Today, led by Chief Justice John Roberts, the Supreme Court upheld the constitutionality of the Affordable Care Act in almost all respects. While upholding the controversial individual mandate to purchase health insurance, the Court did alter one important aspect of the law, however, in that it limited the government’s ability to withhold all Medicaid funds from a state contingent on the states’ acceptance of the significant Medicaid expansion called for under the Act. Under the Court’s ruling, a state must be allowed to opt out of the Medicaid expansion without threatening the state’s current Medicaid coverage and federal funding. The text of the decision can be found here.
On March 12, 2012, the Department of Health and Human Services (HHS) published a final rule that outlines a framework for states to establish Exchanges . The final rule combines policies from two proposed regulations that were issued last summer, and addresses eligibility and enrollment in Exchanges as well as employer eligibility for the Small Business Health Options Program (SHOP). According to the final rule, Exchanges will perform a variety of functions, including:
- certifying health plans as “qualified health plans” in order to be eligible to participate in the Exchanges;
- operating a website to facilitate consumer comparisons among plans offered in the Exchange;
- operating a toll-free hotline for consumer support and conducting other consumer outreach and education;
- determining eligibility for premium tax credits and other reductions in cost-sharing; and
- facilitating enrollment of consumers in qualified health plans.
The final rule provides minimum standards that health insurers must meet to participate in an Exchange; however, states are given flexibility in determining the number, type and overall requirements for eligible health plans. HHS will accept further comments on certain sections of the rulemaking, which are issued as an interim final rule, including provisions related to the role of agents and brokers. Future rulemaking will address other areas related to Exchanges, including standards for issuing exemptions from the individual mandate, the definition of essential health benefits and standards relating to quality.
On February 9, 2012, the departments of Health and Human Services, Labor and Treasury published final regulations implementing the Affordable Care Act’s Summary of Benefits and Coverage (SBC) and Uniform Glossary requirements. The final rule requires that health insurers provide certain standardized information on benefits ad coverage, as well as a uniform glossary of common coverage terms. According to the agencies, the final rule standards “ensure this information is presented in clear language and in a uniform format that helps consumers to better understand their coverage and better compare coverage outcomes.”1
The final rule requires that the SBC be provided by: (1) a group health insurance issuer to a group health plan; (2) a group health insurance issuer and a group health plan to participants and beneficiaries; and (3) a health insurance issuer to individuals and dependents in the individual market. Depending on the scenario, the SBC must be provided in different circumstances, such as on application for coverage, by the first day of coverage (if information in the SBC has changed), upon renewal or reissuance and upon request.2
The final rule requires that SBC’s have a total of 12 content elements, including standard definitions of coverage terms, a description of coverage (including cost-sharing requirements) and information regarding exceptions and limitations to coverage.
The final rule also provides that failure to provide required information may result in a fine of up to $1,000 for each such failure.3
Although the agency had initially proposed implementation of this requirement on March 23, 2012, the final rule delays the start date of the requirement by six months, to September 23, 2012.4
The Center for Consumer Information and Insurance Oversight (CCIIO) has provided a number of tools on its website related to the SBC, including an SBC template, sample SBC, and instructions for completing the SBC.
1 Internal Revenue Service, Department of the Treasury, Department of Labor and Department of Health and Human Services, Summary of Benefits and Coverage and Uniform Glossary, Final Rule, Prepublication copy, at 4.
2 Id. at 5.
3 Id. at 134.
4 Id. at 135; 149; 150.
The Center for Consumer Information and Insurance Oversight within the Department of Health and Human Services (HHS) issued a bulletin on December 16 to provide information and solicit comments on HHS’s approach to defining Essential Health Benefits (EHB) under the Patient Protection and Affordable Care Act (ACA). The ACA requires non-grandfathered plans in the individual and small group markets, Medicaid benchmark and benchmark-equivalent, and Basic Health Programs to cover EHB beginning in 2014. The scope of EHB, as defined by HHS, must equal the scope of benefits provided under a “typical” employer plan. In the bulletin, HHS stated that it intends to define EHB through a benchmark plan that each state selects. Significantly, HHS intends to allow states to select a benchmark plan from among the following existing health plans:
- One of the three largest small group plans in the state;
- One of the three largest state employee health plans;
- One of the three largest federal employee health plan options; or
- The largest health maintenance organization in the state’s commercial market.
If a state fails to select a benchmark, the default would be the state’s largest small group market plan. Comments on the intended approach are due by January 31, 2012.
On November 14, 2011, the Supreme Court announced that it will hear challenges related to the Affordable Care Act (ACA) during its spring term. The Court has chosen to address four specific issues with respect to legal challenges of the health reform law:
(1) the constitutionality of the law’s requirement that all individuals purchase insurance (i.e., the Minimum Essential Coverage provision, also referred to as the individual mandate);
(2) whether the Anti-Injunction Act, a law which requires individuals to refrain from suing the federal government for the imposition of a tax until after the tax has been paid, bars a pre-enforcement challenge to the individual mandate until 2014 when the provision goes into effect;
(3) the constitutionality of the law’s Medicaid expansion requiring states to provide coverage to all adults under 65 with household incomes below 133 percent of the poverty level; and
(4) the issue of severability, as the Court must determine whether the law must be struck down in its entirety if one of the provisions is found unconstitutional, or whether that provision may be removed while the remainder of the ACA remains intact.
An extraordinary five-and-a-half hours for oral arguments have been granted: two hours on the constitutionality of the individual mandate, 90 minutes on the issue of severability, one hour on whether the Anti-Injunction Act bars some or all of the challenges to the insurance mandate, and one hour on the constitutionality of the Medicaid expansion. Observers speculate that the arguments will be held in March and a decision may be issued by the Court by late June, well in advance of the 2012 Presidential election.
On November 8, 2011, the D.C. Circuit Court of Appeals upheld the individual mandate provision of the Affordable Care Act (ACA) as constitutional. The opinion, authored by Judge Silberman, is the fourth appellate court ruling on the ACA and the second to uphold the law. Recall that the 6th Circuit also found the mandate constitutional in June. The 11th Circuit has declared the individual mandate unconstitutional, and the 4th Circuit has stated that the Anti-Injunction Act is a bar on its ruling until 2014. The Justice Department has already petitioned for review of the 11th Circuit decision by the Supreme Court. According to observers, the growing split among appellate decisions makes it increasingly likely that the Court will consider taking on this issue during the fall term.
On October 7, 2011, the Institute of Medicine (IOM) released a report setting forth the methodology it recommends that the Department of Health and Human Services (HHS) use to determine the essential health benefits package. The Affordable Care Act requires plans participating in the insurance exchanges to, at minimum, provide coverage for a defined set of benefits, known as essential health benefits. While the statute provides a set of ten broad categories of services to be included in the benefits package, HHS asked the IOM to recommend a process by which the Secretary could define and update the essential health benefits. In its report, the IOM concluded that the federal government should consider cost as a factor in deciding what benefits should be included. Although HHS is not bound by the IOM recommendations, Secretary Sebelius said in a statement that HHS would consider IOM’s report and anticipates issuing its proposed rule on the benefits package “soon.” Before publication of such rule, however, HHS plans to hold a series of listening sessions to gain input from relevant stakeholders. The IOM report is available through the IOM web site: http://www.nap.edu/catalog.php?record_id=13234
Today, the Office of Management and Budget (OMB) received the long-awaited Medicare Shared Savings Program: Accountable Care Organization (ACO) final rule. Observers speculate that this means that the rule could be made publicly available very soon. The Affordable Care Act requires that the ACO program be established no later than January 1, 2012.