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Regulation and Compliance > Federal Regulation > IRS

PPACA: IRS Starts to Design Health Plan Quality Research Fee

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The Internal Revenue Service (IRS) is asking for comments about how it should go about using fees from health insurers and sponsors of self-insured health plans to pay for comparative clinical effectiveness research.

The IRS is published a request for comments on the new research fee in IRS Notice 2011-35.

The IRS has issued the notice to implement Section 6301 of the Patient Protection and Affordable Care Act of 2010 (PPACA).

PPACA Section 6301 added Section 9511 – a provision creating a Patient-Centered Outcomes Research Trust Fund — to the Internal Revenue Code (IRC) to provide funding for a new Patient-Centered Outcomes Research Institute.

The institute is supposed to help the government, private insurers, employers, consumers and providers which treatments seem to offer good value for the money spent.

PPACA Section 6301 also added sections 4375, 4376 and 4377 to the Internal Revenue.

Those new IRC sections “impose those fees on what the statute refers to as ‘specified health insurance policies’ and ‘applicable self-insured health plans’ based on the average number of lives covered under the policy or plan,” IRS officials say in the notice.

The fees are supposed to take effect for policy and plan years ending after Sept. 30, 2012.

Health insurance policy issuers would pay a fee of $2 per life covered, indexed for the national health care inflation rate.

An insurer would use the average number of lives covered when computing the fee payment, officials say.

Similarly, the sponsor of a self-insured plan would pay a fee equal to $2 multiplied by the average number of lives covered, adjusted for health care inflation.

The new IRC sections define “sponsor” to include the association, board or other entity that runs a multiple employment welfare arrangement (MEWA), a voluntary employees’ beneficiary association (VEBA), or some other type of plan run by two or more employers.

“Section 4377(c) provides that, for purposes of subtitle F of the [Internal Revenue] Code, the fees imposed by sections 4375 and 4376 are treated as if they were taxes,” officials say.

Officials are asking if they should create an “average lives covered” safe harbor for insurers that report that statistic on the supplemental reporting form developed by the National Association of Insurance Commissioners, Kansas City, Mo.

Officials also are asking how they should apply, or not apply, the requirement to health reimbursement arrangements, what kinds of transitional rules they should offer, and whether more guidance about the terms “policy year” and “plan year” is needed.

Comments are due Sept. 6, 2011.

Other PPACA consequences coverage from National Underwriter Life & Health:


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