On Wednesday, the Obama Administration finalized the regulations governing a number of ACA market reforms. These requirements were initially known as the “September 23rd Reforms,” because they took effect six months after President Obama signed the health reform into law on March 23, 2010. The ACA provisions addressed in the final rule include: grandfathered plan requirements; coverage for dependent children up to age 26; prohibitions on coverage rescissions; prohibitions on life-time and annual limits; coverage of emergency services and the designation of a primary care provider; preexisting condition requirements; and internal and external review requirements.
Instead of following the traditional rule-making process of issuing a proposed rule and then a final rule for these reforms, in the summer of 2010, the Obama Administration issued interim final rules on these issues, which had the full force of law on an immediate basis. The Administration accepted comments on these interim final rules and in the five years since they were initially issued, the Departments of Health and Human Services, Labor, and Treasury have all issued additional guidance, addendums and FAQs related to these regulations. The final rules issued this week contain few substantive changes to existing policy, but instead largely incorporate their subsequent guidance and clarifications into a final regulation. These new rules do not go into effect right away either. To give health plans and employers time needed to make any minor adjustments to plans, their effective date is January 1, 2017, and the existing interim final rules being followed by all plans and employers today will remain in effect until then.
Just because the final rule mostly finalizes existing sub-regulatory guidance, that doesn’t mean there aren’t some interesting nuggets contained in the 104 pages of rules. (Okay so maybe they aren’t items you want to discuss around the Thanksgiving dinner table, but to health policy nerds like us they are interesting!) One of the key things that this final rule does is formalize several rounds of guidance that the Administration has issued over the past few years clarifying that an HRA and other account-based plans may not be integrated with individual market coverage. The final rule explicitly specifies that an HRA or other account-based plan used to reimburse premiums for individual market coverage fails to comply with section 2711 of the Public Health Service Act, which prohibits lifetime or annual limits in health insurance coverage. In addition, the preamble of the rule specifically states that “it has come to the Departments’ attention that there are a wide variety of account-based products being marketed, often with subtle but insubstantial differences, in an attempt to circumvent the guidance set forth by the Departments on the application of the annual dollar limit prohibition and the preventive services requirements to account-based plans. The Departments intend to continue to address these specific instances of noncompliance. The sub-regulatory guidance not specifically addressed in these final regulations continues to apply and the Departments will continue to address additional situations as necessary.”
A related change to policy in this final rule that health insurance agents and brokers should take note of concerns premium reimbursement accounts. The final rule is very clear that standalone HRAs are prohibited, as are health FSAs not offered through a §125 plan and other means of attempting to use other account-based plan arrangements for employers to finance employee individual insurance coverage on a tax-preferred basis. However, this final rule does make a limited exception for small employers who are not subject to the Medicare Secondary Payer requirements (generally those with under 20 employees) who are also exempt from the employer mandate provisions who wish to voluntarily offer a coverage option for their Medicare-eligible employees. The final rule specifies that this very limited group of small employers may now, for their Medicare-eligible employees only, integrate premium reimbursement plans with Medicare Part B or D as long as they offer traditional group health insurance coverage to their other eligible employees who are not currently qualified to receive coverage via the federal Medicare program.
Another interesting change in the final rule concerns balance billing for out-of-network providers when an individual seeks emergency care treatment when some of the providers are actually out-of-network. In the preamble of the rule, the Administration expresses consumer protection concerns about how this practice is playing out for consumers today. In the interim final rule they specified that an insurer must pay out a determined “reasonable amount” before a patient is balance billed. Based on consumer experiences to-date, the final rule specifies that issuers must pay for out-of-network emergency services (prior to imposing in-network cost sharing) in an amount at least equal to the greatest of: (1) The median amount negotiated with in-network providers for the emergency service; (2) the amount for the emergency service calculated using the same method the plan generally uses to determine payments for out-of-network services (such as the usual, customary, and reasonable amount); or (3) the amount that would be paid under Medicare for the emergency service (minimum payment standards). Furthermore, the rule specifically states that it in no way preempts existing state consumer protection laws, nor does it prevent states from enacting new laws with respect to balance billing as long as their protections are at least as strong as the federal statute and regulations.