News of Health Reform Activity in the Federal Government
Updated November 15, 2013
President Obama’s ACA Proposal Addressing Insurance Cancellations
Nov. 15, 2013—In a midday press conference November 14, President Obama proposed that his administration would follow a “transitional” policy permitting health insurers to choose to continue coverage that would otherwise be terminated or cancelled and affected individuals and small businesses (where policies were cancelled) may choose to reenroll in coverage. However, plans going forward in 2014 would be closed to anyone not currently enrolled. The decision was designed to ease the impact on millions of consumers who have received cancellation notices in recent weeks.
In a letter to state insurance commissioners, Gary Cohen, Director of the Center for Consumer Information and Insurance Oversight (CCIIO), Centers for Medicare and Medicaid Services (CMS) at the U.S. Department of Health and Human Services explained that health insurance coverage in the individual or small group market that is renewed for a policy year starting Jan. 1, 2014, and Oct. 1, 2014, and associated with group health plans of small businesses, will not be considered to be out of compliance with specific market reforms and under specified conditions which are outlined in the letter.
The U.S. House of Representatives is scheduled to vote on a separate measure introduced by Representative Upton (R-MI), ‘‘Keep Your Health Plan Act of 2013’’ (H.R. 3350). The bill would permit a health insurance issuer that has in effect health insurance coverage in the individual market as of Jan. 1, 2013, to continue offering the coverage for sale during 2014 outside of a health care exchange established under the Patient Protection and Affordable Care Act (ACA) and treats the coverage as a grandfathered health plan for purposes of an individual meeting the requirement to maintain minimum essential health coverage. Minority Leader Pelosi announced that she is also working on a “legislative fix,” but there are no details available on her approach.
Responses to the Proposal
Health insurers, insurance commissioners and actuaries all seem less than enthusiastic about proposals that would delay implementation of the insurance reforms or the individual mandate because of the impact it would have on the financial viability of the health care marketplaces and on insurance premiums. In response to the President’s announcement, America’s Health Insurance Plans’ (AHIP) President and CEO Karen Ignagni responded to the proposal by the administration related by saying, “Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers. Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace.” She went on to say, “Additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers.”
The American Academy of Actuaries also responded by cautioning state and federal policymakers who are considering action to recognize potential consequences of taking action on the proposal. They cautioned saying, “changing the ACA provisions could alter the dynamics of the insurance market, creating two parallel markets operating under different rules, thereby threatening the viability of insurance markets operating under the new rules.”
The President’s remarks may be viewed on YouTube.
FACT SHEET: New Administration Proposal To Help Consumers Facing Cancellations
Initial Marketplace Enrollment Data
Nov. 14, 2013—After an inaugural month plagued with problems, the Department of Health and Human Services (HHS) has released the initial open enrollment-related data for the new health insurance Marketplaces during period Oct. 1 through Nov. 2, 2013. According to the report, 106, 185 enrollees have chosen their health plans for coverage that will begin Jan. 1, 2014. The Office of the Assistant Secretary for Planning and Evaluation (ASPE) has published an issue brief providing analysis of the initial figures which represents only 22 percent of the Congressional Budget Office (CBO) estimates of seven million in 2014. Based on the available data, 846,184 completed applications were submitted to Marketplaces during the first month. Of the 106,185 individuals who selected a plan, 79,391 were plans in State-based Marketplaces (SBMs), and 26,794 in Federally-facilitated Marketplaces (FFMs). Enrollment includes people who have selected a qualified health plan, and who either have or haven’t paid the first month’s premium.
From the first day technology supporting the marketplace enrollment, especially the HealthCare.gov website for the FFMs in 36 states, has experienced glitches in the system, and shown security problems as well as failing to handle the volume of consumers enrolling that would be necessary to reach enrolment projections. A total 846,184 applications were completed during this period across Marketplaces including 326,623 completed applications submitted to SBMs, and 519,561 submitted to the FFMs. In addition to the electronic applications, the FFM also has 259,107 additional paper and call center applications that are not included in this total. The initial open enrollment period was set to end March 15, 2014 but has been extended to the end of March based on the initial complications consumers experienced. For coverage beginning Jan. 1, 2014, individuals must submit their first-months premium by Dec. 15, 2013.
HHS Press Release
Health Reform Back in the Courts
On October 22, a U.S. District Court judge ruled that a lawsuit challenging a major health reform regulation may proceed. Key provisions in the Affordable Care Act (ACA) designed to make health insurance more affordable are central to the success or failure of the health law. To make the purchase of coverage manageable for low-income families, the ACA provides subsidies to individuals whose incomes are at or below 400 percent of the federal poverty level (FPL) through tax credits if coverage is purchased through a health insurance exchange. The ACA directs that a health insurance exchange be established in every state, and in the absence of state action to do so, the ACA directs the federal government to establish and operate the exchange. In two separate sections the law provides for the establishment and operation of an exchange, in one scenario by a state and in the other by the federal government. The ACA specifically provides premium assistance tax credit to individuals enrolled in a state exchange, but remained silent on the issue in relation to a federal exchange.
The Internal Revenue Service (IRS), who was charged with the distribution of health insurance tax credits, issued final rules granting subsidies in the states where a federally operated exchange will be in existence. The IRS rule states that subsidies will be available to anyone “enrolled in one or more qualified health plans through an exchange,” and then defines “state exchanges, regional exchange, subsidiary exchange, and federally facilitated exchange.”
In May of 2013, a group of 12 plaintiffs, individuals and employers, filed suit in the U.S. District Court for the District of Columbia claiming the IRS rule is in violation of the explicit provisions of the ACA. Under the Administrative Procedure Act, agency action must be set aside if it exceeds statutory jurisdiction or is not in accordance with the law. In Halbig v. Sebelius, the plaintiffs claim that the IRS went beyond its legal authority as set up under the ACA when it issued a rule allowing for refundable tax credits–subsidies–for individuals who buy their health insurance through a federally established and operated exchange. “The IRS rule we are challenging is at war with the act’s plain language and completely rewrites the deal that congress made with the states on running these insurance exchanges,” said Michael Carvin, a partner at law firm Jones Day who is representing the challengers.
In a three hour hearing Oct. 22, the U.S. District Court for the District of Columbia denied motions by the administration to dismiss the case, and the plaintiffs for preliminary injunction which would block the governments’ ability to offer subsidies. If the IRS regulations are ruled invalid, individuals in states with a federal or partnership exchange will not receive premium assistance tax credits. If the plaintiffs prevail, then premium assistance tax credits will only be available in 18 states and D.C.
Judge Paul L. Friedman, who heard arguments on the motions Monday, put the case on an expedited schedule and declared he would rule on the merits on or before Feb. 15, 2014. There are now four cases, Halbig v. Sebelius, Pruitt v. Sebelius, King v. IRS, and Indiana v. IRS challenging the IRS regulation, and overall there are at least six lawsuits against the healthcare law pending in courts around the country.
Health Insurance Marketplaces are Open for Business
On Oct. 1, 2013, Health Insurance Marketplaces (or Exchanges) established under provisions of the Affordable Care Act (ACA) began enrollment in each state. Open enrollment will run from Oct. 1, 2013 through March 31, 2014. Health coverage obtained under the marketplaces begins Jan. 1, 2014. The U.S. Department of Health and Human Services (HHS) will support or fully run the Health Insurance Marketplace in 36 states, where at least two different health insurance carriers will offer an average of 53 qualified health plan choices in those states. States will operate the exchanges in all the other states and the District of Columbia.
A Sept. 25, 2013 HHS report provides examples of the health plan choices and premiums that will be available in the federally involved marketplaces. The report also includes similar information that is publicly available from the 11 states and the District of Columbia that are implementing their own marketplace.
As of Oct. 8, there also is a consumer price comparison feature on HealthCare.gov that allows any interested person to examine the range of prices and benefits for his or her county prior to giving their name or personal information or establishing a personal account.
U.S. Department of Health and Human Services
Affordable Care Act Health Insurance Marketplace Outreach and Enrollment Toolkit for Elected Officials
At the NCSL Health Summit in Atlanta, Georgia, Department of Health and Human Services Secretary Kathleen Sebelius unveiled a new outreach and enrollment toolkit for elected officials. The toolkit provides an overview of the new markeplaces that will go into effect January 1, 2014: a sample outreach and enrollment plan; sample materials for newsletter articles, and multipurpose messages; information on community resources; frequently asked questions; and HHS regional contact information. Open enrollment begins October 1, 2013 and last through March 31, 2014.
New Internal Revenue Service (IRS) Website on the Affordable Care Act (ACA) Tax Provisions
The IRS launched a new website August 15 outlining the ACA tax related provisions. The web page is divided into three main sections focusing on individuals and families, employers, and other organizations. It offers information concerning open enrollment for the new marketplaces ub 2014, filing requirements, premium tax credits, and links to legal guidance and other resources within the federal government.
The Centers for Medicare and Medicaid Services (CMS) Releases New Guidance for Eligibility Reviews Under the Payment Error Rate Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) Programs
August 15, 2013—CMS released new guidance to states on eligibility reviews under the PERM and MEQC programs to reflecting the changes to the way state will adjudicate eligibilty for applicants for Medicaid and the Children's Health Insurance Program (CHIP) starting in 2014. CMS will be implementing an annual 50-state pilot program strategy in January 2014 for fiscal years (FY) 2014 through 2016. This initiative will help inform CMS's approach to rulemaking that will undertake prior to the resumption of the PERM eligibility measurement component in FY 2017. The PERM program was developed in response to the Improper Payment Information Act (IPIA) of 2002 which fuocused on reducing improper payment across the federal government. The reviews take place on a rotating cycle with one third of states being reviewed each year. Under MEQC, statea must annually demonstrate the accuracy of their Medicaid eligibility determination process.
CMS is implementing an interim change in methodology for conducting Medicaid and CHIP eligibility review. Instead of the current PERM and MEQC review requirements in FY 2014 through 2016, all states will participate in the eligibility review pilot to provide more targeted, detailed information on the accuracy of eligibility determinations. CMS is working with states to develop pilot specifications and tools, and will be providing additional technical guidance and assistance going forward. Refer all questions to Chrissy Fowler at (410) 786-9232 or Barbara Richards at (410) 786-5920.
CMS Posts Arkansas Expansion Proposal
CMS has posted for public comment Arkansas's Medicaid expansion proposal, the Arkansas Health Care Independence Demonstration. Under the proposed demonstration waiver, Arkansas would use premium assistance to purchase coverage within qualified health plans (QHPs) offered in the individual market through the new marketplace for individuals eligible for coverage under Medicaid who are either (1) childless adults ages 19 to 65 with incomes at or below 138 percent of the federal poverty level (FPL) or (2) parents between the ages of 19 and 65 with incomes between 17 and 138 percent of the FPL. Arkansas has opted to operate a partnership exchange with the federal government in which they wil share responsibilities in the oepration of the exchange. The demonstration will be statewide and will operate during calendar years 2014, 2015, and 2016. Arkansas anticipates that approximately 225,000 individuals will be eligible for the demonstration. The state has already received conceptual approval for the concept, and in the process for final approval CMS will be accepting public comments until September 7, 2013. Comments may be posted directly on the CMS Idea Factory web page.
CMS Releases Final Navigator Rule
CMS released final rules governing the operation of Navigator and non-Navigator assistance personnel programs in Federally-facilitated Exchanges, including State Partnership Exchanges,and to non-Navigator assistance personnel in State Exchanges, and the non-Navigator assistance personnel in State Exchanges that are funded through federal Exchange Eastablishment grants. It also finalizes the requirement that Exchanges must have a certified application counselor program.
The rule creates conflict-of-interest, training and certification, and meaningful access standards; clarifies that any licensing, certification, or other standards prescribed by a state or Exchange must not prevent application of the provisions of title I of the Affordable Care Act (ACA); adds entities with relationships to issuers of stop loss insurance to the list of entities that are ineligible to become Navigators; and clarifies that the same ineligibility crit eria that apply to Navigators apply to certain non-Navigator assistance personnel.
The final rule also directs that each Exchange designate organizations which will then certify their staff members and volunteers to be application counselors that assist consumers and facilitate enrollment in qualified health plans and insurance affordability programs, and provides standards for that designation.
CMS Releases Eligibility Final Rule
CMS published a final rule July 15, 2013 implementing provisions of the ACA finalizing new Medicaid eligibility provisions; changes related to electronic Medicaid and the Children’s Health Insurance Program (CHIP) eligibility notices and delegation of appeals; modernizing and streamlines existing Medicaid eligibility rules; revising CHIP rules relating to the substitution of coverage to improve the coordination of CHIP coverage with other coverage; and amends requirements for benchmark and benchmark-equivalent benefit packages to ensure that these benefit packages include essential health benefits and meet certain other minimum standards.
This rule also implements specific provisions including those related to authorized representatives, notices, and verification of eligibility for qualifying coverage in an eligible employer-sponsored plan for Affordable Insurance Exchanges. This rule also updates and simplifies the complex Medicaid premium and cost sharing requirements, to promote the most effective use of services, and to assist states in identifying cost sharing flexibilities. It includes transition policies for 2014 as applicable. The effective dates for provisions in the final rule vary, but all will be in complete effect as of January 1, 2014.
Administration Delays Employer Mandate Enforcement
On July 2, 2013, Assistant Secretary for Tax Policy Mark J. Mazur posted an announcement on the Treasury Notes Blog that the Department of the Treasury would be providing an additional year before implementing the ACA mandatory employer and insurer reporting requirements. The ACA requires that health insurance issuers, self-insuring employers, government agencies, and other providers of health coverage annually report information regarding the health insurance which employers offer to their full-time employees. The statute imposes a penalty on large employers, employers with more than 50 employees, who fail to offer minimum essential coverage to its full-time employees (and their dependents) under an eligible employer-sponsored plan. The statute defines a full time employee as one who works at least 30 hours per week. The annual penalty is $2000 times the number of employees and is assessed monthly for any month in which coverage is not offered. An Internal Revenue Service notice released July 10 states that the transition relief will provide additional time for provide employers, insurers, and other providers of minimum essential coverage time to adapt their health coverage and reporting system. According to a report by PricewaterhouseCooper, the majority of private companies (56 percent) say they’re already in compliance with the upcoming provisions, and 72 percent consider themselves prepared for the next wave of the ACA’s requirements.
The action has drawn criticism from Republican Committee leaders in the House who have requested that the Congressional Budget Office (CBO), in consultation with the Joint Committee on Taxation, provide estimates of the announcement’s full budgetary effect. Proposed rules for the information reporting provisions are expected to be published this summer. The House plans to vote on a measure soon that will delay by one year the implementation of both the individual mandate and the employer mandate elements of the ACA. House Speaker Boehner said the measure would formally put the administration’s delay into law, while providing parity for the individual side.
White House Blog-- http://www.whitehouse.gov/blog/2013/07/02/we-re-listening-businesses-about-health-care-law
IRS Notice-- http://www.irs.gov/pub/irs-drop/n-13-45.PDF
Commonwealth Fund Report: Implementing The Affordable Care Act: Key Designs for State-Based Exchanges, July 2013
This report examines key design decisions made by the 17 states and the District of Columbia that chose to establish a state-based exchange. The analysis finds that states made significant progress in structuring their exchanges, with states varying in their design decisions. Many states expect to exceed some federal requirements—to collect and display quality data, for instance—for 2014. These findings suggest that states capitalized on the flexibility provided by the Affordable Care Act to tailor their exchanges to their unique needs and made decisions with an eye towards outcomes, such as enrollment, consumer experience, and sustainability. These findings also suggest that states’ initial decisions will inform future exchange implementation and that states will adjust their decisions while continuing to adopt innovative approaches to accomplish policy goals. (See an interactive map for the status of each state's marketplace.)
New Congressional Research Service Reports Released
The Congressional Research Service (CRS) released two new reports focusing on employer penalties and small business. The first report, Potential Employer Penalties Under the Patient Protection and Affordable Care Act, was published July 3, 2013 and provides information on the statutory requirements and the proposed regulations issued to implement these statutory requirements in December 2012. IT does not yet reflect the proposed administration changes regarding the employer mandate. The second report, Health Care Reform and Small Business, was published July 5, 2013 and considers issues in the employer penalty for small business.
NCSL State Federal Relations Staff Contacts
Joy Johnson Wilson, NCSL Federal Affairs Counsel, Health Policy Director at email@example.com or Rachel B. Morgan RN, BSN, NCSL Health Committee Director, at firstname.lastname@example.org .