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The 2012 Road to Overhaul May Well Wind Beyond High Court

By John Reichard, CQ HealthBeat Editor

January 3, 2012-- Big pieces of the health care law could easily remain standing even if the U.S. Supreme Court rules later this year that its individual mandate is unconstitutional. And many of the provisions that could survive still have to be implemented.

The upshot: 2012 looks like it could be a busy year for health care law implementation, beyond the big job of creating state-based health insurance exchanges.

For example, the Centers for Medicare and Medicaid Services (CMS) is on the hook to start varying Medicare payments to hospitals based on the quality of care they provide. It also must issue a regulation to streamline billing to lower the administrative costs of running health care plans. And it has to begin contracting with provider groups that qualify to deliver team-based care as accountable care organizations (ACOs).

To be sure, states have the heaviest lifting to do this year. Each must do enough of the spade work to create insurance exchanges to convince CMS that it will have a functioning new marketplace for insurance plans by 2014, when the overhaul (PL 111-148, PL 111-152) requires everyone to have health insurance. Even if the Supreme Court nullifies that requirement, the law’s provisions requiring exchanges and the availability of subsidies to some Americans to buy coverage could survive.

To prepare for the exchanges, state legislatures must pass laws to create the new marketplaces and specify how they will operate. States also must prepare information systems to handle plan selection, payment and enrollment, among other functions.

They’ll have to design exchanges in a way that permits efficient enrollment in the Medicaid program if that’s the coverage an applicant qualifies for. And they’ll have to begin making decisions on what they will deem as the “essential benefits” that insurers must provide if they are selling coverage in the exchange.

Much time, effort and money is involved in setting up the marketplaces. Many states have left most of the work until this year. In many cases, they haven’t passed the needed supporting legislation. Only nine states have passed laws creating exchanges since the passage of the health law, according to the National Conference of State Legislatures (NCSL database).

If CMS fails to certify by Jan. 1, 2013, that a state’s exchange will be ready for business by Jan. 1, 2014, the federal government will run the exchange for that state.

CMS officials have taken some of the load off states’ shoulders by saying they will help with certain exchange-related functions while letting the state run its own exchange. And the agency will give states that eventually want to open their own exchange the right to do so even if the federal government has to fully operate the marketplaces for a while.

States are trying to find new ways to lighten the load. For example, Dan Crippen, executive director of the National Governors Association, wrote to the Department of Health and Human Services on Dec. 8 to find out whether states could use IT systems created for the federally run exchange “in lieu of re-creating the necessary systems for state-facilitated exchanges.”

Preparations at Federal Level
The federal government also has work to do. CMS has proposed hundreds of pages of rules governing the creation of exchanges, but the agency has yet to issue the final regulations.

The final regulation for accountable care organizations is in place, however. CMS is expected to begin accepting and reviewing applications for prospective ACOs in the coming weeks, and to begin signing contracts with them later this year.

The agency also has taken steps to launch a “Value-Based Purchasing” program designed to improve the quality and efficiency of care. The health care law requires payments to hospitals starting Oct. 1 to be lower or higher based on how well they perform on certain measures of quality. But the program in some respects has been initially scaled back.

“Some of the individual measures were delayed because they were not made publicly available on Hospital Compare for a full year prior to implementation, which was required by the [health care] law,” said Amanda Forster, spokeswoman for the Premier health care alliance, a consortium of hospitals at the forefront of efforts to create a quality-based payment system. Hospital Compare is the CMS website that rates hospitals on their quality.

So, for example, payments won’t be lowered by Oct. 1 for poor performance on several measures of hospital-acquired infections. In addition, CMS won’t implement on that date a provision varying payment based on how efficiently a facility treats Medicare beneficiaries.

The law also directs the agency to develop other value-based purchasing programs this year for skilled nursing facilities, home health agencies and ambulatory surgical centers.

This year also marks the start of a schedule of lower payments to Medicare Advantage plans that phase in through 2017. But in 2012, Medicare Advantage plans, the private, managed care plans in Medicare, also can get paid more if they perform well based on a system of quality rankings.

Later this year federal officials will issue the first of a number of regulations under the health care law designed to reduce the paperwork and administrative costs of health care plans. “The new law will institute a series of changes to standardize billing and requires health plans to begin adopting and implementing rules for the secure, confidential, electronic exchange of health information,” an HHS summary notes. The first regulation takes effect Oct. 1.

Consumer protections won’t dramatically be expanded in 2012 compared with the coverage requirement issued in 2010 for young adults or the major Medicaid expansion that starts in 2014 covering individuals with incomes up to 133 percent of federal poverty.

But Medicare patients will get a little more help this year with their prescription drug costs. The program launched in 2011 requiring 50 percent discounts on brand-name drugs for patients in the “doughnut hole” continues in 2012. Beneficiaries in this coverage gap would have had to pay the full cost of prescriptions if the law hadn’t provided for gradually increasing subsidies for brand-name and generic drugs.

This year the federal government picks up a higher share of generic drug costs for seniors in the doughnut hole. In 2011, Medicare drug coverage plans picked up 7 percent of the cost of generic drugs in the doughnut hole; in 2012, they will cover 14 percent of those costs, rising to 75 percent of generic drug costs in the doughnut hole in 2020.

Also this year, CMS is starting an “Independence at Home” pilot program in which teams of doctors and nurses can sign up to treat frail patients in the patients’ homes, sharing in savings from keeping them out of hospitals and nursing homes.

The agency also is required to start testing new forms of payment in Medicaid, such as “bundled payments for episodes of care.” The term refers to providing a single payment for a variety of services delivered to treat a particular medical condition, rather than paying separately for each service that is provided. The aim is to encourage more efficient treatment.

Finally, the health care law this year will require doctors and hospitals to report more data on race, ethnicity, sex, primary language and disability status as a way to lessen racial and other disparities in treatment.

John Reichard can be reached at [email protected].

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