In an effort to promote evidence-based research and improve healthcare outcomes, the Patient-Centered Outcomes Research Institute (PCORI) was established under the Affordable Care Act (ACA) in 2010. To fund its activities, PCORI collects a fee known as the PCORI fee from certain health insurance issuers and self-insured plan sponsors. The PCORI fee must be paid by July 31, 2023.
What is the PCORI Fee?
The PCORI fee is a per-employee, per-year fee levied on health insurance issuers and plan sponsors of self-insured group health plans. The fee is intended to support the research conducted by PCORI, which focuses on comparing the effectiveness of various medical treatments, procedures, and strategies. The aim is to provide patients, caregivers, and healthcare providers with evidence-based information to make informed decisions about healthcare options.
Purpose and Benefits:
The primary purpose of the PCORI fee is to generate funds for PCORI to conduct research that compares the effectiveness of different healthcare interventions. By evaluating the outcomes, benefits, risks, and costs associated with various treatment options, PCORI aims to provide valuable insights that can inform clinical decisions and improve patient outcomes. The research funded by PCORI helps to bridge the gap between research and clinical practice, ensuring that healthcare interventions are grounded in real-world effectiveness.
Who Pays the PCORI Fee?
The responsibility for paying the PCORI fee varies depending on the type of health insurance plan. In the case of fully insured plans, the fee is typically paid by the insurance company or health insurance issuer. For self-insured plans, the fee is paid by the plan sponsor, which is usually the employer.
Calculation and Reporting:
The PCORI fee is calculated based on the average number of covered lives under the health insurance plan for the policy year. The fee amount changes annually and is indexed to inflation. For plans that end on or after October 1, 2022, and before October 1, 2023, the PCORI rate per covered individual is $3.00.
Plan sponsors and insurance issuers must use one of three available calculation methods: the Actual Count Method, the Snapshot Method, or the Form 5500 Method. The chosen method must be consistently applied for the entire policy year.
Formula: Total number of covered lives ÷ Number of days in the policy year = Average number of covered lives
Once you have the average number of covered lives, you multiply it by the applicable PCORI fee rate to determine the total PCORI fee owed.
Formula: Sum of covered lives on snapshot dates ÷ Number of snapshot dates = Average number of covered lives
Similar to the Actual Count Method, once you have the average number of covered lives, you multiply it by the applicable PCORI fee rate to determine the total PCORI fee.
Formula: Number of participants reported on Form 5500 = Average number of covered lives
Once you have the average number of covered lives, you multiply it by the applicable PCORI fee rate to determine the total PCORI fee.
Impacts on Stakeholders:
Conclusion:
The PCORI fee plays a crucial role in funding research conducted by the Patient-Centered Outcomes Research Institute, which aims to improve healthcare outcomes by comparing the effectiveness of different treatments and interventions. While the fee is primarily paid by health insurance issuers or plan sponsors, its impact may indirectly affect employers, individuals, and employees through potential changes in premiums or cost-sharing arrangements. Understanding the PCORI fee helps stakeholders navigate the complex landscape of healthcare costs and decision-making based on evidence-based research.