Late in the afternoon on Friday, December 14, Federal US District Judge Reed O’Connor struck down the Affordable Care Act (ACA) in its entirety, a feat that was, for the past few years, unsuccessfully attempted by the Republican-led Congress. O’Connor reasoned that if the individual mandate is no longer valid, the entire ACA must also be scrapped, because the rest of the ACA is “inseverable” from the individual mandate. The opinion is likely to be appealed, and the final decision may ultimately lay with the US Supreme Court. Despite the ruling, Centers for Medicare & Medicaid (CMS) has stated that the exchanges remain open and 2018 and 2019 coverage will not be impacted.
On October 10, 2018 President Trump signed two bills that ban “gag clauses” in pharmacy contracts. Congress passed the two bills—one for Medicare prescription drug plans (“Know the Lowest Price Act”) that will go into effect in January 2020, and another for commercial employer-based and individual policies (“Patient Right to Know Drug Prices Act”) effective immediately—by almost unanimous vote in September 2018.
While many states have already prohibited the use of these clauses, this is the first such action on a federal level.
Gag clauses are sometimes found in contracts between pharmacies and insurance companies, pharmacy benefit managers or group health plans and bar pharmacists from telling customers that they could save money by paying cash for their prescriptions rather than using their health insurance. If pharmacists violate the gag rule, they risk penalties and/or contract termination. Under the new legislation, pharmacists are not required to tell patients about the lower cost option, but they also cannot be contractually prohibited from engaging in the cost conversation.
The legislation is consistent with the position of the Centers for Medicare & Medicaid Services (CMS), which, in May of this year, issued guidance stating that “gag clauses” are unacceptable in the Medicare Part D program.
Originally published in the Health & Life Sciences News blog.
The Medicare Modernization Act of 2003 requires employers who offer prescription drug coverage to provide an annual notice to all Medicare Part D eligible individuals who are participants in, or eligible for, the employer’s prescription drug coverage indicating whether such coverage is creditable before October 15th of each year. “Creditable coverage” means that the prescription drug coverage offered by an employer plan is expected to pay, on average for all plan participants, as much as the standard Medicare prescription drug coverage pays. Prescription drug coverage is “non-creditable” when it is not expected to pay, on average for all plan participants, as much as the standard Medicare prescription drug coverage pays.
The notice must be furnished regardless of whether the employer plan pays primary or secondary to Medicare, and must be sent to all Part D eligible individuals including retirees, actives, COBRA beneficiaries and dependents of such individuals. The Centers for Medicare and Medicaid Services (CMS) provides Model Disclosure Notices for creditable and non-creditable coverage.
If you would like additional information about this requirement, or if you have any questions, please contact your McDermott lawyer or one of our Benefits attorneys.
Charnae Supplee, a law clerk in the Firm’s Washington, DC office, also contributed to this article.
When passed in 2010, the Affordable Care Act (ACA), often called “Obamacare,” had three basic goals: increase access to health insurance, reduce costs and spending, and offer patients stability with respect to their insurance coverage. By offering a subsidy for low- and middle-income Americans to purchase private insurance plans, the ACA was successful in expanding coverage for about 14 million previously uninsured individuals, including those with pre-existing medical conditions.
Gary Scott Davis authored this bylined article about the future of the ACA. “We need to learn from both the strengths and weaknesses of the ACA to build a long-term sustainable approach that promotes access to care, brings insurance coverage within the reach of the many, contains costs, and aligns economic incentives among payors, providers and patients, while improving the nation’s overall level of health,” he wrote.
Shelby Buettner, Marshall Jackson, Jr., Lisa Schmitz Mazur and Dale Van Demark wrote this bylined article on a proposed US Senate bill to expand Medicare’s coverage of telehealth services. The bill would require the Center for Medicare and Medicaid Innovation to test the effectiveness of telehealth models, and cover through the Medicare program those models that meet criteria for effectiveness, cost and quality improvement.
CMS recently released a final rule with the goal of stabilizing Exchange markets for 2018. The agency also issued several significant guidance documents where CMS extended the deadlines for 2018 rate and Exchange qualified health plan application submissions, adopted a good faith compliance standard for 2018 and delegated additional plan certification responsibilities to states. While these steps may provide some comfort for issuers, the agency did not address the most significant areas of issuer concern when it comes to 2018 Exchange participation. Namely, the Final Rule and guidance documents do not resolve ongoing uncertainty regarding cost-sharing reduction funding, the enforcement of the individual mandate or ongoing efforts to repeal the Affordable Care Act.
The Centers for Medicare & Medicaid Services’ Final Notice of Benefit and Payment Parameters for 2015 contains numerous alterations to premium stabilization programs, cost-sharing requirements and employee counting provisions to account for lower-than-anticipated enrollment through the Exchanges and the Obama Administration’s decision to permit individuals to “keep their current plan” through 2016. All of these changes and the fluid regulatory environment create significant challenges for issuers, who must operationalize these changes, some of which are effective in 2014, and prepare for the 2015 benefit year.
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On March 14, 2014, the Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services (CMS) released guidance clarifying the final regulations implementing Section 2702 of the Public Health Service Act (PHSA). PHSA Section 2702 addresses guaranteed availability of coverage. Pursuant to that section, health insurance issuers offering non-grandfathered health insurance coverage in the group or individual market, including coverage under a state or federal Marketplace Exchange, must accept every employer and individual in the state that applies for the coverage, subject to limited exceptions. PHSA Section 2702 and the related regulations prohibit discriminatory marketing practices, including discrimination based on sexual orientation.
The new CMS guidance clarifies that health insurance issuers offering non-grandfathered group or individual health insurance coverage must offer coverage on the same terms and conditions to same-sex spouses that is offered to opposite-sex spouses. Prior to this guidance, this requirement to extend coverage to same-sex spouses already applied in states that perform and recognize same-sex marriage. The new CMS guidance clarifies, however, that all insurance companies in all states are required to make such coverage available.
Importantly, the CMS guidance does not require private sector employers to offer coverage to same-sex spouses. Instead, the guidance requires an insurance company offering non-grandfathered health insurance coverage to offer private employers the option to cover same-sex spouses.
Employers will continue to have discretion—subject to other non-discrimination laws—regarding whether or not to offer coverage to same-sex spouses. For example, employers with self-insured plans are not subject to the new CMS guidance. Likewise, employers sponsoring fully-insured plans that are funded by insurance contracts issued in states that do not currently recognize same-sex marriage also are not necessarily required to offer coverage to same-sex spouses; they must simply be offered the opportunity by the insurance company.
Thus, while the CMS guidance ensures that health insurance coverage will always be available to employers that wish to offer coverage to same-sex spouses, it does not ensure that all same-sex spouses will receive coverage under employer plans. The CMS guidance clarifies that while health insurance issuers are encouraged to offer coverage to same-sex spouses in 2014, all issuers must fully comply for plan or policy years beginning on or after January 1, 2015.
Next Steps for Employers
Employers with insured group health plans should review their policies to determine whether existing spousal coverage is required to be extended to same-sex spouses. Plans insured under a contract issued in a state where same-sex marriage is legal already must extend existing spousal coverage to same-sex spouses. Employers with insured plans issued in states where same-sex marriage is not legal must have the option of extending coverage to same-sex spouses beginning on or after January 1, 2015.
Employers offering either insurer or self-insured plans may also wish to consider whether other nondiscrimination laws implicate the decision whether to offer same-sex coverage.