Health Care Reform Implementation Update - February 27, 2013

by Cozen O'Connor

As Washington and the rest of the country brace for cuts from the sequester to kick in on March 1, Florida Gov. Rick Scott surprised many and confirmed others' predictions by announcing his state will expand its Medical program, and the Department of Health and Human Services (HHS) issued long-awaited final rules on essential health benefits, as well as pre-existing conditions and premium rate bands.

On Friday (2/22), HHS released final rules implementing the provisions of the Affordable Care Act (ACA) that require insurers to cover those with pre-existing conditions without charging higher prices. 

Friday’s final rules also crystalize regulations on how insurers may set their premiums.  Under the ACA, only certain, very limited criteria may be used to set premiums.  With respect to age, the law says plans can only charge older patients three times more than younger ones, even though older patients are notoriously much more expensive to treat than younger ones.  Though many interest groups fought this provision when it was included in the proposed rule, it nonetheless remains in the final rule.  America’s Health Insurance Plans (AHIP) says this outcome will cause insurance for young people to spike “overnight.”  The rules do ensure young adults will have access to a catastrophic coverage plan, which will offer lower premiums and less generous coverage for those who do not seek much health care outside of an emergency situation.

On Wednesday (2/20), HHS issued a long-awaited final rule on essential health benefits (EHB).  The final rule outlines the standards for essential health benefits that insurers must cover in and out of health insurance marketplaces beginning in 2014.  Insurers must cover 10 broad care categories, which include emergency services, maternity care, mental health and substance abuse services, and preventive and wellness services.  As in the proposed rule, individual and small group plans for 2014 and 2015 must cover at least one drug in every therapeutic category and class or the same number of prescription drugs in each category and class as the state's EHB benchmark plan, whichever is greater.  Many states require at least two drugs per class.

The final regulation does not differ much from the proposed regulation.  One change uncovered by the American Cancer Society Cancer Action Network concerns colonoscopies.  Under both the proposed and final regulations, colonoscopies are deemed a preventive service that insurers have to cover without copayment.  What was previously unsettled, however, was whether if a doctor discovered a polyp and removed it during the procedure, whether this too would be included.  The final regulation says insurance companies cannot charge patients for the removal of a polyp during a recommended colonoscopy.

The Medicaid and CHIP Payment and Access Commission (MACPAC) named Anne L. Schwartz, PH.D., as its new executive director.  Schwartz has been the acting executive director for the past four months.

On Thursday (2/21), the Center for Medicare and Medicaid Innovation announced that it is awarding $300 million to 25 states through the State Innovation Models Initiative, which supports the development and testing of state-based models for multipayer payment and health care delivery system transformation to improve health system performance.  Six states will receive awards for Model Testing, three for Model Pre-Testing, and 16 for Model Design.  Of the $300 million, more than $250 million will go to Arkansas, Maine, Massachusetts, Minnesota, Oregon and Vermont.

Friday (2/15) was officially the last day for states to report to the federal government that they wanted to participate in running health insurance marketplaces in their states in partnership with the federal government.  The federal government will be running more than half  – 26 – of the state’s health insurance marketplaces.

Florida Gov. Rick Scott, a Republican and leading critic of the Affordable Care Act, announced on Wednesday (2/20) that his state would expand  Medicaid coverage.  A day after Gov. Scott’s announcement, Sec. Sebelius said that states are opting to expand Medicaid because the offer is “simply too good to pass up.”

On Tuesday (2/19), Oklahoma State Representative Mike Ritze (R) introduced legislation that would declare the Affordable Care Act unconstitutional and void in the state.  Ritze's motivation is the law’s mandate that requires employers to provide birth control coverage in health insurance plans.  The legislation was approved 7-3 by the House Public Health Committee.

Still no deal on the Hill to prevent the sequester, set to begin March 1.  Medicaid is protected from the cuts, but Medicare spending will be cut by 2 percent through reductions in payments to hospitals, physicians and other care providers.  Additionally, according to the Congressional Budget Office (CBO), other health-related programs like medical research, mental health treatment and approvals for new drugs are subject to 5 percent or more in cuts.

On Thursday (2/21), 17 major medical specialty groups recommended that doctors reduce their use of 90 widely used unnecessary tests and treatments.  The list includes recommendations not to induce labor or perform a Cesarean section before a woman’s 39th week of pregnancy unless it is medically necessary, not to automatically use CT scans to examine children’s minor head injuries, and to avoid routine preoperative testing for low-risk surgeries without a clinical indication.

On Thursday (2/21), Time Magazine ran the longest article by one writer the magazine has ever published, "Bitter Pill: Why Medical Bills are Killing Us."  The cover story provides in-depth discussion of the country’s high medical costs and the major problems hospitals, insurance companies and the pharmaceutical industry are facing.

Written by:

Cozen O'Connor

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