Materials for Employers
Materials for Health Care Providers and Plans
The Patient Protection Act
Health care reform is accomplished through three key pieces of federal legislation. Two (the Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010) effect sweeping changes to virtually all aspects of the health care system — expansion of coverage, insurance reform, payment reform, the new individual mandate and revenue-raising provisions.
These laws are not very user friendly. Titles I through IX of PPACA are the starting point. Title X of PPACA contains amendments to Titles I through IX, and the Reconciliation Act contains further amendments to PPACA. Thus, one must look in all three places to be sure the waterfront has been covered. Unfortunately, no official consolidated version of these laws has been produced. However, the House Office of the Legislative Counsel ("HOLC") has prepared an unofficial consolidated version that some may find useful.
This website uses the term "Patient Protection Act" to mean PPACA and the Reconciliation Act, taken together.
The HITECH Act
A precursor to the Patient Protection Act was the Health Information Technology for Economic and Clinical Health
Act ("HITECH Act"). Passed as part of the American Recovery and Reinvestment Act of 2009, the HITECH Act provides economic incentives for the meaningful use of electronic health records ("EHRs") by hospitals and physicians, modifies and strengthens the federal privacy and security rules that protect individually identifiable health information, dramatically expands the scope of such rules and establishes new notification requirements when breaches of health information occur.
Implementation of many of the Patient Protection Act’s reforms will depend on the timely collection of detailed cost, treatment and quality data. EHRs will be an integral part of the process.
Materials for Employers:
Early Retiree Reinsurance Program
The Early Retiree Reinsurance Program is a temporary program established by the Patient Protection Act. Interim Final Regulations relating to the program were issued on May 5, 2010, establishing that the program became effective June 1, 2010. The program has funding of $5 billion and will end no later than January 1, 2014, or when such appropriation is exhausted.
The Early Retiree Reinsurance Program provides reimbursement to employer and union sponsors of participating employment-based plans for a portion of the cost of health benefits for early retirees and their spouses, surviving spouses and dependents. The Secretary of HHS will reimburse sponsors for certain claims between $15,000 and $90,000 (with those amounts being indexed for plan years starting on or after October 1, 2011).
On June 29, 2010, HHS published the official ERRP Program Application, official ERRP Application Instructions, and Application Submission Dos and Don'ts (including the address for submitting an application).
For more information on the Early Retiree Reinsurance Program please visit: www.errp.gov.
Among other useful information, www.errp.gov provides information on:
- How to apply
- Frequently Asked Questions
- Educational materials for sponsors describing how to complete the necessary steps to receive reimbursement
Pre-Existing Condition Insurance Plan
HHS has opened enrollment in a federally funded temporary program for high-risk individuals who cannot currently obtain health coverage. The Pre-Existing Condition Insurance Plan (PCIP) offers coverage for individuals who have been uninsured for at least six months, have been unable to get health coverage because of a health condition and are U.S. citizens or legal residents. Approximately 21 states have elected to have HHS administer their PCIP. Currently 29 states and the District of Columbia have elected to run their own programs. The PCIP will end in 2014, when insurers will no longer be able to discriminate against adults with preexisting conditions. Five billion dollars are available under the Patient Protection Act to support the PCIP in every state, with no state matching requirement. The Act establishes general eligibility for the PCIP, but states can determine the costs, benefits, and rules for determining pre-existing conditions for their programs. Below are links to Interim Final Regulations issued by HHS on June 30, 2010, implementing the program, along with a fact sheet outlining features about the plan.
The Departments of HHS, Treasury and Labor have released Interim Final Regulations that implement a number of health care reform provisions designed to provide consumer protections against certain insurance policies. The "Regulations", sometimes referred to as the "Patient's Bill of Rights", implements reforms that restrict the use of annual limits and prohibit insurers from rescinding coverage, imposing lifetime limits and excluding children due to preexisting conditions. The Regulations also protect the right for individuals to choose their primary care doctor and remove barriers to emergency services. Generally, these restrictions will become fully or partially effective during the first plan year beginning on or after September 23, 2010. For the most part, the regulations affect both group health plans and individual health insurance policies. However, they do not apply to stand-alone dental or vision coverage, or to retiree-only coverage.
The Department of Health and Human Services' (HHS) Office of Consumer Information and Insurance Oversight (OCIIO) has released guidance on obtaining a waiver of the restricted annual limits required by the Patient Protection Act. The regulations on annual limits provide that these restrictions may be waived by the HHS Secretary if compliance with the interim final regulations would result in a significant decrease in access to benefits or a significant increase in premiums. This guidance is especially relevant to limited benefit (mini-medical) plans.
Grandfathered Health Plans
The Departments of HHS, Treasury and Labor released Interim Final Regulations on June 17, 2010, clarifying circumstances in which certain requirements of the Patient Protection Act apply to grandfathered health plans. The regulations provide rules for when a grandfathered plan will lose this status and be required to comply with insurance provisions such as providing coverage for approved clinical trials. The rules generally restrict grandfathered plans' ability to increase copays and deductibles, reduce benefits and raise coinsurance charges, as well as prohibiting these plans from adding or tightening annual limits or changing insurance companies. On November 17, 2010, the Departments issued an amendment to the original regulations that allows group health plans to change insurance companies without losing grandfathered status in certain circumstances. Below are links to the Interim Final Regulations, the November 17th amendment thereto, along with fact sheets and Q&As.
Coverage for Dependent Children
The Departments of HHS, Treasury and Labor released Interim Final Regulations on May 13, 2010, implementing the Patient Protection Act's requirements that group health plans, health insurance issuers offering group or individual health insurance and grandfathered plans that provide coverage for a beneficiary's dependents continue to offer coverage until the child reaches the age of 26. Both married and unmarried children qualify for this coverage. This rule applies to all plans in the individual market and to new employer plans. It also applies to existing employer plans unless the adult child has another offer of employer-based coverage (such as through his or her job). Beginning in 2014, children up to age 26 can stay on their parents' employer plan even if they have another offer of coverage through an employer. Below are links to a fact sheet and FAQs relating to the required dependent care coverage.
In April 2010, the Internal Revenue Service issued Notice 2010-38 addressing the federal income tax consequences of health care coverage provided to adult dependent children as required by the Patient Protection Act. Specifically, the Notice addresses the scope of the income exclusion for this required coverage.
Insurance Web Portal Requirements
The Patient Protection Act requires the establishment of a website through which individuals and small businesses can obtain information about the insurance coverage options that may be available to them in their state. HHS issued Interim Final Regulations on May 10, 2010, to provide categories of information that will be collected and displayed via the website and the data the department will require from issuers and request from states, associations, and high risk pools in order to create the content of the web portal. The web portal provides information on coverage available through health insurers, Medicaid and CHIP, state health benefits high-risk pools (including the high-risk pool created by the Patient Protection Act) and coverage within the small group market for small businesses and their employees.
Expanded External and Internal Claims Review Process
On July 22, 2010, the Departments of HHS, Treasury and Labor published Interim Final Regulations (the "Regulations") setting out new requirements for internal claims and appeals, and for external review processes. These Regulations apply to nongrandfathered group health plans and health insurance issuers. The Regulations apply for plan years beginning on or after September 23, 2010, and will expire on July 22, 2013, or on an earlier date provided in the final regulations.
The Regulations require that group health plans, and health insurance issuers providing health insurance coverage in connection with group health plans, comply with the Department of Labor's claims procedure regulations and impose additional requirements for internal claims and appeals. In addition, the Regulations require that group health plans comply with either a state external review process (applicable to fully insured plans and non-ERISA self-funded plans, such as governmental plans and church plans) or a federal external review process (applicable to self-funded ERISA plans and in cases where no applicable state external review process is in place). Below is a link to the Regulations. Additional guidance has been released about these review processes, including model notices that could be used to satisfy the notice requirements under the Patient Protection Act.
Model notices and fact sheet:
Preventive Care Services
The Departments of HHS, Labor and the Treasury issued Interim Final Regulations (the "Regulations") on July 14, 2010, requiring health plans beginning on or after September 23, 2010, to cover certain recommended preventive services. The regulations require health plans to provide such preventive services without any cost-sharing for the enrollee when delivered by in-network providers, which means that health plans may not charge patients copayments, coinsurance, deductibles or similar amounts for these services. These Regulations do not apply to grandfathered plans. Covered preventive services include:
- evidence-based items or services with an A or B rating in the U.S. Preventive Services Task Force recommendations with respect to the individual involved
- immunizations for routine use in children, adolescents and adults with a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved
- evidence-informed preventive care and screenings, for infants, children and adolescents, that are included in the comprehensive guidelines supported by the Health Resources and Services Administration ("HRSA")
- evidence-informed preventive care and screening for women included in the comprehensive guidelines supported by HRSA (not otherwise addressed by the recommendations of the Task Force). HHS expects to issue these guidelines by August 2011.
Below is a link to the Regulations and also a website providing access to the agencies listed in the Regulations that define the preventive services to be covered by health plans. For recommendations that have been in effect for less than one year, plans and issuers will have one year from the effective date to comply.
Recently the Departments of HHS, Labor and Treasury solicited comments on value-based insurance design ("VBID") in the context of preventive care. VBID generally includes the use of incentives to promote customers to access providers, treatments and services. The Departments recognize that VBIDs can encourage the use of appropriate preventive services. Below is the link to the request for comment.
Medical Loss Ratios
Historically, insurance companies have spent a substantial portion of consumers' premium dollars on administrative costs and profits, including executive salaries, overhead, and marketing. On December 1, 2010, the Department of HHS released Interim Final Regulations implementing the "medical loss ratio" provision of the Patient Protection Act which requires insurance companies to spend 80 to 85 percent of premium dollars on medical care and health care quality improvement, rather than on administrative costs, starting in January, 2011. Insurance companies that do not comply with these requirements will be required to provide a rebate to their customers starting in 2012.
The medical loss ratio regulation outlines disclosure and reporting requirements, how insurance companies will calculate their medical loss ratio and provide rebates, and how adjustments could be made to the medical loss ratio standard to guard against market destabilization.
The Patient Protection Act allows the Secretary to adjust the medical loss ratio (MLR) standard for a State if it is determined that meeting the 80 percent medical loss ratio standard may destabilize the individual market. In order to qualify for this adjustment, a State must demonstrate that requiring insurers in its individual market to meet the 80 percent MLR has a likelihood of destabilizing the individual market and could result in fewer choices for consumers. This HHS Bulletin describes the method and format States must use in order to apply for an MLR adjustment. Applications must be submitted by email to
In addition, the Internal Revenue Service has issued guidance relating to the application of the MLR requirements. The Service issued Notice 2010-79 which limits special deductions available to insurance companies under Section 833 if such insurance company's MLR is less than 80%. The Service also issued Notice 2011-4 sets forth procedures for Blue Cross and Blue Shield organizations and other health insurance organizations to change their methods of accounting for unearned premiums if such organization fails to meet the applicable MLR requirement.
Set forth below are links to the Interim Final Rule and Technical Corrections, as well as a news release announcing the issuance of the MLR regulations, a fact sheet, the HHS bulletin for insurers seeking adjustments of the MLR and both Internal Revenue Service Notices
Many small businesses in industries that have high employee turnover or a lot of part-time or hourly workers favor offering basic health insurance policies to their workers. Such businesses are in industries such as restaurants, retail, and light industrial. Part-time or hourly workers are usually not eligible for major medical plans. "Mini-medical" plans are for those without any other form of insurance. They are basic plans that may pay for portions of doctor's visits or prescription drugs but they are not for catastrophic health events although they may pay a portion of basic hospitalization. Mini-medical plans may not satisfy certain requirements of the Patient Protection Act. For example, employers can be penalized for offering employees sub-standard coverage. Sub-standard coverage is defined as less than 60% of the employee's medical expenses.
The Department of HHS has released guidance specific to these mini-medical plans. The first bulletin discussed the application of restricted annual limits to Mini-medical plans. The second release discussed notice requirements for making the limitations of these plans more transparent to consumers. Links to both of the notices are set forth below.
Nondiscrimation Rules Applied to Insured Plans
The Patient Protection Act provided that insured group health plans must comply with certain nondiscrimination requirements set forth under Section 105(h) of the Internal Revenue Code. Internal Revenue Service released Notice 2011-1 exempting such insured plans from these nondiscrimination rules (and related penalties for non-compliance) until further guidance is issued. The notice also provides that future guidance is expected to only apply to plan years beginning after issuance.
Materials for Health Care Providers and Plans:
Accountable Care Organizations - Proposed Rules and Notices Issued
On March 31, 2011, as part of a coordinated effort, several federal agencies issued proposed rules and notices addressing various legal aspects of Accountable Care Organizations (ACOs). ACOs are groups of health care providers that will collaborate under the Affordable Care Act of 2010 to improve health quality and reduce costs. The specific proposed rules and notices are set forth below.
CMS Proposed Shared Savings Program (Accountable Care Organization) Rule
The Centers for Medicare & Medicaid Services (CMS) published long-anticipated proposed rules that would implement Section 3022 of the Affordable Care Act, which requires the Secretary to establish a Medicare Shared Savings Program to facilitate development of ACOs. As CMS states in the proposed rule, "[t]he Shared Savings Program is a key Medicare delivery system reform initiative that will be implemented under the Affordable Care Act and is a new approach to the delivery of healthcare aimed at: (1) better care for individuals; (2) better health for populations; and (3) lower growth in expenditures." The rule proposes eligibility criteria for ACOs seeking to participate in the Shared Savings Program, a methodology for assigning beneficiaries to ACOs, over 60 quality measures that must be reported by ACOs, and two shared savings payment methodologies (a "one sided model" in which ACOs share only in any savings generated for the Medicare program, and a "two sided model" in which ACOs share in any savings generated but also are at risk if costs to the Medicare program increase). The proposed rule is expected to be published in the Federal Register on April 7, 2011, and comments will be due not later than 60 days thereafter. A copy of the full text of the proposed rule can be found here.
CMS & OIG Joint Notice on Accountable Care Organization Waivers
In conjunction with the issuance of its proposed rule for ACOs, CMS and the Office of Inspector General (OIG) jointly issued a notice with comment period describing possible waivers of the application of the Physician Self-Referral Law (commonly known as the "Stark" law), the Federal anti-kickback statute, and certain civil monetary penalties (CMP) law provisions to specified financial arrangements involving ACOs. The notice is expected to be published in the Federal Register on April 7, 2011, and comments will be due not later than 60 days thereafter. A copy of the full text of the notice can be found here.
FTC and DOJ Joint Proposed Policy Statement on Accountable Care Organizations
The same day that CMS issued its proposed rule for ACOs and its joint notice with the OIG, the Federal Trade Commission (FTC) and Department of Justice (DOJ) released for public comment a joint proposed policy statement addressing how the two agencies would apply federal antitrust laws to ACOs. The proposed policy statement reflects the agencies' plan to coordinate their competition analysis with CMS and expresses their general view of how health care providers can successfully form ACOs that meet improved health care quality and reduced cost goals without raising significant competitive concerns. The FTC and DOJ are accepting public comment on the proposed policy through May 31, 2011. A copy of the full text of the proposed policy can be found here.
ONC Issues Final Rule for Permanent Certification Program for Health Information Technology
On Friday, January 7, 2011, the final rule for the establishment of a permanent certification program for the purposes of certifying health information technology (HIT) was published in the Federal Register by the Office of the National Coordinator for Health Information Technology. The final rule was issued pursuant to the authority granted to the National Coordinator under section 3001(c)(5) of the Public Health Services Act (PHSA), as added by the Health Information Technology for Economic and Clinical Health (HITECH) Act. The regulations established by the Final Rule are effective February 7, 2011, and will replace the temporary certification program previously established (see 74 Fed. Reg. 36,158 (June 24, 2010)).
Transforming Health Care Delivery: Accountable Care Organizations, the Center for Medicare and Medicaid Innovation and Other Reforms
A principal goal of the Patient Protection Act is to transform how health care is paid for in America, with the hope that doing so will transform how health care is delivered. The Patient Protection Act contains a myriad of provisions addressing health care payment reform. One such provision (§ 3022) creates the Medicare shared savings program — a program that encourages the formation of accountable care organizations ("ACOs"). An ACO is an organization of health care providers that agrees to be accountable for the quality, cost and care of the Medicare beneficiaries assigned to it. The Patient Protection Act raises more questions about ACOs than it answers, such as beneficiary assignment metrics, ACO-provider exclusivity, the extent to which partial capitation or other innovative payment mechanisms will be used and permissible distribution mechanisms for payments received under the program. CMS is working on implementing regulations, which are expected to be published in the fall of 2010. The shared savings program is to go into effect January 1, 2012
The Patient Protection Act also creates the Center for Medicare and Medicaid Innovation ('CMI') (§ 3021). The purpose of CMI is to reduce program expenditures while preserving or enhancing quality of care. To do so CMI will test payment and service delivery models to determine their effect on cost and quality. The Patient Protection Act identifies 18 models for potential testing and permits testing of any other model the Secretary determines will address a defined population having poor clinical outcomes or potentially avoidable expenditures. Although budget neutrality is not required of models initially, models must be modified or implementation terminated after testing if the model is expected to increase spending or if the model is expected to be spending-neutral and is not expected to improve quality of care. CMI is to be operational by January 1, 2011. No implementing regulations are required for testing to begin, but rulemaking is required to expand implementation of a model after initial testing and evaluation.
Additional Requirements for Charitable Hospitals
Section 9007 of the Patient Protection Act imposes many new requirements on tax-exempt hospitals. These include conducting comprehensive community health needs assessments every three years and making such assessments "widely available to the public," establishing and publicizing an emergency medical care policy, establishing and publicizing a financial assistance policy and limiting the amount charged for emergency or other medically necessary care provided to individuals who qualify for hospital financial assistance to "not more than the lowest amounts charged to individuals who have insurance covering such care." Charitable hospitals failing to comply with the community health care needs assessment requirements are subject to a tax equal to $50,000. The IRS is reviewing comments on these new requirements and working on implementing regulations.
Proposed Rule Regarding Hospital OPPS and ASC Payment Systems and Rates, GME Education and Costs, and Physician Self-Referral Rules
On August 3, 2010, the Centers for Medicare & Medicaid Services ("CMS") published a proposed rule that would revise the Medicare hospital outpatient prospective payment system ("OPPS") and the Medicare ambulatory surgery center ("ASC") payment system, and, in part, implement provisions of the Patient Protection Act relating to payments to hospitals for graduate medical education ("GME") and indirect medical education ("IME") costs, as well as the statute's new limitations on physician referrals to hospitals in which they have an ownership or investment interest. The proposed changes to the OPPS and ASC payment systems would be applicable to services furnished on or after January 1, 2011. Comments to the proposed rule were due no later than August 31, 2010.
CMS Interim Final Rule With Comment Period Regarding Provider and Supplier Enrollment, Ordering and Referring Documentation Requirements and Provider Agreements
On May 5, 2010, CMS published an interim final rule with comment period implementing several provisions of the Patient Protection Act relevant to health care providers and suppliers. Specifically, the interim final rule implements the requirement that providers and suppliers that qualify for a National Provider Number ("NPI") include their NPI on all Medicare and Medicaid program enrollment applications as well as on all claims for payment under the Medicare and Medicaid programs. The interim final rule also imposes new referral documentation requirements on provider, physician and supplier referrals to programs with a high susceptibility to abuse, including durable medical equipment, prosthetics, orthotics and supplies ("DMEPOS"), home health and other items or services specified by the Secretary of Health and Human Services. The interim final rule became effective July 6, 2010, with comments due no later than that date.
HITECH Act Materials
Several guidance documents and rules have been published pursuant to the HITECH Act. These include proposed rules implementing the HITECH Act's modifications to the HIPAA Privacy Rules and Security Rules, guidance documents on security risk analyses and securing protected health information ("PHI"), a request for comments on the HITECH Act's enhanced requirements to account for disclosures of PHI, a proposed rule implementing the HITECH Act's incentives for use of electronic health records ("EHRs") and rules addressing enforcement and the HITECH Act's new breach notification requirements.
A variety of governmental organizations have prepared analyses of various aspects of the Patient Protection Act. Some you might find of interest are collected below.
- Congressional Research Service, TRICARE and VA Health Care: Impact of the Patient Protection and Affordable Care Act (April 28, 2010)
- Congressional Research Service, Medicaid and SCHIP Provisions in PPACA (April 28, 2010)
- Congressional Research Service, Medicare Provisions in PPACA (April 21, 2010)
- Congressional Research Service, Private Health Insurance Provisions in PPACA (April 15, 2010)
- Congressional Research Service, Regulations Pursuant to the Patient Protection and Affordable Care Act (April 13, 2010)
- Congressional Research Service, Medicaid - The Federal Medical Assistance Percentage (FMAP) (April 7, 2010)
- Congressional Research Service, Health Insurance Premium Credits Under PPACA (April 6, 2010)
- Congressional Research Service, Health Care: Constitutional Rights and Legislative Powers (April 5, 2010)
- Joint Committee on Taxation: Technical Explanation of the Revenue Provisions of the "Reconciliation Act of 2010," as Amended, in Combination with the "Patient Protection and Affordable Care Act" (March 21, 2010)
The Department of Labor has issued three sets of Frequently Asked Questions (FAQs) regarding implementation of the market reform provisions of the Health Care Reform Act. These FAQs were prepared jointly by the Departments of Health and Human Services, Labor and the Treasury and are intended to provide clarity and additional information as to implementation of various provisions of the new law.