News of Health Reform Activity in the Federal Government

Updated  March 6, 2013

OIG Investigates State Readiness to Implement Streamlined Eligibility and Enrollment Systems

Feb. 20, 2013–The ACA requires HHS and states to streamline procedures for determining eligibility and enrolling applicants in state health subsidy programs (i.e., Medicaid, the Children’s Health Insurance Program (CHIP), and state exchanges) by Jan. 1, 2014. All states must develop a secure electronic interface for exchange of information among programs, and each state program must participate in data-matching agreements for obtaining eligibility information from various sources. OIG conducted a survey of all 50 states, and the District of Columbia (DC) in March and April of 2012 to assess their readiness to implement the system. The survey was structured around three main requirements (1) development of an eligibility and enrollment system, (2) application forms, and (3) eligibility data sharing. Of the 45 states that responded, 35 reported that they anticipate implementing the system on-time. Several states reported encountering challenges in meeting the implementation date including outdated eligibility and enrollment systems, and a lack of funds to implement a streamlined system. Even though states reported that CMS guidance was helpful, they expressed a need for further guidance on a number of subjects, including HHS’ application and the federal data hub. At least 26 states felt that the complexity of the system required would prohibit full compliance by the target date. Eleven states report problems with outdated systems as the challenge, and several others reported challenges related to the slow authorization process for state funding. OIG concluded that state responses may have been different if the survey had been conducted after the release of the Supreme Court decision. In a Dec. 20, 2013 letter responding to the report, acting administrator for CMS Marilyn Tavenner said that the agency has issued the kind of guidance and technical assistance recommended in the report to states individually. “CMS has tailored its technical assistance and support activities according to the agencies engaged in each state,” she said.

The Department of Health and Human Services (HHS) Amends Rules Governing ACA Requirements for Coverage of Preventive Services

Feb. 1, 2013–The HHS issued a notice of proposed rulemaking (NPRM) proposing two key changes to the preventive services coverage rules in order to accommodate the religious objections to contraceptive coverage of eligible organizations. The ACA imposes certain coverage requirements on non-grandfathered plans and health insurance issuers to offer preventive health services, which include women’s preventive health services and contraceptive coverage, without beneficiary cost-sharing. The NPRM would amend the criteria for the religious employer exemption to ensure that an employer whose services extend beyond religious purposes, or hires people of different religious faiths will not be disqualified from exempt status.  The NPRM would also establish accommodations for health coverage established or maintained by eligible organizations, or arranged by eligible organizations that are religious institutions of higher education, with religious objections to contraceptive coverage. The NPRM would simplify the existing definition of a “religious employer” as it relates to contraceptive coverage, and would follow a section of the Internal Revenue Service (IRS) primarily including churches, other houses of worship, and their affiliated organizations. Comments on the NPRM will be accepted until April 5, 2013.

Guidance Regarding Enhanced Medicaid Match for Offering Cost-Share Free Preventive Services

Feb. 1, 2013–In a letter to state Medicaid directors, the Centers for Medicare and Medicaid Service (CMS) issued guidance to states regarding the ACA provisions that establish a one percent increase in the federal medical assistance percentage (FMAP) effective Jan. 1, 2013, applied to expenditures for adult vaccines and clinical preventive services in states that provide these benefits without cost-sharing. The specified preventive services are those assigned a grade of A or B by the U.S. Preventive Services Task Force (USPSTF), and approved vaccines and their administration. The USPSTF is the leading independent panel of private-sector experts in prevention and primary care who also conducts the leading research on the scientific evidence for the effectiveness of a broad range of preventive services. Its recommendations are considered the "gold standard" for clinical preventive services. In order for states to claim the one percentage point FMAP increase for these services, states must cover in their standard Medicaid benefit package all the recommended preventive services and adult vaccines and their administration, and must not impose cost-sharing on these services. States seeking the increased match must also amend their state plans to reflect the coverage and reimbursement. The state should provide an assurance in the state plan indicating that they have documentation available to support the claiming of the federal match for these services.

• CMS Guidance, http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD-13-002.pdf.   
• USPSTF–http://www.uspreventiveservicestaskforce.org/uspstf/topicsprog.htm
• A list of the services that are eligible for the increased FMAP can be found on the following websites, http://www.cdc.gov/vaccines/schedules/hcp/adult.html and http://www.uspreventiveservicestaskforce.org/uspstf/uspsabrecs.htm.

Proposed Rules Published on Minimum Essential Coverage and Shared Responsibility Payments

• Clarification of a hardship exemption,
• Specific rules addressing the nine categories of individuals exempt from the shared responsibility payment,
• Exchange reporting to the IRS, and
• An option for state-based exchanges to use a federally-managed service for conducting eligibility determinations for exemptions.

• A CMS fact sheet summarizing the NPRM is available at http://www.cms.gov/apps/media/press/factsheet.asp?Counter=4511&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=6&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date.
• CMS Rule–http://www.ofr.gov/OFRUpload/OFRData/2013-02139_PI.pdf
• IRS/Treasury Rule–http://www.ofr.gov/OFRUpload/OFRData/2013-02141_PI.pdf

The IRS Issues Final Rules Governing Health Insurance Premium Tax Credits

• U.S Department of Labor (DOL) Frequently Asked Questions (FAQs) on ACA Implementation–Jan. 24, 2013–DOL has issued FAQs regarding implementation of various provisions of the ACA prepared by DOL, HHS, and the Treasury. The document addresses questions from stakeholders that include the following issues:

1. Notice of Coverage Options Available Through the Exchanges–In accordance with regulations promulgated by the Secretary of Labor, employers must provide each employee at the time of hiring (or with respect to current employees, not later than March 1, 2013), a written notice regarding the exchanges, the employer plan’s share of the total allowed costs of benefits, and whether the employee losses and employer’s contribution to health benefit plans offered if they purchase coverage in the exchange.   
2. Compliance of Health Reimbursement Arrangements with Public Health Services Act Section 2711–Addresses how ACA prohibitions on lifetime and annual benefits apply to health reimbursement arrangements (HRAs) and certain other account-based arrangements.

Senate Hearing: Assessing the State of America’s Mental Health System

Jan. 24, 2013–During a hearing of the Senate Committee on Health, Education, Labor, & Pensions (HELP) testimony was given by the Substance Abuse and Mental Health Services Administration’s (SAMHSA) Pamela Hyde, the Director of the National Institute of Mental Health (NIMH) Dr. Thomas Insel, and experts and stakeholders from the behavioral health community to examine the current status of the U.S. mental health system. SAMHSA data revealed a history of failings in the system to either identify and or treat those with mental health conditions. Estimates show that only 38 percent of adults with diagnosable mental health problems, and 11 percent of those with diagnosable substance use disorders receive treatment. Currently less than one in five children and adolescents with diagnosable mental health problems receive treatment. The discussion then focused on case patterns of individuals who committed violent crimes over the last decade. Senators asked questions about existing mechanisms for identification of illness in adolescents and young adults, treatment options, and the potential consequences for failure to identify and treat these individuals. Statistics more often bear out that people with mental illness by-in-large are more often the victims of violent attacks than the general population. But the recent Newtown Connecticut shootings have forced a reappraisal of how and why these events occur. Dr. Insel said that a delay between a first episode of psychosis and onset of treatment in the U. S. ranges from 61 to 166 weeks, with the average being 110 weeks. He added that the risk of violence is 15 times greater if conditions such as psychosis accompanied by symptoms of paranoia and with a history of substance abuse are left untreated. Administrator Hyde had also mentioned that while most mental illnesses and addictions are treatable, those with mental illness often cannot get needed treatment if they do not have health insurance that covers mental health services. In 2014, the Affordable Care Act (ACA) will provide for an expansion of mental health and substance abuse coverage to as many as 30 million Americans, of which an estimated six to 10 million have mental illness. According to the Health Resources and Services Administration (HRSA) 90.6 million Americans live in areas with a shortage of mental health professionals. It would take 6,058 mental health professionals to improve access even to those who have coverage for services.  An archived version of the hearing and additional materials is available online at http://www.help.senate.gov/hearings/hearing/?id=b2048a10-5056-a032-529c-340d7ae5f237.

NCSL Comments on Key Affordable Care Act (ACA) Regulations

Jan. 4, 2013—NCSL submitted comments Dec. 26 to the Department of Health and Human Services (HHS) on a proposed rule (NPRM) detailing the Affordable Care Act (ACA) standards for coverage of essential health benefits (EHBs), actuarial value, and accreditation of qualified health plans (QHPs). The NPRM also proposes a timeline within which QHPs must be accredited to participate in a Federally-facilitated Exchange (FFE). HHS published the  proposed rules Nov. 26.

Comments Regarding 45 CFR Parts 147, 155, and 156, Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation; Proposed Rule.

NCSL also submitted comments on Friday, Jan. 4 to the Office of Personnel Management (OPM) regarding a proposed rule to implement the Multi-state Plan Program (MSPP). The ACA created the MSPP to foster competition among plans competing in the individual and small group health insurance markets in the Affordable Insurance Exchanges (Exchanges) on the basis of price, quality, and benefit delivery. The ACA directs that OPM contract with private health insurance issuers to offer at least two multi-State plans (MSPs) in each of the Exchanges in the 50 States and the District of Columbia.

Comments Regarding 45 CFR Part 800, Establishment of the Multi-State Plan Program for the Affordable Insurance Exchanges

Health and Human Services (HHS) Guidance on the State Partnership Exchanges

Jan. 3, 2013—HHS issued new guidance to states on marketplaces that will be operated in partnership with the federal government. This guidance outlines the various options that states have to provide input and guidance, and take ownership over significant components of the operation of a FFE. The State Partnership Exchange (SPE) options provide states with a high level of participation in plan management and consumer assistance/ outreach either on a permanent basis or as they work toward a goal of running a State-based Exchange. With an SPE, states can continue to serve as the primary point of contact for issuers and consumers, and will work with HHS to establish an exchange.

The guidance outlines state functions, activities, and responsibilities for a "State Plan Management Partnership Exchange," and the "State Consumer Partnership Exchange." To operate an SPE in 2014 a state must complete the relevant portions of the Exchange Blueprint and be approved or conditionally approved by HHS for the functions and activities the state will perform. States may receive funding for the start-up year expenses for activities related to establishing an SPE. After grant funding set aside in the Affordable Care Act (ACA) for this purpose has been depleted, HHS anticipates that continued funding under a different funding vehicle will be available to support these activities. The new guidance also describes how HHS plans to integrate traditional state regulatory functions and activities into FFE operations in the absence of a partnership.

States have until Feb. 15, 2013 to submit a declaration and Blueprint Application for approval as a SPE for 2014 coverage year. States planning to transition to a State-based Exchange for plan year 2015 must submit a Declaration Letter and a Blueprint Application to HHS by Nov. 18, 2013.

Health and Human Services Secretary Sebelius Sends Health Reform Frequently-Asked-Questions to Governors

Dec. 10, 2012—In response to the many questions she’s received from governors, state legislators, and other state officials over the last few months, HHS Secretary Sebelius developed a list of frequently-asked-questions (FAQs) for states. The document was sent to governors and contains answers to questions pertaining to exchanges and market reforms; Federally-Facilitated Exchanges (FFEs); Multi-state Plans; Basic Health Plans; consumer eligibility and enrollment; Medicaid; flexibility for states; and various other questions asked about health reform implementation. Some of the key questions legislators have been asking over the last several months are addressed in the document and include:

1. What federal funding is available to assist a state in creating and maintaining a State-Based Exchange? Will a state have to return federal funding if it decides not to implement a State-Based Exchange?
2. How will the Federally-Facilitated Exchange be funded?
3. If a state accepts the Medicaid expansion, can a state later drop out of the expansion program?
4. Can a state expand to less than 133 percent of the federal poverty level (FPL) and still receive 100 percent federal matching funds?

HHS also released FAQs specific to the issues as they apply to the territories.

Six State Exchanges Receive "Conditional" Approval from HHS for Operation in 2014

The Centers for Medicare and Medicaid Services (CMS) Schedules 10 Health Reform Teleconferences

• Region I/ Boston [CT, ME, MA, NH, RI, and VT]—Tues., Sept. 11, 2012—10:00 AM to 12:00 PM EDT
• Region II/ New York [NJ, and NY]—Thurs., Sept. 13, 2012—2:00 PM to 4:00 PM EDT
• Region III/ Philadelphia [DE, DC, MD, PA, VA, and WV]—Thurs., Sept. 13, 2012—10:00 AM to 12:00 PM EDT
• Region IV/ Atlanta [AL, FL, GA, KY, MI, NC, SC, and TN]—Wed., Sept. 12, 2012—10:00 AM to 12:00 PM EDT
• Region V/ Chicago [IL, IN, MI, MN, OH, and WI]—Thurs., Sept. 6, 2012—1:00 PM to 3:00 PM EDT
• Region VI/ Dallas [AR, LA, NM, OK, and TX]—Fri., Sept. 14, 2012—10:00 AM to 12:00 PM EDT
• Region VII/ Kansas [IA, KS, MO, and NE]—Wed., Sept. 12, 2012—2:00 PM to 4:00 PM EDT
• Region VIII/ Denver [CO, MT, ND, UT, and WY]—Mon., Sept. 10, 2012—3:00 PM to 5:00 PM EDT
• Region IX/ San Francisco [AZ, CA, HI, NV, and Pacific Territories]—Fri., Sept. 14, 2012—1:00 PM to 3:00 PM EDT
• Region X/ Seattle [AK, ID, OR, and WA]—Fri., Sept. 7, 2012—1:00 PM to 3:00 PM EDT

Administration Determines Individuals Given Deferred Action for Childhood Arrivals (DACA) Status are Ineligible for Key Health Care Programs

Aug. 28, 2012—CMS is requesting comments on an amended version of the interim final rule governing the pre-existing condition insurance plan (PCIP) program. The amendment was posted for public display Aug. 28, 2012 () and will be published in the Federal Register Aug. 30. The amendment addresses program eligibility in light of the June 15, 2012 announcement by the Department of Homeland Security (DHS) on the administration’s policy of Deferred Action for Childhood Arrivals (DACA). This policy considers providing temporary relief from removal on a case-by-case basis to any individual who is under the age of 31 and meets DHS’s guidelines, including that he or she came into the United States as a child and does not present a risk to national security or public safety. HHS is amending the definition of “lawfully present” in the PCIP program as written in the interim final rule published July 1, 2010, so that the program interim final rule does not inadvertently expand the scope of the DACA process. Individuals whose cases are deferred under the DACA process also will not be eligible to enroll in coverage through the Affordable Insurance Exchanges, and will not receive coverage that could make them eligible for premium tax credits.

Medicaid and the Children’s Health Insurance Program (CHIP)
CMS also issued a State Health Official letter Aug. 28, 2012 clarifying that these individuals will not be eligible for Medicaid and CHIP under the state option to provide Medicaid and CHIP eligibility to children and or pregnant women who are “lawfully present.” CMS is asking for comments on the determination to exclude these individuals from eligibility for these benefits. Comments will be accepted until Oct. 30, 2012.

The Center for Consumer Information and Insurance Oversight (CCIIO) Releases Final Blueprint for Exchanges

Aug. 14, 2012—CCIIO released the final version of the Blueprint for Exchanges, which states opting to run their own exchange must use to demonstrate how they will operate. The blueprint also sets forth the application process for states seeking to enter into a partnership exchange. CCIIO made changes to the draft Blueprint document released in May based on comments received from stakeholders. Among the changes in the final blueprint was the creation of new “assistors,” who will work directly with the exchanges to promote them to the public in 2013.
Regulations implementing the ACA require HHS to approve or conditionally approve state-based exchanges no later than January 1, 2013. To receive HHS approval or conditional approval for a state-based exchange, or a state partnership exchange, as well as reinsurance and risk adjustment programs, a state must complete and submit an Exchange Blueprint that documents how its exchange meets, or will meet all legal and operational requirements associated with the model it chooses to pursue. The Blueprint outlines:

1. Functions that will be performed by exchanges run by the states, or state-based exchanges;

2. Functions performed by exchanges operated as partnerships between the federal government and states; and

3. Functions that states can perform in “federally facilitated” exchanges that HHS will set up in states that do not operate either of the other two types of exchanges.

States seeking to operate a state-based exchange or electing to participate in a state partnership exchange must submit a complete Exchange Blueprint no later than 30 business days prior to the required approval date of Jan. 1 (November 16, 2012, for plan year 2014). A state may submit its declaration letter at any time prior to this deadline. If a state submits their declaration letter more than 20 business days prior to the submission of its Blueprint, the state may request an Exchange Application consultation with CCIIO regarding preparation of its application for approval as a state-based exchange or state partnership exchange. Information concerning the required content of the declaration letter is included in the final Blueprint.

NAIC White Papers—Adopted July 27, 2012.

• Exchanges Plan Management Function: Accreditation and Quality White Paper—This paper is intended to be a resource to help the states understand the obligations of the exchange with regard to accreditation and quality. The paper also addresses situations where the states have options, including situations where options may exist but federal guidance on specifics is not yet available.

• NAIC Form Review White Paper—This paper discusses those requirements, while focusing in large part on considerations for state departments of insurance (DOIs) that plan to handle or participate in QHP certification for either a state-based Exchange (SBE) or a federally facilitated exchange (FFE).

• Marketing and Consumer Information White Paper: Navigators, Agents and Brokers, Marketing and Summary of Benefits and Coverage—This paper is intended to explore the issues and options for implementation of certain provisions of the law and regulations issued to date. These provisions include the management of marketing; the summary of benefits and coverage required to accompany each policy beginning in September 2012; and how agents, brokers and Navigators will be regulated and managed in regard to the ACA. This paper will not address issues concerning consumer outreach in general, nor will it address the many facets of issues surrounding agents, brokers and Navigators that do not directly involve how state Departments of Insurance (DOIs) will manage these individuals. Those issues may be addressed at a later date when more information has been released by HHS.

• Plan Management Function: Network Adequacy White Paper—The purpose of this white paper is to provide a framework for the states to consider for ensuring compliance with the network adequacy requirements (both statutory and regulatory) for both inside an exchange for qualified health plans (QHPs)—whether a state is implementing an state-based exchange (SBE), FFE or partnership federally facilitated exchange (PFFE)—and outside an exchange for managed care plans.

• Rate Review White Paper—The purpose of this white paper is to assist state policymakers with the implementation of the Affordable Care Act (ACA) provisions related to health insurance rating, rate filing and rate review. The focus of the paper is the rate review requirements related to the certification of qualified health plans (QHPs) in the Exchanges, but many of the ACA provisions impacting rate review apply to all plans in the individual and small group markets.

The Department of Health and Human Services (HHS) Adopts Permanent Certification Program for Electronic Health Records (EHR) Technology

Cohen Appointed to Head the Center for Consumer Information and Insurance Oversight (CCIIO)

Consumer Assistance Grants Awarded

Congressional Research Service (CRS) Distribution Memorandum—Legal Analysis of Availability of Premium Tax Credits in State and Federally Created Exchanges Pursuant to the ACA

July 23, 2012—This memorandum analyzes whether premium tax credits available to certain individuals under the Internal Revenue Service Code will be available for individuals who participate in federally facilitated health insurance exchanges. It has been argued that premium tax credits will only be available in state-based exchanges. This memorandum provides a brief background on relevant provisions of the ACA, addresses consideration that a court could take into account in interpreting the statutory language of the Act, and finally, discusses how regulations implementing the premium tax credit could be evaluated.

GAO—Medicaid Expansion: States' Implementation of the Patient Protection and Affordable Care Act ACA

Aug. 1, 2012—Senator Charles Grassley (R-IA) requested that the GAO to report on the actions states are taking to implement the Medicaid expansion authorized in the expansion This report addresses the following questions: (1) What are states’ responsibilities for implementing the Medicaid expansion provisions under ACA?; (2) What actions have selected states taken to prepare for the Medicaid expansion provisions of ACA, and what challenges have they encountered?; (3). What are states’ views on the fiscal implications of the Medicaid expansion on state budget planning? To identify state responsibilities, GAO reviewed selected ACA provisions, implementing regulations and guidance from CMS, and held discussions with selected states. To identify the actions selected states have taken to prepare for the implementation of the Medicaid expansion and the challenges they encountered, the GAO conducted semi-structured interviews with state Medicaid officials in six states: Colorado, Georgia, Iowa, Minnesota, New York, and Virginia. To identify states’ views on the fiscal implications of the Medicaid expansion on state budget planning, the GAO administered a web-based survey of state budget directors from all 50 states, the District of Columbia, and four U.S. territories with a survey response rate of 76 percent.  The survey document and counts of responses received for each question are reproduced in an e-supplement that was issued with the report—GAO-12-944SP. This work was conducted from June 2011 to July 2012, and was completed prior to the U.S. Supreme Court’s June 28, 2012 decision on the constitutionality of certain ACA provisions.

• GAO Report Link
• E-Supplement to this report

Preventing Health Care Fraud: New Tools to Protect Taxpayer Dollars

July 26, 2012—Medicaid and Medicare are two of the largest programs in the federal government, financing health care services for a combined total of approximately 119 million individuals at a cost of about $983 billion in 2011 According to the Government Accountability Office (GAO). These two programs also have some of the largest reported estimates of improper payments—payments that either were made in an incorrect amount or should not have been made at all. The Centers for Medicare & Medicaid Services (CMS) has estimated that improper payments in the Medicaid program were $21.9 billion in fiscal year (FY) 2011, and almost $43 billion in the Medicare program. HHS and the Department of Justice (DOJ) announced the launch of a new program that joins between the federal government, state governors, several leading private health insurance organizations, and other health care anti-fraud groups in a coordinated effort to prevent health care fraud. The focus of the partnership is to share information and best practices in order to improve detection and prevent payment of fraudulent health care billings.

The ACA created several new tools to fight fraud under which the partnership will operate. The ACA increased federal sentencing guidelines for federal health care fraud offenses from 20 to 50 percent for crimes that involved more than one million dollars in losses, and established penalties for obstructing a fraud investigation. It also required a higher level of scrutiny of providers and suppliers wishing to participate in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) including licensure and background checks, and on-site visits to confirm legitimacy and location. The ACA also imposed new requirements on states to withhold Medicaid payments where there is a pending investigation of a credible allegation of fraud unless the state has good cause not to do so. The partnership will share information on specific schemes that will be refined by working groups to finalize the operational structure. NCSL Foundation for State Legislatures sponsors Amerigroup Corporation, and Blue Cross and Blue Shield Association are one of members of the partnership. For more information regarding the new initiative and waste fraud and abuse provisions from the ACA go to http://www.cms.gov/apps/media/press/release.asp?Counter=4413&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=1%2C+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date

Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) Release Updated ACA Provision Estimates Reflecting the Supreme Court Decision

July 24, 2012— CBO and the JCT released updated estimates of the federal budgetary effects of the health insurance coverage provisions of the ACA to take into account the U.S. Supreme Court decision National Federation of Independent Business v. Sebelius issued on June 28, 2012. The Supreme Court ruled that states are allowed to choose whether or not to expand Medicaid eligibility without suffering the loss of federal matching funds under the program if they choose not to expand. CBO and JCT now estimate that the insurance provisions of the ACA will have a net cost of $1,168 billion over the 2012–2022 period—compared with $1,252 billion projected in March 2012 for that 11-year period—for a net reduction of $84 billion. CBO estimated that in 2022 about one-half of potential newly eligible beneficiaries will live in states that partly expand Medicaid to a lower threshold than the 138 percent of the federal poverty level (FPL) authorized by law; 40 percent will be in states that expand coverage to 100 percent of the FPL; and 10 percent in states where coverage will extend to a level below 100 percent of the FPL. The updated figures show fewer people covered by the Medicaid program, approximately three million additional people enrolled in the exchanges, and about three million more people uninsured than previous reports. Subsidies for the period 2012 through 2022 are approximately $210 billion higher than before because of the shift. The details of the estimates are available online at http://www.cbo.gov/publication/43472 .

Adult Quality Grants: Measuring and Improving the Quality of Care in Medicaid

July 13, 2012—CMS released a two-year funding opportunity announcement that is open to all 50 states, the District of Columbia, and territorial Medicaid agencies for the purpose of supporting their efforts to build a set of health quality measures for adults enrolled in Medicaid without a state match. The ACA provided funding to support state Medicaid agencies through competitive, performance-based grants to use the measures to produce information that can provide insight on the quality of health care provided to Medicaid-eligible adults. By Jan. 1, 2013, a Medicaid Quality Measurement Program will be established to fund the development, testing, and validation of emerging and innovative evidence-based adult health quality measures. Specifically, up to $56 million will be awarded each fiscal year (FY) over a 2-year period of performance. A total of 56 grant awards are available in the amount of up to $1 million for each 12-month budget period (an estimated total of up to $2 million per Grantee) over the two-year project period and there is no require state match. The closing date for all applications is Aug. 31, 2012 with the notice of awards occurring by Oct. 31, 2012. Period of performance for grant activities will be Oct. 31, 2012 through Oct. 30, 2014.

HHS Letters to States on the Supreme Court Decision & the Expansion of Medicaid

In a series of letters and responses to governors, HHS has begun to clarify their interpretation of the U.S. Supreme Court ruling June 28 in NFIB v. Secretary Sebelius, Department of Health and Human Service. In the initial letter on July 10, HHS Secretary Kathleen Sebelius addressed the decision and the next steps concerning the implementation of the health insurance exchanges and the Medicaid expansion with governors. Regarding the Medicaid expansion Secretary Sebelius noted that: (1) the enhanced match for new-eligibles and the flexibility to design the benefit package for covered individuals is still available to states; (2) she hopes states will implement the Medicaid expansion; and (3) “If any state were to choose not to do so, the Affordable Care Act exempts individuals who Congress determined cannot afford coverage from the individual responsibility provision. As to the very small number of affected individuals who would not qualify for the statutory exemption, Congress provided additional authority, which we intend to exercise as appropriate, to establish any hardship exemption that may be needed.”

Responding to a letter from the Republican Governors Association (RGA) requesting additional guidance from the Obama Administration, CMS Acting Administrator Marilyn Tavenner clarified that no deadlines had been set for states to make a decision concerning the expansion of their Medicaid programs. RGA Chairman Governor Robert McDonnell (R-VA) has publicly stated that he asked 30 specific questions and expected 30 specific answers that he failed to receive regarding Medicaid and the expansion. He has also been quoted as saying that the governors need more information, and want acknowledgement that the federal government is willing to give states flexibility to reform Medicaid. NCSL held a conference call on June 29 to discuss the opinion, which included participants from 47 states, the District of Columbia, and the U.S. Virgin Islands. An audio recording of the call is available on the NCSL web page at, http://www.ncsl.org/issues-research/health/health-conference-call.aspx. Additional information on the opinion is available online at http://www.ncsl.org/issues-research/health/us-supreme-court-and-the-federal-health-law.aspx. In addition, HHS is holding four regional forums, as noted above, where they expect to discuss many of the issues in the next steps to implement health reform.

RGA Letter on Medicaid and Exchanges to President Obama

The Department of Health and Human Services (HHS) Regional Implementation Forums Dates Have Changed

On July 11, HHS announced that they would be hosting a series of forums across the country intended to provide an opportunity for states and stakeholders to learn about the next steps in implementation of the ACA health care law and ask questions about the work needed to build Affordable Insurance Exchanges.  These forums were scheduled to begin with a meeting in Washington D.C. at the end of July. HHS has informed us that these meetings have been rescheduled to the following:

1. August 14: Washington D.C.,

2. August 15: Atlanta, GA

3. August 21: Chicago, IL

4. August 22: Denver, CO

An updated schedule and instructions for registration is attached with this email. If you have previously registered for one of the forums it is unclear whether a second registration is required for one of the new dates. NCSL urges everyone to register as soon as possible because space is limited. Registration may be made through the following link, https://www.quickbase.com/db/bg92mriu2.

Single Streamlined Application Data Elements Open for Comment

On July 6, 2012, CMS released a request for comments in the Federal Register on the data elements that will be collected on the single, streamlined application for Exchanges, and used to determine eligibility for Medicaid and or the Children’s Health Insurance Program (CHIP). The request addresses data collection that will support: (1) eligibility determinations and enrollment for employees in the small business health option programs (SHOP); (2) eligibility determinations and enrollment for small businesses in the SHOP, and; (3) data collected to support eligibility determinations for Insurance Affordability Programs, and enrollment through Affordable Insurance Exchanges, and Medicaid and CHIP programs. The request also addresses the data elements that will be collected to support qualified health plan (QHP) certification. All comments should be submitted by August 31.

Webinar Opportunity
The ACA directs the secretary of HHS to develop and provide a single, streamlined form to be used for all insurance affordability programs, but also gave states the option to develop their own form that would be subject to HHS approval. CMS is designing the application in consultation with states, tribes, consumer groups, health plans, and other interested groups. They will be hosting two webinars to present the data elements and their proposals for the application, and to answer questions from states and other stakeholders. The webinar will take place on Thursday, July 19 & 26, 2012 from 1:00 p.m. until 2:00 p.m..

CMCS Informational Bulletin

CMS Proposed Rule Increasing Medicare Family Physicians Payment for Calendar Year (CY) 2013

July 6, 2012—CMS issued a proposed rule that would increase payments to family physicians by approximately seven percent and other practitioners providing primary care services by three to five percent. For CY 2013, CMS is proposing to pay for the care required to help a patient transition back into the community following a discharge from a hospital or nursing facility. Provisions in the ACA require state Medicaid payment rates to primary care physicians for primary care services be no less than 100 percent of the equivalent Medicare payment rates in 2013 and 2014, and provides 100 percent of the increase through federal funding, http://www.gpo.gov/fdsys/pkg/FR-2012-05-11/pdf/2012-11421.pdf. The proposal calls for CMS to make a separate payment to the patient’s community physician or practitioner to coordinate the patient’s care in the 30 days following a hospital or skilled nursing facility stay. The proposed rule will be published in the Federal Register July 30, 2012, but can be viewed online at the following location, http://www.ofr.gov/OFRUpload/OFRData/2012-16814_PI.pdf . CMS will be accepting comments on the proposed rule until Sept. 4, 2012.

July 6 Press Release
 

The Center for Medicaid and CHIP Services (CMCS) Guidance on Developing and Implementing Integrated Care Models in Medicaid Programs

July 10, 2012—The Centers for Medicare and Medicaid Services (CMS)issued the first two letters in a series providing states with guidance on designing and implementing care delivery and payment reforms within the Medicaid program. They describe the policy considerations for creating “Integrated Care Models” (ICMs) that will support what they believe to be value-driven strategies to improve health, delivery of care, and reduce costs within the Medicaid program. ICMs could include initiatives such as the medical/health homes, Accountable Care Organizations (ACOs), ACO –like models, and other forms of coordinated and comprehensive care. The letters not only propose policy considerations, but also introduce a state option to facilitate the efforts of a state that wishes to pay for quality improvement in fee for services (FFS) reimbursement programs without a waiver.

New State Options

States may seek to explore new initiatives or enhance existing efforts under a Medicaid state plan or use demonstration or waiver authority. Existing Medicaid authorities allow states the opportunity to implement ICMs on a statewide basis or through a more limited approach based on geographic area, individual needs, or through selective provider contracts. The CMCS guidance provides an overview that describes potential ICM pathways either through a state plan option or through Medicaid demonstrations and waivers. They recommend that in selecting a pathway for an ICM, a state should consider the goals of the model and its core features. CMCS developed a list of considerations they would apply to all models, and include a list of questions with the guidance to help generate ideas and anticipate issues CMS may raise in reviewing proposals.

• CMCS Bulletin—State Guidance on Developing and Implementing Integrated Care Models in Medicaid Programs
• State Medicaid Director Letter Re: Integrated Care Models—SMDL# 12-001
• State Medicaid Director Letter Re: Policy Considerations for Integrated Care Models—SMDL#12-002

Essential Health Benefit Small Group Guidance and CMS Request for Comments on Data Collection Requirements

On July 2, 2012, the CMS published guidance to facilitate states’ selection of the benchmark plans that will serve as the reference plans for the essential health benefits (EHB). The ACA requires plans both inside and outside of the Affordable Insurance Exchanges (AIE) to offer a comprehensive package of items and services, known as “essential health benefits.” The new document updates the publication released Jan. 25, 2012 on the three largest small group products offered in each state, and complements the bulletin on EHBs released on Dec. 16, 2011.

HHS has proposed that EHBs be defined by a benchmark plan selected by each state. The selected benchmark plan would serve as a reference plan, reflecting both the scope of services and any limits offered by a “typical employer plan” in that state. States must select their benchmark plan on or before Sept. 30, 2012. If a state fails to make that selection, HHS will use the largest small group plan in the state as the default benchmark plan.

HHS collected the data included in this report from issuers of individual and small group major medical insurance on their products based on March 31, 2012 enrollment data. The guidance also includes information on the largest three nationally available Federal Employee Health Benefit Program (FEHBP) plans, and the single largest Federal Employees Dental and Vision Insurance Program (FEDVIP) dental and vision plans respectively.
Essential Health Benefits: List of the Largest Three Small Group Products by State--http://cciio.cms.gov/resources/files/largest-smgroup-products-7-2-2012.pdf.pdf

CMS Request for Comments
CMS has also issued a request for public comments regarding the data that will be collected for a number of functions for the health insurance exchange markets that begin operation in 2014. The request for comments specifically addresses data collection in four areas: (1) collection of data that will support qualified health plan (QHP) certification and other exchange operations; (2) data that will support eligibility determinations and enrollment for employees in the small business health option programs (SHOP); (3) data collected to support eligibility determinations and enrollment for small businesses in the SHOP, and; (4) data collected to support eligibility determinations for Insurance Affordability Programs, and enrollment through Affordable Insurance Exchanges, Medicaid and Children’s Health Insurance Program agencies. The request was published in the Federal Register July 6. Comments should be submitted by August 31. 

U.S. Supreme Court Upholds Most of Federal Health Law

The U.S. Supreme Court today upheld most provisions of the Patient Protection and Affordable Care Act, but rejected the portion of the law that would have penalized states that did not comply with the expanded eligibility requirements for Medicaid. The law called for cutting off all Medicaid funding to states that did not go along with the expanded eligibility provision. NCSL held a conference call on June 29 to discuss the opinion, which included participants from 47 states, the District of Columbia, and the U.S. Virgin Islands. An audio recording of the call is available. Additional information on the opinion is available online. NCSL SCOTUS page More

Center for Medicare and Medicaid Services (CMS) Seeks Public Input on Modified Adjusted Gross Income Standards (MAGI) Conversion

(June 21) CMS issued a “solicitation of public input” on their analysis of two potential methodologies for converting state Medicaid and Children’s Health insurance Program (CHIP) income eligibility standards to equivalent MAGI standards based on the provisions in the ACA. Starting Jan. 1, 2014, eligibility for Medicaid for most individuals, as well as for CHIP, will be determined using methodologies that are based on MAGI. Eligibility for advanced payments of premium tax credits for the purchase of private insurance coverage through Affordable Insurance Exchanges will also use MAGI. The success of the income standards conversion process is important for maintaining coverage, simplifying and streamlining eligibility determinations. The first methodology they propose involves using state-level data to average the income disregards applied to all beneficiaries in a state to create one average disregard to be applied to the income threshold for each eligibility category in a state, against which individuals' gross income would then be compared to determine eligibility for Medicaid. The second, involves using national survey data to determine an income standard using MAGI-based methods that would be reasonably estimated to result in the same number of individuals (not necessarily the same individuals) being determined eligible according to the state's current net income standard. Public comments on the two methodologies are due to CMS by July 23rd, 2012.
 

Court Opinion on the Health Reform Law Expected June 28

June 25, 2012—The U.S. Supreme Court announced today that they will conclude all remaining cases Thursday June 28th. For those of you who are interested in keeping up with the events as the Court releases the opinion, may follow the live information on SCOTUSblog beginning at 9:45 a.m. Thursday morning. The web page is located at the following address http://scotusblog.wpengine.com/ . NCSL will provide additional details as we are able to review the case opinion. Please let us know if you have any questions.

Centers for Consumer Information and Insurance Oversight (CCIIO) Health Insurance Exchange Conference Materials

CCIIO hosted the Health Insurance Exchange System-Wide Meeting (Exchange Meeting) for state exchange grantees and related state agencies on May 21-23, 2012 in Washington, D.C. The three-day conference was designed to provide guidance to states in preparing for approval of their exchanges in 2013. The materials cover an array of issues related to the implementation of a health insurance exchange, and include issues concerning the federally-facilitated model and how it will impact states. They have been posted on the CCIIO web page.

CCIIO Director Steve Larsen Resigns

June 15, 2012—According to a report from POLITICO Pro, Steve Larsen, director of the Center for Consumer Information and Insurance Oversight (CCIIO), Centers for Medicare & Medicaid Services (CMS), and Deputy Administrator at the U.S. Department of Health and Human Services (HHS) has resigned his position to take a spot as executive vice president with OPTUM, a health services business within United Health Group. Larsen’s work has been central to the implementation efforts of the Affordable Care Act provisions within HHS, and has been supportive of NCSL activities. He last spoke to legislators at our 2011 Fall Forum in Tampa, Florida where he addressed the NCSL Federal Health Reform Implementation Task Force and the NCSL Standing Committee on Health. Before joining CMS, Larsen was the Commissioner of the Maryland Insurance Administration. Mike Hash, director of the Office of Health Reform, will serve as interim director of CCIIO. Larsen will leave CCIIO in July.

OPTUM, a health service company, is comprised of three businesses—OptumHealth, OptumInsight and OptumRx—offering a variety of health services and technologies.
 

Insurance Exchanges—Draft Blueprint For Approval of State-based and State Partnership Insurance Exchanges

May 16, 2012—Regulations implementing the ACA require HHS to approve or conditionally approve state-based exchanges no later than Jan. 1, 2013, for operation in 2014. To receive HHS approval or conditional approval for a state-based exchange or a state partnership exchange, as well as reinsurance and sick adjustment programs, a state must complete and submit an exchange blueprint that documents how its exchange meets or will meet all legal and operational requirements associated with the model it chooses to pursue. As part of its exchange blueprint a state will also demonstrate operational readiness to execute exchange activities. A declaration letter and a blueprint must be submitted to HHS by Nov. 16, 2012.

1. Draft Exchange Blueprint Guidance- HHS released a Draft Exchange Blueprint Guidance providing states with the information they need to develop an exchange blueprint. The draft package includes a declaration letter and application for use in the approval process. States must document in their blueprint how they meet, or plan to meet all legal and operational requirements associated with the exchange model they have chosen. The primary decision is whether their exchange will operate as a state-based exchange or a federally-facilitated exchange. In a federally-facilitated exchange (FFE), states may pursue a state-partnership exchange, where a state may administer and operate exchange activities associated with plan management and/or consumer assistance. The blueprint also sets forth the application process for states seeking to enter into a Partnership Exchange. In addition, they released guidance describing how they will consult with stakeholders to implement an FFE, where necessary, how states can partner with HHS to implement selected functions in an FFE, and key policies organized by exchange function. NCSL is developing a web page to provide FFE information as it becomes available.
   • Draft Exchange Blueprint Guidance 
   • Draft Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchange: Frequently Asked Questions
2. The Declaration Letter-A state seeking to operate a state-based exchange or participate in a state partnership exchange in plan year 2014 will declare the type of exchange model it intends to pursue through an exchange declaration letter as part of its exchange blueprint. The HHS guidance requires the state letter to be signed by the state's governor, and include a designation of the individual (s) who will serve as the primary point of contact. If a declaration letter is not received by November 16, 2012, HHS will plan to implement a federally-facilitated exchange for the state.
3. Application Instructions- In addition to a declaration letter, a complete exchange blueprint requires submission of an exchange application which HHS provided in their guidance. The application should be used to document a state's completion or progress towards completion of all exchange requirements, either as a state-based exchange or state partnership exchange.

HHS General Guidance on Federally-Facilitated Exchanges (FFEs)

May 16, 2012— Provides information concerning state partnership participation options of an FFE. Offers guidance on the approach that may be taken in an FFE for key exchange functions. HHS is requesting comments on the guidance which must be submitted to FFEcomments@cms.hhs.gov by June 18. The full text of the guidance is available online at, http://cciio.cms.gov/resources/files/FFE_Guidance_FINAL_VERSION_051612.pdf.

CMS Guidance: Management of the Pre-Existing Condition Insurance Plan (PCIP) Program in 2012

CMS guidance released May 25 states that for new applications postmarked or submitted online on or after May 1, 2012, the federally administered PCIP will no longer accept documentation from a healthcare provider as proof of a pre-existing condition. Instead applicants 19 years of age and older must submit one of the following documents dated within the last 12 months: (1) A denial letter from an insurance company for individual insurance coverage; (2)a letter from a licensed insurance agent or broker reflecting non-eligibility in an individual insurance plan because of a medical condition; or (3) an offer of coverage letter with a rider that shows non-coverage for a specific medical condition if plan coverage is accepted. The guidance also announces that the PCIP broker referral program has sunset as of May 1, 2012. State-based PCIPs may consider similar options as those taken by the federal PCIP. 

CMS Publishes Notice of Proposed Rulemaking on Data Collection to Support Standards Related to Essential Health Benefits and the Recognition of Entities for the Accreditation of Qualified Health Plans

CMS released a proposed rule June 5, establishing data collection standards necessary to the implementation of aspects of the ACA. The rule outlines the data on applicable plans to be collected from certain issuers to support the definition of essential health benefits. It also establishes a process for the recognition of accrediting entities for purposes of certification of qualified health plans. The rule officially recognizes the National Committee for Quality Assurance (NCQA) and URAC as the only two organizations that accredit health plans who meet the statutory requirements for carrying out the process of accrediting qualified health plans (QHPs) beginning this year. The rule also provides a basic framework of accreditation standards QHPs must meet. For the process of identifying the benchmark plan in each state, CMS is proposing that the largest three products in each state provide information based on the plan with the highest enrollment within the product. Comments on the rule must be submitted by July 5. http://www.gpo.gov/fdsys/pkg/FR-2012-06-05/pdf/2012-13489.pdf

CMS Issues Final Rule Regarding Medicaid and Children’s Health Insurance Plan (CHIP) Disallowances of Claims for Federal Financial Participation (FFP) and Technical Corrections

CMS released a final rule May 29 to implement provisions in the ACA that increases the period of time states have to collect provider overpayments before they are required to return the federal share. Under the rule, states are given up to one year from the date of discovery of an overpayment made to a Medicaid provider to recover, or attempt to recover the overpayment before the federal funds must be returned. The final rule revises the repayment schedule of federal funds by installment by providing three options for states qualifying for and electing a repayment schedule. It also makes several additional changes through existing statutory authorities to improve the disallowance process, makes a technical correction to the reporting requirements for disproportionate share hospital payments, removes obsolete language, and corrects other technical errors. The final rule takes effect June 28 and is available online at, http://www.ofr.gov/%28X%281%29S%28e3g5ts4wpjscf4puy043hkza%29%29/OFRUpload/OFRData/2012-12637_PI.pdf.

CCIIO Notice to Policyholders and Subscribers when Medical Loss Ratio (MLR) Standards are Met

The release of final rules implementing MLR notification standards for issuers in the group and individual markets that meet or exceed MLR standards was followed by CCIIO issuing language that plans are required to use when notifying beneficiaries that they had met the standard. MLR reporting year must be provided by Aug. 1, 2012. The language is available on the CCIIO web page at, http://cciio.cms.gov/resources/files/Files2/2012-0511-medical-loss-ratio-information.pdf.

Frequently Asked Questions Released by CMS on Medicaid/CHIP ACA Implementation

1. Federal Medical Assistance Percentage (FMAP)—Defines the term “expansion state” under the ACA, and provides guidance on claiming the enhanced FMAP for parents in the new adult group, http://www.medicaid.gov/State-Resource-Center/Frequently-Asked-Questions/Downloads/FMAP-FAQs.pdf.
2. Benefits and Delivery Systems—Addresses how Essential Health Benefits (EHBs) will be defined for Medicaid benchmark or benchmark-equivalent plans, and provides guidance on the options available to states in selecting an EHB reference plan for benchmark benefit plans. http://www.medicaid.gov/State-Resource-Center/Frequently-Asked-Questions/Downloads/Benefits-FAQs.pdf
3. CHIP and the ACA—Provides guidance regarding the application of the CHIP enhanced FMAP, and the treatment of children who lose Medicaid eligibility as a result of the conversion to Modified Adjusted Gross Income (MAGI). http://www.medicaid.gov/State-Resource-Center/Frequently-Asked-Questions/Downloads/CHIP-and-ACA-FAQs.pdf
4. Section 1115 Waiver Transitions—Provides information on the continuation of 1115 waiver authority beyond Dec. 31, 2013, and information concerning the development of transition plans to 2014. http://www.medicaid.gov/State-Resource-Center/Frequently-Asked-Questions/Downloads/1115-FAQs.pdf
5. Coordination Across Insurance Affordability Programs—Describes how CMS envisions the “shared eligibility services” that will support interoperability between insurance affordability programs, and state options for eligibility assessments and determinations for MAGI and non-MAGI groups. http://www.medicaid.gov/State-Resource-Center/Frequently-Asked-Questions/Downloads/Coordination-FAQs.pdf
6. Eligibility Policy— Describes the realignment of Medicaid eligibility groups, enrollment of pregnant women, and people with breast or cervical cancer as an optional eligibility group. Addresses what happens to existing groups like Transitional Medical Assistance (TMA), individuals with disabilities and other long-term care needs, and the medically needy in 2014. http://www.medicaid.gov/State-Resource-Center/Frequently-Asked-Questions/Downloads/Eligibility-Policy-FAQs.pdf
7. Eligibility and Enrollment Systems—Addresses how states can access certain business solutions and leverage them to build exchange and Medicaid eligibility and enrollment solutions. Describes the availability of funding and the conditions under which funding may be allocated. http://www.medicaid.gov/State-Resource-Center/Frequently-Asked-Questions/Downloads/Eligibility-and-Enrollment-Systems-FAQs.pdf

The Center for Consumer Information and Insurance Oversight (CCIIO) Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio (MLR) Reporting Form, Notice to Policyholders and Subscribers

CCIIO released technical guidance May 24 outlining MLR reporting requirements imposed upon health insurance issuers by the ACA. The ACA requires health insurance issuers to submit MLR reports to the Department of Health and Human Services (HHS) and to issue rebates to their enrollees if the issuer’s MLR is less than the percentages outlined in the ACA. The ACA required individual and small group plans to meet the MLR standard by spending at least 80 percent of premiums on medical claims or quality improvements, and large plans to spend at least 85 percent. Notices of rebates based on the 2011 plan year. A final rule implementing the MLR notice requirements was published on May 16, 2012. The May 24 guidance includes MLR reporting form instructions and the Health Insurance Operating System (HIOS) instructions, on the following topics: (1) applicability of MLR Rule to Excepted Benefit Plans; (2) determining the Number of Employees of an Employer; (3) attestation, Uploading and Submission of MLR Reporting; (4) group Health Insurance Coverage with Dual Contracts; (5) experience rating refunds; (6) notices; and (7) Enforcement. The guidance is available online at http://cciio.cms.gov/resources/files/mlr-guidance-5-24-12.pdf .

NCSL Submits Comments on Key Affordable Care Act (ACA) Regulations

NCSL submitted comments to the Department of Health and Human Services expressing state concerns regarding two sets of final and interim final health care rules implementing key provisions in the ACA. The comment periods ended on May 7 for rules governing the Medicaid program and eligibility changes under the ACA, and May 11 for rules guiding the establishment of exchanges and Qualified Health Plans (QHPs), and exchange standards for employers.

42 CFR Parts 431, 435, and 457—Medicaid Program; Eligibility Changes under the ACA

The ACA contained several provisions affecting Medicaid eligibility, enrollment and coordination with the Affordable Insurance Exchanges (AIE), CHIP, and other insurance affordability programs. CMS published final rules and interim final rules implementing statutory provisions changing the minimum Medicaid income eligibility level to 133 percent of the Federal Poverty Level (FPL), eliminating some eligibility categories, modernizing eligibility verification rules, and ensuring coordination across Medicaid, CHIP, and the exchanges. Submission of comments were due May 7, and NCSL provided remarks focusing on timeliness and performance standards, Federally-facilitated Health Insurance Exchanges, and Medicaid coverage of incarcerated individuals.

NCSL Comments

42 CFR Parts 155, 156, and 157—Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans; Exchange Standards for Employers

The ACA provides states with an opportunity to establish an exchange through which individuals can purchase affordbale insurance coverage.The exchanges will provide competitive marketplaces for individuals and small employers to directly compare available private health insurance options on the basis of price, quality, and other factors. The exchanges will become operational by January 1, 2014, and will help enhance competition in the health insurance market, improve choice of affordable health insurance, and give small business the same purchasing clout as large business. The final rule incorporates two proposed rules, the July 15, 2011 rule titled “Establishment of Exchanges and Qualified Health Plans” (Exchange establishment proposed rule), and the August 17, 2011 rule titled “Exchange Functions in the Individual Market: Eligibility Determinations and Exchange Standards for Employers” (Exchange eligibility proposed rule). While originally published as separate rulemaking, the provisions contained in these proposed rules are integrally linked, and together encompass the key functions of Exchanges related to eligibility, enrollment, and plan participation and management. In addition, several sections in this final rule are being issued as interim final rules and HHS is are soliciting comment on those sections.

The final rule:

(1) Sets forth the minimum federal standards that states must meet if they elect to establish and operate an Exchange, including the standards related to individual and employer eligibility for and enrollment in the Exchange and insurance affordability programs;
(2) Outlines minimum standards that health insurance issuers must meet to participate in an Exchange and offer qualified health plans (QHPs); and
(3) Provides basic standards that employers must meet to participate in the Small Business Health Options Program (SHOP).

NCSL comments submitted May 11 continue to advocate for state flexibility in structuring exchange governing boards and urges HHS to give that same flexibility to states in forming their navigator programs. It raises concern over the issue of deeming multi-state plans as certified by the states and exempts them from complyance with state laws. Interim final rule comments address agents and brokers, the eligibility process, and verification of eligibility process.

The Center for Medicare and Medicaid Services (CMS) Publishes Proposed Rules Implementing Medical Loss Ratio (MLR) Reporting and Notice Requirements under the Patient Protection and Affordable Care Act (ACA)

On May 11, 2012, CMS issued final rules implementing MLR standards for health insurance issuers. The final rules amend previously released regulations by establishing the notice requirements for issuers in the group and individual markets that meet or exceed MLR standards in the 2011. Previously issuers were only required to send notice to their beneficiaries if they failed to meet the standard. The ACA required individual and small group plans to meet the MLR standard by spending at least 80 percent of premiums on medical claims or quality improvements, and large plans to spend at least 85 percent. Notices of rebates based on the 2011 MLR reporting year must be provided by August 1, 2012. The Final Rule

CMS Releases Proposed Rules Governing Enhanced Medicaid Primary Care Physician Payments

On May 11, CMS published proposed rules to implement provisions in the ACA providing for an enhanced Medicaid payments for primary care services. Under this provision, physicians that provide primary care services would be paid the Medicare rates that were in effect in calendar years 2013 and 2014 (or if greater, the Medicare rate in effect in 2009) instead of their usual state established Medicaid rates. The increased payment will apply to primary care services furnished by a physician with a specialty designation of family medicine, general internal medicine, or pediatric medicine, and any primary care services paid through Medicaid managed care plans by incorporating the increased payment into their contract. States will receive a 100 percent federal match for the difference between the Medicaid state plan payment amount as of July 1, 2009 and the applicable Medicare rate; in other words, no state matching funds are required. The policy is intended to help states bolster their primary care networks in anticipation of increased enrollment under the ACA health insurance reforms.

The rule also proposes to update the interim regional maximum fees that providers may charge for administration of pediatric vaccines to federally vaccine-eligible children under the Vaccines for Children (VFC) program. The rates were issued on an interim basis in 1994 and have never been updated.

• Comments on the rule will be accepted until June 11, 2012.
• CMS Press Release
• CMCS Bulletin
• CMS Fact Sheet

Provider Preventable Conditions Rule Becomes Effective

On June 6, 2011, CMS issued a final rule implementing provisions of the ACA affecting payment for Provider Preventable Conditions (PPCs) under the Medicaid program. The rule prohibits federal payments to states for any amounts expended providing medical assistance for health care-acquired conditions. The rule provides incentives quality improvement at the provider-level and cost savings for states by requiring states to reduce payments at the occurrence of hospital errors and Never Events in specific health care settings. The rule became effective July 1, 2011, but CMS provided states with an additional year to meet these new requirements. In preparation for full implementation, states should have submitted a state plan amendment (SPA) for their Medicaid programs to institute the changes. In preparation for the approaching final implementation date of July 1, 2012, CMS is offering technical assistance, and has provided on their website basic information about the requirements, SPA pre-prints and instructions, as well as a Frequently Asked Questions page.

The Georgetown Center on Health Insurance Reforms and the National Academy of Social Insurance (NASI) — Plan Management: Issues for State Partnership and Federally Facilitated Health Insurance Exchanges

This report reviews the activities involved in health plan regulation in the commercial marketplace and Medicaid programs. It evaluates the associated regulatory structure in six states: Arizona, Minnesota, New York, Tennessee, Washington, and Wisconsin. Because CMS may be responsible for plan management for some federally facilitated exchanges, it also examines CMS’ experience running Medicare Advantage, a federal program providing Medicare beneficiaries with private health plan choices. It is not a comprehensive evaluation of all plan management functions as defined by HHS, but focuses on a subset of plan management activities similar to what state and federal regulators are currently doing in various programs.

House Approves Budget Reconciliation Package Reducing Mandatory Spending By $310 Billion Over the Next Decade

On May 10, the U.S. House of Representatives voted 218—199 to approve the budget reconciliation package in H.R. 5652. The measure will cancel $98 billion in automatic cuts in discretionary spending scheduled to go into effect in January 2013 under current law, including a ten percent reduction in discretionary Department of Defense programs, and an eight percent reduction in discretionary domestic programs. The reconciliation savings were recommended by six House committees that over a decade would realize a reduction in mandatory spending of $310 billion.
The health proposals in the measure would:

1. Eliminate the authority of the Health and Human Services (HHS) Department to award grants to states for the establishment health insurance exchanges. ($14.1 billion in federal savings over 10 years)
2. Repeal the Prevention and Public Health Fund, which provides grant assistance to states and other entities for prevention, wellness and other public health-related programs and activities authorized under the Public Service Health Act. ($10.9 billion in federal savings over 10 years)
3. Rescind unobligated balances provided for the Consumer Operated and Oriented Plan (CO-OP) program, a program created to provide grants to encourage the development of nonprofit insurance providers and plans that would be made for sale within the state insurance exchanges. ($300 million in federal savings over 10 years)
4. Reduce the Medicaid provider tax threshold from six to 5.5 percent. ($11.3 billion in federal savings over 10 years)
5. Eliminate increased Medicaid payments to territories established in the Patient Protection and Affordable Care Act (PPACA). ( $6.3 billion in federal savings over 10 years)
6. Rebase Medicaid payments to disproportionate share hospitals (DSH). ($4.2 billion in federal savings over 10 years)
7. Repeal state maintenance of effort (MOE) requirements established in the PPACA for Medicaid and the Children's' Health Insurance Program (CHIP). ($1.4 billion in federal savings over 10 years)
8. Repeal CHIP performance bonus program, established in the 2009 reauthorization of the program to provide incentives to states to increase enroll of eligible children in the program. ($400 million in federal savings in 2013)
9. Include the provisions of H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act
10. Repeal the provision in the PPACA that for individuals with income below 400 percent of the federal poverty level (FPL) limits the liability for overpayments resulting from advanced premium assistance payments and replace it with a provision that requires repayment of the full amount of the overpayment. ($43.9 billion in federal savings over 10 years)

Additional information

CBO analysis posted May 8.

The Centers for Consumer Information and Insurance Oversight (CCIIO) Questions and Answers Regarding the Medical Loss Ratio (MLR) Regulation

The Affordable Care Act (ACA) required health insurance issuers to submit MLR data to the Department of Health and Human Services (HHS) annually and to issue a rebate to enrollees if the issuer’s MLR was less than applicable percentages as required by the ACA. The final rule implementing the MLR requirements and the interim final rule implementing the MLR rebate requirements for non-federal governmental plans (state and local government employee plans) were published Dec. 7, 2011. The questions and answers in the CCIIO Technical Guidance 2012-2, published on April 20, provides additional guidance on the following topics: (1) the applicability of the MLE to certain types of plans; (2) applicability to employer groups of one; (3) counting employees for determining market size; (4) individual association policies; (5) offering policyholders a “premium holiday;” (6) reinsurance and reporting; (7) exchange user fees; (8) states with a higher MLR standard; (9) the “Mini-Med” experience- application of the adjustment; and (10) form of rebate. The guidance is available at http://cciio.cms.gov/resources/files/mlr-qna-04202012.pdf. 

CCIIO Verification of Access to Employer-Sponsored Coverage Bulletin

The purpose of this CCIIO bulletin is to request comments on a proposed interim strategy and potential regulatory approach for verification of an applicant’s access to qualified coverage in an employer sponsored plan. HHS is soliciting comments on the development of a proposed interim verification strategy which would provide a standardized way for employees and employers to voluntarily collect and communicate coverage information to complete an exchange application, and allow exchanges to verify employer-sponsored during this period through use of pre-enrollment verification based on data available to an exchange. They are also asking for comments on an approach to verify data for exchange plan years in 2016 and beyond. The bulletin is available online at http://cciio.cms.gov/resources/files/exc-verification-guidance-vach.pdf  and comments should be submitted to the following email address, EmployerCoverageBulletin@cms.hhs.gov  .

The Centers for Medicare and Medicaid Services (CMS) Final Rule Implementing the Community First Choice (CFC) Option Program

On April 26, CMS released the final rule implementing the CFC program that establishes a new state option to provide home and community-based attendant services and supports. States electing the plan option under Medicaid may receive a six percentage point increase in their federal medical assistance percentage (FMAP) as an incentive to expand the use of home and community-based services. Services provided would be based upon a person-centered service plan based on a functional needs assessment and must be agreed to in writing by the beneficiary. Beneficiaries may “self direct” their services which may include assistance with activities of daily living and health-related tasks. States may choose to offer coverage for transition costs to assist Medicaid beneficiaries who are leaving an institution in order to return to the community. Provisions related to setting requirements for the CFC program are not final and are addressed in the NPRM on State Plan Home and Community-Based Services (see description in next bullet). The rule will be published in the Federal Register on May 7 and will become effective 60 days thereafter. The final rule is available at — https://s3.amazonaws.com/public-inspection.federalregister.gov/2012-10294.pdf  and there is a CMS Fact Sheet .

State Plan Home and Community Based Services (HCBS) Program Proposed Rule

The proposed rule offers states new flexibility in providing necessary and appropriate services to elderly and disabled populations. The rule: (1) removes the eligibility link between HCBS and institutional care that exists under the current Medicaid HCBS waiver program; (2) provides authority for 5-year demonstration projects or waivers, at the discretion of the Secretary, when they involve individuals dually eligible for Medicaid and Medicare benefits; and (3) provides an additional limited exception to the general requirement that payment for services under a state plan must be made directly to the individual practitioner providing a service when the Medicaid program is the primary source of reimbursement for a class of individual practitioners, allowing payments to be made to other parties. The payment reassignment provisions were included in the rule because state Medicaid programs often operate as the primary or only payer for the class of practitioners that includes HCBS service providers. Finally, the rule amends Medicaid regulations to provide home and community-based setting requirements for the Community First Choice (CFC) state plan option program. The NPRM is available at http://www.ofr.gov/OFRUpload/OFRData/2012-10385_PI.pdf  and there is a CMS Fact Sheet.

Internal Revenue Service (IRS) Notice of Proposed Rule Making (NPRM) and Notice of Public Hearing: Regulations Pertaining to the Disclosure of Return Information to Carry Out Eligibility Requirements for Health Insurance Affordability Programs

The NPRM and notice of public hearing published in the April 30 Federal Register addresses issues related to the disclosure of federal income tax return information to carry out eligibility requirements for health insurance affordability programs under the PPACA. A public hearing discuss all aspects of the rule is scheduled to be held on August 31, 2012 at 10:00 a.m. (EDT) in the IRS Auditorium in Washington, D.C. Comments on the NPRM and outlines of topics to be discussed at the hearing will be accepted until July 30. The NPRM is available online at, http://www.gpo.gov/fdsys/pkg/FR-2012-04-30/pdf/2012-10440.pdf.

IRS Notice 2012-31—Minimum Value of an Employer-Sponsored Health Plan

Beginning in 2014, an individual eligible to purchase coverage in a health insurance exchange is eligible for premium tax credits as long as they are not eligible for other minimum essential coverage, including employer-based coverage that is affordable and provides minimum value. The notice describes and requests comments on several possible approaches to determining whether health coverage under an eligible employer-sponsored plan provides minimum value within the meaning as prescribed by the PPACA. It also describes how guidance issued by HHS on the determination of actuarial value is expected to be applied on determining minimum value and outlines ways in which the determination of minimum value is expected to differ from the determination of the actuarial value of qualified health plans (QHPs) and employer-sponsored plans. Comments may be submitted on or before June 11, 2012. The notice will be published in the Internal Revenue Bulletin scheduled to be published on May 14. The notice is available online at, http://www.irs.gov/pub/irs-drop/n-12-31.pdf.

IRS Notice 2012-32—Request for Comments on Reporting of Health Insurance Coverage

The notice invites comments concerning the reporting requirements of the Internal Revenue Code for health insurance issuers, government agencies, employers that sponsor self-insured plans, and other persons that provide minimum essential coverage to an individual. The reporting requirements apply to coverage provided on or after Jan. 1, 2014. Comments will be accepted until June 11, 2012. The notice will be published in the Internal Revenue Bulletin scheduled to be published on May 14. The notice is available online at, http://www.irs.gov/pub/irs-drop/n-12-32.pdf

 IRS Notice 2012-33—Request for Comments on Reporting by Applicable Large Employers on Health Insurance Coverage Under Employer-Sponsored Plans

The notice invites comment on reporting for applicable large employers. Comments will be accepted until June 11, 2012. The notice will be published in the Internal Revenue Bulletin scheduled to be published on May 14. The notice is available online at, http://www.irs.gov/pub/irs-drop/n-12-33.pdf.

House Committee on Energy and Commerce Advances Reconciliation Recommendations

On April 25, the House Committee on Energy and Commerce approved recommendations required by the House Fiscal Year 2013 Budget Resolution. The recommendations, many proposing changes to the Patient Protection and Affordable Care Act (AAPCA), are projected to save $114 billion in the next decade and exceed the savings the committee was directed to identify by $17 billion. The committee proposes to: (1) Repeal the Prevention and Public Health Fund and rescind unobligated funds; (2) Repeal the state exchange authority and rescind unobligated funds; (3) Rescind unobligated funds for the Consumer Operated and Oriented Plan (CO-OP) Program; (4) Repeal the Medicaid and Children’s Health Insurance Program (CHIP) maintenance of effort (MOE) requirement related to program eligibility; (5) Rebase the disproportionate share hospital (DSH) allotment in FY 2022 to maintain the FY 2021 level of annual aggregate reductions that are set to begin in FY 2014; (6) Repeal the increased federal Medicaid funding cap and federal match rate for the territories; (7) Reduce the Medicaid provider tax threshold from 6 percent to 5.5 percent beginning in FY 2013; (8) Repeal the bonus payments to state authorized in the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) to provide incentives to states to increase enrollment of eligible children in Medicaid and CHIP; and (9) Implement medical liability reforms (provisions of H.R. 5, the Help Efficient, Accessible, Low Cost, Timely Healthcare (HEALTH) Act of 2012, already enacted in the House). http://www.cbo.gov/sites/default/files/cbofiles/attachments/EnergyandCommerceReconciliation.pdf

The Centers for Consumer Information and Insurance Oversight (CCIIO) Announces New Funding Opportunity for Consumer Assistance Programs

The ACA made grant funding available to states to establish, expand or provide support for the establishment of independent offices of health insurance consumer assistance or ombudsman programs. On April 20, CCIIO announced funds are available for a new limited-competition funding opportunity. The 38 state grantees from the first grant cycle will be eligible to apply for the additional funding to strengthen their consumer assistance programs through May 21 The grant application outlines how the funds may be used. Eligible applicants include—the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, AR, CA, CT, DE, GA, IL, IA, KS, KY, ME, MD, MA, MI, MS, MO, MT, NV, NH, NJ, NM, NY, NC, OK, OR, PA, RI, SC, TN, TX, VT, VA, WA, and WV.

• CCIIO Announcement, http://cciio.cms.gov/programs/consumer/capgrants/ltdfacts.html
• Grants.gov Announcement, http://www.grants.gov/search/synopsis.do;jsessionid=XKPCPWyCzlHRgdWQlpHqhccSKdz1GFy4YJPbnNhG98GhWJ4JQ3qs!-889918338
• Frequently Asked Questions— http://cciio.cms.gov/programs/consumer/capgrants/ltdfaq.html   

State Demonstrations to Integrate Care for Dual Eligible Individuals

Proposals for the Centers for Medicare and Medicaid Services (CMS) demonstration projects providing models of care designed to coordinate services to individuals covered by the Medicare and Medicaid programs, or “duals”, must be submitted by May 31. The goal of the project is to identify and validate delivery system and payment coordination models that can be tested and replicated in other states. CMS is also making technical assistance available to all states interested in improving services for duals. Open enrollment for the project will begin in October. Originally implementation of the program was to begin Jan. 1, 2013, but states may request a delayed implementation deadline as late as Jan. 2014. The program’s auto enrollment has drawn comments of concern including Medicare Payment Advisory Commission (MedPAC), and Medicaid and CHIP Payment and Access Commission (MACPAC) Commissioners who worry whether states and the provider community are prepared to address the needs of such a large number of Medicaid beneficiaries with complex care needs.

• Design Contracts— http://cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/StateDemonstrationstoIntegrateCareforDualEligibleIndividuals.html
• Demonstration RFP — http://cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/Downloads/RFPCMS2011_0009.pdf    
• Fact Sheet — http://www.cms.gov/apps/media/press/factsheet.asp?Counter=3929&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numdays=3500&sr

The George Washington University School of Public Health & Health Services: Multi-State Plans Under the Affordable Care Act

Health insurance exchanges were conceived in the ACA as a means of offering consumers a choice of affordable health insurance coverage through qualified health plans (QHPs) offered in the exchange. At least two of the QHPs offered in each state exchange are required by the ACA to be a multi-state plan or MSP. MSPs will be administered by the federal Office of Personnel Management (OPM) and must meet the same requirements as other QHPs. This paper, based on interviews conducted by the George Washington University School of Public Health & Health Services with federal and state policy makers and others, examines key implementation issues. http://www.gwumc.edu/sphhs/departments/healthpolicy/dhp_publications/pub_uploads/dhpPublication_A80A0AAA-5056-9D20-3D25B59C65680B79.pdf  

Internal Revenue Service (IRS) Proposed Rules and Notice of Public Hearing on Health Insurance Policies and Self-Insured Plans—Impacts State Budgets

The IRS released proposed rules and notice of an April 12 public hearing outlining fees on health insurers and health plan sponsors of certain self-insured health plans that will be used to fund the Patient-Centered Outcomes Research Trust Fund. Provisions in the Affordable Care Act (ACA) established a private, nonprofit corporation, the Patient-Centered Outcomes Research Institute whose mission would be to assist, through research, patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing the quality and relevance of evidence-based medicine through the synthesis and dissemination of comparative clinical effectiveness research findings. The provision specifically imposes a fee on an issuer of a specified health insurance policy for each policy year on or after Oct. 1, 2012 and before October 1, 2019.

Application to State Sponsored Self-Insured Plans
The proposed rule defines specified health insurance policy as any accident or health insurance policy (including a policy under a group health plan) issued with respect to individuals residing in the United States. The ACA does not exempt a governmental entity that is a plan sponsor of a self-insured health plan from paying the fee. Only those governmental programs including Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) or any program established under Federal law for providing medical care to individuals in the U.S. Armed Forces or their retirees, and members of Indian Tribes are exempt.
Comments on the rule will be accepted until July 16, 2012. The IRS has also issued a notice of a public hearing which will be held Wednesday August 8, 2012 at 10:00 a.m. Requests to speak must be received by July 30, 2012.

• Proposed Rule— https://s3.amazonaws.com/public-inspection.federalregister.gov/2012-09173.pdf
• IRS Notice— http://www.irs.gov/pub/irs-drop/n-11-35.pdf   

The Department of Health and Human Services (HHS) Provides Notice of a Meeting to Discuss the Risk Adjustment Program

HHS has announced that they will be holding an open public meeting May 7 and 8 in Arlington, Virginia to provide information to states, issuers, and other interested parties to discuss the risk adjustment program required under the ACA. The meeting will focus on the risk adjustment model, calculation of plan average actuarial risk, calculation of payments and charges, data collection approach, and the schedule for running risk adjustment. The meeting will provide stakeholders and opportunity to communicate with HHS about the program. Attendance will be limited to the space available and registration must be completed before April 30, 2012.

Federal Register Notice— http://www.gpo.gov/fdsys/pkg/FR-2012-04-11/pdf/2012-8771.pdf.

Registration is available online at http://www.regonline.com/builder/site/Default.aspx?EventID=1081800.

HHS Proposes New Rules for Administrative Simplification and Delays ICD-10 Coding System Until Oct. 1, 2014

HHS released proposed rules establishing new requirements for administrative transactions that would improve the utility of existing Health Insurance Portability and Accountability Act of 1996 (HIPAA) transactions and reduce administrative burden and costs. The rule adopts a data element to serve as an identifier for entities that are not health plans, health care providers, or individuals that need to be identified in standard transactions. The rule proposes an addition to the National Provider Identifier (NPI) requirements. The rule also proposes to delay by one year, until Oct. 1, 2014, the date by which covered entities must comply with the Classification of Disease 10th Edition or ICD-10 disease coding system.  

• The CMS announcement is available at https://www.cms.gov/ICD10/Downloads/HHSPressReleaseICD10final321612.pdf
• Additional CMS resources regarding the ICD-10 conversion are available at https://www.cms.gov/ICD10/01_Overview.asp#TopOfPage
• CMS Fact Sheet — http://www.cms.gov/apps/media/press/factsheet.asp?The

The Centers for Consumer Information and Insurance Oversight (CCIIO) Release Instructions for Medical Loss Ratio (MLR) Annual Reporting

Effective 2011, provisions in the ACA establish minimum MLR standards for health insurance issuers, and requires issuers to provide rebates when their MLRs are lower than the applicable MLR standards established in the act. Issuers must submit annually to HHS data on their use of premium dollars within major categories, including data required to calculate the MLRs and rebates. An MLR form must be prepared and submitted for each state in which the issuer has written direct health insurance coverage or has direct amounts paid, incurred or unpaid for the provision of health care services.

Annual MLR Reporting Form Filing Instructions http://cciio.cms.gov/resources/files/mlr-annual-form-instructions.pdf

MLR Annual Reporting Form, http://cciio.cms.gov/resources/files/mlr_annual_form.xlsx

Twenty-Six States Award Medicaid Recovery Audit Contractor (RAC) Contracts

The Centers for Medicare and Medicaid Services (CMS) announced that 26 states have awarded RAC contracts. These states are reviewing Medicaid claims for under and overpayments as required in the Affordable Care Act. CMS posted an at-a-glance map of states who have implemented this review program, http://www.cms.gov/medicaidracs/ .

Ten Non-Profits Receive COOP Funding

In creating a new framework to improve access to more affordable health insurance coverage, the ACA created a new type of nonprofit health insurer called the Consumer Oriented and Operated Plan or COOP. HHS is providing funding to plans in 10 states—IA, ME, MT, NE, NJ, NM, NY, OR, SC, WI— as a low-interest loan to enable the COOPs to offer health coverage through a state exchange beginning in 2014. There will be additional quarterly opportunities for these loans through December 31, 2012. http://www.healthcare.gov/news/factsheets/2012/02/coops02212012a.html

Center for Medicaid, CHIP and Survey & Certification (CMCS) Informational Bulletin: Medicaid Information Technology Architecture (MITA) Guidance – Version 3.0

CMS announced the release of MITA Version 3.0. This system will help foster integration of information technology (IT) systems enabling states and the federal government to build an IT framework for Medicaid eligibility functions. The 3.0 version incorporates a number of recent legislative changes, including the CHIP Reauthorization Act (CHIPRA), the ACA, and the Health Information Technology for Economic and Clinical Health Act (HITECH) under the Recovery Act of 2009. The recent revisions are intended to accommodate newer technologies, such as cloud computing, as well as IT-related guidance from CMS also. The 3.0 version does not incorporate the recent Medicaid and Exchange eligibility rules. Those updates are forthcoming. The MITA 3.0 Framework can be downloaded at http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Data-and-Systems/Medicaid-Information-Technology-Architecture-MITA.html.
CMS Informational Bulletin, http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/CIB-03-28-12.pdf
 

Health Reform before the U.S. Supreme Court: HHS v. Florida

The Affordable Care Act (ACA) was argued before the U.S. Supreme Court March 26, 27, and 28. Audio files are available online at the following link, http://www.supremecourt.gov/oral_arguments/argument_audio.aspx . Written transcripts may also be obtained on the Supreme Court web page at the following link, http://www.supremecourt.gov/oral_arguments/argument_transcripts.aspx.

Links to the orders and briefs as well as other pertinent documents are available on the U.S. Supreme Court resource page, http://www.supremecourt.gov/docket/PPAACA.aspx  .

The arguments were presented as follows:

Monday, March 26, 2012 (90 minutes for oral argument)

Issue: Anti-Injunction Act
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.
________________________________________
Tuesday, March 27, 2012  (2 hours for oral argument)

Issue: Minimum Coverage Provision
Whether the individual mandate exceeds Congress’ enumerated powers under the Commerce Clause of the U.S. Constitution.

The minimum coverage language in the ACA is located in Title I, Subtitle F, Part I, Sec. 1501 (http://www.ncsl.org/documents/health/ppaca-consolidated.pdf).

________________________________________
Wednesday, March 28, 2012 (90 minutes for oral argument)

Issue: Severability
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 ACA
________________________________________
Wednesday, March 28, 2012  (1 hour for oral argument)

Issue: Medicaid
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.

Additional Resources

• CSPAN: Oral Arguments on Health Care 
   
• Anti-Injunction Act, 26 U.S.C.  
   
• Congressional Research Service Report (CRS) reports

1.Individual Mandate and Related Information Requirements under PPACA (September 21, 2010)

2. Requiring Individuals to Obtain Health Insurance: A Constitutional Analysis (May 7, 2010)
3.  Health Care: Constitutional Rights and Legislative Powers (April 5, 2010) 

The Department of Health and Human Services (HHS) Releases Several Key Rules Governing Health Insurance Exchanges

During the week of March 12 HHS released several rules that implement key provisions from the Affordable Care Act through 2014.

− Medicaid Program; Eligibility Changes under the Affordable Care Act of 2010
Final/Interim Final Rule. Implements provisions of the Affordable Care Act (ACA). This final rule codifies policy and procedural changes to the Medicaid and CHIP programs related to eligibility, enrollment, renewals, public availability of program information and coordination across insurance affordability programs. The rule becomes effective January 1, 2014. The applicable comment period ends May 8, 2012.

Federal Register document http://www.ofr.gov/OFRUpload/OFRData/2012-06560_PI.pdf
Regulatory Impact Analysis http://www.medicaid.gov/AffordableCareAct/Provisions/Downloads/MedicaidEligibilityFinalRule_Regulatory-Impact-Analysis.pdf  
Fact Sheet http://www.medicaid.gov/AffordableCareAct/Provisions/Downloads/MedicaidCHIP-Eligibility-Final-Rule-Fact-Sheet-Final-3-16-12.pdf

− Establishment of an Exchange and Qualified Health Plans, and Exchange Standards for Employers
Final/Interim Final Rule. Implements the new Affordable Insurance Exchanges, consistent with the ACA. An exchange will allow individuals and small employers to directly compare available private health insurance options on the basis of price, quality, and other factors that increase competition in the marketplace. This rule addresses the key functions of an exchange that will become operational by Jan. 1, 2014. In addition. Several sections of this final rule are being issued as interim final rules and HHS is soliciting comments on those sections. The rule becomes effective May 27, 2012. The applicable comment period ends May 12, 2012.

Federal Register Document http://www.ofr.gov/OFRUpload/OFRData/2012-06125_PI.pdf
Regulatory Impact Analysis http://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf
Fact Sheet http://www.healthcare.gov/news/factsheets/2011/07/exchanges07112011a.html  

− Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment
Final Rule. Implements standards for states related to reinsurance and risk adjustment, and for health insurance issuers related to reinsurance, risk corridors, and risk adjustments consistent with the ACA. These programs will lessen the impact of potential adverse selection and stabilize premiums in the individual and small group markets as insurance reforms exchanges are implemented, starting in 2014. The rule becomes effective May 23, 2012.

Federal Register Document http://www.ofr.gov/OFRUpload/OFRData/2012-06594_PI.pdf
Regulatory Impact Analysis http://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf
Fact Sheet http://www.healthcare.gov/news/factsheets/2012/03/risk-adjustment03162012a.html  

− Certain Preventive Services Under the Affordable Care Act
Advanced Notice of Proposed Rulemaking. This is a request for comments in advanced of proposed rulemaking on the potential means of accommodating religious organizations objecting to the coverage of contraceptive services and ensuring coverage for plan participants and beneficiaries without cost sharing. The comment period ends June 21, 2012.

Advanced Notice of Proposed Rulemaking in the Federal Register

− Student Health Insurance Coverage
Final Rule. Establishes requirements for student health insurance coverage under the ACA. The final rule defines “student health insurance coverage” as a type of individual health insurance coverage, and specifies that certain Public Health Service (PHS) Act requirements are inapplicable to this type of individual health insurance coverage. It also amends the medical loss ratio (MLR) and annual limits requirements for student health insurance coverage under the PHS Act. The rule becomes effective April 21, 2012. No comment period applies.

Final Rule Document

Fact Sheet http://www.healthcare.gov/news/factsheets/2012/03/student-health-plans03162012a.html  
 

CBO—Effects of Eliminating the Individual Mandate to Obtain Health Insurance

Senior Advisor for Health and Human Resources Jessica Banthin's Presentation at the RAND BGOV Event on the Individual Mandate. http://cbo.gov/publication/43117

HHS to Administer Risk Adjustment Programs in Federally Facilitated Health Insurance Exchanges

HHS has announced that they will take control of health insurance risk adjustment programs for states not operating their own exchanges and those partnering with the federal government on exchanges. The ACA created three programs to eliminate incentives for health insurance plans to avoid insuring people with pre-existing conditions or those who are in poor health, and to reduce uncertainty that could increase premiums when health insurance exchanges begin. The three programs are risk adjustment, reinsurance, and risk corridors. The primary goal of the risk adjustment program is to better spread the financial risk borne by health insurance issuers. States certified to operate an exchange have the option to establish a risk adjustment program, but are not required to do so. If a state does not establish a risk adjustment program, HHS will establish the program and will perform the risk adjustment functions for that state. A federally-developed risk adjustment methodology will be proposed in the annual HHS Notice of Benefit and Payment Parameters in the fall of 2012. On a March 22 conference call with groups representing state government, HHS announced that there will be fees assessed on states for the administrative costs associated with HHS running the risk adjustment programs.
 

Standards Related to Reinsurance, Risk Corridors and Risk Adjustment Final Rule: http://www.ofr.gov/OFRUpload/OFRData/2012-06594_PI.pdf
Fact Sheet: http://www.healthcare.gov/news/factsheets/2012/03/risk-adjustment03162012a.html 
 

 HHS Deems Health Insurance Rate Hikes in Nine States Excessive under Rate Review

HHS Secretary Sebelius released a new report on March 22 showing initial results of six months of a rate review program established under the ACA. Since the inception of the program more states have taken an active role in monitoring rate increases by insurers, resulting in a 4.5 percent increase in premium increases. The report released shows that:

•  Texas, Kentucky, Nevada and Indiana are reporting fewer requests for rate increases over 10 percent.
• California, New York, Oregon, and many others, have proactively lowered rate increases for their residents.
• The rate review program requires insurance companies to explain their increases, and more than 180 reviews have been posted publicly and are open for consumer comment on companyprofiles.healthcare.gov.
   

Information on the specific determinations is available at: http://companyprofiles.healthcare.gov/
The rate review report released today is available at: http://www.healthcare.gov/law/resources/reports/rate-review03222012a.html

The Centers for Medicare and Medicaid Services (CMS) Guidance Regarding the Adoption of Operating Rules for Health Information Transactions

In a CMS bulletin on March 21, CMS describes standards for adoption of operating rules for eligibility for a health plan and health care claim status transactions. The bulletin is one of a series CMS will publish while implementing the provisions of the ACA. This bulletin specifically addresses provisions in the ACA pertaining to the Health insurance Portability and Accountability Act of 1996 (HIPAA). HHS has adopted operating rules for the eligibility and claim status transactions which require health plans, including Medicaid, to use certain codes, templates and/or formats in the process.
CMS Bulletin, http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/CIB-03-21-12.pdf.

Employee Benefits Security Administration (EBSA) Frequently Asked Questions (FAQs) about ACA Implementation (Part VIII)

EBSA has published FAQs regarding implementation of the summary of benefits and coverage (SBC) provisions of the ACA. These FAQs have been prepared jointly by the Departments of Labor (DOL), HHS, and the Treasury. http://www.dol.gov/ebsa/faqs/faq-aca8.html  
 

CMS Call for Applications for the Graduate Nurse Education Demonstration

CMS has announced a call for applications for a new ACA initiative designed to strengthen the primary care workforce. Under the Graduate Nurse Education Demonstration, CMS will provide hospitals working with nursing schools to train advanced practice registered nurses (APRNs) with payments of up to $200 million over four years to cover the costs of APRNs’ clinical training. The primary goal of the demonstration is to increase the provision of qualified training to APRN students. The clinical training included in this demonstration will provide APRNs with the clinical skills necessary to provide primary care, preventive care, transitional care, chronic care management, and other services appropriate for Medicare beneficiaries. The demonstration will be operated by the Center for Medicare and Medicaid Innovation (Innovation Center). The Innovation Center was created by the ACA to test innovative payment and service delivery models to reduce expenditures while preserving or enhancing the quality of care. http://innovation.cms.gov/initiatives/gne/  
 

 CMS Launches Initiative to Reduce the Number of Preterm Babies Born to Medicaid Moms

Approximately 12 percent of infants born in the U.S. today are born prematurely. That rate has increased by 36 percent over the last 20 years. The rate of preterm births, medically defined as less than 37 weeks of gestations, is a growing public health problem and has been estimated to cost society at least $26 billion each year. Medicaid currently finances about 40 percent of all births in the United States. The ACA authorized the CMS Innovation Center to develop, implement, and evaluate innovative payment and service delivery models to reduce program expenditures in public programs while preserving the quality of care. This solicitation offers direct funding to applicants for the purpose of providing specific combinations of enhanced prenatal care services. Funding may be used for start-up and implementation costs associated with these programs focusing on one of three approaches— enhanced prenatal care through centering/group visits, enhanced prenatal care at birth centers, and enhanced prenatal care at maternity care homes. Up to $43.2 million is available to fund this initiative and awards will be made for a four-year period. Eligible applicants include providers in partnership with states, state Medicaid agencies applying in partnership with providers, and Medicaid-contracted managed care entities and/or convener proposals in partnership with states and providers. Applications must be received by June 13, 2012, with an anticipated award date of September 10, 2012.

Center for Medicare and Medicaid Innovations Overview— http://innovations.cms.gov/initiatives/Strong-Start/index.html  
 

National Association of Insurance Commissioners (NAIC) Issue Brief Health Insurance Exchanges Plan Management Functions

NAIC has stressed that whether an exchange is state or federally operated that states should examine the coordination of activities between the exchanges and state departments of insurance. This brief lists the major plan certification requirements from the ACA and subsequent federal regulations that should be consider as you plan for coordination activities. The brief is available at the following web address, http://www.naic.org/documents/committees_b_exchanges_1203_issue_brief.pdf .

The Centers for Medicare and Medicaid Services (CMS) Extends Application Dates for Level Two Establishment Grants

The ACA provided for grant funding to states to plan for and establish health insurance exchanges. Forty-eight states and the District of Columbia were awarded the first planning grants in Sept. of 2010. Ultimately every state with the exception of Alaska received grants for planning which made them eligible to receive additional funding through establishment grants beginning in January of 2011. There are two levels of awards for states to apply for establishment grants. Level One Establishment grants provided one year of funding to state that are ready to initiate establishment activities after having made sufficient progress under their planning grants. Level Two Establishment grants provide funding to states that have achieved benchmarks identified in the Level Two Establishment review criteria. HHS anticipates releasing the funding opportunity announcement June 15, 2012. CMS announced in the Federal Register March 2, 2012 that they have extended opportunities to apply for Level One and Level Two Establishment grant funding quarterly through the end of 2014.

The period of performance for Level One Establishment grants is up to one year after the date of the award, and up to three years after an award for a Level Two Establishment grant award. The Federal Register notice stressed the importance of the timely submission of information regarding state progress to HHS. States should anticipate additional guidance on data submission from HHS in the future. The Federal Register notice is available online, http://www.gpo.gov/fdsys/pkg/FR-2012-03-02/pdf/2012-5011.pdf  .

Center for Consumer Information and Insurance Oversight (CCIIO) ACA Announcement: Actuarial Value Bulletin

HHS released a bulletin regarding Actuarial Value and Cost Sharing Reductions. The purpose of this bulletin is to provide information and solicit comments on the regulatory approach that HHS plans to propose to define actuarial value (AV) for qualified health plans (QHPs) and other non-grandfathered coverage in the individual and small group as well as to implement cost-sharing reductions from the ACA. AV is a measure of the percentage of expected health care costs a health plan will cover. AV is calculated based on the cost-sharing provisions for a set of benefits. Provisions in the ACA direct issuers to reduce cost-sharing on essential health benefits (EHB) for individuals with household incomes below 400 percent of the Federal Poverty Level (FPL) who are enrolled in a QHP in the individual market through an Affordable Insurance Exchange. The bulletin is available online at http://www.cciio.cms.gov/resources/files/Files2/02242012/Av-csr-bulletin.pdf

House Committees Approve Bill Repealing the ACA’s Independent Payment Advisory Board (IPAB)

The ACA created the IPAB and a process by which the board would make recommendations to Congress to affect economies in the Medicare program. The process would automatically permit the HHS Secretary to follow the IPAB’s recommendations should Congress fail to enact policy or in some way achieve necessary savings to meet specific targets. H.R. 452, the Medicare Decisions Accountability Act of 2011, would repeal the ACA provisions. The measure has been approved in the House Committees on Energy and Commerce, and Ways and Means with 234 co-sponsors which include 20 Democrats. Offsets for the bill have not yet been identified but must be included before going to the House floor.
Resources:
1. House Committee on Ways and Means markup— http://waysandmeans.house.gov/Calendar/EventSingle.aspx?EventID=283481
2. House Committee on Energy and Commerce Summary— http://energycommerce.house.gov/News/PRArticle.aspx?NewsID=9105
3. (CBO) Cost Estimate— http://cbo.gov/publication/43048
4. The White House Blog, The Facts About the Independent Payment Advisory Board, http://www.whitehouse.gov/blog/2011/04/20/facts-about-independent-payment-advisory-board
5. Kaiser Family Foundation—Explaining Health Reform: Medicare and the New Independent Payment Advisory Board, http://www.kff.org/healthreform/upload/7961-02.pdf 
 

The Centers for Medicare & Medicaid Services (CMS) Final Rules on the Application, Review, and Reporting Process for Waivers for State Innovation

CMS has published the final rules, which lay a framework for the submission and review of initial applications for a Waiver of State Innovation, implementing the Affordable Care Act (ACA) provisions that allow HHS to waive certain requirements respective to health insurance coverage within the state beginning in plan year Jan. 1, 2017. Proposed rules were published March 14, 2011, and the final rules only vary on a few small issues. One particular change clarifies that states will not be required to enact legislation pertaining to a waiver if the state already has a law in place. The rule becomes effective April 27, 2012 and is available for review at http://www.ofr.gov/OFRUpload/OFRData/2012-04395_PI.pdf.

CMS Final Rules on the Medicaid Program: Review and Approval Process for Section 1115 Demonstrations

Provisions in the ACA revised procedures in the review and approval of demonstration projects under section 1115 of the Social Security Act relating to Medicaid and the Children’s Health Insurance Program (CHIP). The goal of the new procedures is to promote greater transparency in the process and allow for public input and availability of outcomes data. The procedural requirements also include review standards pertaining to goals of the demonstrations and provide for state reporting requirements on all approved demonstrations.

To allow for public comment, states must provide for a 30-day notice and comment period before submission of an application to CMS for any new demonstration project or an extension of any existing program. In addition, at least two public hearings must be held approximately 20 days prior to submission of the application. States will be held accountable for annual reporting including program impact analysis and outcomes of care, quality of care, cost of care, access to care, and complaints made by the demonstration populations. Proposed rules were published Sept. 17, 2010 and the final rule will become effective April 27, 2012. The rule is available for review online at (will insert web address Monday after posting). The Center for Medicaid and CHIP Service (CMCS) issued a bulletin February 22nd that provides some additional guidance to the rule http://www.medicaid.gov/Federal-Policy-Guidance/downloads/CIB-02-22-12.pdf.

An Early Retiree Reinsurance Program (ERRP) Status Report

The ERRP program was established by the ACA with an appropriation of $5 billion dollars to temporarily offer financial assistance to health plan sponsors as an who provide coverage to early retirees between the ages of 55 and 64. ERRP payments were to be used to reduce plan participants’ costs thereby acting as an incentive for plan sponsors to continue coverage. The program received a significant response from the employer community including 47 states and the District of Columbia. In fact the program was so well received that it ceased accepting applications for participation May 6, 2011, and in December 2011 informed participants that claims incurred after Dec. 31 would not be accepted. HHS has released updated information regarding the ERRP program payments in a report available online at http://cciio.cms.gov/resources/files/Files2/02172012/errp-posting_feb2012.pdf. On the State Affordable Care Call February 23, HHS officials informed state program participants that documentation detailing all claims for which payments had been received would have to be submitted by March 31. Any outstanding documentation requirements after that date would result in recoupment of the funds provided to the plan sponsor for the associated claim.

 HHS Reports on the Pre-Existing Condition Insurance Plan Program (PCIP)

HHS has released two reports providing state specific information on the funding that has been provided to cover individuals with pre-existing conditions across the country. The PCIP was established in the ACA as a temporary high risk health insurance program in all 50 states and the District of Columbia for uninsured people with pre-existing conditions. Twenty-seven states are operating their own program, often in coordination with existing High Risk Pools (HRPs), and 23 states and the District of Columbia have opted to have a federally-operated program. The first report, Covering People with Pre-Existing Conditions: Report on the Implementation and Operation of the Pre-Existing Condition Insurance Program is available online at http://www.cciio.cms.gov/resources/files/Files2/02242012/pcip-annual-report.pdf. The second report, Pre-Existing Condition Insurance Plan Data as of December 31, 2011, is also available online at http://cciio.cms.gov/resources/files/Files2/02242012/pcip-data-12-31-2011.pdf.

New Loan Program Helps Create Customer-Driven Non-profit Health Insurers

CMS has announced that $638.7 million dollars has been loaned to seven nonprofit health insurance co-operatives who are the first to receive these types of loans. The ACA created the Consumer Operated and oriented Plans (CO-Ops) that are intended to be directed by their customers. These low interest loans will only be provided to eligible non-profit organizations and begin providing coverage in their states in 2014. The announcement is on the HealthCare.gov web page at http://www.healthcare.gov/news/factsheets/2012/02/coops02212012a.html.

CCIIO Releases Frequently Asked Questions (FAQs) on the Essential Health Benefits Bulletin

The Center for Consumer Information and Insurance Oversight (CCIIO) released FAQs to provide additional guidance on the Essential Health Benefits Bulletin released Dec. 16, 2011, which outlined the proposed policies to give states more flexibility to create an EHB package for their exchanges. HHS intends to define the EHB packages through a benchmark approach. The FAQs provide further information about the process of selecting and updating a benchmark and more information on the disposition of state mandated benefits.

• CCIIO FAQs— http://cciio.cms.gov/resources/files/Files2/02172012/ehb-faq-508.pdf    
• EHB Bulletin — http://www.healthcare.gov/news/factsheets/2011/12/essential-health-benefits12162011a.html  

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 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. The report is available online at, http://www.mhpa.org/_upload/MillimanReport.pdf.

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 to CMS Acting Administrator Marilyn Tavenner http://www.ncsl.org/documents/health/EHBbultn.pdf.

The Center for Medicaid and CHIP Services (CMCS) Proposes New Rules Governing Medicaid Covered Outpatient Drugs

CMCS has 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. Please refer to the Federal Register http://www.ofr.gov/OFRUpload/OFRData/2012-02014_PI.pdf . The NPRM will be officially posted Feb. 2, 2012 in the Federal Register.

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.
 

Tri-agency Letter on Cost Allocation Requirements

 Jan. 23, 2012. In August of 2011, the Centers for Medicare and Medicaid Services (CMS), the Administration for Children and Families (ACF), and the U.S. Department of Agriculture (USDA) provided guidance on a time-limited exception to cost-allocation requirement associated with building a state-based information technology system used in eligibility-determinations in state insurance exchanges, Medicaid and the Children’s Health Insurance Program (CHIP). Normally cost allocation requirements from the Office of Management and Budget (OMB) require benefitting programs to pay their fair share of the costs associated with building the state-based technology system (OMB Circular A-87, Sec. C.3, http://www.whitehouse.gov/sites/default/files/omb/assets/agencyinformation_circulars_pdf/a87_2004.pdf ).

The three agencies have released additional guidance that focuses on integrated eligibility system strategies. The guidance provides an implementation timeline that would have the systems fully operational and tested by no later than the summer of 2013. A phased development of the system is highly recommended and would expand the functionality after all the health components are operational. State agencies would be permitted a one-time exception of the cost-allocation requirements in order to support the development of the system. The guidance provides some clarification of the allowable shared savings under the exception, and provides instruction for submission of funding requests. The document is available on the web at, http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD-01-23-12.pdf.

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 .

CMCS Informational Bulletin: Use of Federally Imposed Civil Money Penalty (CMPs) Funds by States

The ACA provided that funds collected from long-term care facilities as a result of federally imposed CMPs may be used to support activities that benefit residents of those facilities in some way. This bulletin provides guidance to states on the implementation of the provisions from the ACA. Use of CMPs levied for deficiencies as a result of federal requirements must be approved by CMS. http://www.medicaid.gov/Federal-Policy-Guidance/downloads/CIB-01-13-12.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. 

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.

CMCS Guidance to States on the Expansion of the Recovery Audit Contractor (RAC) Program to Medicaid

CMCS provided additional guidance to states on the expansion of the RAC program to Medicaid in an informational bulletin Dec. 30, 2011. The final rule implementing the ACA provisions became effective Jan. 1, 2012. In the rule, CMS restricted states from paying contingency fees to Medicaid auditors that would exceed the highest fees paid to a Medicare Recovery Auditor. The bulletin also provides information on recent modifications CMS has made regarding Medicare contingency fees. http://www.medicaid.gov/Federal-Policy-Guidance/CIB-12-30-2011.pdf  

National Academy of Social Insurance (NASI)−Federally-Facilitated Exchanges and the Continuum of State Options

Under the support of the Robert Wood Johnson Foundation (RWJF) NASI examines how the various core functions of a health benefit exchange carried out in a variety of models, and the implications for states selecting one model over another, http://www.nasi.org/sites/default/files/research/Federally_Facilitated_Exchanges_and_the_Continuum_of_State_Options.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.