President Trump Signs the “Securing our Agriculture and Food Act”

President Trump recently signed the “Securing our Agriculture and Food Act” (H.R. 1238). The bill amends the Homeland Security Act of 2002 to direct the Assistant Secretary for Health Affairs for the Department of Homeland Security (DHS) to carry out a program to coordinate DHS efforts related to defending the food, agriculture and veterinary systems of the United States against terrorism and other high-consequence events that pose a high risk to homeland security.

According to Michigan Farm News, the law will:

  • Provide oversight and management of DHS’s responsibilities pursuant to Homeland Security Presidential Directive 9 – Defense of United States Agriculture and Food;
  • Provide oversight and integration of DHS activities related to veterinary public health, food defense and agricultural security;
  • Lead DHS policy initiatives related to food, animal and agricultural incidents and to overall domestic preparedness for, and collective response to, agricultural terrorism;
  • Coordinate with other DHS components on activities related to food and agriculture security and screening procedures for domestic and imported products; and
  • Coordinate with appropriate federal departments and agencies.
This post was written by Aaron M. Phelps of  Varnum LLP© 2017
For more legal analysis go to The National Law Review

Potential Obstacle To Effective Internal Compliance Reporting System? The False Claims Act

Yes, you read the title of this post correctly.  Under the False Claims Act, a whistleblower is not required to report compliance concerns internally through a company’s internal reporting system before filing a “qui tam” court action.  Indeed, the False Claims Act — with its potential “bounty” of 15 to 30 percent of the government’s recovery — may actually encourage employees to file suit in the first instance, to qualify as an “original source,” and bypass the organization’s reporting system altogether, thereby frustrating a key component of an effective compliance program.  Whistleblower organizations have recently gone so far as to discourage individuals employed by health care providers from bringing compliance concerns directly to their employer so that they can get a share of the government’s recovery.

A provider or other entity participating in the Medicare or Medicaid programs, however, can mitigate that risk through, among other things, employee training and disciplinary policies encouraging good-faith reporting and the promotion of a culture of compliance, including setting the right “tone from the top.”

Internal Reporting System.  The cornerstone of any effective compliance program is developing and implementing a robust internal reporting system that employees can use to raise any compliance concerns on an anonymous basis.  Among other things, when compliance concerns are brought to the attention of the organization’s compliance personnel, the organization can investigate the issue and take appropriate steps to prevent or remediate any continued potential misconduct.  Likewise, having such a system in place may serve as a defense to liability under the False Claims Act.  Even if improper billing is found to have taken place, evidence that the organization has an effective, anonymous internal compliance reporting system may show that the improprieties were not the result of deliberate indifference or reckless disregard for such practices.

False Claims Act.  Plainly, the risk of treble damages and per claim penalties under the False Claims Act is a powerful incentive for a health care organization to implement an effective compliance program.  What is more, the provision for whistleblower awards under the False Claims Act can be an effective tool to aid the government in detecting and preventing overpayments by Medicare and Medicaid to fraudulent operators and other bad actors.  By allowing whistleblowers to file relator actions under seal and potentially share in any of the government’s recovery — as well as to seek damages for any retaliatory employment action — the False Claims incentivizes employees in the health care industry to come forward with information about fraudulent billing, without the fear of reprisal.

The Tension Between The Two.  At the same time, a whistleblower’s potential recovery can operate as a countervailing disincentive for an employee to report compliance concerns internally.  That is because under the False Claims Act, a qui tam relator is entitled to a “bounty” only if the individual is the “original source” of information to the government about the improper billing practices that are the subject of the relator’s action.  On the other hand, if an employee does dutifully report a compliance concern internally through the organization’s reporting system, and the organization itself reports any overpayments to the government or remediates the misconduct itself, the whistleblower may be unable to sue and recover any “bounty.”  As noted earlier, this point is not lost on the relator bar.

Overcoming The Tension.  How does a provider overcome the entreaties of the relator bar, along with the incentives under the False Claims Act whistleblower provisions, to convince employees with compliance concerns to avail themselves of the company’s internal reporting system?  At the outset, the reporting system may be both effective and credible to instill  confidence in the system so that employees will take full advantage of it – that is, the organization must deliver on its promise of anonymity and protection of good-faith reporting and must follow through on a timely basis with a thorough investigation and meaningful corrective action, if indicated.  Further, a robust reporting system, standing alone, will not be effective unless all other elements of an organization’s compliance program are working effectively as well, starting with a “culture of compliance,” reinforced by the executive team and management, and continuing with inservice compliance training, underscoring the importance of timely reporting and the anonymity and other protections afforded to reporting employees.

Likewise, the organization must have personnel and disciplinary policies that reward good-faith reporting and punish compliance lapses, both for engaging in unlawful conduct as well as for failing to report it.  That said, taking any disciplinary action against an employee who files suit as a relator, without ever having reported the compliance concerns in breach of the employee’s duties, is fraught with the risk that the termination or other action will be challenged as retaliation for filing the False Claims Act action, and that the cited ground — failing to report   — is allegedly merely pretextual.

However, with the proper messaging and training, coupled with a robust anonymous reporting system, the company can give its employees good reason to “do the right thing” and report compliance concerns to the company in the first instance, despite the lure of a False Claims Act bounty.

This post was written byBrian T. McGovern of Cadwalader, Wickersham & Taft LLP.
For more legal analysis check out the National Law Review.

US Attorney’s Office in Chicago Announces Creation of Health Care Fraud Unit

Acting US Attorney Joel Levin says the new dedicated unit aims to bring “even greater focus, efficiency, and impact to our efforts in this important area.”

The US Attorney’s Office for the Northern District of Illinois recently announced the creation of a Health Care Fraud Unit—a team of five assistant US attorneys devoted to prosecuting all types of healthcare fraud cases, including fraudulent billing schemes and diversion of controlled substances.

The announcement came just days after the largest US Department of Justice national healthcare fraud enforcement “takedown” action against 412 defendants across 41 federal districts for the alleged participation in schemes involving over $1 billion in fraudulent healthcare billing. Fifteen individuals, including two Chicago-area licensed physicians, are facing federal criminal charges and potential Office of Inspector General (OIG) exclusion as a result of this action.

Nationwide, US Attorney offices have a major role in healthcare fraud enforcement. In Fiscal Year 2016 alone, US Attorney offices opened 975 new criminal healthcare fraud investigations and 930 new civil healthcare fraud investigations.[1] 

While the US Attorney’s Office for the Northern District of Illinois has a long history of prosecuting healthcare fraud cases, the creation of a dedicated unit within the office may have a number of quantifiable effects, including the following:

Rise in Criminal Investigations and Prosecutions. The dedicated unit, comprised of criminal prosecutors, will focus on the criminal prosecution of entities and individuals when the alleged healthcare fraud rises to the level of criminal culpability. As such, there likely will be a rise in investigative activity that includes attempted interviews of potential targets, subjects, or witnesses by government agents; the issuance of grand jury subpoenas; and the execution of search warrants.

In addition, the criminal prosecutors undoubtedly will work closely with government attorneys assigned to the civil division and—to the extent permitted in accordance with grand jury secrecy rules—share certain information with civil division attorneys.

Rise in Enforcement Investigations and Actions. With increased focus, resources, and the sharing of information obtained from criminal investigations, there also may be a rise in the number of civil investigative demands issued to companies in the healthcare industry that are suspected of fraud, waste, and abuse. The US Attorney’s Office for the Northern District of Illinois may become more proactive in its efforts—alongside the OIG—to increase the collection of civil penalties against healthcare organizations and executives.

Rise in Qui Tam Suits. With a dedicated Health Care Fraud Unit, the Northern District of Illinois may become a more attractive venue for whistleblowers seeking to recover under the False Claims Act for alleged fraud, waste, and abuse.

The new Health Care Fraud Unit will operate within the criminal division of the US Attorney’s Office for the Northern District of Illinois. Assistant US Attorney Heather McShain will lead the unit, and Assistant US Attorney Stephen Chahn Lee will serve as senior counsel.

For more Health Care news go to the National Law Review.


[1] See The Department of Health and Human Services and The Department of Justice Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2016.

This post was written by Tinos Diamantatos and  Eric W. Sitarchuk of Morgan, Lewis & Bockius LLP.

HSAs and the ERISA Fiduciary Rule: What Employers Should Know

With the fate of health care reform—and its repeal and/or replacement—up for grabs in Washington, there is a health-related compliance item outside of health care reform that should be on employers’ radars: health savings accounts (HSAs) and the new Employee Retirement Income Security Act (ERISA) fiduciary rule.

We have previously kept you apprised concerning the evolving saga of the ERISA fiduciary rule, the Best Interest Contract Exemption (BICE), and other related exemptions in a series of posts. As you likely know, post-inauguration, this hotly-debated and controversial rule and its exemptions largely became effective June 9, 2017 (with a transition period extending through year-end).

At this stage, most employers and plan sponsors have engaged in dialogue with their retirement plan investment advisors and recordkeepers to understand what is being done to comply with the rule. However, employers offering HSAs, the custodial accounts that can be paired with high deductible health plans (HDHPs) to gain significant tax benefits, should not turn a blind eye to this rule.

Discussing the ERISA fiduciary rule in context of HSAs may seem surprising or bizarre given that HSAs are generally not plans governed by ERISA. These accounts are employee-owned (no “use it or lose it” applies) and not employer-sponsored. That said, the Department of Labor has taken the position that an HSA should be treated like an Individual Retirement Account for purposes of the ERISA fiduciary rule, given that its investment accounts may be used as savings accounts for retiree health care expenses. Depending upon the level of involvement an employer has with the HAS, including whether the employer offers or actively facilitates the provision of investment recommendations/advice on the HSA investments or receives a benefit (including revenue sharing) from an HSA vendor or investment, ERISA’s expanded fiduciary rule could come into effect.

At a minimum, an employer who offers a HDHP and facilitates HSA contributions should consider whether its involvement could trigger ERISA fiduciary status. This undertaking could involve reviewing HSA vendor agreements and related practices touching investments. Even if it is determined that the employer is unlikely to be a fiduciary for its HSA plan, an employer may still benefit from implementing certain features of ERISA best practices to mitigate risk for their organization and employees during this transition time period.

For more legal analysis, go to the National Law Review.

This post was written by Carrie E. Byrnes and Jorge M. Leon of Michael Best & Friedrich LLP. 

Senate Unveils Changes to the Better Care Reconciliation Act of 2017: Significant Changes, but Uncertainty Remains

On July 13th, the Senate released the updated version of the Better Care Reconciliation Act (BCRA) of 2017. While the new version makes some significant changes to the original Senate proposal, the major components of the original bill remain intact.

Will the Changes Result in Additional Support?

Securing the required votes to pass the revised BCRA will be very difficult, with two GOP Senators, Rand Paul (R-KY) and Susan Collins (R-ME) announcing soon after its release they cannot even support beginning debate on the measure, a key procedural Senate vote. Senator Paul believes the bill doesn’t go far enough to repeal the Affordable Care Act (ACA) while Collins believes the Medicaid cuts are far too deep.  Four other Republican Senators have publicly said they remain undecided and many moderates in the Caucus have not announced their position.

Currently, Senate Republican Leader Mitch McConnell (R-KY) plans to begin the procedural process to allow debate on the bill as early as next week, following an anticipated Congressional Budget Office score Monday of the new language and the possible addition of an amendment by Senator Ted Cruz (R-TX).  In an effort to appease more conservative Senators, the Cruz amendment would allow non-ACA compliant plans to exist alongside ACA compliant plans in the exchanges. However, that causes angst for many moderates who are concerned about the potential loss of assurances such as coverage for pre-existing conditions.  Similar to the dynamic that unfolded in the House, moderates and conservatives in the Senate are deeply divided and appeasing one group tends to aggravate the other.

The following are highlights of the changes in the most recent version of the BCRA:

Changes to the Medicaid Provisions

  • Allows CMS to increase federal contributions to states above the limits imposed by per capita caps or Medicaid block grant amounts, if the state, or a location within the state, has a declared public health emergency.
  • Modifies requirements for Medicaid block grants to allow them to be applied to the Medicaid expansion population, and to prohibit states from using unspent block grant funds for non-Medicaid services.
  • Would retain an ACA requirement for states to cover children up to age 19 with incomes below 133% of the federal poverty level.
  • Allows states to receive relief from reductions in allowable disproportionate share hospital (DSH) payments during the following quarter in 2018 or 2019 if the state terminates its Medicaid expansion, and modifies the formula by which non-expansion states can receive additional DSH allocations.
  • Would allow seniors and the disabled to have Medicaid cover services provided during the three months prior to enrollment, as in current law.  Other Medicaid beneficiaries would be limited to retroactive coverage during the month of enrollment.
  • Would allow states to apply for an aggregate of up to $8 billion in additional federally funded payments for home and community based services (HCBS) providers through a demonstration project.  The 15 states with the lowest density are given priority in applying for these demonstration project funds.
  • Would expand federal support for services provided to members of an Indian tribe by enrolled Medicaid providers that are not Indian Health Services facilities.

Insurance-Related Changes

  • Consumers will be permitted to use HSA funds to pay health insurance premiums for the first time.  This will allow consumers to use pre-tax dollars to pay for health insurance, and could reduce the financial incentives that have long supported employer-provided health insurance coverage.
  • The so-called “Cruz Amendment” has been included in the revised BCRA.  This amendment would permit insurers to sell individual health insurance policies that do not comply with the market reforms in the ACA, so long as the insurer also sells an ACA-compliant policy in the same state.
    • The non-ACA-compliant policies would be exempt from a number of popular market reforms, including:
      • Actuarial value requirements
      • Essential health benefits coverage
      • Limits on out-of-pocket expenses
      • Community rating
      • Guaranteed issuance of policies
      • Prohibition of pre-existing condition exclusions
      • Limitations on coverage waiting periods
      • No-copay preventive care coverage
      • Medical Loss Ratio requirements
    • Coverage under a non-ACA-compliant policy does not constitute creditable coverage, so persons moving from non-compliant policies to ACA-compliant policies will be subject to a 6-month waiting period.
    • Non-ACA-compliant policies are not included in the ACA’s risk adjustment program (42 U.S.C. §18063).

Other Notable Items

  • Substance use disorder treatment and recovery service funding is increased from $2 billion for one year to approximately $5 billion per year from 2018 through 2026.
  • Purchasers in the individual market will be able to buy catastrophic/lower-premium plans and still be eligible for tax credits.
  • While most of the Affordable Care Act tax repeals remain, this version does not repeal the net investment income tax, additional Medicare tax, and the limit on insurance company deductions for executive compensation.

As we continue to monitor the Senate debate on the BCRA, we will provide updates on the status of the Senate repeal and replace efforts.

This post was also written Nick Welle, Anil Shankar , Jennifer F. Walsh, Morgan J. Tilleman Marian E. Dodson of  Foley & Lardner LLP,

Better Care Reconciliation Act – Key Takeaways for Employers and Plan Sponsors

On June 22, 2017, the Senate released its much anticipated health care reform legislation – the Better Care Reconciliation Act (“BCRA”) (linked to amended version released June 26, 2017). In many respects the BCRA is similar to the House of Representatives’ American Health Care Act (which was described in our March 9, 2017 and May 4, 2017 blog entries). However, the BCRA differs from the AHCA in several important respects.

As of the date of this blog entry, the BCRA does not have sufficient support to pass a vote in the Senate and House GOP members have indicated that they would reject the bill. Therefore, Senate leadership has delayed a vote on the BCRA until after the July 4th holiday recess.  Nevertheless, as we provided for the AHCA, below are key takeaways for employers and plan sponsors and a few comparisons between the AHCA and BCRA.  A more detailed comparison between key provisions of the Affordable Care Act (“ACA”), the AHCA, and the BCRA is provided at the end of this blog.

1. Individual and Employer Mandates. Like the AHCA, the BCRA would essentially repeal the ACA’s individual and employer mandates effective after December 31, 2015. Both bills do this by “zeroing-out” the penalties for not having minimum essential coverage (individual mandate) or for not offering adequate minimum essential coverage to full-time employees (employer mandate). Outside of the effective repeal of the employer mandate, the AHCA’s and BCRA’s impact on group health plans appears to be minimal. However, if either the AHCA’s 30% surcharge or the BCRA’s 6-month waiting period becomes law, it is likely that plan sponsors will be required to provide notices similar to the certificates of creditable coverage required in the pre-ACA era

In the absence of an individual mandate, the AHCA and BCRA have different methods of incentivizing individuals to maintain continuous health coverage. Under the AHCA method, insurance carriers would be required to charge a 30% premium surcharge to those who fail to have continuous coverage (i.e., a break in coverage of 63 days or more would trigger the surcharge). The BCRA would require insurance carriers to apply a 6-month blanket coverage waiting period to any individual with a 63-day or more break in continuous coverage during the prior 12 months.

Outside of the effective repeal of the employer mandate, the AHCA’s and BCRA’s impact on group health plans appears to be minimal. However, if either the AHCA’s 30% surcharge or the BCRA’s 6-month waiting period becomes law, it is likely that plan sponsors will be required to provide notices similar to the certificates of creditable coverage required in the pre-ACA era.

2. BCRA Retains ACA’s Subsidy and Tax Credit Program. The Senate appears to have rejected AHCA’s elimination of cost-sharing subsidies and premium tax credits available only for coverage purchased on the Marketplace. The AHCA would have replaced the ACA’s program with an advance tax credit program available to individuals purchasing individual market insurance (not just Marketplace coverage) or enrolled in unsubsidized COBRA coverage. Under the AHCA, the amount of the tax credit would be based on age and would be available only to individuals with income less than $75,000 (individual) or $150,000 (jointly with a spouse).

The BCRA, however, maintains the ACA’s cost-sharing subsidies and premium tax credit program, albeit with some modifications. Under the BCRA, cost-sharing subsidies and premium assistance would be determined based on age, with younger individuals getting more assistance than older individuals, and income. Household income in excess of 350% of the federal poverty line would disqualify an individual from cost-sharing subsidies and premium assistance, in contrast to the ACA’s 400% threshold. Additionally, under the BCRA, the premium tax credit would be based on a benchmark plan that pays 58% of the cost of covered services (in contrast to the ACA’s use of the second-lowest cost silver (70%) plan). This lower value of coverage effectively reduces the amount of premium assistance an individual can get.

3. Employer Reporting Obligations to Continue. Although the individual and employer mandates would be repealed, it is likely that the ACA reporting obligations (Forms 1094-B/C and 1095-B/C) would remain in place, at least in some forms. As noted above, the BCRA retains the ACA’s cost-sharing subsidies and premium assistance, the availability of which is conditioned on an individual not being enrolled in employer-sponsored coverage. Therefore, the IRS would likely still need to obtain coverage information from employers.

4. Cadillac Tax Repealed Subject to Reinstatement. Like the AHCA, the BCRA effectively delays the so-called Cadillac Tax until 2025. The Cadillac Tax was originally slated to be effective in 2018, but it was delayed until 2020 in prior budget legislation.

5. Most ACA-Related Taxes Repealed. The BCRA would also repeal most of the tax reforms established under the ACA. Most relevant to employers and plan sponsors would be the elimination of the contribution limit on health flexible spending accounts (HFSAs), the ability reimburse over-the-counter costs under HFSAs and health savings accounts (HSAs), the increase in HSA contribution limits, and elimination of the Medicare surcharge applied to high-earners.

6. Popular ACA Reforms Remain. As was the case under the AHCA, the BCRA would keep many popular ACA market reforms and patient protections in place. These include:

• The requirement to cover dependent children until age 26;

• The prohibition on waiting periods in excess of 90 days;

• The requirement for individual and small group plans to cover essential health benefits;

• The prohibition against lifetime or annual dollar limits on essential health benefits;

• The annual cap on out-of-pocket expenditures on essential health benefits;

• Uniform coverage of emergency room services for in-network and out-of-network visits;

• Required first-dollar coverage of preventive health services;

• The prohibition of preexisting condition exclusions;

• Enhanced claims and appeals provisions; and

• Provider nondiscrimination.

7. ERISA Preemption for “Small Business Health Plans.” The BCRA would add a new Part 8 to ERISA for “small business health plans.” Currently, some states have enacted insurance laws that prohibit small employers from risk-pooling their employees in a single, large group insurance plan. New Part 8 of ERISA would preempt these state laws and allow the formation of “small business health plans,” which, generally, are plans sponsored by an association on behalf of its employer members. Small business health plans must meet certain organizational and financial control requirements and apply to the Department of Labor for certification.

8. Employee Tax Exclusion Remains Intact. Like the AHCA, the BCRA does not currently include a limitation on the employee tax exclusion that would result in imputed taxes to employees if the value of health coverage exceeds a certain amount. This absence, however, does not necessarily mean that such a limit will not eventually be imposed. It is possible that Congress will consider limiting tax incentives for both retirement and health and welfare plans when broader tax reform is considered.

9. HFSA/HSA Expansion. As mentioned above, the BCRA includes the same modifications to the HFSA and HSA rules as the AHCA. The BCRA would remove the annual contribution cap on HFSAs. Additionally, HFSAs and HSAs would now be able to reimburse on a non-taxable basis over-the-counter medication without a prescription. The annual contribution limit to HSAs would be equal to the out-of-pocket statutory maximum for high-deductible health plans. Spouses would both be able to make catch-up contributions to the same HSA.

It is still too early to tell whether the BCRA will fare better than the AHCA. In any event, we will continue to monitor legislative efforts and will provide updates as substantive developments occur.

Health Care Reform Legislation Comparison

Shared Responsibility ACA AHCA

BCRA

Employer Mandate Applicable large employers (those with 50 or more full-time employees and equivalents) face penalties if minimum essential coverage not offered to 95% of full-time employees (and dependents) or if coverage is not minimum value or affordable. No penalties for failing to provide adequate coverage. No penalties for failing to provide adequate coverage.
Individual Mandate Individuals subject to tax if not enrolled in minimum essential coverage unless exception applies. No tax for failing to enroll in minimum essential coverage. However, effective for plan years beginning in 2019, a 30% premium surcharge would be charged by insurance carriers to an individual who purchases insurance coverage following a lapse in coverage of 63 days or more. No tax for failing to enroll in minimum essential coverage. However, individuals who have a lapse in coverage of 63 or more days in the prior 12-month period will be subject to a 6-month coverage waiting period.
Reporting IRC §§ 6055 and 6056 require reporting from issuers of minimum essential coverage and applicable large employers. No change to ACA reporting requirements under IRC §§ 6055 and 6056. Additional Form W-2 reporting required. No change to ACA reporting requirements under IRC §§ 6055 and 6056.

Market Reforms

ACA AHCA

BCRA

Dependent Coverage If dependent children covered, coverage must continue until age 26. No change. No change.
Essential Health Benefits Small group and individual market plans must cover 10 essential health benefit categories, as defined by benchmark plan established by state. No change, but states can apply for waiver to establish separate definition of essential health benefit. No change, subject to relaxed waiver rights under ACA § 1332 (State Innovation Waivers).
Annual/Lifetime Dollar Limits No annual or lifetime dollar limits can be applied to essential health benefits. No change, but states can apply for waiver to establish separate definition of essential health benefit. No change, subject to relaxed waiver rights under ACA § 1332 (State Innovation Waivers).
Out-of-Pocket Maximums Out-of-pocket maximum applied to essential health benefits. No change, but states can apply for waiver to establish separate definition of essential health benefit. No change, subject to relaxed waiver rights under ACA § 1332 (State Innovation Waivers).
Preexisting Condition Exclusions Preexisting condition exclusions prohibited. No change, but insurance providers must apply a 30% premium surcharge if individual has a gap in coverage of 63 days or more. No change, but 6-month waiting period applied if individual has a gap in coverage of 63 days or more.
Preventive Care Preventive care covered without cost-sharing. No change. No change.
Emergency Coverage Emergency room visit at an out-of-network hospital must be covered at in-network rate. No change. No change.
Rescissions Coverage cannot be retroactively terminated except in cases of fraud or misrepresentation or for premium nonpayment. No change. No change.
Summaries of Benefits and Coverage Short (8-page) disclosure of plan terms and glossary distributed on an annual basis. No change. No change.
Enhanced Claims Procedures Claims procedures now require additional claims procedures and voluntary external review. No change. No change.
Provider Nondiscrimination Cannot discriminate against a health care provider acting pursuant to state license. No change. No change.
Section 105(h) Nondiscrimination Fully-insured employer-sponsored health plans cannot discriminate in favor of highly compensated individuals (not yet effective). No change. No change.
Medical Loss Ratio Individual and small group plans must spend 80% of premium income on claims and quality improvement. Large group insurance plans must spend 85% of premium income on claims and quality improvement. No change. Applicable ratio determined by the state (effective for plan years beginning on or after January 1, 2019).

Tax Reforms

ACA AHCA

BCRA

Cadillac Tax 40% excise tax applied to cost of group health coverage exceeding threshold (effective January 1, 2020). Delayed until January 1, 2025. Repealed effective December 31, 2019, but to be reinstated effective January 1, 2025,
Small Business Tax Credit Tax credit for premiums paid toward group health coverage available to small businesses. Not available for plans that cover abortion for plan years beginning on or after January 1, 2017; repealed for plan years beginning on or after January 1, 2020. Same as AHCA.
Health FSA Limit Maximum contribution to health FSA set at $2,500 (subject to annual increases for inflation). Repealed effective January 1, 2017. Repealed effective January 1, 2018.
HSA Distribution Penalty Penalty for HSA distributions used for non-qualifying medical expenses increased to 20%. Repealed effective January 1, 2017. Penalty would go back to 10% for HSAs and 15% for Archer MSAs. Same as AHCA.
HSA Contribution Limits No change. Increased to match statutory out-of-pocket maximum for high-deductible health plans (effective January 1, 2018). Same as AHCA.
FSA/HSA Over-the-Counter Health FSAs and HSAs cannot reimburse over-the-counter products without a prescription (excluding purchase of insulin). Repealed effective January 1, 2017. Same as AHCA.
Medical Expense Deduction Itemized deduction under IRC § 223 available for medical expenses in excess of 10% of adjusted gross income. Repealed effective January 1, 2017. Threshold would return to 7.5% adjusted gross income. Same as AHCA.
Medicare Surcharge Additional 0.9% hospital insurance (Medicare) tax applied to high-earners. Repealed effective January 1, 2023. Same as AHCA.
Medicare Investment Income Tax Medicare tax of 3.8% applied to unearned income. Repealed effective January 1, 2017. Same as AHCA.
Health Insurance Tax Tax applied to insurance carriers based on premiums collected. Repealed effective January 1, 2017. Repealed effective January 1, 2018.
Health Insurer Compensation Deduction No compensation deduction available to certain health insurance providers for compensation in excess of $500,000 paid to applicable individuals. Repealed effective January 1, 2017. Same as AHCA.
Medical Device Tax Excise tax of 2.3% imposed on manufacturer, producers and importers of medical devices. Repealed effective January 1, 2017. Repealed effective January 1, 2018.
Branded Prescription Drug Fee Manufacturers and importers of branded prescription drugs are subject to an annual fee. Repealed effective January 1, 2017. Repealed effective January 1, 2018.
Retiree Drug Subsidy Amount received under Retiree Drug Subsidy must be taken into consideration when determining prescription drug cost business deduction. Repealed effective January 1, 2017. Same as AHCA.

Marketplace

ACA AHCA

BCRA

Marketplace Structure

Individuals can purchase insurance coverage on risk-pooled Marketplace established by Federal or state government.   Individuals purchasing coverage on the Marketplace may be eligible for cost-sharing subsidies and premium assistance.  Plans available on Marketplace (“qualified health plans”) must meet certain cost-sharing and actuarial value levels (i.e., gold, silver, bronze plans).  Qualified health plans must cover essential health benefits.

Effective January 1, 2020, cost-sharing subsidies and premium assistance are repealed. Additionally, Marketplace plans are no longer required to meet cost-sharing and actuarial value requirements.  Limited-scope, or catastrophic plans would be available.

No structural changes from ACA.   Marketplaces, including cost-sharing subsidies and premium assistance, remain intact with modifications.

Cost-Sharing Subsidies and Premium Assistance Available to individuals with household income between 100% and 400% of federal poverty line. Age is not a factor in amount of subsidies or assistance available.

For plan years beginning in 2018 and 2019, basic structure remains the same except that age and income are factors in the amount of cost-sharing subsidies and premium assistance that is available.  No subsidies or assistance is available for qualified health plans that cover abortion.

Cost-sharing subsidies and premium assistance repealed for plan years beginning in 2020. Instead, advance tax credit available based solely on age.

Available to individuals with household income between 100% and 350% of federal poverty line. Age is a factor in amount of subsidies or assistance available.
Premium Rate Setting Small group and individual insurance markets may vary rates based only on certain factors, including individual or family coverage, community rating, age (3:1 ratio) and tobacco use.

Age ratio increases to 5:1 beginning January 1, 2018. States may apply to waive ACA requirements and base premiums on health factors.

Age ratio increases to 5:1 beginning January 1, 2018. State Innovation Waiver Program (ACA § 1332) requirements relaxed, giving states ability to waive many of the ACA’s market reforms.

This post was written by Damian A. Meyers and Steven D. Weinstein of Proskauer Rose LLP.

The Healthcare Executive’s Simple Guide to FMV For Attorneys, C-Suite, Compliance, and Physicians

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This guide will help healthcare executives navigate nearly every type of FMV opinion for transactions and compensation agreements. Readers will be able to quickly access pertinent material to help better understand and ensure a sound FMV analysis.

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• Current regulatory environment and guidance behind FMV
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