Health Care Reform Implementation Update

On Monday, November 22, 2010, the Department of Health and Human Services (HHS) issued its long-awaited regulations on medical payouts required under the health care law, a standard known as the medical loss ratio (MLR). The new rules say that HMOs must spend 80% (for individuals) or 85% (for groups) of all premium dollars, net of taxes, on health care. So if one pays $15,000 a year for family coverage, on average, $12,000 must go to doctors, pharmacies, hospitals, or for other care. The rest can be spent on insurance company marketing, overhead, and profits. If these MLRs are less than 80% or 85%, HMOs must provide a refund to their plan members. HHS Secretary Kathleen Sebelius estimates 9 million people will get refunds under the MLR rules next year. The rebates may aid Democrats attempting to fend off Republican attacks on the Patient Protection and Affordable Care Act (PPACA).
Sen. Olympia Snowe (R-Maine), the only Republican senator to vote for a version of President Obama’s health care bill, has signed onto an amicus brief challenging the law’s individual mandate in the federal court in Florida. Sen. Snowe was joined by Sen. Susan Collins (R-Maine) in the effort lead by Senate Minority Leader Mitch McConnell (R-Ky.), who has now secured the signatures of 32 Senate Republicans.

Sens. Ron Wyden (D-Ore.) and Scott Brown (R-Mass.) introduced the “Empowering States to Innovate Act.” The legislation would allow states to develop their own health care reform proposals that would preempt the federal government’s effort. If a state can think of a plan that covers as many people, with as comprehensive insurance, at as low a cost, without adding to the deficit, the state can get the money the federal government would have given it for health-care reform but be freed from the individual mandate, the exchanges, the insurance requirements, the subsidy arrangement, and more.

HHS is awarding $8 million in federal funding from PPACA for existing community health center cooperatives. According to HHS, the organizations may use the funding for, among other things, meaningful-use health IT. Starting in 2011, the Health Information Technology for Economic and Clinical Health (HITECH) Act will spend $36 billion+ to encourage providers to use health IT such that their electronic medical records meet the government’s test for “meaningful use.”

On Tuesday, November 16, officials at CMS launched the Center for Medicare and Medicaid Innovation (CMI) that aims to fulfill the goals of improving individual care, coordinating between providers, and promoting prevention. The launch involved a stakeholder meeting including representatives from the health care industry, consumers, states and employers. The goal is to improve care in settings such as hospitals, nursing homes, and doctors’ offices while also addressing chronic issues such as obesity and heart disease. CMS also announced the beginning of new demonstration projects that will support efforts to better coordinate care and improve health outcomes for patients.

Eight months into the new law there is a growing frenzy of mergers involving hospitals, clinics and doctor groups eager to share costs and savings, and cash in on the incentives. They have deployed a small army of lawyers and lobbyists trying to persuade the Obama administration to relax or waive a body of older laws intended to thwart health care monopolies, and to protect against shoddy care and fraudulent billing of patients or Medicare.

On Wednesday, November 17, CMS Administrator Donald Berwick testified before the Senate Finance Committee, reflecting his strong support for PPACA, but the expected fireworks never materialized as Republicans were given only a few minutes to ask questions and treated Berwick gently.

At least two newly elected House Republicans say they won’t accept the congressional health insurance program, just days after Democrats highlighted that the new members campaigned on repealing the health care reform law. Another freshman Republican, Andy Harris of Md., has complained about the length of time it will take for his new coverage to take effect, prompting additional pressure from Democrats who want to see reform naysayers forfeit their federally provided insurance coverage.

Next Thursday, The Alliance for Health Reform will hold a discussion titled “The Health Workforce Dream Team: Who Will Provide the Care?” This briefing will explore the question of how to ensure enough health care workers given the growing, aging population and its ever-increasing chronic care needs.  Next Thursday and Friday, the Office of the National Coordinator for Health Information Technology will hold a Web meeting on standards, implementation specifications and certification criteria for the electronic exchange and use of health information for purposes of adoption, consistent with the implementation of the Federal Health IT Strategic Plan.

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