Health Care Reform Implementation Update - July 3, 2013

Cozen O'Connor

The Obama administration announced Tuesday it was delaying the Affordable Care Act’s (ACA) Employer Mandate, which requires employers with 50 or more full-time workers to provide affordable health insurance to its employees or pay a fine; the House Committee on Energy and Commerce released a more detailed legislative framework on repealing Medicare’s sustainable growth rate (SGR), which is the reimbursement formula for Medicare physicians; CMS confirmed that nine of the 32 Pioneer Accountable Care Organizations (ACOs) may be exiting the program; and proposed rules on 2014 payments to home health agencies and end-stage renal disease dialysis providers were released.


The Obama administration announced on July 3 that the ACA employer mandate, which requires businesses with more than 50 full-time employees to provide their employees with health insurance, will be delayed from 2014 until 2015.  This will give businesses more time to comply with complicated regulations, and also will benefit Democrats up for reelection in the 2014 midterm elections, in which Republicans are likely to highlight key Obamacare burdens.

On July 2, HHS Secretary Sebelius announced nearly $32 million in Connecting Kids to Coverage Outreach and Enrollment Grants to 41 state agencies, community health centers, school-based organizations and nonprofit groups in 22 states.  The grants will be used to identify and enroll children eligible for Medicaid and the Children’s Health Insurance Program (CHIP).

On June 26, the Department of Health and Human Services (HHS) issued a final rule explaining the eligibility requirements for individuals seeking an exemption from the individual shared responsibility provision of the ACA.  Individuals may receive exemptions through a health insurance marketplace or the tax filing process, depending on what type of exemption they seek.

On June 28, the Obama administration released its final ruling on whether religious organizations will be required to offer contraceptives through their health insurance plans under the Affordable Care Act.  The ruling says that most employers will have to provide contraception as part of their health insurance plans.  Churches and other houses of worship will be exempt from this requirement,  and religious nonprofit entities, such as hospitals and universities with religious affiliations, will have to offer contraception through their health insurance plans, however will not directly have to “arrange, contract, pay or refer” for this.

Nine of the 32 Pioneer Accountable Care Organizations (ACOs) may exit the program, intended to change the way medical providers are paid to manage care for patients with chronic conditions.  The Pioneer ACO model is one of three such models, and it is the one that carried the most risk (and the most opportunity for gain).  Four of the nine exiting ACOs may move to the Medicare Shared Savings Program, one of the other three ACO models, which does not penalize ACOs for failing to meet cost and performance goals as the Pioneer ACO program does.

On July 1, CMS issued a proposed rule that would update and make revisions to payment policies and rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to beneficiaries for calendar year 2014.  The proposed rule would decrease dialysis facility payments by $970 million in calendar year 2014.

A proposed rule from CMS that came out on June 27 would cause home health agencies to see a 1.5 percent reduction in their Medicare payments for 2014 and decrease overall payments by $290 million next year compared with 2013 levels.


The House Energy and Commerce Committee released a more detailed legislative framework to repeal Medicare’s sustainable growth rate.  The Committee on Energy and Commerce released a draft bill back in May and invited comments from stakeholders through June 10.  On June 28, the Committee unveiled draft legislation incorporating this feedback.  The draft legislation would repeal the SGR formula that is used to calculate payments for physicians participating in the Medicare program and replace it with a fee-for-service system in which providers would develop quality measures.  Energy and Commerce has requested stakeholder feedback by July 9.  Chairman Fred Upton (R-Mich.) indicated that the committee is in the process of addressing the need for a means of paying for the change.

On June 28, House Committee on Ways and Means Chairman Dave Camp (R-Mich.), Health Subcommittee Chairman Kevin Brady (R-Texas), and Oversight Subcommittee Chairman Charles Boustany (R-La.) along with Republican members of the committee sent a letter to HHS Sec. Sebelius expressing concerns about the readiness and ability of the government to protect sensitive taxpayer health and financial information that will be housed in the new Federal Data Services Hub, which is integral in running the state and federal exchanges scheduled to open this October.

Senate Minority Leader Mitch McConnell (R-Ky.) and Republican Whip John Cornyn (Texas) wrote letters to the commissioners of the NFL, MLB, NBA, NHL, PGA and the chairman and chief executive officer of NASCAR, stating “Given the divisiveness and persistent unpopularity of the health care law, it is difficult to understand why an organization like yours would risk damaging its inclusive and apolitical brand by lending its name to its promotion.”  On June 28, a spokesman for the NFL said the league has no plans to work with the White House on implementation of “Obamacare.”

On June 26, Secretary Sebelius participated in a press conference hosted by Democratic Leader Nancy Pelosi (Calif.) to celebrate, inspired by Independence Day, the health independence of American families.

In the Weekly Republican Address, Sen. Pat Roberts (Kan.) discussed the Affordable Care Act and said Americans are concerned about how such a “massive federal government takeover of health care” can work.  Sen. Roberts centered his address on the point “Health care as you know it will change.”

On June 27, a group of 28 Republican senators told HHS Secretary Sebelius to stop helping Enroll America until she answers questions about steps she has taken on behalf of this nonprofit.  Some Republican lawmakers believe Sec. Sebelius’s fundraising requests to health care companies for Enroll America were unethical.


On June 30, the  Pennsylvania state Senate approved Medicaid expansion legislation.  The legislation was then sent to the state House, where, as expected, on July 1 the House voted to remove the Medicaid expansion language that the Senate had inserted into the welfare code.  The Medicaid issue continues to hold up the passage of the welfare code, which authorizes funding for a wide array of health programs in the state.

On June 27, the Mississippi Legislature returned in special session to sort out the state’s plans for its Medicaid program, which was set to expire on June 30 at midnight due to the legislature’s failure to reauthorize the program (because of partisan disagreement on expanding Medicaid under the ACA).  The Mississippi House voted along party lines, rejecting a Democratic push to consider Medicaid expansion.  However, the House voted overwhelmingly to reauthorize the state’s traditional Medicaid program.  In addition, the House plan eliminates the requirement for the state’s Medicaid program to be renewed every few years.  The plan will now move to the state Senate.

Rhode Island Health Insurance Commissioner Christopher Koller approved 2014 premiums he said were "significantly lower" than those requested, however they still represent increases from previous years.

On June 28, the Massachusetts Legislature approved a measure requiring Gov. Deval Patrick to seek a waiver from the ACA’s rating rules, which prohibit insurance companies from using certain rating factors to calculate premiums, starting next year.

In Montana, Democrats failed by a single vote to bring a Medicaid expansion vote to the floor.  After the vote, one Democrat said he actually intended to vote to bring the measure to the floor but made a mistake.  Now, a coalition of labor, health and other advocacy groups is taking first steps to put a voter initiative on the 2014 ballot to expand Medicaid coverage in Montana.

Michigan Governor Rick Snyder is pressuring state Senate Republicans to hold a summer vote on Medicaid expansion.  The Majority Leader, Randy Richardville, said his caucus needs more time to study the proposal the House was able to develop and debate over several weeks.


The 10th Circuit Court of Appeals in Denver reversed a lower-court ruling that rejected Hobby Lobby, which has 525 retail stores across the country employing more than 13,000 full-time workers, and its sister company Mardel’s request for temporary protection from the ACA regulation that requires employers to include contraception coverage as part of its employees’ health care coverage.  The 10th Circuit judges said the Oklahoma Court should have granted the companies an injunction in the face of serious financial penalties.

On June 28, Judge Beryl Howell of the U.S. District Court for the District of Columbia dismissed a case, in which Matthew Sissel argued that the ACA’s individual responsibility provision violated the Origination Clause of the Constitution and exceed Congress’s Commerce  Clause authority.


UnitedHealth Group Inc., which is the largest insurer in the country, announced that it will leave California's individual health insurance market before major ACA changes kick in, forcing close to 8,000 customers to find a new provider.

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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