Health Care Reform Implementation Update - January 24, 2014

by Cozen O'Connor

In a high-stake but relatively uneventful series of negotiations, the House and Senate passed a continuing resolution to fund the government through September, averting another government shutdown. Also over the past week, the Director of the Center for Consumer Information and Insurance Oversight (CCIIO) Gary Cohen testified before the House Committee on Energy and Commerce subcommittee on oversight that he was confident was secure; a federal judge ruled that the Affordable Care Act’s (ACA’s) insurance subsidies are lawful in those states that did not create their own marketplaces, the Medicare Payment Advisory Commission (MedPAC) held its monthly meeting; the Department of Health and Human Services (HHS) extended the Pre-Existing Condition Insurance Plan (PCIP) by two months; and the administration released data showing that to date less than a quarter of those who have signed up for health insurance through the ACA are between the ages of 18 and 34.


Avoiding another government shutdown, and funding the government through September, the $1.1 trillion omnibus spending bill passed the House with a vote of 359-67 on January 15 and passed the Senate with a vote of 72-26 on January 16. The final omnibus spending bill will ease some of the cuts imposed by budget sequestration. Additionally, the bill includes a section that requires HHS in the president’s fiscal year 2015 budget proposal to detail all spending by the Centers for Medicare and Medicaid Services (CMS) on the exchanges since the ACA was enacted, as well as proposed uses for such funding for fiscal year 2015. The bill also reduces funding for the Independent Payment Advisory Board (IPAB) by $10 million.

On January 16, CMS’s Director of the Center for Consumer Information and Insurance Oversight (CCIIO), Gary Cohen testified before the House Committee on Energy and Commerce subcommittee on oversight that: full end-to-end testing of was completed on December 18, that he was fully confident that the site is secure, and that a temporary system was in place to allow insurers to calculate what they are owed.

House Majority Leader John Boehner (R-Ohio) predicted on January 16 that House Republicans would unveil and potentially vote on a replacement for the ACA this year.

The effort to extend emergency unemployment compensation stalled in the Senate, with Democrats and Republicans disagreeing over the amendments process. We expect lawmakers to resume consideration of this legislation, which may involve payment cuts to Medicare providers, in late January or early February.

On January 16, the House passed ACA exchange disclosure legislation, which would require weekly reports on enrollment and operation of the insurance exchanges. Among the data that must be included in these reports are the number of unique visitors to the site, new account registrations and enrollees in private exchange plans and Medicaid. The bill was sponsored by Reps. Lee Terry (R-Neb.) and Bill Cassidy (R-La.). On January 9, the Office of Management and Budget said the Obama administration is opposed to this bill.

On January 15, the likely replacement for Senate Finance Chairman Max Baucus (D-Mont.), Ron Wyden (D-Ore.), along with Sen. Jonny Isakson (R-Ga.), Rep. Peter Welch (D-Vt.) and Rep. Erik Paulsen (R-Minn.) unveiled The Better Care, Lower Cost Act of 2014, a proposal to revamp Medicare to focus care on the chronically ill and rein in program costs, under which Medicare providers would have the option of receiving new risk adjustments and capitated payments and to be rewarded for better outcomes.

The Medicare Payment Advisory Commission (MedPAC), the independent body that advises Congress on issues affecting the Medicare program met on January 16 and 17. The topics covered were: assessing payment adequacy and updating payments: hospital inpatient and outpatient services, and reforming Medicare’s prospective payment system for long-term care hospitals; the Medicare Advantage program: status report, and employer group plan and hospice policies; Medicare Accountable Care Organizations (ACOs): policy options; assessing payment adequacy and updating payments: home health care services; and steps toward broad post-acute care payment reforms; assessing payment adequacy and updating payments: ambulatory surgical centers, hospice, inpatient rehabilitation facilities, and long-term care hospitals status report on part D, and financial assistance for low-income Medicare beneficiaries.

The Medicaid and CHIP Payment and Access Commission (MACPAC), the non-partisan federal agency charged with providing policy and data analysis to Congress on Medicaid and CHIP, is meeting today, January 23 to discuss the following: Administrative Capacity of State Medicaid Programs; New Studies Focused on CHIP Benefits; Characteristics of Medicaid Managed Care Programs; Paying for Value in Medicaid: Lessons Gleaned from Advanced Payment Models in Four States; Medicaid and Population Health; and Early Insights into ACA Enrollment: Focus Group Highlights.


On January 14, HHS announced that the approximately 85,000 people currently enrolled in the Pre-Existing Condition Insurance Plan, the high-risk insurance pools created by the ACA, will have an extra two months – until March 31 – before they lose coverage. The program was originally slated to end at the end of 2013. Given the widespread technical difficulties with, the administration decided to give people more time to enroll in insurance exchanges.

According to theNew York Times, the Obama administration has announced another ACA provision delay to the provision of the law that would fine employers who provide top executives with better health coverage than the coverage offered to other employees. Though a similar policy has long been in place for employers serving as their own insurers, the ACA extends these protections to employers who buy insurance for their workers through a third party. The report says that the Internal Revenue Service has not yet been able to issue regulations that would clarify which individuals qualify as “highly compensated.”

Under the ACA, starting in 2015 employers with 50 or more employees must offer health coverage to all employees who work 30 hours or more per week. Up until last week, “employees” included volunteer firefighters and other emergency personnel – even if they were not paid or paid only a nominal amount. Many were concerned that these requirements would have devastated some of the 50-plus-employee volunteer fire companies and other similar organizations. Last week, the Treasury Department said it would not count volunteer emergency responders as full-time equivalent employees.

The administration released new enrollment data, which shows that of the 2.2 million who have enrolled in new coverage under the ACA, only 24 percent are between the ages of 18 and 34. This concerns some watching the makeup of the risk pools, since those who are older tend to be more expensive beneficiaries to cover. The administration said the demographics of those who have signed up to date are promising, and it expects the younger individuals to sign up closer to the deadline.


According to the latest update from New York’s state Health Department, close to 330,000 people have signed up for health insurance coverage through the state’s health insurance exchange, putting the state on track to meet its goal of enrolling 1.1 million by the end of 2016, according to health officials from New York.


Douglas Holtz-Eakin, the former Congressional Budget Office (CBO) director, opened The Center for Health and Economy, a new health care-focused think tank. The think tank will score proposals introduced by lawmakers and other think tanks.


On January 15, in the case of Halbig v. Sebelius, a federal judge ruled that the ACA’s insurance subsidies are lawful in those states that did not create their own marketplaces. The U.S. District Court Judge wrote in his decision that, “The plain text of the statute, the statutory structure, and the statutory purpose make clear that Congress intended to make premium tax credits available on both state-run and federally-facilitated Exchanges.”

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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