The plot thickens. The president endorses amendment of the Affordable Care Act (ACA) to encourage innovation by the states while his administration implements and innovates at an unabated pace. Interesting times.
The following is the Health Care Reform Implementation Update for the week of February 28, 2011.
A new tracking poll from the Kaiser Family Foundation shows that only 52 percent of Americans know that the ACA is still law, while 22 percent of Americans believe it is not, and 26 percent say they don't know. The poll also shows that 48 percent of Americans have an unfavorable view of the law and 43 percent have favorable a view. Six in 10 Americans said they oppose the idea of lawmakers using the legislative budgetary process to defund implementation, with the main reason being that it's “not the way our government should work.”
After a series of private conversations at the National Governors' Association’s semiannual meeting this past weekend, group leaders formed a bipartisan committee to determine what kind of flexibility over Medicaid the states could agree to seek from the federal government. It is unclear whether the bipartisan leaders will be able to find common ground given their partisan views of Medicaid and the new health care legislation; however, both Democratic and Republican states realize they cannot afford the Medicaid programs they currently have, let alone more expensive ones. Traditionally, states have been free to control Medicaid spending by making changes to eligibility requirements, but under the ACA’s “maintenance of effort” provision, states stand to lose a federal match for their Medicaid dollars if they restrict enrollment standards before new health insurance exchanges open in 2014. Republican governors are pushing for the federal government to provide Medicaid block grants because this would provide states with the flexibility to manage the safety net for the poor in a responsible way. The administration, however, is not eager to transform Medicaid from an entitlement program to a block grant, which would be a change akin to the transformation welfare underwent in the mid-1990s, when the government began to give state a fixed sum of money each year, along with the latitude to spend it as they wanted.
On Monday, February 28, President Obama told state governors that he would give states more flexibility in implementing health reform. Though under the ACA states were not permitted to ask for waivers from PPACA provision until 2017, President Obama says they can now do so earlier, starting in 2014.
On Tuesday, February 22, HHS announced over $45 million in grants to 13 states for the implementation of PPACA as part of the Money Follows the Person Program, a component of the ACA which is designed to help states alleviate their Medicaid-related budget burdens. The states that will receive grants are Colorado, Florida, Idaho, Maine, Massachusetts, Minnesota, Mississippi, Nevada, New Mexico, Rhode Island, Tennessee, Vermont and West Virginia. These states will join the 29 states and the District of Columbia, which are already program participants.
On Thursday, February 24, HHS announced that nearly $200 million in new grant funds are available to assist states in developing programs that will make health insurance premiums more transparent and to empower states to stop unreasonable premium increases.
Also on Thursday, February 24, CMS Administrator Donald Berwick said CMS is planning to issue a notice for proposed rule-making for accountable care organizations shortly. Dr. Berwick said ACO's will operate in the context of Medicare's fee-for-service program and will not be structured as revised managed care models. Dr. Berwick also discussed the Medicare Innovation Center, which received $10 billion in funding from the ACA and is tasked with funding programs and technologies that provide lower cost care. Berwick described CMI as "the jewel crown of the ACA." Finally Berwick said CMS plans to roll out a major patient safety initiative to address health-care acquired conditions.
Director of CMS’ center for Medicaid, CHIP and Survey & Certification Cindy Mann said in a clarification letter to states that state Medicaid directors may increase “premiums” charged to parents of children enrolled in Children’s Health Insurance Programs. This instruction clarifies requirements for states, which understood the so-called maintenance-of-effort requirements placed on them after they accepted additional Medicaid funding through the American Recovery and Reinvestment Act and the ACA to prohibit such increases.
CMS is inviting states to compete for grants to fund programs demonstrating change in health risk and outcomes. This $100 million program for Medicaid Incentives for Prevention of Chronic Disease Program is mandated by the ACA and will enable states to offer incentives to Medicaid enrollees to adopt healthy behaviors such as quitting smoking or losing weight. CMS will accept only one application for state, State Notices of Intent are due by April 4, 2011, and complete Grant Applications are due by May 2, 2011.
On Wednesday, February 25, CMS encouraged early adoption of electronic health records and touted programs that offer bonuses to health care providers who use electronic health records. CMS reported that more than 21,000 providers have already indicated they plan to apply for Medicare and Medicaid incentives, and 11 states have already launched Medicaid EHR programs.
On Thursday, February 24, HHS announced funding to help states evaluate health insurance rates and run preventative medicine programs. According to Steve Larsen, the Director of the HHS Center for Consumer Information and Insurance Oversight, starting in August, states can apply for three-year grants worth $3 million to create or enhance their reviews of the premiums health insurance companies charge. A year later, they can apply for a second round of two-year grants worth $2 million. The federal government is also offering about $50 million of grants to help states with the extra workload that comes with increased rate evaluations and to reward states that have authority to block unjustified insurance rate hikes.
On Tuesday, February 22, U.S. District Judge Gladys Kessler dismissed a lawsuit filed by the American Center for Law and Justice, a Christian legal group, on behalf of five Americans who have chosen not to buy health insurance for years. The group argued that the individual mandate violates the religious freedom of those who rely on God to protect them. VA Attorney General Ken Cuccinelli, who has lead one of the main charges against the ACA's constitutionality, said this decision was the best of those that declare the ACA constitutional. He said that, "of the three rulings that are wrong, it is the best written of the three."
The 26 states and a business group that successfully challenged the ACA in a Florida federal court filed a response to a Justice Department request on Wednesday (2/23). In their filing the states say that because a federal judge in Florida declared the law unconstitutional, they should not need to implement it. The Justice Department would like the judge to order the states to follow the law while the case is pending review in a higher court.
According to Milliman’s 2010 Group Health Insurance Survey, health insurers are adjusting their long-term strategies in response to the ACA by preparing to participate in Health Insurance Exchanges, strengthening self-insurance options for employers, and expanding into markets for individual insurance and small and large group insurance. Insurers also indicated that they plan to encourage providers to use evidence-based medicine, risk-sharing agreements with providers, and to offer incentives and bonus programs for medical providers.
On Friday, February 25, HHS released a report, which shows that the ACA has provided or offered $2.8 billion in funding to assist states in improving health care benefits.
In New Jersey on Tuesday, February 22, Governor Christie presented a $29.4 billion budget, which cuts state spending by 2.6 percent. He proposed that employees pay 30 percent of their health care premiums.
Wisconsin Governor Scott Walker is trying to pass a budget repair bill, under which the Department of Health Services would drop from Medicaid non-pregnant, non-disabled adults who earn more than $14,484 annually. Currently facing a $3.6 billion deficit over the next two years (half of which is associated with Medicaid costs), the bill would save the state anywhere from $50 to $80 million.
Though Georgia Insurance Commissioner Ralph Hudgens strongly opposes the ACA, on Wednesday, February 23, he said that Georgia is moving forward with plans to create and run its own insurance exchange.
On Friday, February 25, South Carolina Governor Nikki Haley said that though the state will continue to fight the ACA requirements, it will begin to implement its provisions.
Even though Oklahoma has filed a lawsuit challenging the ACA, the state has decided to accept a $54.6 million federal grant to develop information technology infrastructure to operate a health exchange.
On Tuesday, February 22, a bill, which aims to block the ACA requirement that most people buy health insurance or face a penalty, passed the North Carolina House of Representatives, largely along party lines by a 69-49 vote. It now heads to the desk of Gov. Beverly Perdue, who has indicated that she would let it become law without her signature. The House initially approved the measure two weeks ago, but the chamber needed to accept Senate changes to it. The measure also directs Attorney General Roy Cooper to defend the challenge.
On Thursday, February 24, New York’s Health Department proposed to adopt a number of changes to curb health expenses in the coming year, including putting a cap on Medicaid spending. The state’s Medicaid redesign panel will vote on a final package on Tuesday, March 1. New York’s fiscal year begins on April 1, and the state faces a $10 billion deficit.
Though those who testified in Idaho on Friday made clear that they felt the bill to nullify the health care overhaul was an appropriate means of preventing federal invasion into their everyday lives, and though many of those who voted believe the ACA to be unconstitutional, on Friday, February 25, the Idaho Senate dumped the measure that sought to declare the ACA void and would make Idaho return federal money it received to implement the reforms. The Senate President Pro Tempore and the Senate Majority Leader said the courts are really the appropriate venue for the issue.
On Wednesday, February 23, the Tennessee Senate passed the “Health Freedom Act” along party lines, 21-10. The Act would allow Tennesseans to opt out of the ACA. The House Commerce, Labor and Agriculture Committee still needs to hear the companion bill.
Pennsylvania's adultBasic insurance was created in 2001 and is one of only a handful of health plans funded entirely by states to provide coverage to low-income adults who do not qualify for Medicaid. AdultBasic is paid for by a combination of funds from the state’s tobacco settlement and donations from the state’s four Blue Cross and Blue Shield insurance companies. It cost $166 million 2010. As the tobacco money dwindles, and the cost of health care increases, the state needs to identify other funds to make up the difference. Though officials are searching, they have not yet identified any. Shortly after taking office in January, Governor Corbett, a Republican, announced that the program was out of funding and coverage would end February 28.
A piece in the Wall Street Journal on Tuesday, February 22, cautioned that though Republicans are now trying to repeal or defund “Obamacare,” much damage has already been done, and even if the law is repealed or defunded, new laws will need to be passed to undo this damage. The Journal reported that the most significant change was a wave of consolidation in the health industry. Because of ACA requirements, insurers have already begun raising premiums and cutting payments to doctors and hospitals. The smaller insurance companies are being forced to sell themselves to larger entities, and doctors and hospitals, too, are beginning to move to large institutions.
The House is tentatively scheduled to consider and approve legislation that would repeal a provision from the ACA that requires companies to report goods and services transactions worth $600 or more annually to the IRS. On Wednesday, March 2, the Brookings Institution held an Oxford-style debate entitled "The Constitutionality of the Individual Mandate." Also on Wednesday, March 2, the Senate Finance Committee held a hearing on efforts to prevent health care fraud. On Friday, March 4, the Alliance for Health Reform will hold a briefing entitled "Medicaid: A Primer on the Federal-State Partnership." Panelists from CMS, Kaiser Commission on Medicaid and the Uninsured, the Kansas Health Policy Authority and the Brookings Center on Children and Families will speak.
As always, please feel free to contact us with any questions.
To view our compilation of this week's health care reform implementation news, click here.