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CMS Addresses TPA and PBM Reporting for Contraceptive Claims Costs
Practical Law Legal Update w-020-3066 (Approx. 6 pages)
CMS Addresses TPA and PBM Reporting for Contraceptive Claims Costs
by Practical Law Employee Benefits & Executive Compensation
| Published on 13 May 2019 • USA (National/Federal) |
The Centers for Medicare and Medicaid Services (CMS) issued FAQ guidance addressing how third-party administrators (TPAs) and pharmacy benefit managers (PBMs) report contraceptive claims costs incurred by plan participants and beneficiaries. The reporting process relates to the accommodation for entities that object to providing contraceptive services as required under the Affordable Care Act's (ACA's) contraceptives mandate.
On May 8, 2019, the Centers for Medicare and Medicaid Services (CMS) issued FAQ guidance addressing a process (including a web-based form) for third-party administrators (TPAs) and pharmacy benefit managers (PBMs) to report contraceptive claims costs incurred by plan participants and beneficiaries. The reporting process relates to an accommodation for entities that object to providing contraceptive services as required under the Affordable Care Act's (ACA's) contraceptives rules.
Background
Under the ACA and implementing guidance, non-grandfathered group health plans and insurers must provide coverage for certain preventive health services without cost-sharing, including preventive care and screenings for women under guidelines supported by the Health Resources and Services Administration (HRSA) (42 U.S.C. § 300gg-13; Section 2713 of the Public Health Service Act (PHSA); see Practice Notes, Contraceptives Coverage Under the ACA and ACA Contraceptives: Religious Beliefs/Moral Convictions Exemption and Accommodation). Plans and health insurers must provide coverage for all Food and Drug Administration (FDA)-approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity, as prescribed by a health provider.
Reimbursing Payments by TPAs and PBMs for Contraceptive Claims Costs
The ACA's contraceptives mandate has proven controversial, with some employers objecting to the mandate on religious belief grounds. Implementing regulations issued under the Obama administration provided an exemption for group health plans of religious employers and an accommodation for certain nonprofit "eligible organizations" that object to covering contraceptives but are ineligible for the exemption (see Practice Note, Contraceptives Coverage Under the ACA: Accommodation for Nonprofit and Certain For-Profit Entities and Legal Update, Final Contraceptive Rules Include TPA Role for Providing Certain Contraceptive Coverage). Under the accommodation:
- Eligible organizations are not required to provide, arrange, or pay for contraceptives.
- Contraceptives are provided through the plan's insurer or TPA.
Regarding the contraceptives accommodation, TPAs are reimbursed (including a 15% administrative margin) by obtaining a reduction in the fee paid by insurers to participate in an ACA federally facilitated exchange (FFE). (As background, insurers offering plans through a federally facilitated exchange (FFE) must pay HHS a monthly fee that is calculated by multiplying the number of members enrolled in the insurer's plan through the exchange by an HHS-determined monthly user fee rate (see Article, Health Insurance Exchange and Related Requirements Under the ACA).)
An insurer that offers a plan through an FFE may qualify for an adjustment to the FFE user fee if the insurer either:
- Pays for contraceptives coverage on a TPA's behalf.
- Seeks an adjustment to the FFE user fee regarding a TPA that made or arranged for payments for contraceptives coverage.
Insurers seeking an FFE user fee adjustment must submit to HHS, in the year following the year for which payments were made under an accommodation, the total amount of the payments for contraceptives coverage during the year (see Practice Note, Contraceptives Coverage Under the ACA: Funding Contraceptives Coverage). In the self-insured health plan context, TPAs and PBMs must notify HHS if they intend for a participating insurer to seek an FFE adjustment regarding the TPA or PBM for payments for contraceptive claims costs.
The CMS web-based form addressed in the FAQ guidance permits CMS to:
- Determine the reduction to the FFE user fee for participating insurers.
- Ensure that adjustments to the monthly FFE user fee reflect payments for contraceptive services paid under the accommodation and are applied to the correct insurer.
The web-based form will be available on the Center for Consumer Information and Insurance Oversight (CCIIO) website. CMS has made available training webinars regarding its web-based submission form.
FAQs Address Details of User Fee Adjustment Process
The CMS FAQs address:
- The process for reporting information to CMS to obtain reimbursement through an FFE user fee adjustment.
- How CMS applies the FFE user fee adjustment to insurers.
TPAs must submit a "Notice of Disclosure Form" reflecting their intent to partner with an FFE insurer to seek a user fee adjustment for a year. According to CMS, this is the same web-based form that TPAs use to report contraceptive claims costs during the year.
The FAQs clarify that PBMs (in addition to TPAs) may enter into reimbursement arrangements for contraceptive services provided to the participants and beneficiaries of an eligible organization's self-insured health plan. The PBM must satisfy the same requirements that apply to TPAs, including submission of the "Notification of Intent" form.
Assuming a TPA or PBM are not part of the same entity as an FFE insurer, the TPA or PBM must complete the web-based form to indicate the total value of eligible contraceptive claims that were paid. It is not sufficient for the insurer alone to submit the amounts.
The FAQs also address claims reporting and user fee calculation issues. For example, an FFE insurer or TPA or PBM cannot include costs for claims incurred in a future year as part of its claims submission for a prior year.
Payment for Contraceptive Claims Costs
After an FFE insurer submits the required data to CMS through the web-based form, it need not take additional steps to ensure that the user fee adjustment is applied. CMS will automatically deduct the user fee adjustment amount from the user fee amount that the insurer otherwise owes for a given month. (The agency does not make direct payments to insurers for the user fee adjustment amount.) CMS collects FFE user fees by automatically deducting the user fee amount from insurers' monthly payment of advance premium tax credit (PTC) payments (see Practice Note, Affordable Care Act (ACA) Overview: Premium Tax Credit under Health Insurance Exchanges).
After the data submission period for the year has closed, CMS will apply the FFE user fee adjustment for a year on a monthly basis as an adjustment to the current year's monthly user fee charges. CMS automatically deducts the adjustment from an insurer's monthly user fee obligation starting in the summer immediately following the data submission period. As a result, for 2018 contraceptive claims:
- CMS will collect data in May-June 2019 from TPAs/PBMs and FFE insurers.
- Insurers will begin receiving the monthly user fee adjustment beginning in July/August 2019.
Practical Impact
Although regulations finalized by the Trump Administration in November 2018 permitted a wider range of entities to claim exemptions from the ACA's contraceptives mandate, those final rules were blocked by court order – including a nationwide injunction – earlier this year (see Legal Updates, Two District Courts Block Trump Administration's Final ACA Contraceptives Rules and First Circuit Lets Challenge to ACA Contraceptives Rules Proceed; Other Health Plan Litigation Moves Forward and Article, Trump Administration Religious Beliefs and Moral Convictions Exemptions to the ACA's Contraceptives Mandate). As a result, these updated CMS reporting procedures regarding the Obama-era ACA accommodation process have greater relevance than if the Trump rules were in effect.