Health Care Reform Implementation Update - April 12, 2013

by Cozen O'Connor

While Congress was in recess, the Centers for Medicare and Medicaid Services (CMS) surprised many when it changed course on Medicare Advantage payment rates – switching from a 2.3 percent reduction to a 3.3 percent increase, the Department of Health and Human Services (HHS) announced a one-year delay for the small business health options program exchange to offer multiple health plans, and HHS released a final rule detailing the expanded Medicaid program and confirming that the federal government would cover 100 percent of the expenses for newly eligible Medicaid beneficiaries.


On Monday (4/1), CMS surprised many when it announced that it would change the 2.3 percent cut to Medicare Advantage rates to a 3.3 percent increase.  Prior to the news, health insurers were predicting painful changes for Medicare Advantage customers.  The initial rates included in the proposed regulation assumed that there would be significant cuts in physician payments, and in turn lower Medicare costs, because of the Sustainable Growth Rate.  The switch follows a report from the Congressional Research Service, which said CMS could assume that Congress would avoid major cuts to Medicare physician reimbursements at the end of the year, and letters from Senate Finance Committee Chairman Max Baucus, Ranking Member Orrin Hatch and 98 House members to CMS expressing concern about the proposed rates.

On Wednesday (4/3), CMS released a proposed rule that outlines standards for navigators in federally facilitated and state partnership markets.  Navigators will help educate consumers on available health coverage options and will assist them in shopping for health insurance.

On Tuesday (4/2), CMS published an update to the clinical quality measures for hospitals participating in the meaningful use program for electronic health records (EHRs).  Prior to the update, hospitals were required to use EHR systems that met the clinical quality measure specifications of the December 2012 interim final rule.  Now, however, CMS is encouraging the use of updated clinical quality measures.

HHS announced a one-year delay to a requirement of the small business health options program (SHOP) exchange this week.  Though small businesses were supposed to be able to choose from multiple health plans through insurance exchanges beginning in 2014, HHS granted an extra year for the requirement to offer multiple plans on SHOP exchanges.

On Friday (3/29),  HHS released a final rule describing the methodology states will use for claiming a higher match rate for newly eligible Medicaid beneficiaries.  The regulation implements the ACA provision that authorizes states to expand Medicaid to adults under 65 with incomes up to 135 percent of the federal poverty level.  The federal government will cover the full cost of newly eligible beneficiaries for the next three years, and afterward the federal contribution will gradually be phased down to 90 percent by 2020.

The National Association of Insurance Commissioners had its annual spring meeting on Friday (4/5).  At the meeting, a draft paper titled "Rate Increase Mitigation Strategies" was presented.  The paper addresses the "rate shock" that may be caused by the ACA.


On Thursday (4/4), Sen. Chuck Grassley (R-Iowa) sent a letter pressing CMS for information about how a Wall Street analyst was able to learn about the Medicare Advantage rates in advance of CMS’s official announcement.

On Friday (4/5), Reps. Joe Pitts (R-Pa.) and Michael Burgess (R-Texas) of the House Ways and Means Subcommittee on Health released a press release offering suggestions for making health reform more affordable.  Suggestions offered in the release include creating a premium increase safety valve, allowing state coverage compacts, giving Americans coverage options like those of members of Congress, ensuring consumers who like their insurance can keep it, prioritizing coverage for Americans with pre-existing conditions over wasteful spending, and replacing price controls with market-based solutions and incentives.


Vermont posted its partnership plan proposals this week, listing the prices residents can expect for health insurance coverage  in 2014.  The Vermont Department of Financial Regulation posted a summary sheet that compares what Blue Cross Blue Shield Vermont and MVP Health Care – two carriers that have filed proposed rates with the department – might charge for coverage for singles, couples, single parents with children, and couples with children.

An amendment to a bill that lays out health care exchanges passed the Virginia House and Senate.  The amendment bars health insurance plans sold through a federal exchange from covering most abortions.

Pennsylvania Gov. Tom Corbett met with Sec. Sebelius on Tuesday (4/2) to discuss Medicaid expansion.  Neither HHS nor Gov. Corbett publicly reported any developments after the meeting.  Gov. Corbett said the meeting was “meaningful,” that he asked the secretary for  answers to key questions and that he is still considering the options for Pennsylvania.

On Friday (4/5), Center for Consumer Information & Insurance Oversight (CCIIO) Director Gary Cohen sent Massachusetts a letter granting it permission to phase in certain rules Massachusetts business leaders had argued would have led to rate shock in 2014.  Massachusetts will be permitted to phase out certain rating standards such as age, smoking status and wellness.


On Thursday (4/4), the Department of Justice filed a brief in the 4th Circuit Court of Appeals arguing that the Anti-Injunction Act prevents the court from hearing the case of Liberty University, which continues to challenge the ACA’s employer mandate and argues that the reform law provided federal funding for abortions.

Federal Judge Edward Korman ruled on Friday (4/5) that the most common morning after pill be made available over the counter for all ages, rather than requiring a prescription for girls 16 and younger.  The Food and Drug Administration has recommended this type of unrestricted access for years, however both President Obama and Sec. Sebelius have supported restricting over the counter access to morning after pills for those younger than 17.

Written by:

Cozen O'Connor

Cozen O'Connor on:

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