IRS Proposes Regulations on Fees to Fund Patient-Centered Outcomes Research


The IRS has issued proposed regulations regarding the fees imposed by health care reform on health insurers and on sponsors of self-insured health plans to support clinical effectiveness research by the new Patient-Centered Outcomes Research Institute (sometimes referred to as CER or PCOR fees). The fees apply only to policy or plan years ending after Oct. 1, 2012, and before Oct. 1, 2019 (i.e., for seven full plan years). For years ending before Oct. 1, 2013, the fee is $1 times the average number of covered lives under the policy or plan. For later years, the fee rate increases to $2, subject to adjustment based on changes in per capita National Health Expenditures as reported by the Treasury.
Here are some highlights of the proposed regulations (which may be relied upon pending the issuance of final regulations):
•    Affected Policies and Plans

•    Definition of Self-Insured Plan Sponsor

•    Multiple Self-Insured Arrangements

•    Average Number of Lives Covered:

– an “actual count method” that takes into account the lives covered on each day during the plan year;
– a “snapshot method” based on the lives covered on one day during each quarter of the plan year (the snapshot method permits the number of lives covered by family coverage to be estimated by multiplying the number of participants by 2.35); or
– a “Form 5500 method” based on the number of participants as of the beginning and end of the plan year as reported on Form 5500 (under the Form 5500 method, the total number of lives is determined by simply adding the participant counts at the beginning and end of the year).

•    Payment Process and Timing

The full text of the proposed regulation is available at

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