The Vita Blog February 2023

During the Public Health Emergency, the Drug Enforcement Agency (DEA) and Health and Human Services (HHS) adopted policies to waive the in-person exam requirement for prescribing controlled substances as required by the Ryan Haight Act. This enabled registered DEA practitioners to prescribe Schedule II-V controlled substances to patients without in-person interaction. This action was taken in order to ensure that patients (both established and new) were able to receive medically necessary prescriptions via telemedicine.

At the conclusion of the COVID-19 Public Health Emergency, this flexibility will expire, and the Ryan Haight Act provisions that require an in-person visit for prescribing controlled substances will, once again, be the rule.
 

Potential Action to Extend

There have been efforts to amend the Ryan Haight Act, and HHS has announced that the DEA is planning to establish rules so that the ability to prescribe controlled substances via telemedicine in certain circumstances would be retained. To do so, the DEA will need to activate a telemedicine special registration rule. Many are hoping this can be achieved prior to the expiration of the Public Health Emergency, slated to end on May 11, 2023. However, to date, pending legislation to amend the Ryan Haight Act has not passed, and the DEA has not activated the telemedicine special registration rule.
 

Current Status

As matters currently stand, when the Public Health Emergency expires on May 11th, without further action on the part of the legislature or the DEA, the in-person requirement will revert to being the rule.

This means that, after May 11^th, providers will be prohibited from prescribing any controlled substance for any patients for whom only telehealth visits have occurred because the special COVID provisions will have expired. Patients requiring controlled substance prescriptions will need to be seen by an in-person provider.
 

Point of Awareness for Employers

If DEA action is not formalized to extend the telehealth flexibility rule, participants who are prescribed controlled substances will experience a significant change in the process when filling their prescriptions. Health plan and pharmacy benefits managers will revert to the prior rules, and participants may be caught off-guard by this change in the process. Employers should be aware of this possibility, watch for further updates, and be prepared to communicate to plan participants should the emergency rule not be extended.

As of February 21, 2023, it has been confirmed that group health plans and health insurance issuers will not be required to submit required reports on air ambulance services by March 31, 2023. CMS has informally confirmed that since final regulations have not yet been issued, no reporting is required in 2023.

The proposed regulations had indicated that the initial reporting deadline would be March 31, 2023 (for 2022 calendar-year reporting). However, that deadline assumed final regulations would be issued before the end of the calendar year 2021. As it stands, final regulations have not yet been issued.

If the final regulations are issued in 2023, the first report would be due 90 days after the end of 2024 (March 31, 2025) for the 2024 calendar year.

The originally published article has been updated to reflect this change. (See below.)
 

Overview

Proposed regulatory guidance for the No Surprises Act requires health plans, issuers, and providers to report certain air ambulance data for calendar years 2022 and 2023. Reporting for these plan years assumed that regulations would be finalized in 2021. Given that they were not, the first reporting year will now be 2024.

The data will be used by the HHS and the Department of Transportation to produce a comprehensive public report on air ambulance services. The goal is to help increase transparency on the cost for these services.
 

Employer Responsibility

Technically, employers hold joint responsibility for reporting the data. In practice, employers/plan sponsors don’t hold or have access to the data that is required for reporting purposes. As such, the responsibility will fall to insurers (for fully insured plans) and ASO providers (for self-funded plans).
 

Fully Insured Employers

Employers with fully insured plans are exempt from reporting, but only to the extent that they have a written agreement with their insurer to report the information.

Employer Action Item: Execute a written agreement with the insurer confirming that all reporting obligations are transferred to the insurer and that filings will be made by the insurer on behalf of the employer.
 

Self-Funded Employers

Employers with self-funded plans may utilize a third-party administrator (TPA) to assist with reporting, but employers would remain legally responsible for any reporting failures. While executing an agreement to transfer reporting obligations is likely to be the norm, self-funded plans will remain legally responsible for any noncompliance regardless of whether their TPA agrees to complete the reporting. Of course, parties are free to negotiate indemnification contractually, but the legal obligation will remain with the self-funded employer.

Employer Action Item: Execute a written agreement with TPA confirming that reporting obligations will be completed by the TPA and that filings will be made by the TPA on behalf of the employer.
 

Timing

The regulations have not yet been finalized, and HHS has yet to establish a method for submitting the reports. Nonetheless, health insurance issuers and TPAs should be looking forward and preparing systems to enable reporting in the future. Reports must be submitted to the HHS by the dates indicated below:

• Reports for the 2024 calendar year are due by March 30, 2025.
• Reports for the 2025 calendar year are due by March 30, 2026.

Required Data to Report

The regulatory guidance requires group health plans and issuers to report the following data elements for each claim for air ambulance services. Reporting must reflect claims received or paid for each of the two calendar years required.

1. Identifying information for the group health plan, plan sponsor, or issuer, and any entity reporting on behalf of the plan or issuer
2. Market type for the plan or coverage (fully insured, self-funded, individual, large group, small group, etc.)
3. Date of service
4. Billing National Provider Identifier (NPI) information
5. Current Procedural Terminology (CPT) code or Healthcare Common Procedure Coding System (HCPCS) code information
6. Transport information, including the type of aircraft, loaded miles, pick-up, and drop-off zip codes, whether the transport was emergent or non-emergent, whether the transport was an inter-facility transport, and, if applicable, the service delivery model of the provider (e.g., government-sponsored, public-private partnership, hospital-sponsored, etc.)
7. Whether the provider had a contract with the plan or issuer
8. Claim adjudication information, including whether the claim was paid, denied or appealed, the denial reason, and appeal outcome
9. Claim payment information, including submitted charges, amounts paid by each payor, and cost-sharing amounts.

Employer Action Item

Execute an agreement or an amendment to a current service agreement to transfer responsibility for required air ambulance data filings to the insurance carrier or TPA.

With the extension of the deadline, employers will have additional time to ensure that written agreements are in place with carriers and TPAs. That said, we recommend that employers keep the momentum of getting written agreements in place at this time. This will create smoother sailing once the new deadline approaches in a few years.

Which States Have Requirements?

Four states currently have separate state ACA reporting requirements in addition to the federal Form 1095-C. These states are:

• California
• Massachusetts
• New Jersey
• Rhode Island
• District of Columbia

Employer Action

For fully insured plans, these obligations are generally fulfilled by the insurer. 

For self-funded plans, the employer bears the responsibility to satisfy the state reporting obligations. 
 

Deadlines to Furnish Notice to Individuals

The timing of the requirements to provide notices to individuals also vary for some states (compared to the current ACA deadlines).

• CA and MA: Must be provided by January 31, 2023
• DC, NJ, and RI: Must be provided by March 02, 2023

If an employer missed the dates to furnish the California or Massachusetts notices, the recommendation action is to promptly furnish the requisite notices to individuals and then complete the necessary filing with the states in a timely manner. 
 

Deadlines to File Notices with State

The four states (California, Massachusetts, New Jersey, and Rhode Island) have a filing deadline of March 31, 2023, which is in line with the ACA filing deadline with the IRS.

The filing deadline for the District of Columbia is 30 days after the federal filing date. For 2023, it is May 1^st as a result of April 30, 2023, falling on a Sunday.
 

Overview of State Requirements

The state requirements largely follow the federal Form 1094-1095 reporting requirements. Following is an overview of the specifics for each state: 

• California: Self-funded employers must report all employees and dependents who had health coverage at any point during the year. The penalty for failure to report timely is $50 per covered individual who was provided health coverage.
• Massachusetts: State filings do not need to contain employee-level details as is required under the ACA filings to the IRS and are generally completed by insurance carriers on behalf of individual employers. Employers must also issue Form 1099-HC to their employees and report information to the state Department of Revenue. The filing deadline for the 1099-HC is January 31, 2023. Organizations that fail to comply with 1099-HC requirements could be subject to a penalty of $50 per employee, up to a maximum of $50,000.
• New Jersey: ALEs use the same IRS form 1094-C/1095-C to report health insurance information to the state. No additional or "special" forms are required.
• Rhode Island: Rhode Island maintains an individual penalty for residents not maintaining health insurance. Furnishing federal Form 1095s to employees satisfies the requirement to furnish notice to employees. However, employers must also submit these returns to the state’s Division of Taxation (DOT) to fully meet the notice requirements.
• District of Columbia: Applicable entities must submit an information return regarding MEC coverage provided to the Office of Tax and Revenue (OTR). Information regarding the individuals’ type of coverage must also be submitted. While similar, it should be noted that these filing requirements are not the same as ACA requirements.

Potential Future State Reporting

A number of additional state legislatures are either in the process of passing or have already passed ACA reporting requirements. This includes Connecticut, Hawaii, Maryland, Minnesota, and Washington. Employers in these states should anticipate additional responsibilities with regard to state reporting and watch for details on required forms and filing procedures.
 

Conclusion

In addition to federal reporting, a patchwork of state-level ACA reporting has developed over recent years. This creates a myriad of complexities for employers, especially for employers with operations in multiple states.

As a final reminder, enforcement efforts at the federal level are ramping up, and employers can no longer rely on the comfort of “good faith effort” in their federal 1095 reporting.

Employers have long struggled with the issue of not having SSNs for certain dependents on their health plans and/or getting bounce backs on 1095-C filings due to incorrect dependent SSNs.

In the early years of 1095 filings, employers were protected by regulatory guidance, providing that if a “good faith effort” could be shown, penalties for non-compliance would not be applied. However, seven years have passed since the first filings were required, and the IRS now presumes that enough grace was provided to “work out the kinks”. Therefore, the IRS has expressly removed the “good faith effort” protection for filing 1095s beginning with filings for the 2022 plan year that have just been completed.

While the good faith protection is gone, issues with missing or incorrect SSNs still remain. This leaves employers with the reality that they must properly document their outreach efforts to obtain SSNs or face potential penalties for these errors.
 

What are the penalties?

Information reporting penalties are outlined in the IRS document Instructions for Forms 1094-C and 1095-C.

Applicable Large Employers are subject to the employer-shared responsibility penalty payments of the ACA. These penalties are both well-established and well-known. However, they are not the only penalties that may be levied. Employers that fail to comply with the information reporting requirements may also be subject to reporting penalties for failure to file correct information returns and failure to furnish correct payee statements (1095-Cs).

For the 2022 tax year, the following penalties apply for failing to file/provide correct information returns:

• Failure to File: This means failure to file a return or failure to file a correct return (meaning filing an incorrect return). This applies to Form 1094-C and the accompanying Form 1095-Cs. The penalty is $290 for each return for which the failure occurs. The total penalty for a calendar year is capped at $3,532,500.
• Failure to Provide: This means failing to provide a return to plan participants or failure to provide a correct return (meaning providing an incorrect return). This applies to the Form 1095-Cs that must be provided to plan participants. The penalty for failure to provide a correct payee statement is $290 for each statement for which the failure occurs. The total penalty for a calendar year is capped at $3,532,500.
• Intentional Disregard: Special rules apply that increase the per-statement and total penalties if there is intentional disregard of the requirement to file the returns and furnish the required statements.

Penalties may be waived if the failure was due to reasonable cause and not willful neglect.
 

Getting the Penalties Waived

Notice the last sentence above: “Penalties may be waived if the failure was due to reasonable cause and not willful neglect.”

In a world where missing and incorrect SSNs for dependents remain a reality that many employers struggle with, this sentence is our friend! While compliance will not be nearly as easy as the former “good faith effort” standard, understanding the requirements for avoiding the penalties is an important first step for employers. In short, it all comes down to understanding the definition of Reasonable Cause. If the reasonable cause criteria are met, the authorities have indicated that the penalties will be waived.
 

What is Reasonable Cause?

The IRS has a very specific definition of Reasonable Cause. The IRS regulations outline a complex and layered definition of Reasonable Cause . . . with five different layers. Following are the key elements thinned down for how they apply to these troublesome SSN issues for 1095 filings:

General Rule: The penalty for a failure relating to an information reporting requirement is waived if the failure is due to Reasonable Cause and is not due to willful neglect.

Reasonable Cause: The relevant, reasonable cause elements require that the failure must arise from events beyond the filer's control. Here the IRS presents several possibilities for such impediments, but the relevant section can be paraphrased: Certain Actions of a person providing necessary information with respect to the return or statement.

Certain Actions: The relevant certain action elements require that the person who must provide the information to the employer either does not provide the information or provides incorrect information upon which the filer relied in good faith. To substantiate, the employer, upon request of the IRS, showing that the failure was attributable to the person who was supposed to provide the information. documentary evidence upon request of the IRS showing that the failure was attributable to the person who was supposed to provide the information.

Special Rules for SSNs: There are special rules relating to the availability of a waiver of penalties where the filer's failure relates to an SSN, and the failure is attributable to the actions of the person. Specifically, the employer must act in a Responsible Manner.

Responsible Manner: Employers will be deemed to have acted in a responsible manner only if they satisfy the requirements of the Special Rules for Missing/Incorrect SSNs.

After all these layers are outlined, it comes down to this: If an employee does not provide an SSN or provides an incorrect SSN, the baseline criteria for Reasonable Cause is triggered. However, In order to avoid penalties, employers must also respond by acting in a Responsible Manner. This means following and documenting a 3-Step Process for trying to obtain the requisite SSNs.
 

The 3-Step Process for SSN Outreach

A Reasonable Cause penalty waiver requires the employer to make one initial solicitation and two annual solicitations for the SSN (if the prior solicitations did not yield results).

1. Initial Solicitation. Must occur at the time an employee first elects coverage under the benefit plans or first adds a dependent without an SSN.
2. First Annual Solicitation. Must be made on or before December 31 of the year in which the initial coverage election becomes effective (or by January 31 of the following year for elections in the preceding December).
3. Second Annual Solicitation. Must generally be made by December 31 of the year immediately following the calendar year in which the coverage becomes effective.

Upon Receipt of an SSN

Upon receiving an SSN or a corrected SSN as a result of one of the solicitations, employers must then include that SSN on any information returns filed after the date that the employer receives the SSN.
 

Makeup Solicitations

What if initial and subsequent annual solicitations haven’t been made? An employer who has previously not made any solicitations may rectify this by:

• Making two consecutive annual solicitations in subsequent years (make-up solicitations) AND
• If an SSN is received, include that SSN on any information returns due after the date the employer receives the SSN.

While this action protects employers on a go-forward basis, penalties may still apply for years prior to which the make-up solicitations were made.
 

Method of Solicitation

The regulations specify a detailed process for satisfying solicitation requirements. Following is a summary of the key elements of the solicitation standards set by the IRS.

If solicitation is via mail, the following elements must be included:

• Notification must inform the individual that he or she must provide the required SSN
• Notification must inform the individual that a $50 penalty may be imposed by the IRS if he or she fails to furnish the required SSN
• Notification must include a Form W-9 or an acceptable substitute form on which the payee may provide the SSN
• Notification must include a return envelope for the payee to provide the SSN, which may be, but is not required to be, postage prepaid.

If solicitation is via phone, the procedure must be reasonably designed and carried out in a manner that is conducive to obtaining the SSN.

• Caller must speak to an adult member of the household
• Caller must verbally request the SSN
• Caller must inform the individual that they must provide the required SSN
• Caller must inform the individual that a $50 penalty may be imposed by the IRS if he or she fails to furnish the required SSN.

If solicitation is via email or other electronic means, the following elements must be included:

• Same written requirements as via mail (above)
• Must follow standard IRS electronic notification procedures.

If It Isn’t Documented, It Didn’t Happen

The IRS requires that the employer maintain contemporaneous records showing that the solicitation was properly made. In addition, the employer must be able to provide such records to the IRS upon request.

Employers are urged to keep detailed documentation on solicitation attempts. It is the combination of the actual solicitation AND the documentation of the solicitation that will shield an employer from a potential penalty.
 

What about the dreaded name mismatch?

Employers experience frustration when 1095 bounce back notifications indicate an error in the SSN, but the number actually appears to be correct by all their records. This common problem usually indicates a name mismatch issue. Examples include:

• An employee gets married (or divorced) and changes their name with the Social Security Administration from Susan Archer to Susan Barclay, but Susan hasn’t yet notified you, the employer, of the change.
• Or vice versa, where Susan has notified you, the employer, but the change hasn’t been filed or completed processing with the Social Security Administration.
• An employee’s employment record indicates Harry Houdini. However, the SSN records read Harold Houdini.
• An employee’s payroll records read Carson Polansky, but his SSN record indicates Carson S. Polansky.
• There are three (3) John Smiths in your employ, and the SSNs have somehow gotten mixed up between the employees.

All of these situations will likely result in a 1095 bounce back and will require manual intervention to discover and correct. If any such errors are not corrected for the specific filing year, the standard solicitation rules outlined above should be followed.
 

Is reasonable cause a new thing?

No. The Reasonable Cause and Responsible Action processes have been in place for some time as they apply to the process of securing Tax ID numbers of all sorts from many different types of companies and for many different purposes. For example, banks for people opening accounts, employers needing to secure SSN for payroll purposes, etc.

With the removal of the “good faith effort” compliance rule, the filing and providing of Form 1095 documents simply became subject to the standard process that has been in existence for other information returns and tax filings.
 

Reference

The information filer penalties, Reasonable Cause framework, and solicitation rules are outlined in 26 CFR § 301.6724-1.

On Jan 30, 2023, the HHS and the DOL proposed a new rule to strengthen access to birth control coverage under the Affordable Care Act (ACA). Under the ACA, most plans are required to offer coverage of birth control with no out-of-pocket cost. The goal of the proposed rule is to expand and strengthen access to this coverage, specifically for women whose employers exclude this coverage because of a moral or religious objection. The action is the latest effort by the Biden-Harris Administration to bolster access to birth control at no cost.
 

Current Status

The ACA guarantees coverage of women’s preventive services, including birth control and contraceptive counseling, at no cost for women who are enrolled in group health plans. However, in 2018, final regulations expanded exemptions for religious beliefs and moral convictions allowing private health plans and insurers to exclude coverage of contraceptive services based on moral or religious objection.
 

What is Changing?

The proposed rules would remove the moral exemption and retain the existing religious exemption.

The 2018 rules include an optional accommodation that allows objecting employers to completely remove themselves from providing birth control coverage while ensuring women and covered dependents enrolled in their plans can access contraceptive services at no additional charge. Under the 2018 rules, these women and covered dependents would get this contraceptive access only if their employer, college, or university voluntarily elects the accommodation—leaving many without access to no-cost contraceptives. 

The proposed rules seek to ensure broader access to contraceptive services by creating an independent pathway for individuals enrolled in plans arranged or offered by objecting entities to make their own choice to access contraceptive services directly through a willing contraceptive provider without any cost. This would allow women and covered dependents to navigate their own care and still obtain birth control at no cost in the event their plan or insurer has a religious exemption and, if eligible, has not elected the optional accommodation. The proposed rules leave in place the existing religious exemption for entities and individuals with objections, as well as the optional accommodation for coverage.
 

How Will it Work?

The proposal creates a new “individual contraceptive arrangement” through which individuals enrolled in plans sponsored by employers with religious objections could access no-cost contraceptive services without the involvement of their employer, group health plan, plan sponsor, or insurer. A provider or facility that furnishes contraceptive services in accordance with the individual contraceptive arrangement would be reimbursed through an arrangement with an Exchange insurer, which would request an Exchange user fee adjustment to cover the costs. The practical details of this arrangement will obviously need to be worked out over time.
 

More Information

The U.S. Supreme Court’s decision in Dobbs, overturning Roe v. Wade, has placed a heightened importance on access to contraceptive services nationwide. HHS released a report in August on actions taken to ensure access to reproductive health care, including contraception, following the Supreme Court’s ruling, with further details on future actions and commitments. Following is a link to the report: Reproductive Care Report

Summary: This applies to all employers offering medical plan coverage with a plan renewal date of January 1. The online disclosure must be completed by March 1, 2023 (assuming a calendar year medical plan contract).
 

Overview

Federal law requires that employers provide annual notification of the Medicare Part D Prescription Benefit "creditability" to employees prior to October 15th. However, that same law also requires plan sponsors to report creditability information directly to the Centers for Medicare and Medicaid Services (CMS) within 60 days of the first day of the contract year if coverage is offered to Part D-eligible individuals. Many employers have a January 1 renewal plan year. So, for many employers, the deadline is in a couple of weeks! If your plan renews sometime other than January 1, you have 60 days after the start of your plan year to complete this disclosure.
 

Mandatory Online Creditable Coverage Disclosure 

Virtually all employers are required to complete the online questionnaire at the CMS website, with the only exception being employers who have been approved for the Retiree Drug Subsidy (RDS). This disclosure requirement also applies to individual health insurance, government assistance programs, military coverage, and Medicare supplement plans. There is no alternative method to comply with this requirement! Please remember that you must provide this disclosure annually.

The required Disclosure Notice is made through the completion of the disclosure form on the CMS Creditable Coverage Disclosure web page. Click on the following link: CMS Disclosure Form.

Employers must also update their questionnaire if there has been a change to the creditability status of their prescription drug plan or if they terminate prescription drug benefits altogether.
 

Detailed Instructions and Screenshots are Available

If you would like additional information on completing the online disclosure, a detailed instruction guide is available online. The instructions also include helpful screenshots so that you will know what data to have handy. More info here: CMS Notification Instruction Guide.

Helpful Tip for Vita's Clients

The Medicare Part D creditability status of your medical plans is outlined in the Welfare Summary Plan Description that we provide to all clients. Please refer to this document as you will need this information to complete the online disclosure.