Health Care Reform Implementation Update

by Cozen O'Connor

Affordable Care Act (ACA) action on Capitol Hill this past week centered on investigations into improper ACA subsidy payments, a potential constitutional amendment proposal, and support for an appeal of the ACA in favor of a Republican-sponsored replacement. At the agencies, a high-level official departed the Department of Veterans Affairs amidst controversy, and the Centers for Medicare and Medicaid Services (CMS) announced that there will be more physician payment data releases in the future. Also this week, many states announced new contracts to assist with their state-run ACA exchange websites.


This week the Senate will vote on the nomination of Sylvia Burwell for Secretary of Health and Human Services (HHS). Burwell enjoys bipartisan support for her nomination, and it is expected that she will be confirmed.

In a May 27 letter to the HHS Office of the Inspector General (IG), Senators Orrin Hatch (R-Utah), Mitch McConnell (R-Ky.) and Tom Coburn (R-Okla.) requested an investigation into whether certain individuals were being given improper tax subsidies for their health care costs. Under the ACA, low-income individuals can apply for tax subsidies to help pay for their health care plans. The letter expresses concern that there is insufficient IRS oversight of these subsidies. Citing reports from The Washington Post and the Treasury Inspector General for Tax Administration, the senators expressed concern that the IRS has not fully implemented the systems needed to “verify the accuracy of applicant information” for the tax subsidies. The HHS IG is already required by Congress to produce a report to Congress on the subsidies by July 1, 2014.

During a Memorial Day speech, Senator Orrin Hatch (R-Utah) told a crowd of veterans and their families that he might propose a constitutional amendment that would give employers the right to deny contraception coverage to their employees if the Supreme Court does not rule in favor of Hobby Lobby in its current ACA contraception-mandate case against HHS. The Hobby Lobby suit against HHS alleges that the ACA violates the First Amendment by requiring companies to cover specific types of contraception in their health care plans. Hatch stated that if the Supreme Court did not find in favor of Hobby Lobby, its ruling would “foul up the First Amendment again.”

This past week House members from the Republican Study Committee (RSC) wore pins to highlight their support for a bill that would replace the ACA with a Republican devised alternative. The alternative bill, H.R. 3121, “American Health Care Reform Act,” is co-sponsored by 130 House Republicans. The bill was introduced by Congressman Phil Roe (R-Tenn.), who is also a physician, and would replace the ACA with an expansion of health savings accounts, medical liability reform and permission for individuals to purchase health care plans across state lines. Supporters of the bill are pushing Republican leadership to bring the bill up for a House vote in the next two months.


Amid growing controversy regarding improper record keeping and extensive wait times for veterans seeking health care in VA facilities, Secretary of Veterans Affairs Eric Shinseki resigned from his post on Friday. President Obama accepted Shinseki’s resignation but has not announced his choice for a replacement nominee. In the interim, Deputy Secretary of Veterans Affairs, Sloan Gibson, will oversee the agency.

Fabien Levy, one of the press secretaries for HHS, announced his departure from the agency on May 28. Levy worked for the department for two years and resigned via email, writing that his work at HHS was the “most important work of my life.”

CMS Administrator Marilyn Tavenner, CMS Deputy Administrator for Innovation & Quality Patrick Conway, and CMS Acting Director of the Offices of Enterprise Management Niall Brennan, published an article in the New England Journal of Medicine on May 28 in which they state their support for the agency’s recent release of data on Medicare payments to individual physicians. The officials also reported that the agency will provide additional data and that the perceived harm to physicians is mitigated by the value of providing transparency to consumers.

On May 29, the HHS Inspector General released a report finding that in 2010, the Medicare program paid out $6.7 billion for health care visits that were improperly coded or that lacked proper documentation. The report found that 42 percent of diagnostic and assessment claims were improperly coded and that 19 percent of these types of claims were improperly documented. The report noted that though many coding errors are the result of legitimate mistakes, these errors tend to result in higher payments for physicians. On a related note, CMS recently conducted a “test-run” of the new ICD-10 coding system and reported that it accepted 90 percent of the claims using the new coding from the test participants. CMS will be conducting other ICD-10 test-runs before its full implementation in October of this year.


Two patient advocacy groups filed an administrative complaint on May 29 with HHS’s Office of Civil Rights alleging discrimination against patients with HIV/AIDS. The complaint claims that four Florida health insurance companies,CoventryOne, Cigna, Humana and Preferred Medical Plan, are charging higher out-of-pocket costs for HIV/AIDS medications and requests that the federal government take action to end what it calls discrimination against individuals with HIV/AIDS. The complaint argues that these higher prescription drug costs violate provisions of the ACA that prohibit insurance companies from discriminating against enrollees based on “race, color, national origin, sex, age or disability.”

On May 29, the governor of Oregon said that he asked the state’s attorney general to bring suit against Oracle, the contractor it used to build its exchange website. The governor said that the suit would be brought under the False Claims Act and that the state would seek recovery of attorneys’ fees, funds spent on building the website, and damages. Oregon paid Oracle more than $134 million to develop the Cover Oregon website, which never functioned properly.

The Center for Public Integrity (CPI), a news organization, is suing CMS for withholding public documents. CPI is requesting that CMS release information regarding program audits, billing data, and any documents that pertain to investigations of health insurance plans that may be overcharging the federal government under Medicare Advantage payments. The suit alleges that CMS has ignored CPI’s request since May 2013.


New York state is finalizing a contract with Xerox to have the company take over management of its Medicaid management system. The $500 million contract was confirmed by a New York State Department of Health spokesman. This announcement came just a week after Nevada severed its contract with Xerox over the company’s inability to effectively implement and manage the state’s ACA exchange.

Some California lawmakers would like the state to subsidize their Farmer Health Care Program so that it can continue to operate. The Farmer Health Program currently covers 10,700 farm workers in California but does not meet all of the requirements for health care plans under the ACA. In order to meet those requirements the state would need to purchase $3.2 million in supplemental insurance. Some state lawmakers do not support this subsidy, and a decision on the future of the plan will be made by June 15.

The Center for Consumer Information & Insurance Oversight (CCIIO) at CMS is requesting that Rhode Island provide the agency with a report on the sustainability of the state’s ACA exchange after the next enrollment period. The CCIIO cited media reports claiming that there are issues with the state-run exchange as the basis for their request.

Connecticut’s Chief Information Officer for its state-run exchange, James Wadleigh, announced that the state is launching a smartphone app for its exchange website. The state-sponsored smartphone app would be the first in the country and is intended to encourage young people to enroll for health plans under their ACA exchange.

Oregon announced that it will be seeking services from companies to transfer its now defunct state-run ACA exchange website to the federal exchange website, The state plans to solicit bids from 10 companies for the estimated $35 million in work to integrate the two systems.

Maryland has approved more than $43 million in contracts to assist with improving its state-run ACA exchange website. Xerox was awarded $29.3 million to develop new technology similar to that used in the Connecticut exchange, and Deloitte was awarded $14.2 million for software development.


The Journal of the America Medical Association released HHS’s review of the nation’s overall health, which is conducted by the agency and reported on every decade. The results were mixed. On the positive side, the review found improvements in decreasing health inequity gaps between whites and minorities, infant mortality rates and adult cigarette smoking. On the negative side, adult obesity, diabetes and dental care showed no improvement over the last decade. HHS authors of the review wrote that the ACA would assist with improving the nation’s overall health over the next decade.

On May 29, the Comptroller General (CG) of the U.S. Government Accountability Office announced the appointment of three new members to the Medicare Payment Advisory Commission. The new members are Kathy Buto, Francis Crosston and Warner Thomas. The CG also reappointed two existing members and designated the commission’s vice chairman.

A report released on May 28 showed that the health care industry had a higher risk of cybersecurity breaches than any other industry. BitSight Technologies, a security ratings firm, drafted the report and claims that those in the health care industry do not make cybersecurity a priority in comparison to financial, retail and utility industries. According to the report’s findings, cyber-events in health care lasted almost a full day longer on average than cyber-events in any other industry.

The Robert Wood Johnson Foundation released data on May 28 showing that more than half of the uninsured in the United States are eligible for ACA subsidies, Medicaid or the Children’s Health Insurance Program (CHIP). Findings in the report suggest that 27 million people who would have been previously uninsured will be covered under the ACA by 2016.

A study released by the National Bureau of Economic Research found that the ACA requirement on health plans to allow adults under age 26 to remain on their parents’ policies has primarily benefited college graduates. The study authors noted that while all categories of young adults had increases in insurance coverage, only those who were college educated had “substantial new investments” in their health.


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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