Entering the Final Stretch - Preparing for New Affordable Care Act Obligations
1. 27th Annual Paramedic Systems
of Wisconsin Conference
September 17, 2014
Green Bay, Wisconsin
1
2. Entering the Final Stretch
Preparing for New Affordable
Care Act Obligations &
Opportunities
3. Presenters
Thomas Shorter, Godfrey & Kahn, S.C.
Health Care & Employment
(608) 284-2239
tshorter@gklaw.com
Todd Cleary, Godfrey & Kahn, S.C.
Employee Benefits & Health Care
(414) 287-9433
tcleary@gklaw.com
3
4. Overview
• Review how the ACA will affect Emergency
Medical Organizations as employers.
• Review how to prepare and position as an
employer for continued implementation of the
ACA.
4
5. Overview
• Review how the ACA will affect Emergency
Medical Organizations as providers.
• Review the changing “players” in the health
care arena after ACA and how to position for
success.
5
7. I. Introduction
• “Pay or play” rules will go into effect in 2015 for
many employers
• Application to any specific employer hinges on
employer’s workforce in 2014
• Other important Affordable Care Act
rules/changes/opportunities looming
• Consequently, it is vital that employers
understand the issues now and prepare
accordingly
7
8. II. Pay or Play Rules
A. Applicable Large Employers
• Rules apply only to “applicable large employers”
• 50 or more FTEs on average for preceding year
• Exemption available during 2015 for employers
with between 50 and 99 FTEs
• To qualify for exemption, employer needs to certify
that it generally maintained workforce, hours of
service, and coverage during 2014
• Full-time employee generally is one who regularly
works 30 or more hours per week
8
9. II. Pay or Play Rules
A. Applicable Large Employers (cont.)
• Controlled group and affiliated service group
member employees must be included
• Controlled group and affiliated service group
rules are extremely complicated, and
consequences could be dire if applicable
employees are not counted
• Foreign service not considered
9
10. II. Pay or Play Rules
B. First Level Penalty
• Applies if:
i. An applicable large employer does not offer
“minimum essential coverage” to at least 70%
(95%, after 2015) of its full-time employees and
their dependent children; and
ii. A full-time employee receives governmental
assistance for coverage under a health
insurance exchange
10
11. II. Pay or Play Rules
B. First Level Penalty (cont.)
• Subsidies generally available to individuals with
household income between 100% and 400% of federal
poverty limit
• Use “measurement periods” and “stability periods” to
ease administration
• Calculated on a monthly basis
• Penalty is $166.67 x total number of employer’s full-time
employees in excess of 80 (30, after 2015)
• Controlled group and affiliated service group members
considered separately
• Penalty is not deductible (health insurance premiums
generally are deductible)
11
12. II. Pay or Play Rules
C. Second Level Penalty
• Can apply even if employer offers minimum
essential coverage
• Applies if (i) applicable large employer offers
coverage to full-time employees that is
“unaffordable” or does not provide “minimum
value”, and (ii) a full-time employee receives
governmental assistance for coverage under a
health insurance exchange
12
13. II. Pay or Play Rules
C. Second Level Penalty
• Calculated on a monthly basis
• Penalty is $250 times the number of the
employer’s full-time employees who receive
governmental assistance for coverage under a
health insurance exchange
• Not deductible (health insurance premiums
generally are deductible)
13
14. II. Pay or Play Rules
D. Federal Exchange Subsidy
• Statute says subsidies are only available as to
exchanges “established by the State”
• Only 14 states set up exchanges; other 36 use
Federal exchange
• Recent split in Federal circuit courts over
whether subsidies are available under Federal
exchange
• Limit of subsidies to State exchange could
have dramatic effect on ACA
14
15. II. Pay or Play Rules
E. Critical Points for Employers
• Review and understand the law
• Rules to determine whether an employer is an
“applicable large employer” are complicated
• Structure of employer’s 2014 (and 2015)
workforce is critical
• Rules should be considered when determining
timing of transactions and changes in
workforce
• Decision not to play shouldn’t be taken lightly
15
16. III. Annual Employer Reporting
A. Section 6055 Reporting (IRS and Individuals)
• Applies to any employer providing major
medical plan coverage regardless of size
• Assists enforcement of individual mandate
• Obligation is on insurer for insured plans. For
self-funded plans, each entity that participates
must report. A controlled group member can
report on behalf of other group members.
• Use Form 1095-B if not an applicable large
employer but plan is self-funded
16
17. III. Annual Employer Reporting
B. Section 6056 Reporting (IRS and Individuals)
• Applies only to entities that are (or are part of)
applicable large employers. A controlled group
member can file reports on behalf of other
controlled group members.
• Determines compliance with pay or play rules
and availability of subsidies under exchange
• Combined Section 6055 and 6056 reporting by
applicable large employers on single form
(IRS Form 1095-C)
17
18. III. Annual Employer Reporting
C. Effective Date and Deadline
• Early 2016 (to report coverage for 2015)
• Although reporting is voluntary for 2014
coverage, employers should do so to work out
kinks
• Individual statements due by January 31
• IRS reporting due by February 28 (March 31, if
filed electronically)
18
19. IV. Contraceptive Coverage
A. Hobby Lobby Issue
• Under ACA, non-grandfathered plans are
required to provide first dollar coverage for
preventive care (including contraception)
• Accommodation was set up by HHS in 2013
for certain non-profits
• U.S. Supreme Court held this mandate
substantially burdens exercise of religion as to
for-profit closely held corporations whose
owners object for religious reasons
19
20. IV. Contraceptive Coverage
B. Application
• HHS expanded accommodation to for-profit
closely held entities with religious objections to
contraception coverage
• Guidance expected on meaning of “closely held”
• Accommodation can be obtained by (1) filing
Form 700 with insurer or third-party administrator
or (2) notifying Secretary of HHS
• Mid-year dropping of coverage can create
participant notice requirements
20
21. V. 90-Day Waiting Period
A. Rule
• No plan may impose a waiting period that exceeds 90 days
• 90 days does not equal three months
• Substantive eligibility conditions are permitted
A. Orientation Period
• One-month “orientation period” is permissible because it is
treated as substantive eligibility condition
• Must be “reasonable” and a “bona fide employment
orientation period”
• Maximum 90-day waiting period must begin on day
orientation period ends
21
22. V. 90-Day Waiting Period
C. What Does Orientation Period Mean?
• True evaluation of whether employment
situation is satisfactory for both parties
• Seems to leave some flexibility
• However, employees should undertake
evaluation of employer during this period
C. Interaction with Pay or Play Rules
• Compliance with waiting period rule does not
guarantee avoidance of pay or play penalty
22
23. VI. Small Business Tax Credit
A. Eligible Employer
• Fewer than 25 full-time employee equivalents
• Pays average annual wages below $50,000
• Contributes 50% or more toward employees’
self-only health plan coverage
• Purchases coverage through exchange
23
24. VI. Small Business Tax Credit
B. Credit
• Up to 50% of premium contribution (35%, for
non-profits)
• Credit is on sliding scale based on employer
size and average pay
• Available for any two consecutive tax years
• Claimed on IRS Form 8941
24
12061431_1
25. VII. Wellness Programs
A. Participant-based vs. health contingent-based programs
B. Health contingent-based program changes
• Maximum reward/penalty has increased to 30% of cost of
coverage (20% maximum before 2014)
• Maximum has increased to 50% of cost of coverage when
wellness program includes tobacco prevention (non-tobacco
piece can’t exceed 30%)
• For some programs, (i) “reasonable alternative” must be provided
regardless of reason for not satisfying standard, and (ii) physician
verification may not be required
• If reasonable alternative includes educational component (e.g.,
tobacco cessation program), employer must pay for it
• Time commitment for satisfaction of reasonable alternative must
be reasonable
• Changes to required language in notice of reasonable alternative
25
27. I. Fraud Enforcement
• ACA Fraud Initiatives
- More money to prevent and fight fraud
• $350 million over 10 years
- Better Screening and Compliance
• Pre-enrollment Screening
• Moratorium on New Providers
- (e.g., Houston & Philadelphia)
• Compliance Plans
- OIG Compliance Plan Guidance from 2003
27
28. I. Fraud Enforcement
• ACA Fraud Initiatives
- New Penalties
• Expanded Office of Inspector General authority
• 60 Day Overpayment Rule
• May 12, 2014 Proposed Rules
- Failure to provide records-$15,000 per day
- False statements in enrollment-$50,000
- 60 day overpayment rule-$10,000 per claim per day
- False statement - $50,000 per false statement.
28
29. I. Fraud Enforcement
OIG Work Plan for 2014
•Examine Medicare claims data to assess the
extent of questionable transports billings.
•Review transports that may not have occurred or
were medically unnecessary transports, notably
for dialysis.
•Review whether Medicare payments for
ambulance services satisfied Medicare
requirements.
29
30. II. Essential Health Benefits
• All non-grandfathered health insurance
coverage in individual and small group markets
must cover essential health benefits.
• Emergency transport is included as an essential
health benefit.
30
31. II. Essential Health Benefits
• Non-emergency transport is not an essential
benefit (e.g., trip to the morgue).
• Prudent layperson standard - serious enough
that person with average knowledge of health
and medicine can reasonably assume that
immediate medical attention is absolutely
necessary.
31
32. III. Accountable Care Organizations
• National and State Trend Started with ACA
- Medicare ACOs
• $372 Million in Savings to date for Medicare
- Commercial ACOs
• Partnership of providers
- Hospitals
- Insurers
- Physicians
- Emergency Medical Transport
32
33. III. Accountable Care Organizations
• Commercial ACO negotiates rates and
determines quality measures.
• Closer working relationships among providers
to ensure appropriate point of care – most
appropriate facility usage, outpatient and post-acute
care.
33
34. III. Accountable Care Organizations
• How does EMS improve quality of care, avoid
admissions and readmissions as part of ACO?
- Make home visits the first day of discharge
- Verify medication and post-discharge compliance
- Link physicians to consultation via telemedicine
video equipment
• Strategy – be part of the conversation!
• What ACO is in your market?
34
35. IV. Health Insurance Exchanges
• Increase in insured individuals
- More individuals covered by insurance may
result in fewer no pay or uninsured transports
- Emergency medical transport is essential benefit
- 165,000 Wisconsin residents signed up (7/16/14)
• Some things never change….
- Copays, Deductibles & Coinsurance
• Collection still an issue
- Failure to pay premiums
• Insurers required to pay for 30 days
35
36. Thank You!
• 9/27/14 – First Responders Appreciation Day
• Thanks for all you do!
36