September 20 update: On September 18, 2015, CMS issued three frequently asked questions documents. The first FAQ document provides that insurers that submitted their medical loss ratio and risk corridor data for 2014 on a timely basis, but were required to revise and resubmit those forms because of data validation and reconciliation issues, will have until October 30 to disburse medical loss ratio rebates to their enrollees rather than having to do so by the September 30 deadline that would otherwise apply.
The second deals with the notices that marketplaces are supposed to provide employers when employees are determined eligible to receive premium tax credits because they attest that they do not have employer coverage and are not offered affordable coverage by their employer that meets the minimum value standard. The federally facilitated marketplace (FFM) did not send out these notices in 2015, but it will begin doing so on a phased basis in 2016 in situations where employees provide a complete address for their employers. The notices will identify specific employees who have received tax credits but will not include medical or tax information regarding the employee. The FFM will also send employers notices when their employees terminate marketplace coverage.
The FFM will begin sending these notices in batches to employers by mail upon the end of open enrollment in 2016 and will send them periodically thereafter. In situations where the employer asserts that its employee is receiving employer-sponsored coverage or is offered affordable minimum value coverage, the employer can appeal the notice to the marketplace. If the employer’s appeal is successful, the employee will be asked to update eligibility information. State marketplaces may also phase in provision of the employer notices. States may refer appeals to the federal appeals entity.
Regardless of whether they receive notices from the marketplaces, employers will be liable for the employer mandate penalty for 2015 if they fail to offer an employee affordable minimum value coverage and the employee receives premium tax credits. Employers will in any event receive a notice from the IRS, which is also reviewable.
Finally, a third FAQ concerns the use of agents and brokers in the SHOP marketplace. Agents and brokers who wish to assist employers enrolling in coverage through the SHOP must register with the SHOP, sign required agreements, and create a searchable profile at the SHOP marketplace agent/broker portal. Agents and brokers are strongly encouraged, but not required, to complete SHOP agent and broker training. Employers who wish to authorize an agent or broker to represent them must log onto their own account and send their preferred agent or broker an authorization request through the portal. The agent and broker must then accept the authorization through the portal.
Once authorized, agents and brokers may manage their clients’ accounts, change their clients’ status, create proposals, receive compensation for sales, submit enrollment, monitor client accounts, and perform all health or dental insurance application and enrollment functions except paying premiums. Once an enrollment is completed, the marketplace will forward the broker or agent’s identifying information to the insurer, which pays the commission. The marketplace does not set or pay the commission, but the commission will be the same regardless of whether coverage is bought through the marketplace or outside. Premiums paid by employers will also be the same regardless of whether coverage is purchased through the marketplace or outside. Brokers and agents do not have to pay a charge to enroll a small group through the SHOP marketplace.
An agent or broker remains authorized for renewals until the agent or broker status is changed or terminated. Employers may change their agent or broker up to two times a year.
September 18 update: The Internal Revenue Service (IRS) has published Notice 2015-68, describing regulations it intends to propose under § 6055 of the Internal Revenue Code, the provision requiring insurers, government programs, and self-insured employers that provide minimum essential coverage to report that coverage to the IRS and to covered individuals. Form 1095-B is used for this purpose.
The new rules would provide that:
- Health insurers must, as of 2016, report coverage in catastrophic health insurance plans that individuals are enrolled in through a marketplace. Ordinarily insurers are not required to report marketplace coverage because the marketplace reports its coverage using form 1095-A, but marketplaces do not report catastrophic coverage so insurers will have to do so.
- Statements reporting coverage may be delivered electronically to persons covered under an expatriate health plan unless the recipient explicitly refuses consent or requests a paper statement.
- Filers reporting on insured group health plans may use a truncated taxpayer identification number (TIN) to identify the employer on the statement furnished to a taxpayer.
- A provider of minimum essential coverage is not required to report coverage of an individual who has other minimum essential coverage under certain circumstances. Specifically:
- if an individual is covered by multiple minimum essential coverage plans or programs provided by the same provider (such as major medical coverage and a health reimbursement account from the same employer), reporting is required for only one of them; or
- if an individual has minimum essential coverage for which the individual is eligible only if the individual is covered by other minimum essential coverage for which § 6055 reporting is required (such as a Medicare supplement plan supplementing Medicare coverage), only the primary coverage need generally be reported. These rules would apply month by month and individual by individual.
The notice also requests comments as to further relief from penalties for reporting entities that have difficulties in securing taxpayer identification numbers from covered individuals and provides temporary relief pending further guidance if specified efforts are made to secure TINs.
The notice also advises the governments of United States possessions or territories, namely American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands that they are not required to report coverage under Medicaid and the Children’s Health Insurance Program (CHIP) since bona fide residents of the territories are considered to have minimum essential coverage.
Finally, it provides that a state government agency sponsoring coverage under the Basic Health Program is required to report Basic Health Program coverage. Basic Health Programs are an alternative that states may offer for individuals with incomes between 133 and 200 percent of the federal poverty level. Minnesota offers a Basic Health Program, and New York intends to do so.
Contraceptive Coverage Mandate: Ruling For Plaintiffs Creates Circuit Split
Across the country, dozens of lawsuits have been brought challenging the accommodations offered by the federal government to religious organizations that object for religious reasons to their group health plans covering contraceptives for their employees. The preventive services rule, promulgated by the federal agencies in 2012, requires group health plans to cover all FDA-approved contraceptives without cost-sharing.
That regulation, however, also permits nonprofit organizations that object to covering some or all contraceptives for religious reasons to notify the Department of Health and Human Services (HHS) of their objection and of the identity of their insurer or third party administrator. Once it has notified HHS, the organization has no further obligations to provide or pay for contraceptive coverage, but the federal government will require the insurer or third party administrator to provide coverage without involvement of the religious organization.
Nonprofit religious organizations have challenged this regulation under the federal Religious Freedom Restoration Act (RFRA). RFRA provides that a federal regulation cannot “substantially burden a person’s exercise of religious” unless the government “demonstrates that application of the burden to the person . . . is in furtherance of a compelling governmental interest” and “is the least restrictive means of furthering that compelling governmental interest.”
To date three-judge panels of seven federal circuit courts (the Second, Third, Fifth, Sixth, Seventh, Tenth, and D.C. circuits) have ruled that the accommodation does not violate RFRA. On September 17, 2015, however, a three judge panel of the Eighth Circuit concluded in two separate cases that the current rule does violate RFRA and affirmed a district court order preliminarily enjoining its enforcement against the plaintiffs.
The Validity Of The Plaintiffs’ Sincere Religious Belief That Notification Would Make Them Complicit In Contraceptive Coverage Can Not Be Challenged
The court’s decision in Sharpe Holdings Inc. v. Burwell, written by Judge Roger Wollman, disagrees with the decisions of the other circuits in two key respects. First, the other circuits had concluded that the self-certification requirement does not substantially burden the exercise of religion since objectively all it requires is the organization informing the government of its belief. The religious organization is as a matter of law, these courts concluded, not complicit in the provision of contraceptive coverage because the coverage is required of the insurer or third party administrator by the federal law, not because of the organization’s actions.
The Eighth Circuit, however, concludes that the question of whether or not the notification procedure makes the religious organization complicit in provision of contraceptive coverage is itself a question of religious belief, and government cannot question the correctness of religious beliefs. The question is not whether the plaintiff organizations correctly interpreted the law, but whether they hold a sincere religious belief, the validity of which cannot be disputed. The court holds that the plaintiffs did have such a belief, and that the penalties that they would face for violating their conviction substantially burdens their beliefs.
The Government Has Not Proven That There Is No Less Restrictive Means Of Meeting Its Compelling Interest In Providing Contraceptive Coverage
The court thus proceeds to the second part of the test. The court does not challenge the compelling interest of the government in the contraceptive mandate, which was more or less acknowledged by the Supreme Court in its Hobby Lobby decision, but rather holds that the government has not proven that there is no less restrictive means of satisfying this interest. The government as an alternative, for example, could require the organization to notify HHS of the objection and then itself identify the organization’s insurer or third party administrator. The government could set up programs to provide contraceptives directly to individuals who need them or provide coverage to employees of religious organizations who want contraceptive coverage through the marketplace. The court’s decision merely affirms a preliminary injunction by the district court, so the government could at least in theory prove that none of these alternatives were feasible on remand for further proceedings in the district court.
In another case decided on the same day, Dordt College v. Burwell, the same panel reached the same result relying on its Sharpe Holdings decision.
The court acknowledges that all other circuits have decided for the government on the RFRA question. Indeed, the court cites repeatedly to dissenting opinions from the other circuits. The key question addressed by the court, however—whether a religious organization gets to decide itself as a matter of its religious belief that an action it is required to take makes it complicit in actions that it considers sinful taken by another or whether the question of complicity is a question of law to be decided by the court—is a substantial question on which reasonable judges disagree.
With a split among the circuits now appearing on this question, it is almost certainly a question that the Supreme Court will now take up. It is also almost certainly a question on which the justices will disagree among themselves.
Census Bureau Report Shows Declines In The Uninsured
On September 16, 2015, the Census Bureau released its annual Health Insurance Coverage in the United States report for 2014. If anyone still doubts that the Affordable Care Act (ACA) has reduced the percentage of Americans who are uninsured, this report should put an end to the debate.
The annual report combines data from two different surveys — the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) and the American Community Survey (ACS). The CPS ASEC reports the percentage of the population who had no insurance coverage during an entire year. The ACS reports the percentage of the population who lacked coverage at the point in time of the survey. By both measures, the percentage of the uninsured declined dramatically between 2013 and 2014, by almost identical amounts — 2.9 percentage points for the CPS ASEC, 2.8 percentage points for the ACS. Prior to 2013, the uninsured rates had remained more or less steady since 2008.
What is remarkable about the report, however, is that the rate of the uninsured decreased or the rate of insurance coverage increased for virtually every category the Census Bureau measures. The rate of insurance coverage increased for people for each year of age from birth to 75-plus while the uninsured rate dropped for each of the 50 states. Insurance coverage rates increased for the married and the divorced; the disabled and non-disabled; full-time and part-time workers and the unemployed; those with no high school diploma, high school graduates, and college graduates, and those with post-graduate degrees; people at every level of income; those who live in cities, in the suburbs, and in the country; those who live alone, with related persons, and with unrelated persons; non-Hispanic Whites, Blacks, Hispanics, and Asians; and among the native born, naturalized citizens, and non-citizens.
While the number of people covered by every form of insurance tracked by the Census Bureau except for military coverage increased, gains were, not surprisingly, the greatest for Medicaid and direct purchase insurance — the form of private insurance available through the marketplaces. Direct purchase coverage increased 3.2 percentage points, from 11.4 percent to 14.6 percent, while Medicaid increased 2 percentage points, from 17.5 to 19.5 percent. In general, decreases in the uninsured rate were greater in states that expanded Medicaid under the ACA than in states that failed to do so. Employment-based coverage continued to be the most prevalent, covering 66 percent of the population.
As to each category of the population that it analyzes, the report provides the percentage of the group that has private or public coverage. There are few surprises here: children and seniors are more likely to have public coverage, as are the poor, the disabled, people living in rural areas, and nonworkers. Highly educated people are more likely to have private coverage, as are married people, families, and people living in the suburbs.
As has been true in the past, Hispanics are least likely to be insured, followed by Blacks and Asians, while non-Hispanic whites are most likely to be insured. People over 65 are most likely to be insured, followed by children under 18 (particularly those under 10). The percentage of uninsured climbs steeply at age 18 and then jumps again at age 26, as individuals age off their parents’ policies. It then declines gradually to age 65, when again it drops sharply.
GAO Releases Report On State IT Projects Related To The ACA
Also on September 16, the Government Accountability Office released a lengthy report on state information technology (IT) projects related to implementation of the Affordable Care Act. Between September 2010 and March 2015, states spent about $1.45 billion in marketplace grants on IT. About $1.37 billion of these funds were spent by states that established marketplaces. Eighty-nine percent of these funds were spent on contracts for services.
Between April 2011 and December 2014, both marketplace and non-marketplace states spent about $2.78 billion in federal and state Medicaid funds on Medicaid enrollment and eligibility systems, much of which was spent on marketplace support. States were granted 90 percent federal funding to design, develop, and install Medicaid claims processing and information retrieval systems and 75 percent matching funds to operate these upgraded systems.
As is well known, many of the state marketplaces experienced serious IT problems during the first open enrollment period, as did the federally facilitated marketplaces (FFMs). None of the states in the FFMs were able to transfer or receive Medicaid applications at the time the marketplace opened in October of 2013. As of February 2015 according to the GAO’s evaluation, six state-based marketplaces were only partially operational as to their eligibility and enrollment systems, eight were partially operational as to their financial services function, and only one state each had a fully developed data hub and had fully completed performance testing as to submission to the Internal Revenue Service (IRS) of information regarding tax credits. Six of 17 states with state-based marketplaces changed their IT systems between the first and second open enrollment period. As of November of 2014, seven of the 37 states using the FFM were still not able to transfer Medicaid applications.
The report is quite critical of CMS oversight of state IT funding and projects. It specifically asserts that CMS failed to have in place a comprehensive communications plan that clearly documented and defined its state marketplace oversight structure and associated roles and responsibilities, did not sufficiently involve senior executive-level personnel in project oversight, and failed to ensure that state marketplace IT projects were fully ready for operation before launch. CMS generally accepted the GAO’s recommendations based on these findings, but also asserted that its oversight and technical assistance were generally adequate, even if they did not take the form the GAO would have recommended. States that responded to the GAO gave generally positive ratings to CMS assistance and oversight, although some states identified instances of delayed or insufficient communications with CMS.
Perhaps the most interesting section of the report describes the states’ report of the challenges they experienced and the lessons they learned from the implementation process. Among the greatest challenges identified by the states were the compressed timeframe within which they had to operate, changes in requirements during the implementation process, and inadequate staff. Developing interfaces and interoperability with insurers, state marketplace eligibility functions, and call center operation were noted as substantial challenges experienced by state marketplaces. Compressed timeframes, changes to requirements, and conducting systems integration testing were among the greatest challenges experienced by FFM states.
Several state exchange states and the District of Columbia took issue with the findings of the GAO. In particular, the states and D.C. responded to the characterization of their operational status by the GAO, which they asserted was inaccurate. Although the report is on the whole critical, it also recognizes the magnitude of the task the states faced, and that the implementation of the marketplaces has been a learning experience for all involved.
