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Health Care Reform Overview and Implementation

Health Care Reform Overview and Implementation . Jim Smith American Continental Group 900 19 th Street, N.W. Washington, DC 20006 202-327-8100. Health Care Reform Legislation. The new health care reform law contains two parts:

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Health Care Reform Overview and Implementation

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  1. Health Care Reform Overview and Implementation Jim Smith American Continental Group 900 19th Street, N.W. Washington, DC 20006 202-327-8100

  2. Health Care Reform Legislation • The new health care reform law contains two parts: • PatientProtection and Affordable Care Act (PPACA) signed into law March 23, 2010 (P.L.111-148) • Health Care and Education Affordability Act Reconciliation Act signed into law March 30, 2010 (P.L.111-152) • They include numerous provisions intended to: • expand access to health insurance • improve the quality and comprehensiveness of coverage • make coverage more affordable for all Americans • Hundreds of mistakes, ambiguities and blank holes to be addressed by administrative rulemaking, technical corrections and Secretarial discretion.

  3. Big Picture

  4. Individual Mandate • Requires U.S. citizens and legal residents to have qualifying health coverage. • Those without coverage pay a tax penalty of the greater of $695 per year up to a maximum of three times that amount ($2,085) per family or 2.5% of household income. • The penalty will be phased in according to the following schedule: $95 in 2014 for the flat fee Or: 1.0% of taxable income in 2014 $325 in 2015 for the flat fee 2.0% of taxable income in 2015 $695 in 2016 for the flat fee 2.5% of taxable income in 2016 • Beginning after 2016, the penalty will be increased annually by the cost-of-living adjustment. • Exemptions will be granted for various groups (i.e. financial hardship, religious objections, American Indians, and others).

  5. Health Insurance Exchange • Creates state-based exchanges for individuals and small businesses with up to 100 employees to purchase qualified coverage. Funding available to states to establish Exchanges within one year of enactment and until January 1, 2015. • Permits states to allow businesses with more than 100 employees to purchase coverage in the SHOP Exchange beginning in 2017. • Requires the Office of Personnel Management to contract with insurers to offer at least two multi-state plans in each Exchange.

  6. Health Insurance Exchange (cont.) • Authorizes a Consumer Operated and Oriented Plan (CO-OP) program of $6 billion to promote the creation of state non-profit, member-run health insurance companies. • Permits states to create a Basic Health Plan for individuals between 133-200% FPL. • Requires all plans operating in the Exchanges to pay FQHCs a rate that is no less than their Medicaid PPS rates.

  7. Subsidies to Individuals • Provides tax credits for premiums and cost sharing for individuals with incomes up to 400% of the federal poverty level • Limits Exchanges to U.S. citizens and legal immigrants • Employee plans must have an actuarial value of at least 60% if the employee-share of the premium exceeds 9.8% of income. • Provides refundable and advance-able premium credits to eligible individuals and families with incomes between 133-400% FPL to purchase insurance through the Exchanges on a sliding scale

  8. Employer Requirements • $2,000 fee per full-time employee on employers with more than 50 employees not offering coverage with at least one full-time employee who receives a premium tax credit (first 30 employees excluded) Employers with 50 or fewer employees will be exempt from any penalties. • Starting January 1, 2014, employers with more than 50 employees offering coverage with at least one full-time employee receiving a premium tax credit will pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee. • Free Choice Vouchers starting January 1, 2014.

  9. Small Business Tax Credit • A tax credit for employer contributions to pay for health insurance for employees, applies to taxable years beginning on or after January 1, 2010. • To qualify: • No more than 25 full-time equivalent employees • Average annual full-time equivalent wages not exceeding $50,000. • To qualify for maximum credit: • No more than 10 full-time equivalent employees • Average annual full-tine equivalent wages not exceeding $25,000.

  10. Plans - - What is a Grandfather? • Grandfathered plans (any group or individual health plan inexistence on March 23, 2010) are exempt from some of the new healthinsurance plan requirements • In addition, the penalty under the Employer Mandate appliesonly to non-grandfathered plans • Modifications to the existing plan may result in loss ofgrandfathered status. Rules are expected from HHS. • Maintaining grandfathered plan status may be an importantobjective for some employers

  11. No Lifetime and Annual Limits • No dollar value maximum limits on benefits, except on specific covered benefits that are not essential health benefits • Applies to Grandfathered Plans (GF Plans) and Nongrandfathered Plans (NGF Plans) • Effective plan years beginning on or after September 23, 1010 • HHS may provide for exceptions

  12. No Preexisting Conditions • Elimination of preexisting conditions exclusions • Applies to GF Plans and NGF Plans • Elimination of PCE's for children under age 19 effective for plan years beginning on or after September 23, 2010 • Generally effective for all participants plan years beginning on or after January 1, 2014

  13. Dependent Coverage to Age 26 • Plans covering dependent children must allow continued coverage up until age 26 • Applies to GF Plans and NGF Plans • Effective plan years beginning on or after September 23, 2010 • Full time student and unmarried conditions cannot apply

  14. No Rescissions • Health plans cannot rescind coverage, except for fraud or intentional misrepresentations • Applies to GF Plans and NGF Plans • Effective plan years beginning on or after September 23, 2010

  15. Preventive Care • Certain preventive care received without cost sharing • Applies to NGF Plans only • Effective for plan years beginning on or after September 23, 2010

  16. Pre-Authorizations • Elimination of plan requirements to obtain prior authorization or pay increased cost sharing for in-network or out-or-network emergency services, or obtain prior authorizations or referrals for obstetrical and gynecological care. • Applies to NGF Plans • Effective plan years on or after September 23, 2010

  17. Auto Enrollment • Auto enrollment for new hires of large employers (more than 200 full-time employees). • Applies to GF Plans and NGF Plans. • Effective Dates of March 23, 2010 or when specified in regulations issued by DOL.

  18. Health Care Flexible Spending Accounts • New annual limit of $2,500 per employee • Effective for taxable years beginning on or after January 1, 2013

  19. Cost Sharing Limits • Annual out of pocket limits (indexed for inflation) cannot exceed the limits that apply to HSA's ($5,950 single/$11,900 family) • Deductibles cannot exceed $2,000 for single coverage and $4,000 for family coverage (both indexed for inflation) • Applies to NGF Plans only • Effective plan years beginning on or after January 1, 2014

  20. Waiting Periods • Waiting periods cannot exceed 90 days • Applies to GF Plans and NGF Plans • Effective plan years beginning on or after January 1, 2014

  21. Wellness Plans • Maximum permissible employer wellness programs incentive • based on satisfying a standard related to a health status factor • is increased to 30% from 20% of employer and employee plan • cost for applicable coverage • Effective plan years beginning on or after January 1, 2014

  22. Pilot and Demonstration Projects • Numerous Pilots and Demos in Reform Law • Operated out of the newly created Center for Medicare and Medicaid Innovation • Focus on “wellness,” quality of care, keeping people in their homes longer

  23. Demo Projects (examples) • Bundled Payment Demo • Medicaid global payment system Demo • Pediatric Accountable Care Organization Demo • Independence at home Demo • Extension of gainsharing Demo • Medicare hospice concurrent care Demo • Patient navigator program • Demonstration project concerning individualized wellness plan

  24. Pilots & Demo Projects Implementation CMS Has Broader Authority on Pilots and Demos  • Budget Neutrality Relaxed. CMS has wider latitude to see if cost savings will materialize over periods longer than 5 yrs. • CMS has more latitude in evaluation and implementation. CMS historically needed at least 5 years to move from the creation of a pilot to making a national policy change from it. Now, CMS has been given legal authority to roll out some or all of the attributes of a pilot without doing a post evaluation or going to Congress (as long as CMS sees that the pilot or a part of the pilot saves money). This can happen at anytime during the pilot. • Too soon to evaluate how these changes will affect the use of pilots/demonstration projects, but the changes could prove significant.

  25. Accountable Care Organizations A group of providers who agree to manage quality, cost, and overall care of a defined population of Medicare fee-for-service beneficiaries • Must participate in the program for at least three years • Have a formal legal structure allowing it to receive and distribute payments for shared savings • Include enough primary care professionals to cover the Medicare beneficiaries assigned to it • Have in place leadership and management structures that include clinical and administrative systems • Define processes to promote evidence-based medicine and patient engagement • Demonstrate to the Secretary that it meets patient-centeredness criteria

  26. ACO Implementation Issues • Establishment of ACO qualification criteria • Interaction with federal antitrust law • Interaction with state insurance regulation • Payment methodologies • Beneficiary safeguards • Multi-payer participation • Performance measurement and reporting • Selection and expansion of pilots • Interaction with Medicare Advantage

  27. Hospitals • Rising level of coverage for uninsured patients • Reductions in funding for Medicare disproportionate share • More coordinated care, financial risk and public accountability • Medicare cuts drive efforts to "bend the cost curve“ by promoting safety and efficiency • Episodic Payments create bundled payments and penalties for readmissions

  28. New Rules for Non Profits: • Conduct a community health needs assessment once every three years • Adopt financial assistance policy • Limit charges for those qualifying for financial assistance • Refrain from extraordinary collection actions before making reasonable efforts to determine whether a patient qualifies for financial assistance • Tax-exempt hospitals must include and disclose additional information on Form 990 Schedule H (community needs assessment implementation and financial audits). • IRS must review every exempt hospital’s community benefit activities as reflected on its Form 990/Schedule H at least once every three years • Treasury Secretary must report annually to Congress on comparative levels of hospital charity care and complete a Congressional study on emerging trends after five years

  29. Community Benefit and Tax Exemption • The annual reports must also include information on costs incurred by tax-exempt hospitals for community benefit activities. • The Secretary must also prepare a study on the trends emerging in the annual reports and submit it to Congress within 5 years.

  30. Community Health Centers • Authorizes and appropriates $9.5 billion in the following annual amounts to a new Community Health Centers Trust Fund for the purpose of expanding Community Health Centers’ operational capacity to serve nearly 20 million new patients and enhance their medical, oral, and behavioral health services: • $1 billion for FY2011; • $1.2 billion for FY2012; • $1.5 billion for FY2013; • $2.2 billion for FY2014; • $3.6 billion for FY2015. • Within the Community Health Centers Trust Fund, also authorizes and appropriates $1.5 billion over five years to allow Community Health Centers’ to meet their capital needs by expanding and improving existing facilities and constructing new sites. • TOTAL = $11 billion over five years.

  31. National Health Service Corps Program Funding • Authorizes and appropriates the following annual amounts to a new National Health Service Corps Trust Fund: • $290 million for FY 2011; • $295 million for FY 2012; • $300 million for FY 2013; • $305 million for FY 2014; • $310 million for FY 2015. • TOTAL = $1.5 billion over five years. • Allows for teaching to count as clinical practice for up to 50% of obligated service.

  32. Medicaid Expansion • Medicaid for all up to 133% FPL based on modified adjusted gross income beginning January 1, 2014, All states go to 90% FMAP by 2020 • Guarantees “Essential Health Benefits” as defined in the law. • Eliminates cost-sharing for preventive services in Medicaid and Medicare. • States can expand Medicaid eligibility to childless adults beginning April 1, 2010. • Increases Medicaid payments in fee-for-service and managed care for primary care services provided by primary care doctors (family medicine, general internal medicine, or pediatric medicine) to 100%

  33. Treatment of CHIP • Require states to maintain current income eligibility levels for children in Medicaid and CHIP until 2019 and extend funding for CHIP through 2015. CHIP benefit package and cost sharing rules will continue as under current law. • Beginning in 2015, states will receive a 23 percentage point increase in the CHIP match rate up to a cap of 100%. • CHIP-eligible children who are unable to enroll in the program due to enrollment caps will be eligible for tax credits in the state Exchanges.

  34. FQHC Medicare Payments • FQHC preventive services are updated to include an expanded list of preventives services covered under Medicare, effective for services provided on or after January 1, 2011. • FQHCs’ Medicare reimbursement will be updated to a new PPS payment methodology effective on or after October 2014. At this time, both the Medicare cap and productivity screen are eliminated.

  35. Prevention and Wellness Programs • Appropriates $7B annually to establish a Prevention and Public Health Fund (prevention, wellness, and public health activities, including prevention research and health screenings, the Education and Outreach Campaign for preventive benefits, and immunization programs) • Provides grants for up to five years to small employers that establish wellness programs. • Establishes a demonstration program for health centers to receive funding for drafting individualized patient wellness plans. • Directs the President to establish the “National Prevention, Health Promotion and Public Health Council” • Establishes Community Preventive Services Task Force to review effectiveness of clinical and community-based preventive services and make recommendations.

  36. Medicaid and the Exchange • CHIP maintained at current eligibility and benefits levels with cost-sharing under current law until 2015; after 2014, CHIP-eligible children who are not able enroll in CHIP due to enrollment caps eligible for tax credits in exchanges. • States required to maintain eligibility levels for Medicaid until 2019. Beginning in 2014, individuals with incomes between 100-400% FPL eligible for subsidies to purchase insurance through the Exchanges although individuals with incomes less than 133% FPL coverage through Medicaid.

  37. Teaching Health Centers • Authorizes Title VII grant program for development of Teaching Health Centers - - community-based ambulatory patient care centers operating a primary care residency program. • Sec 340H provides per-resident payments to teaching health centers for operation of residency programs. • Strictly prohibits hospitals from receiving payments for this reimbursed time. • Appropriates directly $230 million for 340H over 5 yrs.

  38. Mental Health Provisions • Essential Health Benefits and Medicaid benchmark both include mental health (Sec. 1302 and 2001) • Preexisting conditions include both “physical and mental” (Sec. 2705 ) • Extension of physician fee schedule mental health add-on (Sec. 310) • Mental and behavioral health education and training grants (Sec. 5306) • Co-locating primary and specialty care in community-based mental health settings (Sec. 5604)

  39. Forecast for Future • Larger government role in health care delivery may accompany expanded federal share of payment • Significant provider cuts likely necessary to reduce $500B from Medicare • Substantial implementation issues arise for employers, individual, plans and providers.

  40. Implementation • Several phases over the next 5+ years • Over a thousand references to Secretarial discretion which will prompt Administrative interpretations and rulemakings throughout the coming years. • Administrative Rulemakings expected regularly through the next several years to address key definitions, schedules, program rules, etc. • Technical Corrections are also expected to clear up ambiguities resulting from the lack of a House-Senate conference before final passage • Transparency and Public Feedback will be critical to success

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