Health Reform WK-EDGE Top 5 ACA-related legislation and final rules for 2015
Thursday, January 14, 2016

Top 5 ACA-related legislation and final rules for 2015

By Sheila Lynch-Afryl, J.D., M.A.

Throughout 2015, various agencies have continued to release final rules implementing the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). While 2015 saw upwards of 25 final rules implementing the ACA, those addressing the contraceptive mandate, the Medicare Shared Savings Program MSSP, and various provisions including preexisting condition exclusions are significant. Even more important was Congress’s successful passage of an omnibus spending bill that delayed key provisions of the ACA. This Strategic Perspective discusses the top five final rules implementing, and pieces of legislation amending, the ACA for 2015.

1. Omnibus Spending Bill

The Consolidated Appropriations Act, 2016 (P.L. 114-113) delayed some of the ACA’s most controversial provisions (see Changes to ACA requirements, COOL, cybersecurity, and more in Appropriations Act, December 23, 2015).

Cadillac tax. Section 101 of title I, division P of the law amended ACA sec. 9001 by delaying the imposition of the “Cadillac” tax two years, until January 1, 2020. Section 9001 provides that if the cost of employer-sponsored health coverage exceeds a threshold, the excess is subject to a 40 percent excise tax. The Cadillac tax attempts to reduce the overall cost of health care by discouraging high-cost plans.

Annual fee for health insurance providers. Section 201 of title II, division P of the law amended ACA sec. 9010(j) by imposing a one-year moratorium during 2017 on the annual fee imposed on health insurance providers, which the IRS began collecting in 2014.

Medical device tax. Health Care and Education Reconciliation Act (HCERA) (P.L. 111-152) sec. 1405(a)(1) imposes a 2.3 percent tax on the sale of certain medical devices by manufacturers, producers, and importers. Section 174 of Division Q of the appropriations bill amended 26 U.S.C. §4191, as added by HCERA sec. 1405(a)(1), by imposing a two-year moratorium on the medical device tax for sales in 2016 and 2017.

Menu labeling rules. In December 2014, the Food and Drug Administration (FDA) published a final rule (79 FR 71156) establishing menu nutritional labeling standards pursuant to Section 4205 of the ACA (see Finally final: FDA releases ACA mandated menu labeling requirements, December 3, 2014). The rules require a restaurant or similar retail food establishment that is a part of a chain with 20 or more locations doing business under the same name and offering for sale substantially the same menu items to provide nutritional information on menus and menu boards beginning on December 1, 2015. In July, the FDA extended (80 FR 39675) the compliance date one year, to December 1, 2016 (see FDA says a longer wait is on the table for restaurant labeling, July 15, 2015).

Division A title VII section 747 of the appropriations bill prohibits the use of funds to implement, administer, or enforce the food labeling final rule until the later of December 1, 2016, or one year after the HHS Secretary publishes Level 1 guidance with respect to nutritional labeling of standard menu items in restaurants and similar food establishments.

Risk corridors. Section 225 of the Consolidated Appropriations Act, 2016 prohibits fund transfers to the reinsurance risk corridors program, as required by Section 1342(b)(1) of the ACA. In October 2015, HHS noted that insurers will pay risk corridors charges of approximately $362 million for the 2014 plan year despite having requested $2.87 billion. In the event of a shortfall for the 2016 plan year, “HHS will explore other sources of funding for risk corridors payments.”

2. Contraceptive mandate: definition of “eligible organization”

In July, in response to the U.S. Supreme Court’s decision in Burwell v Hobby LobbyNo. 13-254 (2014), the Employment Benefits Security Administration (EBSA), CMS, and the Internal Revenue Service (IRS) modified the definition of an “eligible organization” for purposes of the contraceptive mandate, codified in Public Health Service Act (PHSA) Sec. 2713(a), as added by Section 1001(5) of the ACA (see Closely-held corporations provided with contraception coverage accommodation in final regulations, July 15, 2015).

Eligible organization. The final rule (80 FR 41318, July 14, 2015) defined an “eligible organization” as an organization that opposes providing coverage for some or all of any contraceptive items or services required to be covered on account of religious objections and that: (1) is organized and operates as a nonprofit entity and holds itself out as a religious organization, or (2) is organized and operates as a closely held for-profit entity and the organization’s highest governing body has adopted a resolution or similar action establishing that it objects to covering some or all of the contraceptive services on account of the owners’ sincerely held religious beliefs.

Amended 26 C.F.R. Sec. 54.9815-2713A29 C.F.R. Sec. 2590.715-2713A, and 45 C.F.R. Sec. 147.131 define a closely held for-profit entity as an entity that: (1) is not nonprofit, (2) has no publicly traded ownership interests, and (3) has more than 50 percent of the value of its ownership interest owned directly or indirectly by five or fewer individuals.

3. Improving Access to Emergency Psychiatric Care Act

Section 2707 of the ACA established the Medicaid Emergency Psychiatric Demonstration Project, under which Medicaid reimburses private psychiatric institutions for treatment of psychiatric emergencies provided to eligible Medicaid beneficiaries aged 21 to 64 who have an acute need for treatment. The ACA provided that the program would have a three-year duration.

The Improving Access to Emergency Psychiatric Care Act (P.L. 114-97) extended the project through fiscal year 2016 for states selected to participate on or before March 13, 2012, as long as a state's participation is projected not to increase net Medicaid program spending. The Secretary may permit an eligible state participating at the time HHS submits required recommendations on the program to Congress to continue participating through December 31, 2019, provided that the state's participation does not increase net Medicaid spending. The Secretary may expand the number of states eligible to participate through December 31, 2019 (see Emergency psychiatric care demonstration project extended, open to additional states, December 23, 2015).

4. Medicare Shared Savings Program final rule

ACA Sec. 3022, which added Soc. Sec. Act Sec. 1899, established the Medicare Shared Savings Program (MSSP). On June 9, 2015, CMS published a final rule (80 FR 32692) modifying the MSSP (see MSSP changes encourage ACOs to take on greater performance-based risk, June 10, 2015). The most significant change was the creation of a new Track 3, a second two-sided model under which the accountable care organization (ACO) shares in both savings and losses.

New 42 C.F.R. sec. 425.610 provides that an ACO that meets all the requirements for receiving shared savings payments under Track 3 will receive a shared savings payment of up to 75 percent of all the savings under the updated benchmark. The sharing loss rate must be between 40 and 70 percent, and the amount of shared losses for which an eligible ACO is liable may not exceed 15 percent of its updated benchmark. CMS also updated the requirements for claims data sharing and for participation as an ACO.

5. Grandfathered health plans and other provisions

On November 18, 2015, EBSA, the IRS, and HHS published a broad rule covering various aspects of the ACA (see Interim no more, ACA insurance reforms promoted, November 18, 2015). Generally, the final rule adopted without substantial change interim final regulations released by the agencies in 2010.

Grandfathered health plans. Section 1251 of the ACA provides that certain plans or coverage existing as of March 23, 2010, referred to as grandfathered health plans, are subject to only certain provisions of the ACA. The agencies described the statutory provisions that apply to grandfathered plans and changes that cause cessation of grandfather status.

Preexisting condition exclusions. Pursuant to PHSA Sec. 2704, as added by Section 1201 of the ACA, a group health plan, or a health insurance issuer offering group health insurance coverage, may not impose any preexisting condition exclusion.

Coverage of dependent children to age 26. Pursuant to PHSA Sec. 2714, as added by Section 1001(5) of the Affordable Care Act, a group health plan, or a health insurance issuer offering group health insurance coverage, that makes available dependent coverage of children must make such coverage available until age 26. With respect to a child who has not attained age 26, a plan or issuer may not define dependent for purposes of eligibility for dependent coverage of children other than in terms of a relationship between a child and the participant.


CMS and other agencies published more than 25 final rules implementing the ACA during 2015, fewer than what was published in 2014. Further, as 2015 ends, fewer proposed rules are pending as compared to this time last year. It remains to be seen whether the release of final rules is slowing down. It is, however, clearer that the battle over the ACA at the Congressional level is not over yet.

MainStory: StrategicPerspectives NewsFeed AccountableCareNews CadillacTaxNews ContraceptionCoverageNews DemonstrationProjectNews DependentCoverageNews FoodNews GroupMarketReformNews MedicaidNews MedicalDeviceTaxNews ReinsuranceNews

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