Health Care Reform Implementation Update - May 2014

by Cozen O'Connor

Congress returned from its Spring recess and got right to work on a number of Affordable Care Act (ACA) related issues including a bipartisan bill regarding health insurance for Americans living abroad, Medicare oversight, reports on ACA enrollee data and meetings with Health and Human Services (HHS) Secretary nominee Sylvia Burwell, whose first confirmation hearing is scheduled for next Thursday before the Senate Health, Education, Labor and Pensions (HELP) Committee. The Centers for Medicare and Medicaid Services (CMS) also had a busy week releasing a number of proposed rules regarding Medicare payment rates at hospitals and other types of health facilities for fiscal year 2015. On Friday, another HHS high-level employee announced their departure from the agency. In the states, Oregon, California and Nevada made announcements about their state-run ACA exchanges. Last week also saw a number of reports from various organizations regarding projections for ACA enrollment, polling numbers for ACA approval and disapproval, and a request for clarification on HHS’s position on charitable contributions for medical payments.


On Wednesday, HHS Secretary Nominee Sylvia Burwell met with Senate Finance Committee Chairman Ron Wyden (D-Ore.). Though no date has been set for Burwell’s confirmation hearing at the Senate Finance Committee, Senate Finance is the committee that will have to vote for her nomination to go to the Senate floor. On Tuesday, Burwell met with Senate HELP Committee Chairman Tom Harkin (D-Iowa). Burwell is scheduled to testify at a Senate HELP Committee hearing regarding her confirmation on May 8. Both Wyden and Harkin have expressed their support for Burwell’s nomination. Burwell is expected to face tough scrutiny from some Republicans on both committees who continue to express concern over ACA implementation. 

On April 29, the House of Representatives passed a bill that would change requirements for insurance company coverage for Americans living abroad. Some insurers claim that ACA-compliant health plans for American expatriates would be too costly. The bill, titled the “Expatriate Health Coverage Clarification Act of 2014,” passed by a bipartisan vote of 268-150 and would exempt U.S. health plans sold to expatriates from having to comply with some ACA requirements. The White House expressed its opposition to the bill in its current form but did not definitively say that it would veto it if it made it to the president’s desk. At this time, however, a Senate vote appears unlikely.

Also on April 29, the House Ways and Means Health Subcommittee held a hearing on Medicare oversight. The HHS Deputy Inspector General for Audit Services Gloria Jarmon testified that CMS paid out $50 billion in improper payments in 2013. In her testimony, Jarmon provided details on the amount of improper payments for three major Medicare programs: $36 billion to the Medicare fee-for-service program, $11.8 billion to Medicare Advantage and $2.1 billion to the Medicare Part D program.

On April 30, the House Energy and Commerce Committee reported it had collected data illustrating that only 67 percent of ACA exchange enrollees had paid their first month’s premium by April 15. In light of these findings, the House Energy and Commerce Oversight and Investigations Subcommittee will hold a hearing on May 7 titled “Patient Protection and Affordable Care Act Enrollment and Insurance Industry.” Insurance providers and their trade groups have been asked to testify. President Obama and other Democrats pushed back against the significance of the figure highlighting that premium payments are not due until May 1. 


CMS released a lengthy proposed rule regarding hospital payments on April 29 that implements several provisions included in the ACA. Under the proposed rule, hospitals would be required to release a standard list of prices for the medical services they provide or give the public access to such information after an inquiry. Payment rates for general acute care hospitals paid under the inpatient prospective payment system would also be increased by 1.3 percent, while aggregate payments would be reduced by $241 million in fiscal year 2015 due to increased oversight and penalty provisions included in the proposed rule. The proposed rule would also increase Medicare payments to long term care hospitals by $44 million, an increase of 0.8 percent during fiscal year 2015. The proposed rule also solicits comments from hospitals regarding payments for short hospital stays. Comments regarding the proposed rule are due by June 30, 2014. The hospital payment proposed rule also contains several references to an October 1, 2015 implementation date for ICD-10, leading many to comment that CMS is tipping its hand regarding the new implementation date for the coding system. Last month, Congress delayed implementation of ICD-10 in the “doc fix” rule, but did not set a new implementation date. On May 1, an HHS spokesperson stated that the agency expects to release an interim final rule soon that will require the use of ICD-10 by October 1, 2015.

On May 1, CMS released proposed rules regarding prospective payment systems for inpatient psychiatric facilities, skilled nursing facilities (SNFs) and inpatient rehabilitation facilities (IRFs). Under the proposed rules, which would set payments for fiscal year 2015, payment rates for inpatient psychiatric facilities would increase by 2.1 percent, payment rates for SNFs would increase by approximately 2 percent, and payment rates for IRFs would increase by about 2.2 percent. Under the proposed rules, inpatient psychiatric facilities would be required to report on additional quality measures, and modifications would be made to the IRF quality reporting program and the reconsideration and extraordinary waiver circumstances processes that currently affect IRF payment rates. Under the SNF proposed rule, minor adjustments would be made to the classification system that is used to set payments.

On April 30, the Bureau of Economic Analysis released data showing that consumer spending on health care surged in the first quarter of the year, resulting in its fastest growth in more than 30 years. Growth in health care spending increased by 9.9 percent in the first quarter of 2014 compared to the last quarter of 2013. Many are attributing the surge to implementation of the ACA. Without the health care-attributed increase, the nation’s gross domestic product would have fallen for the first time in three years. The analysis included ACA enrollments through February 15, 2014.

On May 2, Mike Hash, the director of the HHS Office of Health Reform, announced that he will be retiring at the end of May. He had been with the Office of Health Reform since 2011. Hash is the third high-level HHS official to announce their departure from the agency in the last month.


On Thursday, the Obama administration released a report showing that between October 1, 2013 and April 19, 2014, 8,019,763 people enrolled in ACA exchange plans and that Medicaid and CHIP added 4.8 million people. This same report also provided further details regarding ACA exchange enrollees: 28 percent of enrollees are young adults, 54 percent of enrollees are women, 65 percent of enrollees chose a silver-level plan, 20 percent chose a bronze-level plan, 9 percent chose a gold-level plan, 17 percent are African-American, 11 percent are Latino, 8 percent are Asian and 63 percent are Caucasian. Outgoing HHS Secretary Kathleen Sebelius attributed the enrollment figures to an “unprecedented outreach” effort in which she said she visited 100 cities.


The Oregon Legislative Counsel says that the Cover Oregon’s board of directors does not have the right to dismantle the technical-glitch plagued state-run exchange in Oregon and enroll the state in the federal health exchange. It is unclear whether the counsel’s decision is legally binding.

In Nevada, the board that runs the Silver State Health Insurance exchange delayed a decision on whether to abandon the state-run exchange and instead requested a cost analysis report on its “feasibility.” 

A proposal from the Obama administration would shift responsibility from the federal government to the states for determining who would receive a waiver from the individual mandate in the 2015 enrollment period. Seven states that run their own exchanges have protested that they do not have the technical capability for this and ask that this responsibility remain with the federal government.

A report drafted by the Robert Wood Johnson Foundation found that states that used the federal marketplace instead of creating their own state-run exchanges spent far less on outreach and enrollment efforts. The 16 states that ran their own exchanges paid an average of $17.15 per uninsured resident, while states that used the federal marketplace spent only $5.42 per resident.

The California Senate Health Committee advanced a bill that would expand the state Medi-Cal plan to include undocumented immigrants.


A new report issued by S&P Capital IQ argues that large companies will be encouraged to drop employee health plans by 2020 in favor of sending their employees to ACA exchanges. The report claims that companies would save money by paying the ACA employer penalty instead of providing their employees with health coverage. The report estimates that by 2025, publicly traded companies could save $700 billion by dropping employee health plans. 

On April 28, the American Hospital Association and Catholic Health Charities sent a letter to HHS asking it to clarify CMS guidance from February 7 and an interim final rule from March 14 regarding ACA premium subsidies provided by charitable organizations. The two organizations requested clarification in light of seemingly conflicting guidance from CMS regarding such third-party premium assistance payments.

The second-biggest health insurer in the United States, WellPoint Inc., has increased its profit forecast for 2014 and lowered its premium increase estimates due to new customers who have signed up through ACA exchanges. NewWellPoint, Inc., customers who enrolled in ACA exchanges are younger than had been anticipated and thus decreased the expected health insurance costs to the company overall. 

A Kaiser Family Foundation poll released on April 29 shows that public opinion regarding the ACA has remained largely unchanged. The poll was conducted April 15-21 and surveyed more than 1,500 adults. Overall support for the ACA remains at the exact level as the previous month’s poll with 38 percent of respondents stating a favorable view for the law.


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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