State Finalizes Medical Provider Network Rules

The California Dept. of  Insurance has issued final regulations that include requirements for health insurers to create and maintain adequate medical provider networks. “These regulations go into effect immediately because they address a number of critical problems consumers have faced with insurers when seeking timely access to care,” says Insurance Commissioner Dave Jones. He had issued temporary emergency regulations, which have been in effect since late January 2015. The regulations require health insurers to do the following:

  • Include enough numbers and types of providers in the network to deliver covered services.
  • Adequately provide for the treatment of mental health and substance use disorders.
  • Include an adequate number of primary care providers and specialists with admitting and practice privileges at network hospitals.
  • Monitor and adhere to new appointment wait time standards.
  • Regularly report information about the networks and changes to the networks to the Dept. of Insurance for review.
  • Maintain accurate provider network directories available to the public and update them weekly.
  • Arrange out-of-network care at in-network prices when there are insufficient in-network care providers.

Calif. exchange officials seek tighter enrollment rules

The Covered California health insurance exchange board of directors is expected to vote in April on proposed rules that would require consumers to provide documentation of eligibility for enrolling in a health plan outside the open enrollment period. California Healthline (2/19)

Calif. employers brace for Fair Pay Act rules

California’s new Fair Pay Act goes into effect Friday, and employers are assessing their wage scales, Lauren Weber writes. The law will force employers to justify discrepancies between how they pay men and women for “substantially similar” work, and will give employees more rights to challenge lost wages. The Wall Street Journal (tiered subscription model) (12/29)

Administration Releases New Rules To Implement Health Law’s Individual Mandate

by Mary Agnes Carey

Reprinted with permission from Kaiser Health News (

As congressional Republicans push for a delay in the 2010 health law’s individual mandate, the Obama administration announced final regulations implementing the requirement that most Americans have health insurance coverage by Jan. 1 or pay a fine.

The document from the Treasury Department and the Internal Revenue Service is in addition to regulations the Department of Health and Human Services published in late June.

The regulations specify nine categories of individuals who are exempt from the mandate, including people who can’t afford coverage or taxpayers whose income is so low they don’t have to file a tax return, according to a fact sheet from the agencies. People in jail or who are not in the country lawfully are also exempt, as are individuals who experience a coverage gap of three months or less.

When filing 2014 taxes in 2015, individuals must say on their returns if they have health insurance coverage and, if not, pay a fine. The individual penalty is the greater of $95 or 1% of income, rising to the greater of $695 or 2.5% of income, in 2016. The Congressional Budget Office estimates that less than 2% of Americans who don’t have health insurance will pay the fine.

In July, the Obama Administration delayed for one year a provision in the health law that employers with 50 or more workers offer coverage to employees or pay a fine. Republicans said that if the administration delayed the employer mandate for a year, individuals should also get a reprieve from the health law’s individual mandate set to begin next January. In July, the House of Representatives passed legislation to delay the individual mandate requirement for a year, but the measure is not expected to come to a vote in the Senate.

Tuesday’s announcement from Treasury and the IRS — along with the final individual mandate regulations that HHS issued in June — make it clear that the administration is moving ahead with implementing the individual mandate, which has become one of the law’s most politically explosive elements. House Republicans have tried to repeal or defund the law 40 times on the House floor and more votes are likely this fall.

Supporters of the law and many health care economists say that the requirement that most Americans have coverage or pay a fine is critical to making the law work as intended.

The individual mandate is one of two lynchpins that make the Affordable Care Act work, Washington state Insurance Commissioner Mike Kreidler said in a statement. You simply cannot guarantee everyone coverage — regardless of their health status — without also requiring that everyone participate. The individual mandate guarantees personal responsibility. Without it, there’s nothing to prevent people from only buying health insurance when they need it — which is similar to allowing people to buy homeowners insurance when their house is on fire.

America’s Health Insurance Plans, a trade group representing health insurers, wants the health law’s tax on health insurance plans repealed but supports the individual mandate.

There is broad agreement that requiring health plans to cover everyone, including those with pre-existing conditions, cannot work without an individual mandate, the group said in a statement. By requiring all Americans to get health coverage, the risk pool becomes large enough to account for the sickest Americans, without the adverse effect of skyrocketing premiums.

Tax pro explains how the ACA’s credits and subsidies will work

Tax credits for the purchase of health insurance are available to people whose employers do not offer comprehensive policies deemed affordable under the law and whose household income amounts to less than 400% of the federal poverty level. Tax expert and former IRS official Cathy Livingston explains how eligibility and maximum premium subsidies will be determined, options for taking the credits, information that must be reported to the IRS, and rules regarding overpayments. Livingston says it’s especially important for consumers to retain records as they learn the ropes. Kaiser Health News (7/24)

Why Brokers Must Get Up to Speed on HIPPA Rules Now

HIPAALogoIf you are not protecting your clients’ health information according to HIPPA privacy rules, you could be in deep trouble. The Dept. of Health and Human Services (HHS) issued a rule to expand many HIPPA requirements to business associates that receive protected health information, such as contractors and subcontractors. Some of the largest breaches reported to HHS have involved business associates. HIPPA penalties for non-compliance are no laughing matter. Under this rule, they have been increased based on the level of negligence with a maximum penalty of $1.5 million per violation.

Another interesting provision is that, a patient who pays by cash can instruct their provider not to share information about their treatment with their health plan.

The changes also strengthen the Health Information Technology for Economic and Clinical Health (HITECH) Breach Notification requirements by clarifying when breaches of unsecured health information must be reported to HHS.

“This final omnibus rule marks the most sweeping changes to the HIPAA Privacy and Security Rules since they were first implemented. These changes not only greatly enhance a patient’s privacy rights and protections, but also strengthen the ability of my office to vigorously enforce the HIPAA privacy and security protections, regardless of whether the information is being held by a health plan, a health care provider, or one of their business associates,” said HHS Office for Civil Rights Director Leon Rodriguez.

In addition, patients can ask for a copy of their electronic medical record in an electronic form. The final omnibus rule sets new limits on how information is used and disclosed for marketing and fundraising purposes and prohibits the sale of an individual’s health information without their permission.

The final rule also streamlines individuals’ ability to authorize the use of their health information for research purposes. The rule makes it easier for parents and others to give permission to share proof of a child’s immunization with a school and gives covered entities and business associates up to one year after the 180-day compliance date to modify contracts to comply with the rule.

The final omnibus rule is based on statutory changes under the HITECH Act, enacted as part of the American Recovery and Reinvestment Act of 2009, and the Genetic Information Nondiscrimination Act of 2008 (GINA) which clarifies that genetic information is protected under the HIPAA Privacy Rule and prohibits most health plans from using or disclosing genetic information for underwriting purposes.

The Rulemaking is in the Federal Register at

CMS Issues Proposed Rule on Exchanges

CMS issued a proposed rule on Jan. 14 describing how states should handle eligibility determinations for Medicaid and other income assistance programs on state-based health insurance exchanges, beginning in January 2014. The proposed rule would lay out a structure and options for coordinating Medicaid, CHIP, and Exchange eligibility notices and appeals; provide additional benefits and cost-sharing flexibility for state Medicaid programs; and codify several provisions included in the Affordable Care Act and Children’s Health Insurance Program Reauthorization Act (CHIPRA). The proposed rule includes the following Key Provisions:

Process for Appeals of Eligibility Determinations
The rule proposes a coordinated Exchange and Medicaid appeals process. The rule proposes that enrollees have the opportunity for a preliminary case review by appeals staff, referred to as “informal resolution.”  If the enrollee is satisfied by the outcome, the decision stands as an official appeal decision. Enrollees who are not satisfied would have rights to a full appeal. As required by statute, a federally managed appeals process would be available to all enrollees in the individual market. State-based exchanges could implement their own appeals processes in accordance with the Notice of Proposed Rulemaking standards, with people retaining the right to a federal appeal at HHS after exhausting the state-based appeals process.

The proposed rule provides options for states to coordinate appeals of eligibility decisions across Medicaid, CHIP, and the Exchange. Specifically, states could choose between the following options:
• A state Medicaid or CHIP agency could delegate the authority to make final determinations in Medicaid and CHIP eligibility appeals to an Exchange appeals entity subject to standards.

• A state could retain the Medicaid and CHIP appeals functions, consistent with the choice offered to states with respect to permitting the Federally-facilitated Exchange to make Medicaid and CHIP eligibility determinations or assessments.

Notices to applicants and beneficiaries would include combined, clear, and accurate information about eligibility for all insurance affordability programs, including Medicaid, CHIP, advance payments of the premium tax credit and cost-sharing reductions, as well as eligibility to enroll in a qualified health plan through the Exchange.  The final combined notice would be generated by the agency that completed the last step in making the eligibility determination (which could be the Exchange or the Medicaid or CHIP agency).  This coordinated process would not have to be in place until January 1, 2015.

Medicaid Benefits
The proposed rule modifies existing “benchmark” regulations applicable to Medicaid programs to implement the benefit options available to low-income adults beginning January 1, 2014.  The Notice of Proposed Rulemaking provides guidance on the use of section 1937 benchmark and benchmark-equivalent plans (now known as Alternative Benefit Plans) for the new eligibility group for low-income adults; the relationship between Alternative Benefit Plans and Essential Health Benefits; and the relationship between section 1937 and other Title XIX provisions.

Medicaid Cost Sharing
The rule proposes to update the maximum allowable cost-sharing levels and to consolidate redundant provisions. The goal is to create one streamlined set of rules for all Medicaid premiums and cost sharing.  States could establish higher cost sharing for non-preferred drugs and impose higher cost sharing for non-emergency use of the emergency department.

Streamlining Eligibility Categories
The proposed rule would do the following:
• Define the range of eligibility groups for Medicaid and eliminate obsolete categories to reflect the existing federal statute and use of the Modified Adjusted Gross Income (MAGI) methodology to determine eligibility with most populations.
• Codify eligibility categories authorized in CHIPRA and the Affordable Care Act, such as new coverage for former foster care children up to age 26.
• Simplify and align the citizenship documentation process across Medicaid, CHIP, and the Exchange.

Verification of Employer-sponsored Coverage
The proposed rule includes detail on the procedures for the Exchange to verify access to employer-sponsored coverage.  An Exchange relying on HHS to fulfill the employer-sponsored coverage verification process.

Application Counselors
Application counselors play a key role in helping people apply for and maintain coverage in a qualified health plan through the Exchange and through insurance affordability programs. This rule proposes standards for certifying those who want to become application counselors.

You can submit comments to the proposed rule by 5:00 p.m. on February 13 at To read the proposed rule, visit

IRS Proposes Rule On FTE Employees

On Jan. 2, the IRS proposed a new regulation clarifying the requirements for companies to provide health insurance to full-time equivalent (FTE) employees under the Affordable Care Act. Companies with 50 or more full-time employees (or an equivalent combination of full- and part-time employees) are required to provide ”affordable” health insurance coverage to workers that meet time-in-service qualifications.

The proposed rule states that an FTE employee working 130 hours in a calendar month satisfies the 30 hours of work per week requirement. The proposal would prescribe three different methods to determine whether a non-hourly employee qualifies:

1. Counting actual hours of service.
2. Using a days-worked equivalency, in which eight hours of service counts as a day.
3. Using a weeks-worked equivalency, in which 40 hours of service per week counts as a week.

Companies can apply the methods to different classifications of non-hourly employees, as long as it is done consistently and does not understate their hours in service so as to disqualify them from health coverage.

New hires will be under a 12-week grace period before their status is reviewed under a look-back formula, which lays out how to classify variable-hour employees and new hires whose statuses have changed in the first three months of work.

The proposed rule would require employer plans to offer coverage to a qualifying employee’s dependents, defined as children under the age of 26. Companies will not be required to include an employee’s spouse in their medical plans. For more information, see the proposed IRS FTE regulations here.

Last Updated 01/19/2022

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