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New Guidance on Affordable Care Act Provisions Issued

by Amy Gordon, Susan Nash, Maureen O’Brien

Recent guidance issued by the Departments of Health and Human Services and Labor and the Internal Revenue Service clarifies health care reform rules regarding waiting periods and the definition of full-time employee for purposes of the employer requirement to provide health care coverage beginning in 2014.   The Internal Revenue Service has also issued guidance relating to the determination of wages for purposes of determining affordability of health care coverage under the Affordable Care Act.

Click here to see IRS Notice 2012-58 and here for Technical Release 2012-02.  McDermott will be releasing a detailed analysis of the new guidance soon.

New Guidelines Issued on Preventive Services for Women, Including Religious Employer Exception

by Amy M. Gordon, Susan M. Nash and Jamie A. Weyeneth

The U.S. Departments of Treasury, Labor, and Health and Human Services recently released joint guidance regarding mandatory coverage of contraceptive services for women under the preventive services requirements of health care reform.  The new guidance coincides with the issuance of expanded preventive care coverage requirements for women released by the Health Resources and Services Administration (HRSA).

Health care reform requires non-grandfathered group health plans and health insurance issuers to provide first-dollar coverage of certain preventive services furnished by in-network providers.  The preventive services coverage requirements are based on recommendations of the U.S. Preventive Services Task Force, the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention, and HRSA.  In addition, HRSA was charged with developing additional preventive care and screening guidelines for women.  HRSA commissioned the Institute of Medicine (IOM) to help to identify gaps in preventive care services already required under health care reform.

When the IOM released its recommendations in mid-July 2011, concerns about the inclusion of contraceptive services were raised by religious organizations.  The regulators determined it would be appropriate to take into account the religious beliefs of religious employers and issued guidance providing for limited religious accommodation.  Specifically, the interim final regulations on mandatory preventive care were revised to permit HRSA to create an exception for group health plans established or maintained by religious employers with respect to any requirement to cover contraceptive services.  A religious employer is one that has the inculcation of religious values as its purpose; primarily employs persons who share its religious tenets; primarily serves persons who share its religious tenets; and is a nonprofit organization under Section 6033(a)(1) and Section 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code.  The regulators noted this approach is consistent with most states that require coverage of contraceptive services under state insurance laws.  The final guidelines released by HRSA on August 1, 2011, include this exception for religious employers.

Click here to view the new women’s preventive services guidelines issued by HRSA.  Recommended preventive services issued after September 23, 2009, are effective as of the first day of the first plan year/policy year beginning on or after the one-year anniversary of the date the recommendation is issued.  Therefore, these new guidelines (including the religious employer exception) will apply for plan years/policy years beginning on or after August 1, 2012.

U.S. Department of Labor Releases New Guidance Further Delaying Enforcement for Health Care Reform Appeals Rules

by Amy M. Gordon, Susan M. Nash, Michael T. Graham and Jamie A. Weyeneth

The U.S. Department of Labor has released new guidance further delaying enforcement of certain Health Care Reform claims, appeals and external review requirements.  Although the guidance was issued by the Department of Labor, the enforcement grace period applies to the U.S. Departments of Health and Human Services, Labor, and Treasury.  The Department of Health and Human Services is also encouraging states to provide similar grace periods with respect to insurance issuers.  The enforcement delay is intended to give the Departments time to publish new regulations to implement the claims, appeals and external review requirements under Health Care Reform. 

Highlights of the technical release are:

Enforcement Grace Period Extended to Plan Years Starting On or After July 1, 2011 (January 1, 2012 for calendar year plans)

  • Requirement to include specific information to identify the claim involved in adverse benefit determination communications, such as the date of the service, the health care provider and the claim amount (if applicable).
  • Requirement to include a description of the standard that was used in denying the claim in adverse benefit claim determination communications (e.g., a claim denied because treatment is experimental).
  • For communications about a final internal adverse benefit determination, the requirement to include a discussion of the reasons for the decision.
  • Requirement to provide a description of available internal appeals and external review processes, including information regarding how to initiate an appeal.
  • For plans and issuers in states in which an office of health consumer assistance program or ombudsman is operational, the disclosure of the availability of, and contact information for, such program.  The guidance includes a list of consumer assistance programs and ombudsmen for each state (Minnesota may have been inadvertently left off of the list), American Samoa, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands.

Enforcement Grace Period Extended to Plan Years Starting On or After January 1, 2012 (formerly on or after July 1, 2011)

  • 24-hour review of an initial urgent care claim (shortened from the current 72-hour review period).
  • Requirement to provide claims and appeals notices in a culturally and linguistically appropriate manner.
  • Deemed exhaustion of internal claims and appeals processes if there is not strict compliance with the new Health Care Reform rules.
  • Requirement to include diagnosis and treatment codes and their corresponding meanings in claim denial notices.

The full guidance is available at, U.S. Department of Labor Technical Release 2011-01.

Recent Updates on Challenges to the Health Care Reform

by Amy M. Gordon and Michael T. Graham

On January 31, 2011, another Federal district court judge opined on the constitutionality of the controversial Health Care Reform legislation.  In Florida v. U.S. Department of Health and Human Services, Judge Vinson of the U.S. District Court for the Northern District of Florida, in a case brought by governors and attorneys general from 26 states, held that the individual insurance mandate provisions in the legislation that require all persons to purchase health care insurance were unconstitutional.

In his opinion, Judge Vinson found that the individual insurance mandate exceeded the regulatory powers granted to Congress under the U.S. Constitution’s Commerce Clause. Judge Vinson held that the penalties associated with not purchasing health care insurance went beyond Congress’ broad authority to make laws that are “necessary and proper” to carrying out its designated responsibilities.  He found that if Congress could regulate an individual’s inactivity through the Commerce Clause, then Congress could regulate virtually any kind of activity or inactivity with almost unlimited power.  He concluded that if Congress could penalize an individual for deciding not to engage in certain commerce, the enumeration of individual rights in the Constitution would have been made in vain.  In ruling on a second claim, Judge Vinson dismissed a claim that the legislation violated state sovereignty rights by requiring states to pay for a fractional share of the planned expansion of Medicaid.

Judge Vinson’s decision updates the federal judicial scoreboard on whether Health Care Reform is or is not unconstitutional at 2 and 2.  However, unlike the Virginia federal court that also ruled against the individual mandate provision but upheld the rest of the legislation, Judge Vinson went further, concluding that the individual mandate was so inextricably connected to the other provisions in the legislation that its unconstitutionality required that the entire legislation be invalidated.  Ultimately, while this ruling comes in what may be the most prominent challenge to Health Care Reform given that the case was filed by many states’ governors and attorneys general, it will merely become one of many opinions on the individual mandate’s constitutionality given that there are over 20 pending cases challenging the legislation. 

On the Legislative front, on February 2, 2011, Senate Republicans were defeated by a vote of 51-47 in their effort to repeal Health Care Reform. 

As of now, these two events will have little impact on employers and their group health plans.  We recommend a wait and see approach.  Senate Republican leaders expressed that they were not surprised that this effort was defeated and that votes were cast generally along party lines.  As for the Florida court decision, Judge Vinson declined to require enforcement of his ruling pending an expected appeal by the Obama administration. 

Because the individual mandate provision does not take effect until 2014, it is likely that the Federal courts will continue to provide differing opinions until the issues is settled by the Supreme Court.  In fact after the Senate defeat, Democratic Senator Bill Nelson of [...]

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