It's Time to Refocus

On July 2, 2013, the Obama Administration announced that it would postpone until 2015 the implementation of two key elements of the Affordable Care Act (ACA).  These two elements pertain to the reporting requirements for large employers (50 or more full-time equivalent employees) that determine whether or not employers provide affordable, qualified health coverage to full-time employees:

• Section 6055 - the reporting by insurers, self-insuring employers, and other parties that provide health coverage
• Section 6056 - the reporting by certain employers concerning the health coverage they offer to their full-time employees.

Employers that fail to do so will be assessed a “shared responsibility” (pay or play) penalty.  The Administration’s decision to postpone these reporting requirements were dictated by the complexity and technical challenges of the reporting requirements and the Treasury Department’s failure to issue formal guidelines for these issues.   Originally, these provisions were set to be implemented on January 1, 2014.

(Note: Since the July 2nd decision to postpone, the provisions have been delayed until 2016 for small employers1 with plan years beginning before Jan. 1, 2016.2)

The postponement of the ACA provisions was generally well accepted and appreciated by large employers. The July delay, coupled with the negative publicity of the health insurance exchanges, allowed employers to further delay implementing benefit changes to conform to the law. Many employers are just starting to formulate plans to meet their desired conformity level. This means that the first six months of 2014 are going to be extremely busy in the benefit’s arena. Employers are going to want a tremendous amount of information, pricing for plan changes, contract changes, employee communication material, system updates, etc. An additional real problem is that they’re going to want the work completed and ready for open enrollment periods in the last quarter of 2014.

We strongly urge employers to begin now. Plan and make necessary or desired changes to your program as soon as possible. Even if you delay implementing the changes until closer to 2015, we recommend you plan to do so now to avoid the chaos and backlog that will occur in the last quarter of 2014. Each employer will have different needs and learning curves regarding the ACA so a six month planning, scheduling, and implementation window is realistic.   The timetable below is for your review. Take a look at it and determine where you think your company’s efforts fall on the chart.

Do keep in mind that, assuming no further delays, "Pay or Play" penalties for non-compliance start January 1, 2015. Don’t delay!  Start now!

What has your company done to comply with these imminent requirements?

1The Affordable Care Act defines a small employer as having at least one but no more than 100 employees. However, it provides states the option of defining small employers as having at least one but not more than 50 employees in plan years beginning before Jan. 1, 2016.

Generally, if you have fewer than 100 employees (using the definition for full-time equivalents) you will be purchasing coverage in the small group market.

2 Starting in 2015, employers with 50 or more full-time employees or equivalents that do not offer coverage to their full-time employees face a penalty of $2,000 times the total number of full-time employees (minus 30) if at least one full-time employee receives a premium tax credit/subsidy to purchase coverage through a government-run health insurance exchange established under the PPACA. (SHRM article dated July 3, 2013)

The following blog posting was contributed by William E. Allison, Jr., Partner, Benefits Design Group, Inc. For the purposes of this discussion, the premise assumes that employers qualify as a large employer as defined by the ACA and are subject to all the provisions and penalties associated with the Act.

On July 2, 2013, the Obama Administration announced that it would postpone the implementation of two key components of the Affordable Care Act (ACA) that were set to start at the beginning of 2014. The two provisions relate to the “shared responsibility” penalties, sometimes referred to as “play or pay” provision, and the reporting requirements necessary for the government to determine if employers provide affordable, minimum health coverage to their full-time employees. The implementation of these two points was delayed until 2015. These provisions have again been postponed until 2016 for employers with 50-99 full-time or full-time equivalent (FTE) employees. 

Prior to the decision to delay implementation employers were starting to rush to understand the provisions and to cope with the potential penalties. However, the postponement allowed employers to delay their plans and to analyze the results of the opening of the Health Insurance Marketplace. Now that the first open enrollment period has been completed and individuals are debating the success or lack of success, two things have become apparent. The Affordable Care Act will continue and 2015 is coming quickly.

Potential Employer Penalties

The IRS has been tasked by the Obama Administration with the responsibility of enforcing the provisions of the act and to enforce the penalties and fines generated by the ACA. It’s estimated that these penalties/fines could amount to $69 Billion. It’s been reported that the IRS is hiring thousands of new agents to help enforce these provisions.

Large employers potentially face specific non-compliance penalties as the result of the Act from several areas:

• Health Coverage
  
  • Penalties assessed for the failure of a large employer to offer a health plan that provides minimum essential coverage (MEC)
  • Penalties assessed for the failure of a large employer to offer a health plan that is both affordable and offers minimum value health coverage (MVC)
• Reporting
• Failure of large employers to properly comply with the vast number of reports and guidelines of the Act to both the government and employees on a timely and accurate basis

Health Coverage

MEC Penalty: The ACA requires that employers offer a MEC health plan to 95 percent or more[1] of its FTE employees or be subject to a penalty of $2,000 per FTE employee, less 30. This can be a very substantial penalty to an employer. For example, if an employer has 1,000 FTE employees, the penalty would be $1,940,000 ($2,000 x 970[2]). 

Affordable/Minimum Value Penalty: Large employers that provide MEC plans must also offer a health plan that is both affordable and offers minimum value or be subject to a fine.  In order to meet these provisions,

• The employee premium contribution for single coverage cannot exceed 9.5 percent of the employee’s annual income and
• The employer plan must cover at least 60 percent of healthcare expenses.

penalty for each employee receiving a subsidy.

Reporting and Guidelines

The ACA has a number of reports and notices that need to be sent to either the government and/or employees on a timely basis in order to avoid non-compliance penalties. Some reporting is already required and other reporting starts in 2016 for 2015 calendar year plans. As mentioned earlier, the ACA is partially funded by penalties and fines leveled against companies and individuals. The penalties are not inexpensive and the IRS has built its agent force to enforce these guidelines.

On March 5, 2014, the IRS issued final regulations concerning the new reporting requirements enacted under the ACA for insurers and self-funded plans. The ACA added sections 6055 and 6056 to the Internal Revenue Code (IRC). Together, these sections outline the reporting requirements, including the processes and data to be supplied by insurers and self-funded plans. 

Section 6055 of the IRC, sometimes referred to as “Individual Mandate Reporting”, requires health insurers and employers sponsoring self-funded group health plans to annually report to the IRS and to individuals covered under a plan whether the coverage qualifies as a MEC plan under the ACA and the months in which the individual was enrolled. This report will be used to determine when the individual mandate penalty might apply and help the IRS enforce the provision.

Section 6056 requires large employers to report certain information to the IRS and to individual employees. The report to the IRS, referred to as “play-or-pay” reporting, will include information about compliance with the employers shared responsibility provisions of the ACA.  The reporting requirement to FTE employees is to assist the employee in determining whether they can claim a premium tax credit for a given month of the calendar year.

Both sections 6055 and 6056 were initially required under the ACA to correspond to the 2014 calendar year plans.  However, the effective date was delayed last year. The first report filing is due in the first quarter of 2016 which will report on coverage provided in 2015.  Please note that employers with 50-99 FTEs are not subject to the play-or-pay provisions for 2015 but employers are still subject to section 6056 reporting for 2015.  Employers with fewer than 50 FTEs do not have to comply with 6056 reporting requirements.

Tips to Compliance and Avoiding Penalties

In the above information, I have tried to outline some of the potential pitfalls and penalties to large employers due to the requirements of the Affordable Care Act. However, there are many more provisions that you need to be aware of and develop a game plan to deal with situations. 

Below are some actions you should consider in dealing with the provisions and consequences of the ACA:

• Work closely with someone who knows the provisions of the ACA and listen to their advice.  If your current broker is not up to date on the provisions, has not talked to you in great detail about the ACA, and has not made concise recommendations, seriously consider replacing him/her.  All of these items should have occurred months ago.
• Reacquaint yourself with your employees. By this I mean update all of your personnel records to obtain certain information about your employees that will allow you to make intelligent decisions about your benefit plans and contribution levels. Examples of information you need would be:
  • Marital Status
  • Number of Children
  • Does the spouse work? For whom?
  • Does the spouse's employer offer a medial plan?
  • Are family members covered under another Major medical plan?

The answers you obtain will help you formulate the provisions of your medical plans and to better understand your liabilities.  Your company may want to accept some potential liability as long as you know the extent of the liability.

• If you do not have a Benefit Administration system, you should seriously consider getting one as soon as possible. A Benefit Administration system that is fully integrated with payroll, human resources, time and attendance, insurance providers, and insurance administrators is going to be of upmost importance in dealing with the reporting and recordkeeping requirements of the ACA. A fully integrated system will be able to pull information from all of these sources quicker and more accurately than trying to accumulate information manually or with an older outdated system. 

The system will also help you manage benefit eligibility dates, enrollment deadlines, Enrollment options, open enrollment periods, full-time employee status, manage W-2 reporting and the look-back periods on variable hours employees. Many of these items are reflected in the data needs for ACA reporting.

• DO NOT consider paying the $2,000 penalty without serious consideration and great thought.  Although the penalty is probably much less costly than the cost of providing a group health insurance program, it is probably not the best idea for the company.  First of all, the $2,000 penalty is not deductible to the company and must be paid with after-tax dollars.  Secondly, Employers need to realize that there are many other less expensive solutions to this potential penalty that should be explored.

Savings Tip - The ACA indicates that the Employer needs to “offer” a MEC plan.  It does not require that an Employer pay for or even contribute to the cost of a MEC plan.  Therefore, an Employer can offer a fully contributory (employee paid) MEC plan to its full-time equivalent employees for a very nominal cost (probably an administrative and broker cost to cover the cost of doing business).  By just offering a MEC plan, employers satisfy 100% of their liability under the ACA, completely eliminating the $2,000 penalty potential.

Self-funded MEC plans are available in the marketplace at a cost less than $100 per employee per month from many sources.

• If you have a segment of FTE employees that are currently unbenefited or not eligible under a Company group health program, don’t panic because you’re worried about the potential penalties.  There are many things that can be done to help limit your liability.

Important items you need to be aware of and items that can be incorporated in the plan design to help limit your exposure are:

• You are only liable for the $3,000 penalty if your subsidy-eligible employee actually enrolls in a health exchange plan.
• If your FTE employee is eligible for Medicaid, he is not eligible for a subsidy
• If your FTE employee is married and is eligible for a qualified health plan through the spouse’s health plan, the employee is not eligible for a subsidy
• To eliminate the potential $3,000 penalty, you need to offer a plan that is both affordable and offers MVC. Remember, you only have to offer a qualified plan; employees do not have to participate.
• While presenting a plan to employees that is basically unattractive, you can also offer other non-qualified plans that may be more attractive to employees. 

Conclusion

The intent of this white paper is to present some ideas and areas of thought that will get employers thinking about the ACA and to take action.  The provisions and penalties are real and will start impacting large employers very shortly.  In fact, they are already affecting employers who may not realize it.  Do not allow that to happen to you.  Act now and get a handle on your liability and what needs to be done to limit this exposure.

BlueFinHR can help you with all of the items addressed in this piece.  If you would like to discuss any of these points or how we can assist you, please contact us.

I acknowledge that blogs are for the purpose of educating and earning your trust, but at times I think it’s alright to blow one’s own horn once in a while. After all no less a business guru than Kenneth H. Blanchard said, “If you don't blow your own horn, someone else will use it as a spittoon.” In the highly competitive world of claims clearinghouses, blowing our own horn is a must and doing it early is essential. Otherwise, the ensuing copycat cacophony will drown it out. So, here it is.

ProClaim Partners announces the release of its new integrated HETS/CLIP/DDE module as part of its automated claim processing clearinghouse software. For providers who bill Medicare this is a boon. It gives them access to Medicare eligibility and claims management tools through one portal. What is particularly noteworthy is that billers will be able to:

• Browse claims data through the ProClaim Partners proprietary web user interface
• Have a secure, high speed connection between the portal and the Centers for Medicare and Medicaid Services (CMS)
• Enjoy an integrated implementation of the new HIPAA Eligibility Transaction System (HETS) for real-time eligibility determinations
• Access Claims-in-Process (CLIP) which securely sweeps the CMS data during off hours for the latest claims activities.

The data seamlessly integrates into the ProClaim database and workflows. Together these functions will present the CMS data in a much more user-friendly, browser-based format than what billers have had through other tools. While CMS has recently delayed the sunset date for access to the older technology used for eligibility determination, the transition to HETS is still imminent. Why wait? With this new module providers don’t have to worry about a future sunset date.

Eligibility

For real-time Medicare eligibility determinations, ProClaim implements the new digital certificates (X.509), Simple Object Access Protocol (SOAP), and Multipurpose Internet Male Extension (MIME) standards within the ProClaim software service to provide web-based workflow and access to HETS. ProClaim makes instant programmatic determinations of eligibility against the CMS backend data store with minimum time and effort.

Claims in Process

The ProClaim Claims-in-Process (CLIP) function displays the current Medicare claims status, avoiding the need to navigate through the many legacy screens of the soon-to-be-phased-out eligibility inquiries into CWF using DDE for each individual claim. ProClaim’s CLIP accesses DDE during off hours to deliver programmed operator services. These services sweep the claims data off the DDE Mainframe and into the ProClaim database.

DDE Access

By design ProClaim minimizes DDE usage. However, under certain circumstances, claims administrators and billers may still need to access DDE. ProClaim provides a new and powerful DDE access solution as an integrated part of the software service. Now, providers have the choice of continuing to use 3rd party terminal emulation software for DDE access to the CMS Host or using the new ProClaim DDE access.

In summary, ProClaim Partners helps Long Term Care providers face a challenging environment converting claims to cash, especially when dealing with CMS/Medicare systems. In short, we’ve modernized and simplified the daily Medicare claims processing workload. The key benefits of using the system include:

• Real time eligibility determination
• Faster access to CWF data
• Faster access to Claims in Process
• Faster resolution of ADRs
• Reduced training time for new claims administrators
• Quicker collection of cash from claims

Tada! I have finished my horn solo. It’s nice to know that technology has caught up with the complex world of revenue cycle management.

Where are you in adopting new technologies to accelerate payments and improve cash flow?

Is it HETS or miss?

In a recent issue of CMS’s Medicare Learning Network Matters News Flash, SE 1249, CMS reaffirmed its intention to replace the Common Working File (CWF) Medicare beneficiary health insurance eligibility queries with HIPAA Eligibility Transaction System (HETS). (You can refer to last year’s blog posting for more details.) However, CMS has opted to postpone (again) the CWF access termination – this time indefinitely, but with a caveat. While this announcement will not affect the use of DDE to submit claims or to correct claims and will not impact access to beneficiary eligibility information, providers “should immediately begin transitioning to the Medicare Health Insurance Portability and Accountability Act (HIPAA) Eligibility Transaction System (HETS).”

Succinctly put, “While termination was originally scheduled for April 2014, CMS is delaying the date. CMS will provide at least 90 days advanced notice of the new termination date.”

So, in other words, transition to HETS sooner than later or you are at risk of missing out. Borrowing from our earlier blog, at some point in time you will no longer be able to check on a resident’s Medicare eligibility through the Common Working File (CWF).  HETS is replacing CWF inquiries. In a way, CMS has made life much easier for billers, because with HETS you can check a beneficiary’s eligibility in real time. CMS has simplified the eligibility checking process so that through HETS you can submit your inquiry with a real-time 270 request and receive your 271 response, a Functional Acknowledgement (999), an Interchange Acknowledgement (TA1), or a proprietary error response over a secure connection. According to the guide, “The information included in the 271 response is not intended to provide a complete representation of all benefits, but rather to address the status of eligibility (active or inactive) and patient financial responsibility for Medicare Part A and Part B.” This change will likely require you to change your billing processes.

Some of the information HETS will reveal to you will be in a format somewhat different from what you may be used to. Also, HETS will eventually be able to send Hospice information in the same format as the CWF. The HETS 270/271 Companion Guide gives you more insight into the eligibility information you will receive in the HETS 271 response.

ProClaim Partners offers direct access to HETS through its enterprise-class automated claims clearinghouse portal. Not only can you submit, monitor, and correct claims, if necessary, you can also determine a Medicare beneficiary’s eligibility. You can select exactly what information you want to see. There is no need to bounce between applications; your information regarding all things Medicare and other insurance payers is conveniently accessible in your own branded portal.

Question: If you are using HETS, how has this changed how you check a resident’s eligibility?