The Patient-Centered Outcome Research Institute Fee

The Patient-Centered Outcomes Research Institute (PCORI) is authorized by Congress to conduct research to provide information about the best available evidence to help patients and their health care providers make more informed decisions. PCORI’s research is intended to give patients a better understanding of the prevention, treatment and care options available, and the science that supports those options.

PCORI is funded through the Patient-Centered Outcomes Research Trust Fund (PCORTF), which was authorized by Congress as part of the Patient Protection and Affordable Care Act of 2010 and receives income from two funding streams:  the general fund of the Treasury and a small fee assessed on health insurers and employers who sponsor self-insured health plans. The PPACA imposes a fee on health insurers and employer who sponsor self-insured health plans, for each policy or plan year ending on or after Oct. 1, 2012, and before Oct. 1, 2019, with the first fee payment due July 31, 2013. The PCORI fee will be due no later than July 31 following the last day of the plan year.  PCORI is expected to receive an estimated $3.5 billion from the PCORTF to fund patient-centered outcomes research through September 30, 2019, the date through which the Act authorizes it to remain in operation

For FYs 2014-2019, the PCORTF will receive $150 million from the general fund in appropriation plus an annual $2 fee per individual assessed on Medicare and private health insurance and self-insured plans and an adjustment for increase in healthcare spending. The combined estimated total averages $650 million per year.

The PCORI fee applies to all plans, grandfathered or not, small or big. In fully funded plans the issuer pays it for the plan; in self-funded plans the plan will pay it directly. Issuers will usually bill it back to the plan.  And it is a tax on all “members”, not participants. This will include not only employees but beneficiaries as well – i.e. anyone (including children) covered on the plan. So although it still is relatively small amount, it is more than it appears. One of the biggest costs comes in trying to figure out how the rules actually apply.

The fee is reported by the employer on IRS form 720.