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NAHU Washington Update -7/30/2010

House Vote Pulled to Prevent GOP PPACA Limited Repeal Amendment from Passage

The GOP is gaining traction with its efforts to repeal some of the key provisions of the Patient Protection and Affordable Care Act (PPACA). Last night, the House Democratic leadership had to pull a vote on small business jobs legislation because there was real concern that an amendment to repeal the expanded 1099 reporting requirements in PPACA, filed by Representative Dave Camp (R-MI), would pass. Apparently, there were enough moderate and rank-and-file Democrats who would have supported the motion to recommit to outright repeal the part of PPACA that requires businesses to file a 1099 form for any vendor to whom they pay more than $600 on in a given year beginning in 2011. Democratic leadership is determined not to let any type of outright “repeal” bill pass, so instead they pulled the vote on the entire Investing in American Jobs legislation.

The very unpopular 1099 provision in PPACA is expected to impact 40 million U.S. businesses, self-employed workers, charities and government agencies. It is not only expected to impose a serious administrative burden and significant costs on these entities, but as previously reported in Washington Update, the requirement has also been criticized by the IRS as potentially more trouble than it is worth.

To address the bipartisan concerns about the 1099 requirements without actually repealing a portion of PPACA, the House leadership is expected to release a revised version of the small business jobs bill today that contains language to tweak the 1099 requirements in order to make them less of a burden. Alternatively, the repeal measure as a stand-alone is on the suspension calendar, which requires a two-thirds majority vote, so whether or not it will pass is unclear. Senator Mike Johanns (R-NE) has a bill pending in the Senate that is very similar to the Camp amendment and would repeal the 1099 requirements in PPACA.

The Senate version of the small business bill, with its parity provision for deductibility of health insurance costs for the self-employed, was also pulled after the Senate failed to invoke cloture and will likely hold over until September. Even if Majority Leader Harry Reid (D-NV) brings the bill up next week, the House will be in recess, so the differences between the House and Senate versions will have to be hammered out over the August recess.

HHS Issues Clarification on Child-Only Policies

The Department of Health and Human Services issued a clarification to earlier regulations banning preexisting condition exclusions for children in individual and non-grandfathered group plans on Tuesday. The new guidance was issued in response to publicly articulated concerns by many insurance companies that the new requirement, which takes effect in health plan contract years following September 23, would lead to adverse selection. The clarification specifies that carriers are free to set up specific open enrollment periods for child-only plans if allowed under state laws.

Last week, carriers and insurance commissioners made news when they pointed out that the initial rules seemed to permit parents to wait until their children got sick and then purchase coverage. Due to the potential cost of such adverse selection, some carriers indicated they might have to pull out of the child-only policy market. However, as a result of the new guidance, the health insurance carrier community has publicly backed away from the idea of pulling out of this market.

Scott Serota, president of the Blue Cross and Blue Shield Association, said following the release of the new guidance, "We think this policy will ensure that children get the comprehensive coverage they need while avoiding this unintended consequence. This is consistent with other public and private health insurance programs."

Regulatory Overload

In addition to the new guidance on child-only policies, HHS had an extraordinarily busy day yesterday when it released the interim final rules on how the new federal high-risk pool program will work, only a month after the program went into effect. The new regulation outlines how states may determine who has a preexisting condition and verify citizenship and current insured status to prevent crowd-out. It also outlines coverage appeals processes for the new pool, fraud protection measures and how federal program funding will be allocated to the states that elect to operate their own preexisting condition insurance plan.

In addition, HHS announced the first phase of grants for states to begin working on their state-based health insurance exchanges. Along with the grant announcement, HHS put forth a request for comments by October 4 from the states and interested stakeholders on how best to create health insurance exchanges. NAHU will be preparing a detailed response on behalf of our members.

They’re Outta Here

Congress is about to leave town for their summer recess. The House of Representatives is scheduled to begin their break today, reconvening on September 14, while the Senate is scheduled to remain in session until the end of next week, reconvening a day before the House. While they are gone, it’s been reported that House Democrats have been asked to focus on weekly themes, and that the theme for the week of August 16 will be the benefits of the “September 23” reforms included in PPACA. Previous attempts by Speaker Pelosi to encourage her rank-and-file members to focus on the benefits of PPACA during the Memorial Day and Fourth of July recesses didn’t really work—few members actually held health-related district events. It will be interesting to see if House Democrats follow the party’s themes during this much longer break. If you are represented by a Democratic representative, keep an eye out for health reform-related events the week of August 16.

NAIC Holds Interim Meetings in Washington, DC

The National Association of Insurance Commissioners (NAIC) held interim meetings July 22-23 in Washington, DC, dedicated to health care reform implementation. The Health Insurance and Managed Care (B) Committee and workgroups on exchanges and consumer information held a series of panel discussions on key reform issues, including the structure and function of state insurance exchanges, enforcement of provisions that become effective on September 23, standard definitions of insurance terms, and uniform enrollment forms. The NAIC also continued its ongoing work on crafting the definitions as to which health insurance expenses will and will not be included in the medical loss ratio (MLR) calculation required by the PPACA. They are not expected to complete this work on the MLR definitions until the end of the summer, at the earliest.

The role of agents and brokers was debated during the exchange subgroup discussion. Consumer advocates likened the role of insurance agents to that of travel agents, but several commissioners took issue with that characterization. Florida Commissioner Kevin McCarty was quoted in Politico as saying, “A number of us feel very strongly about the important role agents play providing advice and counsel to the thousands of Floridians and Americans across the country on making really critical decisions. I know some people have thought perhaps if we gravitate toward the exchange program, it will lessen the role of an agent. I substantively disagree with that.”

The NAIC will hold its summer meeting in Seattle August 12-17. The meeting will be attended by three NAHU representatives, and the reform implementation discussions will continue at that time.

Please Consider a GRIP Contribution

We know many of you have been extremely active and generous with your time and resources with legislative issues leading up to the new health reform law, and we want to thank you for your hard work! Please know it has certainly made a difference and has helped in preserving and protecting the role of professional benefit specialists.

The next few months of implementation of PPACA will be among the most intensive and demanding of times for our association's government affairs efforts. In order to help provide the best possible information, strategy and direction in this all-important and complex implementation stage, we are reinstating our Grass Roots Initiative Program. GRIP is a voluntary donation program for our legislative and regulatory expenses at the national level that was created some years ago.

We are now soliciting both individual and chapter contributions to GRIP, and would greatly appreciate any additional help as there is still much to be done on the legislative and regulatory front.

NAHU Washington Update - 07/23/2010

It’s Baaaack! Democrats Introduce New Public Plan Option Bill

Representative Lynn Woolsey (D-CA) and 128 other Democratic co-sponsors introduced H.R. 5808 yesterday to establish a government-run public plan option within the exchanges. The proposed new plan would only pay providers Medicare rates plus five percent. As a result, the Congressional Budget Office (CBO) analysis indicated the plan would be able to under-price premiums by five to seven percent when compared to other private insurance options and could save the federal government $68 billion between 2014 and 2010.

With the House unable to find time on its legislative schedule right now for health care measures that have much stronger public and congressional support, like increased Medicaid funding to the states, it’s a safe bet that this measure isn’t going anywhere. But it’s bringing attention back to the public option issue and shows that many House Democrats still feel that the Patient Protection and Affordable Care Act (PPACA) didn’t go far enough.

NAIC’s Work on Medical Loss Ratios Heating Up

The National Association of Insurance Commissioners (NAIC) is holding an interim meeting this week in Washington, DC. The group is continuing its lengthy efforts to develop the definitions of which health insurance expenses will and will not be included in the medical loss ratio (MLR) calculation required by the PPACA. The NAIC has until December 31 to complete its work on the issue, but all concerned would like them to be done prior to that date. DHHS needs to certify their work and issue corresponding regulations, and carriers need time to make any product adjustments before the start of the 2011 plan year. Regulators had been hoping to finish by the end of August, but hinted yesterday it could be closer to September.

In advance of the meeting, Senator Jay Rockefeller (D-WV), who originally wanted a 90% MLR requirement for all markets, sent a letter to the NAIC warning them against making the MLR definitions too weak and complaining about the influence by insurance industry groups such as NAHU over the NAIC’s process. He writes, “As you continue to be deluged by letters, comments and analyses by the insurance industry, I ask you to recall that the purpose of the new medical loss ratio law is to give the citizens and businesses of your state the health coverage they pay for and deserve.”

In addition to the committee meetings on the MLR issue, the group is also conducting meetings of its consumer information subgroup (of which NAHU CEO Janet Trautwein is an appointed member) to discuss uniform definitions and enrollment applications. The exchange subgroup is holding its first meetings, and the commissioners will also be discussing the impact of the federal reform that takes effect September 23. NAHU has three representatives attending the meeting and will provide more detailed information about its outcome in next week’s Washington Update.

Obama Signs Unemployment Bill

President Obama signed legislation yesterday to extend long-term unemployment benefits through November after a GOP Senate filibuster was broken on Tuesday. The extension is not offset by other spending cuts and consequently adds another $34 billion to the federal deficit. A motion for the Senate to consider the GOP version of the legislation, which would have paid for the extended benefits through cuts to economic stimulus bill funding, reducing the deficit by $7 billion, failed to pass the Senate 42-56.

One of the most notable things about the final bill was the list of items it did not include. Originally proposed as a vehicle to extend all kinds of tax breaks and federal programs, it was limited to just unemployment insurance benefits in the end. The legislation did not include an extension of the federal COBRA health insurance subsidy, so no newly unemployed individuals are eligible for the subsidized coverage. However, individuals who are in the midst of their 15 months of benefits will continue to receive their subsidized coverage for as long as they remain eligible. Also, despite extensive lobbying for state lawmakers, the final bill contained no extension of expanded Medicaid payments to the states from the federal government (FMAP). Many members of Congress have expressed interest in attaching at least the FMAP provisions to another bill, but at this stage in the legislative calendar, what bill they could be added to is unclear. The latest idea is attaching it to one of the tax bills that needs to be passed before year-end, but that is still only an idea and not a particularly comforting one to the many states that have based their FY 2010 budgets on receiving the extra funding from the federal government.

Small Business Jobs Act

The Senate will take up the Small Business Jobs Act today, which was introduced by Finance Committee Chairman Max Baucus (D-MT) and Senate Small Business Committee Chairwoman Mary Landrieu (D-LA). NAHU is highly supportive of one of the law’s provisions which would allow self-employed individuals a one-year tax break regarding their health insurance coverage costs. This provision is based on a recommendation NAHU has made to Congress for many, many years—allow self-employed individuals who are sole proprietors or who have Sub-S corporations tax equity regarding the deductibility of health insurance premiums with businesses organized as “C” corporations by establishing that their health insurance premium costs are a fully deductible business expense.

Under current law, business owners are not permitted to deduct the cost of health insurance for themselves and their family members for purposes of calculating self-employment tax. The Baucus/Landrieu legislation would allow business owners to deduct the cost of health insurance incurred in 2010 for themselves and their family members in the calculation of their 2010 self-employment tax.

Looking for Something New to Decorate Your Office Wall?

Remember that scary chart Senator Arlen Specter made outlining the Clinton health plan proposal way back in 1994? Former Speaker of the House Newt Gingrich’s Center for Health Transformation teamed up with America’s Health Insurance Plans (AHIP) and have developed something similar regarding PPACA’s implementation requirements and deadlines. Their chart outlines the law’s nearly 500 deadlines from the day of enactment through 2020. Each deadline is color coded by issue (Medicare, Medicaid, insurance, taxes, etc.) and includes a brief summary and specific effective date. They have a wall chart version available, as well as an interactive online version.

The wall chart is a nice complement to their earlier work—a chart outlining the 159 new government entities created by PPACA.

The smallest version of the implementation chart, at three feet by six feet, is a little too big to print out on a standard printer, but the Center is selling copies on their website. They also have a five feet by10 feet version available if you have a big blank space to fill!

New Internal/External Review Regulation Released

The Obama administration unveiled its final interim regulation regarding the PPACA provisions effective in plan years following September 23 yesterday. The latest rule outlines the internal and external review requirements for health plans regarding consumer claims appeals. The new requirements apply to all individual and group health plans, including self-funded plans, with the exception of plans with grandfathered status. Grandfathered plans will not have to comply as long as they retain their status.

Forty-four states already have internal and external review laws in place, many of which were based on NAIC model legislation and regulations. The new rules will standardize the claims review requirements across the states. Existing state laws that are more stringent than the federal requirements will still apply, but states with laws on the books already will have to update their requirements so that they are consistent and at minimum meet the “federal floor” of appeal protections across all health insurance markets and products.

The new rules give greater specifics on the PPACA requirement that all plans must have an appeals process in place for denied claims and coverage cancellations, including an expedited review process for urgent cases. It also provides the parameters for the extensive consumer notification requirements regarding the appeals process. An administration fact sheet on the new requirements can be found here.

Please Consider a GRIP Contribution

We are now soliciting both individual and chapter contributions to GRIP, and would greatly appreciate any additional help as there is still much to be done on the legislative and regulatory front.

NAHU Washington Update - 07/09/2010

CMS Gets a New Administrator via Recess Appointment

Yesterday, President Obama filled a four-year vacancy at the Centers for Medicare and Medicaid Services (CMS) by naming Donald Berwick as its new administrator via a recess appointment. The politically controversial Berwick, who previously expressed support for using the British National Health Service as a model for the U.S., was nominated by President Obama for the CMS job on April 19. Berwick was in the process of being vetted by Senate Finance Committee members and awaiting a confirmation hearing by that committee, which was expected to be held later this summer. However, yesterday President Obama elected to install Berwick directly while the Senate was out of session for the Fourth of July holiday.

The Obama administration claimed the appointment was necessary to avoid politically motivated delay during Berwick’s confirmation process, and that filling the administrator position at CMS immediately was a necessary step as the implementation process for the Patient Protection and Affordable Care Act moves forward. Recess appointments are normally used after a protracted delay by the Senate in the confirmation process, resulting in a necessary administration position going unfilled for an extended period of time. As Ruth Marcus stated yesterday in the Washington Post, “a recess appointment should be a last step in cases of egregious delay, not one of the first.”

While few would argue against the vacancy at CMS needing to be filled, or that a Berwick confirmation hearing would have been a politically charged event, it is also true that President Obama waited 15 months to nominate Berwick to the post and that Berwick’s Senate confirmation process, had it been allowed to continue, would have likely been ultimately successful. As a result, the appointment has drawn bipartisan ire from members of the Senate. Senate Minority Leader Mitch McConnell called the appointment “outrageous.” Finance Committee Chairman Max Baucus (D-MT), whose committee was in charge of Berwick’s Senate confirmation hearing, said in a written statement yesterday that the Senate’s role in the confirmation of key officials is an essential check on executive power and that he is “troubled that, rather than going through the standard nomination process, Dr. Berwick was recess appointed.”

As a recess appointee, Berwick will have full authority as CMS administrator, but he will only be able to remain in his post until the end of the 111th Congress, or late 2011, unless he is confirmed by the full Senate before then.

Berwick comes to CMS from Harvard University, where he was a professor in the School of Public Health and head of the University’s Institute for Healthcare Improvement.

Berwick’s past experience includes a significant focus on reducing health care costs and quality of care issues, which NAHU views as essential priorities as health reform moves forward. Our association continues to work closely with CMS on reform implementation and other key issues under its jurisdiction like Medicare and CHIP, and we look forward to building a relationship with Dr. Berwick in the coming weeks.

Update on the NAIC’s Role in PPACA Implementation

The National Association of Insurance Commissioners was charged by Congress with considerable implementation responsibilities relative to PPACA, and NAHU continues to work with state regulators and the NAIC on a weekly basis on implementation issues of concern to health insurance agents and brokers. The primary issue the NAIC is currently working on of key interest to NAHU and its members is the crafting of definitions relative to what health insurance services will be covered by the PPACA’s minimum loss ratio (MLR) requirements.

The law gives the NAIC until December 31 to craft the MLR definitions, but HHS has requested that the NAIC complete its work early so that necessary regulations relative to MLR implementation can also be developed. HHS originally asked that the NAIC complete its work by June 1, but the NAIC rejected the timetable, stating it was too tight. Initially, the NAIC said they hoped to get their final work product to HHS by the end of July. However, during a conference call yesterday, Commissioner Steve Ostlund, chair of the NAIC’s Accident and Health Working Group, which is the primary committee within the NAIC working on the definitions, backed away from the end-of-July timeframe. While he was clear that the group will finish its work well in advance of December 31, he refused to specify exactly when they will finish.

The NAIC committees addressing this issue meet via conference call on at least a weekly basis, and the group is holding an interim meeting on the MLR issue in Washington the week of July 18. The NAIC will also hold their regularly scheduled meeting in Seattle from August 14-17, and NAHU will continue to be an active participant in all of these calls and meetings. Our most recent letter to the NAIC on the MLR issue was sent in conjunction with the entire Agent/Broker Alliance and can be found here.

In addition to the MLR issue, the NAIC is also charged with crafting a sample of the notice all health insurers must send to customers by March 2012 outlining plan benefits and costs. The goal of the NAIC committee is to translate complicated insurance-related terms and benefit information into summaries that can be easily digested by consumers. PPACA required the NAIC committee to be made up of not just insurance regulators, but also interested parties like insurers and consumer groups. NAHU CEO Janet Trautwein was appointed by the NAIC as one of the statutory working group’s formal members to represent the interests of health insurance agents and brokers.

The law gives the NAIC group until March 2011 to craft their sample forms, and the committee has begun meeting on a biweekly basis to accomplish that task. As with the MLR definitions, HHS has requested that the committee finish its work early—by the fall of 2010. NAHU will keep you apprised of the committee’s progress on the sample notices via future editions of Washington Update.

IRS Expresses Concern about Its Role in PPACA Administration and the Cost Impact on Small Businesses

One of the lead federal agencies charged with PPACA administration and enforcement, the Internal Revenue Service, expressed concern this week about its ability to enforce some of the legislation’s provisions, as well as its potential negative cost impact on millions of our nation’s small businesses. In a report issued Wednesday by IRS National Taxpayer Advocate Service head Nina E. Olsen, the agency raises “concern about the adequacy of the IRS taxpayer service, particularly as the IRS begins to implement health reform.” The report goes on to say that that the agency is “neither structured nor funded to effectively oversee social programs.”

One aspect of the new law that is particularly troubling to the agency is the new requirement that businesses file a 1099 form for any vendor to whom they pay more than $600 to in a given year. This provision is expected to impact 40 million U.S. businesses, self-employed workers, charities and government agencies. Not only will this new requirement create problems for the agency in terms of process and enforcement, the IRS estimates the new reporting will have a significant cost impact on small businesses, charities and government agencies and may require the purchase of new accounting software and the hiring of new personnel for compliance purposes. Furthermore, as Olsen said in the news release accompanying the report, those burdens “may turn out to be disproportionate as compared with any resulting improvement in tax compliance.”

New HITECH Act Rule Released

The Department of Health and Human Services issued a new proposed rule yesterday to modify HIPAA privacy requirements as mandated by the Health Information Technology for Clinical Health (HITECH) Act. The new proposal would expand many of HIPAA’s existing privacy requirements for covered entities, like health insurers and providers, to subcontractors and business associates. NAHU is in the process of analyzing the proposed rule and its potential impact on our members and your clients. We will provide more information about it in future editions of Washington Update, raise any issues of concern with HHS during informal meetings and submit formal comments to HHS later this year on behalf of our members as part of the regulatory process.

Senate Doctors Issue 100-Day Checkup Report

Now that PPACA has been in effect for 100 days, the Senate’s two physician members, Drs. Thomas Coburn (R-OK) and John Barrasso (R-WY), have released a new oversight report on the law’s impact on the American people. According to them, the prognosis is not good. In Bad Medicine: A Checkup on the New Federal Health Law, the two senators state that “the passage of this law will exacerbate current problems in health care and could make them even worse." The report reveals new information and goes through a litany of problems with this flawed legislation. The full text of the report can be found here.

Please Consider a GRIP Contribution

We are now soliciting both individual and chapter contributions to GRIP, and would greatly appreciate any additional help as there is still much to be done on the legislative and regulatory front.

NAHU Washington Update - 07/02/2010

Big Day in Reform Implementation as Web Portal, Programs for Covering High-Risk Uninsured Individuals and Tanning Tax Get Underway

Yesterday was a big day for implementation of some of the Patient Protection and Affordable Care Act’s most immediate provisions. The Department of Health and Human Services unveiled its new consumer Web portal, www.healthcare.gov, a number of states and the federal government began accepting applications for new programs to cover previously uninsured individuals with serious medical conditions, and a new tax on indoor tanning services went into effect.

The new consumer Web portal is geared toward individuals and small business owners to allow them to compare private health insurance option information, as well as obtain information and applications for public health coverage programs like CHIP and Medicaid on a state-by-state basis. It was required by the PPACA to serve as a central repository of information about coverage options and the rollout of the PPACA’s provisions until states begin operating their own health insurance exchanges with online components in 2014.

The portal is intended to be an evolving site, with information options being added between now and October 1. While the site does not currently contain a direct link to information about how to contact independent agents and brokers, NAHU has met with HHS and White House officials in the last few weeks to discuss adding this option in the near future. In addition, NAHU worked with Representative Charlie Melancon (D-LA) to craft a bipartisan letter from leading members of Congress that was sent to HHS Secretary Kathleen Sebelius this week urging the inclusion of independent health insurance and agent and broker contact information in the portal.

One of the coverage information options included in the new web portal is the Pre-Existing Condition Insurance Plan (PCIP), the federal government’s new subsidized high-risk pool coverage option for previously uninsured individuals who have serious medical problems and previously had trouble accessing individual coverage. The PPACA gave states the option of operating their own such program by July or allowing for a federally administered plan in their state.

Twenty-nine states and the District of Columbia have opted to start their own plans, and 21 states will allow residents to enroll in the PCIP program. To be eligible for the coverage, people must have been denied coverage by a private insurer due to a preexisting condition, and they must have been uninsured for at least six months.

The federal PCIP plan and many state plans began accepting applications for enrollment yesterday. The hope is to actually begin covering individuals in August or, in some states, later this fall. Eligible residents of Montana and Pennsylvania can apply for and obtain coverage now.

One of the major issues with the new program for uninsurable individuals is its cost. The PPACA appropriated $5 billion in funding for it over the next three years, and analysts at both the federal Centers for Medicare and Medicaid Services (CMS) and the Congressional Budget Office (CBO) have indicated that this amount will not be nearly sufficient to cover all eligible individuals across the nation, and that funding could run out as early as 2011. Most state programs have indicated their plans will cover individuals on a first-come first-served basis, so early applications are essential.

In addition, the premiums for coverage through this program, while subsidized to some degree, are still fairly expensive. Cost and benefit options will vary by state, but are expected to be in the range of $400-550 per month for single PPO coverage with a $1,500 deductible. As even Richard Popper, the former Maryland high-risk pool administrator and current HHS official operating the PCIP plan, noted, a “significant number” of people with preexisting conditions who are uninsured have limited income, and they will not be able to afford the premiums. He added, “But for those who can afford it this is going to be a great, great plan for them."

Finally, in addition to the portal and the high-risk pool programs, a new 10% excise tax on indoor tanning services went into effect yesterday. This "sin tax," which was added fairly late in the game to PPACA as a payment offset, has caught much of the American public by surprise. However, beginning yesterday, all indoor tanning salons must now levy this new tax directly upon their customers.

Cloture Motion on Tax Extender Legislation Fails Again in Senate

A cloture motion on the latest iteration of the tax extender bill, which included extensions of unemployment benefits and the homebuyer’s tax credit, failed again in the Senate 58-38 on Wednesday.

Senators Susan Collins and Olympia Snowe of Maine were the only Republicans to vote for the cloture motion. Senator Ben Nelson (D-NE) opposed it, and Senate Majority Leader Harry Reid (D-NV) registered a no vote for procedural reasons. Opposition to this measure has been based on cost concerns and the lack of payment offsets for the bill’s provisions. Three earlier, even more costly versions of this bill have been defeated in previous weeks.

Following the failed cloture vote, Senate Minority Leader Mitch McConnell (R-KY) asked consent to pass a fully paid for, two-month extension of the expired unemployment assistance benefits, but Senate Democrats objected.

The lack of progress on the tax extender legislation could have an impact on the budgets of many states. Earlier failed versions of this bill included an extension of the federal government’s increased Medicaid payments to the states that originated with the economic stimulus legislation passed last year. Without an extension, each state’s federal Medicaid match will drop to their original levels. But many states have balanced their already fragile 2010 budgets based on their anticipation that the increased federal Medicaid matching rate would be extended. This has led to many gubernatorial visits to Washington over the past few weeks to urge senators to restore the federal government’s increased Medicaid funding assistance. However, even if the Senate passes legislation that includes additional funds for Medicaid, there is no guarantee the states will get this money. Additional Medicaid matching funds were stripped out of the House-passed version of the tax extender bill due to the lack of federal dollars to pay for it.

New Regulations on the Horizon

The Departments of Health and Human Services, Labor and Treasury are expecting to release the final two sets of interim final rules (IFRs) regarding PPACA provisions that become effective on September 23 within the next few weeks.

The IFR specifying the terms of the preventive care insurance coverage mandate will be released as soon as next week. The preventive care mandate provisions in the PPACA will apply to all health insurance plans (individual, group, self-funded and fully insured) in contract years after September 23 unless the plan has grandfathered status. This regulation will spell out exactly what preventive care services must be covered by these plans, and it will specify how plans can utilize value-based insurance designs and still meet the terms of the coverage mandate.

On July 23, the Departments plan to issue the last IFR in this first wave of PPACA requirements that will clarify PPACA’s amendment of ERISA to require new federal insurance claim and appeal procedures. Like the preventive care rules, these requirements will apply to health plans created after September 23 and those plans that have surrendered their grandfathered status. Grandfathered health plans will be exempt from both the new preventive care and coverage and claims and appeal process rules.

Small Business Legislation Contains NAHU-Advocated Tax Break for the Self-Employed

The Small Business Jobs Act, a new piece of legislation introduced by Senate Finance Committee Chairman Max Baucus (D-MT) and Senate Small Business Committee Chairwoman Mary Landrieu (D-LA), would allow self-employed individuals a one-year tax break on their health insurance coverage costs. NAHU for years has recommended that self-employed individuals who are sole proprietors or who have Sub-S corporations should have tax equity regarding the deductibility of health insurance premiums with businesses organized as “C” corporations. We have always suggested that the current deduction for premiums from gross income should be changed so that health insurance premium costs would be a fully deductible business expense. The Baucus/Landrieu legislation, among many other provisions, would do just this, albeit just for the 2010 tax year. NAHU will continue to report on the progress of this legislation in future issues of Washington Update.

A Note About Health Reform Resources – Please Contact NAHU with Questions

From time to time we are pleased to be able to share with our members resources that have been complied and crafted from other groups, associations, law firms, etc. We ask NAHU members that if you have questions about any of the content in these publications, please contact us, NOT the authors of the publications. We cannot and should not impose upon our friends in the health care community questions that come from our members about their resources. Thank you for your cooperation, and we are always happy to help find the right answers for you.

Please Consider a GRIP Contribution

We are now soliciting both individual and chapter contributions to GRIP, and would greatly appreciate any additional help as there is still much to be done on the legislative and regulatory front.

NAHU Washington Update - 06/25/2010

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Middle-of-the-Night House and Senate Action on Tax Extenders, Medicaid Payments to the States and Medicare “Doc Fix”

A middle-of-the night cloture vote on “tax extender” legislation failed again in the Senate with a vote of 57-41. Senator Ben Nelson (D-NE) joined all present Senate Republicans in voting against the measure based on cost concerns and the lack of payment offsets for many of the bill’s provisions. An earlier, even more costly version of this bill was defeated last week.

Last night’s failed version of the bill included extensions of both unemployment benefits and increased federal Medicaid payments to the states, as well as a temporary fix to scheduled payment reductions to Medicare-participating providers. It did not contain any extension of the federal COBRA health insurance subsidy that expired on May 31.

Following the vote, Minority Leader Mitch McConnell (R-KY) asked for consent to pass fully paid-for 30-day extensions of COBRA, unemployment insurance, flood insurance and small business lending, among other things, but Senator Durbin (D-IL) objected. There are no votes today in the Senate; the next scheduled vote will be on Monday at 5:30 p.m.

The House passed a version of comprehensive tax extender legislation in May but, due to cost concerns, increased Medicaid funding to the states and an extension of COBRA subsidy benefits were not part of that legislative package.

While the Senate comprehensive tax extender legislation has been twice defeated, they did pass a stand-alone bill to adjust Medicare payments to providers for another six months last week. Initially, House Speaker Nancy Pelosi refused to take up the Senate’s stand-alone “doc fix” bill, hoping to force them to pass broader legislation. As a result of the lack of agreement, CMS was forced to begin implementing the required 21% cut to Medicare providers this week.

Recognizing that the Senate is unlikely to pass a comprehensive bill any time soon, Pelosi allowed a House vote late last night on the Senate’s temporary Medicare payment fix bill. The House voted 417-1 to approve it, with House Education and Labor Committee Chairman George Miller (D-CA) casting the only no vote. The “doc fix” measure will go to President Obama for signature, and CMS will be able to issue retroactive payment increases to providers upon its enactment.

New “Patient’s Bill of Rights” Regulation Released

The Departments of Health and Human Services, Labor and Treasury issued regulations on June 22 to implement five of the insurance market reform provisions included in the Patient Protection and Affordable Care Act (PPACA). During the unveiling of the new rules at the White House, President Obama specifically warned the insurance industry not to use the new rules and PPACA “as an opportunity to enact unjustifiable rate increases.”

However, he praised insurers for implementing many of the law’s initial consumer-protection provisions early, such as extending coverage to dependents up to age 26. In a nod to insurance companies, HHS Secretary Kathleen Sebelius said, "We need to be in this together...the underlying cost drivers are certainly not all isolated with insurance companies."

NAHU is still completing a detailed analysis of the rules, and will distribute that to you next week. However, HHS has already released a fact sheet on the scope of the new regulation.

The five areas addressed by the new rules, which the Obama administration is billing as a new “Patient’s Bill of Rights,” include:

the prohibition against preexisting condition exclusions

the prohibition against lifetime health insurance coverage limits

the restriction of annual coverage limits

the limitation on rescissions

the provisions guaranteeing direct access to certain types of providers and access to out-of-network emergency care.

Most of these requirements are scheduled to go into effect for plan years starting after September 23, 2010. The preexisting condition requirements are only effective for children this year; the remainder of the preexisting condition requirements take effect on January 1, 2014, and the annual limit provisions are phased in. The prohibition on lifetime coverage limits and the limits on rescissions apply to all plans, including those who elect to maintain their grandfathered status, and the limits on preexisting condition exclusions and on annual dollar limits apply to grandfathered group plans. The other provisions do not apply to grandfathered plans.

New Rule Addresses Key NAHU Concern Regarding Group Limited Benefit Plans

In creating the new rules, the Obama administration addressed a key concern raised by NAHU and other business and insurer groups regarding group limited benefit plans in a positive way. As NAHU has reported in previous versions of Washington Update, group limited benefit, or “mini-med,” plans were potentially threatened by the implementation of PPACA and its annual limit requirements. While these plans are by their very definition limited in nature, they do provide some coverage for 1.4 million Americans, many of whom are low-wage and/or part-time workers who cannot afford other coverage. We were concerned the annual limit rules were too restrictive, potentially forcing this group of Americans to go from having some health coverage benefits to none at all.

The administration recognized that some coverage is better than no coverage and specifically established a transition process for limited benefit plans between now and January 1, 2014, when other coverage and subsidy options for the impacted population will take effect. Group limited benefit plans will be able to apply for a waiver to be exempted from the restrictions on annual benefit limits. We still need the administration to clarify whether waivers will run from now through 2014 (which would be less disruptive to the marketplace) or if they will have to be renewed on a yearly basis. In any case, NAHU is very pleased this issue has been addressed by the administration and hopes that their willingness to respond to our concerns on this issue is a harbinger of further good implementation news to come.

CBO Confirms PPACA Funding for New Federal High-Risk Pool Program is Insufficient

On Monday, the Congressional Budget Office (CBO) released a letter prepared at the request of Senator Mike Enzi (R-WY), ranking member of the Health, Education, Labor and Pensions (HELP) Committee, regarding the funding allocated by PPACA for the new federal high-risk pool program to help uninsured individuals with preexisting medical conditions through 2013. The CBO not only confirmed that the $5 billion appropriated for high-risk pool funding under current law is insufficient to cover all eligible individuals through the life of the program, so enrollment will have to be limited, but it also found that an additional $10-15 billion in federal funds would be required to cover all of the eligible participants. Additionally, CBO found that while a fully funded program would enroll about 400,000 individuals in 2011, rising to as many as 700,000 participants in 2013, the current law method of capped funding would enroll an average of only 200,000 individuals between 2011 and 2013—meaning as many as half a million individuals with preexisting conditions could lose out on coverage opportunities due to the funding shortfall. CBO also pointed out that “most of these enrollees [in the risk pool] would have been uninsured,” meaning that the lack of full funding for the program will result in fewer people with preexisting conditions obtaining coverage prior to 2014.

According to the statute, the federal high-risk pool program was supposed to be up and running by June 21, or 90 days from enactment. However, the states and HHS are still organizing their programs and do not anticipate beginning to enroll individuals until later this summer or even this fall. Senator Enzi has requested that HHS Secretary Kathleen Sebelius respond to the CBO letter, and NAHU will report on any such response if it is received.

Financial Regulatory Reform Conferees Reach Agreement on Broker-Dealer Provision

Financial regulatory reform conferees working to reconcile the House and Senate versions of “Wall Street Reform” legislation reached a final agreement on the broker-dealer provision of the bill today. The provision addresses whether broker-dealers should be held to the same fiduciary standard of customer care as investment advisers when they provide clients with advice.

The version of the bill that passed the House of Representatives last December established a “best interest” standard for broker-dealers and investment advisers. The rationale behind the idea is a belief by some that broker-dealers should be held to the same “best interest” standard that investment advisers when they provide advice to a client.

The version of the bill that passed the Senate in March took a different approach than the House. The Senate chose to grant the Securities and Exchange Commission (SEC) the authority to conduct a study on how current obligations of broker-dealers are applied and enforced relative to investment advisers. After the study is complete, the SEC would be granted rulemaking authority to address any gaps or overlaps in regulation found in order to enhance investor protections.

Conferees agreed on compromise language which states that:

The SEC will still conduct the study in the Senate bill and must report to Congress in 6 months.

The SEC is given the authority to implement a “best interest” standard for broker-dealers, and investment advisers. The “best interest” standard only applies to “personalized investment advice about securities” and the duty does not continue beyond the advice. There is requirement that the application of a “best interest” standard be tied it to the findings of the study.

Conferees are working finalize negotiations on the overall legislation today. A vote on the agreement is expected tonight. The bill will then move to the House and Senate floors for approval by the full Congress. The hope is to have the bill placed on the President’s desk before the Fourth of July recess.

Please Consider a GRIP Contribution

The next few months of implementation of the PPACA will be among the most intensive and demanding of times for our association's government affairs efforts. In order to help provide the best possible information, strategy and direction in this all-important and complex implementation stage, we are reinstating our Grass Roots Initiative Program (GRIP). GRIP is a voluntary donation program for our legislative and regulatory expenses at the national level that was created some years ago.

We are now soliciting both individual and chapter contributions to GRIP, and would greatly appreciate any additional help as there is still much to be done on the legislative and regulatory front.

NAHU Washington Update - 06/14/2010

“Grandfathered” Health Plan Proposed Rules Released

Today the U.S. Departments of HHS, Labor and Treasury issued interim final and proposed regulations for group health plans and health insurance coverage relating to status as a grandfathered health plan under the Patient Protection and Affordable Care Act (P.L. 111-148). The regulations, which also call for comment, will be published in the June 17 Federal Register.

The PPACA exempts “grandfathered” plans that were in existence on March 23, when the law was enacted, from many of the new requirements of the law, which will cost more for plans to incorporate.

NAHU staff will be providing soon more detailed analysis and summaries of the proposed rules, but you may be interested in this fact sheet released today by HHS.