Health Care Reform Implementation Update - April 2014

by Cozen O'Connor

Last Thursday Kathleen Sebelius resigned from her post as Secretary of Health and Human Services (HHS). On Friday President Obama nominated Sylvia Matthews Burwell, the Office of Management and Budget (OMB) Director.  As March came to a close, the first official open enrollment period since the individual mandate went into effect and the health insurance exchanges began operating came to a close, and the Obama administration met its goal of 7 million people signing up for health insurance. The Congress passed and President Obama signed into law a one-year “doc fix,” the Protecting Access to Medicare Act, which prevents payment cuts to doctors who provide care to Medicare beneficiaries that were slated to go into effect on April 1. Though Congress spent considerable effort to achieve a permanent fix to the formula used to determine Medicare payments to doctors, it ultimately was unable to find a way to pay for the permanent fix before April 1 and instead passed a temporary patch. The Centers for Medicare and Medicaid Services (CMS) released its final Medicare Advantage (MA) payment announcement, which increases MA rates by .4 percent.  And finally, in a historic move, CMS released data on payments to Medicare doctors.


On April 1, President Obama signed the “Protecting Access to Medicare Act,” which delays Medicare payment cuts to physicians under the sustainable growth rate formula (SGR), the formula on which doctors who see Medicare patients' payments are based, for another year. This latest “doc fix” passed the House by a controversial voice vote on March 27 and passed the Senate on March 31, the day before the previous doc fix was set to expire. There was significant pushback from many congressional members who would have preferred to see a permanent repeal of the SGR formula. Senate Finance Committee Chairman Ron Wyden (D-Ore.) was perhaps the most vocal opponent of this temporary “patch” and still plans to move forward with his bill that would permanently repeal the SGR. Chairman Wyden received strong support for his bill from numerous senators but ultimately no agreement could be reached on how to pay the $140-180 billion price tag for permanent repeal of the SGR.

Although the temporary doc fix is the main component of the Protecting Access to Medicare Act, other elements of the law will affect various areas of the health care industry as well. Of particular note is a provision that would delay ICD-10 implementation (a revision of the medical classification list by the World Health Organization) for another year despite CMS Administrator Marilyn Tavenner’s definitive statement in February that such a delay would not occur. The law also includes provisions that will create a value-based purchasing program for skilled nursing facilities, delay the enforcement of CMS’s two-midnight rule, create a framework for ordering diagnostic imaging scans, and provide relief to dialysis providers who received a payment cut last year. 

On April 3, the House passed the Save American Workers Act, which would change the definition of full-time work under the Affordable Care Act (ACA) from 30 hours to 40 hours per week. Congressional members that led the charge say that the 30-hour week definition incentivizes companies to cut work hours to 29 per week, resulting in smaller paychecks for individuals who previously worked more than 29 hours a week as well as a less productive economy. The Senate is not expected to take up the bill, and the president has already stated that he would veto it if it came to his desk.

House Budget Committee Chairman Paul Ryan (R-Wis.) released his FY2015 budget blueprint, which aims to balance the federal budget by cutting $5 trillion in spending over the next decade. The plan, called “The Path to Prosperity: A Responsible, Balanced Budget” would cut $5.1 trillion in spending, balance the budget by 2024, repeal the Affordable Care Act, reform Medicaid, SNAP (Supplemental Nutrition Assistance Program) and Medicare, and adopt parts of Ways and Means Chairman Dave Camp’s tax reform proposal. Given the proposal’s repeal of the ACA as well as its substantial reforms to entitlement programs, the plan has no chance of passing in the Senate but nonetheless serves as a vehicle for Republicans to define their priorities. On April 10, the House passed the budget measure. 

The Medicare Payment Advisory Commission (MedPAC), the independent body that advises Congress on issues affecting the Medicare program, met on April 3 and 4. The commissioners discussed the Health and Human Services (HHS) secretary’s required report on the impact on home health payment rebasing on beneficiary access to and quality of care, team-based primary care, per-beneficiary payment for primary care, measuring quality of care in Medicare, and measuring the effects of medication adherence for the Medicare population.

The Medicaid and Children’s Health Insurance Program (CHIP) Payment and Access Commission (MACPAC), the non-partisan federal agency charged with providing policy and data analysis to the Congress on Medicaid and CHIP, met on April 10 and 11.  The commissioners discussed: improving delivery and payment: state perspectives on the Medicaid health homes initiative, managed care payment, the Children’s Health Insurance Program, administrative capacity, Medicaid and population health, long-term services and supports, Medicaid managed care encounter data and Children's Health Insurance Program Reauthorization Act (CHIPRA).


Last Thursday Kathleen Sebelius resigned from her post as Secretary of Health and Human Services (HHS). On Friday President Obama nominated Sylvia Matthews Burwell, the Office of Management and Budget (OMB) Director. Burwell has a business background, which many have said is a key distinction the drivers of the ACA’s implementation should have. 

The Obama administration has extended the ACA enrollment period to April 15 for certain individuals who had begun filling out paperwork but had yet to complete the process, as well as for other individuals in particular circumstances. On March 26, the Center for Consumer Information and Insurance Oversight (CCIIO), released guidance for these extensions. CCIIO released a second guidance document that details additional grounds for extensions such as natural disasters, medical emergencies, planned system outages that occur near plan selection deadlines, display errors on the marketplace website, or enrollment errors where insurance companies do not receive a consumer’s information due to technical problems 

On April 3, HHS announced that the Social Security Administration has begun processing Medicare requests for same-sex spouses. This announcement served to clarify the effect that the Supreme Court ruling last year against portions of the Defense Against Marriage Act would have on evaluating the eligibility of same-sex couples for Medicare benefits. 

On April 7, the Centers for Medicare and Medicaid Services (CMS) announced that there would be a 0.4 percent increase in payment rates for Medicare Advantage in 2015. In February CMS had proposed a cut of 1.9 percent. The payment increase was announced after significant pushback from congressional members who expressed concern that the cuts would cause undue harm to seniors and specific concerns from Democrats who were worried that the proposed cuts would further harm their mid-term election prospects.

 On April 9, CMS released a detailed accounting of Medicare payments to 880,000 doctors. This is first time in over 35 years for this level of disclosure. The disclosure of these payments is intended to provide better transparency on the kinds of procedures performed by individual doctors and the amount of money physicians receive from the government through Medicare. Physician groups had resisted this move as a privacy violation. An injunction by the American Medical Association that had been in place since 1979 was overturned by a federal judge in May 2013, prompting the release of this data. So far, the data has revealed that a small proportion of doctors receive over a quarter of the $77 billion in Medicare payments to providers.

On April 10, then Secretary Sebelius testified before the Senate Finance Committee on the president’s budget with respect to HHS. Secretary Sebelius said that at least 7.5 million Americans have signed up for health coverage through the ACA exchanges. In response to questions, Sebelius said that she does not know how many of those who signed up for coverage previously had insurance or how many lost their plans because of the ACA's requirements. Additionally, Secretary Sebelius said that the decision to begin the next open enrollment period on November 15 instead of October 1 was not made for political reasons and separately said that the federal commitment to Medicaid expansion (the 100 percent match rate) was solid for the next 10 years so long as funding is not repealed by Congress. 


On April 1, the Obama administration announced that more than 7 million individuals had signed up for health insurance through the ACA exchanges. Supporters of the ACA touted the achievement as a huge victory for health reform, especially given the early and continuing technological issues the exchanges face. Opponents of the law are calling the figure misleading, as it does not detail how many of those who signed up were individuals who already had health insurance prior to the ACA, nor does it provide information on how many of these individuals have paid the premiums associated with the plans. According to a report by the Blue Cross and Blue Shield Association, the trade association for all Blue Cross and Blue Shield plans, 80-85 percent of individuals who have signed up for their plans under the ACA have paid their premiums. The Obama administration has yet to release actual payment data for all of the individuals across all plans that have enrolled in ACA exchanges.

Robert Gibbs, former White House press secretary, recently called into question whether or not the employer mandate under the ACA will actually be implemented, saying, “It’s a small part of the law. I think it will be one of the first things to go” at an event in Colorado. In an appearance on CNN’s “Face the Nation” on April 6, House Minority Leader Nancy Pelosi pushed back on Gibbs’ statement by assuring the public that the employer mandate would not be eliminated.


On March 25, New Hampshire lawmakers voted to become the 26th state to expand Medicaid under the ACA.

DC Health Link, the District of Columbia’s health insurance exchange, announced that it would allow residents to apply for individual or family coverage under the ACA until April 15.

On April 2, Louisiana Governor Bobby Jindal (R) introduced his replacement health care plan to the Affordable Care Act. Main features of Governor Jindal’s plan include full repeal of the Affordable Care Act, allowing the states to develop their own plans for covering individuals with preexisting conditions, a tax deduction for individuals who purchase their own insurance plans, and giving seniors funds to purchase private health insurance outside of the Medicare and Medicaid programs. Governor Jindal’s plan is a plan intended not just for Louisiana, but for the country, that you can expect to see as a primary component of his presidential campaign platform should he run. 


While substantial attention has been paid to the case before the Supreme Court of Sebelius v. Hobby Lobby, in which Hobby Lobby as well as Conestoga Wood challenge the ACA’s requirement that private companies provide particular types of contraceptives through their health insurance plans contrary to the owner’s religious beliefs, there is another case that would be more damaging to the ACA were it to be decided in favor of the law’s challengers. On March 25, the Court of Appeals for the D.C. Circuit heard oral arguments in Halbig v. Sebelius. The case turns on a question of statutory interpretation. The ACA, as written, seems to only provide for subsidies for low-income individuals who are on state exchanges. Thirty-six states, however, are not operating state exchanges but rather are using the federal exchange. Were the courts to find that subsidies could only be given to individuals using state-run exchanges, many fewer people would be able to afford coverage through the federal exchanges. Supporters of the Affordable Care Act say that this case is a long shot for the challengers.

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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