Health Care Reform Implementation Update - December 9, 2013

by Cozen O'Connor

The Obama administration announced that it met the November 30 deadline for fixing’s problems; however, there are some concerns that information submitted by consumers is not properly transmitting to insurers, and many continue to question issues with the site’s security, as well as Affordable Care Act (ACA) concerns more generally, such as cancelled health policies and the inability to keep your doctor. Both the Senate Finance Committee and the House Ways and Means Committee are planning to hold markups on repealing the sustainable growth rate (SGR) formula proposal this week; however, there is speculation that a full repeal would not happen until next year given that Congress is expected to recess this Friday. Additionally, Secretary Sebelius is slated to testify before the House Committee on Energy and Commerce this week in her first appearance on the Hill since October, andMedPAC and MACPAC will hold their December meetings at the end of this week.


As we have noted over the past month, the Senate Finance Committee is planning to hold a markup to consider legislation to repeal the sustainable growth rate system and health care extenders on December 12. Additionally, on December 5, House Ways and Means Chairman Dave Camp (R-Mich.) said that Ways and Means will also mark up a bill to repeal and replace the SGR this week. If Congress does not act, Medicare pay cuts of 24.4 percent are set to take effect on January 1. Current speculation is building around a short term, three to six month SGR patch that can carry Congress over the debt ceiling debate this spring, with Congress continuing to work towards a longer-term deal. On December 6, the Congressional Budget Office reported that repealing the formula would cost $116.5 billion over 10 years. This cost is further reduced from the reduced rate the CBO reported earlier this year of $139 billion, and may serve as an additional push for swift Congressional action.

Secretary Sebelius is scheduled to testify before the House Energy and Commerce Health Subcommittee on December 11 about how the health law rollout is going. The last time Secretary Sebelius appeared before Congress was October 30.

The Medicare Payment Advisory Commission, MedPAC, the independent body that advises Congress on issues affecting the Medicare program, is scheduled to meet on December 12 and 13. The commission’s agenda includes the following sessions: Assessing payment adequacy and updating payments: physician, other health professional, and ambulatory surgical center services; Assessing payment adequacy and updating payments: hospital inpatient and outpatient services; Assessing payment adequacy and updating payments: long-term care hospital services; Assessing payment adequacy and updating payments: outpatient dialysis services; Skilled nursing facility services: assessing payment adequacy and updating payments; steps toward post-acute care payment reform; Assessing payment adequacy and updating payments: home health care services; The Medicare Advantage program, status report, and employer bid and hospice policies; Assessing payment adequacy and updating payments: hospice services; and Assessing payment adequacy and updating payments: inpatient rehabilitation facility services.

The Medicaid and CHIP Payment and Access Commission, MACPAC, a non-partisan federal agency charged with providing policy and data analysis to the Congress on Medicaid and CHIP, is also scheduled to meet on December 12 and 13. The commission’s agenda includes the following sessions: Overview of March report; Review of draft chapter for March report: Medicaid and CHIP in the context of the ACA; Review of draft chapter for March report: Strategies to address churning; Review of draft chapter for March report: Issues in Pregnancy Coverage under Medicaid and Exchange Plans; Review of Draft Chapter for March Report: Medicaid Eligibility Changes: program integrity issues; Review of draft chapter for March report: Medicaid non-DSH supplemental payments; Access measures for March MACStats; Examining Medicaid managed care; Review of draft chapter for March report: Selected issues in children’s coverage under CHIP and exchange plans; Review of draft chapter for March report: Long-term services and supports.

After spending the lead-up to Thanksgiving messaging on the ACA’s failed promise that “If you like your plan, you can keep it,” Republicans this week are focusing on a new message: the ACA’s failed promise that “If you like your doctor, you can keep your doctor.”


On December 1, the Obama administration announced that it had met its goal of having working smoothly for the vast majority of users by the end of November. Following the difficulties experienced in the first days of open enrollment, HHS set November as the deadline by which they would have the site functioning. On December 1, HHS held a briefing to discuss the website’s progress by the November 30 deadline. Jeff Zients, who is leading the charge to get running smoothly, said that the website was functioning at 42.9 percent for most of October but is now functioning at 90 percent. 

In the first two days of December, about 29,000 people signed up for health insurance through This number exceeds the total number of people who signed up during the month of October. Notwithstanding these successes, some insurance industry officials are pointing out that they continue to receive garbled reports of who is enrolling on their end. This could mean that those who have completed the health insurance enrollment process may not actually be signed up on the insurer end.

A new Centers for Medicare and Medicaid Services (CMS) report finds that applications jumped 15.5 percent in states expanding Medicaid in October.

On November 27, the Obama administration announced that it will delay the small-business online enrollment under the ACA for one year. HHS announced that it was opening up direct enrollment for small businesses to sign up immediately through an insurer, agent or broker.

On November 26, the Internal Revenue Services (IRS) released three ACA rules: the Additional Medicare Tax Rule, which increases Medicare contributions from individuals who make more than $200,000 annually and married couples filing jointly making more than $250,000 by 0.9 percent on income above that amount; the Health Insurance Providers Fee Rule, which details which health insurers will be subject to these fees in 2014; and the Net Income Investment Tax Rules (also a product of the ACA), which also requires high-income earners to assist in paying for the ACA’s health insurance expansion. 

CMS announced the launch of a direct enrollment pilot program with 16 issuers of qualified health plans in Texas, Florida and Ohio in an effort to sign up consumers. The pilot will allow insurance companies to sign people up for ACA coverage directly, circumventing

On November 25, HHS released a proposed rule outlining various options under consideration to implement President Obama's allowance for insurance policies to extend cancelled plans even if they do not meet the ACA's requirements for an additional year. The proposed rule seeks input on risk pool program modifications.

On December 6, CMS proposed a new timeline for the implementation of meaningful use for the Medicare and Medicaid EHR Incentive Programs, and the Office of the National Coordinator for Health Information Technology (ONC) proposed a new approach for updating ONC's certification regulations. The revised timeline extends Stage 2 through 2016 and has Stage 3 beginning in 2017 for those providers that have completed at least two years in Stage 2.

On November 27, CMS released the 2014 Medicare physician payment rates and policies for 2014, including a major proposal to support care management outside the routine office interaction. The physician payment rates represent significant reductions that would go into effect if Congress does not step in to change the SGR formula, or halt the cuts temporarily.

On November 27, CMS released a final calendar year 2015 hospital outpatient and ambulatory surgical centers (ASC) payment rule that CMS says will give hospitals and ASCs new flexibility to lower outpatient facility cost and strengthen the long-term financial stability of Medicare. The rule merges five outpatient codes into one for hospital clinic visits and increases hospital outpatient payment by 1.7 percent. Additionally, it establishes an encounter-based payment for certain device-related procedures, but unlike the proposed rule delays this until 2015.


President Obama and his administration, congressional Democrats and other outside allies of the ACA launched a coordinated campaign on December 3 to reboot ACA publicity and encourage participation. The White House has scheduled three weeks of ACA promotion events and activities. In a kickoff speech on December 3, Obama touted the benefits of the Affordable Care Act, as part of an effort to reframe the narrative around the health law after the website repairs.

On November 26, representatives from the major physician lobbying groups met at the White House with Chris Jennings and Jeanne Lambrew to discuss various exchange issues, including that new ACA insurance plans only offer limited provider networks and low reimbursement rates for doctors, which could lead to many of those who are enrolled not having access to care despite their insurance.


On December 6, Pennsylvania Gov. Tom Corbett’s administration posted key details from the proposal it plans to submit to the federal government mid-January to cover the state’s Medicaid expansion population. Corbett’s proposal is similar to the one submitted by Arkansas and approved by the federal government, using federal funds to cover costs through a private insurance exchange system created under the ACA, instead of expanding Medicaid rolls. Additionally, the plan proposes that recipients pay modest monthly premiums and that working-age recipients be engaged in a job search in order to qualify.

The enrollment numbers released by HHS show that 2,207 Pennsylvanians enrolled in health insurance coverage in October.

On November 26, Pennsylvania Insurance Commissioner Michael Consedine said Pennsylvania’s state insurance department will follow the White House’s request to allow insurers to extend existing individual policies by a year.

On December 3, Idaho Governor Butch Otter announced that he would like insurers to extend canceled plans and other non-complying non-grandfathered plans as allowed for by President Obama’s proposed administrative fix.

The District of Columbia’s new insurance commissioner announced on November 27 that the D.C. insurance department would not pursue the White House’s proposal to allow consumers to keep canceled insurance policies an extra year.

On December 2, the director of Oregon’s health insurance exchange, Rocky King, stepped down on medical leave not providing information on whether he would be back. King led the exchange project in his state for almost two years, and it still does not function properly; however, it is predicted to be operational later this month.


The Supreme Court has agreed to hear two private companies’ challenges to the Affordable Care Act’s contraception mandate. The Court is expected to hear the cases in March and issue a decision by June, Sebelius v. Hobby Lobby Stores, Inc., and a similar suit brought by Conestoga Wood Specialties Corp. The White House then released a statement on November 26 calling the requirement that private companies provide contraceptive coverage “lawful and essential to women’s health.” The Supreme Court declined to review the case of Liberty University, which would have required the Court to review the constitutionality of the ACA’s employer mandate for a second time. 

On December 3, the U.S. District Court in Washington heard a case on whether the ACA provides for federal premium subsidies for people buying insurance through the federally facilitated exchanges in the 36 states that did not set up their own exchanges. Three private employer and four individual taxpayer plaintiffs argued that the way the ACA was drafted – consumers are eligible for federal tax credits when they buy through an exchange “established by the state” – only those buying coverage through state-run exchanges are permitted to receive subsidies. If the plaintiffs were to be successful in their challenge, millions of people in the states with federal exchanges could be denied government subsidies to assist them in paying for health insurance.

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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