Recently, HHS Office of Civil Rights (OCR) announced that it has entered into settlement agreements with two entities following enforcement actions, both arising from stolen laptops that were not encrypted in accordance with the Security Rule.

According to HHS, an unencrypted laptop was stolen from a physical therapy center in Springfield, Missouri.  The center was part of a larger health system, Concentra Health Services.  Through conducting required HIPAA risk analyses, Concentra had previously recognized that the lack of encryption on its devices posed a security risk.  However, HHS found that Concentra’s efforts to address this risk were “incomplete and inconsistent over time.”  Concentra has agreed to pay over $1.7 million to settle potential violations, as well as to submit a corrective action plan.  This significant monetary penalty suggests HHS will not look favorably upon violations of the Security Rule that the covered entity has documented but not taken reasonable efforts to correct.
Continue Reading Two HIPAA Settlements Follow Stolen Laptops

Employers should be aware that the Department of Human Services (“HHS”) is stepping up its enforcement of requirements for covered entities, such as group health plans, to adopt and implement policies and procedures for protecting and securing protected health information in accordance with the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).  As our

By now, employers who sponsor self-insured medical plans are familiar with the fees they must pay to fund Patient-Centered Outcomes Research (“PCORI”) and the Transitional Reinsurance Program. This post describes a detail that can have a significant effect on the amount that each sponsor must pay.

Both fees are calculated as a dollar amount per covered life.  The implementing regulations describe three ways to determine the number of covered lives:

  1. Actual count (averaging), where you count the number of covered lives on each day of a period (a year for the PCORI fee and 9 months for the Reinsurance fee), and then divide by the number of days;
  2. Snapshot, where you count the number of covered lives on one or more days per calendar quarter and then divide by the number of days; and
  3. Form 5500, where the number of covered lives is based on the number of participants reported on the plan’s Form 5500.

There are minor differences in the calculations for the PCORI fee and the Reinsurance fee.  Those differences and other details are not discussed in this post.

Whereas the actual count and snapshot methods require counting every person in the plan–including employees, spouses, and dependents–the Form 5500 method offers a shortcut that can produce significant savings for large employers.  Instead of actually counting covered lives, the plan sponsor simply deems the number of covered lives to be the number of participants at the beginning of the year plus the number of participants at the end of the year.

The reason for this shortcut is that a Form 5500 reports only the number of participants, and not spouses or dependents.  The shortcut assumes an average of one spouse or dependent per participant.  For plans that have an average of more than one spouse or dependent per participant, this shortcut will result in savings.
Continue Reading Potential Savings Opportunity for Sponsors of Self-Insured Medical Plans

The Departments of Treasury, Labor, and Health and Human Services (collectively, the “Departments”) recently issued a set of Frequently Asked Questions (Part XV) (the “FAQs”), which provide that, starting in 2014, employers and health insurance issuers must implement two new requirements under ACA that apply to non-grandfathered group health plans:

(1) a prohibition on discriminating against health care providers that are licensed or certified under state law; and

(2) a mandate to cover routine patient costs or services for participation in certain clinical trials for life-threatening diseases.

The FAQs state that the Departments do not intend to issue regulations implementing these two requirements in the near future and therefore employers and health insurance issuers must implement the requirements based on a good-faith, reasonable interpretation of the statutory provisions.  The FAQs also delay, until at least 2015, implementation of requirements to disclose publicly certain information regarding group health plans, such as financial information, cost-sharing requirements, and data on claim denials and enrollment.
Continue Reading New FAQs Issued on Nondiscrimination, Clinical Trial, and Reporting Requirements under the Affordable Care Act

On April 23, 2013, the Departments of Labor, Health and Human Services and the Treasury (the “Departments”) issued an updated template and sample completed template for summaries of benefits and coverage (“SBCs”) that must be provided for coverage beginning in 2014.  The Departments also released Frequently Asked Questions that include the following guidance:

  • The only change to the existing SBC template is the addition of statements regarding whether a group health plan offers minimum essential coverage that meets the requirements for providing minimum value.  (See ACA’s Cost-Sharing Limitations on Employer Health Coverage for an explanation of the minimum essential coverage and minimum value requirements.)  If an employer or issuer is unable to modify the SBC template to include this additional information and continues to use the template provided for 2013, the new information for 2014 may be disclosed in a separate document that is provided with the SBC.  No other changes have been made to the SBC template, including to the examples that must be included, to the instructions for providing SBCs, or to the uniform glossary.
  • The Departments have extended for another year enforcement relief that they issued last year.  Pursuant to this relief, the Departments will not impose penalties on plans and issuers that are working diligently and in good faith to provide the required SBC content in a format that is consistent with the final regulations.  In addition, the Departments have also extended the safe harbor for providing SBCs electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan.
  • Because annual limits on essential health benefits will no longer be permissible starting in 2014, a plan may, at its option, delete the following row that appears on the first page of the SBC template:  “Is there an overall limit on what the plan pays?”.  Otherwise, the plan should answer “no” to this question.
  • If an educational institution, such as an institution of higher education, maintains insured health coverage for its students, the institution will have met its requirements for providing SBCs if another party, such as the health insurance issuer, timely provides completed SBCs to the students.
    Continue Reading Departments Publish Updated SBC Template, Making Few Changes for 2014

The HIPAA / HITECH omnibus rule published in the Federal Register late last week includes a number of changes that will require action by employers, health plans, and business associates in the coming months.  The new requirements take effect on March 26, although group health plans and business associates have until September 23, 2013, to comply with most of the new requirements. 
Continue Reading New HIPAA / HITECH Rule Requires Health Plan Changes

On November 26, 2012, the IRS and Departments of Labor and Health and Human Services published in the Federal Register proposed regulations that would permit group health plans to provide greater incentives for participation in wellness programs.  The proposed regulations include a welcome implementation of statutory changes that were made by the Affordable Care Act, but they leave unanswered important questions about compliance with the Genetic Information Nondiscrimination Act of 2008, as amended (GINA) and the Americans with Disabilities Act, as amended (ADA).  Employers putting wellness programs in place should be mindful of the possibility that a program might comply with the proposed regulations but still violate a requirement of GINA or the ADA.

If finalized, the proposed regulations will be effective for plan years beginning in 2014 or later–the same effective date as the changes to the statute.  Until then, existing regulations that were issued in 2006 continue to apply.  Comments on the proposed regulations are due by January 25, 2012.
Continue Reading Proposed Regulations Will Permit Greater Incentives for Participation in Wellness Programs

The Second Circuit recently held that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional.  That section prohibits recognizing same sex marriages under federal law.  The court’s decision in Windsor v. United States is the second by a U.S. Circuit Court to find that this portion of DOMA violates the Constitution’s Equal Protection Clause.  In May, the First Circuit also found DOMA to be unconstitutional in Massachusetts v. U.S. Dep’t of HHS.  The question of whether DOMA is constitutional could have a significant impact on employee benefit plans.

The two Circuit Court cases differ in one key respect:  the Second Circuit applied “intermediate scrutiny” while the First Circuit reviewed DOMA under an enhanced rational basis standard, under which the court “scrutinize[d] with care” and applied “closer than usual scrutiny.”  Notably, the Justice Department is seeking Supreme Court review of the Second Circuit’s decision.  Even before the Second Circuit ruled, the Justice Department had filed a petition for a “writ of certiorari before judgment filed.”  Following the Second Circuit’s decision, the Justice Department filed a supplemental brief urging the Court to grant its petition in that case and hold the petition in the First Circuit decision.  Earlier this week, the Supreme Court scheduled petitions for certiorari in the First Circuit and Second Circuit cases (and several other same-sex marriage cases) to be considered during a conference on November 20, 2012.
Continue Reading DOMA Held Unconstitutional by Second Circuit, Increasing Likelihood of Supreme Court Review