Health Care Reform Implementation Update - April 26, 2013

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Marilyn Tavenner received bipartisan support from members of the Senate Committee on Finance in her confirmation hearing to lead the Centers for Medicare and Medicaid Services (CMS) though a full Senate vote is being held up, the president released his FY 2014 budget proposal with health care reform and specified reimbursement reductions to providers and manufacturers totaling $400 billion over 10 years sprinkled throughout it, and Department of Health and Human Services (HHS) Secretary Sebelius received a warm welcome from the Senate Committee on Health, Education, Labor & Pensions but faced tough questions from members of the House Committee on Ways and Means and Senate Finance Committee Chair Max Baucus, who announced his retirement this week but called the secretary’s health reform implementation efforts a “train wreck.”

IN THE WHITE HOUSE
On April 10, the president released his FY 2014 budget proposal. As is always the case, the president’s budget is a non-binding proposal meant to serve as a guide for Congress to the president’s priorities. The budget would give HHS about $1.5 million for setting up marketplaces and helping consumers navigate them. It also would reduce growth in Medicare spending by $371 billion over the next decade. Changes to Medicare include requiring higher cost sharing for new Medicare beneficiaries, making wealthier seniors pay more of their Part B and D premiums, closing the doughnut hole by 2015 instead of 2020 as in the Affordable Care Act, and cutting payments to hospitals and other providers for bad debt and graduate medical education over the next 10 years. The budget also suggests delaying the planned reduction to hospitals in disproportionate share payments to offset the charity care they provide. The proposal would eliminate the Center for Disease Control and Prevention’s Preventive Health and Health Services Block Grant Program, and expand and simplify the tax credits provided to small businesses for their non-elective contributions to employee health insurance. The budget requests $305 million for the IRS to pay for IT to implement the health law – in total, the plan calls for about $440 million and nearly 2,000 more workers to implement the law.

AT THE AGENCIES
On April 9, the Senate Finance Committee held a confirmation hearing for President Obama’s nominee to lead CMS, Marilyn Tavenner. Tavenner has been the CMS acting administrator on an interim basis for over a year.  It has been about six years since the Finance Committee last held a confirmation hearing for a CMS administrator.  Tavenner is expected to be confirmed.  Sen. Orrin Hatch, the ranking Republican on the Senate Finance Committee, said he supports Tavenner’s nomination.  House Majority Leader Eric Cantor introduced Tavenner and expressed strong support in his introduction.  Tavenner said she would run the agency as a business.  On April 23, the Senate Finance Committee voted to approve Tavenner’s nomination. Then on April 24, Sen. Harkin delayed Tavenner’s full vote in response to CMS’s use of the public health and prevention money for ACA implementation. We do not expect this to be a permanent problem for Tavenner and expect her to be confirmed in the near future.

On April 8, CMS issued a pair of proposed rules that would extend the safe harbor exception for donated electronic health records systems from December 31, 2013 to December 31, 2016, when the Medicare meaningful use incentive program also ends.

ON THE HILL
On April 24, bipartisan members of the Senate Committee on Finance released an analysis outlining a comprehensive overview of the policy and legislative recommendations received from 146 stakeholders in the health care community on ways to improve federal efforts to combat waste, fraud, and abuse in the Medicare and Medicaid programs.

On April 12, Sec. Sebelius testified at a hearing before the House Ways and Means Committee on the president’s budget.  She told the committee that the federally run insurance exchange would be up and running by October 1.  Sec. Sebelius explained that the exchange data hub was “basically built and paid for” but also that implementation funding was still a challenge. Though many expect House Republicans will be unwilling to provide additional funding for reform implementation, members of the committee did not explicitly say so at the hearing.

On April 17, Secretary Sebelius testified before the Senate Committee on Finance. Chairman Max Baucus questioned the law’s implementation and said he “see[s] a huge train wreck coming down.” Sen. Baucus was a key architect of the Affordable Care Act. Then on April 23, Sen. Baucus announced that he would not seek reelection in 2014.

House Republicans were pushing H.R. 1549, The Helping Sick Americans Now Act, which would divert money from the ACA's Prevention and Public Health Fund to fund the Pre-Existing Condition Insurance Plan through the remainder of the year. In February, HHS had announced it was suspending enrollment because its $5 billion appropriations were depleted. The House canceled a vote on the bill on April 24, when it became clear there were not enough votes.

On April 24, CMS Center for Consumer Information and Insurance Oversight (CCIIO) Director Gary Cohen testified before the House Energy and Commerce oversight subcommittee. House Republicans expressed deep concern to Cohen that the health insurance exchanges would not be ready in time for open enrollment, and Cohen assured them that HHS was on schedule.

IN THE STATES
Five states were awarded $275.6 million from the Obama administration to continue building health insurance exchanges.  Hawaii received $128.1 million, Illinois received 115.8 million, Arkansas received $16.5 million, New Hampshire received $5.4 million and Rhode Island received $9.8 million.

On April 18, the Ohio House of Representatives passed its budget in House Bill 59 without Governor Kasich's proposed Medicaid expansion. The House is calling for a separate debate on this issue and the budget includes an amendment that will make it possible to revisit the issue.

On April 16, the Arkansas House voted 77-23 to approve an appropriation bill that plans on Medicaid expansion in the state, and on April 17 the Arkansas Senate approved a "private option" Medicaid expansion as well, 28-7.  Unlike traditional Medicaid or the expanded Medicaid originally envisioned by the ACA's drafters, the Medicaid expansion proposed in Arkansas would use federal Medicaid dollars to buy private coverage in insurance exchanges.  On April 23, Arkansas Gov. Mike Beebe signed the plan into law.  The Obama administration has agreed to the plan in principle but has not yet given final approval.  Arkansas officials will travel to Washington soon to present the plan.

On April 16, North Dakota Governor Jack Dalrymple(R) signed legislation to expand Medicaid in the state. The expansion is expected to grow the program from covering about 65,000 a month to 85,000 a month.

On April 16, the Iowa Senate Ways and Means Committee advanced a bill that would extend a state tax break to small businesses that cover their employee's health care costs.

IN THIRD PARTIES
A new study by the Kaiser Family Foundation predicts that by 2019, annual health care cost growth will be over 7 percent, compared to the 3.9 percent between 2009 and 2011.  The study attributes most of this disparity to the poor economy, but suggested that structural changes in the health care system may be playing a role as well.

A new study from Families USA says that almost 26 million individuals will be eligible for tax credits through the ACA to help them purchase health insurance in marketplaces.

On Friday (4/19), Alan Simpson and Erskine Bowles, who lead President Obama's 2010 National Commission on Fiscal Responsibility and Reform, released a new deficit reduction proposal.  The plan aims to cut the deficit by a total of $5.2 trillion over 10 years.   The proposal is similar to the original Simpson-Bowles plan but more modest.  It would cut deficits by $2.5 trillion.

The Bipartisan Policy Center issued a report on health care cost containment with recommendations for the next phase of health reform.  The plan suggests over 50 recommendations, which would cut the federal deficit by about $560 billion over the next 10 years.