The Fact of the Month
Here’s something to talk about when you are discussing plan design options with your clients.
Our lawmakers, both in Washington, DC, and in Harrisburg, continue to work on legislation to end surprise balanced billing. A new study, published in the journal Health Affairs highlights why they need to agree on these measures sooner rather than later. The author reviewed roughly 4 million insurance claims and found that at in-network hospitals, 11.8 percent of anesthesiology care, 12.3 percent of care involving a pathologist, 5.6 percent of claims for radiologists, and 11.3 percent of cases involving an assistant surgeon were billed out-of-network. If these specialists (who patients do not choose) were not able to charge out-of-network rates, it would lower physician payments for privately insured patients by 13.4 percent and reduce health care spending for people with employer-sponsored insurance by 3.4 percent (approximately $40 billion annually).
The Big Three
Each month GPAHU identifies three top public policy or legal developments that could impact our members and their clients. Here are this month’s big three!
New Jersey Lawmakers Move to Limit Self-Funding in the Small Group Market
Just across the river in New Jersey, the state legislature is moving quickly on a bill to significantly limit small employer access to stop-loss insurance related to self-funded or level-funded employee benefit plans. The New Jersey State Senate amended and advanced S.3270 on December 16, 2019. The legislation should be finalized in early 2020 and signed by Governor Murphy.
The bill would limit stop-loss coverage for small groups to policies with per-person specific stop-loss limits as follows: $40,000 for all stop-loss insurance policies written, issued, administered or renewed on or after January 1, 2020; $45,000 for all stop-loss insurance policies written, issued, administered or renewed on or after January 1, 2021; and $50,000 for all stop-loss insurance policies written, issued, administered or renewed on or after January 1, 2022. An aggregate attachment point could not be less than 150% of expected claims per plan year. Small group stop-loss carriers could not medically underwrite their coverage, and they would not be able to deny coverage to a small employer based on the health status of an employee or an eligible dependent. The bill provides an exception for small employer groups that are part of a multiple employer welfare arrangement. The New Jersey Association of Health Underwriters is monitoring this legislation closely but has remained neutral on the bill.
Congress Eliminates the Cadillac, HIT and Medical Device Taxes and Extends the PCORI Fee
Three controversial Affordable Care Act (ACA) taxes–the “Cadillac tax,” the “HIT tax,” and the medical device tax were all repealed by the end-of-year appropriations and tax bill, H.R. 1865. The Cadillac tax has never been in effect, and the medical device tax will end right now. However, the national health insurance premium tax on fully insured coverage, known as the HIT tax, will still be collected in 2020 and impact the current year’s premiums. But in 2021 on forward, the HIT tax will be gone! Repeal of the HIT and Cadillac taxes has been a policy priority for both GPAHU and NAHU for almost ten years. The Congressional Budget Office reports the repeal of these two taxes will save consumers nearly $350 billion, and it will also save employers from significant compliance costs.
In the same measure, Congress extended the ACA’s Patient-Centered Outcomes Research Institute (PCORI) fee through 2029. This tax applies to all individual and group major medical plans to fund a federal research institute on outcomes-based medicine. Health insurers pay the PCORI fee for individuals and companies with fully-insured private coverage. Self-funded and level-funded health plans, including HRAs, must pay the excise tax annually based on the number of individuals covered by the plan. The federal government will release the 2020 PCORI fee amount later this year.
Appeals Court Strikes Down Individual Mandate in Texas v. United States
On Wednesday, December 18, 2019, the United States Court of Appeals for the 5th Circuit partially upheld a lower court ruling in the case of Texas v. United States. The three-judge panel found the ACA’s requirement that individuals maintain minimum essential health coverage or pay a tax penalty unconstitutional, since the tax penalty is now $0. However, the appeals court did not strike down the whole law. Instead, they sent the case back to U.S. District Court, so that the judge there can determine what, if any, parts of the ACA can separate from the individual mandate. That process will take months, if not a year or more. Plus, any lower court ruling about the severability of the ACA is also likely to be appealed. The defendants in the case have asked the Supreme Court of the United States to take up the case now, but in all likelihood, we won’t know the fate of the ACA until after next year’s Presidential election. In the meantime, all provisions of the law are in force. ACA-compliant coverage will carry forward, and all ACA requirements for employers and health plans remain unchanged.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!
America’s Health Insurance Plans recently published a report called Health Coverage: State-to-State. For all fifty states and the District of Columbia, it lists the number of people covered by each market segment, specifics about employment related to health insurance in each jurisdiction, and the most significant health plans per market segment by the number of covered lives.