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The big non-PPACA product appeal: 3 things to know

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In the past few years, the major Patient Protection and Affordable Care Act (PPACA) court battles have involved constitutional battles.

Does Congress have the constitutional authority to make individuals pay for broccoli or else pay a “penalty” to the Internal Revenue Service?

Does the U.S. Department of Health and Human Services (HHS) have the authority to interpret PPACA to mean that employers have to cover birth control costs, or at least tell HHS that they have opted out of covering birth control?

This year, one of the closely watched health law cases, Central United Life et al. vs. Burwell et al. (Case Number 15-5310), has to do with PPACA nuts and bolts: how HHS applies a provision that exempts “excepted benefits,” or supplemental health insurance products, from the PPACA major medical health insurance medical underwriting restrictions and benefits mandates.

See also: King vs. Burwell: Not the only PPACA court game around

In May 2014, HHS tried to impose restrictions to ensure that insurers would sell one type of supplemental product, fixed indemnity health insurance, only to consumers who were using the products to supplement the kind of major medical coverage that HHS classifies as “minimum essential coverage” (MEC), not as a substitute for MEC.

HHS said that it would not require sellers of indemnity products to verify whether consumers had MEC, but that it would require the consumers buying the supplemental products to attest that they had MEC.

Central United Life Insurance Company and Senior Security Benefits Inc. sued the HHS secretary, HHS, the Centers for Medicare & Medicaid Services (CMS), and the head of CMS over the indemnity health insurance attestation requirement in a U.S. District Court in Texas in 2014. 

Royce Lamberth, a U.S. senior district judge, ruled in favor of the plaintiffs in September 2015. He issued a permanent injunction prohibiting HHS from putting the attestation requirement into effect.

HHS filed an appeal with the U.S. District Court for the District of Columbia in November 2015. The court has scheduled oral argument for April 15. Quin Sorenson and other lawyers at Sidley Austin LLP are representing the insurers.

Alisa Klein, a lawyer at the U.S. Department of Justice, is at the top of the list of lawyers representing HHS and CMS.

For more about the battle, read on.

Piece in a puzzle

1. HHS says it needs the flexibility to interpret a vague provision of the law.

Congress never gave a definition of “fixed indemnity insurance,” and PPACA drafters clearly would have wanted HHS to keep consumers from using the product as an inadequate substitute for health insurance, HHS says in a court filing.

The HHS regulation “addresses an interstitial matter that falls within the agency’s expertise,” the department says.

The American Heart Association and AARP have warned that many consumers with inadequate coverage may not understand the deficiencies until the bills start rolling in, the department says.

See also: 5 hot battles over the PPACA-free zone

A man with a sign saying, "No!"

2. Insurers say HHS clearly exceeded the authority PPACA gave it.

Drafters of the law included a provision expressly exempting fixed indemnity insurance from PPACA requirements, the insurers have argued in court filings.

Many of the consumers who buy the products are unwilling to pay for major medical coverage, but they are willing to pay the combined cost of indemnity health insurance premiums and the PPACA penalty now imposed on consumers who fail to have what HHS defines as MEC, the insurers say.

See also: HHS may kill stand-alone indemnity

U.S. Capitol

3. The insurers say an HHS notice rule that’s already in effect provides all the protection consumers need.

The insurers have noted in a court pleading that HHS requires issuers to warn, in large type, that a supplemental product “IS A SUPPLEMENT TO HEALTH INSURANCE AND IS NOT A SUBSTITUTE FOR MAJOR MEDICAL COVERAGE.”

“By itself, this notice is more than sufficient to address the government’s concerns regarding consumer confusion,” the insurers argue.

PPACA does not give the government authority or discretion to require a consumer to buy MEC before buying fixed indemnity insurance, the insurers say.

See also:

What Will the NAIC’s Limited Medical Benefit Panel Cover?

When Clients Have Gaps In Health Coverage-Sell Plugs


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