Part IV. Items — Internal Revenue Bulletin 2014-15

Request for Information

Request for Information Regarding Provider Non- Discrimination

REG–108641–14

AGENCIES: Internal Revenue Service, Department of the Treasury; Employee Benefits Security Administration, Department of Labor; Centers for Medicare & Medicaid Services, Department of Health and Human Services.

ACTION: Request for information.

SUMMARY: This document is a request for information regarding provider nondiscrimination. The Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Departments) invite public comments via this request for information.

DATES: Comments must be submitted on or before June 10, 2014.

ADDRESSES: Written comments may be submitted to HHS. Any comment that is submitted will be shared with the other Departments. Please do not submit duplicates. All comments will be made available to the public. Warning: Please do not include any personally identifiable information (such as name, address, or other contact information) or confidential business information that you do not want publicly disclosed. All comments are posted on the Internet exactly as received and can be retrieved by most Internet search engines. No deletions, modifications, or redactions will be made to the comments received, as they are public records. Comments may be submitted anonymously.

You may submit comments in one of four ways (please choose only one of the ways listed):

Electronically . You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the “Submit a comment” instructions.
By regular mail . You may mail written comments to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9942-NC, P.O. Box 8016, Baltimore, MD 21244-8016.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

By express or overnight mail . You may send written comments to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9942-NC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

By hand or courier . Alternatively, you may deliver (by hand or courier) your written comments ONLY to the following addresses prior to the close of the comment period:

a. For delivery in Washington, DC—

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201

(Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

b. For delivery in Baltimore, MD—

Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address, call telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members.

Comments erroneously mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.

For information on viewing public comments, see the beginning of the “SUPPLEMENTARY INFORMATION” section.

FOR FURTHER INFORMATION CONTACT: Beth Baum or Amy Turner, Employee Benefits Security Administration, Department of Labor, at (202) 6938335; Karen Levin, Internal Revenue Service, Department of the Treasury, at (202) 317-6846; Cam Moultrie Clemmons, Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services, at (410)786-1565.

Customer Service Information: Individuals interested in obtaining information from the Department of Labor concerning employment-based health coverage laws may call the EBSA TollFree Hotline at 1–866–444–EBSA (3272) or visit the Department of Labor’s Web site ( http://www.dol.gov/ebsa ). In addition, information from HHS on private health insurance for consumers can be found on the CMS Web site ( www. cciio.cms.gov ), and information on health reform can be found at http://www. HealthCare.gov .

SUPPLEMENTARY INFORMATION:

I. Background

Section 2706(a) of the Public Health Service Act (PHS Act) ¹, as added by section 1201 of the Affordable Care Act, states that a “group health plan and a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license or certification under applicable state

1PHS Act section 2706(a) also is incorporated into section 715(a)(1) of the Employee Retiree Income Security Act (ERISA) and section 9815(a)(1) of the Internal Revenue Code (the Code). Accordingly, the Departments have concurrent jurisdiction over the implementation of PHS Act section 2706(a).

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law.” Section 2706(a) of the PHS Act does not require “that a group health plan or health insurance issuer contract with any health care provider willing to abide by the terms and conditions for participation established by the plan or issuer,” and nothing in section 2706(a) of the PHS Act prevents “a group health plan, a health insurance issuer, or the Secretary from establishing varying reimbursement rates based on quality or performance measures.”

On April 29, 2013, the Departments issued a Frequently Asked Question (FAQ), ² that states that section 2706(a) of the PHS Act is applicable to nongrandfathered group health plans and health insurance issuers offering group or individual coverage for plan years (in the individual market, policy years) beginning on or after January 1, 2014 and stated that until further guidance is issued, plans and issuers are expected to implement the requirements of section 2706(a) of the PHS Act using a good faith, reasonable interpretation of the law. The FAQ states that, for this purpose, to the extent an item or service is a covered benefit under the plan or coverage, and consistent with reasonable medical management techniques specified under the plan with respect to the frequency, method, treatment or setting for an item or service, a plan or issuer shall not discriminate based on a provider’s license or certification, to the extent the provider is acting within the scope of the provider’s license or certification under applicable state law. The FAQ also states that section 2706(a) of the PHS Act does not require plans or issuers to accept all types of providers into a network and also does not govern provider reimbursement rates, which may be subject to quality, performance, or market standards and considerations.

The Senate Committee on Appropriations Report dated July 11, 2013 (to accompany S. 1284) ³ states that section 2706 of the PHS Act “prohibits certain types of health plans and issuers from discriminating against any healthcare pro

vider who is acting within the scope of that provider’s license or certification under applicable State law, when determining networks of care eligible for reimbursement. The goal of this provision is to ensure that patients have the right to access covered health services from the full range of providers licensed and certified in their State. The Committee is therefore concerned that the FAQ document issued by HHS, DOL and the Department of Treasury on April 29, 2013, advises insurers that this nondiscrimination provision allows them to exclude from participation whole categories of providers operating under a State license or certification. In addition, the FAQ advises insurers that section 2706 allows discrimination in the reimbursement rates based on broad ‘market considerations’ rather than the more limited exception cited in the law for performance and quality measures. Section 2706 was intended to prohibit exactly these types of discrimination. The Committee believes that insurers should be made aware of their obligation under section 2706 before their health plans begin operating in 2014. The Committee directs HHS to work DOL and the Department of Treasury to correct the FAQ to reflect the law and congressional intent within 30 days of enactment of this act.” ⁴

II. Solicitation of Comments

Pursuant to this report, the Departments are requesting comments on all aspects of the interpretation of section 2706(a) of the PHS Act. This includes but is not limited to comments on access, costs, other federal and state laws, and feasibility.

Signed at Washington, DC this 6 ^th day of March, 2014.

Victoria A. Judson, Division Counsel/ Associate Chief Counsel,

Tax Exempt and Government Entities,

Internal Revenue Service. Department of the Treasury.

Signed at Washington, DC this 6 ^th day of March, 2014.

George H. Bostick, Benefits Tax Counsel, Department of the Treasury.

Signed this 5 ^th day of March, 2014.

Phyllis C. Borzi Assistant Secretary, Employee Benefits Security

Administration, Department of Labor.

Dated: March 6, 2014

Marilyn Tavenner,

Administrator, Centers for Medicare & Medicaid Services.

Dated: March 6, 2014

Kathleen Sebelius,

Secretary, Department of Health and Human Services.

2 See FAQs about Affordable Care Act Implementation Part XV, available at http://www.dol.gov/ebsa/faqs/faq-aca15.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/ aca_implementation_faqs15.html .

3 S. Rep. No. 113–71, at 126 (2013).

4 S. Rep. No. 113–71, at 126 (2013). Additionally, in Title I of the report, regarding the Department of Labor Employee Benefits Security Administration, the Committee “directs the Department to work with HHS and the Department of the Treasury to revise their joint FAQ regarding section 2706 of the ACA, as explained in the HHS title of this report.” S. Rep. No. 113–71, at 27 (2013).

Bulletin No. 2014–15 929 April 7, 2014

Withdrawal of Notice of Proposed Rulemaking and Notice of Proposed Rulemaking

Removal of the Qualified Payment Card Agent Program

REG–163195–05

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Withdrawal of notice of proposed rulemaking and notice of proposed rulemaking.

SUMMARY: This document contains proposed regulations that will remove regulations relating to information reporting and backup withholding for the Qualified Payment Card Agent (QPCA) Program. This document also amends regulations to remove references to the QPCA Program and withdraws proposed regulations relating to the QPCA Program. Enactment of the payment card and third party network reporting requirements in the Housing Assistance Tax Act of 2008 made the QPCA Program obsolete. Because no payors have applied to be designated as a QPCA (and no payors have been designated as a QPCA), no taxpayers will be affected by these proposed regulations.

DATES: Comments and requests for a public hearing must be received by June 23, 2014.

ADDRESSES: Send submissions to: CC: PA:LPD:PR (REG–163195–05), room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be handdelivered Monday through Friday between the hours of 8:00 a.m. and 4:00 p.m. to CC:PA:LPD:PR (REG–163195–05), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, DC 20224. Alternatively, taxpayers may submit comments electronically via the Federal eRulemaking Portal at www. regulations.gov (IRS REG–163195–05).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Michael Hara, (202) 3175417; concerning the submission of comments and requests for a public hearing, Oluwafunmilayo Taylor, (202) 317-6901 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

This document contains proposed regulations to remove deadwood provisions implementing the now obsolete QPCA Program. When finalized, the proposed regulations would remove § 31.3406(g)– 1(f), § 301.6724–1(e) (1)(vi)(H), and § 301.6724–1(f)(5)(vii). In addition, the proposed regulations would amend § 301.6724–1(c)(6) to remove references to QPCAs. This document also withdraws proposed regulations (REG–163195–05) relating to the QPCA Program.

The QPCA Program was developed by the IRS to enhance the accuracy of section 6041 information reporting in transactions where a payment card, such as a credit card, is accepted as payment. Under the QPCA Program, a payment card organization may apply to be designated as a QPCA. For this purpose, a payment card organization is an entity that sets the standards and provides the mechanism, either directly or indirectly through members and affiliates, for effectuating payment between a purchaser and a merchant in a payment card transaction. See § 5.06 of Notice 2007–59, 2007–30 IRB 135 (July 23, 2007). Once designated, the QPCA may act on behalf of a payor/cardholder to solicit, collect, and validate the name and taxpayer identification number (TIN) of a payee/merchant, and provide that information to the payor/cardholder so that the payor/cardholder can meet its section 6041 reporting obligation, if any. Enactment of section 6050W and changes to the regulations under section 6041 obsolete the QPCA Program by requiring payment card organizations, rather than payor/cardholders, to report payments made in payment card transactions to payees/merchants. See § 1.6041– 1(a)(1)(iv) (eliminating duplicate reporting under section 6041 if the payment is

subject to reporting under section 6050W). Section 6041(a) requires persons engaged in a trade or business and making payment in the course of such trade or business to another person of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income of $600 or more in any one taxable year to file information returns with the IRS and to furnish information statements to payees. Among other items, the payor must include the payee’s name and TIN on the information return and the information statement. Section 3406(a)(1) requires a payor to withhold on any reportable payment (as defined in section 3406(b)(1)) if: (1) the payee fails to furnish the payee’s TIN to the payor as required; or (2) the Secretary notifies the payor that the TIN furnished by the payee is incorrect.

On January 31, 2003, temporary regulations relating to the IRS TIN Matching Program were published in the Federal Register (TD 9041) (68 FR 4922). Under the IRS TIN Matching Program, a participating payor may reduce name/TIN errors on information returns by contacting the IRS before filing to verify whether the name and TIN combination furnished by a payee matches IRS records. The 2003 temporary regulations permit a payor’s authorized agent to participate in the IRS TIN Matching Program on behalf of the payor. Under the authority of these temporary regulations, the IRS issued Rev. Proc. 2003–9 (2003–1 CB 516 (February 24, 2003)) (see § 601.601(d)(2)(ii)( b ) of this chapter) to allow all payors, as well as a payor’s authorized agent, to participate in the IRS TIN Matching Program.

A notice of proposed rulemaking (REG–116641–01) cross-referencing the 2003 temporary regulations was also published in the Federal Register (68 FR 4970) for January 31, 2003. The notice of proposed rulemaking contained additional proposed rules relating to the information reporting and backup withholding requirements for payment card transactions effectuated through a QPCA.

On February 24, 2003, Notice 2003–13 (2003–1 CB 513 (February 24, 2003)) (see § 601.601(d)(2)(ii)( b ) of this chapter) was published in the Internal Revenue

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Bulletin, announcing a proposed revenue procedure that would establish a procedure for a payment card organization to request a determination that it is a QPCA.

On July 13, 2004, final regulations relating to the information reporting requirements, information reporting penalties, and backup withholding requirementsfor payment card transactions effectuated through a QPCA were published in the Federal Register (TD 9136) (69 FR 41938). The amendments implementing the QPCA Program were generally effective for payments made on or after January 1, 2005. The final regulations also made the temporary regulations implementing the TIN Matching Program permanent.

On August 2, 2004, Revenue Procedure 2004–42 (2004–2 CB 121 (August 2, 2004)) (see § 601.601(d)(2)(ii)( b ) of this chapter) was published in the Internal Revenue Bulletin, setting forth procedures for a payment card organization to request a determination that it is a QPCA. Also on August 2, 2004, Revenue Procedure 2004–43 (2004–2 CB 124 (August 2, 2004)) (see § 601.601(d)(2)(ii)( b ) of this chapter) was published in the Internal Revenue Bulletin, setting forth an optional procedure for payors who make payments in the course of their trade or business through payment cards to use Merchant Category Codes, or other similar codes to determine whether the payments are reportable under sections 6041 and 6041A.

On July 13, 2007, a notice of proposed rulemaking (REG–163195–05) proposing revisions to the QPCA Program allowing merchants to opt-out of the QPCA Program and permitting QPCA’s to furnish certain payee notifications electronically was published in the Federal Register (72 FR 38534).

On July 23, 2007, Notice 2007–59 (2007–30 IRB 135 (July 23, 2007)) (see § 601.601(d)(2)(ii)( b ) of this chapter) was published in the Internal Revenue Bulletin, which provided a proposed revenue procedure that would supersede Rev. Proc. 2004–42 to revise procedures for a payment card organization to request a determination that it is a QPCA.

On July 30, 2008, Congress enacted the Housing Assistance Tax Act of 2008, Public Law 110–289, which added sec

tion 6050W to the Internal Revenue Code. Section 6050W requires payment settlement entities, including payment card organizations, to report payments made in settlement of payment card and third party network transactions. Regulations published under section 6050W and section 6041 provide, among other things, that payments required to be reported under section 6050W are not also required to be reported under section 6041. See § 1.6041–1(a)(1)(iv). Because payment card organizations now have a reporting obligation with respect to payment card transactions, there is no longer a need for payment card organizations to solicit, collect, and verify payee/merchant names/ TINs for the payor/cardholder. Thus, enactment of section 6050W made the QPCA Program obsolete. Accordingly, the regulations under § 31.3406(g)–1(f), § 301.6724–1(e)(1)(vi)(H), and § 301.6724– 1(f)(5)(vii) are proposed to be removed, § 301.6724–1(c)(6) of the regulations is proposed to be amended, and the proposed regulations published in the Federal Reg- ister on July 13, 2007, are being withdrawn. In addition, Revenue Procedure 2004–42, Revenue Procedure 2004–43, Notice 2003–13, Notice 2003–37, and Notice 2007–59 are obsoleted. See § 601.601(d)(2)(ii)( b ).

Effective Date

Sections 31.3406(g)–1(f), § 301.6724– 1(e)(1)(vi)(H), and § 301.6724–1(f)(5)(vii) would be removed on the date these regulations are published as final regulations in the Federal Register . Amendments to § 301.6724–1(c)(6) would be effective on the date these regulations are published as final in the Federal Register .

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. Because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility

Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the “Addresses” heading. The Treasury Department and the IRS requested comments on all aspects of the proposed rules. All comments will be available at www.regulations.gov or upon request.

A public hearing will be scheduled if requested by any person who timely submits comments. If a public hearing is scheduled, notice of the date, time, and place for the hearing will be published in the Federal Register .

Effect on Other Documents

The following publications are obsolete as of the date these regulations are published as final regulations in the Fed- eral Register : Notice 2003–13, (2003–1 CB 513); Notice 2003–37 (2003–1 CB 1121); Rev. Proc. 2004–42 (2004–2 CB 121); Rev. Proc. 2004–43 (2004–2 CB 124); and Notice 2007–59 (2007–30 IRB 135) (see § 601.601(d)(2)(ii)( b ) of this chapter).

Withdrawal of Notice of Proposed Rulemaking

Accordingly, under the authority of 26 U.S.C. 7805, the notice of proposed rulemaking (REG–163195–05) that was published in the Federal Register on July 13, 2007 (72 FR 38534) is withdrawn.

Drafting Information

The principal author of these proposed regulations is Michael Hara of the Office of Associate Chief Counsel (Procedure and Administration).

Bulletin No. 2014–15 931 April 7, 2014

List of Subjects

Proposed Amendments to the Regulations

Accordingly, 26 CFR parts 31 and 301 are proposed to be amended as follows:

PART 31—EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE

Paragraph 1. The authority citation for part 31 continues to read in part as follows:

Authority: 26 U.S.C. 7805 - -

§ 31.3406(g)–1 [Amended]

Par. 2. Section 31.3406(g)–1 is amended by removing paragraph (f).

PART 301–PROCEDURE AND ADMINISTRATION

Par. 3. The authority citation for part 301 continues to read in part as follows: Authority: 26 U.S.C. 7805. - -

§ 301.6724–1 [Amended]

Par. 4. Section 301.6724–1 is amended by:

a. Removing the language “or a qualified Payment Card Agent (QPCA) as de

fined in § 31.3406(g)–1(f)(2)(v) of this chapter,” from the introductory text of paragraph (c)(6).

b. Removing paragraphs (e)(1)(vi)(H) and (f)(5)(vii).

John Dalrymple Deputy Commissioner for Services and Enforcement.

(Filed by the Office of the Federal Register on March 21, 2014, 8:45 a.m., and published in the issue of the Federal Register for March 24, 2014, 79 F.R. 15926)

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