Legal Alert: What Employers Need to Know About the New Transparency Rules

Proposed Transparency Rule Released

Following President Trump’s Executive Order on Improving Price and Transparency in American Healthcare, one final and one proposed rule was released by HHS and CMS that aim to increase price transparency for hospitals and insurance companies.  These rules would have an impact on employers who sponsor group health plans. Healthcare Reform

It is important for employers to remember that the Transparency in Coverage Proposed Rule is only a proposed rule and will not be finalized until after the public comment period if it all. There is also a possibility it may not become a final rule. It is anticipated that many organizations and entities will provide comments on this rule, and there is a likelihood that if finalized in the future, it could be markedly different from the proposed rule. Furthermore, for rules of this magnitude, additional guidance will be required by federal agencies to assist employers, Third-party administrators, insurance carriers, and hospitals, with the specific implementation processes and policies. Employers should look for updates on this rule but should not make decisions or changes based on these proposed rules at this time.

The final rule for hospitals is the Calendar Year (CY) 2020 Outpatient Prospective Payment System (OPPS) & Ambulatory Surgical Center (ASC) Price Transparency Requirements for Hospitals to Make Standard Charges Public Final Rule. This rule will require hospitals to provide, publicly on the internet, standard charges (gross charges, payer-specific negotiated charges, the amount the hospital will accept in cash from a patient, and the minimum and maximum negotiated charges) for all items and services. This rule will go into effect in 2021. The information must include common billing and/or accounting codes and descriptions of the items or services so consumers can compare standard charges between hospitals.

The rule will also require hospitals to make similar information available for 300 common shoppable services, which include services that consumers can schedule in advance such as x-rays, outpatient visits, and bundled services such as a cesarean delivery including pre- and post-delivery care.

Civil monetary penalties of $300 a day will be imposed on hospitals that do not comply.

The second rule which could impact employers and carriers is the Transparency in Coverage Proposed Rule. This rule is aimed to ensure consumers would be able to get estimates of their cost-sharing liability for health care for different providers, allowing them to both understand how costs for covered health care items and services are determined by their plan, and shop and compare costs for health care before receiving care. The rule is also intended to increase consumerism and provide opportunities for innovation in health care.

The proposed rule would require all non-grandfathered group health plans or health insurance issuer:

  • Make available to participants, beneficiaries and enrollees (or their authorized representative) personalized out-of-pocket cost information for all covered health care items and services through an internet-based self-service tool and in paper form upon request.
  • Make available to the public, including stakeholders such as consumers, researchers, employers, and third-party developers the in-network negotiated rates with their network providers and historical payments of allowed amounts to out-of-network providers through standardized, regularly updated machine-readable files.

In addition to comments on the above items, the rule seeks comments on whether group health plans and insurance issuers should be required to make available through a standards-based application programming interface the cost-sharing information referenced above that is proposed to be disclosed through the internet-based self –service tool and the machine-readable files.

The information provided by the health plan would have to include: 

•    The participant’s estimated cost-sharing liability
•    Accumulated amounts (financial responsibility already incurred w/ respect to the deductible or out of pocket limits)
•    The negotiated rate, reflected as a dollar amount
•    Out-of-network allowed amount (if requested item or service is out of network)
•    Items and services content list
•    Notice of pre-requisites of coverage
•    Disclosure notice

This information would have to be provided in the following manners: 

•    Internet-based self-service tool
•    Paper form at no fee provided via mail no later than 2 business days after it is requested by the participant, beneficiary, or enrollee, with an option to allow participants to select delivery over the phone, via email, by fax, or face to face.

The proposed rule would allow employers and health insurance carriers to contractually agree that the information will be provided by the carrier.

 


Danielle Capilla, JD
Director of Compliance, Employee Benefits
In her role as Director of Compliance, Employee Benefits, Capilla focuses on enhancing  Alera Group’s existing compliance capabilities and building new world-class solutions for Alera Group’s employee benefits clients. Her legal background helps Alera Group clients navigate the complex landscape of healthcare legislation, regulation and reform. Capilla currently serves as an adjunct professor at DePaul University College of Law and is the Federal and State Legislative Chair for the Downtown Chicago Chapter of the National Association of Health Underwriters (NAHU).

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our employee or our clients. This is not legal advice and no client-lawyer relationship between you and Alera Group or any of its employees is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and the Alera Group are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.

Legal Alert: IRS Releases Draft 2019 ACA Reporting Forms and Instructions

The IRS has released draft forms and instructions for the 2019 B-Series and C-Series reporting forms (Forms 1094-B, 1095-B, 1094-C and 1095-C) used by employers and coverage providers to report certain information to full-time employees and the Internal Revenue Service (IRS). ACA Reporting

As background, the Affordable Care Act (ACA) added Sections 6055 and 6056 to the Internal Revenue Code. These sections require employers, plans, and health insurance issuers to report health coverage information to the IRS and to participants annually. Section 6055 reporting requirements apply to insurers, employers that sponsor self-insured group health plans, and other entities that provide minimum essential coverage (such as multiemployer plans). Section 6056 reporting requirements apply to “applicable large employers” or “ALEs” (generally, employers with 50 or more full-time employees) and require reporting of health care coverage provided to the employer’s full-time employees.

Reporting under Sections 6055 and 6056 involves two sets of forms:  the “B-Series” (Forms 1094-B and 1095-B); and the “C-Series” (Forms 1094-C and 1095-C).  Each includes a transmittal form (Form 1094-B or 1094-C), which serves as a cover page and provides aggregate information, and an individualized form (Form 1095-B or 1095-C) for each employee for whom the employer is required to report.

The forms for calendar year 2019 are due to employees by January 31, 2020. Forms are due to the IRS by February 28, 2020 if filing by paper and by March 31, 2020 if filing electronically.  The forms that must be filed and distributed depend on whether the employer is an ALE and the type of coverage provided. Employers filing 250 or more of a particular form are required to file with the IRS electronically. The following table summarizes the responsible parties and forms applicable to the ACA’s reporting requirements.

Responsible Entity Fully Insured Plan Self-Funded Plan
Applicable Large Employer (ALE)

50 or more full-time equivalent employees on average in prior calendar year

Forms 1094-C and 1095-C

(Parts I and II of Form 1095-C)

Forms 1094-C and 1095-C

(Parts I, II, and III of Form 1095-C)

Either B-Series or C-Series Forms for covered non-employees

Non-ALE

Fewer than 50 full-time equivalent employees on average in prior calendar year

Not required to file Forms 1094-B and 1095-B
Insurance Carrier Forms 1094-B and 1095-B Not Applicable


2019 Draft Instructions

The draft forms and instructions can be found here:

The draft instructions reflect the newly increased penalty structure (generally leaving the penalty at $270 per return but increasing the penalty cap from $3.275 million to $3.339 million).

Note Regarding 2019 Form 1095-C, Line 15.  The section 4980H “affordability” safe harbor percentage threshold is adjusted to 9.86% for plan years beginning in 2019, up from 9.56%.

Employers should continue to work closely with their insurance broker and other trusted advisors when determining how their organization will address the reporting requirements. Unless extended, 1095-C and 1095-B forms for the 2019 calendar year are due to participants by January 31, 2020. Forms 1094/1095-C and 1094/1095-B are due to the IRS by February 28, 2020 if filing by paper and by March 31, 2020 if filing electronically.  Employers should endeavor to file timely, as the IRS has begun enforcing penalties against employers who have failed to file timely or file electronically when required.

 

 

About the Author.  This alert was prepared for Spring Consulting Group by Stacy Barrow.  Mr. Barrow is a nationally recognized expert on the Affordable Care Act.  His firm, Marathas Barrow Weatherhead Lent LLP, is a premier employee benefits, executive compensation and employment law firm.  He can be reached at sbarrow@marbarlaw.com.
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Benefit Advisors Network and its members are not attorneys and are not responsible for any legal advice.  To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.

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Spring to Present at Cayman Captive Forum

As the weather turns cold in Boston, the Spring team is looking forward to heading to the Cayman Islands in a few weeks!

It’s not just a holiday in the sun, however. Being one of the largest domiciles, Cayman is a breeding ground for captive thought leadership and Spring has been a longtime supporter of the Insurance Managers Cayman Captive ForumAssociation of Cayman (IMAC) who puts on this great event every year. In fact, Spring has been attending the annual forum for over a decade. This year, we are proud to announce that our Managing Partner, Karin Landry, will be presenting on voluntary benefits in captives on Thursday, December 5th at 3PM, during the three-day event.

Karin will be presenting alongside Larry Smith, Vice President of MedStar Health, a not-for-profit healthcare organization with over 120 entities in the Baltimore area. The session will highlight different advantages to adding voluntary benefits to your captive, and offer strategies and best practices for how to structure a program. The audience will be walked through two case studies to make the concepts come to life.

If you’re heading to Cayman, we hope you can make Karin’s session. If not, we’ll have a whole team that would love to chat with you at booth #7!

 

Legal Alert: Massachusetts Employers Must File HIRD Form by December 15

Massachusetts Employers Must File HIRD Form by December 15

As part of Massachusetts’ expanded Employer Medical Assistance Contribution (EMAC) program, employers with 6 or more employees in Massachusetts must submit a health insurance responsibility disclosure (HIRD) form annually, which collects information about employer-sponsored health insurance offerings.  Employers throughout the Commonwealth should have received email communication from the Department of Revenue (DOR) indicating that the HIRD form must be completed by December 15, 2019Massachusetts HIRD Form

The HIRD reporting requirement is administered by MassHealth and the DOR through the employer’s MassTaxConnect (MTC) account.  Employers may complete the HIRD form by logging into their MTC Withholding Tax account and selecting the “File HIRD” hyperlink under the “I Want To” section. The form will be available starting November 15 and will be used to assist MassHealth in identifying its members with access to qualifying insurance who may be eligible for the MassHealth Premium Assistance Program.  The DOR has published FAQs available here: https://www.mass.gov/info-details/health-insurance-responsibility-disclosure-hird-faqs.

Under the law, employers who knowingly falsify or fail to file the form may be subject to a penalty of $1,000 – $5,000 for each violation.

Next Steps

Employers should check with their payroll provider to determine if they will assist with the filing.  While the HIRD form may be filed by either the employer or its payroll company, it’s the employer’s responsibility to ensure that the form is timely filed.

The form is used to indicate whether the employer has offered to pay or arrange for the purchase of health insurance and information about that insurance, such as the premium cost, benefits offered, cost sharing details, eligibility criteria and other relevant information.  The HIRD form will be used to assist MassHealth in identifying its members with access to qualifying insurance who may be eligible for the MassHealth Premium Assistance Program. The Premium Assistance Program helps eligible working individuals and families pay for qualifying employer-sponsored insurance.

 

About the Authors.  This alert was prepared for Spring Consulting Group by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Peter Marathas or Stacy Barrow at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.

Spring’s SVP Speaking at the National Workers’ Compensation and Disability Conference

We are excited to share that our Senior Vice President, Karen English, has been invited to speak at this year’s National Workers’ Compensation and Disability Conference & Expo, which runs from November 6th-8th in Las Vegas. Karen, winner of the 2019 Power Broker award for Workers’ Compensation, is an expert in the field and will bring great value to the audience. Workers' Comp and Disability

Her session, Getting Smart Integrating Workers’ Comp, Disability and Leave Programs, runs from 2:30-3:45 PM on Wednesday, November 6th. She will be presenting alongside Kerry Daley, Absence Program Manager at Robert Half. Together they will cover the full spectrum of integrated program benefits, such as:

  • Cost reductions
  • Increased productivity
  • Greater efficiency
  • Deeper understanding of employee health
  • More consistent claims

The duo will offer best practices for integrating, and will demonstrate different approaches, implementation challenges and results through a case study. Attendees will leave with enhanced knowledge about the dangers of a program of silos, and with a plan of attack for integrating and/or maintaining their leave program.

 

DOL Issues Ruling to Further Support Retirement Income Security for Small & Mid-Sized Employers

Summary

The U.S. Department of Labor (DOL) finalized a ruling that will improve retirement security for small and mid-sized employers as it estimates that 38 million private sector employees do not have access to retirement benefits. The ruling was issued on July 29, 2019 and was effective September 30, 2019. The ruling is as a result of an executive order issued by President Trump in October 2018 that focused on retirement plan security for small and mid-sized employers. The DOL used its delegated authority under ERISA to create this ruling. The ruling from the DOL is specific to defined contribution plans and did not include defined benefit plans.Association Retirement Plans

The DOL ruling states that small and mid-sized employers can now offer retirement savings plans through Association Retirement Plans (ARPs), otherwise known as Multiple Employer Plans (MEPs). These plans allow employers to come together to offer retirement plans to their employees. For this purpose, the association can be in a certain geography (i.e., split by city, state, or multi-state metropolitan area) or in a common industry with-out regard to geography. The DOL ruling also provides a safe harbor for a Professional Employer Organization (PEO) to offer an ARP.

An ARP is considered a single ERISA plan and therefore ERISA requirements (such as reporting, disclosure, plan documents, and investment monitoring) do not apply to each participating employer separately as the ERISA requirements instead apply to the ARP. The participating employers, however, would still have a fiduciary duty to ensure the plan is operating appropriately.

Key Reasons to Consider an ARP or MEP

Organizations that would like to offer traditional 401(k) retirement plans to help retain and attract new talent, may want to consider these types of programs as they will be more cost effective and will require far less internal resources than a traditional individual employer plan. Importantly, ARPs can provide substantial fiduciary support and improved level of governance, including investment management and oversight services. Outsourcing plan administration and investment fiduciary services will provide for better overall plan management and much lower risk for each adopting employer versus setting up individual employer plans.

In addition, there could be access to lower cost investment options that would be available in the ARP due to larger purchasing power versus an individual small employer plan. While there is a single plan document, each adopting employer still has the flexibility to design key provisions of the benefit program that would work for them. Examples include plan eligibility, contribution levels, and vesting provisions.

Association Retirement Plans versus Association Health Plans

A similar ruling was passed for Association Health Plans (AHPs) in 2018. However, in March 2019, a federal district court found that the ruling violated ERISA. This case developed after push back by several states and the District of Columbia of the AHP ruling. It is possible that the federal dis-trict court’s decision could be overturned in the appeals process. AHPs have had very different outcomes versus ARPs, given involvement from the states for AHPs. ARPs are federally regulated and therefore consistent in all areas.

Conclusion

Retirement income security continues to be an important topic for employers and employees. The DOL ruling provides additional opportunities for small and mid-sized employers to offer defined contribution retirement benefits to their employees in this competitive employment landscape. We expect more of these employers to focus on retirement benefits as they assess their over-all benefits package for recruiting and retention purposes.

3 Unique Use Cases for Captives, From VCIA 2019

Every year for over a decade, Spring has sent team members to Burlington, Vermont in late summer for the annual Vermont Captive Insurance Association (VCIA) conference. As a leading US Captive domicile, Vermont has long been at the forefront of captive expansion and policy, and their yearly summit brings together some of the best and the brightest in the industry. This VCIA in particular was special for me personally, as I was recognized as an emerging professional in the field. It is always special when you win an award, more so, when it is your peers who recognize you.Captive Review Award Winner 2019

As per usual, seminars covered a wide range of topics, from drones and artificial intelligence, to ROI, reinsurance negotiation and tax updates. However, after taking the time time to reflect on what really stuck with me from the conference (and to jot it all down), I realized that many were interested in the different, perhaps untraditional ways to use a captive. As such, I am sharing some key takeaways centered around that theme below.

  1. Product & Program Innovation

Not only are captives in and of themselves are a mode of innovation, but they also serve to proliferate further innovation, in terms of coverage lines, products and program structures.  In one Innovation Spotlight session, edHEALTH and HCMS Group highlighted their use of captives to reduce health spend, implement population health management and develop predictive modeling. In “Captive as Laboratory”, Steve McElhiney and Ed Koral covered emerging and future risks, encouraging the audience to think about what unique risks their organization faces, both internally and externally. They then discussed how to use a captive to provide a tailor risk
offering with potential risk support, for risks such as TRIA or contingent business interruption.

  1. Group Health Plans

Unfortunately for both employers and employees, the unaffordable healthcare trend doesn’t appear to be going anywhere. Reducing healthcare spend is a key component of many organizations’ captives, as they allow for more control and transparency. Beyond that, there is an opportunity for captives to serve as a group health exchange structure for like organizations who band together. As mentioned above, edHEALTH is a great example of a group of higher education institutions joining together for group purchasing power for health and other benefits. Further, Spring’s Managing Partner, Karin Landry, spoke on Association Health Plans, which have hit some regulatory hurdles, but have a clear tie to the self-insured captive model. This session featured a case study on Agri-Services Agency, a subsidiary of the Dairy Farmers of America, who is in the process of using a captive to allow for the provision of group healthcare for its diverse membership, many of whom reside in rural areas or are sole proprietors.

 

  1. Retention

“Utilizing a Captive as a Talent Retention Tool” brought a different angle to the benefits and use cases of captives. The presentation emphasized how captives can boost employee benefits in a noticeable way to the end-user: the employee. Captives also create unique roles and responsibilities within an organization that enable valuable experience and growth for employees.

 

As you see, in between an exciting awards ceremony for myself and Spring, and plenty of dinner and cocktail receptions, I was certainly still able to further my industry knowledge and I met a lot of great people along the way. We are already looking forward to VCIA’s 2020 conference and hope to see you there!

4 Areas That Kept Popping Up at the DMEC Annual Conference

Now that the dust has settled and we are even ahead to next year’s conference, we’ve had the time to reflect on key learnings from the 2019 DMEC Annual Conference. Spring, and myself, have been active participants in the organization’s events and programs for many years, and the Annual Conference is one of the industry’s largest hubs for thought leadership. This year was no exception. Between cocktail receptions and dueling piano bar outings, there was a lot of knowledge shared among the (approximately) 500 professionals who came together from August 5th-8th in the D.C. metropolitan area.

As a general practice, we at Spring like to reinforce a conference’s highlights by putting pen to paper (or fingers to keyboards) and jotting them down to share with our colleagues. While the pre-conference material was focused on behavioral health in the workplace, there were four other hot topics that we couldn’t help but notice creating a thematic backbone to the main conference. Generally, what piques people’s interest most at a conference like DMEC is a good indicator of trends in the HR and benefits market at large. So, here they are!

  1. Paid Leave

I wasn’t surprised that paid leave was on a lot of people’s minds at the conference. After all, eight states and Washington D.C. have now enacted statewide paid leave policies, and there are several more, similar legislations being proposed in other states. While this is all great progress for the American workforce, it does complicate things from an HR and leave administration and compliance perspective. Various DMEC presenters were out to share their experience to help employers across the country who are grappling with the policies.

 

There was, “A Case Study: Developing a Paid Parental Leave Program”, which walked the audience through Halliburton’s approach. We also heard from an attorney on how to design a compliant paid sick leave policy, and in “They’re Here! A Deep Dive Into Paid Family and Medical Leaves”, we were given a national, trend-based overview as well as a granular, state-by-state look at the existing paid family and medical leave programs, as well as tips for employers getting started with a program.

  1. Data

Not all of the work of benefits and disability management professionals is always at the forefront of a business, but it sure does make an impact. As such, there was a heavy focus on the data and numbers behind all of that work being done. In “Got ROI?”, led by two of our Senior Vice Presidents, Teri Weber and Karen English, data was name of the game  – what types to look for, how to collect it, how to measure success, and how to take numbers and turn them into actionable insights.

 

Further, one session focused on paid leave data, and how it ties into corporate communications, cyber security and onboarding. CoreHealth Technologies presented on data specifically for healthcare organizations, focusing on their unique challenges. Lastly, in “How to Use Absence and Disability Data to Understand Your Workforce”, discussions revolved around turning health and populatio

Employee Absence Management

n data into insights you can use for various early intervention tactics.

 

  1. Employee Experience

It’s the employee’s world and we’re just living in it. Not really, but there was a definite emphasis at DMEC on the customer, which in many cases means the employee. Our very own Teri Weber led a workshop called “Your Self-Audit Checklist”, which, at its core, is really centered around making processes more seamless and compliant-friendly so that employee and employer alike have a more pleasant work environment. Another session revolved around advocacy, and how it can be used to elevate the employee experience. In “Winning the War for Talent by Perfecting the Employee Experience”, a panel discussed the importance of the employee experience for retention and recruitment, and suggested strategies for improvement.

 

  1. ADA/FMLA

With a name like Disability Management Employer Coalition, the ADA and FMLA are always prevalent at the conference. This year, however, with the DOL’s proposal of form changes for FMLA and several high-profile court cases around both policies, we wanted to make sure to note it yet again as a pressing priority for professionals in this space. The topic(s) appeared in the following presentations:

  • “It’s Complicated: The Always-Evolving ADA/FMLA Relationship”, which covered how shifts in technology and business needs necessitates pivots to your FMLA and ADA approach.
  • “Opioids and the ADA/FMLA”, where a doctor and a representative from Lincoln Financial Group discussed the opioid epidemic, how it came about, how it impacts the workplace, what to watch out for and how to develop employer policies and strategies for prevention and management.
  • “Reducing Your ADA Burden by Implementing a Return to Work Strategy” outlined myths and benefits of return-to-work and stay-at-work programs, an employer’s ADA obligations, EEOC guidelines and tips for a successful program.
  • “FMLA/ADA Lessons Learned: Jury Verdicts, Settlements & Recent Court Cases” provided an overview of court cases like Gunter v. Bemis Company, Hawkins v. Grinnel Regional Medical Center, Jacobs v. Wal-Mart Stores, and Ramirez v. Jack in the Box. The presenters reiterated what it means to be compliant in areas such as reasonable accommodations and “essential job functions”, so that employers in the audience were better equipped to prevent having their own court case on their hands one day.

I hope you found our event recap useful. From attending great industry events like DMEC, we know that sharing knowledge is the best way to make progress, so we wanted to pay it forward. You might also be interested in this summary on another session my colleague Karen English led, called “The RFP Process: A Deep Dive”.

We are already looking forward to – and planning for – DMEC’s two annual conferences next year.