exchange if they don’t qualify for Medicaid or other programs, are not enrolled in their employer’s coverage and meet either of the following conditions:

• The employee’s share of the premium exceeds 9.5 percent of their household income
• The plan pays for less than 60 percent on average of covered health care expenses (e.g. coverage offered does not have at least a 60-percent actuarial value).

After 2014, penalty amounts are indexed by a premium adjustment percentage for the calendar year.

The Congressional Budget Office expects the penalties to generate $52 billion toward the overall cost of health reform by 2019. The Department of Health and Human Services estimates that fewer than 2 percent of large American employers will have to pay the assessments.

For more information, visit HealthCare.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Employers that don’t offer minimum essential health coverage may face penalties

Michigan’s Medicaid program has approximately 1.43 million* enrollees and a budget of nearly $10 billion for the 2011 fiscal year. The state will add an estimated 450,000 new Medicaid enrollees by 2015.**

Effective April 1, 2010, the law allows state Medicaid programs to cover childless adults with incomes up to 133 percent of the Federal Poverty Level (FPL) at the state’s regular federal match rate. Some states, including Michigan, have received federal waivers to provide basic coverage for very low-income childless adults. In Michigan, individuals qualify if they are up to 45 percent of the FPL, or have an annual income of about $5,000.

Effective Jan. 1, 2014, the law expands Medicaid eligibility to individuals that:

• Are under age 65
• Are not eligible for Medicare
• Are not pregnant
• Have incomes up to 133 percent of the FPL. Based on 2010 data, 133 percent of FPL equates to $14,404 for an individual or $29,326 for a family of four.

Currently, individuals must meet certain criteria, income standards and asset tests to be eligible for Medicaid. The federal government sets mandatory and optional eligibility categories, but states design their own programs, causing a wide variation in eligibility among state Medicaid programs.

The health care reform law will standardize the eligibility and income standards among state Medicaid programs. Eligibility will be determined without an asset test for most individuals.

The Congressional Budget Office projects that the law will increase collective enrollment in Medicaid and the Children’s Health Insurance Program by about 16 million people by 2019. For the first three years of the Medicaid expansion, the federal government will cover the costs of the newly eligible Medicaid population. In 2017, federal funding will decrease to 95 percent and drop to 90 percent in 2020.

Effective Jan. 1, 2014, state Medicaid programs must offer insurance premium assistance for Medicaid-eligible residents who are offered employer-sponsored health care coverage. Employers of low-income workers could be encouraged to offer group health insurance coverage if workers receive premium assistance from Medicaid.

Medicaid benefits

States must maintain current eligibility levels until the new health insurance exchanges are functional in January 2014.

The law adds a few new mandatory and optional benefits to Medicaid. Like eligibility standards, the federal government sets certain mandatory benefits that states must cover if they establish a Medicaid program.

Likewise, the government lists optional benefits that states may cover. The law adds family planning services to the list of optional benefits and also adds two mandatory benefits: coverage for free-standing birth centers and tobacco cessation for pregnant women. The Michigan Medicaid program currently provides family planning services, smoking cessation programs and coverage for services provided by midwives at a licensed birthing hospital.

Temporary primary care reimbursement increase

Medicaid reimbursement rates for primary care providers will increase to address concerns that the expansion of Medicaid eligibility will lead to access issues.

The federal government will finance the reimbursement rates, which will match Medicare rates for 2013 and 2014. It is unclear if states will fund the reimbursement increase when the federal funding ends in 2015.

 * Source: 2009 U.S. Census data for Michigan Medicaid enrollees
** Source: 2010 Centers for Healthcare Research and Transformation Issue Brief; Impact of Health Reform on Coverage in Michigan

This article was originally published by Blue Cross Blue Shield of Michigan health reform. How health care reform will change medicaid

Work is underway to design and implement the exchanges. The proposed regulations lay out a timeframe under which states must submit their applications to the federal government. In order to be fully operational on January 1, 2014, Michigan must receive approval from HHS by January 1, 2013. Michigan must submit a plan and undergo a business readiness assessment ensuring that its entire geographic area is covered by one or more exchanges, and must notify HHS and receive approval for any changes. If a state is not running its own exchange, HHS will step in and run the exchange in that state.

If Michigan is not completely ready by January 1, 2013, but is still aiming to have a fully operational state-run exchange by January 1, 2014, HHS may issue a conditional approval. Alternatively, Michigan may seek approval to begin operations on January 1, 2015 or on January 1 of a subsequent year. States must receive HHS approval at least 12 months prior to the proposed effective date of a state-run exchange, and must be able to transition to a state-operated exchange if the exchange is initially federally operated. If a state does not expect that it can run all of the exchange functions itself, states can enter into a partnership with HHS or other states to help administer the exchange or can rely completely on the federal fall back. Federal funds are available for states that are working to implement an exchange, but no federal funding will be provided after January 1, 2015.

Exchanges must be a governmental agency or a non-profit entity established by the state. The HHS proposed rule envisions exchanges having governing boards consisting of health experts, including representatives from health insurance issuers. The exchange must regularly consult with certain stakeholders including health insurance issuers.

The following are requirements of the Exchange:

• Must accept applications directly from an applicant, an authorized representative of an applicant, or someone acting responsibly for an applicant.
• Must allow application filing via an internet portal, a call center, by mail and in person.
• Must provide consumer support, including a toll-free call center, website with comparison tools, and personalized calculator to determine subsidies and cost of coverage.

Small Business Health Options Program (SHOP) Exchange - Employer options

In order to purchase coverage on the SHOP Exchange, an employer must be a small employer and must offer coverage to all its full-time employees. Small employer must be defined as 1-100 employees beginning 2016; prior to 2016, states can limit to the small employer definition to 1-50 employees. If the employer chooses to offer coverage to employees based on the employee's primary worksite, rather than the employer's principal place of business, the SHOP Exchange must allow the employer to offer coverage to those employees whose primary worksite is in the SHOP's service area.

SHOP Exchange - Employee choice

The SHOP Exchange must allow a qualified employer to select a metal level of coverage (bronze, silver, gold or platinum), in which all health plans sold at that level of coverage on the Exchange are available to the employer's qualified employees. The SHOP Exchanges have the option of permitting employers to make one or more health plans available through other means.

For example, the SHOP Exchange could allow employers to have the option of picking a single plan for their employees, to pick from several specific plans at one or more metal levels, or to pick from any plan available on the exchange.

Navigators

Navigators minimum duties include: maintain expertise in eligibility, enrollment, and program specifications; conduct education activities to raise awareness about the exchange; provide information in a fair, accurate and impartial manner; facilitate enrollment; provide referrals for any enrollee with a grievance; and provide information in a culturally and linguistically appropriate manner.

• Navigators will be paid by the Exchange.
• Navigators cannot receive a commission for sales of coverage on an Exchange.
• However, at state discretion, navigators may be able to receive commissions from health insurance issuers for sales of products off the Exchange.
• The state or Exchange may enforce existing and establish new standards or licensing requirements tailored to navigators.
• Navigators performing Medicaid and CHIP administrative functions may claim federal funding for a share of expenditures incurred.

Agents and Brokers

• States have the option to permit agents or brokers to assist qualified individuals, qualified employers, or qualified employees with enrollment on an Exchange.
• States have the option to allow agents and brokers to assist individuals with applications for advance payments of the premium tax credit and cost-sharing reductions.
• The Exchange may provide agent and broker information on its website.

The proposed regulation is open to public comments until October 31, 2011 at which time modifications may be made prior to the issuance of final regulations. Blue Cross Blue Shield of Michigan will continue to monitor the regulation.

For more information about insurance exchanges, visit HealthCare.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Nondiscrimination requirements for fully insured group health plans

Under federal health care reform, employers must provide unpaid, reasonable break periods and a private place where nursing mothers can express breast milk as frequently as needed. The space cannot be a bathroom and must be clean and free from intrusion from coworkers and the public. The requirement applies up until the child’s first birthday.

The law applies to all employers covered by the Fair Labor Standards Act - generally meaning workers who are subject to overtime pay laws. It does not apply to salaried workers who are exempt from overtime pay, such as those in management positions, although employers may choose to provide reasonable break times.

Employers with fewer than 50 workers are exempt if the requirement would "impose an undue hardship" based on the business' size, financial resources and other factors. The undue hardship standard has traditionally been a high one to meet.

The law went into effect with the signing of the Patient Protection and Affordable Care Act on March 23, 2010, but rules for enforcement are not yet in place. The Department of Labor is expected to clarify the terms “reasonable break time” and “significant difficulty or expenses” used in the law.

While nearly half of all states currently have laws related to breastfeeding in the workplace, state law in Michigan only exempts breastfeeding from public indecency laws.

The new federal law will provide a minimum level of support for lactating mothers in all states, but it doesn’t supersede laws in states with stronger protections.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Employers must allow breastfeeding breaks under health reform

Individuals with an income of $85,000 or above, or married couples filing jointly with an income of $170,000 or above, must pay an extra premium amount for Part D coverage. This extra premium amount is called the income-related monthly adjustment amount (IRMAA). This amount is based on modified adjusted gross income as reported on the beneficiary’s most recent IRS tax return.

CMS recently provided the following tables showing the Part D premium adjustment amount based on income threshold. If the beneficiary is single and filed an individual tax return, or married and filed a joint tax return, the following chart will apply:

If beneficiary is married and lived with their spouse at some time during the taxable year, but filed a separate tax return, the following chart will apply:

CMS also provided the following frequently asked questions and answers:

1. What is the income-related monthly adjustment amount (IRMAA)?
Changes in the law affect how Medicare prescription drug coverage premiums are calculated for those with higher incomes. Beginning January 1, 2011, if you have a higher income, you will pay a higher premium for your Medicare prescription drug coverage (Part D). If your income is $85,000 or above (individual) or $170,000 or above (married filing jointly), you must pay an extra premium amount for your Medicare Part B and Medicare prescription drug coverage. This extra premium amount is called the income-related monthly adjustment amount (IRMAA). This amount is based on your modified adjusted gross income as reported on your IRS tax return from 2 years ago (your most recent tax return).

2. How will I know if I have to pay Part D-IRMAA?
Social Security will send you a letter if you have to pay an extra amount for your Medicare prescription drug coverage. This letter will explain how they determined the amount you must pay and the actual IRMAA amount.

Your health plan does not determine who will be subject to the Part D-IRMAA. Therefore, if you disagree with the amount you must pay, you must contact the Social Security Administration. You can visit them at www.socialsecurity.gov/mediinfo.htm, call 1-800-772-1213, or visit your local Social Security office. TTY users should call 1-800-325-0778.

3. Do I have to pay the Part D-IRMAA?
Yes. You must pay both the extra amount, as well as your plan’s premium each month in order to keep Medicare prescription drug (Part D) coverage.

4. Why am I subject to Part D-IRMAA in addition to my standard prescription drug premium?
A new law changes how Medicare prescription drug coverage premiums are calculated for those with higher incomes. Social Security will send you a letter if you have to pay an extra amount for your Medicare prescription drug coverage. This letter will explain how they determined the amount you must pay and the actual amount.

Your health plan does not determine who will be subject to the Part D-IRMAA. Therefore, if you disagree with the amount you must pay, you must contact the Social Security Administration. You can visit them at www.socialsecurity.gov/mediinfo.htm, call 1-800-772-1213, or visit your local Social Security office. TTY users should call 1-800-325-0778.4

5. Why am I receiving a bill from the Centers for Medicare & Medicaid Services (CMS) for my Part D-IRMAA, rather than Social Security withholding the amount from my check?
By law, income-related monthly adjustment amount (IRMAA) for prescription drug coverage must be withheld from Social Security, Railroad Retirement Board, or Office of Personnel Management benefit checks unless the monthly payment isn’t enough to cover the entire amount owed. If your check isn’t enough to cover the entire amount, you will get a bill from Medicare. For more information about the Part D-IRMAA withholdings from your benefit check, visit www.socialsecurity.gov/mediinfo.htm, call 1-800-772-1213, or visit your local Social Security office. TTY users should call 1-800-325-0778. For more information about the bill you received from Medicare, visit Centers for Medicare and Medicaid Services resources are available at www.medicare.gov or by calling 1-800-MEDICARE (1-800-633-4227; TTY 1-877-486-2048).

Note: If you get railroad retirement benefits, you will initially get bills from the Railroad Retirement Board (RRB) for this amount each month. The RRB will send you these bills until it has a system in place to withhold this amount from your monthly benefit check.

6. Can I pay my Medicare prescription drug plan premium and my Part D-IRMAA premium together?
No. By law, the income-related monthly adjustment amount (IRMAA) for Medicare prescription drug coverage is deducted from your Social Security, Railroad Retirement Board, or Office of Personnel Management benefits if your monthly payment can cover this amount. If not, you will get a bill from Medicare. Your drug plan is responsible for billing and collecting the non-IRMAA part of your premium. Since these two amounts are billed and collected by two separate entities, you will get two separate bills and need to pay each of them separately.

Note: If you get railroad retirement benefits, you will get bills from the Railroad Retirement Board (RRB) for this amount each month. The RRB will send you these bills until it has a system in place to withhold this amount from your monthly benefit check.

7. Will an individual be charged the Part D-IRMAA if they do not have a Medicare prescription
drug plan?
If an individual does not have or no longer has Medicare prescription drug coverage, they shouldn’t be charged the Part D-IRMAA. However, if someone didn’t pay the Part D-IRMAA that was owed before disenrolling from their prescription drug coverage, they are responsible for the past due amount.

8. How can I get more information about the Part D-IRMAA?

• Visit www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227).
  TTY users should cal l1-877-486-2048.
• Visit www.socialsecurity.gov/mediinfo.htm, call 1-800-772-1213, or visit your local Social Security office. TTY users should call 1-800-325-0778.

Source:
Anthony Culotta, Director Medicare Enrollment & Appeals Group.
DEPARTMENT OF HEALTH & HUMAN SERVICES, Centers for Medicare & Medicaid Services
Part D-Income Related Monthly Adjustment Amount—Frequently Asked Questions & Answers
December 10, 2010

This article was originally published by Blue Cross Blue Shield of Michigan health reform. High-income individuals to pay higher premiums for Medicare Part D coverage

The size of the credit depends on the average wages and number of employees. The tax credit is worth up to 35 percent of the employers' health care cost for businesses with up to 10 employees and average annual wages of up to $25,000. For example, if the employer contributes $100, the tax credit would be up to $35.

The tax credit phases out as the number of employees increases from 10 to 25, and also phases out as average wages increase from $25,000 to $50,000.

Tax exempt small businesses are also eligible, but their tax credit is up to 25 percent of the employers' health care costs.

Small business employers can use this IRS work sheet (PDF) to determine if they qualify for the tax credit.

The tax credits are available retroactive to Jan. 1, 2010 and apply to both grandfathered and non-grandfathered health plans. Under national health care reform, grandfathered plans are those in existence on or before March 23, 2010. For more information, visit the IRS Small Business Health Care Tax Credit for Small Employers website.

UPDATED: Sept. 17, 2010

IRS provides draft form to calculate tax credit

The Internal Revenue Service provided a draft version of the form that small businesses and tax-exempt organizations can use to calculate the tax credit when they file income tax returns next year. The form can be accessed here (PDF). The final version of the form will be available later in the year.

More information was also provided about how tax-exempt organizations that are eligible for the credit can claim the credit during the 2011 filing season.

More information about the small business tax credit, including a step-by-step guide (PDF) and answers to frequently asked questions, is available on the on the IRS website.

UPDATED: Dec. 17, 2010

Forms and additional guidance available to help small businesses claim tax credit

The Internal Revenue Service released final guidance for employers of eligible small businesses to claim the tax credit for the 2010 tax year. The guidance includes Form 8941, Credit for Small Employer Health Insurance Premiums, and Form 990-T. The IRS also provided instructions to Form 8941 and Notice 2010-82, both of which are designed to help small employers correctly figure and claim the credit.

More information about the credit, including a step-by-step guide to claiming the credit and answers to frequently asked questions, is available on the Affordable Care Act page on IRS.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Some small group customers may be eligible for a tax credit under the new reform law

Rescissions

Effective for plan years on or after Sept. 23, 2010, the interim rules state that the employer group health plan is responsible for providing notification to a member 30 days prior to a rescission, where a rescission is permissible. A rescission is defined as any termination or discontinuance of coverage that is retroactive. However, the federal government does not consider the following situations to be rescissions:

• A retroactive termination for nonpayment of premiums or cost of coverage
• A retroactive elimination of coverage back to the date of termination of employment, due to delay in administrative record-keeping

The 30-day notice to employees is required only in the case of a rescission. The current regulations do not specifically address the notice requirements, if any, in the case of a terminated employee. Absent additional regulatory guidance, it is believed that notice could be provided well in advance and at a time other than at termination. For example, open enrollment materials and Summary Plan Description typically state that, in the case of termination of employment, coverage is only offered until the end of the current pay period (or whatever the employment eligibility requirements are for that plan’s coverage.)

Cancellation for nonpayment

Retroactive termination for nonpayment of premium is permissible, and there is no requirement that a premium be accepted after the original due date. If a group is cancelled due to nonpayment of premium, prior notice is required. The reform law stipulates that health plans or health insurance coverage may not be canceled without prior notice to the enrollee. We expect further clarification regarding notice requirements for cancellation of coverage in cases other than rescission.

Material benefit changes will require 60-day notice no later than March 23, 2012*

The employer group health plan or health insurer must provide notice to enrollees at least 60 days prior to the effective date of any material modifications in the terms of the plan or coverage.

BCBSM and BCN will update current internal policies to align with the latest regulatory information when it becomes available. We are committed to meeting additional requirements issued by the government relating to these PPACA requirements.

*The statute leaves unclear the effective date of this requirement, but we believe it is intended to be effective March 23, 2012. The Department of Health and Human Services is expected to issue additional guidance by March 23, 2011, which may provide clarification to eliminate the effective date ambiguity in the statute.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Health care reform requires employers to notify their employees in advance of certain coverage changes

Additionally, employers can offer higher incentives to employees who participate in group-sponsored wellness programs beginning in 2014.

The wellness grants are available to small businesses with fewer than 100 employees who work 25 hours or more per week. They will be available over five years to businesses that did not have a wellness program in place when the law went into effect on March 23, 2010.

To qualify, wellness programs must be available to all employees and include the following:

• Health awareness initiatives, such as health education, preventive screenings and
  health risk assessments
• Efforts to maximize employee engagement and encourage participation
• Initiatives to change unhealthy behaviors and lifestyle choices (such as seminars, counseling, online programs and self-help materials)
• Supportive workplace efforts, including policies to encourage healthy lifestyles, healthy eating, increased physical activity and improved mental health.

Employers will apply for the grants directly with the federal government.

Starting Jan. 1, 2014, employers can offer discounts of up to 30 percent to employees who participate in employer-sponsored wellness programs, an increase from the current 20 percent. (This reward could increase to 50 percent at the discretion of the secretaries of the departments of Health and Human Services, Labor or Treasury.)

If a wellness program ties rewards to health status goals, such as reaching a certain body mass index (BMI), blood pressure or cholesterol level, certain conditions must be met:

• Rewards for all goal-based wellness programs cannot exceed more than 30 percent of the cost of employee-only or family coverage through the plan.
• The wellness program must set an easily met standard for improving health status or preventing disease among participants. The program also must not be overly burdensome, cannot be used to discriminate based on health status and cannot use highly suspect methods to promote wellness.
• Eligible individuals should be able to qualify for the reward at least annually.
• The program must offer reasonable alternative standards (or a waiver) for obtaining the reward to any individual who cannot satisfy the standard for that period due to unreasonable difficulty resulting from a medical condition or medical inadvisability.
• The group health plan or health insurer can seek verification from the individual’s doctor.
• Programs do not need to establish an alternative standard until an enrollee informs the health plan that they are unable to participate due to health reasons.
• Alternative standards could include meeting a lower threshold, following a personalized physician recommendation, walking three days a week for 20 minutes, etc.
• Notification and/or details that alternative standards or a waiver exists must be disclosed in
  plan materials.

The reform law will also create a 10-state pilot project by July 1, 2014 to allow participating states to use similar rewards for involvement in wellness programs in the individual market.

It is difficult at this time to say whether Michigan will seek to qualify for the project. States will be deemed eligible if it is determined that participation will not result in any decrease in coverage and will not increase costs to the federal government when providing premium tax credits.

If determined to be effective, the demonstration project will expand to additional states beginning
July 1, 2017.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Employer wellness grants, higher discounts for wellness programs allowed under health care reform

A health insurer’s overall MLR must be greater than 85 percent for health plans in the large group market, which means that 85 cents of every premium dollar collected must be spent on costs directly related to members’ health. The MLR must be greater than 80 percent for health plans in the individual and small group markets. If a health insurance issuer does not meet these ratios for each market, it must provide rebates to its members equal to the dollar amount needed to meet the required threshold. Any required rebates will first be paid in 2012, based on 2011 experience. Rebates may be in the form of cash or future rate reductions.

The MLR ratio will be calculated across all groups or individuals within the relevant market segment. For example, all of the carrier’s insured large group business is pooled to calculate the large group MLR for the carrier.

• The small group definition for MLR purposes is not clearly defined in federal law. In Michigan, small groups are currently groups with 50 or fewer eligible beneficiaries or 50 or fewer beneficiaries enrolled with a carrier.
• The individual market is characterized as the market for health insurance that is offered to individuals, not in connection with a group health plan.

Certain types of coverage, such as self-insured arrangements, Medigap, stand-alone dental or vision, and Medicare Advantage are exempt from MLR reporting and rebate requirements as described above.

As a part of our ongoing commitment to serving our members, BCBSM and BCN have traditionally met and exceeded the required MLR minimums.

The National Association of Insurance Commissioners (NAIC) and the Department of Health and Human Services (HHS) are in the process of establishing the standards for MLR reporting and will release regulations in the upcoming months.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Insurers must meet Medical Loss Ratio requirements or provide rebates to members

The reform law calls for the adoption of a single set of operating rules, certification requirements, and Health Insurance Portability and Accountability Act (HIPAA) transactional standards to simplify health insurance administration and create uniformity in the implementation of electronic standards. The changes are meant to reduce administrative costs associated with health care through standardization, enhance ease of doing business between insurers and providers, and to promote growth of electronic recordkeeping and use of electronic claims processing.

The rules include the following key provisions:

• Eligibility verification and claims status (effective Jan. 1, 2013)
• Electronic funds transfers and health care payment and remittance (effective no later than Jan. 1, 2014)
• Health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, and referral certification and authorization (effective no later than July 1, 2016)
• Unique heath plan identifier (effective no later than Oct. 1, 2012)
• Claims attachments (effective no later than January 1, 2016)

For more information, see Sec. 1104 (Administrative Simplification) in the Patient Protection and Affordable Care Act (PDF).

Blue Cross Blue Shield of Michigan and Blue Care Network have had internal solutions in place to help simplify administrative functions since HIPAA was implemented in 2002. The Blues will continue to evaluate and implement measures needed to ensure compliance with all electronic transaction requirements.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Administrative simplification provision creates operating rules and uniform standards

Blue Cross Blue Shield of Michigan (BCBSM) and Blue Care Network (BCN) interpreted the interim final regulations in a previous Reform Alert. Since then, as a result of comments received from Blue Cross and Blue Shield Association and others, the U.S. Department of Labor (DOL) has provided additional clarifications to the interim final regulations. The DOL’s additional guidance states that employers will have more administrative flexibility when retroactively cancelling coverage than originally provided in the interim final regulations. The DOL provided the following additional guidance on October 8, 2010:

“The statutory prohibition related to rescissions is not limited to rescissions based on fraudulent or intentional misrepresentations about prior medical history. An example in the Departments’ interim final regulations on rescissions clarifies that some plan errors (such as mistakenly covering a part-time employee and providing coverage upon which the employee relies for some time) may be cancelled prospectively once identified, but not retroactively rescinded unless there was some fraud or intentional misrepresentation by the employee. On the other hand, some plans and issuers have commented that some employers’ human resource departments may reconcile lists of eligible individuals with their plan or issuer via data feed only once per month. If a plan covers only active employees (subject to the COBRA continuation coverage provisions) and an employee pays no premiums for coverage after termination of employment, the Departments do not consider the retroactive eliminat on of coverage back to the date of termination of employment, due to delay in administrative record-keeping, to be a rescission. Similarly, if a plan does not cover ex-spouses (subject to the COBRA continuation coverage provisions) and the plan is not notified of a divorce and the full COBRA premium is not paid by the employee or ex-spouse for coverage, the Departments do not consider a plan’s termination of coverage retroactive to the divorce to be a rescission of coverage. (Of course, in such situations COBRA may require coverage to be offered for up to 36 months if the COBRA applicable premium is paid by the qualified beneficiary.)”

Blue Cross Blue Shield of Michigan and Blue Care Network are updating their current internal policies to comply with the rescissions provision where necessary. We will provide our group customers with information about this provision, and explain instances where retroactive terminations are prohibited, as the group should only pass permissible retroactive terminations as part of their eligibility information. Groups may need to update their current policies to comply with the provision.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Department of Labor clarifies rescissions regulation

UPDATED: Sept. 15, 2010

The IRS provided updates on the allowable medical expenses for consumer-driven health care accounts on Sept. 3, 2010. Beginning Jan. 1, 2011, over-the-counter (OTC) medicines and drugs can only be purchased with the spending account if it is prescribed. This rule does not apply to insulin, which can be purchased without a prescription.

Health FSA and HRA debit cards cannot be used for purchasing OTC medicines or drugs after Jan. 1, 2011. The IRS will allow a grace period until Jan. 15, 2011, where they will not dispute such charges. After Jan. 15, 2011, any debit card charges for purchasing OTC medicines or drugs will not be permitted or will be challenged by the IRS. Debit cards can be still be used for other medical expenses other than OTC medicines or drugs.

With the limited exception of those OTC drugs and medicines purchased with a Health FSA or HRA debit card during the grace period, the regulations specify that all OTC medicine and drug purchases made after Jan. 1, 2011, will require proof that they were prescribed before being reimbursed with an HRA or Health FSA. Such proof may include:

• Receipts that include the name of the person who was prescribed the medicine or drug, the date, cost of purchase, and the prescription number
• For receipts without the prescription number included, receipts must be attached to a copy of the prescription

The prescription requirement does not apply to those items that are not medicines or drugs, such as crutches, bandages, diagnostic devices (i.e., blood sugar test kits), or personal care items that qualify as medical expenses.

For more information, see the FAQ on IRS.gov.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. IRS provides more information about 2011 changes to spending accounts

The Patient Protection and Affordable Care Act (PPACA) builds on existing federal requirements for internal claims processes and appeals. The federal requirements previously applied only to some employer group health care plans. Under PPACA, these protections are being extended to include the individual market and group health plans not previously subject to the federal requirements. PPACA also requires external independent review be made available either under applicable state law or, for coverage not subject to the state independent review laws, under a new federal process.

BCBSM and BCN are in the process of modifying our internal review processes to meet the additional PPACA requirements. Additionally, since PPACA will now require our self-funded ERISA groups to offer an external review process, we’re working to determine the impact on those groups, and are assisting them to develop a compliant process.

What does PPACA require?

For adverse benefit determinations, enrollees have the option of appealing the decision first through their health plan or health carrier’s internal process, and then externally through an independent party if their internal appeal is denied. For our underwritten group enrollees, individuals and some self-funded non-ERISA group enrollees, the external appeals are coordinated through the Michigan Office of Financial and Insurance Regulation (OFIR). In the future, self-funded ERISA group external appeals will be reviewed by an independent review organization.

“Adverse benefit determination” is defined in the interim final regulations as a denial, reduction, or termination of benefits resulting from a decision that:

• An individual is not eligible for coverage
• A benefit is not covered
• A pre-existing condition exclusions or other benefit limits apply
• A service is experimental or not medically necessary

The health plan or carrier must comply with notice requirements, include and explain diagnosis and treatment codes, include details about the benefit determination and describe the appeals process.

Who is impacted by the new appeals requirements?

The new requirements apply to fully insured and self-insured groups, and to individuals. The PPACA requirement does not apply to grandfathered health plans, groups exempt from PPACA, or to excepted benefits. PPACA also excludes Federal Employee Programs, Medicare Advantage, Medigap and Medicaid plans, as they have their own mandated processes.

Internal appeals

PPACA requires non-grandfathered health plans to have an internal appeals process that, according to the Department of Health and Human Services (HHS) must at a minimum:

• Allow enrollees to appeal when a health plan or carrier denies a claim for a covered service, rescinds coverage or denies an application for individual coverage;
• Give enrollees detailed information about the reasons for the denial of claims or coverage;
• Require health plans or carriers to notify enrollees about their right to appeal, and instructs them on how to begin the appeals process;
• Ensure a full and fair review of the denial; and,
• Provide consumers with an expedited appeals process in urgent care cases.

External reviews

Enrollees may also seek external review if their internal appeal is denied. By requiring all states to establish or update their external appeals process, and providing access to a new Federal external review process, enrollees of non-grandfathered health plans will have access to a standardized process to guarantee a full and fair review. Fully insured groups already have an external appeals process in place through the State.

Examples

For more clarification, we have included some scenarios provided by HHS for examples of when an internal appeal or external review is available, and a description of what happens after a decision has been made.

• If your health insurer denies coverage of a test, such as an MRI, you and your doctor can appeal that decision to the insurer. If the insurer still refuses to cover the test, you can appeal to an external reviewer. If the external reviewer agrees with your appeal, your insurer must pay for the test.
• If your insurer decides to rescind your coverage altogether based on the fact that information on your application for coverage was not accurate, you can appeal. If your appeal is successful, the insurer must reinstate your coverage. This would only occur if no evidence of fraud or intentional misrepresentation is found and proven during this process.
• If you go to the emergency room and your insurer won’t pay the bill, you will have the chance to provide information to the insurer about why you needed emergency care – and take your request to an external reviewer if your appeal to your insurer is denied.

You can read the press release, fact sheet (PDF), or visit healthcare.gov to learn more about
appeals processes.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Appeals process standardized under health reform law

More information was also provided about how tax-exempt organizations that are eligible for the credit can claim the credit during the 2011 filing season.

More information about the small business tax credit, including a step-by-step guide (PDF) andanswers to frequently asked questions, is available on the on the IRS website.

June 2, 2010: Some small group customers may be eligible for a tax credit under the new reform law

The government will provide a tax credit to some small business employers that pay at least 50 percent of their employees' health insurance premiums.

The size of the credit depends on the average wages and number of employees. The tax credit is worth up to 35 percent of the employers' health care cost for businesses with up to 10 employees and average annual wages of up to $25,000. For example, if the employer contributes $100, the tax credit would be up to $35.

The tax credit phases out as the number of employees increases from 10 to 25, and also phases out as average wages increase from $25,000 to $50,000.

Tax exempt small businesses are also eligible, but their tax credit is up to 25 percent of the employers' health care costs.

Small business employers can use this IRS work sheet (PDF) to determine if they qualify for the tax credit.

The tax credits are available retroactive to Jan. 1, 2010 and apply to both grandfathered and non-grandfathered health plans. Under national health care reform, grandfathered plans are those in existence on or before March 23, 2010. For more information, visit the IRS Small Business Health Care Tax Credit for Small Employers website.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. IRS provides draft form to calculate tax credit

Enrollment periods
In previous years, Medicare Advantage subscribers had two opportunities to change plans or insurance providers. The Patient Protection and Affordable Care Act (PPACA) states that Medicare Advantage subscribers will now have one opportunity, unless they have special circumstances

Annual election period
As usual, the annual election period this year will occur between Nov. 15 and Dec. 31. During this time, subscribers can:

• Enroll in a Medicare Advantage plan
• Change Medicare Advantage plans
• Enroll in a Part D prescription drug plan
• Change their Part D prescription drug plan
• Return to Original Medicare

Changes made during this period are effective on Jan. 1, 2011.

In the fall of 2011, the annual election period will be held Oct. 15 through Dec. 7. Subscribers will still have the same opportunities to choose or change their plan during this time. Changes made will be effective on Jan. 1, 2012.

Open enrollment period
The open enrollment period that was formerly held between Jan. 1 and March 31 has been eliminated under PPACA. Instead, the new legislation provides for a 45-day annual disenrollment period from Jan. 1 through Feb. 14. During this time, subscribers can drop their Medicare Advantage plan and return to Original Medicare. They can also select a stand-alone prescription drug plan if they are returning to Original Medicare, regardless of whether the Medicare Advantage plan they are dropping did or did not cover prescription drugs. Subscribers will no longer be able to switch Medicare Advantage plans during this period.

Special enrollment periods
Special enrollment periods still provide an opportunity to enroll in or switch plans outside of the annual election period. Below is a list of the most common situations in which a subscriber may be eligible to enroll during a special enrollment period. There are other situations that are not listed here where a subscriber can enroll during this period.

• If they permanently move outside their plan’s service area. They may change plans one month prior to their move and two months afterward.
• If they lose coverage from their employer group, group retiree plan or COBRA. Subscribers are entitled to a special enrollment period that begins the month they are advised of their loss of creditable coverage. This special enrollment period ends two months after their loss of creditable coverage.
• If they qualify for extra help (known as low-income subsidy benefits) to pay for their prescription drug costs, and they don’t receive Medicaid benefits. Subscribers may enroll in a Part D plan during a special enrollment period that begins the month they become eligible for low-income subsidy, and lasts as long as they are eligible for low-income subsidy. This special enrollment period allows subscribers to enroll in, or disenroll from, a Part D plan at any time.
• If they receive any type of assistance from the Medicaid program. This includes individuals often referred to “full dual eligible” (enrolled in both Medicare and Medicaid), and partial duals who receive only cost sharing assistance under Medicaid. This special enrollment period begins the month they becomes dually-eligible and exists as long as they receive Medicaid benefits. This special enrollment period allows an individual to enroll in, or disenroll from, a Part D plan. In addition, those who are no longer eligible for benefits under Medicaid will have a special enrollment period beginning with the month they lose eligibility, plus two additional months, to make an enrollment choice in another prescription drug plan, a Medicare Advantage Prescription Drug plan, or to disenroll entirely from Part D.

BCBSM and BCN are thoroughly analyzing the impacts of these regulations and will provide specific information regarding implementation at a future date.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Changes to Medicare Advantage enrollment periods

2010

Please see the Reform Alert about the $250 rebate for beneficiaries who reach the Part D prescription coverage gap, or “donut hole.”

2011

• Changes to Open Enrollment Periods and Annual Election Periods
• Restrictions on higher cost sharing
  • Cost sharing for Medicare Advantage plans cannot be greater than cost sharing for Original Medicare plans for certain services as required by the Centers for Medicare and Medicaid Services (CMS)
• Maximum out-of-pocket limit*
  • Medicare Advantage plans will have maximum out-of-pocket limit for designated Medicare Part A and B services of $6,700.
  • The mandatory maximum out-of-pocket limit for PPOs would apply to in-network services only, and a higher catastrophic maximum would apply to both in and out-of-network services.
  • The maximum out-of-pocket limit applies to Medicare Advantage for both group health plans and individual health plans.
• Changes to benefits
  • CMS “highly encouraged” Medicare Advantage plans to provide certain preventive services
    with no cost sharing.
  • Annual wellness visits, including health risk assessment and personalized prevention plan, will be a new required benefit. CMS “highly encouraged” Medicare Advantage plans to provide the new benefit with no additional cost sharing.
• Closing Part D coverage gap (“donut hole”)
  • Phased-in closing of the donut hole begins with new drug discounts in the coverage gap.
• Part D donut hole drug discounts
  • Pharmaceutical manufacturers will give 50 percent discount assistance for brand-name drugs in the donut hole for Part D and Medicare Advantage/Part D beneficiaries. Discounts must be provided at the point of service at the pharmacy.
  • The costs paid by manufacturers are considered incurred costs for beneficiaries and applied toward their out-of-pocket threshold.
  • Part D beneficiaries will also receive a 7 percent discount for covered generic drugs in the donut hole. The discount is provided as a reduction in Medicare’s required beneficiary coinsurance rate in the donut hole from 100 percent to 93 percent. Discounts must be provided at the point of service
    at the pharmacy.
• Part D income-related premiums
  • Medicare will set income thresholds for Part D beneficiaries, similar to those set for Part B.
  • These income thresholds will determine the dollar amount of the premium paid by enrollees, with higher-income beneficiaries paying higher premiums.
  • Part B and Part D subsidies will begin to be reduced for individuals with income greater than $85,000 and couples filing a joint tax return with income greater than $170,000.

2012

• No cost sharing for preventive services
  • Medicare Advantage plans will be required to provide specific preventive services with no cost sharing.

You can visit www.medicare.gov for more information.

*This change is required by CMS and is not a PPACA requirement; however, it is often grouped with and discussed in the context of changes to Medicare Advantage required by PPACA.

BCBSM and BCN are thoroughly analyzing the impacts of these regulations and will provide specific information regarding implementation at a future date.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. How Medicare Advantage will change due to national health reform

See the Reform Alert, “Patient’s Bill of Rights”: Government Releases regulations on several patient protection provisions,” for more information about rescissions.

According to the current interim rules, retroactive cancellation of coverage is not permissible, even when a non-eligible individual’s coverage was continued by mistake. The interim rules state that if a group mistakenly continues coverage for a non-eligible employee, and then later informs their insurer that the group wants to retroactively cancel the employee’s coverage, then the insurer is prohibited by PPACA from doing so for the group.

The interim rules also state that where a rescission is permissible, the group health plan (or the health insurance issuer offering group health insurance coverage), is responsible for providing notification to the member(s) 30 days prior to the cancellation or rescission. If a group is cancelled due to nonpayment of premium, their health insurer must notify the group 30 days prior to cancellation. However, retroactive termination for nonpayment of premium is permissible, and there is no requirement that premium be accepted after the original due date.

The following is an example used in the regulations to illustrate the interim rules:

“An employer sponsors a group health plan that provides coverage for employees who work at least 30 hours per week. Individual B has coverage under the plan as a full-time employee. The employer reassigns B to a part-time position. Under the terms of the plan, B is no longer eligible for coverage. The plan mistakenly continues to provide health coverage, collecting premiums from B and paying claims submitted by B. After a routine audit, the plan discovers that B no longer works at least 30 hours per week. The plan rescinds B’s coverage effective as of the date that B changed from a full-time employee to a part-time employee.

The plan cannot rescind B’s coverage because there was no fraud or an intentional misrepresentation of material fact. The plan may cancel coverage for B prospectively, subject to other applicable Federal and State laws.”

Please note that rescission regulations were issued as interim final rules, and the U.S. Department of Health and Human Services (HHS) has solicited comments on the rules. The comments were due Aug. 27, 2010, the effective date of the interim rules.

Blue Cross Blue Shield of Michigan and Blue Care Network worked with the Blue Cross and Blue Shield Association and other organizations to submit timely comments to HHS regarding the interim final rules to ensure our group customers are represented fairly under this PPACA provision. Among the recommendations made to the agency was that the final rule provide that routine enrollment adjustments and corrections of routine enrollment errors for non-eligible persons, with respect to group health plans, do not constitute an impermissible rescission of coverage.

BCBSM and BCN will make timely changes to existing processes and policies after consideration of the comments by the agencies.

BCBSM and BCN are thoroughly analyzing the impacts of these regulations and will provide specific information regarding implementation at a future date.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Interim final rules would restrict employers ability to retroactively cancel coverage

PPACA removes lifetime dollar limits from all health plans. Individuals who previously reached their lifetime dollar limit can also be added or re-enrolled during the special enrollment period.

Special enrollment period

Blue Cross Blue Shield of Michigan and Blue Care Network will hold the special enrollment period for individuals impacted by the provisions to extend dependent coverage and remove lifetime dollar limits from Nov. 1 through 30, 2010. This special enrollment period is only for individuals impacted by these two provisions.

The coverage effective date for enrollment is Jan. 1, 2011, with the exception of groups that have a plan year that begins between Sept. 23 and Dec. 31, 2010. In this case, the coverage effective date is the plan year start date.

If a group routinely conducts its open enrollment from Oct. 1 through Dec. 31, then the group may use its normal open enrollment period as an opportunity to enroll those impacted by the two provisions, as long as it is at least 30 days in duration. Groups with a documented plan year between Jan. 2 and Sept. 22, 2011 can use their normal open enrollment period as long as it is 30 days in duration.

Grandfathering

PPACA prohibits both of these provisions from being grandfathered, therefore all groups must hold a Special Enrollment Period in order to comply with the regulations. However, until 2014, employers who are considered grandfathered have the option of excluding employees’ adult children if they are eligible for coverage under their employers health plan.

BCBSM and BCN are thoroughly analyzing the impacts of these regulations and will provide specific information regarding implementation at a future date.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Coming soon: Special Enrollment Period to add or re-enroll eligible dependents

The regulations, which are available on the HHS health care reform website, state that preventive coverage, such as recommended vaccinations, health screenings and children’s wellness visits, must be covered for all new health plans starting with plan years beginning on or after Sept. 23, 2010. BCBSM and BCN are working to implement these provisions for all group and individual health plans.

Services that must be covered with no cost-sharing include:

Evidence-based preventive services: The U.S. Preventive Services Task Force (USPSTF), an independent panel of experts, rates preventive coverage based on scientific evidence documenting their benefits, including preventive services with a “grade” of A or B, such as:

• Certain screenings for cancer
• Vitamin deficiencies during pregnancy
• Diabetes
• High cholesterol
• High blood pressure
• Depression
• Counseling for tobacco cessation

Routine immunizations: Health plans will cover a set of standard vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) for routine use ranging from routine childhood immunizations to periodic tetanus shots for adults.

Prevention for children: Health plans will cover preventive care for children up to age 21 described in guidelines from the Health Resources and Services Administration (HRSA) and the American Academy of Pediatrics, including:

• Regular pediatrician visits
• Vision and hearing screening
• Developmental assessments
• Immunizations and screening
• Counseling to address obesity

Prevention for women: Health plans will cover preventive care and screening provided to women according to guidelines supported by HRSA that are not otherwise addressed by the USPSTF recommendations. HHS is developing further guidance on this requirement, which it expects to issue by
Aug. 1, 2011.

When new services are added to the recommendations, health plans will be required to cover the services for plan years that begin one year after the date of the new recommendation.

Specifics about cost-sharing:

Cost-sharing, such as copayments, coinsurance or deductibles, for in-network provider office visits may be charged, depending on how providers bill.

• If it the preventive service, item or immunization is billed separately from the office visit, cost-sharing may be applied to the visit but not to the preventive service, item or immunization.
• If the primary purpose of the visit is to receive recommended preventive services, items or immunizations, and they are not billed separately, the member may not be charged cost-sharing for the visit.
• If the primary purpose of the visit is for anything other than to receive preventive services, items or immunization, the member may be charged for the office visit, even if a preventive service or immunization is provided.
• Optional preventive services, preventive services related to, but not included in the USPSTF, ACIP or HRSA list of recommendations, and services that have been removed from these lists may be provided with cost-sharing.
• Preventive services provided by out-of-network providers do not have to be covered. If they are covered, they do not have to be covered with no cost-sharing.

BCBSM and BCN are thoroughly analyzing the impacts of these regulations and will provide specific information regarding implementation at a future date.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Regulations released for immunizations and preventive coverage with no cost-sharing

Blue Cross Blue Shield of Michigan and Blue Care Network will implement near-term benefit changes required under PPACA for most groups and individuals on Jan. 1, 2011, with a few exceptions.

This first round of benefit changes required by PPACA will impact all employers who offer health care coverage, their employees, and those who purchase insurance in the individual market.

Since PPACA became law on March 23, 2010, the federal Department of Health and Human Services (HHS) has released interim regulations for various provisions.

BCBSM and BCN will implement the following near-term benefit changes required by PPACA for most groups and individuals on Jan. 1, 2011:

• Extending dependent coverage up to age 26
• Removal of lifetime dollar limits
• Removal of pre-existing condition exclusions for children up to age 19
• Prohibiting rescissions with limited exceptions
• Clarifying emergency services

Many of these patient protection provisions are consistent with longstanding business practices and values of the Michigan Blues, and will cause little disruption to our groups and members. In fact, BCBSM and BCN were already substantially compliant with the following near-term requirements prior to the passage of PPACA:

• Obstetrician and gynecologist for women’s access
• Pediatrician for child’s primary care physician

Extending dependent coverage up to age 26

Of all of the near-term reforms, there has been the most interest, from customers and individual members, regarding how and when they can enroll or re-enroll dependents up to age 26.

The Blues define child dependents as those related to the employee by birth, marriage, legal adoption or legal guardianship. Dependent eligibility will no longer be limited by financial dependency, marital status or enrollment in school. Also, rates charged for dependents can no longer vary by age.

BCBSM and BCN will adjust their policies to allow coverage of dependents through the end of the calendar year of their 26th birthday.

We will begin allowing the addition of dependents between the age of 19 and 26 during a special open enrollment period from Nov. 1, 2010, through Nov. 30, 2010. Some groups may accomplish this with their regular fourth-quarter open enrollment periods. In most cases, coverage will be effective for added dependents on Jan. 1, 2011.

Some near-term implementation strategies to be determined

HHS recently released interim regulations for immunization and preventive coverage with no cost-sharing. BCBSM and BCN are analyzing the impacts of these regulations, and will provide implementation details once we’ve thoroughly reviewed the regulations.

HHS has yet to issue clarifying regulations for “essential benefits” related to annual dollar limits. When these regulations become available, BCBSM and BCN will move forward with benefit changes related to those provisions.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. How health benefits will change in the near future

• Effective immediately, the age for dependent coverage under a Health FSA or HRA can be extended to any participant's child who has not reached age 27 by the end of the tax year.
• Effective Jan. 1, 2011, a physician prescription is required for over-the-counter (OTC) drugs, medicines and biologicals (products found in medicines) to be considered eligible for reimbursement against an HSA, HRA or FSA (more detail below).
  • Members utilizing these kinds of accounts may be required to submit a copy of the prescription along with required receipts when seeking reimbursement.
  • Expenses for OTC purchases incurred prior to Jan. 1, 2011, will not require a prescription.
• Effective Jan. 1, 2011, the excise tax for using HSA funds for non-qualified medical or other expenses increases from 10 percent to 20 percent.
• Effective for tax years beginning after Dec. 31, 2012, contributions to a Health FSA will be capped at $2,500 per year.
  • This amount will be indexed for inflation after 2013.

More details on eligible reimbursement expenses for FSA, HRA and HSA:

Though the specific list of items affected has not been completely assessed, the following categories of items will require a doctor's prescription in order to be an eligible expense:

This change affects only OTC drugs, medicines and biologicals. Bandages, home health-aids and other OTC items will still be eligible and can be purchased using HSA funds without further documentation. The following are examples of some of the items that will remain available without a physician prescription:

For a full list of eligible expenses, see IRS publication 502.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. National health reform changes that affect consumer-driven health care accounts

2011

Tax on non-qualifying health spending accounts (HSAs):

• The tax on non-qualifying HSA withdrawals increases from 10 percent to 20 percent beginning in 2011.

W2 forms:

• Health care costs must be included on employees’ W-2 forms beginning with the 2011 tax year. This does not include flexible spending accounts, health savings accounts or medical savings accounts.
• Health care costs for this purpose can be calculated in two ways:
  • Use of Consolidated Omnibus Budget Reconciliation Act (COBRA) rate (minus a 2% administrative fee) as an illustrative rate
  • Actual premium paid (both employer and employee components)

2012

1099 forms:

• Beginning with the 2012 tax year, 1099 form must be filed for most vendors paid more than $600.

Communication and standardization:

• Prior to early 2012, federal regulations will develop standardized processes and formats for compiling and communicating benefits, plan changes and rights.

2013

Exchange notification:

• Employees must be notified of the existence of their state Healthcare Exchange and eligibility for potential premium credit by March 1, 2013

Flexible spending accounts (FSAs):

• In 2013, flexible spending contributions are limited to $2,500. In 2011, over-the-counter drugs must be prescribed to use FSA.

Long term care program enrollment:

• In 2013, employees may be auto-enrolled in a new federal long-term care plan called the Community Living Assistance Services and Supports (CLASS) program. The department of Health and Human Services has yet to provide details about eligibility, benefits and administration of the CLASS program.

Payroll taxes:

• Employee share of the Medicare hospital tax will increase by 0.9% for individuals with incomes greater than $250K (joint filers) or $200K (single filers), effective 2013. Employers will have to withhold additional payroll taxes from individual’s income once it exceeds $200k.

Comparative effectiveness fee:

• Beginning with policy years ending during the 2013 fiscal year, there is a $1 fee per covered life to pay for comparative effectiveness research. For fully insured groups, this fee is remitted by the insurer. For self-insured groups, this fee is remitted by the plan sponsor, which in most cases is the employer. The fee goes up to $2 per covered life for policy years ending during the 2014 fiscal year.

2014

Exchange eligibility:

• Exchanges open to small employers in 2014. States may open to large employers beginning 2017.

Free choice vouchers:

• Beginning 2014, all employers offering health care coverage will be required to provide "free choice vouchers" to qualified employees to purchase insurance through the state Healthcare Exchange.
• Employees qualify for free choice vouchers if employee premium contributions are at least 8% but less than 9.8% of income and the employee's income is at or below 400% of the federal poverty level.

Reporting to IRS:

• Reporting is required in 2014 to identify employees with coverage through their employers.

Other Administrative Matters

Auto-enrollment:

• Large employers must auto-enroll new-hires in one of the plans and continue enrollment of current employees. Automatic enrollment programs must include adequate notice and opportunity to opt out. (There is no specific effective date for this provision in the statute. Some commentators believe the provision will take effect in 2014, while others believe the provision will take effect upon issuance of the statutorily mandated regulations by the Department of Labor, which could be much sooner.)

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Michigan employers working to comply with several administrative health care reform requirements

There are many criteria to determine "plan year," but we believe that for most BCBSM and BCN group and individual customers, "plan year" will be Jan. 1 through Dec. 31, because that is when plan deductibles reset. BCBSM and BCN are moving forward with implementation of near-term reforms, such as extending dependent coverage to age 26, removing lifetime limits and ending waiting periods for pre-existing conditions for children under age 19, based on this definition of "plan year" in most cases.

Groups that have questions about how "plan year" specifically impacts them should contact their BCBSM or BCN sales representation or agent.

The portal is not intended as a mechanism for consumers to buy insurance, but rather as a tool for them to get information until the state Exchanges are active in 2014.

The site provides information on reforms and allows users to access information specific to them based on answers they provide to basic questions. The site provides resources to help users:

• Find insurance options
• Learn about prevention
• Compare care quality
• Understand the new law

The portal also includes news releases, speeches, webcasts and video, and reform fact sheets.
Pricing estimates for coverage options will be added to the portal on Oct. 1, 2010.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Government Internet portal for individuals and small groups up and running

The Department of Health and Human Services (HHS) announced today it is accepting applications for early retiree reinsurance funds made available by the Patient Protection and Affordable Care Act.

The current application (PDF), which may later be updated, is available on the HHS website. Application instructions (PDF) are also available on the HHS website.

Blue Cross Blue Shield of Michigan and Blue Care Network are well prepared to assist group customers in managing the early retiree reinsurance application and funds recovery process.

The reform law enables employers that offer health coverage for early retirees between the ages of 55 and 64 to apply for reimbursement of 80 percent of early retiree costs between $15,000 and $90,000. The funds will be dispersed to qualified employers on a first-come, first-served basis. There are $5 billion available for early retiree reinsurance.

Group customers and agents representing group customers that offer early retiree health coverage are encouraged to contact their Blue Cross Blue Shield of Michigan or Blue Care Network sales representative for more information about the early retiree reinsurance process, timelines and applicable fees.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Department of Health and Human Services accepting applications for companies to apply for early retiree reinsurance

These new protections apply to nearly all individual and group health insurance plans. Further guidelines defining “essential benefits” are still to come and may impact implementation of the provisions described below. The information in this Reform Alert includes highlights of the Patient’s Bill of Rights regulations. You view the complete regulations here.

Pre-existing Condition Exclusions:

• Individual and group plans that choose not to cover specific conditions that are not required to be covered by PPACA, such as coverage for autism, may still choose to deny coverage for those conditions for all members.
• Plans also cannot impose waiting periods for individuals or group members to receive coverage for pre-existing conditions. This applies to people under age 19 for plan years beginning on or after Sept. 23, 2010 and to everyone for plan years beginning on or after Jan. 1, 2014.
• This provision does not apply to grandfathered individual plans, those in existence prior to Mar. 23, 2010.

Rescissions:

• The regulations define a rescission as a cancellation or discontinuation of coverage that has a retroactive effect. In other words, rescissions that treat a policy as void from the time of enrollment or that void benefits paid up to a year before the cancellation are prohibited for individual and group members, except in two circumstances.
• Rescissions are allowed in cases of fraud or intentional misrepresentation of material facts.
• Plans can cancel or choose not to renew policies:
• Due to nonpayment of premiums
• When an insurer stops offering a specific product
• When an insurer moves out of the geographic area
• When individuals or employers move out of the geographic market
• Retroactive cancellation for nonpayment of premiums is not considered a “rescission” under the law and is permissible.
• A cancellation or discontinuance of coverage that only affects future coverage and claims is not a rescission.
• The law applies whether the rescission applies to a single individual, an individual covered by a family policy or an entire group of individuals.
• If an individual or group omits certain information that constitutes fraud, plans can rescind coverage.
• Plans must provide at least 30 calendar days notice to an individual before rescinding coverage. Notices must provide individuals the opportunity to contest the rescission or to look for alternative coverage as appropriate.

Annual Dollar Limits:

• “Essential health benefits” will be defined in future regulations.
• In the interim, HHS will take into account good faith efforts to comply with a reasonable interpretation of the term “essential health benefits,” and group health plans must apply this definition consistently.
• The regulation does not provide any information or prohibition on non-dollar limits, such as limits on frequency of doctor visits for certain conditions.
• Plans may exclude all benefits for a specific condition and not be in violation of the annual and lifetime limit provision of PPACA. However, if any benefits are provided for a condition, the requirements of the provision apply.
• Before Jan. 1, 2014, restricted annual dollar limits on essential benefits are permitted. There is a three-year phase out of the restricted annual limits on “essential health benefits.” The lowest annual limits plans may apply are:
• $750,000 for plan years beginning from Sept. 23, 2010 to Sept. 22, 2011
• $1.25 million for plan years beginning from Sept. 23, 2011 to Sept. 22, 2012
• $2 million for plan years beginning from Sept. 23, 2012 to Dec. 31, 2013.
• Minimum annual limits apply on an individual by individual basis (not family)
• Only essential benefits are counted against the restricted annual limits. Benefits which are not essential benefits cannot be counted against the restricted annual limit amount.
• HHS may waive requirements for annual limits if compliance would result in significant decrease in access to benefits or significant increase in premiums. HHS will be issuing additional regulations relating to waivers and applications.
• This provision does not apply to grandfathered individual plans.

Lifetime Dollar Limits:

• Starting with plan years beginning on or after Sept. 23, 2010, lifetime limits are no longer allowed for “essential health benefits.”
• If an individual lost coverage due to reaching a lifetime limit, they must be allowed to re-enroll via an open-enrollment period.
• This regulation does not apply to individuals who reached a lifetime limit while covered by a contract that was not renewed or is no longer in effect.
• It does apply to family members who lost coverage due to reaching a lifetime limit if other members of the family are still covered by an active policy.
• Plans must notify these individuals how and when they are eligible to re-enroll.
• The open enrollment opportunity must occur no later than the first day of the first plan year beginning on or after Sept. 23, 2010.
• Coverage must start no later than the first day of the first plan year beginning on or after Sept. 23, 2010.
• This applies to all plans in all market segments, new or grandfathered.

Choice of Health Care Professional:

• The regulation outlines requirements about how plan members can choose primary care providers, including the ability to choose pediatricians as primary care providers for children and required access to obstetric and gynecological care.
• This regulation only applies to plans that have networks of providers.
• If plans require that members choose a primary care provider, the plan must provide notice that:
• Any participating primary care provider who is available to accept the member or beneficiary can be designated.
• Any participating physician specializing in pediatrics can be designated as the primary care provider for a child.
• Plans may not require authorization or referral for obstetrical or gynecological care by in-network health care professionals specializing in obstetrics or gynecology.
• This does not apply to grandfathered plans.

Choice of Primary Care Provider:
• Plans that require members to choose a primary care provider must allow those members to choose any primary care provider who is available to accept the member.

Choice of Pediatrician as Primary Care Provider for a Child:
• Plans that require members to choose a primary care provider must allow members to choose any participating provider specializing in pediatrics as the primary care provider for a child as long as the provider is available to accept the child.
• The requirement to allow members to choose a pediatrician as a primary care provider for a child does not affect the general terms of insurance coverage regarding pediatric care.
• For example, if a plan does not cover treatment for food allergies, the plan does not have to pay for any treatment for food allergies even if the designated pediatrician referred the child for food allergy treatment.
• This does not apply to grandfathered plans.

Access to Obstetric and Gynecological Care:

• Plans that provide coverage for obstetrical or gynecological care that require members to choose a primary care provider must allow female members seeking obstetrical or gynecological care to see in-network providers specializing in obstetrical or gynecological care without a referral or authorization.
• As defined by the regulation, a health care professional who specializes in obstetrics or gynecology is any individual who is authorized under applicable state law to provide obstetrical or gynecological care. This is not limited to physicians.
• Under the direct access provision, a woman will not need to obtain a specialist referral to see an OB/GYN. However, the OB/GYN is required to follow the plan’s policies on referrals to other providers and prior authorizations for services to be performed by them. In other words, a plan may not impose a preauthorization requirement in order for a woman to see an OB/GYN but may require preauthorization for additional services or referrals. So for example, the health plan can require prior authorization before providing benefits for specific procedures such as uterine fibroid embolization. The plan requirement for prior authorization before providing benefits for uterine fibroid embolization does not violate the requirements of the regulations because, although the prior authorization requirement applies to obstetrical services, it does not restrict access to any providers specializing in obstetrics or gynecology.
• This does not apply to grandfathered plans.

Coverage of Emergency Services

• Plans that provide any benefits for emergency services in hospital emergency departments must:
• Provide coverage without requiring prior authorization, even if the services are provided out of network.
• Cover emergency services for both in-network and out-of-network providers.
• May not charge members more for out-of-network emergency services than for in-network emergency services.
• Cost sharing in the form of a copayment or coinsurance for out-of-network emergency services cannot exceed cost sharing for in-network emergency services.
• An out-of-network emergency services provider can bill patients for the difference between the providers’ charges and the amount collected from the plan and from the patient in the form of copayment or coinsurance.
• In order to ensure that a “reasonable amount” is paid to out-of-network emergency services providers in order to limit additional costs for members, plans are required to pay an amount equal to the greatest of the following:
• The amount negotiated with in-network providers for the emergency service furnished minus patient cost sharing.
• The amount for the emergency service plans generally pay for out-of-network services minus the coinsurance or copayment amount the member would pay for in-network services.
• The amount that would be paid under Medicare for the emergency service not including any cost sharing a Medicare member would pay.
• Cost sharing requirements that members pay, such as deductibles or out-of-pocket maximums, may only apply for out-of-network emergency services in the same way they generally apply for all out-of-network services.
• Deductibles can only apply for out-of-network emergency services if they are part of an overall out-of-network deductible.
• If maximum out-of-pocket costs generally apply for out-of-network services, those out-of-pocket maximum costs must apply to out-of-network emergency services.
• Insurers are allowed to apply lower cost-sharing amounts for out-of-network emergency services than those generally applied for out-of-network services.
• This does not apply to grandfathered plans.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Patients Bill of Rights - Government releases regulations on several patient protection provisions

• A glossary of insurance and medical terms used in the summary.
• Descriptions of benefits, including information about copayments and deductibles.
• Information about applicable reductions, exclusions and limitations on coverage.
• Directions about how to renew and maintain coverage.
• Examples of common health situations, such as pregnancy or diabetes, and information about associated costs for members in these situations.
• A contact number and website address where members can go to get copies of their actual subscriber agreements.

Blue Cross Blue Shield of Michigan and Blue Care Network certificates already include many of these features. We are committed to meeting whatever additional requirements issued by the Department of Health and Human Services relating to these PPACA requirements.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Plans to simplify benefit information for members

The Department of Health and Human Services (HHS) recently released regulations that further define "grandfathered" and in what cases health plans can lose grandfathered status.

Please review the questions and answers below for an overview of the grandfathering regulation. More details, including specific examples, are available in a HealthReform.gov Fact Sheet.

What changes will result in a loss of grandfathered status?

• Changing insurance carriers (for individuals and fully-insured groups)
• Changing coinsurance amounts
  • Coinsurance is the percentage of a health care provider's charge for which the patient is financially responsible under the terms of the policy.
• Increase since March 23, 2010 to fixed-amount copayment where the increase is more than $5 plus the rate of medical inflation or is 15 percentage points higher than medical inflation (whichever is greater)
  • Copayments are flat-dollar amounts that patients must pay when visiting a health care provider.
  • Medical inflation is defined in this regulation as the medical care component of the Consumer Price Index for All Urban Consumers.
• Increases since March 23, 2010 to fixed-amount cost-sharing other than copayment (i.e. raising a deductible) that exceed the rate of medical inflation by 15 percentage points
• Decrease in the overall percentage of costs paid by the employer (i.e. the employer's share of premium costs) by more than 5 percent
• Elimination of benefits specific to certain health conditions (Additionally, elimination of a benefit for any necessary element to diagnose or treat a condition is considered for this purpose to be an elimination of benefits, resulting in loss of the plan grandfather status.)
• For plans with no annual or lifetime dollar limits, the addition of an annual or lifetime dollar limit
• For plans with lifetime dollar limits but no annual dollar limits, the addition of an annual dollar limit that is lower than the existing lifetime dollar limit
• For plans with annual dollar limits, a reduction in annual dollar limits

What changes can be made without losing grandfathered status?

• Changes to premiums
• Changes to comply with federal or state legal requirements
• Changes to voluntarily comply with provisions of PPACA (For example, some plans that are covered under collective bargaining agreements are not required to comply with certain reform provisions. Should they decide to implement such reforms anyway, that change will not jeopardize their grandfathered status.)
• Changing third-party administrators for plans that are self-insured who use third-party administrators to process claims
  • A plan is self-insured (or self-funded), when the employer assumes the financial risk for the health care benefit claims of its employees.
• Other changes that are not prohibited by the regulation

What must employers and health insurers do to maintain grandfathered status?

Group health plans and health insurers must maintain records documenting the terms of the plan in effect on March 23, 2010 and any other documents necessary to verify, explain or clarify its status as a grandfathered plan. Group health plans and health insurers must also include a statement in plan materials to participants, beneficiaries or primary subscribers, describing the benefits provided in the policy and explaining why they believe the policy is grandfathered as defined by PPACA. Contact information for questions and complaints must also be included. Model language for this statement is available in the HHS regulations.

What provisions apply to grandfathered plans?

Grandfathered individual and group health plans are exempt from many PPACA provisions. However, some major provisions they are required to comply with for plan years beginning on or after Sept 23, 2010 include:

• No pre-existing condition exclusions for individuals under age 19 (groups only, not applicable to grandfathered individual health coverage)
• No lifetime dollar limits on "essential benefits"
• No restrictive annual dollar limits on essential benefits (2014) (annual dollar limits of grandfathered individual plans are enforceable)
• No rescissions except for fraud or misrepresentation
• Extending coverage for dependents up to age 26 (Until 2014, grandfathered group plans are not required to cover dependents who are eligible for employer-sponsored health coverage elsewhere.)

A chart detailing reform provisions and whether or not they apply to grandfathered plans is available in the HHS regulations

How does grandfathering apply to collectively bargained groups?

Collectively bargained plans are only grandfathered until the end of the last collectively bargained agreement relating to the coverage. This applies only to fully-insured collectively bargained plans and applies even if the group changes insurance carriers while in the current collective bargaining agreement (CBA) period. At the end of the current CBA period, the new benefits must be compared to the benefits in effect on March 23, 2010 to see if the group is still grandfathered. From this point forward, any change in insurance carrier will result in the loss of grandfathered status. CBA plans must comply with all PPACA provisions that apply to grandfathered plans with plan years beginning on or after Sept. 23, 2010

How are new dependents and employees treated in grandfathered plans?

Dependents and new employees may be added to a grandfathered plan and be treated as a grandfathered enrollee.

How does grandfathering apply to employers providing multiple health benefit options?

Each total benefit plan has separate grandfathered status. For example, if an employer offers employees choices of three different insurance plans, a loss of grandfathered status for one plan due to benefit changes only applies to that plan and does not affect the other choices.

How many plans are expected to lose grandfathered status over the next few years?

• 40 percent to 67 percent of individual policies will lose grandfathered status by 2011
• 34 percent to 64 percent of large employer group plans (100 or more employees) will lose their grandfathered status by 2013
• 49 percent to 80 percent of small employer group plans (3 to 99 employees) will lose their grandfathered status by 2013

A complete chart of estimates is available in the HHS regulations.

Under what circumstances can a group maintain grandfathered status after 2014?

Any existing group that requests to maintain its grandfather status, and has not made any material changes that impact its status, can remain grandfathered beyond 2014.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. What "grandfathered" means and how it impacts customers and members

Below is a chart identifying and describing each near-term reform requirement along with open issues:

Key Points:

• We have only received HHS regulations on dependent coverage.
• We are currently working on system modifications to allow enrollment of dependents up to age 26. We will notify customers and members as soon as we are able to do so and provide information about the special enrollment period.
• If a group is considering making benefit changes now, this may impact their grandfathered status. Grandfathered plans are in some cases exempt from certain reform provisions. Furthermore, final HHS regulations are still to come on many reform provisions, which will likely require further changes.
• We will provide more updates as regulations are released and decisions are made.
• To comply with new requirements in PPACA many groups will have to change their health insurance coverage. As a result, their rates may also change, and rate adjustments may not be reflected in upcoming renewal packages. Once all the required changes are identified we will notify groups of the impact on their rates. To learn more about PPACA, groups should consult with legal counsel.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. BCBSM and working with stakeholders to ensure compliance with near-term health care reform requirements

The Department of Health and Human Services announced in April rebates would begin starting June 15. Once enrollees hit the prescription drug donut hole, or when the total amount the plan and the member pays for drug cost exceeds $2,830, the enrollee will be eligible for a $250 rebate. This applies to beneficiaries enrolled in individual and group plans, even if the plan covers prescriptions in the donut hole, as long as the enrollee is not receiving extra help though a low-income subsidy.

The $250 check will be sent directly to enrollees from Medicare. Generally speaking, the enrollee should receive their check within four months of the date they enter the coverage gap or if their plan does not have a gap, when their total drug spend exceeds $2,830. However, the timeframe could vary depending upon the month in which the member enters the coverage gap.

There's no application process and no private company will be involved in getting rebate checks to Medicare Part D beneficiaries. Enrollees do not need to provide any personal information (such as a Medicare number or social security number) to get the rebate check. Enrollees should beware of potential fraud schemes and should not give any personal information over the phone to anyone who may call about the rebate.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Medicare Part D beneficiaries will automatically receive $250 rebate when they reach "donut hole".

Effective immediately, we will continue coverage for dependents that are currently enrolled in our fully-insured plans if they are under age 26. Self-funded groups are not required to offer extended coverage before PPACA requires it, but have the option to do so.

Following is a Q&A that will help you answer questions you receive about the announcement. This is an updated version of the Q&A that was sent on April 21, including additional details from the Department of Health and Human Services.

Q&A

What is happening with coverage for children who would normally roll off their parents' policies when they turn a certain age?

It has been BCBSM's longstanding policy to allow dependents to remain on their parents' BCBSM health insurance coverage for the remainder of the calendar after graduation for fully-insured customers.

The legislation requires health plans which offer dependent coverage to cover dependent children until age 26, for plan years beginning on or after Sept. 23, 2010.

What about my child who previously rolled off my policy but is still under 26? How can I re-enroll my eligible adult child?

Dependents up to age 26 whose coverage ended in that Plan by reason of reaching a dependent eligibility threshold must be offered coverage on their parents' policy for plan years beginning on or after Sept. 23, 2010. BCSBM will work with customers to enroll dependents under 26 in time to meet the requirement to do so.

What plans are required to extend dependent coverage up to 26?

The coverage extension applies to all BCBSM individual policies and employer plans beginning with the first plan year on or after Sept. 23, 2010. In the case of a grandfathered group plan however, this requirement of extending coverage is not applicable until 2014 if the adult child is eligible to enroll in an employer group health plan other than that of a parent.

Does this apply to all people who have group coverage?

Self-insured groups can choose whether or not to extend dependent coverage for their employees in advance of the Sept, 23, 2010 requirement to do so. However, all group plans have to comply beginning with the first plan year starting on or after Sept. 23, 2010 (except as noted above for a grandfathered group plan where the adult child is eligible for employer group coverage other than that of a parent).

Are there limits on who qualifies based on financial dependency, martial status, enrollment in school, residency or other factors?

No. An eligible dependent must only be the child of a covered individual by birth, legal adoption or legal foster arrangement.

Once the requirement to extend coverage is applicable to the particular Plan, the Plan may not restrict or deny coverage for an adult child based on financial dependency, residency with the parent, student status, or any other combination of these factors. There is one exception for "grandfathered" group plans in existence on March 23, 2010. If the parents' group plan is grandfathered, that plan may exclude adult children who are eligible to enroll in another employer-sponsored health plan other than that of a parent. This exception will not apply for plan years beginning on or after Jan. 1, 2014, when children up to age 26 can stay on their parents' employer plan even if they are eligible for other employer coverage. A plan that came in to existence after March 23, 2010, is called a "non-grandfathered" plan.

If the parents' policy is a fully-insured, grandfathered plan:

• Currently covered adult children will stay on the policy
• If the adult child's coverage in that plan previously ended by reason of reaching a dependent eligibility threshold, the first plan year beginning on or after Sept. 23, 2010, the adult child will be able to re-enroll on their parents' policy
• As noted above, there is a special rule for grandfathered group plans where the adult child is eligible for other employer group coverage

If the parents' policy is a fully-insured, non-grandfathered plan:

• Currently covered adult children will stay on the policy
• The adult child will be able to re-enroll on their parents' policy with the plan year beginning on or after Sept. 23, 2010

If the parents' policy is a self-insured, grandfathered plan:

• Adult children currently covered on their parents' policy will roll off at graduation (or whenever the plan guidelines specify), unless the employer chooses otherwise
• The adult child will be able re-enroll on their parents' policy with the first plan year beginning on or after Sept. 23, 2010 if they are not eligible for other employer group coverage

If the parents' policy is a self-insured, non-grandfathered plan:

• Adult children currently covered on their parents' policy will roll off at graduation (or whenever the plan guidelines specify), unless the employer chooses otherwise
• The adult child will be able to re-enroll on their parents' policy with the first plan year beginning on or after Sept. 23, 2010

Will adult children be given a special chance to enroll after Sept. 23, 2010?

Yes. For plan years beginning on or after Sept. 23, plans must give children who qualify an opportunity to enroll that continues for at least 30 days, regardless of whether the plan or coverage offers an open enrollment period. BCBSM and your employer will work together to provide details about when and how to enroll.

Does the adult child have to purchase an individual policy?

No. Eligible adult children wishing to take advantage of the new coverage will be included in the parents' individual family policy.

Will Medicare cover adult children in the same way that private insurance will?

No. The provision does not apply to Medicare.

Is BCBSM required to provide coverage for the spouse of the adult children or the children of adult children receiving the extended coverage?

No.

Are there tax benefits related to the extension of dependent coverage?

Yes. The value of any employer-provided health coverage for an employee's child is excluded from the employee's income through the end of the taxable year in which the child turns 26. The exclusion applies to any coverage that is provided to an adult child from March 30, 2010, through the end of the taxable year in which the child turns 26.

Who benefits from the tax treatment?

This expanded health care tax benefit applies to various workplace and retiree health plans. It also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. More information available regarding continued coverage for dependent children up to age 26

You may also find the Department of Health and Human Services FACT SHEET about The Affordable Care Act's Early RetireeReinsurance Program helpful

149.40 Application

The applicant must submit an application to participate in this program to the Secretary, which is signed by an authorized representative of the applicant who certifies that the information contained in the application is true and accurate to the best of the authorized representative's knowledge and belief.

Applications will be processed in the order in which they are received.

An application that fails to meet all the requirements of this part will be denied and the applicant must submit another application if it wishes to participate in the program. The new application will be processed based on when the new submission is received.

An applicant need not submit a separate application for each plan year but must identify in its application the plan year start and end date cycle (starting month and day, and ending month and day) for which it is applying.

An applicant must submit an application for each plan for which it will submit a reimbursement request.

In connection with each application the applicant must submit the following:

1. Applicant's Tax Identification Number.
2. Applicant's name and address.
3. Contact name, telephone number and email address.
4. Plan sponsor agreement signed by an authorized representative, which includes -
   1. An assurance that the sponsor has a written agreement with its health insurance issuer (as defined in 45 CFR 160.103) or employment-based plan, as applicable, regarding disclosure of information to the Secretary, and the health insurance issuer or employment-based plan must disclose to the Secretary, on behalf of the sponsor, at a time and in a manner specified by the Secretary in guidance, information, data, documents, and records necessary for the sponsor to comply with the requirements of the program.
   2. An acknowledgment that the information in the application is being provided to obtain federal funds, and that all subcontractors acknowledge that information provided in connection with a subcontract is used for purposes of obtaining federal funds.
   3. An attestation that policies and procedures are in place to detect and reduce fraud, waste, and abuse, and that the sponsor will produce the policies and procedures, and necessary information, records and data, upon request by the Secretary, to substantiate existence of the policies and procedures and their effectiveness.
   4. Other terms and conditions required by the Secretary.
5. A summary indicating how the applicant will use any reimbursement received under the program to meet the requirements of the program, including:
   1. How the reimbursement will be used to reduce premium contributions, co-payments, deductibles, coinsurance, or other out-of-pocket costs for plan participants, to reduce health benefit or health benefit premium costs for the sponsor, or to reduce any combination of these costs;
   2. What procedures or programs the sponsor has in place that have generated or have the potential to generate cost savings with respect to plan participants with chronic and high-cost conditions; and
   3. How the sponsor will use the reimbursement to maintain its level of contribution to the applicable plan.
6. Projected amount of reimbursement to be received under the program for the first two plan year cycles with specific amounts for each of the two cycles.
7. A list of all benefit options under the employment-based plan that any early retiree for whom the sponsor receives program reimbursement may be claimed.
8. Any other information the Secretary requires.
9. An application must be approved, and the plan and the sponsor certified, by the Secretary before a sponsor may request reimbursement under the program.
10. The Secretary may reopen a determination under which an application had been approved or denied:
    1. Within one year of the determination for any reason;
    2. Within four years of the determination if the evidence that was considered in making the determination shows on its face that an error was made; or
    3. At any time in instances of fraud or similar fault.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Health and Human Services releases interim final rule about application requirements for early retiree reinsurance

"Blue Cross Blue Shield of Michigan believes in covering people, not rejecting people. We believe in fulfilling the promise of health insurance when it's needed most," said Andrew Hetzel, BCBSM vice president for corporate communications. "It has never been our policy to drop someone's coverage when they get sick, and we support the rest of the health insurance industry following suit."

For more than 70 years, BCBSM has been a guarantee-issue insurer with a mission to provide broad access to health coverage. BCBSM is the only health insurance company in Michigan that guarantees access to coverage every day of the year; BCBSM also must submit its rates for regulatory approval prior to using them in the market.

BCBSM has been asking the Michigan Legislature for more than three years to increase consumer protections by ending the practice of rescissions, requiring all insurers to take everyone and leveling the playing field in regards to how rates are set.

"We are pleased to see the reforms we have championed here in Michigan take hold as a result of national health care reform," Hetzel said. "But there remains a need here in Michigan to bridge the gap between now and 2014, when comprehensive insurance reforms take effect."

Blue Cross is earning praise lately for its existing coverage policies. Just last week, as Congress and the Obama Administration pressed health insurers to change their policies of dropping young adults under age 26 from their parents' health coverage upon graduation from college, BCBSM reiterated its longstanding policy of keeping college graduates — as well as young adults who turn 19 and choose not to attend college — active on their parents' fully insured plans. Self-funded plans — plans for which Blue Cross administers claims — will independently determine whether to adopt a similar approach

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Blue Cross Blue Shield of Michigan ahead of pack with long-standing policy regarding insurance rescissions

Some Blue Cross Blue Shield of Michigan and Blue Care Network customers may be eligible to receive early retiree reinsurance funds made available by the recently passed Patient Protection and Affordable Care Act. Blue Cross Blue Shield of Michigan and Blue Care Network are well prepared to assist group customers in managing the early retiree reinsurance application and funds recovery process.

The reform law enables employers that offer health coverage for early retirees between the ages of 55 and 64 to apply for reimbursement of 80 percent of early retiree costs between $15,000 and $90,000. The Department of Health and Human Services is developing an online application process that we anticipate will be available in June. The funds are expected to be dispersed to qualified employers on a first-come, first-served basis. There are $5 billion available for early retiree reinsurance.

While the Department of Health and Human Services has yet to provide the actual application needed to apply for early retiree reinsurance, it has identified information that will likely be required:

• An acknowledgement that the information in the application is being provided to obtain federal funds
• The projected amount of reimbursement to be received for the first two plan year cycles with specific amounts for each plan year
• A statement that policies and procedures are in place to detect and reduce fraud, waste, and abuse
• A description of the procedures or programs the employer has in place to generate cost savings with respect to chronic and high-cost conditions
• An assurance that the employer has a written agreement with its health insurance carrier or employment-based plan to provide Health and Human Services information and data necessary to verify compliance with program requirements
• A summary of how the employer will use the money to lower premiums, deductibles, coinsurance or copayments in future years

Group customers and agents representing group customers that offer early retiree health coverage are encouraged to contact their Blue Cross Blue Shield of Michigan or Blue Care Network sales representative for more information about the early retiree reinsurance process, timelines and applicable fees.

This article was originally published by Blue Cross Blue Shield of Michigan health reform. Blue Cross Blue Shield of Michigan and Blue Care Network to assist employers in applying for early retiree reinsurance