Congress eases ACA employer reporting, looks for year-end healthcare deal 

With just over a week before government funding runs out on December 20, Congress is racing to decide what healthcare measures might ride on a short-term funding plan including an extension of telehealth flexibilities and new Pharmacy Benefit Manager reforms. The likelihood is that any healthcare package will be small relative to the slew of bipartisan legislation that has advanced in this Congress. In any event, the shape of any final product is not clear as of this writing as the two parties trade offers. 

ACA employer reporting and employer shared-responsibility enforcement relief heads to president

In the meantime, however, the Senate on December 10 cleared for the president’s signature a pair of House-passed bills to streamline employer reporting requirements under the Affordable Care Act’s Employer Shared-Responsibility provisions and provide some ESR enforcement and compliance relief.  

The Paperwork Burden Reduction Act (HR 3797) will codify and expand existing IRS rules that excuse employers from having to mail paper copies of Forms 1095-B and C to all employees if their website contains a “clear and conspicuous notice” that employees may receive paper copies on request.  Currently, the IRS’s Form 1095-C “alternative manner” disclosure relief applies only to forms delivered to nonemployees and employees not considered ACA full-time. 

Separately, the Employer Reporting Improvement Act (HR 3801) will allow substituting any covered individual's birthdate for the person's Taxpayer Identification Number if the reporting entity has been unable to collect that TIN, give employers 90 days (instead of the current 30 days) to respond to proposed IRS assessments (via Letter 226-J) for alleged violations of the ESR rules, and set a six-year statute of limitations for ESR assessments. IRS’s current position is that no statute of limitations applies to ESR assessments. HR 3801 will also codify current IRS rules on electronic delivery of Forms 1095-B and C to employees (which requires individuals’ affirmative consent).

The ACA reporting relief applies for 2024 Forms 1095 statements due to individuals on March 3, 2025, leaving little time to take advantage this year. In addition, with respect to the jurisdictions  (California, New Jersey, Rhode Island and Washington, DC) that have their own individual mandate and disclosure/reporting requirements and let plan sponsors use Form 1095 (and Form 1094) to satisfy them, guidance from states may be needed on whether this new federal reporting relief applies for state purposes.   

Parties trade offers as talks continue on year-end healthcare package

Republicans’ initial proposal for a package would extend for three years the pandemic-related Medicare telehealth flexibilities set to expire at year-end. Though many lawmakers in both parties also want to extend the relief that allows health savings account-qualifying high-deductible health plans to cover telehealth on a pre- or no-deductible basis, the length of a possible extension is uncertain. Without an extension, the relief will expire on Dec. 31, 2024, for calendar-year plans (and during 2025 for noncalendar-year plans).  

Also on the table are parts of a bill that passed the House nearly a year ago, the Lower Costs, More Transparency Act (HR 5378), that would reform PBM business practices, implement “site-neutral” Medicare billing reforms including parity for payments to off-campus hospital outpatient departments and to physician offices for administering drugs, and require more transparency in the health care system, particularly for PBMs and hospitals.  

Ongoing negotiations are focused on consensus changes to Medicare and Medicaid and not on the commercial market, including PBM-related proposals to delink PBM compensation from list drug prices in Medicare and to ban spread pricing in Medicaid. Republicans also want to include a provision from HR 5378 that would require off-campus hospital outpatient departments to use a unique billing code for that facility to bill Medicare. Many lawmakers reluctant to directly regulate the employer-sponsored healthcare system hope that public program reforms will drive the commercial market to change. 

The PBM and site-neutral payment reforms would raise revenue to pay for telehealth extensions and to provide more money for physicians in Medicare, among things, as would Republicans’ proposal to kill the Biden administration’s controversial rule that sets minimum staffing rules for nursing homes. Democrats call the repeal of the nursing home staffing rule a non-starter and plan to offer alternative revenue raisers.  

For their part, Republicans oppose Democrats’ proposal to extend the expanded/enhanced Affordable Care Act premium tax credits first enacted in 2021 (and later extended) to help individuals buy health insurance though state and federal Marketplaces. These expanded/enhanced subsides will expire at the end of 2025 without congressional action. Democrats cite a new nonpartisan Congressional Budget Office analysis that warns of premium increases and a jump in the number of uninsured Americans if the subsidies expire. But whether to continue the ACA premium subsidies will, like many pending healthcare reforms, likely be left to the next Congress.