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“Seyfarth Shaw” refers to Seyfarth Shaw LLP (an Illinois limited liability partnership). Seyfarth Shaw LLP
Legislative and Compliance Update: Future of the Affordable Care Act? (And Other Welfare Plan Developments)Ben ConleySeyfarth Shaw LLP
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
ACA – Positive Developments
• Enrollment Gains
https://aspe.hhs.gov/pdf-report/chartpack-affordable-care-act-has-led-historic-widespread-increase-health-insurance-coverage
From 2010-2015 the uninsured rate dropped:• 19.9% to 10.0% in expansion states (50%)• 25.9% to 17.7% in non-expansion states (32%)
2©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
ACA – Positive Developments
• The Impact of Medicaid Expansion• Studies show:
– Lower Medicaid spending per enrollee for new adults– Declining costs for new enrollees since expansion– Marketplace premiums 7% lower in expansion states compared to
non-expansion states (greater risk pool)• Reduction in uninsured hospital visits and uncompensated care
whereas non-expansion had no reduction• Documented significant job growth• Adults with disabilities significantly more likely to be employed
– Over half expansion enrollees reported Medicaid enrollment made working easier
Source: http:/ /kff.org/medicaid/issue-brief/the-effects-of-medicaid-expansion-under-the-aca-updated-findings-from-a-literature-review/
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx 3
ACA - Challenges
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx 4
ACA - Challenges
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx 5
ACA - Challenges
6©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
ACA – Landscape Facing Congress
Source: Kaiser Family Foundation
7©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
ACA – Landscape Facing Congress
Source: Kaiser Family Foundation
8©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
ACA - Process
9
• Current Senate Make-Up:
• Votes Needed for “Regular Order”:
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
What is Reconciliation and What are the Limitations?
• Pros:– Only requires 51 votes in the Senate (50 if VP serves as tie-
breaker)• Cons:
– Can only address budget/revenue items– Must be at least budget-neutral in ten year window– Must be tied to fiscal-year budget reconciliation instructions
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx 10
Timeline for Repeal Efforts
• Republicans win both Houses of Congress & Presidency• Promise “repeal and replace” of ACA will be waiting for President
on inauguration dayNovember 2016
• Republicans make first attempt to repeal ACA through American Healthcare Act (AHCA)
• Bill pulled from floor minutes before vote• Paul Ryan declares ACA “is the law of the land for the foreseeable
future”
March 2017
• MacArthur Amendment introduced and repeal effort gains steam• Republicans in House vote 217-213 to pass bill• White House hosts Rose Garden Ceremony to celebrateMay 2017
11©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
Timeline for Repeal Efforts
• Senate releases long-awaited bill, the Better Care Reconciliation Act (BCRA). Bill largely mirrors AHCA
• President Trump reportedly calls AHCA “mean”• McConnell fails to obtain votes to move to debate before July 4th
recess
June 2017
• Senate votes to bring bill(s) to the floor• BCRA 2.0 voted down• Rand Paul proposal voted down• “Skinny repeal” voted down
July 2017
• Graham-Cassidy effort shelved due to lack of votes• Window closed on repealing and replacing ACA through current
fiscal year reconciliation processSeptember 2016
12©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
ACA vs. Republican Proposals
ACA Republican ProposalsEmployer Mandate Penalty reduced to $0 (but reporting obligation
continues – potentially simplified)
Individual Mandate Penalty reduced to $0 (but see Continuous Coverage penalty)
Cost of Coverage:• Cost-sharing subsidies for lower-income
individuals on Marketplace• Income-based premium tax credits for lower-
income individuals on Marketplace
Cost of Coverage:• AHCA & BCRA included tax credits• Graham-Cassidy included block-grants to states
Age Rating:May only charge older adults more than 3x younger adults
Older enrollees may not be required to pay more than 5x the rate of younger enrollees;
States may apply for a waiver to allow for an even greater age weighting
13©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
ACA vs. Republican Proposals
ACA Republican ProposalsHealth Status:
May not charge more for Pre-Existing Conditions
Continuous Coverage Penalty
Essential Health Benefits:• 10 categories of EHBs must be covered for
Marketplace plans;• Employer plans must select a state’s EHBs as a
model plan
Allows states to waive the requirement of EHBs for plans on their exchange
14©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
ACA vs. Republican Proposals
ACA Republican Proposals
Reinsurance:• Temporary high risk pools between 2010 and
2014• Marketplaces with shared risk pooling effective
2014, with high cost claims offset by new taxes (such as TRP fee)
• Four year reinsurance program;
• Short-term: $50B to CMS to help insurers:
• Long-Term: $62B from 2019-26 into funding state efforts, being front-loaded. States required to match an increasing % beginning in 2022.
• State Performance Bonuses: $8B distributed by HHS to state Medicaid and CHIP programs (2023-2026)
Opioid Funding:Not directly addressed – primarily treated through Medicaid expansion and adding substance abuse as EHB
• Medicaid significantly scaled back• EHBs potentially waived• Billions allocated to address opioid epidemic
15©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
ACA vs. Republican Proposals
ACA Republican ProposalsTaxes on High Earners:• Additional 0.9% Medicare HI tax for high wage
earners • 3.8% tax on certain passive income• Wages paid in excess of $500,000 to officer,
director or employee of insurer not deductible
Taxes on High Earners:• Early proposals eliminated taxes• Later proposals retained taxes
Medicaid :
States may expand coverage for Medicaid to those above 133% of FPL, and receive Federal reimbursement
• Gradual phase-out of ACA expansion• Shift traditional Medicaid funding to per capita or
block grants (i.e., federal contribution is set subject to CPI-M inflation until 2025 when CPI inflation), meaning states carry the primary risk of increasing costs
16©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
What Options Remain?
17
Congressional Action Executive ActionBi-partisan stabilization efforts (Lamar-Murray) Defund Marketplace cost-sharing subsidies
New Reconciliation instructions (2018? 2019?) Executive action on selling insurance across state lines and Association Health Plans
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
Senate Composition – Challenges for Future Efforts
Source: NY Times
18©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
Senate Composition – Challenges for Future Efforts
Source: Roll Call
19©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
Evolution of EEOC Wellness Guidelines
• AARP v. EEOC– AARP argued there should be no incentives for wellness – programs. – Court found incentives are permissible but found no basis for – EEOC settling on 30% limit. – Remanded for further rulemaking – Existing rules remain in effect, pending new regulations.
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx 20
MHPAEA
• MHPAEA does not mandate that plans cover mental health/substance abuse benefits
• MHPAEA does mandate that plans covering any MH/SA benefit cover all MH/SA benefits at same level as medical/surgical
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx 21
Comparing Medical to MH/SA Benefits
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Comparing Medical to MH/SA Benefits
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx
Inpatient In-Network
Inpatient Non-Network
Outpatient In-Network
Outpatient Non-Network
Emergency
Prescription Drug
23
Warning Signs
• Blanket pre-authorization for all MH/SA• Fail-first protocols• Probability of improvement standard• Written treatment plan requirement• Limits on:
– Residential treatment– Geographical region– Licensure
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©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx 25
• Issue:– Out-of-network providers appeal,
purportedly on behalf of participant in plan, under designation of authorized representative and assignee of benefits
– Content: Request for documents Allegations of breach of fiduciary duty Various other allegations
Out-of-Network Provider Claims
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx 26
• Considerations:– Failure to produce documents
within 30 days can lead to civil penalties
– Understand what is required under ERISA 104(b)(4)
– Push back on assignment of benefits
– Cigna v. Humble $13MM assessment against Cigna (in
lawsuit brought by Cigna!) Cigna challenged “fee-forgiving”
practice Court: Cigna abused discretion and
did not follow plain-language interpretation of plan
Out-of-Network Provider Claims
Questions?
Ben ConleySeyfarth Shaw [email protected]
©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential - 41318027_1.pptx 27