On April 12, 2012, the Centers for Medicare & Medicaid Services (“CMS”) released a final rule with comment period (“Final Rules”) implementing changes to the Medicare Advantage program and Medicare’s prescription drug benefit program, referred to as Medicare Parts C and D, respectively. Part C and D plan sponsors and other participants should carefully review the changes, particularly those related to increased transparency and exclusion from Parts C and D. The Final Rules are the latest effort by CMS to improve accountability, transparency, and effectiveness of the Medicare program. 

Included among these regulations are changes to the law under the Affordable Care Act (“ACA”). The Final Rules codify Medicare’s Coverage Gap Discount program, a program enacted in January 2011 through the ACA to eliminate the prescription drug coverage “donut hole.” They also implement section 6005 of the ACA, which requires Medicare Part D sponsors and other entities with pharmacy benefit managers to report certain information and also provides that such reports will remain confidential. Penalties will be imposed for failure to comply with the reporting requirements.

The Final Rules make several additional changes to Medicare Parts C and D including:

1. CMS’ adoption of the authority to exclude any plan sponsors who fail to achieve at least a 3-star rating for three consecutive years on CMS’ performance quality rating; 
2. Changing the Part D appeals process to allow prescribers to request a reconsideration on an enrollee’s behalf without first obtaining an appointed representative form;
3. Allowing dual eligible special needs plans that meet integration and performance standards to expand their supplemental benefit offerings to include benefits such as nonskilled nursing services, personal care services, or other long term care services where CMS finds that the benefit will improve integration of care for the dual eligible population;
4. Permitting Medicare Advantage plans to limit durable medical equipment to ‘‘preferred’’ brands and manufacturers so long as beneficiary access protections are in place including access to all preferred brands, a transition period during plan changes that allow enrollees to retain durable medical equipment, providing medical necessity exceptions to plan limitations and appeal rights for brand or manufacturer based denials, and full disclosure of plan limitations on durable medical equipment;
5. Application of a lower, pro-rated cost sharing when prescriptions are dispensed with less than a month’s supply where appropriate; and,
6. Requiring Part D sponsors to include an active and valid prescriber National Provider Identifier on prescription drug event records submitted to CMS.

Read CMS’ announcement on the changes here. 

On February 9, 2012, the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury jointly issued final regulations pursuant to the Affordable Care Act regarding plain-language health insurance plan descriptions. Health insurers will soon be required to present health plan benefits and coverage information in a clear, consistent and comparable manner.                

Starting on September 23, 2012, health insurers and group health plans will be required to provide two significant tools to help consumers navigate the health insurance market.  First, a Summary of Benefits Coverage (“SBC”) will outline key features of a plan, such as the covered benefits, cost-sharing provisions, and coverage limitations and exceptions.  The SBC will also include a standardized plan comparison chart, showing common procedures and the corresponding plan coverage.  The second tool, a Uniform Glossary, will explain terms commonly used in health insurance coverage, such as “deductible” and “co-payment”. Insurers must provide the SBC and Uniform Glossary at certain times during the enrollment process, such as when consumers are shopping for coverage, when coverage is renewed, when certain changes occur and upon request.  The Uniform Glossary will also be publicly accessible on government websites, granting consumers easier access to insurance information.   

To view the final rule, visit: http://ofr.gov/OFRUpload/OFRData/2012-03228_PI.pdf.

On January 13, 2012 CMS issued Transmittal 153, implementing section 3108 of the Affordable Care Act which now allows physician assistants to perform level of care certifications and recertifications in skilled nursing facilities.  The physician assistant may perform the certification or recertification if the physician assistant collaborates with the physician but does not have a direct or indirect employment relationship with the facility.  The new transmittal will be implemented on February 13, 2012 and the changes will be effective with items and services furnished on or after January 1, 2011. 

Read CMS’ full transmittal here. 

On December 20, 2011 the Supreme Court of the United States set the date to hear challenges to the health care reform law.  On March 26 – 28 the Court will hear five-and-a-half hours of oral argument on the several challenges to the Affordable Care Act that are currently pending before the Court.  The first day is reserved for oral argument on the federal anti-injunction act’s effect on commerce clause challenges to the Affordable Care Act, and on the second day the Court will hear the long-anticipated argument on the constitutionality of the Affordable Care Act’s individual mandate.  The final day is reserved for argument on the severability of the individual mandate and the constitutionality of the Medicaid expansion created through the Affordable Care Act.

The Centers for Medicare & Medicaid Services (CMS) issued its final rule today establishing the Affordable Care Act’s (ACA’s) Consumer Operated and Oriented Plan (CO-OP) program.  The CO-OP program was established to provide financial support, in the form of loans, for the creation of non-profit, private, consumer-governed health insurance companies that will be qualified to offer insurance plans through the ACA’s health insurance exchange markets.  As CMS described in the final rule, the goal of the CO-OP plans is to increase the number of plans that are focused on integrated care and plan accountability, as well as to increase competition and promote efficiencies, premium reductions, and improve enrollee services and benefits.  This final rule establishes a two-year time frame for CO-OP plans to transition to member-elected boards, clarifies that certain existing insurers are ineligible for funding, and sets forth the instances in which CO-OP plans may receive state or local government funding.  The final rule likewise describes the CO-OP’s obligation to remain compliant with state and federal standards for insurers.

Read the full text of the rule here. 

The Centers for Medicaid & Medicare Services (“CMS”) recently released a final rule establishing the new medical loss ratio requirements under the Affordable Care Act (“ACA”).   Under the ACA, individual and small group market insurers are required to spend at least 80 percent of premium dollars on medical care and quality improvement, and large group market insurers must spend at least 85 percent of premium dollars on the same services.  The final rule describes the technical process for calculating medical loss ratio and also provides details on insurers’ annual medical loss ratio reporting requirements, as well as the ACA’s requirement that insurers grant rebates to consumers in the event the insurer fails to meet the required medical loss ratio. 

Read the full text of the rule here, or HHS’ fact sheet on the ACA’s changes to medical loss ratios here. 

The Department of Health and Human Services (HHS) recently cited as “excessive” a 12% insurance rate increase proposed by Everest Insurance under a Pennsylvania insurance plan.   HHS’ finding that the rate increase was excessive was the first such move under the Affordable Care Act, which gives HHS the authority to review insurance rate increases over 10% and cite them as excessive.  Although the Affordable Care Act does not give HHS the authority to sanction insurers attempting to push through excessive rate increases, the hope is that publicizing the excessive rate increases will increase transparency and accountability.   

Read HHS’ full news release here. 

In a highly anticipated decision, on November 14, 2011 the United States Supreme Court granted certiorari in three cases on the constitutionality of the Affordable Care Act (“ACA”): National Federation of Independent Business v. Kathleen Sebelius, Secretary of HHS, et al.; Florida, et al. v. Department of Health and Human Services; and Department of Health & Human Services et al. v. Florida, et al.  The Court’s review will address four fundamental questions: (1) whether the ACA’s individual mandate is constitutional, (2) whether the individual mandate may be severed from the ACA if it is unconstitutional, (3) whether the claim brought by the opponents to the mandate is barred by another federal statute, and (4) whether the ACA’s expansion to Medicaid coverage was valid.  The Court has granted a total of four and a half hours of oral argument for the three issues, which is highly unusual.  This decision will be monumental for the future of the ACA, and will be closely followed by Duane Morris attorneys. 

View the United States Supreme Court’s order here. 

On November 8, 2011, in the latest scrimmage regarding the Affordable Care Act’s (ACA’s) individual mandate, the D.C. Circuit Court of Appeals upheld the mandate’s constitutionality.  The Court found that Congress could create “national solutions to national problems, no matter how local–or seemingly passive–their individual origins,” and that the individual mandate was therefore constitutional because it was within Congress’ authority. 

On November 10, 2011, the United States Supreme Court will hold a private conference to decide whether to hear the challenges to the ACA.     

Read the entire decision here. 

On September 13, 2011, the United States District Court of the Middle District of Pennsylvania held that the Affordable Care Act’s individual mandate was unconstitutional as a violation of the Commerce Clause. In Goudy-Bachman v. U.S. Department of Health and Human Services, No. 1:10-CV-763 (M.D. Pa. Sept. 13, 2011), the court found, similar to its predecessors in other courts, that the federal government was one of limited enumerated powers and that “Congress [could not] invoke its Commerce Clause power to compel individuals to buy insurance as a condition of lawful citizenship or residency.” Thus, although the court recognized that “[t]he nation undoubtedly faces a health care crisis,” it severed the individual mandate, the guaranteed issue, and preexisting conditions reforms from the Affordable Care Act as unconstitutional. However, because the provisions found unconstitutional were severed from the Affordable Care Act, this decision allows the rest of the Act to stay intact and operative. The full decision is available at http://www.pamd.uscourts.gov/opinions/conner/10v763a.pdf.

On Friday, August 12, 2011, the U.S. Court of Appeals for the Eleventh Circuit held that the individual mandate provision in the Patient Protection and Affordable Care Act (“Act”) is an unconstitutional exercise of Congress’ power under the Commerce Clause of the United States Constitution. However, the court refused to hold the entire Act unconstitutional, ruling instead that the individual mandate provision is severable from the rest of the Act. The decision creates a circuit split because it conflicts with the recent decision by the U.S. Court of Appeals for the Sixth Circuit, which rejected a challenge to the individual mandate provision’s constitutionality.

On August 1, 2011, the U.S. Department of Health and Human Services (HHS) announced guidelines requiring new health insurance plans to provide certain preventive services to women without cost-sharing. The guidelines were developed by the Institute of Medicine. The preventive services that will no longer be subject to any co-payment, co-insurance or deductible include well-woman visits, screening for gestational diabetes, HPV testing for women 30 years of age and older, sexually-transmitted infection counseling, HIV screening and counseling, contraception and contraception counseling, breastfeeding support, and domestic violence screening and counseling. New health insurance plans must comply for plan years starting on or after August 1, 2012.

To read more about this announcement, please go to http://www.hhs.gov/news/press/2011pres/08/20110801b.html.

On January 31, 2011, a United States District Court in Florida held that the individual mandate provision in the Patient Protection and Affordable Care Act ("Act") is an unconstitutional exercise of Congress' power under the Commerce Clause of the United States Constitution. The court also held that "[b]ecause the individual mandate is unconstitutional and not severable, the entire Act must be declared void." The court reasoned that "[i]f [Congress] has the power to compel an otherwise passive individual into a commercial transaction with a third party merely by asserting—as was done in the Act—that compelling the actual transaction is itself 'commercial and economic in nature, and substantially affects interstate commerce' . . . it is not hyperbolizing to suggest that Congress could do almost anything it wanted." In concluding its decision, the court emphasized that the ruling only addressed a constitutional issue and that it was not about whether the Act was good or bad legislation.

This lawsuit was brought by the attorneys general and/or governors from 26 states, two private citizens and the National Federation of Independent Business. Please see the decision for additional information about the lawsuit.

On December 21, 2010, CMS released Transmittal 2122 providing instructions for waiving coinsurance and deductibles for certain preventative services provided in Rural Health Clinics, as provided for in Section 4104 of the Affordable Care Act. Qualifying preventative services are those recommended by the United States Preventive Services Task Force with a grade of A or B. The transmittal is effective for services provided on or after January 1, 2011.

To read Transmittal 2122, please go to: http://www2.cms.gov/transmittals/downloads/R2122CP.pdf.