PA-NABIP Pulse December 2024

The Facts of the Month

Here is something to mention when discussing access to care and prescription drugs in the New Year.

Between 2018-2021, more pharmacies in the United States closed than opened. Of the 88,930 retail pharmacies operating during 2010–20, 29.4 percent had closed by 2021. The risk for closure for pharmacies in predominantly Black and Latinx neighborhoods was higher than in White neighborhoods. Independent pharmacies were at greater risk for closure than chain pharmacies across all neighborhood and market characteristics.

Source: Guadamuz, Jenny, Alexander, G. Caleb, Kanter, Genevieve P., Mazen Qato, Dima. “More US Pharmacies Closed Than Opened In 2018–21; Independent Pharmacies, Those in Black, Latinx Communities Most At Risk,” Health Affairs, Vol. 43, No. 12, December 2024. https://www.healthaffairs.org/toc/hlthaff/43/12

The Big Three

Each month PA NABIP identifies three top public policy or legal developments that could impact our members and clients. Here are this month’s big three!

1. Two Federal Employer Reporting Simplification Laws Enacted

Two federal measures long supported by NABIP and our Legislative Council, the Employer Reporting Improvement Act and the Paperwork Burden Reduction Act, were signed into law just two days before Christmas. Both are geared at simplifying the employer reporting requirements associated with the Affordable Care Act’s (ACA) requirements for individuals to maintain minimum essential health coverage and for applicable large employers to offer coverage that meets affordability and minimum value requirements or face penalty liability.

The Employer Reporting Improvement Act applies to employers who are classified by the ACA as “applicable large employers” or “ALEs,” which means they are subject to the law’s employer shared responsibility requirements, or “the employer mandate,” as the requirements are more commonly known. It also applies to health insurance issuers and self-funded and level-funded group health plans who are required to report on health plan beneficiary coverage status. The new law will make three important changes to reporting requirements moving forward:

1. It will allow employers to send Form 1095-C forms specifying offers of coverage to qualified employees electronically, rather than mailing paper statements if the employee agrees. This change applies for 1095-C statements due after December 31, 2024.
2. It specifies an employer or health insurance issuer may use an employee or dependent’s date of birth as identifier on 1095-B and C statements reporting coverage status, if the person’s tax identification number (TIN) or social security number is unavailable. This safe harbor was already outlined in regulatory guidance, but the law makes it official. This change applies for all statements due after December 31, 2024.
3. It increases the length of time an ALE has to respond to 226-J letter from the Internal Revenue Service (IRS) from 30 to 90 days. The IRS sends 226-J letters to ALEs they believe may be liable for an employer mandate penalty, and responding to those letters is an ALE’s opportunity to either document they are not actually liable for a penalty or to document mitigating circumstances in an attempt to get the penalty amount abated. This time extension applies to tax years after 2024.
4. It creates a six-year statute of limitations for the IRS to collect employer shared responsibility penalty assessments from ALEs. Previously, there was no statute of limitations.

The Paperwork Reduction Act of 2024 applies to self-funded and level-funded group health plans and health insurance carriers. Previously, these entities had to provide all covered individuals with paper versions of Form 1095-B or C specifying the months the individual had minimum essential health coverage during the prior year to show compliance with the ACA’S individual coverage mandate. However, in 2019, the ACA was amended to reduce an individual’s penalty for not maintaining health insurance coverage down to $0, making paper statements documenting coverage superfluous. According to the new law:

1. Health insurance issuers and self-funded and level-funded employer plan sponsors will only need to provide Forms 1095 B or the coverage information specified in Part Three of Form 1095 C to beneficiaries upon request.
2. Employer plan sponsors and health insurance issuers must make plan members aware of how they may obtain a copy of their coverage statement if they want it.
3. If a plan participant asks for a copy, the form must be provided by January 31 or 30 days after the date of the request, whichever is later.

These changes apply to all tax statements documenting minimum essential coverage for 2024 on forward.

2. Pennsylvania Insurance Department Releases First Report on the State of Qualified Health Plans in the Commonwealth

The Pennsylvania Insurance Department (PID) recently issued the first Pennsylvania Affordable Care Act and Qualified Health Plans (QHP) Summary Report. The report provides an overview of the Pennsylvania health insurance market and outlines how PID analyzes health insurers’ compliance with rules and regulations related to products and rates.

QHPs are certified by the Insurance Department to ensure compliance with all federal and state health insurance laws, including the ACA. By law, these insurance plans may not deny insurance coverage for pre-existing conditions, and they must cover a core set of essential services (such as preventive and primary care, mental health and substance use disorder care, emergency services, and many others). While all QHPs must comply with and include benefits required under federal and state law, insurers may incorporate additional benefits or features to their health plans to better serve their consumers. This report details the differences between health plans sold in the Commonwealth’s individual and small group markets.

The review found that, for plan year 2025, Pennsylvanians covered under individual and small group plans will see full coverage of:

• The newly approved over-the-counter birth control pill, Opill.
• Applied Behavior Analysis (ABA) therapy for autism spectrum disorder;
• HIV Pre-Exposure Prophylaxis (PrEP) Integral Services with no cost sharing; and
• At least one kind of HIV PrEP medication with no prior authorization or cost-sharing.

Pennsylvanians will also notice several insurers:

• Removed prior authorization requirements on certain drugs, meaning Pennsylvanians are no longer required to seek permission from an insurer when prescribed specific medications;
• Moved certain drugs to lower-cost formulary tiers, making those drugs more affordable for Pennsylvanians;
• Added certain drugs to their formulary, providing consumers with greater access to specific medications; and
• Further clarified coverage of certain Essential Health Benefits for consumers.

3. IRS Releases 2025 PCORI Fees

The IRS recently announced the Patient-Centered Outcomes Research Institute (PCORI) fee amounts that will be due in 2025. For plan years ending on or after October 1, 2023, and before October 1, 2024, the dollar amount will be $3.22. For policy years and plan years ending on or after October 1, 2024, and before October 1, 2025, the amount will be $3.47.

The ACA created the annual federal assessment on health insurance carriers and self-insured group health plans to help fund the federal institute. It is known in the industry as the PCORI fee, and health insurance carriers pay it on behalf of their fully-insured group health plan clients. However, employers who offer self-funded and level-funded health plans, including health reimbursement arrangements and any flexible savings accounts that do not qualify as expected benefit plans, need to pay the PCORI Fee themselves.

The PCORI fee is calculated by multiplying a dollar amount set by the Internal Revenue Service (IRS) each year by the average number of people covered by the plan during the same period. It is due each year by July 31st, and health insurance issuers and self-funded and level-funded plan sponsors file and pay it using the second quarter version of IRS Form 720.

Check This Out!

If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!

The federal Department of Health and Human Services issued the first report to Congress showing the results of the federal RxDC reporting on prescription drug spending. You can read it here.