Entering the Final Stretch - Preparing for New Affordable Care Act Obligations
1. 27th Annual Paramedic Systems
of Wisconsin Conference
September 17, 2014
Green Bay, Wisconsin
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2. Entering the Final Stretch
Preparing for New Affordable
Care Act Obligations &
Opportunities
3. Presenters
Thomas Shorter, Godfrey & Kahn, S.C.
Health Care & Employment
(608) 284-2239
tshorter@gklaw.com
Todd Cleary, Godfrey & Kahn, S.C.
Employee Benefits & Health Care
(414) 287-9433
tcleary@gklaw.com
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4. Overview
⢠Review how the ACA will affect Emergency
Medical Organizations as employers.
⢠Review how to prepare and position as an
employer for continued implementation of the
ACA.
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5. Overview
⢠Review how the ACA will affect Emergency
Medical Organizations as providers.
⢠Review the changing âplayersâ in the health
care arena after ACA and how to position for
success.
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7. I. Introduction
⢠âPay or playâ rules will go into effect in 2015 for
many employers
⢠Application to any specific employer hinges on
employerâs workforce in 2014
⢠Other important Affordable Care Act
rules/changes/opportunities looming
⢠Consequently, it is vital that employers
understand the issues now and prepare
accordingly
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8. II. Pay or Play Rules
A. Applicable Large Employers
⢠Rules apply only to âapplicable large employersâ
⢠50 or more FTEs on average for preceding year
⢠Exemption available during 2015 for employers
with between 50 and 99 FTEs
⢠To qualify for exemption, employer needs to certify
that it generally maintained workforce, hours of
service, and coverage during 2014
⢠Full-time employee generally is one who regularly
works 30 or more hours per week
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9. II. Pay or Play Rules
A. Applicable Large Employers (cont.)
⢠Controlled group and affiliated service group
member employees must be included
⢠Controlled group and affiliated service group
rules are extremely complicated, and
consequences could be dire if applicable
employees are not counted
⢠Foreign service not considered
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10. II. Pay or Play Rules
B. First Level Penalty
⢠Applies if:
i. An applicable large employer does not offer
âminimum essential coverageâ to at least 70%
(95%, after 2015) of its full-time employees and
their dependent children; and
ii. A full-time employee receives governmental
assistance for coverage under a health
insurance exchange
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11. II. Pay or Play Rules
B. First Level Penalty (cont.)
⢠Subsidies generally available to individuals with
household income between 100% and 400% of federal
poverty limit
⢠Use âmeasurement periodsâ and âstability periodsâ to
ease administration
⢠Calculated on a monthly basis
⢠Penalty is $166.67 x total number of employerâs full-time
employees in excess of 80 (30, after 2015)
⢠Controlled group and affiliated service group members
considered separately
⢠Penalty is not deductible (health insurance premiums
generally are deductible)
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12. II. Pay or Play Rules
C. Second Level Penalty
⢠Can apply even if employer offers minimum
essential coverage
⢠Applies if (i) applicable large employer offers
coverage to full-time employees that is
âunaffordableâ or does not provide âminimum
valueâ, and (ii) a full-time employee receives
governmental assistance for coverage under a
health insurance exchange
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13. II. Pay or Play Rules
C. Second Level Penalty
⢠Calculated on a monthly basis
⢠Penalty is $250 times the number of the
employerâs full-time employees who receive
governmental assistance for coverage under a
health insurance exchange
⢠Not deductible (health insurance premiums
generally are deductible)
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14. II. Pay or Play Rules
D. Federal Exchange Subsidy
⢠Statute says subsidies are only available as to
exchanges âestablished by the Stateâ
⢠Only 14 states set up exchanges; other 36 use
Federal exchange
⢠Recent split in Federal circuit courts over
whether subsidies are available under Federal
exchange
⢠Limit of subsidies to State exchange could
have dramatic effect on ACA
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15. II. Pay or Play Rules
E. Critical Points for Employers
⢠Review and understand the law
⢠Rules to determine whether an employer is an
âapplicable large employerâ are complicated
⢠Structure of employerâs 2014 (and 2015)
workforce is critical
⢠Rules should be considered when determining
timing of transactions and changes in
workforce
⢠Decision not to play shouldnât be taken lightly
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16. III. Annual Employer Reporting
A. Section 6055 Reporting (IRS and Individuals)
⢠Applies to any employer providing major
medical plan coverage regardless of size
⢠Assists enforcement of individual mandate
⢠Obligation is on insurer for insured plans. For
self-funded plans, each entity that participates
must report. A controlled group member can
report on behalf of other group members.
⢠Use Form 1095-B if not an applicable large
employer but plan is self-funded
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17. III. Annual Employer Reporting
B. Section 6056 Reporting (IRS and Individuals)
⢠Applies only to entities that are (or are part of)
applicable large employers. A controlled group
member can file reports on behalf of other
controlled group members.
⢠Determines compliance with pay or play rules
and availability of subsidies under exchange
⢠Combined Section 6055 and 6056 reporting by
applicable large employers on single form
(IRS Form 1095-C)
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18. III. Annual Employer Reporting
C. Effective Date and Deadline
⢠Early 2016 (to report coverage for 2015)
⢠Although reporting is voluntary for 2014
coverage, employers should do so to work out
kinks
⢠Individual statements due by January 31
⢠IRS reporting due by February 28 (March 31, if
filed electronically)
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19. IV. Contraceptive Coverage
A. Hobby Lobby Issue
⢠Under ACA, non-grandfathered plans are
required to provide first dollar coverage for
preventive care (including contraception)
⢠Accommodation was set up by HHS in 2013
for certain non-profits
⢠U.S. Supreme Court held this mandate
substantially burdens exercise of religion as to
for-profit closely held corporations whose
owners object for religious reasons
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20. IV. Contraceptive Coverage
B. Application
⢠HHS expanded accommodation to for-profit
closely held entities with religious objections to
contraception coverage
⢠Guidance expected on meaning of âclosely heldâ
⢠Accommodation can be obtained by (1) filing
Form 700 with insurer or third-party administrator
or (2) notifying Secretary of HHS
⢠Mid-year dropping of coverage can create
participant notice requirements
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21. V. 90-Day Waiting Period
A. Rule
⢠No plan may impose a waiting period that exceeds 90 days
⢠90 days does not equal three months
⢠Substantive eligibility conditions are permitted
A. Orientation Period
⢠One-month âorientation periodâ is permissible because it is
treated as substantive eligibility condition
⢠Must be âreasonableâ and a âbona fide employment
orientation periodâ
⢠Maximum 90-day waiting period must begin on day
orientation period ends
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22. V. 90-Day Waiting Period
C. What Does Orientation Period Mean?
⢠True evaluation of whether employment
situation is satisfactory for both parties
⢠Seems to leave some flexibility
⢠However, employees should undertake
evaluation of employer during this period
C. Interaction with Pay or Play Rules
⢠Compliance with waiting period rule does not
guarantee avoidance of pay or play penalty
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23. VI. Small Business Tax Credit
A. Eligible Employer
⢠Fewer than 25 full-time employee equivalents
⢠Pays average annual wages below $50,000
⢠Contributes 50% or more toward employeesâ
self-only health plan coverage
⢠Purchases coverage through exchange
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24. VI. Small Business Tax Credit
B. Credit
⢠Up to 50% of premium contribution (35%, for
non-profits)
⢠Credit is on sliding scale based on employer
size and average pay
⢠Available for any two consecutive tax years
⢠Claimed on IRS Form 8941
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25. VII. Wellness Programs
A. Participant-based vs. health contingent-based programs
B. Health contingent-based program changes
⢠Maximum reward/penalty has increased to 30% of cost of
coverage (20% maximum before 2014)
⢠Maximum has increased to 50% of cost of coverage when
wellness program includes tobacco prevention (non-tobacco
piece canât exceed 30%)
⢠For some programs, (i) âreasonable alternativeâ must be provided
regardless of reason for not satisfying standard, and (ii) physician
verification may not be required
⢠If reasonable alternative includes educational component (e.g.,
tobacco cessation program), employer must pay for it
⢠Time commitment for satisfaction of reasonable alternative must
be reasonable
⢠Changes to required language in notice of reasonable alternative
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27. I. Fraud Enforcement
⢠ACA Fraud Initiatives
- More money to prevent and fight fraud
⢠$350 million over 10 years
- Better Screening and Compliance
⢠Pre-enrollment Screening
⢠Moratorium on New Providers
- (e.g., Houston & Philadelphia)
⢠Compliance Plans
- OIG Compliance Plan Guidance from 2003
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28. I. Fraud Enforcement
⢠ACA Fraud Initiatives
- New Penalties
⢠Expanded Office of Inspector General authority
⢠60 Day Overpayment Rule
⢠May 12, 2014 Proposed Rules
- Failure to provide records-$15,000 per day
- False statements in enrollment-$50,000
- 60 day overpayment rule-$10,000 per claim per day
- False statement - $50,000 per false statement.
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29. I. Fraud Enforcement
OIG Work Plan for 2014
â˘Examine Medicare claims data to assess the
extent of questionable transports billings.
â˘Review transports that may not have occurred or
were medically unnecessary transports, notably
for dialysis.
â˘Review whether Medicare payments for
ambulance services satisfied Medicare
requirements.
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30. II. Essential Health Benefits
⢠All non-grandfathered health insurance
coverage in individual and small group markets
must cover essential health benefits.
⢠Emergency transport is included as an essential
health benefit.
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31. II. Essential Health Benefits
⢠Non-emergency transport is not an essential
benefit (e.g., trip to the morgue).
⢠Prudent layperson standard - serious enough
that person with average knowledge of health
and medicine can reasonably assume that
immediate medical attention is absolutely
necessary.
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32. III. Accountable Care Organizations
⢠National and State Trend Started with ACA
- Medicare ACOs
⢠$372 Million in Savings to date for Medicare
- Commercial ACOs
⢠Partnership of providers
- Hospitals
- Insurers
- Physicians
- Emergency Medical Transport
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33. III. Accountable Care Organizations
⢠Commercial ACO negotiates rates and
determines quality measures.
⢠Closer working relationships among providers
to ensure appropriate point of care â most
appropriate facility usage, outpatient and post-acute
care.
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34. III. Accountable Care Organizations
⢠How does EMS improve quality of care, avoid
admissions and readmissions as part of ACO?
- Make home visits the first day of discharge
- Verify medication and post-discharge compliance
- Link physicians to consultation via telemedicine
video equipment
⢠Strategy â be part of the conversation!
⢠What ACO is in your market?
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35. IV. Health Insurance Exchanges
⢠Increase in insured individuals
- More individuals covered by insurance may
result in fewer no pay or uninsured transports
- Emergency medical transport is essential benefit
- 165,000 Wisconsin residents signed up (7/16/14)
⢠Some things never changeâŚ.
- Copays, Deductibles & Coinsurance
⢠Collection still an issue
- Failure to pay premiums
⢠Insurers required to pay for 30 days
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36. Thank You!
⢠9/27/14 â First Responders Appreciation Day
⢠Thanks for all you do!
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