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Health Headlines - February 25, 2013

25 Feb 2013

HHS Publishes Final Rule Regarding Essential Health Benefits and Actuarial Values Applicable to Certain Individual, Small Group and Medicaid Plans – Beginning in 2014, all non-grandfathered health insurance coverage in the individual and small group markets, Medicaid benchmark and benchmark-equivalent plans, and Basic Health Programs (if applicable) must cover essential health benefits (EHB), which include items and services in 10 statutory benefit categories, such as hospitalization, prescription drugs, and maternity and newborn care, and are equal in scope to a typical employer health plan.  In addition to offering EHB, non-grandfathered health insurance plans must meet specific actuarial values (AVs):  60 percent for a bronze plan, 70 percent for a silver plan, 80 percent for a gold plan, and 90 percent for a platinum plan.  These AVs, called “metal levels,” should assist consumers in comparing and selecting health plans by allowing a potential enrollee to compare the relative payment generosity of available plans.  Taken together, EHB and AV are intended to increase consumers’ ability to compare and make an informed choice about health plans. 

HHS has provided information on EHB and AV standards in several phases.  Most recently, HHS issued a final rule last week that outlines Exchange and issuer standards related to coverage of EHB and AV.  The rule also finalizes a timeline for qualified health plans to be accredited in Federally-facilitated Exchanges and amends regulations providing an application process for the recognition of additional accrediting entities for purposes of certification of qualified health plans.

The final rule provides little in the way of guidance to insurance issuers regarding the nature of required health benefits and instead gives substantial authority to states to make those determinations.  Indeed, although HHS recognized that “[s]everal commenters recommended that HHS have a single, uniform federal [essential health benefits] package because they are concerned that the proposed benchmark options have a large degree of variation in covered benefits which may lead to inconsistent [essential health benefits] packages from state to state,” HHS declined to provide detailed guidance about the necessary contours of essential health benefits packages.  As HHS explained, “[t]he benchmark approach for defining EHB sought to balance the statutory ten benefit categories and affordability while providing states—the primary regulators of health insurance markets—with flexibility.”

HHS’s final rule is available by clicking here.

Reporter, Ramsey Prather, Atlanta, +1 404 472 4624,

OIG Reports that Millions of Medicaid Overpayments Remain Uncollected – On February 19, 2013, the OIG published a report detailing the collection status of Medicaid overpayments.  The Secretary of HHS requires CMS to collect overpayments, defined as “the amount paid by a Medicaid agency to a provider which is in excess of the amount that is allowed for services furnished” through a state’s plan for medical assistance.  42 C.F.R. § 433.304.  In accordance with its authority granted under the Inspector General Act of 1978, the OIG routinely audits CMS and reports findings of unallowable expenditures and the collection status of overpayments.

The OIG recently selected 147 audit reports to determine whether CMS had collected previously identified overpayments.  The audit reports, covering fiscal years 2000 through 2009, were chosen based on the high total dollar amount of overpayments.  Eleven states were represented: Florida, Indiana, Illinois, Kansas, Louisiana, Massachusetts, Missouri, New York, New Jersey, Oregon, and Pennsylvania.  Overpayments reflected in the audit reports totaled $1.2 billion.  As of December 2012, over $225 million remained to be collected.  In addition, CMS could not document over $7 million that reportedly had been collected.

The uncollected $225 million resulted from ten outstanding audit reports for which states did not agree to refund the overpayments.  Based on the OIG’s findings, CMS did not collect the overpayments in a timely manner, letting them remain uncollected for up to 86 months at the close of the OIG’s initial audit.  CMS has indicated that it has resolved three of the outstanding audits and is close to reaching a resolution for the remaining seven.  Regarding the $7 million in collected overpayments that CMS could not document, the OIG concluded that CMS had not ensured that states properly reported overpayments on the appropriate form, CMS-64.  The OIG has recommended that CMS collect the remaining overpayments, review and improve its collection process, maintain adequate documentation regarding collection, and educate states on the proper use of CMS forms.

To view the OIG’s report, please click here.

Reporter, Paige Fillingame, Houston, +1 713 615 7632,

22nd Annual Health Law & Policy Forum on March 18, 2013 – King & Spalding LLP will host the annual Health Law & Policy Forum on March 18, 2013 in the Atlanta office from 8:15 a.m. until 5:00 p.m.  The one-day conference focuses on the latest developments in the healthcare and life sciences industry and featured speakers will include: Congressman Fred Upton (R-MI); Lew Morris, the former Chief Counsel to the Inspector General of the U.S. Department of Health & Human Services; and Brent Henry, Vice President and General Counsel of Partners Healthcare, the largest healthcare provider in Massachusetts.  For more information about the forum including registration details, please click here.

King & Spalding LLP to Host Employee Benefits and Executive Compensation Roundtable Series Throughout March 2013  – King & Spalding LLP will host a multi-city roundtable series on executive compensation, benefits, and employment law throughout the month of March.  For more information regarding the series including registration information and dates of the program across various cities, click here.

This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.

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