IRS Releases Information for Tax Preparers to Resolve Apparent 1095 Conflicts

The IRS released a best practices guide that describes how tax preparers could resolve seemingly conflicting information across 1095 forms, in particular when it appears an individual may have had duplicate coverage in the same calendar month, such as Marketplace coverage with a premium tax credit and Medicaid. The guide instructs preparers to gather necessary information to determine if their client was eligible for premium tax credits, and it provides examples of circumstances under which overlapping coverage would be permissible, including when an individual changes their source of coverage in the middle of a month or is retroactively determined eligible for Medicaid. The IRS recommends that tax preparers urge these dually-enrolled individuals to contact the Marketplace to resolve any discrepancy.

CMS Releases Proposed Rule Reforming Reimbursement Method for Medicare Prescription Drugs

CMS has proposed to test fundamental changes to the way Medicare Part B drugs are paid under the Medicare physician fee schedule and outpatient prospective payment system. Under the first phase of the proposed model, beginning on or after August 1, 2016, CMS will pay approximately 50% of physicians and hospital outpatient departments for Part B drugs using a new formula: the average sales price (ASP) plus 2.5% of the ASP plus a flat rate of $16.80. The remaining providers will continue to receive payments based on the current methodology of ASP plus 6% of ASP. During the second phase of the model, beginning as early as January 1, 2017, CMS will continue both aforementioned formulas and test adding value-based payments for some drugs to each of the formulas (creating four methodologies total). CMS plans to assign approximately 1,700 primary care service areas to each of the four methodologies in phase two. CMS suggests including one or more of the following value-based pricing tools as part of the model: reference pricing, pricing based on safety and cost-effectiveness for different indicators, outcomes-based risk-sharing arrangements, discounting or elimination of patient coinsurance amounts, and clinical decision support tools for appropriate drug use and safe prescribing.

8.8 Million Consumers Effectuated Marketplace Coverage by End of 2015

CMS's recently released data indicates that 8.8 million consumers effectuated Marketplace coverage by paying their premiums as of December 31, 2015. Nearly three-quarters of these enrollees (6.3 million) receive coverage through HealthCare.gov while the remaining are enrolled through State-based Marketplaces. Approximately 84% of Marketplace enrollees receive advance premium tax credits, which average $272 per month. The number of effectuated enrollments is point-in-time and does not account for enrollments in the final month of open enrollment.

California: State Secures $1.4 Billion Through New Health Plan Tax

After a year of deliberation, the State Legislature approved a packages of taxes, including one that will newly apply to all of the State's commercial health plans and will secure $1.4 billion in federal funds. The State's health plan tax was previously only levied against plans that serve Medicaid enrollees, which the Obama administration declared non-compliant with federal law. The replacement bill will give health plans that do not serve Medicaid enrollees around $371 million in corporate and insurance tax breaks, including a tax on premiums, and will save the industry as a whole $100 million.