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February 4, 2013

Washington Health Policy Week in Review Archive c28426d2-dfdd-4ea3-ab49-8eafa664d782

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HHS Proposed Reg Exempts Some in Medicaid from Mandate Penalties

By Jane Norman, CQ HealthBeat Associate Editor

January 30, 2013 -- People who would qualify for Medicaid under the health law's expansion but live in a state that decides not to expand the program would be exempt from the individual mandate, under a recently proposed Obama administration rule. The move is an acknowledgment that not all states will expand the health program for the poor.

Most individuals will be subject to tax penalties if they don't get health insurance when the law (PL 111-148, PL 111-152) is fully implemented in 2014. In their proposed regulations, the departments of Health and Human Services and Treasury Department laid out how these "shared responsibility payments," as they called them, would be levied.

The proposed HHS rule made it clear that health insurance exchanges should provide "hardship" exemptions for people who won't be able to sign up for Medicaid because they live in one of the states that decides against expanding its rolls to adults earning less than 138 percent of the federal poverty level.

About 20 states and the District of Columbia have so far announced they will expand the state-federal Medicaid program while 10 governors have said that they oppose such a move. Plans are unclear in the other states. A 2012 Supreme Court ruling on law gave states the leeway to decide.

Overall, the proposed rules spell out how the U.S. Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS)  will enforce the individual mandate, which consistently has polled as the health care overhaul's most unpopular feature. The proposed rules and an accompanying fact sheet seem to indicate that there will be no iron fist.

HHS officials in the fact sheet downplayed how many people will run afoul of the mandate, pointing out that the Congressional Budget Office (CBO) has projected that fewer than 2 percent of Americans will have to pay up because they don't have health insurance. CBO said in September that number would be about 6 million in 2016, amounting to $7 billion in payments.

The payment will be made via the federal tax return, beginning in 2015.

The proposed rules will help ensure that the payments only will be made by a "limited group of taxpayers who choose to spend a substantial period of time without coverage despite having ready access to coverage," the fact sheet said.

For example, if it's determined that an individual had minimum essential coverage even for just one day in a month, that would count for the entire month, the proposed rule said. So someone who starts a job on March 27 and is enrolled in employer-sponsored coverage that day will be regarded as having been covered for all of March, officials said.

Similarly, anyone who's exempt for one day of a month will be exempt for an entire month. The tax penalties are calculated on a month-by-month basis, beginning after Dec. 31 of this year.

The Treasury-proposed rule also makes it clear that the IRS can't file a notice of lien or levy on a taxpayer's property for failing to pay. In addition, a taxpayer can't be subject to criminal prosecution or penalty for "failing to pay the assessed shared responsibility payment in a timely manner."

Exemptions Allowed

The law allows nine categories of exemptions: people who can't afford coverage, taxpayers with incomes below the Internal Revenue Service filing threshold, members of Indian tribes, people with hardships, individuals with gaps in coverage of less than three months, those who have religious objections, members of health care sharing ministries, people in prison, and people not living in the country.

But it's the rule that defines what a hardship is. For example, it will be considered a hardship if someone initially doesn't buy health insurance because they can't afford it, but whose income over a year is higher than they anticipated.

In addition, the fact sheet says that the hardship exemption "will be available on a case-by-case basis for individuals who face other unexpected personal or financial circumstances that prevent them from obtaining coverage."

As for the Medicaid exemption, HHS officials said their move will protect low-income people. "We believe that this determination is an appropriate use of the hardship exemption given that the Affordable Care Act anticipates that Medicaid will be available to such individuals," officials said in the rule.

But officials also noted that most of the newly eligible Medicaid population are so poor they likely would not have to pay the law's tax penalties anyway, either because they can't afford insurance coverage or had income below the IRS filing threshold, two other reasons allowed for exemptions.

Officials also asked for comment on whether this hardship exemption should be limited to adults earning less than 100 percent of the federal poverty level. Those individuals are not eligible for federal subsidies that allow purchase of insurance policies in the exchanges, since the law assumed they would be signed up for Medicaid.

Public comments are due on the proposed Treasury rule by May 2 and on the proposed HHS rule by March 18.

Affordability Rule

Separately, Treasury issued a final rule last week dealing with the affordability of health insurance coverage. Under the health care law, subsidies to help pay for insurance are offered when coverage is deemed not affordable.

Despite objections from advocates for low-income children and families, the agency kept a proposal that computes affordability for a family based on the premium costs for just one employee rather than the entire family. Advocates say this means many low income families won't be eligible for subsidies because premiums for families are so much higher than premiums for one person.

"Today's final rule is a serious blow to children who will be left out of the coverage that was promised under the Affordable Care Act," Bruce Lesley, president of the advocacy group First Focus, said in a statement. "The children's community is disappointed by the administration's decision to deny access to coverage for children based on a bogus definition of affordability."

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Commonwealth Fund: States Have Work to Do to Implement Health Law Market Rules

By Cristina Marcos, CQ Roll Call

February 1, 2014 -- Many states still need to either pass laws or issue new regulations that will enable them to enforce some critical health care law insurance provisions, something that could complicate nationwide implementation of the overhaul, according to a recent Commonwealth Fund analysis.

Uncertainty surrounding the law's fate, first because of the Supreme Court challenge to the measure and then because of the November elections, led some states to delay any action on this front. But the Commonwealth Fund's findings indicate that it is crucial for states to act this year in order to ensure that key components of the health care law (PL 111-148, PL 111-152) are implemented on schedule, and to avoid confusion between the state and federal governments.

These provisions include a ban on denying coverage to people with preexisting conditions, a ban on waiting periods, guaranteed access to coverage, restrictions on insurers to use gender or health status in setting premiums, and limits on out-of-pocket costs.

While 10 states did not respond to the fund's survey, the results from the others show that between January 2010 and October 2012 there were 11 states and the District of Columbia that addressed this issue legislatively or through regulation. Another eight states already had the needed authority to enforce market provisions, which are scheduled to go into effect in 2014.

As of October, Connecticut was the only state that responded to the survey that had addressed all seven market provisions. Arkansas, California, Maine, Hawaii, Iowa, Maryland, Massachusetts, New Hampshire, New York, New Jersey, North Carolina, North Dakota, Oregon, Rhode Island, Utah, Vermont, Washington, and the District of Columbia had either moved on at least one of the issues or had laws in place before the overhaul. For example, Massachusetts, Maine, New Jersey, New York, and Vermont had guaranteed coverage laws in place before the health law passed.

Katie Keith, the study's lead author, said that the impetus lies largely with state lawmakers—more so than regulators—because states will be the primary enforcers of the sweeping overhaul. While states likely already have some regulatory tools at their disposal for enforcement, the analysis said that legislation would provide stronger authority.

"It's really getting that point across to state legislators of what happens if the state doesn't make changes to prepare," Keith said an interview. "We really think that state legislation is going to be necessary."

The report recommended that federal regulators outline an enforcement standard to provide lawmakers with guidelines for "how much time, energy and political capital should be used to pass new legislation or issue new regulations in 2013." In the event states do not amend their existing laws, state and federal regulators would likely have to figure out how to bridge the enforcement gaps.

There is some reason to believe the states will act on time. A prior study by these authors found that most states took action to implement major provisions of the overhaul that have already taken effect, such as the one allowing people to stay on their parents' insurance as dependents until age 26.

Keith said they expected most states to ultimately align their rules with the changes that will take effect next year now that the new slate of state officials are in place. But she noted that further prolonging the policy adjustment process would reduce clarity about the law's implementation, making the next 11 months critical.

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Enroll America Eyes $100 Million Fundraising Effort

By John Reichard, CQ HealthBeat Editor

January 31, 2013 -- With its budget to implement the health law squeezed tighter and tighter, the Centers for Medicare and Medicaid Services faces an uphill battle to conduct the outreach needed to educate the uninsured about its coverage programs and assist in their enrollment.

But Enroll America, the coalition of private groups that has formed to launch its own enrollment campaign, seems intent on picking up the slack. And it's thinking big—very big—in fundraising for its own effort. It must aim high, says Families USA Executive Director Ron Pollack, given the massive amount of work that will be required.

Pollack says there's no precise goal. "We keep on saying it's got to be in the significant tens of millions of dollars, and hopefully we reach another digit,'' he said. "For the kind of effort that's undertaken, it's not as large as it could be.

"Many of the groups we reached out to were not sure how to proceed because the Supreme Court had not ruled, and then you had the elections, and so it was unclear whether the Affordable Care Act would move forward. So now Enroll America is undertaking a crash fundraising effort."

About two dozen groups already have contributed, but now with the health care law (PL 111-148, PL 111-152) intact, Enroll America wants to expand that donor base. "Clearly we want the insurers, we want the hospitals, we want the different groups who frankly will be doing well by doing good." The effort also will target philanthropic organizations.

As the staff of Enroll America expands, one of its first new hires is Chris Wyant, who ran President Barack Obama's campaign in Ohio, said Pollack. "He is now putting together a crash process of hiring." It's expected that he'll oversee the hiring of "a few hundred people."

In addition to this cadre of full-time staffers, "like a campaign, they will have volunteers working as well, so it's not just paid staff." Pollack said the volunteers likely will include people who volunteered for the Obama reelection campaign. "But it will also include others who just care about health care and have been doing work with respect to health care and the poor."

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Immigration Overhaul Proposal Doesn't Appear to Include Health Care

By Dena Bunis, CQ HealthBeat Managing Editor

January 28, 2013 -- The estimated 11 million illegal immigrants living in the United States probably would still not qualify for federal health care benefits under an immigration policy overhaul recently proposed by a group of senators.

The bipartisan proposal would allow those here illegally to earn their way to legal status and citizenship. In the meantime, those who pass a background check and pay a fine and any back taxes would be given a probationary status that would allow them to live and work legally in the United States. Those with that status would go to the back of the line for permanent legal status, commonly known as a green card. Based on the current number of green cards available, that wait could easily be more than a decade.

However, one of the bullet points in the proposal says: "Current restrictions preventing non-immigrants from accessing federal public benefits will also apply to lawful probationary immigrants." That means that anyone under the probationary status would not be eligible for Medicare, Medicaid, or the Children's Health Insurance Program.

Immigration experts said that provision also suggests that those in the in-between status also would not be eligible for any benefits from the 2010 health care law, including federal subsidies to buy insurance on the health exchanges. They also would not be able to buy insurance on the exchanges, even without subsidies.

"It's going to be a tricky issue, and it has touched a nerve before," said Angela Kelley, vice president for immigration policy and advocacy at the Center for American Progress, which has pushed for a comprehensive immigration policy overhaul for many years. "I don't think that anybody has reached a conclusion or there has been a deal cut on how it will be treated," she said.

Because the proposal doesn't specifically exclude health law participation, there may be room for negotiation, said Jenny Rejeske, a health policy analyst at the National Immigration Law Center's Washington, D.C., office.

"We think there's an opening there, and we're hoping to find a way to work with Congress to make sure that immigrants have access to affordable health care," she said.

But Kelley pointed to the terms of President Barack Obama's executive action on immigration last June for guidance. When Obama announced that hundreds of thousands of illegal immigrants who were brought to the United States as children would be allowed to stay here without fear of deportation, Health and Human Services Secretary Kathleen Sebelius made it clear that the president's action did not mean that these young people could access federal health benefits, including those available under the health care law (PL 111-148, PL 111-152).

"Considering what's happened in the past, we are disappointed," Rejeske said. She said immigration advocates hope to be able to convince Congress that "costs will go down for everybody if immigrants are able to pay into the system. It's common sense."

Under the health care overhaul, only U.S. citizens and legal permanent residents can buy insurance from the exchanges, which are scheduled to begin covering individuals and small businesses in 2014. Also under the health care law, illegal immigrants are not subject to the insurance mandate. They still can be treated in hospital emergency rooms.

"It's an issue that will have some dollar signs beside it and always raises red flags for people," said Kelley, who referred to the comment Republican Rep. Joe Wilson South Carolina made during Obama's joint address to Congress in 2009. Wilson shouted "You lie!" when Obama said illegal immigrants would not benefit from the health care law.

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Federal Officials Approve Applications for Bundled Payment Initiative

By Rebecca Adams, CQ HealthBeat Associate Editor

January 31, 2013 -- More than 500 health care organizations will participate in the Department of Health and Human Services' bundled payments initiative, the agency announced last week. This effort will test whether paying groups of providers a lump sum for a patient's treatment will lower costs without undermining the quality of care.

Under the three-year project, groups of providers such as hospitals, home health agencies and physicians will collaborate on patients' care for a particular condition. Because the providers will share payments, Centers for Medicare and Medicaid Services officials hope they will coordinate closely on treatment. The goal is to avoid unnecessary tests or treatments and ensure that providers' care makes sense holistically.

Many of the organizations that were selected are located in California, Florida, the Northeastern part of the United States, and near the Great Lakes region. The participants are listed in an online, searchable database.

"This is huge and it's historic," Centers for Medicare and Medicaid Services' acting Principal Deputy Administrator Jonathan Blum said on a phone call with reporters. He said agency officials are excited about the project because it will teach them how to build better Medicare payment policies that could be expanded in the future.

Although Medicare and private insurers have experimented with bundling payment pilot projects in the past, none have come close to the scale of the current effort, Blum said.

The providers could choose to apply under four main arrangements. CMS officials approved projects using all four models. Work could start as early as April under one of the options.

When the initiative was first developed, there was only one model available. That would have required providers to give CMS a standard discount for acute care inpatient hospital treatment. Then CMS announced three other options. After the additional choices were unveiled, CMS officials said they considered delaying the implementation of that first option because there wasn't as much interest in it.

But after organizations applied, it became clear that all the models had some support.

As part of the announcement, CMS approved 32 hospitals for the standard discount model—far fewer than for each of the others. The New Jersey Hospital Association gathered together most of the hospitals that will participate under this option, which will allow hospitals and physicians to share in any savings. The only other umbrella groups that were approved for this model were Dignity Health in California and the Greater New York Hospital Association. Later this spring, CMS plans to allow more hospitals to apply for this option.

The second and third models also involve hospital care. Under the second type of project, hospitals will accept a retrospective bundled payment for an inpatient stay and any other services—including for post-acute facilities—related to the care for a period of time after a patient is discharged. The applicants chose whether they wanted the period of time after the stay to last 30, 60, or 90 days.

The third model is similar to the second but is designed just for post-acute health care facilities. This payment period starts when a patient enters one of those facilities, such as a skilled nursing home, after being discharged from a hospital.

Under the fourth model, CMS will give a single bundled payment determined ahead of time to the hospital that would fund all services given to the patient during the inpatient stay by the hospital, physicians and other providers. Physicians and other providers will tell Medicare what their services cost, but the hospital will use money from the bundled payment to pay these providers. If a patient is readmitted within 30 days after discharge, neither the hospital nor the individual providers would get any additional money.

Providers in the second, third, and fourth models are expected to start taking on financial risk in July, after completing a series of requirements, including finalizing contracts and passing CMS anti-fraud reviews.

"We think it's a nice portfolio that meets different providers in different places," CMS Innovation Center Director Richard Gilfillan said.

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Shortage of Primary Care Doctors Seen as Problem for Health Care Law

By Emily Ethridge, CQ Roll Call

January 29, 2013 -- Congress should consider increased payments and other ways to bolster the primary care physician workforce before next year's expansion of health care insurance coverage, witnesses recently told a Senate panel.

The current shortage of primary care physicians will only increase as an estimated 30 million people join the ranks of the insured under the 2010 health care overhaul (PL 111-148, PL 111-152), the witnesses said. The law requires most Americans to buy insurance or pay a penalty.

Sen. Bernard Sanders, chairman of the Senate Health, Education, Labor, and Pensions Subcommittee on Primary Health and Aging, said expansion of insurance coverage is good news.

"The bad news is we don't know how we are going to be providing primary health care to those Americans who now will have health insurance," Sanders, I-Vt., said at the subcommittee hearing.

More than 52,000 additional primary care physicians will be needed by 2025 to meet the needs of the growing population and the expanded insured population, Sanders said.

Currently, about 16,000 additional primary care physicians are needed, according to the Health Resources and Service Administration at the U.S. Department of Health and Human Services.

Subcommittee ranking Republican Michael B. Enzi said it is important to ensure that providers work where they are most needed, including rural areas like his home state of Wyoming.

One of the biggest obstacles to expanding the primary care physician workforce, witnesses agreed, is the pay disparity between primary care providers and specialists.

"That is the driving force in this workforce problem that we're facing today," said Andrew Wilper, acting chief of medicine at the VA Medical Center in Boise, Idaho.

Sanders suggested that some of the problem may lie with how the Centers for Medicare and Medicaid Services (CMS) gets advice on payment rates from a committee of the American Medical Association (AMA).

The AMA/Specialty Society Relative Value Scale Update Committee, or RUC, "plays an enormously important role in determining how much specialists will make, how much primary care physicians will make," Sanders said. But he added that the group is "overloaded" with specialist members and does not have enough primary care physicians.

CMS usually adopts the committee's recommendations, and private insurers often base their payment rates on Medicare's payment rates, said Fitzhugh Mullan, a professor of medicine and health policy at the George Washington University School of Public Health.

"Managing the Medicare conundrum around the pay gap would be key to reforming the whole system, and the RUC is at the center of it," Mullan said.

Uwe Reinhardt, a professor of political economy and of economics and public affairs at Princeton University, said adding more primary care members on the board could be a good idea. He also encouraged lawmakers to look into a Medicare Payment Advisory Commission recommendation for an independent committee to review the RUC proposals.

Witnesses also suggested offering more loan forgiveness for medical students who choose to practice in underrepresented specialties or in underserved regions. Several suggested expanding the National Health Service Corps, which offers student loan repayments for primary care providers who serve in communities with limited access to health professionals.

"Compensation is clearly an issue," Reinhardt said. He proposed an incentive system under which the federal government would forgive a certain amount of student loans upfront if a medical student chose to go into primary care, with additional forgiveness for each year a student practices in a location that the government identifies as underserved.

Wilper also suggested increasing the amount of money given for graduate medical education that is set aside for primary care programs.
Another obstacle to recruiting more primary care physicians from medical students is a culture that devalues primary care physicians. Sen. Christopher S. Murphy, D-Conn., related tales from primary care physicians who were told as students that they were "too smart" to go into primary care.

"That culture is toxic," Mullan agreed.

Reinhardt that new models for delivering primary care, including medical homes and accountable care organizations, will enhance the professional power of primary care physicians and help them earn more money through shared savings.

"In those settings, their prestige will rise," he said.

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