Health Care Reform Implementation Update - July 16, 2013

by Cozen O'Connor

Affordable Care Act Takes Ones Step Back: Employer Mandate Delayed Until 2015

Business Relieved; Congress Seeks Answers, Seeks Similar Relief for Individuals

Capitol Hill and the agencies went back and forth last week on the impact and consideration involved in delaying the Affordable Care Act’s (ACA) employer mandate; votes in the House are expected this week on it, as well as a vote to repeal the individual mandate; the Centers for Medicare and Medicaid Services (CMS) filed final rules on eligibility for exchange subsidies delaying certain core attestation provisions for the same, Medicaid and the Children’s Health Insurance Program (CHIP) as well as proposed rules on Medicare’s physician fee schedule, the hospital outpatient prospective payment system and the ambulatory surgical center payment system; and the Department of Health and Human Services (HHS) announced $150 million in grant awards to 1,159 health centers in the United States to enroll uninsured Americans in new ACA health coverage options.


As we wrote last week, 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, would be delayed from 2014 until 2015. This will give businesses more time to comply with complicated regulations, and also may benefit Democrats up for reelection in the 2014 midterm elections, in which Republicans are likely to highlight key Obamacare burdens.

On July 9, the Internal Revenue Service (IRS) issued a formal notice of its July 2 announcement to postpone the ACA’s employer mandate and issued guidance explaining the impact of the delay.

On July 5, CMS issued a final rule laying out Medicaid and CHIP eligibility and outlining how, for purposes of determining eligibility for health insurance exchange subsidies, it will be determined whether people have access to affordable coverage from their employers. Under the rule, the government will not be able to access comprehensive data on employer-provided coverage, but rather will rely on the word of the applicant and check the information provided against other official sources, such as tax returns, and random outreach to employers for verification.

On July 8, CMS filed a proposed rule (which will be published on July 19) titled “Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule and Other Revisions to part B for CY 2014.” The proposal would update payment policies and rates for services provided under the Medicare Physician Fee Schedule beginning January 1, 2014. In a fact sheet, CMS said the proposal would make changes to several of the quality reporting initiatives that are associated with physician payments: the Physician Quality Reporting System, the Medicare Electronic Health Record Incentive Program, and the Physician Compare tool on the website.

On July 8, CMS filed another proposed rule (which will be published on July 19) for Medicare and Medicaid Programs, titled “Hospital Outpatient Prospective and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Organ Procurement Organizations; Quality Improvement Organizations; Electronic Health Records (EHR) Incentive Program; Provider Reimbursement Determinations and Appeals.” Under the hospital proposal, total calendar year 2014 hospital outpatient prospective payment system payments are projected to increase by $4.37 billion, or 9.5 percent, CMS said in its fact sheet. For ambulatory surgery centers, the 2014 Medicare payments are projected to increase by approximately $133 million, or 3.51 percent, as compared with CY 2013.

The Obama administration has notified insurers that due to a computer system glitch, ACA penalties for tobacco use will be delayed by at least a year.

HHS Secretary Sebelius announced $150 million in grant awards to 1,159 health centers in the United States to enroll uninsured Americans in new health coverage options made available by the ACA.


The Congressional Research Service (CRS) published a report clarifying the various penalties faced by employers under provisions of the ACA. The report details key terms of the employer shared responsibility provision, as well as methods of calculating full-time equivalent employees. The memo also provides guidance on calculating seasonal and part-time workers for determining the number of full-time equivalent employees.

On July 9, House Ways and Means Chairman Dave Camp (R-Mich.), Education and the Workforce Chairman John Kline (R-Minn.), Budget Chairman Paul Ryan (R-Wis.), Energy and Commerce Chairman Fred Upton (R-Mich.), along with Speaker John Boehner (R-Ohio), House Majority Leader Eric Cantor (R-Va.), House Majority Whip Kevin McCarthy (R-Calif.), House Republican Conference Chair Cathy McMorris Rodgers (R-Wash.), House Chief Deputy Whip Peter Roskam (R-Ill.), House Republican Conference Vice Chair Lynn Jenkins (R-Kan.), and House Republican Policy Committee Chairman James Lankford sent a letter to President Obama requesting details on the decision to delay the employer mandate.

On July 10, the Treasury Department responded to the inquiry from House Republicans with a letter defending the legality of the decision to delay implementation of the employer mandate. The response highlighted “the Treasury Department’s longstanding administrative authority to grant transition relief when implementing new legislation like the ACA” and stated “Administrative authority is granted by section 7805(a) of the Internal Revenue Code.”

On July 10, the House Ways and Means Health Subcommittee held a hearing examining the Obama administration’s employer mandate delay. In his opening statement, Chairman Kevin Brady (R-Texas) said, “The Treasury Department’s announcement confirms our concerns – ObamaCare is simply not ready. The committee has serious questions about how and why this alarming decision was made and the effect that delaying this key provision will have on other provisions of the law – specifically the directive that individuals purchase government-approved health care or pay a tax.” As has been the case with many ACA hearings, Democrats defended the law, and Republicans attacked it. Republicans pointed to the need for delay as evidence that the ACA is plagued with problems, and argued that delaying the law for businesses but not for individuals was fundamentally unfair. Democrats argued that the delay is a positive development, a result of the administration listening to the vocal business community saying it needs more time, and that the delay will help the ACA work as it is supposed to work.

The past week has seen several cries from Republicans, most notably from House Majority Leader Cantor, House Speaker Boehner, and Sen. John Thune (R-S.D.) to continue with the ACA delays – permanently. The Republican critics of the ACA pointed to the June jobs report as further evidence that the employer mandate was hurting the economy. On July 3, Speaker Boehner, Majority Leader Cantor, Majority Whip McCarthy and Republican Conference Chairman McMorris Rodgers issued a statement, which ended by saying, “It’s time for a permanent delay of Obamacare.”

On July 11, House Speaker Boehner announced that the House will vote next week whether to delay implementation of both the employer and individual mandate in the health care law. This tactical move will force House Democrats, who likely will vote for the employer mandate delay (as it has been endorsed – and implemented – by the Obama administration), to support or not support the same delay for individuals.

Chairman of the House Committee on the Budget Ryan, Chairman of the House Committee on Ways and Means Camp, Chairman of the House Committee on Energy and Commerce Upton, Ranking Member of the Senate Committee on the Budget Jeff Sessions (R-Ala.), Ranking Member of the Senate Committee on Finance Orrin Hatch (R-Utah), and Ranking Member of the Senate Committee on Health, Education, Labor and Pensions Lamar Alexander (R-Tenn.) sent a letter to CBO Director Doug Elmendorf asking for CBO to provide a cost and budget estimate of the administration’s decision to delay enforcement of the employer mandate.


Following the Pennsylvania Senate’s June 30 vote to include expanded Medicaid in its welfare code, the Pennsylvania House on July 1 voted to strip the legislation of the Medicaid-expanding language and sent the bill back to the state Senate, which, on July 3, voted for the bill as altered by the House.

On July 8, Vermont regulators announced the state’s final 2014 rates for plans on the ACA’s exchanges. Residents will pay on average (not accounting for federal subsidies) about $400 a month for an individual “silver” plan in the state’s health insurance exchange. The only two insurers selling on Vermont’s exchange in 2014 will be Blue Cross Blue Shield of Vermont and MVP Health.


According to the Robert Wood Johnson Foundation’s annual report, “Health Information Technology in the United States,” the number of hospitals using electronic health records jumped about 17 percent from 2011 to 2012.

To view our compilation of recent health care reform implementation news, click here.

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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