Health Care Reform Implementation Update December 23, 2014

The 113th Congress concluded its final legislative work with a $1.1 trillion spending bill, a tax extenders package, and a flurry of nomination confirmations including a new surgeon general. Additionally, the Affordable Care Act (ACA) was the focus for the last House Oversight and Government Reform Committee hearing in the 113th Congress. The Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) also had a busy end of the year agenda with announcements and guidance regarding ACA enrollment numbers, health center and state innovation grant awards, and a plan for health care technology advancement in the next year.


On December 13, the Senate passed a $1.1 trillion spending bill for Fiscal Year 2015. Significant health policy changes some lawmakers wanted in the bill, such as a permanent repeal of the sustainable growth rate (SGR) formula, a continuation of increased reimbursement to Medicaid providers, and funding for the Children’s Health Insurance Program (CHIP) were not included. The spending bill does however, cap the risk corridor program, allow nonprofit health care plans, namely Blue Cross Blue Shield, to maintain their special tax status even if their medical loss ratios fall below 85 percent, and allows plans sold to Americans living abroad to be exempt from many ACA requirements.

On December 9, the House Oversight and Government Reform Committee held a hearing. Lawmakers questioned CMS Administrator Marilyn Tavenner about the incorrect ACA enrollment numbers announced by HHS for 2013. Jonathan Gruber, an economist who served as a government consultant during the drafting of the ACA and who recently made controversial statements about the law’s enactment, was also a witness at the hearing. In her testimony, Administrator Tavenner apologized to the committee for the incorrect numbers released by HHS, however, the majority of the hearing was focused on Gruber. In his testimony and throughout his responses to questions, Gruber apologized for his remarks and claimed that his prior statements regarding the ACA were “arrogant” and “mean.” Darrell Issa, the outgoing chairman for the committee, has since subpoenaed Gruber’s financial statements after Gruber declined to provide details regarding money he received from the federal government for his consultant services.

On December 15, the Senate approved Vivek Murthy as surgeon general by a narrow 51-43 vote. Dr. Murthy’s nomination came under scrutiny from several lawmakers after it was revealed that he supported stricter gun control laws and was an active supporter of the ACA. Opponents of Murthy’s nomination were primarily Republican members, but three Democrats also voted “no” on his appointment.


On December 19, HHS, and the Departments of Labor and Treasury published a proposed rule that would allow, in certain circumstances, group health sponsors to offer wraparound coverage to employees purchasing individual health insurance in the private market or through health insurance exchanges. Comments will be accepted for 30 days from the proposed rule’s publication on December 23.

Cindy Mann, deputy administrator and director for Medicaid and the Children’s Health Insurance Program (CHIP), announced that she will be leaving CMS at the end of January. Vikki Wachino, deputy director of Medicaid and CHIP, will be acting director until a permanent replacement for Mann is found.

On December 11, CMS released information regarding its plan for implementing a star ratings program for home health agencies (HHAs). Under the proposal, CMS will calculate a rating based on 10 of the 27 process and outcome measures that HHAs already report to the agency. CMS plans to ask for input on the methodology and to implement the ratings program in the summer of 2015.

On December 15, CMS released new guidance on the Open Payments program regarding payments made by manufacturers and group purchasing organizations (GPOs) to medical education suppliers that are then paid to physicians as speaking fees. The guidance states that those payments would have to be reported if the identity of the physicians receiving the fees was learned by the manufacturer or GPO during current reporting year or the first six months of the following reporting year. The guidance is somewhat at odds with the agency’s October 2014 Final Rule that said that payments for educational events were not reportable if not directed to specific physicians.

On December 11, CMS released a proposed rule to revise its existing Medicare and Medicaid participating provider and supplier regulations to clarify that same-sex spouses need to be given equal treatment as opposite-sex spouses in situations where state law or the providers’ policies give certain rights or privileges to patients’ opposite-sex spouses. The proposed rule was issued in light of the Supreme Court’s invalidation of certain provisions of the Defense of Marriage Act. The proposed rule would apply to nearly all hospitals, nursing homes, surgery centers, hospices and mental health clinics that accept either program.

On December 9, CMS announced that it had awarded $36.3 million in funding mandated by the Affordable Care Act to more than 1,100 health centers to reward those centers’ achievements in quality improvement and to invest in ongoing quality improvement activities. The awardees were selected based on their quality performance achievements in a variety of clinical measures and on the awardees use of electronic health records to report clinical quality measure data.

On December 8, HHS’s Office of the National Coordinator for Health Information Technology (ONC) released its “2015 – 2020 Federal Health IT Strategic Plan.” Under the plan, the ONC will expand use of health information technology, and improve interoperability, care delivery and research and innovation. Public comments on the plan are due by February 6, 2015, and the ONC will release a final version of the plan later in 2015.

On December 16, HHS reported that almost 2.5 million people had chosen a health plan on as of December 12. The entire open enrollment period ends on February 15, 2015 but for those individuals that would like health insurance coverage on January 1, 2015, the deadline for enrollment was December 15. Some states, such as Idaho and New York, have extended that deadline to December 20 and beyond so that more individuals can start receiving benefits January 1.


On December 18, the U.S. District Court for the District of Columbia dismissed a lawsuit brought by the American Hospital Association (AHA) against HHS where the AHA had sought an order to compel the HHS to process hospitals’ administrative appeals according to timelines set in statute. The court said that HHS’s delay in processing the appeals was “not so egregious as to warrant intervention.”


On December 16, HHS announced that it will be providing $665 million in grants to states under its State Innovation Models initiative fund. These funds will be used to improve quality, affordability and expand the use of health information technology. The grants will be given to 28 states and the District of Columbia, as well as three U.S. territories.

Vermont’s Governor Peter Shumlin stated that due to the large tax increases that would be needed to pay for a single-payer system in the state, Vermont will not be pursuing such a system at this time. Pushback from big business in the state and uncertainty over state lawmakers’ ability to craft a deal to pay for the single-payer program also contributed to the decision.

Arkansas, Connecticut, Massachusetts, New Hampshire, New York and Rhode Island will receive about $189 million in exchange establishment grants to develop their state ACA exchanges, HHS announced December 15. Arkansas is receiving most of the funding as it attempts to transition from a federal to a state-run ACA exchange.


According to a report released by the Urban Institute, primary care physicians may experience average Medicaid reimbursement cuts of about 40 percent after the ACA primary care Medicaid fee bump expires on December 31 of this year. The ACA included a mandatory two-year increase in Medicaid reimbursement for primary care services to match Medicare payment levels.


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