WASHINGTON BUREAU — The ERISA Industry Committee (ERIC)– an employer group – is asking the Internal Revenue Service (IRS) to make administration of the new comparative effectiveness research fee as simple as possible.
“The fee and the associated administrative costs are real and immediate, and apply at a time when ERIC’s members are struggling to cope with a mounting roster of expensive health mandates, as well as increasing health care costs,” ERIC President Mark Ugoretz says in a comment letter sent to the IRS.
ERIC submitted the plea for simplicity in response to a request for comment posted by the IRS in June.
The IRS issued the notice to start the process of implementing 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 (PCORI). The institute is supposed to help the government, private insurers, employers, consumers and providers determine which treatments 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 are supposed to pay for the PCORI work by imposing a fee of $2 per life, indexed for the national health care inflation rate, on health insurance policies and “applicable self-insured health plans,” based on the average number of lives covered under the policy or plan.
The fees are supposed to take effect for policy and plan years ending after Sept. 30, 2012.
ERIC is urging the IRS to administer the new fee in a way that avoids duplication and does not require an employer to pay the fee more than once for the same covered individual.
The IRS also should refrain from requiring employers to set up costly systems to determine the actual average number of lives covered, Ugoretz says in the ERIC letter.
“ERIC believes that this approach is consistent with the intent of the provision imposing the fee,” Ugoretz says.
ERIC recommends that employers should be permitted to treat all accident and health benefits sponsored by an employer as one applicable self-insured plan for purposes of the fee, Ugoretz says.
“If employers are not permitted to aggregate plans, an employer might be required to pay a higher fee merely because it has structured its accident and health coverage as separate plans for unrelated business reasons,” Ugoretz says.
ERIC also recommends that the agencies provide at least two safe harbor methods that employers can use to determine the average number of covered lives, and that the safe harbor methods use assumptions that simplify the process of determining the number of participants and dependents enrolled in self-insured plans.
One safe harbor method proposed by ERIC would be based on use of the number of participants shown on a plan’s Form 5500 annual report.
The second safe harbor would permit an employer to count employees each month and then average the monthly totals over the course of a year, Ugoretz says.
The IRS should keep the rules for counting the number of beneficiaries especially simple, because that is a number often not tracked by employers, Ugoretz says.