Category Archives: Regulation

Nonquantitative treatment limitations in the spotlight

Nonquantitative treatment limitations (NQTLs) continue to be a source of difficulty for many health plans in attaining compliance with the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Now that a few years have passed since the implementation of the final rules, we can see examples of MHPAEA enforcement related to NQTLs and the types of NQTLs being investigated and settled. In this paper, Milliman consultants provide perspective.

IRS announces HSA and HDHP adjusted limits for 2018

The Internal Revenue Service (IRS) recently published Revenue Procedure 2017-37, which provides the inflation-adjusted amounts for health savings accounts (HSAs) for calendar year 2018. The updated limits specify the maximum annual contributions to HSAs that may be tax-deductible, as well as the minimum deductibles and the maximum out-of-pocket expenses allowed under qualifying high-deductible health plans (HDHPs).

The table below reflects the 2018 and 2017 values:

The “catch-up” contribution amount of $1,000 for individuals aged 55 or older was set by law and has not changed since 2009.

Annual out-of-pocket expenses include the HDHP’s deductibles, copayments, and coinsurance, but not premiums paid by plan participants.

Employers that sponsor HSAs and HDHPs should review their programs and communications materials and plan for the updated limits for 2018.

For additional information about the 2018 updated HSA and HDHP limits, please contact your Milliman consultant.

How the Cures Act affects parity of behavioral health services

perlman_j_danielPresident Obama signed the 21st Century Cures Act (Cures Act) into law on December 13. This lengthy bill has gotten attention mostly for its funding of cancer research, reforms to the U.S. Food and Drug Administration (FDA) drug approval process, funding for opioid addiction treatment, and policies to address suicide prevention and serious mental illnesses. Additionally, there are important provisions related to enforcement of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

MHPAEA requires parity of benefits for mental health/substance use (behavioral) conditions and medical/surgical (physical) conditions in health plans that cover both physical and behavioral benefits. It applies to self-funded employer-based plans, and also to insured plans in the large group, small group, and individual markets. MHPAEA applies to quantitative items, such as financial requirements (copays, deductibles, etc.) and some types of treatment limitations (such as annual visit limits). It also applies to nonquantitative items, such as medical management practices and drug formulary design.

The quantitative items have historically received the most attention from health plans and employer plan sponsors, perhaps because there is a clear mathematical test in MHPAEA’s implementing regulations for how to comply. We have seen less attention paid to MHPAEA’s requirements for nonquantitative treatment limitations (NQTLs), where the regulations are less specific. However, NQTLs are just as important in the regulations, and in fact they have been the driving factor behind a number of publicly disclosed enforcement actions under MHPAEA or similar state parity laws.

There are two repeatedly occurring themes throughout the parity-related provisions of the Cures Act. First, the Cures Act seeks to strengthen enforcement of MHPAEA generally. Second, it requires the implementing federal departments (Treasury, Health and Human Services, and Labor) to provide further clarification regarding the NQTL rules under MHPAEA.

Here are key provisions of the Cures Act as related to behavioral health parity:

• The Cures Act requires the departments responsible for enforcement to issue a compliance program guidance document within 12 months. This document should provide concrete examples of what does and does not comply with MHPAEA, including actual examples of findings from investigations. For NQTLs, the examples must provide clear detail to explain the finding of compliance or noncompliance. This document is to be updated every two years with further examples of compliance and noncompliance.

• The law requires the departments to prepare a similar guidance document for health insurers and plan sponsors. This also needs to provide examples of how to comply with the disclosure requirements of MHPAEA. The Cures Act requires the guidance document to provide examples of disclosing information related to what NQTLs there are in a plan, what factors are used to apply an NQTL, and how the plan ensures that they are applied at parity.

• The law enumerates several even more specific types of information for which the departments must provide guidance related to NQTL compliance. For example, the final rules implementing MHPAEA state that in order for an NQTL to be compliant when applied to behavioral services, there must be parity between medical/surgical and behavioral care in the “processes, strategies, evidentiary standards, or other factors used in applying” the NQTL. The Cures Act seeks more clarity and examples regarding the meaning of those terms.

• If a plan issuer or sponsor is found to have violated MHPAEA at least five times, this will trigger an audit by the departments of plan documents in order to help improve compliance. It remains to be seen how “five times” will be defined and interpreted.

• The U.S. Department of Health and Human Services (HHS) is required to produce an “action plan” to improve federal and state coordination of enforcement of MHPAEA.

• For each of the next five years, the departments must submit a report to Congress summarizing the results of all closed federal investigations completed in the past year regarding serious violations of MHPAEA. This report must have detail on how many investigations there were, what benefit classes were examined, what the investigations were about, and how the final decisions were reached.

• The Government Accountability Office (GAO) must prepare a report detailing how well insurers and plan sponsors are complying with MHPAEA. The Cures Act specifically lists NQTL compliance as something to be included in this report, along with a discussion of how well MHPAEA is being enforced.

• There is a brief clarification in the Cures Act that benefits for eating disorders (including residential treatment for eating disorders), if provided, must be provided at parity under MHPAEA.

In short, the Cures Act does not introduce new parity requirements per se, but rather seeks greater clarity and enforcement of existing rules (particularly with respect to NQTLs).

Getting ready for IRS Form 1095-C

Clark-CharlieOne of the following will be a fact when the sun sets on Sunday, February 7, 2016. Which one do you think it is?

1. The New York Jets will be NFL champions after dispatching the New York Giants in Super Bowl 50 in Santa Clara.
2. Your employees will have received Internal Revenue Service (IRS) Form 1095-C from you, which they need to complete their 2015 federal Form 1040 individual tax return.
3. Your employees will be completely knowledgeable about the information on Form 1095-C and will not confuse it with the 2015 Form W-2 you also sent them (perhaps in the same envelope).

If you picked 1, you are a wearing a Joe Namath jersey and have limited knowledge of football. If you picked 2, you are fine as long as they received it by February 1, 2016. If you picked 3, you still have enough time to make it happen if you start planning and working on it now.

Let’s review Form 1095-C, which provides employees eligible for employer-sponsored health insurance under the Patient Protection and Affordable Care Act (ACA) with information about their  options, and why an Applicable Large Employer (ALE) such as your company needs to prepare it and distribute it to employees.

The ACA mandated that ALEs must provide evidence that 70% of your employees were offered minimum essential coverage (MEC) in an employer qualified health plan (QHP) during 2015. The QHP can be self-funded by you as the employer, or you could have fully insured the plan with a health insurance provider. This task is required under IRC Section 6056. Form 1095-C (along with the companion Form 1094-C, a cover sheet a reporting employer must send the IRS) is used in determining whether an employer owes a payment under the employer shared responsibility provisions of IRC Section 4980H.

This new administrative task comes with a complete new set of instructions from the IRS, and the ALE has the choice of preparing the form using its own human resources (HR) information system or hiring a third-party administrator to do so.

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The final rules for the Mental Health Parity and Addiction Equity Act of 2008

The U.S. Departments of the Treasury, Labor, and Health and Human Services issued final regulations on November 8, 2013, implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Although interim final rules (IFR) had been in effect since 2010, the industry has been awaiting these final rules in order to gain clarity on how to comply with certain provisions of MHPAEA.

The new rules clarify or revise some aspects of the IFR that had created unusual consequences for employers and health plans. They also make several important changes to the rules regarding nonquantitative treatment limitations (NQTLs); however, a number of important elements of the IFR, such as the basic framework for testing compliance on financial requirements and quantitative treatment limitations, were left unchanged. This briefing paper authored by Steve Melek presents the key changes to the regulations codified in the final rules and discusses the implications for employers and health plans.

For an overview of the 2010 IFR, see the Milliman healthcare reform briefing paper, “Implementing parity: Investing in behavioral health.”

Many older people will be exempt from the individual mandate

The federal government recently published final regulations for the individual mandate of the Patient Protection and Affordable Care Act (ACA). This Forbes article highlights seven items people need to know about not maintaining minimum essential health coverage. The article quotes Milliman’s Paul Houchens discussing the cost of coverage many older individuals pay, which exempts them from the mandate.

Here is an excerpt:

…Paul Houchens, an analyst at Milliman, puts it this way: if you’re 55 years old, and you’re paying $7,800 a year for health insurance, you’ll be exempt from the individual mandate if your income is between 400 percent of the federal poverty level—about $46,000—and $97,500. (If your income is below $46,000, you qualify for at least a partial subsidy of your insurance costs, which, based on the way the law is written, makes the individual mandate apply to you.)

On the other hand, if you’re a 35-year-old, and you’re paying $3,600 a year for your health coverage, the mandate applies to you in nearly all cases, because $3,600 divided by 8 percent is $45,000, which is lower than 400 percent of the federal poverty level.

For more perspective on how the mandate will impact out-of-pocket premiums for bronze-level coverage in the individual market read Houchens’ paper “Measuring the strength of the individual mandate”.