With authorization from Congress, the Patient-Centered Outcomes Research Institute (PCORI) conducts millions of dollars’ worth of research on how to identify the manner in which diseases, disorders, and other health conditions can most effectively and appropriately be prevented, diagnosed, treated, and managed clinically. To fund this research, Congress established the Patient-Centered Outcomes Research Institute as part of the numerous other health-care related measures passed under the Patient Protection and Affordable Care Act of 2010 (PPACA).

PCORI receives its funding from, first, the general fund of the Treasury, and, secondly, a fee assessed on: (1) issuers of specified health insurance policies and (2) plan sponsors of applicable self-insured health plans. The Patient-Centered Outcomes Research Institute has estimated that it will receive approximately $3.5 billion through October 1, 2019 when its authorization expires.

The PCORI fee will be assessed against “specified health insurance policies” for plan years ending after September 30, 2012 through October 1, 2019. The IRS has announced that it will collect the PCORI fee for the first time this summer on July 31, 2013. That means insurance providers and certain plan sponsors must prepare for reporting and paying the fee.

What is a “specified health insurance policy?”
The Internal Revenue Code imposes the PCORI fee on each “specified health insurance policy” for each policy year ending after September 30, 2012. A “specified health insurance policy” is defined as any accident or health insurance policy (including a policy under a group health plan) issued with respect to individuals residing in the United States (including possessions).

Certain policies are exempt if substantially all of their coverage consists of excepted benefits, such as coverage only for accident, or disability income insurance, liability insurance or coverage issued as a supplement to liability insurance, workers’ compensation, automobile medical payment insurance, credit-only insurance, or coverage for on-site medical clinics.