Health Care Reform Implementation Update – July 10, 2014

On June 30, in one of the most highly anticipated cases affecting the Affordable Care Act (ACA), the Supreme Court ruled that closely held companies could assert a “religious objection” to the ACA contraceptive coverage mandate. Members on the Hill reacted both positively and negatively, with some calling for legislative action. The Centers for Medicare and Medicaid Services (CMS) released annual payment rate and policy proposed rules for home health, end-stage renal disease, hospitals, ambulatory surgical centers and the physician fee schedule, and the Internal Revenue Service (IRS) released a final rule on tax credits for employee health insurance expenses for small employers.


Numerous congressional members reacted to the Supreme Court’s contraception mandate ruling quickly after it was announced. Senate Republican Leader Mitch McConnell (R-Ky.) hailed the decision as evidence that “the Obama administration cannot trample on the religious freedoms Americans hold dear.” Many Democrat senators said they would introduce legislation that would undermine the Supreme Court’s decision. For example, Senator Dick Durbin (D-Ill.) says that he will introduce a bill that will require corporations opting out of the contraception mandate to disclose that to employees and job applicants, and on July 9 a group of Senate Democrats introduced a bill that would not allow for-profit corporations to seek exemption from the ACA contraception mandate.

On June 27, Senators Jay Rockefeller (D-W.Va.) and Pat Roberts (R-Kan.), chairman and ranking member of the Senate Finance Committee’s Subcommittee on Health, sent a letter to CMS Administrator Marilyn Tavenner, requesting that CMS suspend recent guidance regarding Medicare Part D and hospice payments for certain drugs. Seventy senators signed the letter in which they specifically request clarification from CMS on the process it uses to authorize payments to Medicare Part D hospice patients. The letter claims that the recent updated guidance has caused confusion over who is ultimately responsible for paying for medications for hospice patients and may therefore delay access to those medications.

On June 26, Congresswoman DeLauro (D-Conn.) and Senators Sherrod Brown (D-Ohio) and Richard Blumenthal(D-Conn.) introduced a bill that would require insurance companies to finalize their Medicare Advantage (MA) physician networks 60 days before the fall open enrollment period begins and would prohibit the companies from dropping physicians from their networks without cause until the following open enrollment period. The bill, “The Medicare Advantage Participant Bill of Rights Act,” is intended to ensure that MA patients will not be forced to switch to higher cost or out-of-network doctors mid-year. The bill would also require that Medicare Advantage insurers disclose their reasons for ending contracts with providers. The legislation was introduced in response to cuts in provider networks made by UnitedHealth Group last year.


On June 26, the IRS issued a final rule establishing eligibility requirements for the ACA small business tax credit. Employers are eligible if they have no more than 25 “full time equivalent” employees, the employees earn no more than $50,800 in average annual wages, and the employers contribute at least 50 percent of the cost of premiums. Once those criteria are met, the employers can claim a tax credit equal to 50 percent of the premiums they paid.

On July 1, the Centers for Medicare and Medicaid Services (CMS) announced a proposed rule that would cut Medicare payments to home health providers. According to CMS, the 0.3 percent cut amounts to $58 million. The proposed rule would also ease the requirement that physicians have to provide a detailed narrative of a patient’s circumstances to CMS before they could determine whether or not a patient was eligible for home health care.

On July 2, CMS proposed a rule regarding end-stage renal disease (ESRD) policies and payment rates that would increase total Medicare payments by 0.3 percent or $30 million in 2015, with slight variations in the increase depending on the type of ESRD facility. For example, urban facilities that treat ESRD will see a 0.4 percent increase, while rural facilities can expect payments to decrease by 0.5 percent. The rule also proposes to change payment policies related to coverage of and payment for durable medical equipment, prosthetics, orthotics and supplies, as well as to modify the quality incentive program for ESRD providers.

On July 3, CMS released a proposed update to payments under the Medicare hospital outpatient prospective payment system (OPPS) and payments to ambulatory surgical centers (ASC) for 2015. CMS proposes to raise Medicare hospital outpatient payments by 2.1 percent. The proposed rule would also increase payments to ASCs by 1.2 percent in 2015. The update intends to further the transition from a fee schedule model to a complete prospective payment system. The proposal would also continue to provide higher payments to specific types of rural and community hospitals and cut Medicare reimbursements to hospitals that do not meet certain outpatient quality reporting requirements by 2 percent.

Also on July 3, CMS released a proposed rule on physician payments that would hold payments flat for the first three months of 2015, as was required under the “doc fix” legislation enacted earlier this year. The rule further proposes to incorporate a notice and comment process for determining changes to payment rates beginning in 2016; a new payment for non-face-to-face chronic care management services provided by primary care physicians to patients with two or more chronic conditions; and modifications to several physician quality reporting initiatives, such as the Physician Quality Reporting System, the Medicare Electronic Health Record Incentive Program and the Medicare Shared Savings Program (MSSP). With respect to the MSSP, the physician proposed payment rule would change the quality measures for the Medicare Shared Savings Program for accountable care organizations (ACOs) including increasing the total number of measures that the agency uses for quality reporting and providing additional quality improvement awards to ACOs for improving the quality of care they provide over time.

On July 7, Health and Human Services (HHS) announced that it will award $83.4 million in grants to community and tribal clinic residency programs for primary care physicians. The grants are intended for federally qualified health centers, rural clinics, tribal clinics and similar community health providers. Specifically, the grants will support graduate medical education programs at Teaching Health Centers (THCs), which are designed to expand primary care services in community-health based settings. The funding will support training for 550 residents during the 2014-2015 academic year.

Last week, the HHS Office of the Inspector General (OIG) released a report analyzing enrollment processing by the federal insurance exchange and state operated exchanges between October and December 2013. The OIG found that the federal exchange as well as some state exchanges had processed millions of applications that contained either inconsistent or erroneous information. It also reported that exchanges were unable to resolve most of the issues, particularly those related to citizenship and income. The federal exchange was unable to resolve issues, the OIG reported, because its eligibility system was not fully operational at the time. CMS agreed with the OIG’s recommendation that it develop a detailed plan on how it will resolve the inconsistencies and to make the plan public.

CMS announced that some Medicare Part B providers could appeal certain Medicare claims decisions without first having the decision reviewed by an administrative law judge. Instead, under the pilot program, the providers could utilize “Settlement Conference Facilitation” — an alternative dispute resolution process that uses mediation principles to resolve their disputes.


On July 2, the White House Council of Economic Advisers released a report intended to highlight the negative effect to states that chose not to expand Medicaid under the ACA. According to the report, the states that chose to opt out of Medicaid expansion lost a total of $88 billion in federal funding through 2016. The report also said that Medicaid expansion in the opt-out states could have equated to 400,000 new jobs and 5.7 million more people with insurance. The report used data from the Urban Institute and is intended to place added pressure on the states refusing Medicaid expansion.


The Supreme Court ruled on June 30 that closely held, for-profit employers, such as Hobby Lobby, could assert a “religious objection” to the ACA contraceptive coverage mandate. Hobby Lobby and Conestoga Wood argued in the case that four of the 20 types of contraception the ACA required them to offer in insurance plans to their employees violated their religious beliefs. The Court held that the ACA provision violated the Religious Freedom Restoration Act and the religious liberties of some small businesses. The Court also wrote that the government could directly provide birth control to women, rather than through employer-provided health coverage.


On July 1, Indiana Governor Mike Pence (R) submitted a request to CMS to expand Medicaid using a state developed plan. The proposal, the Healthy Indiana Plan 2.0, would still rely on federal funding for Medicaid expansion but is also intended to promote personal responsibility through the use of health savings accounts and patient feedback.

In a report requested by Senator Orrin Hatch (R-Utah), the Government Accountability Office (GAO) revealed information on small group policy provider premiums across states. The report concluded that Connecticut and Alaska small businesses and nonprofits pay more than other states in providing health care coverage to their workers. Connecticut’s per individual average annual premium for small business was $6,080 in 2013, compared to Kentucky’s per individual premium cost of $1,311. Senator Hatch requested the report in order to establish a baseline of small group premium costs before the ACA was implemented in an effort to illustrate premium increases after implementation occurred.

During the last week of June, the Federation of State Medical Boards (FSMB) released draft legislation that would promote the use of telemedicine across the country. The draft legislation takes the form of a compact agreement between the states that would choose to participate. Standards for physicians that would perform telemedicine services under the compact would be set by an interstate commission. FSMB members from various states have claimed that they will encourage their state legislatures to consider the draft legislation.

To view our compilation of recent health care reform implementation news, click here.

To view and search our library of Health Care Reform Implementation Updates, visit our Affordable Care Act Databook.

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