News of Health Reform Activity in the Federal Government
Contents
Additional NCSL Resources
Reports of Interest
NCSL Contacts
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Updated February 7, 2012
NCSL Comments on the CMS Essential Health Benefits Bulletin
On December 16, 2011, HHS issued a bulletin outlining proposed policies that will give states more flexibility and freedom to implement the ACA. The bulletin describes a proposal that HHS intends to pursue in rulemaking to define essential health benefits and requested comments by January 31, 2012. NCSL submitted comments in a memorandum January 31st to CMS Acting Administrator Marilyn Tavenner.
Rules Implementing ACA Requirements Under Review at the Office of Management and Budget (OMB)
Proposed Rules
Medicaid-Payments for Primary Care Services—This proposed rule will implement the ACA provisions requiring states to pay primary care providers equivalent to Medicare reimbursement rates. Once implemented, the requirements of Section 1202 of the ACA will remain in effect for calendar years 2013 and 2014 for primary services delivered by physicians designated as practicing family medicine, general internal medicine, or pediatrics. As of Jan. 1, 2013, the federal government will pay 100 percent of the amount that the new minimum will exceed state reimbursement rates that were in place as of July 1, 2009.
Guidance
Draft Actuarial Value and Cost Sharing Reductions Bulletin—specific details of this guidance are still pending.
Final Rule
Medicaid Eligibility Expansion under the Affordable Care Act of 2010— This rule implements provisions of the ACA expanding access to health insurance through improvements in Medicaid, the establishment of American Health Benefit Exchanges, and coordination between Medicaid, the CHIP, and exchanges. It also implements sections of the ACA related to Medicaid eligibility, enrollment simplification, and coordination.
State Requirements for Exchange--Reinsurance and Risk Adjustments— This rule finalizes guidelines for the transitional risk-sharing programs, reinsurance and risk corridors, as well as for the risk adjustment program that will continue beyond the first three years of exchange operation. The purpose of these programs is to protect health insurance issuers from the negative effects of adverse selection and to protect consumers from increases in premiums due to uncertainty for issuers.
The Center for Medicaid and CHIP Services (CMCS) Proposes New Rules Governing Medicaid Covered Outpatient Drugs
CMCS published a list of proposed rules for implementation of Medicaid drug provisions of the Affordable Care Act (ACA). These rules will increase transparency in drug pricing and through a number of changes including:
1. Aligning reimbursement rates for all drugs closer to the actual price the pharmacy pays for the drug;
2. Increasing rebates paid by drug manufacturers that participate in Medicaid;
3. Providing rebates for drugs dispensed to individuals enrolled in a Medicaid managed care organization; and
4. Lowering reimbursement for certain generic drugs.
The notice of proposed rulemaking (NPRM) will be open for public comment through April 2, 2012, and CMS encourages all interested parties and stakeholders to submit comments. The NPRM wasl be officially posted Feb. 2, 2012 in the Federal Register.
House Approves Repeal the Community Living Assistance Services and Supports (CLASS) Act
On Thursday, February 1st, the House approved H.R. 1173, the Fiscal Responsibility and Retirement Act of 2011, by recorded vote 267 yeas – 159 nays. The bill repeals the Community Living Assistance Services and Supports (CLASS) Program or “CLASS Act” provisions in the Patient Protection and Affordable Care Act (PPACA). The Class Act established a national, voluntary long-term care insurance program for purchasing community living assistance services and supports. The U.S. Department of Health and Human Services (HHS) suspended work on the implementation of the program in 2011 when it was determined that the plan benefits required by the statute would not meet solvency tests. The Class Act had also reauthorized National Clearinghouse for Long-Term Care and appropriated funding for the program as funding not subject to appropriations, “mandatory funding,” through FY 2015. In addition to repealing the CLASS Act, H.R. 1173 would make the funding for the clearinghouse for FY 2013 through FY 2015 ($9 million) subject to appropriations. The Clearinghouse is part of the U.S. Department of Health and Human Services website and provides information and resources to help individuals and families plan for long-term care (LTC) needs. The website includes information about State Partnership programs as well.
Milliman Client Report: PPACA Health Insurer Fee Estimated Impact on State Medicaid Programs and Medicaid Health Plans
Section 9010 of the PPACA imposes an annual fee on health insurance providers beginning FY2014. The fee will apply to any entity that provides health insurance in the United States with the exclusion of governmental entities, and not-for-profit organizations. The health insurer fee is to be considered as an excise tax and is nondeductible for income tax purposes. The Milliman report was commissioned by the Medicaid Health Plans of America, who argues that this treatment of nonprofit Medicaid MCOs in the health insurer fee calculation may distort the competitive balance between for profit and nonprofit Medicaid MCOs, possibly resulting in additional costs to states. The Medicaid Health Plans of America is the leading national organization that represents health plans participating in Medicaid managed care. Milliman estimates that as a result of this fee, Medicaid managed care premiums will increase by 1.5 and 1.6 percent nationwide, and as much as 2.5 percent in some states. They project the state and federal government funding for the increase in premiums will be between $36.5 billion and $41.9 billion over a 10 year period.
CCIIO Publishes Report of Small Group Products by State
Jan. 25, 2012. The Center for Consumer Information and Insurance Oversight (CCIIO) has published a report of the small group products with the three largest enrollments by state. States that are creating an exchange will be allowed to select an existing health plan licensed in their state to serve as a “benchmark” for the items and services that will form the essential health benefits package in their exchange. States may choose a benchmark from among the following types of health insurance plans:
1. The largest plan by enrollment in any of the three largest small group insurance products in the state’s small group market,
2. Any of the largest three state employee health benefit plans by enrollment,
3. Any of the largest three national FEHBP plan options by enrollment, or the largest insured commercial non-Medicaid Health Maintenance Organization (HMO) operating in the state.
The information on this report reflects data collected by HealthCare.gov based on June 30, 2011 enrollment. This report has been provided for informational purposes only and is not to be considered as an endorsement by HHS. For clarification purposes, HHS is using the term “product” when they’re referring to a specific “plan” such as Blue Cross Blue Shield (BCBS) Standard Option, and the term “issuer” when they refer to the “carrier” such as BCBS. The report also contains the links to the three largest national federal employee health benefit plan (FEHBP) by enrollment.
CCIIO link: http://cciio.cms.gov/resources/files/Files2/01272012/top_three_plans_by_enrollment_508_20120125.pdf .
Federally Facilitated Exchanges: Progress Report
In states that elect not to establish an exchange, the ACA requires the HHS to establish and operate one for the citizens of that state. This would also apply in the event HHS determines that despite state efforts to establish an exchange, the exchange has not made sufficient progress to become fully operational by January 1, 2014. HHS has begun laying the groundwork to establish what will become a federally facilitated exchange in 2014. Contracts to build and support the IT systems, state exchange implementation support, eligibility and enrollment strategy and planning, and the eligibility appeals process are under way.
Quality Software Services Inc. (QSSI) has been awarded the contract to build and support the operations of a federal data service hub that will provide data verification to support eligibility processes for all exchanges, Medicaid and the Children’s Health Insurance Program.
CGI Group Inc. will work with CCIIO to build and support the IT systems for the federal exchange. CGI will also design, develop and implement the CCIIO Rate and Benefits Information System (RBIS) that will collect rate and benefit data from health insurance providers to be used by consumers to review in a comparison format.
Booz Allen Hamilton was awarded three separate contracts by CMS to provide state exchange implementation support, eligibility and enrollment strategy and planning, and for the development of the exchange eligibility appeals process.
CMS Guidance Regarding the Termination of Provider Participation in Medicaid
Jan. 20, 2012. CMS issued an informational bulletin providing clarification of the definition of “for cause” terminations provided in earlier guidance. The earlier guidance implemented final rules governing requirements in the Affordable Care Act (ACA) that State Medicaid agencies terminate the participation of any individual or entity provider of health care if they had previously been terminated by Medicare or any other State Medicaid plan. The guidance was issued in response to requests from states for further clarification and is available online at http://www.medicaid.gov/Federal-Policy-Guidance/downloads/CIB-01-20-12.pdf.
HHS “Bulletin vs. Proposed Rule”: Congressional Republicans Question HHS on Chosen Methods for Guidance in the Development of the Essential Health Benefits
House and Senate Republicans have requested in a letter to Health and Human Services (HHS) Secretary Kathleen Sebelius, information concerning the process by which HHS chose to issue a “bulletin” rather than a proposed rule to provide direction to states in creating an essential health benefit package that would be offered by health plans through state exchanges. http://republicans.energycommerce.house.gov/Media/file/Letters/112th/011312ehbbulletin.pdf
House Committee on Ways and Means Approves H.R. 1173 to Repeal the CLASS Act
On Jan. 24, 2012 the House Committee on Rules approved legislation, H.R. 1173, which would repeal the Community Living Assistance Services and Support (CLASS) program created in the Affordable Care Act (ACA). The law was designed to establish a voluntary, national insurance program for American workers to help pay for long-term services and supports. The Department of Health and Human Services (HHS) suspended work on the implementation of the program in 2011 when it was determined that the plan benefits required by the statute would not meet solvency tests. The measure will be presented for floor consideration sometime next week. The language of H.R. 1173 and committee report is available at, http://www.rules.house.gov/Legislation/legislationDetails.aspx?NewsID=695 .
The Center for Medicaid and CHIP Services (CMCS) Releases Guidance on the ACA Changes to Medicaid/CHIP Provider Screening and Enrollment
Provisions in the ACA requires the HHS Office of the Inspector General (OIG) to establish screening procedures for the enrollment of health care providers and suppliers who wish to participate in Medicare, Medicaid, or CHIP. The level of screening must be based on the risk for fraud, waste and abuse with respect to the category of provider or supplier. In addition, institutional providers of medical services and suppliers must pay a fee in order to participate in the program. States must submit a state plan amendment (SPA) to the Centers for Medicare and Medicaid Services (CMS) for review and approval by April 1, 2012 demonstrating that all participating providers will be screened upon initial application, including applications for new service locations, and requests for reenrollment. The guidance provides a list of questions and answers each state should review regarding collection of information, application fees, and other enrollment procedures required by CMS. The guidance is available at http://www.medicaid.gov/Federal-Policy-Guidance/downloads/CIB-12-23-11.pdf.
HHS Releases Interim Final Rules on the Adoption of Standards for Health Care Electronic Funds Transfers (EFTs)
January 5, 2012−The Department of Health and Human Services (HHS) published interim final rules for public inspection, prior to officially posting them on the Federal Register web site. The rules implement provisions from the Affordable Care Act (ACA) that require the adoption of a standard for electronic funds transfers to help reduce administrative costs for health care providers, and public and private health plans. Comments on the rule will be accepted for 60 days after the final posting in the Federal Register, http://www.ofr.gov/OFRUpload/OFRData/2012-00132_PI.pdf.
HHS Publishes Final Rules for the Establishment of CO-OPs
This final rule implements the Consumer Operated and Oriented Plan (CO-OP) program, which provides loans to foster the creation of consumer-governed, private, nonprofit health insurance issuers to offer qualified health plans in the Affordable Insurance Exchanges (Exchanges). The goal of this program is to create a new CO-OP in every state in order to expand the number of health plans available in the Exchanges with a focus on integrated care and greater plan accountability. http://www.ofr.gov/OFRUpload/OFRData/2011-31864_PI.pdf
HHS Provides Guidance to States In Building an Essential Health Benefits (EHBs) Package
December 16, 2011– The Department of Health and Human Services (HHS) released guidance to states in the form of an informational bulletin outlining their proposed policies to give states flexibility in establishing their EHB packages offered through Affordable Insurance Exchanges (AIEs). The Affordable Care Act (ACA) directed that EHBs should include items and services within at least the following ten categories:
1. Ambulatory patient services,
2. Emergency services,
3. Hospitalization,
4. Maternity and newborn care,
5. Mental health and substance use disorder services, including behavioral health treatment,
6. Prescription drugs,
7. Rehabilitative and habilitative services and devices,
8. Laboratory services,
9. Preventive and wellness services and chronic disease management, and
10. Pediatric services, including oral and vision care.
The ACA also specified that the EHBs must be equal to the scope of benefits offered under a typical employer plan. HHS intends to include the policies released Friday in rulemaking sometime in 2012. HHS is giving states the flexibility to select an existing health plan to set the “benchmark” for the benefits to be included in the EHBs package. States’ options include one of the following types of health insurance plans as a benchmark:
- One of the three largest small group plans in the state;
- One of the three largest state employee health plans;
- One of the three largest federal employee health plan options;
- The largest HMO plan offered in the state’s commercial market.
The new design options will eliminate the state expense of funding the share of premium subsidy attributable to state benefit mandates as states may now opt to include mandates in their final EHB package.
Bureau of Labor Statistics National Compensation Survey (NCS)
The National Compensation Survey from the Bureau of Labor Statistics (BLS) provides employer healthcare plans survey information each year as directed by the ACA. BLS conducts a survey of employer-sponsored health plans to determine the benefits typically covered by employers, and to report the results of the survey to HHS. A full version of the report is available at http://www.bls.gov/ncs/ebs/sp/selmedbensreport.pdf. Several reports that provide state specific information are available http://www.bls.gov/ncs/ebs/smb_health.htm.
New Essential Health Benefit Resources
HHS Releases Final Rules Governing Medical Loss Ratio (MLR)
Beginning in 2011, the ACA requires insurance companies in the individual and small group markets to spend at least 80 percent of the premium dollars they collect on medical care and quality improvement activities. Insurance companies in the large group market must spend at least 85 percent of premium dollars on medical care and quality improvement activities. Insurance companies that do not meet the MLR standard will be required to provide rebates to their consumers.
1. Medical Loss Ratio Requirements under the Patient Protection and Affordable Care Act— http://www.ofr.gov/OFRUpload/OFRData/2011-31289_PI.pdf
2. Medical Loss Ratio Rebate Requirements for Non-Federal Governmental Plans— http://www.ofr.gov/OFRUpload/OFRData/2011-31291_PI.pdf
3. CCIIO Fact Sheet—Medical Loss Ratio: Getting Your Money’s Worth On Health Insurance, http://cciio.cms.gov/resources/factsheets/mlrfinalrule.html
CMS Addresses State Questions Concerning Exchange Implementation
November 29, 2011— The Centers for Medicare and Medicaid Services (CMS) published guidance in response to several of the reemerging state questions that focus on the establishment of a health benefit exchange under the Affordable Care Act (ACA). Here are some of the highlights:
1. Costs to States—
- grant funding will be awarded to States through the end of 2014 and are eligible for activities to establish an Exchange, to build State functions necessary to establish a Partnership Exchange with the Federal government, or to support State activities to build interfaces with a Federally-facilitated exchange.
- State Exchanges that don’t become fully certified on January 1, 2013 can continue to qualify for and receive a grant award, subject to the Funding Opportunity Announcement (FOA) eligibility criteria.
- State Medicaid and CHIP programs will not have to contribute to administrative expenses for eligibility determinations under a Federally-facilitated exchange, but will have to transfer information and cases to the exchange. Costs for maintaining interfaces will remain much as they are currently.
2. Basic Health Program Funding—
- Planning grants may be used to support research and explore coverage options including the option for a Basic Health Program.
3. Federally-facilitated Exchange and State Department of Insurance Responsibilities—
- Qualified Health Plans (QHPs) offered through a Federally-facilitated exchange will have to meet State licensure and solvency requirements.
- States will maintain responsibility for health plans licensed and offered in the State.
- HHS will rely on the State for advice and recommendations regarding provider network adequacy standards under the Exchange.
- HHS plans to make efforts to harmonize Exchange policy with the existing State programs and Laws wherever possible.
4. Eligibility under a Federally-facilitated Exchange or a State-based Exchange—
Federally-facilitated Exchange
- Under a Federally-facilitated exchange States may retain authority over final Medicaid eligibility determinations.
- If a State does not choose to retain Medicaid and CHIP eligibility determinations in the Federally-facilitated exchange the exchange will make these determinations using State eligibility rules and standards.
State-based Exchanges
- If a State-based exchange does not wish to operate all the eligibility functions the guidance offers some new options including allowing a State-based Exchange to use Federally-managed services to make determinations for advanced payments of premium tax credits, cost-sharing reductions and exemptions from the individual responsibility requirement.
5. Quality Certification Requirements—
- HHS recommends that States consider using quality information to certify QHPs, including when to require issuer accreditation and how to assess the quality of plans seeking to participate in Exchanges.
- States will also need to determine what quality information will be made available to consumers.
6. Advance Payments of the Premium Tax Credit in the Federally-facilitated Exchange—
- States have been questioning whether individuals who are enrolled in coverage through a Federally-facilitated Exchange will have access to premium assistance programs?
- The administration makes clear through this guidance that individuals enrolled in coverage through a Federally-facilitated Exchange will be eligible for tax credits, including advance payments.
These and several other issues are discussed in more detail in the guidance document, http://cciio.cms.gov/resources/files/Files2/11282011/exchange_q_and_a.pdf.pdf.
U.S. Supreme Court Agrees to Consider Florida Challenge to Health Reform Law
November 14, 2011— The U.S. Supreme Court announced on Monday, November 14th that they would hear arguments regarding four issues related to the Patient Protection and Affordable Care Act (PPACA) during the spring of 2012. The Court is likely to decide the case before they adjourn in June. The Court will consider: (1) whether the challenge to the constitutionality of the individual mandate is barred by the Tax Anti-Injunction Act, under which generally a court will not enjoin the government from assessing a tax, but may later consider a suit to provide a refund of a tax; (2) whether the individual mandate exceeds Congress’ enumerated powers under the Commerce Clause of the U.S. Constitution; (3) if the individual mandate is found to be unconstitutional, to what extent, if any, can the provisions related to the individual mandate be separated, or is severable from other provision of the PPACA; and (4) whether the Congress unconstitutionally coerced the states into agreeing to substantially expand the Medicaid program by threatening to withhold states’ federal Medicaid funding. In a highly unusual move, the Court has allotted five and a half hours for oral arguments providing one hour on the Tax Anti-Injunction Act issue; two hours on the question on the constitutionality of the individual mandate; 90 minutes on severability; and one hour on the Medicaid coercion issue. The oral arguments are likely to be held in March 2012.
Available resources:
- U.S. Supreme Court General Information on Department of Health and Human Services, et al., Petitioners v. Florida, et al.
- Petition For a firit of Certiorari
- Questions Presented to the U.S. Supreme Court
- CERTIORARI -- SUMMARY DISPOSITIONS
- Merit and Amicus Briefs will be posted by the American Bar Association
- Documents from the various court cases filed regarding the ACA
CMS Requests OMB Approval to Collect Information on Company Use of Funds Acquired Through Early Retiree Program
CMS has filed an emergency request to monitor how companies are using funds under the ACA payment for early retiree health benefits. CMS released an updated report November 4th of reimbursements that had been issued to employers in the program through October 14th, http://cciio.cms.gov/resources/files/Files%202/11042011/errp_disbursements_11042011.pdf. Several state and municipal retirement programs have benefitted from this program and would be affected if CMS moves forward with this plan. The program stopped accepting new participants May 6, 2011. Federal Register announcement, http://www.gpo.gov/fdsys/pkg/FR-2011-11-16/pdf/2011-29629.pdf
NCSL Comments Regarding HHS Proposed Rules Governing Exchanges
NCSL submitted comments in response to CMS NPRM Patient Protection and Affordable Care Act Establishment of Exchanges and Qualified Health Plans on October 31st. The comments focused on state flexibility and preemption of state law, and urges CMS to expand the State Partnership proposal to include all the core functions of the Health Benefit Exchanges. The comments have been posted on the NCSL web site at http://www.ncsl.org/IssuesResearch/Health/FederalGuidanceandRegulatoryActions/tabid/23413/Default.aspx .
HHS Action Plan to Reduce Racial and Ethnic Health Disparities
The Affordable Care Act (ACA) required the U.S. Department of Health and Human Services (HHS) to develop new standards for the collection and reporting of health care information based on race, ethnicity, sex, and primary language to help identify the significant health differences that often exist between and within ethnic groups, particularly among Asian, Hispanic/Latino and Pacific Islander populations. HHS has released the final standards this week, http://minorityhealth.hhs.gov/npa/files/Plans/HHS/HHS_Plan_complete.pdf . The set of data collection standards will be included in surveys conducted or sponsored by HHS.
IRS Guidance on the Branded Prescription Drug Fee for 2012
The ACA created an annual fee payable beginning in 2011 by certain manufacturers and importers of brand name pharmaceuticals. On November 4th the IRS issued Notice 2011-92, providing guidance on the branded prescription drug fee for the 2012 fee year. http://www.irs.gov/pub/irs-drop/n-11-92.pdf
CMS Releases Final Rules on the Medicare Shared Savings Program: Everything You Wanted to Know About ACOs, and More
The Centers for Medicare and Medicaid Services (CMS) have released final rules governing the creation of Accountable Care Organizations that will participate in the Medicare Shared Savings Program. The rule made significant changes to address concerns reflected in the comments received about the proposed rules. Please find a link to a CMS document below that summarizes these changes. CMS also released an interim final rule regarding waivers connected with the Shared Savings program. The Federal Trade Commission (FTC) and Internal Revenue Service (IRS) released documents addressing antitrust enforcement policies and a statement of how existing IRS guidance may apply to ACOs respectively.
- CMS Final Rule on ACOs: Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations
- The Affordable Care Act: Helping Providers Help Patients, A Menu of Options for Improving Care
- The Proposed Rule vs. the Final Rule
- Medicare Shared Savings Program and Rural Providers
- Advanced Payment Accountable Care Organization Model
- Advanced Payment Model Solicitation
- Assignment of Beneficiaries to ACOs
- FTC Statement of Antitrust Enforcement Policies Regarding ACOs
- IRS Tax-Exempt Organizations Participating in the Medicare Shared Savings Program through Accountable Care Organizations
HHS Halts Implementation of the "CLASS Act"
In an October 14, 2011 letter to the Speaker of the House, U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius shared HHS’ findings of an in-depth analysis of the Community Living Assistance Services and Supports (CLASS) Act program. The beleaguered program has undergone a great deal of criticism since the enactment of the Affordable Care Act (ACA) for its’ limitations and questions about its financial viability. In 2010, HHS initiated a comprehensive analysis of the CLASS program and over a 19 month period they have concluded that despite their best efforts there is no viable path forward for the program.
Background
The CLASS program was established in the ACA as a federally administered voluntary long-term care (LTC) insurance program to provide a financing mechanism for LTC services for employed individuals aged 18 and older. Premiums were to be determined by HHS based on 75-year actuarial estimate of expected future use and expenditures and vary by age at enrollment. To be eligible for benefits participants would have to meet a five-year vesting and minimum earnings requirements, and have a functional limitation that is expected to last for at least 90 days. The program garnered state support as the funding from the program could be used to supplement Medicaid payments for long-term care services provided in the home or in a facility. The Congressional Budget Office (CBO) estimated that the program would show net receipts for a number of years, and “pay out far less in benefits than it will in premiums over the 2012-2021 period.” In a March 2011 report CBO reduced the estimated from $86 billion to $83 billion. A 2011 Congressional Research Service (CRS) report revealed that the Center for Medicare and Medicaid Services (CMS) provided an independent estimate of federal savings as $38 billion over 10years. It’s unclear specifically how these estimates vary. With concerns over adverse selection, subsidized premiums for the poor, and potential gaming of the system HHS began their attempt to implement the program. The FY2012 Budget requested $120 million for start-up administrative costs. On March 17, 2011 Representative Charles W. Boustany (R-LA) introduced H.R. 1173, “Fiscal Responsibility and Retirement Security Act of 2011,” to repeal the CLASS Act.
Defining the Problem
In a memorandum to Secretary Sebelius, CLASS Administrator Kathy Greenlee stated that the design and implementation of the program involved two areas of tremendous uncertainty. First, because there was no precedent for the program in either the private market or in governmental programs, there is uncertainty in the actuarial assumptions used to assess solvency. And second, the ACA was silent about what would happen if on some future date, requirements of actuarial soundness could no longer be achieved. After developing a broad range of alternative CLASS benefit plan options and use of independent actuarial models and analysis to compute premium estimates the CLASS Office of Actuaries found that premiums for the Basic CLASS Benefit Plan would be between $235 and $391 per month and possibly higher if adverse selection became a serious issue.
CLASS actuaries identified potential plan models that could be actuarially sound and avoid adverse selection, but they would significantly increase the minimum earnings requirement specified in the statute from $1,120 to $12,000 per year among other issues. In addition they note that the CLASS Act failed to define the scope of the secretary’s authority in this context. Others argue that CLASS Act benefits are modest and ill-prepared to cover expenses for the bulk of long-term care services.
Outlook
CBO followed the release of Secretary Sebelius’ letter on October 14th by posting a statement on their blog explaining that a number of people had inquired about whether and how CBO will reflect that statement in its budget projections and cost estimates for legislation. They provided an answer as follows:
- “In its next baseline budget projections (which will be issued in January), CBO will assume that the program will not be implemented (unless there are changes in law or other actions by the Administration that would supersede Friday's announcement).
- Following longstanding procedures, CBO takes new administrative actions into account when analyzing legislation being considered by the Congress—even if it has not published new baseline projections. Beginning immediately, therefore, legislation to repeal the CLASS provisions in current law would be estimated as having no budgetary impact.”
Reflecting on the CBO estimate from March 2011 projecting that the program would save $83 billion over a ten year period, the CBO statement is vague. In press interviews White House representatives have indicated that they would oppose any attempt to repeal the CLASS Act but it’s unclear if the President would veto such a measure.
The Republican Doctors Caucus as well as other Republicans remain in support of a full repeal of the act sighting that the program is fiscally unsustainable.
In support of implementation, a coalition of advocacy organizations called AdvanceClass has set up a web site to urge the administration to move forward with implementation of the program.
Additional Resources
IOM Releases Recommendations for Criteria and Methods in HHS Selection of Essential Health Beneifts
October 7th–The Institute of Medicine (IOM) at the request of Health and Human Services Secretary Sebelius, conducting a study to make recommendations on the criteria and methods for determining and updating the “essential health benefits” packages offered through qualified health plans (QHPs) participating in state exchanges. On October 7, 2011, the IOM released their recommendations as criteria and methods to be used by HHS in determining and updating the essential health benefits packages offered through qualified health plans. The Affordable Care Act (ACA) outlines the general categories of coverage that QHPs are required to provide, but details of the essential health benefits will ultimately be provided through rule. These general categories include:
- ambulatory patient services;
- emergency services;
- hospitalization;
- maternity and newborn care;
- mental health and substance use disorder services including behavioral health treatment;
- prescription drugs;
- rehabilitative and habilitative services and devices;
- laboratory services;
- preventive and wellness services and chronic disease management; and
- pediatric services including oral and vision care. \
Report Release Presentation (pdf file)
IOM Criteria for Essential Health Benefits (pdf file)
IOM Report Brief-Essential Health Benefits (pdf file)
Free Download of Report
For more information on exchanges from NCSL
CMS Proposed Rules—Medicare Program Proposed Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs for Contract Year 2013 and Other Proposed Changes; Considering Changes to the Conditions of Participation for Long-term Care Facilities
The Affordable Care Act (ACA) included significant reforms to both the private health insurance industry and the Medicare and Medicaid programs. Provisions in the ACA concerning the Part C and D programs largely focused on beneficiary protections, MA payments, and simplification of MA and Part D program processes. The CMS proposed rule published October 6, 2011 addresses the following five specific topics:
1. Implementation of provisions of MIPPA and the ACA,
2. Strengthening beneficiary protections,
3. Excluding poor performers,
4. Improving program efficiencies,
5. Clarifying program requirements.
Comments on the proposed rule will be accepted until December. Proposed Rule
HHS Proposed Rules Implementing Affordable Insurance Exchange (AIE) Provisions
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Patient Protection and Affordable Care Act: Establishment of Consumer Operated and Oriented Plan (CO—OP) Program
The Centers for Medicare and Medicaid Services (CMS) has issued proposed rules that would implement the Consumer Operated and Oriented Plan (CO—OP) Program, which provides loans to foster the creation of consumer governed, private, nonprofit health insurance issuers to offer qualified health plans (QHPs) in the AIE. The Affordable Care Act (ACA) created the CO—OP program to foster the creation of new consumer-governed, private, nonprofit health insurance issuers. The CO—OP program seeks to promote integrated models of care and enhance competition in the exchanges. This proposed rule sets forth the eligibility standards, the terms of the loans provided, and certain basic standards that organizations must meet to participate in the program. CMS proposes that those organizations eligible for participation would have formed a nonprofit member organization under state law prior to applying for a loan. Preexisting issuers of health insurance are excluded from eligibility to participate in the program. CO—OP program participants may apply for start-up loans and solvency loans. The ACA leaves the terms of the loan entirely up to CMS. Loan recipients must repay these loans within five years and 15 years respectively. Its felt that the benefits of CO—OP programs is that they have an opportunity to adopt new health care models and new arrangements that are more patient-centered than the current fragmented delivery system. In addition new competition in state markets may promote efficiency. Comments will be accepted on the proposed rule until September 16, 2011.
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Patient Protection and Affordable Care Act: Establishment of Exchanges and Qualified Health Plans (QHPs)
The Center for Consumer Information and Oversight (CCIIO) has released their proposed rules, 45 CFR Part 155 and 156, to begin the implementation process for the new Affordable Insurance Exchanges (AIE) created under the ACA. In 2014, individuals and small business will be able to purchase private health insurance through state-based exchanges operated either by the state or the federal government. Each state electing to establish an exchange will have to adopt the federal standards through state law or regulation that implements these standards. The ACA requires the Department of Health and Human Services (HHS) to establish an exchange in every state that does not elect to establish one, or if the secretary determines on or before January 1, 2013 that they will not have an operable exchange in place by January 1, 2014. The ACA provides broad authority to the secretary to establish standards and regulations to implement the statutory requirements related to exchanges which begins with this proposed rule.
The proposed rule is only the first in a series of rules that will address all the provisions in the ACA language directing the establishment of an AIE. Subjects included in the ACA that will be addressed in separate rulemaking include but are not limited to: (1) standards for individual eligibility for participation in the exchange, advance payments of premium tax credit, cost-sharing reductions, and related health programs and appeals of eligibility determinations; (2) standards outlining the exchange process for issuing certificates of exemption for individual responsibility requirement and payment under section 1411(a)(4); (3) defining essential health benefits, actuarial value and other benefit design standards; and (4) standards for exchanges and QHP issuers related to quality.
CCIIO is seeking comments on many issues throughout the rule and state input may be critical to ultimately crafting standards that will be malleable to allow for state flexibility. Comments will be accepted until September 28, 2011. Here are some of the highlights of the proposed rule:
Approval of a State Exchange
− By January 1, 2013 HHS will determine if a state exchange will be capable of being “fully operational” by January 1, 2014. The proposed rule defines the term “fully operational” as meaning an exchange that has the capability of beginning operations by October 1, 2013 to support an open enrollment period for the 2014 plan year.
− HHS will approved a state exchange by determining if the AIE is capable of carrying out the minimum required functions including:
1.Enrollment,
2.Operation of a SHOP, and
3.Certification of qualified health plans (QHPs).
− An exchange must be compliant with privacy and security of information standards especially with respect to advanced payments for premium tax credits.
− State exchanges must agree to:
1. Comply with regulatory requirements outlined in the proposed rule Standards Related to Reinsurance, Risk Corridors and Risk Adjustment pertaining to the operation of a reinsurance program,
2. Include in the standards it adopts the federal requirements for state reinsurance programs, and
3. Must enter into a contract with one or more reinsurance entities to carry out the program.
Exchange Plan
States must submit an exchange plan to HHS which will constitute as the state’s application. Each state must receive written approval or conditional approval of their plan before operations may begin. There will be a 90 day review period similar to that of Medicaid and CHIP. Ongoing, HHS must approve significant changes to the plan before they may be implemented. Please note that the rule considers changes in state law and or regulation as it relates to the plan as being a significant change which would require review. The review of plan amendments may undergo a similar review process to the state plan amendment process in Medicaid and CHIP. HHS is asking for comments specific to this process.
State Flexibility
− Election to Operate an Exchange After 2014−The proposed rule creates a mechanism for states to seek approval to operate an exchange after January 1, 2013. Interested states must have in effect an exchange plan for a 12 months period prior to the first effective date of coverage. States interested in moving forward with as exchange after 2014 must work with HHS to transition from a federally-facilitate exchange to a state exchange.
− Process for State-operated Exchanges to Cease Operation After 2014−HHS proposes a process by which a state-operated exchange may cease operation after January 1, 2014 and elect to have the federal government establish and operate an exchange. A state would be required to provide notification to HHS 12 months prior to ending operations. The state exchange would be required to collaborate with HHS to develop and execute a transition plan and process to facilitate operations to a federal exchange.
− Establishment of a Regional or Subsidiary Exchange−The ASA provides for the operation of an exchange in more than one state if each state permits this type of operation and HHS approves the exchange. The term “regional exchange” is defined as meaning an exchange that operates in two or more states. The proposed rule sets the criteria that HHS will use to approve such a system. States are also permitted to establish one or more “subsidiary exchanges” if each exchange services a geographically distinct area. CCIIO is requesting comments concerning the idea of a subsidiary exchange that covers across state lines and the flexibility that should be allowed in this structure. These alternative structures are still required to meet all the requirements as proposed in this rule.
General Functions of an Exchange
Functions that must be performed by an exchange and are explained within the proposed rule include:
1. Granting certifications of exemptions from the individual responsibility requirement and payment,
2. Performance of eligibility determinations,
3. Oversight of compliance with financial integrity requirements for QHPs,
4. Oversight of quality improvement strategies by QHPs, and
5. Any functionality considered necessary by the state to supplement the federal requirements. HHS encourages comments regarding these and other functions that should be required.
Navigator Program Standards
The proposed rule defines the term “navigator” as meaning a private or public entity or individual that is qualified, and licensed, if appropriate, to engage in the activities for public education and to raise awareness of the availability of QHPs. The navigator standards in the proposed rule would apply to the exchange including both the individual market and SHOP. CCIIO proposes that exchanges award grants to public or private entities to serve as navigators who must meet any licensure or certification standard established by a state. Exchanges are prohibited from supporting the program with federal funds received by the state to establish their exchange. Two types of entities must be listed as navigators by exchanges, of which insurers are prohibited from participation. CCIIO is requesting specific comments on the standards related to the content of information shared, referral strategies, and training requirements to include in grant award conditions.
The proposed rules also address enrollment, information standards, payment of premiums, and the Small Business Health Options (SHOP) Programs among several other issues. The initial open enrollment period is scheduled to begin October 1, 2013 and will end February 28, 2014 to allow ample time to enroll everyone in the exchange. Exchanges will be expected to be self sustaining by January 1, 2015 and states are required to develop a funding plan for ensuring funds are available. NCSL staff is currently working to develop materials to provide a detailed summary to members on the proposed rule requirements.
Proposed Rule: CMS-9989-P: Establishment of Exchanges and Qualified Health Plans
Preliminary Regulatory Impact Analysis
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Patient Protection and Affordable Care Act: Standards Related to Reinsurance, Risk Corridors and Risk Adjustment
HHS has issued proposed rules to implement standards for states related to reinsurance and risk adjustment. These programs will mitigate the impact of potential adverse selection and stabilize premiums in the individual and small group markets as insurance reforms and the AIEs are implemented in 2014. The temporary federally administered risk corridor program will serve to protect against uncertainty in the exchanges by limiting the extent of issuer losses. The proposed rule establish state standards for the transitional reinsurance program for the individual market used to stabilize premiums for coverage during the years 2014 through 2016.
HHS has identified three critical policy goals of the program which include:
1. The program should offer protection to health insurance issuers against medical cost overruns for high cost enrollees,
2. The program should allow for early and prompt payment of reinsurance funds during the benefit year to help offset potential high costs of health insurance issuers early in the benefit year, and
3. The program should require minimal administrative burden since it is a temporary program.
HHS is proposing that each state that operates an exchange must also establish or enter into a contract with a reinsurance program. However, each state should be allowed flexibility in selecting a reinsurance entity and they do not plan to propose more specific guidelines. States may also set up more than one reinsurance entity. The proposed rule also provides for a process to collect reinsurance contribution funds and calculation of payments.
State High Risk Pools
In general implementation of the ACA will eliminate or modify state high risk pools. The proposed rule would allow those states that continue its high risk pool to coordinate its high risk pool with its reinsurance program. They are seeking comments regarding whether a high risk pool that continues to operate after January 1, 2014 should be considered an individual market plan eligible for reinsurance.
State Standards Related to the Risk Adjustment Program
The ACA provides for a program of risk adjustment for all non-grandfathered plans in the individual and small group market both inside and outside of the exchanges. HHS has been directed to establish criteria and methods to be used by states in determining the actuarial risk of plan within a state. HHS or the state, depending on which governmental entity is operating the exchange, will assess charges to plans that experience lower than average actuarial risk and use them to make payments to plans that have higher than average actual risk. The program is intended to eliminate premium difference among QHPs, and serves to level the playing field inside and outside the exchange. The rules provide direction on risk adjustment administration, and methodologies. HHS interprets the ACA as directing the secretary to establish criteria and methods for risk adjustment although they are proposing to allow states to utilize alternative methodologies which would require final approval from HHS.
Health Insurance Issuer Standards Related to the Temporary Risk Corridors Program
The risk corridor program limits adverse selection and stabilizes markets as changes are implemented starting 2014 by creating a mechanism for sharing risk for allowable costs between the federal government and QHP issuers. The proposed rule provides for program standards, payment methodologies, and other issues pertinent to the establishment of such a program
NCSL staff is currently working to develop materials to provide a detailed summary to members on the proposed rule requirements.
Proposed Rule: CMS-9975-P
The IOM Issues Recommendations for Preventive Services for Women
The ACA requires new health plans to include preventive benefits for women at no out-of-pocket cost. In order to determine what benefits should be considered in the development of guidelines, the U.S. department of Health and Human Services asked the Institute of Medicine (IOM) to review and recommend what services are necessary for women’s health and wellbeing. The IOM issued its report “Clinical Preventive Services for Women: Closing the Gaps” on July 19. It defined preventive services as measures including medications, procedures, devices, tests, education and counseling shown to improve well-being, and /or decrease the likelihood or delay the onset of a targeted disease or condition.
The report recommends eight preventive health care services for women that should be considered by HHS;
1. Screening for gestational diabetes
2. The addition of high risk HPV DNA testing in addition to conventional cytology testing in women with normal cytology results
3. Annual Counseling on sexually transmitted infectious for all sexually active women
4. Counseling and screening for HIV infection on an annual basis for sexually active women
5. The full range of Food and Drug Administration- approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity.
6. Comprehensive lactation support and counseling and costs of renting breastfeeding equipment.
7. Screening and Counseling for interpersonal and domestic violence.
8. At least one well-woman preventive care visit annually for adult women to obtain the recommended preventive services, including preconception and prenatal care.
Among the recommendations the most notable is the consideration of providing contraception without copayments. According to the report the direct medical cost of unintended pregnancy in the
United States was estimated to be nearly $5 billion in 2002, with the cost savings due to contraceptive use estimated to be $19.3 billion. In addition to recommendations, the committee also identified critical gaps in the preventive services already mentioned in the ACA. The IOM’s report is viewed as a road map to agency decision making in the development of guidelines for Women’s Preventive Benefits.
In the Halls of Congress
Correcting an ACA Loophole
Representative Diane Black (R-TN) is sponsoring legislation that would close a loopholes found in the ACA allowing approximately three million more middle-income early retirees to qualify for Medicaid. Richard Foster, Chief Actuary for CMS has been quoted as saying this is one of the most worrisome elements of the law since it would result in unexpected increases in Medicaid eligibility for this population. The Congressional Budget Office (CBO) released preliminary analysis shows that by changing the loophole in the income calculation $10 billion would be saved over a 10 year period. Senator Olympia Snowe (R-ME) has requested that CBO submit a number of documents and information that was originally used to estimate the overall cost of the ACA to reexamine the models used to come up with these figures.
Considering the Cost of Essential Benefits Packages
Senators Michael B. Enzi (R-WY) and Orrin G. Hatch (R-UT) ranking members of the Senate Health, Education, Labor, and Pensions Committee and the Senate Finance Committee respectively has written to the Institute of Medicine (IOM) asking them to consider the impact the health insurance benefit mandates required in the ACA will have on the cost of health insurance coverage. IOM was charged by the ACA with conducting a study that would result in recommendations to HHS regarding the development of the essential benefits package and report by September of this year.
Reports of Interest
NCSL staff contacts: Joy Johnson Wilson, Federal Affairs Counsel, Health Policy Director at joy.wilson@ncsl.org or Rachel B. Morgan RN, BSN, Committee Director, Health at rachel.morgan@ncsl.org
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