IRS Delays Obamacare Penalty On Small Businesses; CMS Focuses On Payments

Legislative Activity

House Committee Investigates HealthCare.gov Glitch

Following news this past Friday that about 800,000 customers of HealthCare.gov received incorrect tax forms, the House Committee on Oversight and Government Reform will hold a hearing on the matter on Thursday. Customers involved in the glitch will likely have to wait weeks to receive new forms to refile their taxes. This latest problem is one in a string of issues that have faced HealthCare.gov since its inception. GOP members of Congress will likely utilize the hearing to air their grievances with the health care reform law generally, as well.

Burwell To Appear Before House Committees

Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell makes the rounds on the House side of the Capitol this week to testify on the President’s FY 2016 Budget Proposal. On Wednesday, Secretary Burwell will appear before the House Committee on Appropriations. On Thursday, she is scheduled to testify before the House Committee on Energy and Commerce.

This Week’s Hearings:

• Wednesday, February 25: The House Committee on Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies will hold a hearing titled “Department of Health and Human Services Budget.” Secretary Burwell will testify.

• Thursday, February 26: The House Committee on Oversight and Government Reform will hold a hearing titled “From Health Care Enrollment to Tax Filing: A PPACA Update.”

• Thursday, February 26: The House Committee on Energy and Commerce Subcommittee on Health will hold a hearing titled “Examining the FY 2016 HHS Budget.” Secretary Burwell will testify.

• Thursday, February 26: The House Committee on Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies will hold a hearing titled “The Vital Responsibilities of Serving the Nation’s Aging and Disabled Communities.”

• Thursday, February 26: The Senate Committee on Health, Education, Labor, and Pensions (HELP) will hold a hearing titled “Medical and Public Health Preparedness and Response: Are We Ready for Future Threats?”

Regulatory Activity

IRS Delays ACA Penalty On Small Businesses

On Wednesday, February 18, the Internal Revenue Service (IRS) issued a notice titled “Guidance on the Application of Code § 4980D to Certain Types of Health Coverage Reimbursement Arrangements.” The notice announced that IRS would grant “limited transition relief” to small business employers who offer “employer payment plans” – group health plans under which an employer reimburses workers for individual insurance premiums.

In 2013, IRS announced that employer payment plans do not comply with Affordable Care Act (ACA) market reforms and may subject employers to the excise tax under IRS Code § 4980D. This week, however, IRS recognized that some small businesses may need additional time to obtain group health coverage. The notice states that although the Small Business Health Options Program (SHOP) Marketplace “addresses many of the concerns of small employers,” the market is still in transition and eligible employers may need additional time to implement changes. Thus, IRS announced that it will not assert the §4980D excise tax on small employers until after June 30, 2015.

Sen. Chuck Grassley (R-IA) and Rep. Charles Boustany (R-LA) both expressed support for a permanent delay of the tax on small employers. Last month in the Senate Committee on Finance, Sen. Grassley offered an amendment that would allow small business owners to offer employer payment plans without penalty and on a pre-tax basis.

CMS Sets Benefit And Payment Parameters For 2016

On Friday, February 20, the Centers for Medicare and Medicaid Services (CMS) released notice of a final rule titled “Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2016.” This rule establishes payment parameters and new standards for issuers and marketplaces to improve the quality, cost, and accessibility of coverage to consumers.

Additionally, the rule sets the 2016 open enrollment period for non-grandfathered plans to November 1, 2015 through January 31, 2016. CMS previously proposed that that beginning with the 2016 benefit year, open enrollment would commence on October 1 and end of December 15 of the prior year. This rule explains that delaying the open enrollment period to November will “provide additional time to meet the filing deadlines for 2016 rates.”

CMS Proposes 2016 Payment Rates For Medicare Health And Drug Plans

On Friday, February 20, CMS released proposed changes for Medicare Advantage (MA) and Part D Prescription Drug Programs for the coming year. The agency has proposed increasing MA rates by an average of 1.05 percent for 2016, though individual plan rates will vary. Additionally, CMS included proposals to change the star quality ratings system and fully implement a new risk adjustment model.

In accordance with the Medicare Prescription Drug, Improvement, and Modernization Act of 2003’s timetable, CMS will announce the MA capitation rates and final policies on April 6, 2015. Public comments on the proposals must be submitted by March 6.

HHS Deputy Secretary Stepping Down

At the end of March, HHS Deputy Secretary Bill Corr will leave the agency. Corr was nominated by President Obama in 2008. Secretary Burwell announced his departure in an e-mail on Friday, February 20.