Midweek update

The New York Times reports that the Internal Revenue Service denied an income tax exemption to an accountable care organization (“ACO”) — owned by a non-profit health system — because the ACO provides care to commercially insured patients – yet Medicare patients would be OK.  ACO’s are blooming in the commercial insurance market because commercial insurers offer more contracting flexibility than the Centers for Medicare and Medicaid Services.  HHS is promoting ACO’s as a favored alternative payment method.  The ACO cost curve is bound to go up if the ACO is a taxable entity.

The IRS also released a general counsel opinion throwing cold water on wellness rewards paid to employees in cash — the great incentor. Taxable wages says the Service.  That’s a proper outcome under the current tax law in the FEHBlog’s opinion. It begs the question why doesn’t Congress change the tax law to exclude low dollar cash wellness rewards from taxation?  What’s wrong with saying it in green?  An alternative is to position the wellness rewards as premium or deductible reductions. The latter approach is available to FEHB plans, but the former is not according to OPM.

The Delaware Business Times tells us the Blue Cross licensee Highmark is offering their members the opportunity to use internet-based tricks to “nudge” family members and friends to undergo cancer screening tests.  (No doubt due to HEDIS quality measure requirements.)  “The nudges, available at www.allforhealth.com, include notes, coupons, bribes, social nudges and nudge-o-grams that can be customized with personal video, photos and special effects.” Tax consequences of nudging are unknown.

The Labor Department is offering a cheat sheet to help health plan members (and their lawyers) sniff out health plan violations of the complex rule implementing the federal mental health parity law.  Simplifying the rule would be preferable in the FEHBlog’s view.