What are the comparative effectiveness research fees?
To support clinical effectiveness of medical treatments, procedures, drugs, and other strategies, Section 6301 of PPACA created a new nonprofit corporation, the Patient-Centered Outcomes Research Institute, Code Sections 4375 and 4376 provide that this entity will be funded in part by fees paid by certain health insurers and applicable sponsors of self-insured health plans.
When will these fees apply?
Code Sections 4375 and 4376 provide that these fees are payable in connection with “specified health insurance policies” and “applicable self-insured health plans” for policy/plan years ending after September 30, 2012, but stop applying for policy/plan years ending after September 30, 2019. For calendar-year policies/plans, this means that these fees would apply for calendar policy/plan years 2012 through 2018.)
What policies and plans are subject to these fees?
Under Code Sections 4375(b) and 4376(b), these fees are payable by insurers of specified health insurance policies and by sponsors of applicable self-insured health plans.
Under Code Section 4375(c), a “specified health insurance policy” is defined as an accident or health insurance policy (including a policy under a group health plan) issued with respect to individuals residing in the U.S.
Under Code Section 4576(c), an “applicable self-insured health plan” is defined as a plan providing accident or health coverage, any portion of which is provided other than through an insurance policy, and which is established or maintained for employees or former employees by an employer, a union, or specified groups of employers (including multiple employer welfare arrangements).
Are there any exceptions to these fees?
Under Code Section 4375(c), these fees do not apply if substantially all of the coverage is of excepted benefits under Code Section 9832(c). Excepted benefits include, among others, health FSAs satisfying certain conditions, certain limited-scope dental and vision coverage, and certain supplemental coverage.
What is the amount of these fees?
Under Code Sections 4375(a) and 4376(a), the fee is $2.00 times the average number of covered lives under the policy or plan (the multiplier is $1.00 in the case of policy or plan years ending before October 1, 2013).
For certain later years, Code Sections 4375(d) and 4376(d) provide that this fee will increase based on the percentage increase in the projected per capita amount of National Health Expenditures.
Code Section 4377(c) provides that these fees are generally assessed, collected, and enforced in the same manner as taxes under other Code provisions.
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