Proposed Regulations Issued to Substantially Increase Access to Federally Subsidized Health Insurance

Jennifer Berman, CEO, MZQ Consulting

On April 5, 2022, the Administration issued new proposed regulations changing certain aspects of the affordability and minimum value rules under the Affordable Care Act (“ACA”).  Notably, the rules only impact whether an individual is eligible for federally subsidized health insurance; they DO NOT change the affordability requirements for applicable large employers under the ACA’s employer mandate.  If finalized, the new rules will increase access to federal subsidies beginning January 1, 2023.

Current guidance provides that an individual is ineligible for a federal subsidy (known as the premium tax credit or PTC) if that individual is eligible for affordable, minimum value coverage through an employer-sponsored plan.  However, since its inception, concerns have been raised about the “family glitch.”  Specifically, previously existing rules interpret the ACA to provide that any spouse or dependent offered medical coverage through an employer-sponsored plan was ineligible for the federal subsidy if that coverage was affordable to the employee.  This interpretation did not consider whether family coverage was affordable.  As a result, many individuals were unable to qualify for the federal subsidy even though the family coverage they were offered through an employer was not in fact affordable.

The new proposed rules change the definition of affordability for purposes of qualifying for the federal subsidy.  Under these rules, coverage is affordable for family members only if the premium for family coverage does not exceed 9.5% (as adjusted for inflation) of the family’s household income.  Where an individual is offered coverage through multiple employer-sponsored plans (i.e., spouses are each eligible for family coverage through separate employers), any offer of affordable coverage will be sufficient to disqualify all members of that family from receiving the federal tax subsidy.  The proposed regulations also provide that if a plan offers coverage to an individual who is not a member of the employee’s household for tax purposes (such as a child under age 26 who is no longer the employee’s tax dependent), the premium attributable for that non-dependent individual will not be considered for affordability purposes.

The proposed rules also adjust the definition of minimum value.  As with the affordability rules, these revisions will take into account family coverage when determining if a plan provides minimum value.  The rules also formalize existing guidance that provides that any plan that does not provide substantial coverage for inpatient hospital services and physician services cannot, by definition, provide minimum value. 

While these proposed rules do not directly impact the employer mandate (i.e., employers are still only required to offer affordable coverage to full-time employees), they could ultimately have a major impact on applicable large employers.  Specifically, to administer the new provisions, the IRS will need to collect substantial additional information about the coverage that employers offer.  This will presumably require major revisions to IRS Forms 1094-C and 1095-C.

The IRS has indicated it intends to finalize the proposed regulations by the end of 2022, with an official effective date of January 1, 2023, as indicated above.  However, we note that these rules are highly likely to be challenged in the courts—particularly because the IRS formerly determined they did not have the regulatory authority to interpret the ACA in this manner.  We will continue to monitor these rules and provide updates when they become available.

CAA of 2022 Includes Federal Extension to Telehealth Protections for HDHPs

By: Jessica Waltman, Principal, Forward Health Consulting

Last week, Congress passed the Consolidated Appropriations Act (CAA) of 2022, a $1.5 trillion governmental funding package.  Among its many provisions, the bill extends access to telehealth services for individuals who are covered under a health savings account (HSA)-qualified high deductible health plan (HDHP).

Typically, HSA-qualified HDHPs cannot pay for covered services, except for specified preventative care, until the participant meets the plan’s deductible.  This legislation permits sponsors of HDHPs to offer telemedicine services at no cost to participants, regardless of the plan’s annual deductible, without impacting participant HSA eligibility.  This relief was initially established as a component of emergency COVID-19 legislation, and it expired on December 31, 2021.  The 2022 CAA reinstates these telemedicine protections for the period of April 1, 2022, through December 31, 2022.

There is a three-month gap in this relief between January 1, 2022, and March 31, 2022, which means that participant deductibles should be applied to any non-preventative telehealth claims incurred during this time.  If the IRS chooses to take enforcement action against HDHP plan participants who accessed telemedicine services without cost-sharing at the beginning of this year, those individuals could lose eligibility to contribute to their HSAs from January-March 2022.  It is unclear if the IRS will pursue enforcement for the period when this relief lapsed or not.

Employers who sponsor HDHPs and want to take advantage of this optional relief should change their plan on a prospective basis and limit the complete coverage of telehealth services to April 1-December 31, 2022.  Employers and brokers should work with their insurance carriers and/or third-party claims administrators to ensure that this relief is only applied to telehealth services provided during that time.

In addition to the extension of telemedicine protections for HDHPs, the 2022 CAA expands the scope of telehealth services that Medicare will cover.  The legislation also allows both Medicare and Medicaid to continue covering select telehealth services for 151 days after the COVID-19 public health emergency ends.

Recent Guidance Expands Preventive Care for Women

By: Megan Diehl, Manager, Compliance Consulting, MZQ Consulting

Under the ACA, non-grandfathered group health plans must provide benefits for “preventive care” on a first-dollar basis. This means such coverage must be provided at no cost to participants (i.e., no co-payments, co-insurance, or deductibles may be applied).  For this purpose, preventive care includes:

  • Evidence-based items or services with an A or B rating recommended by the United States Preventive Services Task Force (USPSTF);
  • Immunizations for routine use for children, adolescents, or adults recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention;
  • Evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration (HRSA) for infants, children, and adolescents; and
  • Other evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the HRSA for women.

The HRSA, which maintains responsibility for the comprehensive guidelines for women, recently issued new guidance that updates and expands the list of women’s preventive services.  These revised guidelines apply to plan years beginning on or after December 30, 2022.

The updates to women’s preventive services include:

  • A new guideline for counseling for women ages 40-60 with normal or overweight body mass index to prevent obesity.
  • An expansion to the breastfeeding services and supplies guideline to include double electric breast pumps, their parts and maintenance, and breast milk storage supplies.
  • An update to the list of women’s contraceptives found in the FDA Birth Control Guide.
  • Revisions to the HIV screening guidelines that recommend (1) all women ages 15 and older receive HIV screening at least once during their lifetime, with earlier and/or additional risk-based screening and (2) that risk assessment and Preventive education begin at age 13.
  • Updates to the well-women Preventive visits to include pre-pregnancy, prenatal, postpartum, and interpregnancy visits.

A full list of women’s preventive services guidelines can be found on the HRSA’s website.

New Updates to Surprise Billing Independent Dispute Resolution Process

By: Megan Diehl, Manager, Compliance Consulting, MZQ Consulting

Last week, a federal judge for the Eastern District of Texas invalidated a portion of the independent dispute resolution (IDR) process outlined in the interim final rules for the No Surprises Act (the Act).  The Act, which applies to plan years that take effect on or after January 1, 2022, prohibits providers from charging “out-of-network” rates for emergency care, air ambulance services, and all care by an “out-of-network” provider in an “in-network” facility.  The provider and the health plan must resolve any differences between what a provider charges in these circumstances and what a plan is willing to pay.  If the two parties cannot agree on payment details within 30 days of billing, either may start the IDR process. 

The rule in question requires IDR entities, the arbitrators responsible for resolving payment disputes, to assume that the plan’s median rate for a particular “in-network” service is the appropriate rate for that same service when provided “out-of-network.”  The Act refers to this median as the qualified payment amount (QPA), and generally requires IDR entities to select the payment offer closest to the QPA unless compelling evidence is presented as to why that should not be the case.  The court’s ruling removes the requirement that IDR entities generally rely on the QPA in making their determination.  Instead, IDR entities must now weigh the QPA equally with other factors included in the evidence to make their decision.

On February 28, 2022, the Employee Benefits Security Administration released a memorandum in response to this ruling.  The memorandum emphasizes that all other provisions of the No Surprises Act are still in place and that the Departments of Health and Human Services, Labor, and the Treasury (the Departments) are working through next steps to comply with the court’s decision.  The Departments plan to:

  • Withdraw existing guidance pertaining to the invalidated portion of the IDR process and publish updated documents that conform with the court’s order;
  • Train IDR entities on the updated guidance once it is available; and
  • Open the federal IDR portal for IDR submissions.  Parties whose open negotiation period has already expired will have fifteen days after the portal opens to initiate the IDR process.

As the Departments emphasize, this court ruling is currently the only change to the No Surprises Act—all other requirements, including the IDR process itself, are still in effect.  We will continue to monitor developments and provide updates as they become available.

New Guidance on the Federal Surprise Billing Process

By: Lee Susan Spiegel

The new federal prohibition on surprise billing first went into effect on January 1, 2022 (and applies to plan years beginning on or after that date).  The new rules prohibit providers from charging “out-of-network” rates for emergency care, air ambulance services, and all care by an “out-of-network” provider in an “in-network” facility.  Any differences between what a provider charges in these circumstances and what a plan is willing to pay must be resolved between the provider and the health plan.  If payment details cannot be settled on within 30 days of billing, either party may start the independent dispute resolution (IDR) process that utilizes a web-based portal maintained by the federal government.  A new FAQ  published last week by the Departments of Health and Human Services, Labor, and Treasury details how that process will work. Included below are several key points from the FAQs.

  • Plans and issuers seeking to use the federal IDR process to resolve a surprise bill are required to start a 30-day open negotiation period before initiating the IDR through the federal portal.
  • The federal portal for IDR requests was launched on January 1, 2022.  As of this writing, it is available for uninsured (or self-pay) individuals.  Over the next few weeks, the system will go “live” for plans, issuers, providers, facilities, and air ambulance services. Certified IDR entities will also be able to use the portal at that time.
  • Model notices are now available for both payers and providers to use during the fee negotiation process.  Almost all actions by the IDR entity and parties need to be completed through the federal IDR portal.
  • The initial list of certified IDR entities is currently available online.  The list will be updated on an ongoing basis, and newly certified entities will be added as approved.
  • The initiating party selects a certified IDR entity from the list on the federal IDR portal.  The non-initiating party may then accept or reject the proposed certified IDR entity.  Federal officials will randomly select a certified IDR entity when the parties cannot agree.
  • There are two fee types related to the IDR process.  An administrative fee of $50 (for 2022) that each participating party must pay, and the IDR entity’s arbitration fee (which must be paid by the losing party).  An IDR entity is permitted to charge between $200 to $500 for a single case, and can charge between $268 to $670 for batched determinations.  Federal approval is needed if an IDR entity wants to charge more for a particular case. 
  • Multiple claims can be batched together, but each included claim must meet the criteria for claims batching.  Importantly, claims from different plans may not be batched together.  Thus, for example, a TPA may not include claims related to different self-funded medical plans in a “batch” of claims.
  • Each party must pay the IDR entity fees upfront.  The fee will be refunded to the prevailing party within 30 business days after the settling of the dispute.  When determinations are batched, the party with the lowest number of findings in its favor is determined to be the non-prevailing party.  The certified IDR entity fee will be split evenly if each party prevails in an equal number of determinations within a batched case.
  • If a settlement is reached by the parties after a certified IDR entity has been selected and started its review, each party must pay half of the IDR entity’s fee (unless the parties agree otherwise).  The administrative fee paid by the parties will not be refunded.
  • The federal IDR process is a document-based review.  Both parties will submit all required information and supporting documents to their IDR entity, and the arbitrator will make their determination based on those materials alone.
  • The information that must be submitted to the IDR entity includes the final offer of payment expressed as both a dollar amount and a percentage of the qualifying payment amount (QPA).  The QPA for the applicable year for the same/similar items or services must also be submitted.  Providers or facilities need to include the size of their practice or facility, their specialty, and their coverage area.  Plans and issuers must include the coverage area of the plan or issuer, the relevant geographic region for purposes of the QPA, and whether the coverage is fully insured or self-funded.
  • Certified IDR entities have 30 business days after selection to settle the dispute.  The external review process for coverage disputes between individuals and plans or issuers remains in place.  The federal IDR process involves disputes regarding payment amounts between providers, facilities, or providers of air ambulance services and plans or issuers.  No coverage determinations are made by IDR entities.

Fully insured groups will generally rely on their health insurance carrier to handle surprise billing issues. It is important to review all contracts to ensure this division of responsibility is reflected. Self-funded group plans should develop parameters with their third-party administrators regarding the negotiation process, a strategy for proposed fee payments, and how an IDR claim is to be handled. Groups with January 1 plan years are beginning to see affected claims. These details should be resolved soon and likely need to be reflected in an amendment to the group’s administrative services agreement.

Additional Guidance Issued on OTC COVID-19 Test Mandate

By: Jessica Waltman, Principal, Forward Health Consulting

On February 4, 2022, additional guidance was issued on the federal mandate requiring health plans to provide over-the-counter (OTC) COVID-19 tests at no cost to participants.

As we have previously shared, plans are allowed to limit the total amount reimbursable to participants for out-of-network tests to $12/test—but, only if the plans meet the requirements of the “direct coverage program” safe harbor.  This new guidance clarifies/adds the following with respect to that safe harbor:

  • The determination of whether a plan provides “adequate access” to tests through its direct coverage program is determined based on facts and circumstances.  In any case, meeting this standard requires that a plan must have a way to procure tests in-person and at least one method to receive tests by mail.

Examples of permissible distribution outlets include: (1) a plan’s pharmacy network, (2) non-pharmacy retailers (including through the distribution of coupons that can be used to pay for tests at the point of sale), and/or (3) alternative distribution sites (such as a drive-through or walk-up site).

The mail order direct coverage option can allow for orders to be placed online and/or via telephone.  For this option, plans may not charge participants for shipping and handling—however, if the safe harbor is met, plans do not have to reimburse costs for shipping and handling when a participant purchases a test on their own and seeks reimbursement.

  • The plan must notify participants that the direct coverage is available.  This notice should include key information and instructions on how to get the tests without making any upfront payments.
  • Plans are not required to make all brands of OTC COVID-19 tests available through the direct coverage program.  However, plans are still required to reimburse participants for any approved OTC COVID-19 test if a participant elects to use the reimbursement option instead of the direct coverage program.
  • A plan will not be out of compliance with the safe harbor if tests are temporarily unavailable through their direct coverage program due to a supply shortage.

The new guidance also clarifies that:

  • To help combat fraud and abuse, plans may disallow reimbursement of tests that were purchased: (1) from a private individual via an in-person or online sale, or (2) from a seller that uses an online auction or resale marketplace.  If a plan elects to put such restrictions in place, it must notify participants of the types of purchases that are not reimbursable and what type of documentation will be required for reimbursement.  Reasonable documentation could include proof of purchase that identifies the seller, such as a UPC code or other serial number, an original receipt, etc.  However, plans may not require multiple documents or implement numerous steps in a manner that unduly delays access to reimbursement.
  • The OTC COVID-19 test rules do not apply to tests that use a self-collected sample but require processing by a laboratory or other health care provider to return results.  However, under preexisting rules, these tests must be covered without cost-sharing and medical management requirements if ordered by an attending health care provider.
  • OTC COVID-19 tests are considered medical expenses and therefore, if not otherwise paid for by a health plan, would generally be reimbursable through a health flexible spending account, health reimbursement account, or health savings account.  The guidance suggests that plan sponsors may wish to remind participants not to seek reimbursement from one of these account-based plans for tests paid for or reimbursed through their medical plan, and not to use a debit card for one of these accounts to purchase tests they wish to have paid for by their medical plan.  If a test is mistakenly paid for “twice” in this way, the participant should contact the health FSA or HRA administrator regarding correction procedures.  If HSA funds are involved, the individual must include the distribution in gross income or repay the distribution to the HSA.

Overall, this new guidance provides helpful clarification to plan sponsors and their service providers as they work quickly to fully implement the new rules.  Our team will continue to monitor for any additional developments.

OSHA Vaccine Mandate for Large Employers is Not Dead Yet

by: Jessica Waltman, Principal, Forward Health Consulting

On January 25, 2022, the Occupational Safety and Health Administration (OHSA) announced that they are withdrawing the Vaccination and Testing Emergency Temporary Standard (ETS) that was adopted in November 2021, effective immediately. However, OSHA specifically notes that they are exclusively withdrawing the policy as an “enforceable emergency temporary standard;” they are not withdrawing it as a proposed rule. This means that OSHA is still trying to make the vaccination and testing mandate into law, they are just using a more formal process that, while slower, is more likely to survive legal scrutiny.

This announcement does not have any direct practical impact currently because the Supreme Court blocked enforcement of the ETS on January 13, 2022.

The OSHA withdrawal also has no impact on the federal government’s vaccine mandate for employees at certain health care facilities that receive federal funding. As a reminder, the Supreme Court voted to allow the healthcare worker vaccination requirement to continue while ongoing legal challenges work their way through the lower federal courts.

DOL FAQs Address Coverage for Colonoscopies and Birth Control

By: Jessica Waltman, Principal, Forward Health Consulting

The ACA requires non-grandfathered health plans to pay for “preventive care” on a first-dollar basis, meaning that no copays, coinsurance, or deductibles can be charged for certain services defined as “preventive” under these rules.  In the same recent FAQs requiring health plans to pay for the cost of over-the-counter COVID-19 testing, the DOL also provided additional guidance on this rule as it relates to colorectal cancer screening and contraceptive coverage.

Colorectal Cancer Screening    

The United States Preventive Service Task Force (“USPSTF”) recommendations have historically encouraged colorectal cancer screening for adults ages 50-75.  That recommendation was shifted by five years to cover ages 45-75 in May 2021.  Therefore, effective for plan years beginning on or after May 31, 2022, colorectal cancer screening needs to be provided regularly for adults ages 45-75.

Under these rules, if a colonoscopy is performed for screening purposes, plan participants cannot be billed for items and services that are integral to the procedure, including:

  • Required specialist consultation prior to the screening procedure;
  • Bowel preparation medications prescribed for the screening procedure;
  • Anesthesia services performed in connection with a preventive colonoscopy;
  • Polyp removal performed during the screening procedure; and
  • Any pathology exam on a polyp biopsy performed as part of the screening procedure.

The FAQs also make clear that it is still “preventive” care if a participant receives a colonoscopy following a positive, non-invasive, stool-based screening test or a direct visualization test (e.g., sigmoidoscopy or CT colonography).  Thus, these colonoscopies and the associated services must also be provided at no cost to the participant.


FDA-approved female-controlled contraceptive methods are also defined as “preventive care” for purposes of these rules.  Prior guidance on this rule stated that plans must cover, without cost sharing, at least one form of contraception in each method that is identified by the FDA in its Birth Control Guide.  Later guidance provided that while “reasonable medical management” is permitted relative to birth control, plans are required to develop and utilize an easily accessible, transparent, and reasonably fast method for handling provider appeals when a provider feels a particular form of birth control is medically necessary.

The new FAQs expressly provide that certain common plan practices violate these rules.  These practices include:

  • Denying coverage for all or particular brand name contraceptives, even after the individual’s attending provider determines and communicates the brand is medically necessary;
  • Requiring individuals to fail first using numerous other services within the same method of contraception before approving the contraceptive product that is medically appropriate for the individual, as determined by the individual’s attending health care provider;
  • Requiring individuals to fail first using other services in other contraceptive methods before the plan or will approve coverage for a service or contraceptive product in the contraceptive method that is medically appropriate for the individual, as determined by the individual’s attending health care provider; and
  • Failing to provide an easily accessible, transparent, and sufficiently expedient exception process for appeals.

These FAQs serve as a warning to plans with these types of practices that they should change them as soon as possible.  This will require significant updates related to the use of formularies in determining coverage levels for birth control moving forward.  This is one more important item for plan sponsors to add to their 2022 agendas. 

Supreme Court Strikes Down Vaccine or Testing Mandate for Large Employers, Upholds Requirement for Healthcare Workplaces

By: Jessica Waltman, Forward, Principal Health Consulting

On January 13, 2022, the Supreme Court of the United States (SCOTUS) voted to block the continued enforcement of the federal Occupational Safety and Health Administration’s Emergency Temporary Standard (ETS) requiring large employers to either require all employees to obtain their COVID–19 vaccinations or submit to weekly virus testing.  In the 6-3 decision in National Federation of Independent Business v. Department of Labor, the majority of justices noted that the ongoing challenge to the ETS working its way through the federal court system is likely to succeed, since the legislation that the Biden Administration is using to justify the measure only “empowers the Secretary to set workplace safety standards, not broad public health measures… Permitting OSHA to regulate the hazards of daily life—simply because most Americans have jobs and face those same risks while on the clock—would significantly expand OSHA’s regulatory authority without clear congressional authorization.” 

Based on the ruling, businesses with more than 100 employees do not need to continue enforcing the ETS requirements at the present time.  Instead, according to SCOTUS, enforcement of the ETS will remain on hold until the resolution of the ongoing federal litigation.  However, it is important to note there is nothing in this ruling preventing employers of any size from establishing a voluntary vaccination and/or testing requirement.  If any business decides to continue to move ahead with vaccination or testing requirements, they just need to abide by existing federal privacy and non-discrimination rules.  OSHA has many FAQs available to help provide compliance guidance.

In addition to releasing their decision on the large employer mandate, SCOTUS ruled on a challenge to the federal government’s mandate that employees at health care facilities that receive federal funding (such as Medicare or Medicaid) receive their COVID–19 vaccinations unless they have a valid religious or medical exemption.  The Court voted 5-4 in the case of Biden v. Missouri to allow the healthcare worker vaccination requirement to continue while ongoing legal challenges work their way through the lower federal courts.  In the ruling, the majority notes, “Congress has authorized the Secretary to impose conditions on the receipt of Medicaid and Medicare funds that ‘the Secretary finds necessary in the interest of the health and safety of individuals who are furnished services.’ COVID–19 is a highly contagious, dangerous, and—especially for Medicare and Medicaid patients—deadly disease.  The Secretary of Health and Human Services determined that a COVID–19 vaccine mandate will substantially reduce the likelihood that healthcare workers will contract the virus and transmit it to their patients…The rule thus fits neatly within the language of the statute.”

While the short-term future for business owners and federally funded healthcare worksites is now clear regarding federal vaccination requirements, SCOTUS’ most recent actions are not the final word on either regulation.  The legal challenges to both requirements will continue in the lower courts, and depending on how they are ultimately resolved, the status of current federal vaccination requirements may change again.  We will continue to monitor developments regarding federal COVID–19 vaccination requirements and bring any additional information to you as it becomes available.

Biden Administration Announces 2023 Out-of-Pocket Limits and PCORI Fee for the Upcoming Year

By: Jennifer Berman, CEO, MZQ Consulting

The Biden Administration recently announced the new out-of-pocket (OOP) limits that will apply to group and individual health plans during the 2023 plan year, as well as the Patient-Centered Outcomes Research Institute (PCORI) Fee for plan or policy years ending on or after October 1, 2021, and before October 1, 2022.  

To comply with the ACA, non-grandfathered health plans cannot require a participant to pay more out-of-pocket during the plan year than the amounts listed below. The limits apply to cost-sharing items like copayments, deductibles, and coinsurance expenditures. Premiums and spending for non-covered services do not count towards the out-of-pocket limits. The limits for 2023, as announced by the Centers for Medicare and Medicaid Services, are listed below in comparison to the 2022 limits:

Out-of-Pocket Limits
Coverage Type20222023
Self-Only Coverage$8,700$9,100
Family Coverage$17,400$18,200

Under the ACA, the out-of-pocket limitation requirement directly applies to essential health benefits. As a reminder, essential health benefits as defined by the ACA fall within ten categories: (1) ambulatory patient services, (2) emergency services, (3) hospitalization, (4) pregnancy, maternity, and newborn care, (5) mental health and substance use disorder services, (6) prescription drugs, (7) rehabilitative and habilitative services and devices, (8) laboratory services, (9) preventative and wellness services, and (10) pediatric services, including oral and vision care.

In addition to announcing the 2023 out-of-pocket limits, the Internal Revenue Service announced through Notice 2022-04 that the PCORI fee for plan and policy years ending on or after October 1, 2021, and before October 1, 2022, will be $2.79. This is a $.13 increase from last year’s rate of $2.66, which still applies to groups with plan years ending on or after October 1, 2020, and before October 1, 2021.

The PCORI Fee was created by the ACA to fund federal clinical care effectiveness research. All health insurance issuers must pay the monthly assessment amount on a per-covered-life basis. Fully insured plans include the PCORI fee in their premiums, but all self-funded group health plans (including heath reimbursement arrangements and level-funded plans) must calculate and pay their PCORI fees directly. If a group health plan needs to report and pay their fee themselves, then they must do so by July 31st of each year using IRS Form 720.

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