Health Care Reform Implementation Update - September 24, 2013

by Cozen O'Connor

With a week until a potential government shutdown and a week until open enrollment begins, the Affordable Care Act (ACA) is in the limelight. On September 20, the House voted for a continuing resolution that funds the government past the end of September while defunding the ACA. This week, the continuing resolution will move to the Senate, where Democrats have pledged to add ACA funding back into the legislation, at which point it would be sent back to the House. It is not clear how Democrats and Republicans in the Senate and the House will come to resolution, but they must negotiate before the end of September to avoid a government shutdown. As the pro-ACA and anti-ACA advocates battle it out on the airwaves, in Congress, and at dinner tables around the country, the law continues to be implemented: the Centers for Medicare & Medicaid Services (CMS) released proposed rules on Basic Health Plans and payment rates for federally qualified health centers, as well as new health spending projections, and Center for Consumer Information and Insurance Oversight Director Gary Cohen appeared before the Energy and Commerce subcommittee on Oversight and Investigations to answer questions about health insurance marketplaces and navigators.


On September 20, the House passed a bill 230-189 to keep the government running until December 15 while defunding the ACA. The bill will now head to the Senate, where Democrats are likely to amend it to include ACA funding, at which point it will be sent back to the House. A continuing resolution must be passed by October 1 or the government will shut down. After passing the legislation, House Republicans urged the Senate to have the same discussion. Senate Majority Leader Harry Reid (D-Nev.) said the chamber would consider the measure during the week of September 23. He also warned, however, that any legislation that defunds or delays Obamacare would be dead in his chamber. Some House Republicans have said that if this attempt at defunding Obamacare fails, they will try again using the debt ceiling negotiation.

According to the Congressional Budget Office’s (CBO’s) Long-Term Budget Outlook released on September 17, federal spending on health care programs and Social Security is projected to grow to 14 percent of GDP by 2038. This rise in spending is attributable to the aging population, rising health care costs and expansion of health insurance subsidies.

On September 19, the House Energy and Commerce subcommittee on Oversight and Investigations held a hearing at which Gary Cohen, the head of the Center for Consumer Information and Insurance Oversight (CCIIO) at CMS testified about his agency’s preparedness for enrollment in insurance marketplaces. CCIIO is the primary agency responsible for the federally facilitated marketplaces and enactment of new ACA insurance rules. In addition to the usual attacks on the ACA from its opponents and praise for the law by its proponents, members of the committee asked Cohen a few clarifying questions. Cohen said that ACA navigators were being instructed not to go door-to-door and that he would look into posting an official listing of navigators on a government website as a measure to prevent fraud.

The Medicare Payment Advisory Commission (MedPAC), the independent body that advises Congress on issues affecting the administration of Medicare, will meet on October 10 and 11. We will update you when the agenda becomes final.


On September 17, the Office of Management and Budget (OMB) sent a memorandum to the heads of executive departments and agencies regarding planning for agency operations during a potential lapse in appropriations, a guide in case of a government shutdown.

On September 20, CMS released a proposed rule that provides guidelines by which states can begin pursuing Basic Health Plans, which gives states the option of establishing a health benefits coverage program for low-income individuals who would otherwise be eligible to purchase coverage through the health insurance marketplace. These plans are intended to benefit residents whose income fluctuates below and above Medicaid eligibility.

On September 18, CMS issued a proposed rule that would establish Medicare payment rates and a payment system for federally qualified health centers. Under the rule, federally qualified health centers would receive higher Medicare reimbursement rates beginning next year. The rule would also allow rural health clinics to contract with “non-physician practitioners,” such as nurse practitioners and physician assistants.

The CMS Office of the Actuary released health spending projections this week, published in Health Affairs. CMS said spending growth is expected to increase in 2014 with economic improvement and expanded coverage under the ACA. The finding may indicate that slowed spending is largely tied to the economy, rather than the ACA.

On September 19, CMS announced that enrollment in Medicare Advantage (MA) plans is expected to increase for the fourth year in a row. Additionally, CMS said the average MA premium in 2014 is projected to increase by only $1.64 from last year.

A new analysis from the Department of Health and Human Services (HHS) says that approximately 6.4 million individuals buying coverage on the new marketplaces will have the option to pay $100 or less each month due to subsidies.

On September 12, HHS released a report showing that 6.8 million consumers saved about $1.2 billion on insurance premiums in 2012 due to the Affordable Care Act.

The Census Bureau released its 2012 report, showing more people were insured in 2012 than 2011, due in large part to increased enrollment in Medicare.

The front page of the September 20 edition of The Wall Street Journal featured a story about the pricing glitches the health insurance marketplaces face less than two weeks out from their rollout. According to the article, four individuals familiar with the development of the health marketplace software that determines how much people will pay for subsidized coverage on the federally run exchanges are reporting that the system is still miscalculating prices.

Following the Obama administration’s announcement that multi-employer plan enrollees would not be able to get exchange premium tax credits, an issue for which unions had been lobbying, Republicans are asking questions about a draft regulation that appeared briefly on the Office of Management and Budget’s website last month. Some Republican members are suggesting that regardless of the Obama administration’s announcement that it would not grant union exemptions, the issue will reappear and unions’ requests will be granted once the 2014 reforms are in motion. On September 18, House Education & the Workforce Committee Chair John Kline (R-Mich.) and Phil Roe (R-Tenn.) asked the OMB for clarification regarding administration efforts with respect to the multi-employer plans.

The Republican Study Committee released the American Health Care Reform Act, a proposal to repeal and replace the ACA. The bill would provide $20,000 in tax deductions to families and a $7,500 deduction to individuals to enable them to buy insurance from vendors in any state. Additionally, the bill proposes allowing Americans to keep the money they save by choosing lower-cost providers.

On September 18, JPMorgan Chase & Co sent a research note to clients predicting a delay in open enrollment based on information from its Washington, D.C. contacts and comments from the administration. The administration responded later in the day that the insurance marketplaces would open for enrollment on October 1 as planned. After the administration’s announcement, J.P. Morgan backed away from its earlier predictions.


On September 18, state and federal officials met at the White House to discuss efforts to crack down on fraud in health insurance marketplaces. The administration announced a toll-free phone number for complaints of fraud. HHS’s Office of the Inspector General also issued a warning about potential fraud in health exchanges.


Pennsylvania Governor Tom Corbett held a press conference on September 16, during which he announced his administration is now hoping to expand the state's Medicaid program. The plan Gov. Corbett outlined would use private health insurance plans and add new requirements for all Medicaid enrollees, such as paying monthly premiums and demonstrating they are searching for jobs.


According to a Pew poll released on September 16, the awareness that health insurance marketplaces are available under the ACA is significantly higher in states with state-run programs than in those that have opted to use a federally run exchange.

Home Depot announced on September 19 that it is planning to shift about 20,000 part-time workers into the health insurance marketplaces. Home Depot said that employees working less than 30 hours a week will no longer be eligible for limited liability health coverage through Home Depot.

Walgreens, which is the largest U.S. drugstore chain, is reported to be planning to move its employees into a private health care exchange much like the ACA marketplaces.

New ads from Generation Opportunity, a Virginia group tied to the Koch brothers, seek to discourage young people from signing up for the ACA. The ads feature Uncle Sam poised to conduct pelvic, prostate and gynecological exams.


On September 19, two different groups asked the Supreme Court to rule on the ACA birth control mandate: the federal government and Conestoga Wood Specialties Corp., a Pennsylvania company. Conestoga Wood Specialties Corp., filed a petition arguing that the Religious Freedom Restoration Act prohibits the federal government from imposing the ACA’s preventive services mandate on for-profit secular companies.

Also on September 19, the Obama administration asked the Supreme Court to uphold the ACA requirement that nearly all employers provide coverage of birth control and other contraceptives in health plans. This third petition the Supreme Court has received on the issue increases the odds that the Supreme Court will decide the case.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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