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HHS Issues Final Rule of Medical Loss Ratios: DOL Issues Related Guidance on Rebates

The Department of Health and Human Services (HHS) recently issued its final rule on medical loss ratios (MLR). Under the Patient Protection and Affordable Care Act, insurance companies are required to spend 80 percent (individual and small group markets) or 85 percent (large group markets) of premium dollars on health care expenses. For insurance companies that do not meet the MLR standards, such issuers are required to provide rebates to their policyholders. Notably, the final rule streamlines the rebate process for group policies, and directs issuers to provide rebates to the group policyholder (generally, the employer). Policyholders must ensure that the rebate is used for the benefit of the subscribers of the group health plan. The Department of Labor (DOL) has issued related guidance on the treatment of rebates paid pursuant to the MLR requirements. For group health plans subject to ERISA, the rebates may constitute ?Ç£plan assets,?Ç¥ and if… Continue Reading

U.S. Supreme Court Will Review Constitutionality of Health Care Reform Law

The U.S. Supreme Court has agreed to review three cases challenging the constitutionality of the Patient Protection and Affordable Care Act (the Health Reform Law). Specifically, the Court has agreed to address the following issues: (1) whether the individual mandate under the Health Reform Law is constitutional; (2)?áwhether the remainder of the Health Reform Law is severable if the individual mandate is ruled unconstitutional; (3) whether the Health Reform Law?ÇÖs expansion of the Medicaid program is constitutional; and (4) whether the Anti-Injunction Act bars state challenges to the individual mandate. A copy of the Supreme Court?ÇÖs order can be found here.

D.C. Circuit Court Rules Health Reform?ÇÖs Individual Mandate Constitutional

In a 2-1 split decision, the United States Court of Appeals for the District of Columbia ruled that the individual mandate under the health reform law is constitutional. In directly addressing whether the individual mandate would violate the commerce clause of the U.S. Constitution, the court noted that, ?Ç£Congress, which would, in our minds, clearly have the power to impose insurance purchase conditions on persons who appeared at a hospital for medical services – as rather useless as that would be – is merely imposing the mandate in reasonable anticipation of virtually inevitable future transactions in interstate commerce.?Ç¥ The court rejected the notion that only voluntary, affirmative acts, can cause an individual to enter into or affect, interstate commerce. A copy of the opinion is available here.

Health Coverage Tax Credit Increased

The Trade Adjustment Assistance Extension Act of 2011 increased the health coverage tax credit (HCTC) that is generally available to eligible individuals under the Trade Adjustment Assistance Program and the Alternative Trade Adjustment Assistance Program. As amended, the HCTC allows a taxpayer to take a credit equal to 72.5 percent of the amount paid by the taxpayer for coverage of the taxpayer and family members under qualified health insurance during the taxable year. The increased credit applies to all coverage months beginning after February 12, 2011. A copy of the Trade Adjustment Assistance Extension Act of 2011 is available?áhere.

Fourth Circuit Dismisses Healthcare Reform Lawsuits

The U.S. Court of Appeals for the Fourth Circuit has rejected two challenges to the constitutionality of the Patient Protection and Affordable Care Act for lack of standing.?á The court dismissed a challenge by the commonwealth of Virginia without reaching the merits, because it concluded that Virginia lacked standing to challenge the personal coverage mandate.?á Next, the Court dismissed a challenge by Liberty University for lack of jurisdiction, holding that the suit?áconstitutea a pre-enforcement action seeking to restrain the assessment of a tax barred by the Anti-Injunction Act.?á Commonwealth of Virginia v. Sebelius (11-1057); Liberty University v. Geithner (10-2347). Two other U.S. Courts of Appeal have split on the constitutionality of the individual mandate.

Restricted Annual Limits of Health Reform Do Not Apply to Stand-Alone HRAs

The Department of Health and Human Services recently issued a class exemption exempting health reimbursement arrangements (HRAs) in effect prior to September 23, 2010 from compliance with PPACA?ÇÖs restricted annual limit requirements until January 1, 2014. As a result, HRAs do not have to apply for waivers from the restricted annual limits of $750,000 in 2011, $1.25 million in 2012, and $2 million in 2013. A copy of the class exemption is available here.

Proposed Rules on Summary of Benefits and Coverage Provision UnderHealth Reform

The U.S. Departments of Labor, Health and Human Services, and Treasury recently issued proposed regulations regarding the provisions of the Patient Protection and Affordability Care Act that require: (1) group health plans and health insurance issuers to provide a summary of benefits and coverage ( ?Ç£SBC?Ç¥ ) to participants and beneficiaries, and (2) group health plans and health insurance issuers to make available to participants and beneficiaries a uniform glossary of terms commonly used in health insurance coverage. The proposed rules describe when the SBC and glossary must be provided, as well as the content, form and manner of disclosure of the SBC and glossary. The regulations are available here. A fact sheet on the regulations is available here. The proposed template for the SBC is available here.

HHS Issues Guidance on Affordable Insurance Exchanges

The U.S. Department of Health and Human Services (HHS) recently issued proposed regulations to address the implementation of certain functions of the new Affordable Insurance Exchanges, to be established by 2014. Beginning in 2014, individuals and small business will be able to purchase private health insurance through the State-based exchanges. Specific exchange functions in the proposed regulations include: eligibility determination for exchange participation and insurance affordability programs (including specific rules on the process for determining eligibility, verification, and eligibility redetermination, and the administration of advance payment of the premium tax credit), and standards for employer participation in the Small Business Health Options Program. The proposed regulations apply to taxable years ending after December 31, 2013. HHS is taking comments until October 31, 2011. A copy of the regulations is available here.

Eleventh Circuit Holds Individual Mandate of Health Reform Unconstitutional

The U.S. Court of Appeals for the Eleventh Circuit has ruled unconstitutional the provision of?áthe Patient Protection and Affordable Care Act (PPACA), the health?ácare reform?álaw, that would require individuals to purchase health insurance or face an annual penalty (called the?á?Ç£individual mandate?Ç¥).?á Unlike the district court, however, the Eleventh Circuit?ádid not conclude that the unconstitutionality of the individual mandate caused the entire act to be unconstitutional.?á The Eleventh?ÇÖs Circuit?ÇÖs decision striking down the individual mandate contrasts with the decision of the Sixth Circuit, which upheld the individual mandate as constitutional.?á The?á?áU.S. Supreme Court is expected to review the constitutionality of health reform during its upcoming term, with a ruling possible by the summer of 2012.?á A copy of the decision an be found here.

Guidance Released on Required Preventive Services for Women under Health Reform

The Patient Protection and Affordability Care Act (i.e., health care reform) provides that, for the first plan year beginning on or after September 23, 2010, non-grandfathered group health plans must provide certain immunizations and certain other preventive care measures without cost-sharing. The Health Resources and Services Administration (HRSA) recently adopted guidelines regarding the required preventive services for women. Under these guidelines, eight categories of services must be covered: contraceptive methods and counseling, well-woman visits, screening for gestational diabetes, human testing, counseling for sexually transmitted infections, counseling and screening for human immune-deficiency virus, breastfeeding support, supplies and counseling, and screening and counseling for interpersonal and domestic violence. However, HRSA may establish exemptions with respect to group health plans established by or maintained by religious employers with respect to any requirement to cover contraceptive services. Non-grandfathered group health plans and issuers must provide coverage for these benefits for the first plan year… Continue Reading

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