Kusserow on Compliance: 6.6 million taxpayers penalized for not having health insurance

On July 15, 2015, the IRS posted on their website a statutorily mandated mid-year report to Congress by the National Taxpayer Advocate (NTA), Nina E. Olson. Olson is the in-house ombudsman for the IRS and reported on the priority issues to be addressed during the upcoming fiscal year, including the administration of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The NTA also reported that about 6.6 million U.S. taxpayers paid a penalty imposed for the first time this year, under the individual service responsibility provision (ISRP) of the ACA, for not having health insurance. This number was about 10 percent more than the Administration had estimated. The average amount of penalty paid was reported to be about $190. Approximately 300,000 taxpayers overpaid the penalty by a total of $35 million.

The NTA is required by statute to submit two annual reports directly to the House Committee on Ways and Means and the Senate Committee on Finance without any prior review or comment from the IRS, Treasury Department, or the Office of Management and Budget. The first report must identify the objectives of the NTA for the fiscal year beginning in that calendar year and the second must identify at least 20 of the most serious problems encountered by taxpayers, discuss the ten tax issues most frequently litigated in the courts, and make administrative and legislative recommendations to resolve taxpayer problems.

There is a penalty of as much as 1 percent of income for not having health insurance, under the ISRP of the ACA. This provision was meant to encourage people to sign up for health insurance. For those who did gain health care coverage under the Marketplaces, 2.6 million filed for premium tax credits to help them afford insurance, adding up to $7.7 billion in subsidies. About eight million people purchased health coverage through the government-run Marketplaces in 2014.

There were about 10.7 million taxpayers who filed Form 8965, Health Coverage Exemptions, claiming exemptions from the health insurance coverage requirements. By the end of April, taxpayers filed about 2.6 million returns with Form 8962, Premium Tax Credit (PTC), which reflected either the receipt of the advanced PTC or new PTC claims for 2014. The average amount of PTC claimed per return was about $3,000. The NTA also reported that some significant glitches occurred during the filing season, the most significant of which was the CMS’ issuance of erroneous Forms 1095-A, Health Insurance Marketplace Statement, to about 800,000 individuals who had purchased health insurance from the federal Marketplace.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.

 

Kusserow on Compliance: GAO enrolled fictitious applicants through the Marketplace

The U.S. Government Accountability Office (GAO) is an independent “congressional watchdog” agency that investigates federal government expenditures. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) provides for the establishment of health insurance exchanges, or Marketplaces, where consumers can compare and select private health insurance plans. The ACA also expands the availability of subsidized health care coverage. The Congressional Budget Office (CBO) estimates the cost of subsidies and related spending under the ACA at $28 billion for fiscal year (FY) 2015. The ACA requires verification of applicant information to determine eligibility for enrollment or subsidies. Filing a federal income tax return is a key control element, designed to ensure that premium subsidies granted at time of application are appropriate based on reported applicant earnings during the coverage year.

The GAO was asked to examine controls for application and enrollment for coverage through the federal Marketplace and, thereafter, it conducted a review to assess the enrollment controls of the federal Marketplace. On July 16, 2015, the agency reported the results of undercover testing of the Marketplace application, enrollment, and eligibility verification controls using 18 fictitious identities. The GAO submitted or attempted to submit applications through the Marketplace in several states by telephone, online, and in person. There were 18 undercover tests performed in 2014, 12 of which focused on phone or online applications. The GAO found that the Marketplace approved subsidized coverage for 11 of the 12 fictitious GAO applicants who obtained a total of about $30,000 in annual advance premium tax credits, plus eligibility for lower costs due at time of service.

For seven of the 11 successful fictitious applicants, GAO intentionally failed to submit all required verification documentation, but the Marketplace did not cancel subsidized coverage for these applicants. The agency also found errors in information reported by the Marketplace for tax filing purposes for three of its 11 fictitious enrollees, such as incorrect coverage periods and subsidy amounts. The GAO shared details of its observations with CMS during the course of its testing, to seek agency responses to the issues raised. Other observations of the Marketplace included:

  • that all inconsistencies between applicant information submitted and information available from verification sources were not recorded;
  • unresolved inconsistencies based on fictitious documentation that GAO submitted;
  • failure to terminate coverage for several types of inconsistencies, including social security number data or incarceration status; and
  • automatically reenrolled coverage for all 11 fictitious enrollees for 2015.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.

 

Kusserow on Compliance: OIG June update highlights

The HHS Office of Inspector General (OIG) provided a monthly update on its activities during June 2015 that included the following:

  • A Spring 2015 Semiannual Report to Congress reported $1.8 billion dollars in recoveries during the first half of 2015.
  • 243 suspects, including 46 doctors, nurses, and other licensed medical professionals, were charged in the largest criminal healthcare fraud takedown in U.S. history involving about $712 million dollars in false billing.
  • A fraud alert warned physicians that commercially unreasonable compensation arrangements may result in liability.
  • Medicare Part D continues to be vulnerable to fraud; the OIG identified questionable billing and geographic hotspots that point to such problems.
  • Medicare spending for commonly abused opioids has grown faster than spending for all Part D drugs.
  • Problems with financial assistance for Health Insurance Marketplace enrollees under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) remain.
  • Texas had paid millions of dollars for unallowable Medicaid orthodontic services.
  • Some Pennsylvania family child daycare home providers did not always comply with state health/safety requirements.
  • CMS was unable to rely on New York qualification rules for home health workers to ensure Medicaid patient safety and quality of care.
  • A former assistant administrator at a Texas hospital was imprisoned for 40 years and must repay more than $31 million dollars for his role in a $116 million dollar Medicare scheme.
  • A Florida skilled nursing facility (SNF) paid a record $17 million dollars to resolve allegations that it used a sophisticated scheme to pay kickbacks for referrals, a SNF record for violations of the Anti-Kickback Statute (AKS).
  • A Washington, D.C., pediatric hospital paid $12.9 million dollars for submitting false cost reports to HHS and Medicaid.
  • Nursing home owners, operators, and a manager in California paid $3.8 million dollars for fraud charges.
  • Six individuals were charged in North Carolina for a $10 million dollar Medicaid scheme for bogus documents and false claims.
  • A Detroit-area neurosurgeon admitted harming patients in an $11 million dollar fraud scheme.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2015 Strategic Management Services, LLC. Published with permission.

Closely-held corporations provided with contraceptive coverage accommodation in final regulations

The Internal Revenue Service, the Employee Benefits Security Administration, and HHS (the Departments) have jointly issued final regulations regarding coverage of certain preventive care services under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Under the ACA, all non-grandfathered insured and self-insured health plans must cover certain preventive services without cost-sharing, including the coverage of contraceptive services. This provision of the ACA has been one of the most hotly contested, resulting in hundreds of lawsuits and a series of related regulations and guidance. The Final rule maintains the existing contraceptive services accommodation for eligible religious nonprofit organizations, but also finalizes an alternative pathway for those organizations to provide notice of their objection to covering contraceptive services. In addition, the final regulations provide certain “closely held” for-profit entities the same accommodations (Final rule, 80 FR 41318, July 14, 2015).

The regulations finalize interim final regulations issued in July 2010 (Interim final rule, 75 FR 41726, July 19, 2010), related to the coverage of preventive services; interim final regulations issued in August 2014 (Final rule, 79 FR 51092, August 27, 2014), related to the process an eligible organization uses to provide notice of its religious objection to the coverage of contraceptive services; and proposed regulations issued in August 2014 (Proposed rules, 79 FR 51118, August 27, 2014), related to the definition of “eligible organization.”

Accommodations

Final regulations issued in July 2013 (Final rule, 78 FR 39870, July 2, 2013) and interim final regulations issued in August 2014 each provide a way for an organization to notify the federal government of their religious objection to providing contraceptive coverage. Organizations are still able to use these two methods: EBSA Form 700 or the alternative process consistent with the Supreme Court’s Wheaton interim order.

The final regulations provide an alternative process, which allows eligible organizations to notify the HHS in writing of its religious objection to covering all or a subset of contraceptive services. This notice must include the name of the eligible organization and the basis on which it qualified for an accommodation; its objection based on sincerely held religious beliefs to covering some or all contraceptive services, as applicable (including an identification of the subset of contraceptive services to which coverage the eligible organization objects, if applicable); the plan name and type (for example, whether it is a student health insurance plan or a church plan); and the name and contact information for any of the plan’s third party administrators and health insurance issuers.

A model notice to HHS that eligible organizations may, but are not required to, use is available at: CMS’ Center for Consumer Information & Insurance Oversight’s website.

HHS and the Department of Labor will then notify insurers and third party administrators of the organization’s objection so that enrollees in plans of such organizations receive separate payments for contraceptive services, with no additional cost to the enrollee or organization, and no involvement by the organization.

Closely held for-profit entities

In Burwell v. Hobby Lobby Stores, Inc., the Supreme Court ruled that the HHS regulations implementing the contraceptive mandate, as applied to closely held corporations, violated the Religious Freedom Restoration Act (RFRA). In response to this decision, the final regulations extend the contraceptive coverage accommodation to closely held for-profit entities.

Relying on a definition used in federal tax law, the Final rule defines a “closely-held for-profit entity” as an entity that is not publicly traded and that has an ownership structure under which more than 50 percent of the organization’s ownership interest is owned by five or fewer individuals, or an entity with a substantially similar ownership structure. For purposes of this definition, all of the ownership interests held by members of a family are treated as being owned by a single individual. Based on available information, the Departments believe that this definition includes all of the for-profit companies that have challenged the contraceptive coverage requirement on religious grounds.

The rules finalize standards concerning documentation and disclosure of a closely held for-profit entity’s decision not to provide coverage for contraceptive services. The organization’s highest governing body (such as its board of directors, board of trustees, or owners, if managed directly by the owners) must adopt a resolution (or take other similar action consistent with the organization’s applicable rules of governance and with state law) establishing that the organization objects to covering some or all of the contraceptive services on account of its owners’ sincerely held religious beliefs.

These final regulations do not establish any additional requirements to disclose the decision. The Departments believe that the current notice and disclosure standards afford individuals eligible for or enrolled in group health plans (and students eligible for or enrolled in student health insurance) with an accommodation adequate opportunity to know that the employer (or educational institution) has elected the accommodation for its group health plan (or insurance coverage), and that they are entitled to separate payment for contraceptive services from another source without cost sharing.

Office visits

The Final rule also discussed cost sharing for office visits for preventive services provided in conjunction with other services. In this section, the Departments noted that “payment for office visits will remain as indicated in previous guidance” but offered a summary of that payment process. Under the ACA, non-grandfathered health plans and insurers must cover without cost sharing evidence-based items or services that have a rating of “A” or “B” in the current recommendations of the Preventive Services Task Force, immunizations for routine use that have in effect a recommendation from the Advisory Committee on Immunization Practices of the CDA, and preventive and screening services listed in the HRSA guidelines for women of the HRSA guidelines for infants, children, and adolescents.

There has been some confusion about when cost sharing can be imposed for an office visit when the enrollee receives some preventive services during the visit. The Final rule noted that when a preventive service is billed separately from an office visit, the plan or insurer can impose cost-sharing of the office visit, but not for the preventive services. When the preventive service is not billed separately, but the primary purpose of the visit is the delivery of the preventive service, the plan may not impose cost sharing for the visit. Finally, when the preventive service is not billed separately, but the primary purpose for the visit is not providing the preventive service, then the plan may impose cost sharing.