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Final Regulations – 2019 Notice of Benefit and Payment Parameters

On April 9, 2018, the Department of Health and Human Services (HHS) issued final regulations and related guidance on Affordable Care Act (ACA) provisions including Essential Health Benefits (EHBs), out-of-pocket (OOP) maximums, and Marketplace updates and reforms. These regulations, generally effective for plans and plan years beginning on and after Jan. 1, 2019, largely mirror the proposed regulations issued Oct. 27, 2017.

The final rule affords greater flexibility to states for determining EHBs, reduces some regulatory requirements in the individual and small group markets and provides annual benefit provision updates. Additional guidance expands the individual mandate hardship exemptions available for 2018 for people living in states with federally-facilitated Marketplaces.

While the EHB benchmark plan changes most directly impact individual and small group plans, they will affect large group health plans as well. Otherwise, the final regulations are primarily focused on individual and small group Marketplace updates and reforms.

Essential Health Benefits (EHBs)
For plan years beginning on and after Jan. 1, 2020, the final rule allows states greater flexibility in selecting EHB benchmark plans. States are allowed to follow current rules and maintain 2017 benchmark plans, or they may select a new EHB benchmark plan annually from one of the following three options:

  • Choose another state’s 2017 benchmark plan – allows states to select another state’s 2017 benchmark plan, and implement the plan benefits and limits to their own EHB standards, such as changing benefits with dollar limits to non-dollar limits.
  • Replace one or more of the 10 required EHB categories of benefits under its current 2017 benchmark plan with the same categories from another state’s 2017 benchmark plan – giving states the ability to make precise changes to their 2017 benchmark plans at the coverage detail level. For example, State A may select the prescription drug coverage EHB from State B, which uses a different drug formulary.
  • Otherwise, select a new set of benefits to become its benchmark plan – provided the plan meets other specified requirements.

The three options are subject to additional requirements, including two scope of benefits conditions. States must affirm that their new/modified benchmark plan provides a scope of benefits that are equal to, or greater than, the scope of benefits provided under a “typical employer plan,” and is no more generous than the most generous of a set of comparison plans. HHS released final guidance with the methodology states can use for comparing benefits. States have until July 2, 2018, to submit their 2020 EHB benchmark plan to the Centers for Medicare and Medicaid Services (CMS). 

As a reminder, any health plan that covers EHBs must cover these benefits with no annual or lifetime dollar maximums. This includes both fully-insured and self-funded employer-sponsored plans.

2019 out-of-pocket (OOP) maximums
The 2019 OOP maximums increase to $7,900 for individual coverage and $15,800 for family coverage. These coverage limits apply to all non-grandfathered plans, regardless of size or funding type.

Marketplace regulations
The final rule also includes a number of provisions (effective Jan. 1, 2019) intended to strengthen the Health Insurance Marketplace, including:

  • Deferring the network adequacy reviews for qualified health plan (QHP) certification to the states
  • Loosening the audit process for agents, brokers, and issuers who participate in the direct enrollment process
  • Updating the risk adjustment model for insurers with high-cost enrollees
  • Modifying the requirements for Marketplaces to verify eligibility for, and enrollment in, qualifying employer-sponsored coverage
  • Not specifying 2019 standardized plan options (known as simple choice plans)
  • Updating special enrollment period (SEP) rules for coverage effective dates specific to SEPs that allow adding or changing dependents
  • Adding a new SEP for pregnant women who were receiving coverage through the Children’s Health Insurance Program (CHIP) but lose that access
  • Allowing Marketplaces to determine individual affordability exemptions based on affordability of the lowest-cost metal level plan available
  • Allowing enrollees to request same-day termination of coverage
  • Removing several Small Business Health Options Program (SHOP) requirements for online enrollment 

Other market reforms
In addition to Marketplace updates, the final rules also modify other ACA provisions, including:

  • Streamlining the rate review process for states and issuers, including when rates are posted by the states, increasing the threshold at which rate increases require review from 10% to 15%, and establishing a process for states to request a higher threshold
  • Modifying the Medical Loss Ratio (MLR) rules, including simplifying quality improvement activity reporting requirements for issuers and establishing a process for states to use to request adjustments to the 80% MLR standard in the individual market

Review the information at these links for additional details:

Expanded individual mandate hardships
On April 9, 2018, HHS also issued guidance that expands individual mandate hardships. These additional circumstances are available to individuals who live in states that have federally-facilitated Marketplaces. While the individual mandate is effectively repealed beginning Jan. 1, 2019 due to the zeroing out of the penalty, eligible individuals may claim these hardships for the current calendar year or up to two years prior. 

New hardship exemptions include people who:

  • Live in a county, borough, or parish in which no QHP is offered 
  • Live in a county, borough, or parish in which there is only one issuer offering coverage and can show that the lack of choice resulted in them failing to obtain coverage under a QHP

SUPPORT for Patients Act signed into law to combat opioid crisis

On Oct. 24, 2018 the SUPPORT for Patients and Communities Act (SUPPORT Act) was signed into law. This comprehensive legislation addresses the U.S. opioid crisis and takes steps to augment and enhance the nationwide system for preventing and treating opioid addiction. The SUPPORT Act enjoyed tremendous bipartisan support, with a vote of 393-8 in the House and 98-1 in the Senate.

The SUPPORT Act makes changes to a variety of public health and law enforcement policies. Here’s an overview of some of the health care-related policy changes included in the law.

  • Medicaid Institutions for Mental Diseases (IMD) Exclusion: Amends the IMD exclusion to allow state Medicaid programs to receive federal reimbursement for covering certain IMD services up to a total of 30 days annually.
  • Telehealth: Expands coverage of telehealth services under Medicare for the treatment of substance use disorders and co-occurring mental health disorders beginning July 1, 2019. Also directs the Secretary of Health and Human Services (HHS) to issue guidance regarding federal reimbursement for telehealth services and treatment for substance use disorders under Medicaid.
  • Medicare and Medicare Advantage: 
    • Requires e-prescribing for coverage of Part D controlled substances starting in 2021.
    • Requires HHS to establish prior authorization standards for electronic submissions starting in 2021.
    • Requires physicians to screen for opioid use disorders during initial Medicare physical and annual wellness visits.
    • Expands Medicare coverage and bundled payment for opioid addiction treatments.
    • Requires drug management programs for at-risk beneficiaries be implemented by 2022 (currently voluntary).
  • Addiction Treatment: Lifts restrictions on maintenance medications used to treat opioid addiction, allowing more types of health care providers to prescribe the drugs.
  • Opioid Alternatives: Provides funding for research and development of non-addictive painkillers and allows the Food and Drug Administration to require that certain opioids be dispensed in packaging that encourages safe use (e.g., small blister packs).
  • Prescription Drug Monitoring Programs (PDMPs): Gives authority to the HHS Secretary to issue guidelines specifying a uniform electronic format for the reporting, sharing, and disclosure of information for PDMPs. It also gives States the ability to share PDMP data with Medicaid managed care entities under certain parameters. 
  • Grant Funding: Includes new and reauthorized grant funding for a number of initiatives to address the crisis, including funding for Comprehensive Opioid Recovery Centers and reauthorizing funding from the 21st Century Cures Act to provide $500 million annually, in fiscal years 2019-2021, for State Opioid Response Grants. The following may also be of interest to employers and other community stakeholders:
    • Career Act: Helps treatment or recovery services that partner with local employers, community organizations, and/or workforce development boards to support recovery, independent living, and participation in the workforce.
    • Addressing Economic Impacts Pilot Program: Supports local workforce boards in areas with a high rate of substance use disorders to engage and assist employers in establishing job-training/transition services for those in recovery.
    • Peer Support Communities: Supports recovery community organizations to develop, expand, and enhance services including fostering connections between such organizations and employers, behavioral care providers, primary care providers, schools, housing services, and child welfare agencies.

Medical record privacy rules update
Notably, after bipartisan negotiations between both chambers of Congress, a key provision aimed at changing medical record privacy rules did not make it into the final law. Under existing federal regulations (42 CFR Part 2), health care providers operating a Part 2 covered program are prohibited from disclosing a patient’s history with a substance use disorder unless they have the patient’s consent. The House’s opioid bill included a provision to align 42 CFR with existing Health Insurance Portability and Accountability Act (HIPAA) privacy requirements, but it is not included in the SUPPORT Act.

Regulation Changes for Wellness Incentives for 2019

If you’re an employer that focuses on employee well being by offering a wellness program, you’ve likely caught wind of recent regulation changes that will impact wellness incentives beginning 1/1/19. Here is the most recent update.

What Happened

In December 2017, the judge in the AARP v. EEOC case vacated the incentive limits established by the Equal Employment Opportunity Commission (EEOC) for certain employer wellness programs and ordered the agency to propose new rules by August 31. In March 2018, the EEOC stated that the agency has no plans to issue new wellness incentive regulations by a specified date, partly because they may wait for confirmation of the new commissioners nominated by President Trump before taking action, but that timing remains uncertain.

Why the change?

The EEOC wants employees to feel they have a choice in participating in employer-sponsored wellness programs, not coerced by large incentives. Two people could look at the same incentive for completing a health screening and one could feel it’s truly voluntary whereas the other, based on their financial circumstances, could feel like they have no choice but to participate, even if they don’t want to.

Is it bad if they leave the regulations unfinalized?

Yes. Most employers are finalizing their 2019 wellness strategies now, which means they’re left in limbo about the future of their wellness programs that are subject to the Americans with Disabilities Act (ADA) or Genetic Information Nondiscrimination Act (GINA) — and thus subject to the EEOC’s wellness regulations.

So what does all of this mean for my wellness program?

When the incentive portion of the EEOC wellness rules is vacated on January 1, 2019, wellness programs that link incentives to components considered “medical exams” (health screenings, annual physical with PCP, cotinine testing to determine tobacco use, meeting certain health criteria/outcomes, etc.), that ask employees disability-related inquiries (health risk assessments), and/or that ask spouses about family medical history (health risk assessments), will need to proceed cautiously. Here are some possible courses of action:

  1. Maintain status quo until new EEOC wellness incentive rules are released. Some employers are choosing to continue to follow the EEOC’s limits on incentives with the assumption that the EEOC is unlikely to challenge an employer that complies with those limits (unless new rules are issued). However, employers should note employees can still bring a private lawsuit without the backing of the EEOC (like we saw in Seff v. Broward County).
  2. Decrease the level of incentive you offer for “medical exams” or certain health risk assessments. Some employers are decreasing their incentive amounts to minimize their risk of employees being disgruntled for being asked to complete health screenings, health risk assessments, etc.
  3. Offer incentives only for completing components that are not medical exams or health risk assessments.By removing an incentive tied to a medical exam or health risk assessment, you are decreasing your risk potential. Examples are tobacco surcharges without medical testing, verified gym use, challenge programs, wellness education/quizzes, etc.

Okay, what are my next steps?

Most importantly, if you require medical exams and/or health risk assessments to earn an incentive, include language on all your wellness communications that tells employees you are willing to work with them to determine an alternative option to earn the same incentive. You do not need to communicate upfront what alternate options are available, you just need to tell employees they have options and who they can contact for more information. Behind-the-scenes you need to determine the logistics of these alternatives in case an employee reaches out.

Regarding how you proceed with your wellness program strategy, consult your legal counsel, your wellness vendors/partners, and your broker!

Two Bills Signed Into Law to Help Consumers from Overpaying for their Prescriptions

This month, Congress sent the Patient Right to Know Drug Prices Act and the Know the Lowest Price Act of 2018 to President Trump’s desk for signature. These bills, which were sponsored by Sens. Susan Collins (R-Maine) and Debbie Stabenow (D-Mich.), help protect Medicare patients and those with private insurance from overpaying for prescription drugs by outlawing pharmacy “gag clauses.”

In some cases, a patient’s copayment may be more than the cost of a prescription medication, making it less expensive for patients to pay cash for the drug than to use insurance. Gag clauses are agreements between health plans or pharmacy benefit managers and pharmacies that allow pharmacies not to disclose that customers they can save money by paying for their medicines out-of-pocket.

Sen. Collins, who is the chairwoman of the Senate Aging Committee and serves on the Senate Health Committee, has worked with colleagues on both sides of the aisle to investigate causes of the high costs of prescription drugs and propose solutions to enhance their affordability and accessibility. The bans on gag clauses passed overwhelmingly with bipartisan support.

Nobody knows for sure how often patients pay their insurers more in copayments than the costs of their medicines. The Pharmaceutical Care Management Association, a trade organization that represents pharmacy benefit managers, is on record as opposing gag clauses but claims they are rare.

However, a University of Southern California study released this year suggests it may be common. In 2013 the authors found that nearly a quarter of pharmacy prescriptions involved a copayment that was greater than the average sale price of the drug. These overpayments are also known as “clawbacks.”

Given the estimated $348 billion dollars in retail spending in 2016, this could represent an enormous transfer of funds from consumers to pharmacy benefit managers and insurers. In a 2016 survey by the National Community Pharmacists Association (NCPA) a whopping 35 percent of pharmacies reported witnessing overpayments more than 50 times the previous month.

Elimination of gag clauses has been a priority of the Trump administration’s efforts to increase transparency in drug pricing and lower costs for patients. In fact, Medicare policy already requires that Plan D sponsors ensure that enrollees pay the lesser of the negotiated Part D price or the co-pay. However, the NCPA survey indicated that this requirement is sometimes ignored.

In a May 17 letter to sponsors of Part D plans, Centers for Medicare and Medicaid Services Administrator Seema Verma reinforced this policy, writing, “We want to make it clear that CMS finds any form of ‘gag clauses’ unacceptable and contrary to our efforts to promote drug price transparency and lower drug prices.”

Further, Verma informed plans that their network pharmacies must disclose the difference between the Part D drug price and the price of its lowest cost, therapeutically-equivalent generic version.

States have also been active in legislating to ensure that pharmacists can tell patients when it is cheaper for them to buy their medicines outright rather than utilizing insurance. As of August 2018, at least 26 state legislatures had prohibited insurance plans and pharmacy benefit managers from instituting gag clauses. Collins’ bills fill the gap, extending this fundamental patient protection nationwide.

Many experts blame the overall lack of transparency in the bio-pharmaceutical supply chain as a key contributor to our escalating drug prices. Elimination of gag clauses takes an important step in the direction of transparency and helps to ensure that patients understand their most cost-effective options for purchasing needed medications.

IRS 2019 Changes For Health FSA and Transit plans

The pre-tax contribution maximum for health flexible spending accounts (FSAs) – including limited purpose FSAs – will increase from $2,650 to $2,700 for plan years on or after Jan. 1, 2019. In addition, qualified transportation/transit and parking monthly limits in 2019 will increase from $260 to $265. There is no change in the Dependent Care FSA limits.

The IRS usually announces changes to contribution limits in October before the typical employee open enrollment period. Because this year’s announcement is coming after many open enrollments have closed, employers may choose whether to increase these maximum limits this year or wait until next year.

Unlike the pre-tax health FSA maximum, the limits under a transportation plan will include any employer contribution toward the parking or transit benefits. Any employer contribution reduces the amount an employee can elect as a pre-tax amount for their parking or transit benefits. Should a member who has elected an FSA want to take advantage of these new limits – even if their open enrollment period has closed – they can work with their HR representative to adjust their payroll deductions. However, members will not be able to elect an FSA if their open-enrollment period has closed.

If your client would like to increase the contribution maximum for their employees, please call your representative for additional information.