Health Law & Policy
| Nov 14 2019

Congress readying renewal of PCORI fee with employer-friendly changes

Geoff Manville
Partner, Mercer’s Law & Policy Group
Rich Glass
Principal, Mercer’s Law & Policy Group

Among the provisions in the Affordable Care Act is an annual fee dedicated to funding a research organization – the Patient-Centered Outcomes Research Institute (PCORI) – charged with establishing the comparative effectiveness of various medical treatments and services. While no one loves an annual fee, this one has been a particular bone of contention for employer health plan sponsors. The research is intended to help consumers, providers and policymakers make better informed decisions by advancing the quality and relevance of evidence-based medicine. But, largely because of statutory language that restricts PCORI’s ability to assess cost effectiveness, employers haven’t seen much bang for their buck.

The PCORI fee is paid by health insurers (fully insured plans) and employers (self-funded plans) on Form 720. The fee was $1 per covered life in the first year, but has ranged from $2.00 to $2.45 per covered life since then based on a formula using projected per-capita national health expenditures.

The fee is now scheduled to end this year for most plans (and next year for all others), so few tears were shed by sponsors of self-funded plans when they made what they thought was their last payment in July. Now, in a matter of weeks, we will likely see Congress pass a multi-year extension -- but with a number of employer-friendly changes to the underlying program, including encouraging more research on the relative costs and value of treatments or services.  

House-Senate negotiators are leaning toward a 10-year extension along with changes to the underlying program outlined in a letter recently sent to a bipartisan group of senators by employer and insurer groups. Draft Senate legislation addresses several employer suggestions, including consideration of relative cost and value in evaluating health outcomes and the clinical effectiveness of medical treatments and services.

The timing and final shape of the legislation are not clear, but Congress is highly likely to renew the fee and adopt many employer suggestions in must-pass legislation later this year or in early 2020. This is a great example of why it’s so important for employers to get involved in healthcare policy. Now let’s get the excised tax repealed – here’s how you can help.


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