Health Care Reform Implementation Update August 12, 2014

August recess has begun on Capitol Hill. Congressmen and women and senators are home in their districts and states, and Capitol Hill staffers are catching up on piled up work. Nonetheless, last week Congressman Kevin Brady (R-Texas) released a discussion draft of a bill that intends to stem waste, fraud and abuse in Medicare. The Centers for Medicare and Medicaid Services (CMS) released final payment rules for inpatient hospitals and hospice providers and announced that it would be restarting their recovery audit contractor program; and the Department of Health and Human Services (HHS) announced grant awards to states for the Home Visiting Program, which was established under a provision in the Affordable Care Act (ACA).


On August 7, House Ways & Means Health Subcommittee Chair Rep. Kevin Brady (R-Texas) released a discussion draft of a bill he intends to introduce regarding Medicare waste, fraud and abuse. The bill, the Protecting Integrity in Medicare Act of 2014, includes security provisions for social security numbers and provider education initiatives, locks those beneficiaries with a high risk of abusing prescription drugs into particular pharmacies to cut down on prescription drug abuse, and expands the already existing prior authorization demonstration for scheduled ambulance trips. Congressman Brady used data from the recent Medicare Payment Advisory Commission (MedPAC) report that pointed to $44 billion in improper payments to providers due to incorrect or fraudulent Medicare payment claims to support the need for the bill. According to Rep. Brady, the bill includes ideas from bipartisan members of the committee.


On August 4, the CMS released final payment rules for inpatient hospitals and hospice providers. Under the inpatient hospital final rule, Disproportionate Share funds, which help to reimburse uncompensated care costs for hospitals that serve a significant number of low-income patients, are reduced. Though DSH payments are reduced, inpatient hospital payments are increased by 1.4 percent for some acute care hospitals, payments to long term care hospitals will increase by 1.1 percent or an estimated $62 million for fiscal year 2015 under the final rule. CMS chose not to replace or revise its controversial “two midnight” provision in the rule.

Under the hospice final rule, payments to hospice providers will increase by an estimated 1.4 percent in fiscal year 2015, an amount equal to $230 million. Hospice providers will also be required to notify CMS within five days of a beneficiary’s choice to use the Medicare hospice benefit, as opposed to the three-day requirement that was included in the proposed rule from earlier this year. If the notice is not filed within five days of the beneficiary’s decision, the hospice provider itself, rather than CMS, will be responsible for the costs of care during the time between the beneficiary election and when the notice was filed.

Also on August 4, CMS announced that it would restart its Recovery Audit Contractor (RAC) program on a limited basis, after putting the program on hold earlier this year. The RACs would be permitted to conduct a small number of automated and complex claims reviews including those related to spinal fusions, outpatient therapy services, durable medical equipment, and cosmetic procedures. CMS said that the RACs would not be auditing short inpatient stay claims under the restart. The agency is in the process of procuring new RAC contracts.

On August 7, CMS announced that it would delay the review deadline of its Open Payments System, which provides information on payments that doctors receive from drug and medical device makers. The agency said that the delay was needed to investigate reported issues with some of the payment data. Earlier last week, the American Medical Association and more than 100 other physician groups asked CMS for a six-month delay in the publication of the database, which the agency had previously intended to publish on September 30.

The Treasury Department’s Inspector General for Tax Administration (TIGTA) released the results of its investigation examining the IRS’s accuracy in providing taxpayer information to exchanges. TIGTA found that during the month of October 2013, the IRS was 100 percent accurate in verifying the maximum monthly premium tax credits that an individual could be eligible for under the ACA, and over 99.9 percent accurate in verifying household income and family size.


On July 31, the parties who lost in King v. Burwell, filed a petition with the U.S. Supreme Court asking the Court to review the case. In the case of Halbig v. Burwell, the Department of Justice, which lost in that U.S. Court of Appeals for the District of Columbia, filed a review petition with the U.S. Court of Appeals for the District of Columbia asking for a rehearing before the full appellate court. The maneuvers were the result of the July 22 rulings from the two appeals courts, which came to different conclusions on the legality of the federal government providing premium subsidies for individuals receiving health coverage through the federal exchange. In Halbig v. Burwell, a three-judge panel at the U.S. Court of Appeals for the District of Columbia held that the government could not provide such subsidies to states using a federal exchange instead of a state exchange, while in King v. Burwell, a panel at the U.S. Court of Appeals for the 4th Circuit said that it could.

On August 4, Sen. Ron Johnson (R-Wis.) filed an appeal for his lawsuit in which he challenged the policy that required congressional lawmakers and their staff to obtain government-subsidized health coverage through exchanges. His suit had been dismissed last month.

On August 7, the U.S. Court of Appeals for the 9th Circuit dismissed a lawsuit regarding the Independent Payment Advisory Board (IPAB), which was created under a provision in the ACA to provide oversight of Medicare spending to prevent the program from becoming insolvent. President Obama’s administration has yet to nominate any members to the IPAB, even though the panel’s work was slated to begin this year. The lawsuit was brought by two individuals who claimed that the potential cuts to Medicare, which may be proposed by IPAB, would cause them harm, and that IPAB itself is unconstitutional. The U.S. Court of Appeals for the 9th Circuit dismissed the case on the grounds that IPAB has not yet been formed, and therefore any potential cuts to Medicare payments are “highly speculative.” The appeals court did not address the constitutionality issue.


The District of Columbia received its third grant from the Department of Health and Human Services (HHS) to continue the development of its ACA exchange. The Level One establishment grant will be used on several projects to support the ACA exchange and will boost security and IT infrastructure for the online exchange. The grant award for this third round was $25.8 million.

On August 5, Indiana state officials met with members of the Potawatomi Indian tribe to discuss ways in which to improve the state’s Medicaid waiver plan, HIP 2.0. On July 17, CMS sent a letter to Indiana officials notifying them that their Medicaid waiver application was incomplete because the state officials had not consulted with tribal representatives. The state officials were directed by CMS to meet with the Potawatomi representatives to resolve this issue.

On August 4, HHS announced that it would be providing funds to states for the ACA's Home Visiting Program. The grants will expand home visiting services to some pregnant women and parents with children under five. Forty-six states and the District of Columbia will receive a combined $106.7 million in these grants, and the program will be administered by HHS’s Health Resources and Services Administration.

State officials in Massachusetts announced that they will discontinue their efforts to merge with the federal health insurance exchange, Maydad Cohen, the state official managing the state’s own health care exchange, said that the state’s online exchange “works” and after a meeting with CMS Administrator, Marilyn Tavenner, both agreed that the state should continue with their efforts to build and improve upon the existing site.


Infrastructure Alert - July 29, 2014

The Senate begins debate today on a bill to prevent the insolvency of the Highway Trust Fund. The bill, already passed by the House and supported by the White House, provides the best chance for Congress to prevent the projected insolvency given the upcoming August recess. Although the Senate is considering four amendments to the bill, under the short time frame before recess and the urgency to pass a stopgap measure, the bill is likely to pass without amendment so that it will not have to return for another vote in the House.


On July 15, the House passed H.R. 5021, the Highway and Transportation Funding Act of 2014, a bill to extend the solvency of the Highway Trust Fund through May. The bill passed by a vote of 367-55, and now awaits a vote in the Senate. The vote for the bill was 186 Democrats and 181 Republicans, whereas 45 Republicans and 10 Democrats voted against. No floor amendments were permitted. The $11 billion, 10-month bill includes a $1 billion LUST Trust Fund transfer, $3.5 billion in customs fees, and $6.4 billion in “pension smoothing” to bolster the Highway Trust Fund.

The Senate will begin debate on the H.R. 5021 this afternoon. Under a unanimous consent agreement, only four amendments will be considered: Wyden #3582, Carper-Corker-Boxer #3583, Lee #3584 and Toomey #3585. The amendment proposed by Sen. Ron Wyden (D-Ore.) is the text of the Preserving America’s Transit and Highways Act, the Senate Finance Committee’s Highway Trust Fund patch. The Carper-Corker-Boxer amendment would remove the pension-smoothing provision and extend the solvency of the Highway Trust Fund only through the end of the year. The amendment proposed by Sen. Mike Lee (R-Utah) is the text of S. 1702, the Transportation Empowerment Act, that would “devolve” most of the responsibility of raising and disbursing transportation funds to the states and cut the federal gasoline tax to 3.7¢ per gallon. The amendment proposed by Sen. Pat Toomey (R-Pa.) would waive most environmental reviews in post-disaster situations to expedite the re-construction of transportation infrastructure.

The White House released a Statement of Administration Policy supporting the passage of the bill to “provide for continuity of funding for the Highway Trust Fund” but notes that “Congress should work to pass a long-term authorization bill well before the expiration date set forth in H.R. 5021.”


On July 25, Anne Ferro of the Federal Motor Carrier Safety Administration announced she would resign from her post, after serving as Administrator for five years.

Also on July 25, the Senate approved Victor Mendez as Deputy Secretary of Transportation and Peter Rogoff as Undersecretary for Policy. Both had been serving in as acting in that capacity. Therese McMillan, the Deputy Administrator of the Federal Transit Administration (FTA), will be nominated to replace Rogoff as Administrator of the FTA. On July 15, Chip Jaenichen was confirmed by the Senate as Maritime Administrator. He has been with the Maritime Administration since July 2012, when he was appointed Deputy Maritime Administrator.

On July 23, the Department of Transportation announced a major notice of proposed rulemaking designed to curtail accidents of trains carrying Bakken crude oil. The increase of crashes in 2014 alone have drawn public scrutiny, and the day following the rule announcement a derailment occurred in Seattle. The notice of proposed rulemaking predicts “15 mainline derailments for 2015, falling to a prediction of about 5 mainline derailments annually by 2034” without the proposed rule.

On July 23, the Government Accountability Office published a report titled “Aviation Safety: FAA’s Efforts to Implement Recommendations to Improve Certification and Regulatory Consistency Face Some Challenges.”

On July 21, Secretary of Transportation Anthony Foxx and 11 former secretaries of transportation published an open letter to Congress, urging Members to pass a sustainable surface transportation bill.

On July 14, the Maritime Administration requested comments on its draft Programmatic Environmental Assessment to evaluate potential environmental impacts associated with the execution of the Marine Highway program.


California: The Third District Court of Appeals in Sacramento upheld the proposed Pacheco Pass route in California’s High-Speed Rail plans. The court ruled that the project must abide by state environmental rules, despite the state arguing that it was exempt from the California Environmental Quality Act because the project is overseen by the Surface Transportation Board.

New York: A Long Island Rail Road (LIRR) strike was averted on July 17 after Governor Cuomo intervened. The potential strike was looming as four years had passed since the last labor contract expired. Under the new contract, union workers will receive a raise of 17 percent over the next six and a half years, though workers will now pay 2 percent of their pay towards their health care coverage cost. Previous to the agreement, the unions had requested the 17 percent pay raise over six years, whereas the Metropolitan Transit Authority had insisted it be spread over seven years.

Virginia:On July 26, the initial 12-mile phase of the Washington Metropolitan Area Transit Authority’s Silver Line began operation. The Silver Line will expand another 11 miles by 2018 to Dulles International Airport. This first stretch cost $2.9 billion, and the remaining extension is expected to cost an additional $2.7 billion. The Silver Line was approved for a $1.9 billion TIFIA loan in May. 

Health Care Reform Implementation Update - July 28, 2014

Last week, two courts issued contradictory rulings on the authority of the federal government to provide subsidies in states using the federal exchange. The House held hearings regarding the Affordable Care Act's (ACA) effects on Medicare Advantage plans, a Government Accountability Oversight (GAO) report on ACA subsidy applications, and whether or not a lawsuit against President Obama should move forward. At the agencies, Secretary Burwell announced a major staff appointment, and the Internal Revenue Service (IRS) released the long-awaited forms regarding the ACA employer mandate. 


On July 23, Senator Mark Warner (D-Va.) sent a letter to the Department of Treasury requesting that the agency create less burdensome regulations regarding the ACA employer mandate or delay the mandate for another year. In the letter, Senator Warner expressed his concern that regulations released in March did not address all of the problems he had expressed in earlier communications about the employer mandate regulations.

In a vote of 7-4 along party lines, the House Rules Committee passed House Resolution 676 (H. Res. 676), which allows Speaker John Boehner (R-Ohio) to advance his plan to file a lawsuit on behalf of the House against President Obama and his administration. The central focus of the lawsuit is that the president overstepped his constitutional authority when the administration delayed implementation of the employer mandate under the ACA. Now that H. Res. 676 has passed out of the committee, it is expected to be debated on the House floor this week. 

On July 23, the House Ways and Means Subcommittee on Oversight held a hearing regarding a GAO report investigating health care subsidies under the ACA. According to the report, 11 out of 12 of the fake applications submitted by GAO investigators attempting to gain approval for the subsidies were accepted. Although the GAO representatives at the hearing claim that the investigation is still underway and that the sample represented in the report is too small to “draw conclusions,” Republicans on the committee claim the report highlights that fraud is prevalent in implementation of the ACA. The GAO says that more complete results of their investigation could be released in the next several months.

On July 24, the House Ways and Means Subcommittee on Health held a hearing on the future of Medicare Advantage (MA) health plans. Republican members focused on the proposed cuts to MA plans due to provisions in the ACA that require the Centers for Medicare and Medicaid Services (CMS) to reduce payment reimbursement to private health plans. The Congressional Budget Office (CBO) has estimated that cuts to MA plans will total more than $300 billion by 2023.

On July 23, Congressman Dan Maffei (D-N.Y.) introduced the “Members Play by the Same Rules Act,” legislation, which would eliminate subsidies for congressional members who purchase ACA health coverage. The bill would also require House and Senate members to purchase ACA coverage through the exchanges designated for their home states. Congressmen Ron Barber (D-Ariz.) and John Barrow (D-Ga.) cosponsored the bill upon its introduction. 


On July 24, the IRS posted to its website drafts of forms employers will have to fill out in compliance with the employer mandate. The forms signal that the IRS is planning to move forward with the twice-delayed ACA requirement that large employers provide health insurance to certain employees or pay fines for not providing the coverage.

Also on July 24, the Department of Health and Human Services (HHS) announced that health plan enrollees will receive more than $330 million this year in refunds as a result of the medical loss ratio (MLR) provisions of the ACA. Under the provisions, health plans that do not spend at least 80 to 85 percent of their premiums on medical care and quality improvement activities are required to return a portion of those expenses back to consumers. Since 2011, insurers have returned approximately $9 billion to consumers under the MLR provisions.

The Health Resources and Services Administration (HRSA) released what it called an interpretive rule regarding its 340B discount program. In the rule, HRSA restated its position that orphan drugs that are not used to treat rare diseases can be purchased at discounted rates under HRSA’s 340B program. The rule is effective immediately. In May, the U.S. District Court for the District of Columbia ruled that HRSA did not have the authority to issue a legislative rule to allow certain types of safety net providers to purchase orphan drugs at a discounted rate when they are not used as treatment for rare diseases. 

In a “frequently asked questions” (FAQ) document prepared by the Departments of Labor, Health and Human Services, and Treasury, the government clarified health plan notification requirements regarding opt-out of the ACA’s contraceptive mandate. According to the FAQ, if a health plan provided by a closely held corporation that is subject to the Employee Retirement Income Security Act (ERISA) wishes to exclude coverage of contraceptives without employee cost-sharing in the middle of a plan year, it must provide a notification to its employees of the coverage reduction. The FAQ was released in the wake of the Supreme Court’s Hobby Lobby ruling, which held that closely held, for-profit employers could assert a “religious objection” to the ACA contraceptive coverage mandate.

On July 23, Sylvia Burwell announced that Leslie Dach will be joining that Department of Health and Human Services in the newly created senior counselor position. Dach previously served as the executive vice president of corporate affairs at Wal-Mart. His new responsibilities include execution of the second open enrollment for the federal exchange.


On July 22, two different U.S. appeals courts came to different conclusions on the legality of the government providing premium subsidies for individuals receiving health coverage through the federal exchange. In Halbig v. Burwell, a three-judge panel at the U.S. Court of Appeals for the District of Columbia held that the government could not provide such subsidies, while in King v. Burwell, a panel at the U.S. Court of Appeals for the 4th Circuit said that it could. Following the Halbig ruling, the government announced that it would request an en banc rehearing before the full appeals court panel on the decision. At issue is an Internal Revenue Service (IRS) regulation that said that the government could provide the premium subsidies for qualifying individuals in both federal and state exchanges notwithstanding the ACA's language that subsidies can be given in states with state-run exchanges. According to a recent estimate, approximately 5.4 million of the 8 million individuals who enrolled in exchanges during the open enrollment period enrolled in the federal exchange.

Also on July 22, the Obama administration filed a legal brief saying that it plans to modify the religious objection accommodation process that is currently in place for certain religious nonprofits that object to the ACA’s contraceptive mandate. Under the current policy, nonprofits are required to fill out a form that permits a third-party to provide the coverage. The administration is developing the new process in response to a recent Supreme Court order that said Wheaton College, which sued the government because of the mandate, could simply file a letter with the government rather than fill out the form. The new process is still under development, but according to the brief, the administration will issue an interim final rule on the new process within a month.

On July 21, a judge dismissed the lawsuit brought by Senator Ron Johnson (R-Wis.) challenging the policy that required congressional lawmakers and their staff to obtain government-subsidized health coverage through exchanges. The judge wrote that Johnson did not have standing to challenge the policy because he was not injured by it.


In letters dated July 16, HHS informed all U.S. territories that they are officially exempt from the ACA requirements that states must follow. HHS had previously claimed that territories fit the definition of state and would have to abide by ACA requirements. HHS, however, reversed that decision after “a careful review” of the ACA statute. In the letters, HHS states that CMS will release regulations soon that will clarify and confirm this new position.


The Kaiser Family Foundation released a report showing that out-of-pocket costs for individuals on Medicare have increased significantly since 2000. The report used data from the Medicare Current Beneficiary Cost and Use file between 2000 and 2010. According to the report, long-term care facilities represent the biggest cost to seniors who are on Medicare. In order to curb these costs, the Kaiser report recommends preventing unnecessary hospitalization and improving post-acute care.

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.

Health Care Reform Implementation Update - July 21, 2014

Last week the Senate debated a bill to reverse the Supreme Court’s contraception mandate decision, a group of House Republicans introduced a bill to replace Affordable Care Act (ACA) cuts to the Medicare home health benefit with a measure that would instead base payments of value of care delivered, the Department of Health and Human Services (HHS) announced a new contract solicitation for managing  and the House passed an appropriations bill that would cut the IRS’ budget for implanting the ACA.


On July 16, Senate Democrats attempted to bring a bill to the floor that would prohibit employers from refusing to provide coverage for contraception. The bill was intended to negate the Supreme Court’s recent decision to allow closely held companies to opt-out of contraception coverage for its employees. The bill was defeated on a procedural vote of 56 to 43. There is a possibility that the bill, or similar legislation, will be brought up again in the Senate later this year.

The House Rules Committee held a hearing on July 16 to explore the legality of the lawsuit against President Obama currently being considered by House Republican leadership. The lawsuit claims that President Obama violated his Constitutional duties by delaying the implementation of the employer mandate under the Affordable Care Act (ACA). The panel of four witnesses split their opinions along party lines as to whether there is legal standing to bring the lawsuit.

On July 16 the House passed an appropriations bill that would cut the IRS’s budget by $1 billion in fiscal year 2015. Among other things, the bill would block the IRS from further implementing the ACA. President Obama has said that he will veto the bill if it makes it to his desk.

The Congressional Budget Office (CBO) released a report on July 15 that says the ACA will reduce federal health care spending. According to the report, over the next 25 years, health care spending will represent 8 percent of the gross domestic product (GDP), an amount that is .01 percent less than CBO’s projection last year. The CBO estimates that this 8 percent figure amounts to $250 billion in savings.

On July 15, Congressmen Greg Walden (R-Ore.) and Tom Price (R-Ga.), along with Reps. Cathy McMorris Rodgers (R-Wash.), Renee Ellmers (R-N.C.), David McKinley (R-W.Va.), Sean Duffy (R-Wis.), and Sam Graves (R-Mo.), Glenn Thompson (R-Wis.), Tom Latham (R-Iowa), Charles Boustany (R-La.), and Erik Paulsen (R-Minn.) introduced the “Securing Access Via Excellence (SAVE) Medicare Home Health Act.” The bill would reverse the cuts made to home health care in January and replace them with a value-based payments plan. The bill would aim to reduce hospital readmissions and would implement the value-based purchasing program by 2019. Under the bill, CMS would develop performance measures for the program and a bonus would be paid to well performing home health providers.


On July 11, CMS reported that 6.7 million more individuals had enrolled in Medicaid or the Children’s Health Insurance Program (CHIP) by May of 2014 compared to September of 2013. Of those enrolled in Medicaid or CHIP, 56 percent are children. CMS also reported that the states that had expanded Medicaid under the ACA had 17 percent more individuals enroll in the two programs.

On July 15, HHS announced that it would make up to $100 million dollars of funding available to states under the Medicaid Innovation Accelerator Program (IAP). The program would offer technical assistance to states to help accelerate payment and service delivery reforms and improve health and lower costs. The program will provide funds to help identify and advance new models of payment and care delivery, analyze data, improve quality measurement, and support state-to-state learning and federal evaluation. The IAP will focus on specific categories of Medicaid enrollees such as pregnant women, newborns, children and individuals with mental illness and those receiving long term care services.

On July 16, CMS posted a new solicitation for a contractor to oversee next year. The new contractor will be responsible for analysis, design, development, testing, maintenance and support. The solicitation also requires that the company chosen be responsible for redesigning parts of the online exchange application and constructing parts of the site that will ensure proper payments to insurers. Accenture, the current company overseeing, was awarded a one-year contract that is set to expire in the beginning of 2015. It is unclear whether the company will bid for this new contract.

On July 18, CMS released a 13-page letter addressed to all Medicare Part D Plan sponsors and Medicare hospice providers regarding Part D drug payments for Medicare beneficiaries enrolled in Medicare’s hospice program. Under Medicare payment rules, hospice covers payments for drugs related to a beneficiary’s terminal diagnosis, while Part D covers payments for drugs for other conditions. In March, CMS had issued a memorandum that required prior authorizations for all drugs needed by Medicare hospice beneficiaries in order to determine whether the drug was covered under Part D. In the July 18 letter, however, CMS recognized the difficulties experienced by both Part D sponsors and Medicare hospice beneficiaries with respect to the prior authorizations, and wrote that it “strongly encourage[s]” prior authorization for hospice patients only needing four categories of drugs, specifically analgesics, anti-nauseants, laxatives and anti-anxiety drugs.

On July 18, CMS announced that it had awarded 14 new contracts for quality improvement organizations (QIOs). This announcement is the second the phase of the new Quality Innovation Network (QIN) program through CMS. These QIOs will work with providers and communities using gathered data to improve quality of care with the specific goals of reducing admissions, promoting prevention and reducing health disparities.


On June 27 and July 9, CMS sent letters to a total of 13 states asking them to address the backlog of Medicaid enrollee applications in their states. In the June 27 letters, CMS asked six states to come up with mitigation plans for clearing their enrollment backlogs but did not offer a confirmed deadline for completion. In the July 9 letters, CMS said that it would conduct its own reviews of the states’ Medicaid eligibility and enrollment systems.

Wisconsin’s alternative to Medicaid expansion enrolled 110,000 childless adults by the end of June 2014, surpassing projections that the state would only enroll 99,000 childless adults by June 2015. Proponents claim that the larger than projected enrollee numbers illustrate the success of the program, while opponents are questioning where the state will get the funds to pay for the higher level of enrollees. Governor Walker opposed the ACA and had opted not to accept federal funds for Medicaid expansion.

In a move that could spread to other states, a new law in Kentucky will now allow nurse practitioners to prescribe routine medications without a doctor’s input. The law, which went into effect on July 15, will provide this authority to nurse practitioners who have completed a four-year collaboration with a practicing physician who was willing to oversee their work. Nurse practitioners across the country are pushing to implement similar laws in their own states, particularly in states with rural areas that may have shortage of primary care doctors.


On July 10, the Chief Administrative Law Judge (ALJ) for the Office of Medicare Hearings and Appeals (OMHA) told lawmakers at an Oversight and Government Reform Health subcommittee meeting that it is planning to hire seven additional ALJs to deal with the current backlog of provider appeals for the Medicare claims. On July 11, OMHA announced that it would be implementing two pilot programs to assist with the backlog. One would create a new settlement conference between providers and suppliers, and the other would allow providers with a large volume of claim disputes to use statistical sampling to help expedite the process. OMHA had approximately 800,000 appeals pending as of July 1, 2014.

The U.S. Court of Appeals for the 11th Circuit announced on July 16 that it would hear oral arguments in a lawsuit challenging the delay of the ACA employer mandate provisions. The Obama administration delayed the effective date of the mandate from 2014 to 2016. Kawa Orthodontics brought the suit in in October of 2013 and claimed it had spent substantial time and money preparing for the mandate.


A report released by the Robert Wood Johnson Foundation and athenahealth says that the ACA has not increased new patient volume for providers. According to the report, overall visits with new patients actually decreased slightly. However, primary care doctors in states that expanded Medicaid did report an increase in Medicaid patients from 12.3 percent last December to 15.6 percent currently.


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.

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.

Infrastructure Alert - July 9, 2014

President Obama and Transportation Secretary Anthony Foxx have been urging Congress to fix the Highway Trust Fund before a projected funding depletion at the end of August. On July 1, Secretary Foxx sent letters to states informing their highway and transit agencies that absent Congressional action, the Department of Transportation will implement cash management procedures for the Federal Highway Administration on August 1 and warned of similar measures for the Mass Transit Account, possibly as soon as October. Starting August 1, the Department of Transportation will shift away from same-day reimbursements to limited payments based on the amount of cash available in the Highway Trust Fund and, when necessary, will distribute incoming funds in proportion to each state’s federal formula apportionment for FY2014. White House spokesmen have indicated, however, that the Administration supports neither a repatriation holiday nor an increase in the gas tax to bridge the Highway Trust Fund shortfall.

On Monday, Nicaragua approved a proposal by the HK Nicaragua Canal Development Investment Co Ltd to create a $40 billion, 172-mile canal from the Atlantic to the Pacific. This canal would serve as an alternative to the Panama Canal and is expected to be completed by 2019 for use in 2020.

On June 30, President Obama signed S. 2086, the Reliable Home Heating Act, into law. The law permits the Federal Motor Carrier Safety Administration to recognize emergency periods as declared by a state governor due to a shortage of residential heating fuel and waives certain FMCSA regulations for motor carriers or drivers carrying residential heating fuel under those conditions.


Leading up to the August recess, Congress and the industry will be focusing on trying to prevent the projected Highway Trust Fund depletion as well as laying the ground work for the eventual surface transportation reauthorization, given that the current authorization expires at the end of the fiscal year. There are a several competing opinions and recommendations from Members of Congress and interested parties as to how to broach both issues, but general consensus that action is preferred to inaction.

In the Senate, Finance Chairman Ron Wyden (D-Ore.) is working on modifying his proposal to extend the solvency of the Highway Trust Fund (HTF) through December. The original proposal was effectively dismissed by Republicans in late June. Chairman Wyden hopes that the bill, the “Preserving America’s Transit and Highways Act of 2014,” will be marked up and approved by his committee this week. His new proposal includes a $750 million transfer from the Leaking Underground Storage Tank (LUST) Trust Fund and removes the original proposal’s tax increase on vehicles weighing over 97,000 pounds. The $9 billion bill originally increased the tax from $550 to $1100 effective June 2015, which was estimated to raise $1.3 billion over the next 10 years.

On June 27, CBO responded to an inquiry from Chairman Wyden, who had asked “Of the additional $8 billion in revenues that CBO estimates would be necessary to meet the obligations of the Highways Trust Fund through December 31, 2014, how much would the highway account require and how much would the transit account require in order to meet their obligations?” CBO estimated that the highways account would require revenues of approximately $6.6 billion and the transit account would require revenues of approximately $1.5 billion. Prior, the CBO had told Chairman Wyden that a 6¢ gasoline tax increase would not be sufficient to keep the HTF solvent through December.

Of the proposed amendments to the bill, many are blatantly partisan amendments, but several are prospective funding mechanisms, including gasoline tax amendments. “Carper Amendment #1” calls for an annual 4¢ over the next three years, and thereafter, the gasoline tax to be adjusted for inflation according to the Consumer Price Index (CPI). Sen. Bob Corker (R-Tenn.) has been a surprise proponent of a 12¢ increase in the federal gasoline tax as well. He and Sen. Chris Murphy (D-Conn.) have been advocating for a 12¢ increase to the gas tax to be indexed to the CPI, but unlike Sen. Carper’s amendment, are calling for the increase over two years instead of three.

If the Senate continues to have difficulty passing a stopgap HTF funding bill, it could be an indication that a six-year surface transportation reauthorization would be politically infeasible as well, and that a shorter term bill may be more likely. Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) and House Transportation and Infrastructure Chairman Bill Shuster (R-Pa.) have both indicated their preferences for a long-term bill.

In the House, Ways and Means Chairman Dave Camp (R-Mich.) announced yesterday that his committee will markup a new proposal, H.R. 5021, to deliver $10 billion in revenue to the Highway Trust Fund, extending its solvency through May. Speaker of the House John Boehner has announced that the bill will have floor time next week. The bill, the “Highway and Transportation Funding Act of 2014,” includes a $1 billion LUST Trust Fund transfer, $3.5 billion in customs fees, and $6.4 billion in “pension smoothing,” a significantly different proposal than the one Senate Finance Committee is considering. Tomorrow’s markup comes after Ranking Member Sander Levin (D-Mich.) and the other Ways and Means Democrats again requested a hearing about the HTF.

Other congressmen had previously floated different ideas for shoring up the HTF. Rep. Earl Blumenauer (D-Conn.), the sponsor of a bill introduced in December to raise the gas tax by 15¢, has recently praised the Murphy-Corker plan of a 12¢ gas tax increase. On June 25, Chairman Dave Camp released a statement indicating his disappointment “that the Senate appears to be heading down a partisan road on highway funding” and asserting that “there is no way tax hikes to pay for more spending will fly in the House.” New House Majority Leader Kevin McCarthy has stated his opposition to raising the gasoline tax as well. Budget Committee Chairman Chris Van Hollen (D-Md.) has a proposal that would raise an estimated $19.5 billion from preventing foreign inversions, or mergers with a foreign company that results in a lower tax rate. A House Republican plan that has since been abandoned was to patch the HTF for a year by eliminating most Saturday U.S. Postal Service deliveries.

Senate Commerce Chairman Jay Rockefeller (D-W.Va.) and Ranking Member John Thune (R-S.D.) were sent a letter from a coalition of 58 maritime organizations urging a markup and vote on S. 2094, the Vessel Incidental Discharge Act. The bill would establish a national standard for ballast water and other vessel discharges. The letter criticizes the current manner in which ballast water and other discharges are regulated, as the Coast Guard and the Environmental Protection Agency regulate under different statutory authorities, and neither preempts state action.

Rep. Janice Hahn (D-Calif.) is expected to file a bill today that would establish a National Freight Network Trust Fund. The bill would require that 5 percent, an estimated $1.9 billion per year, of duties collected on imports to the United States be directed to the new trust fund.

On June 19, Senate Majority Leader pulled the minibus that included Department of Transportation funding, which had received a 95-3 procedural vote on June 17, because an agreement on amendments could not be reached. With a few exceptions, the Administration had voiced its support for the bill in a June 17 Statement of Administration Policy, praising the TIGER funding, increased Federal Railroad Administration safety funding, and Federal Transit Administration Capital Investment (New Start) grants, but opposing language that would suspend the Federal Motor Carrier Safety Administration’s hours of service rule.

Tomorrow, the House Transportation and Infrastructure Committee’s Public-Private Partnerships Panel will hold a hearing titled “Public Private Partnerships for America’s Waterways and Ports.” The panel will hear from the following participants: Jim Hannon, Chief of Operations and Regulatory Division of the U.S. Army Corps of Engineers; John Crowley, Executive Director of the National Association of Waterfront Employers; Mike Toohey, President and CEO of the Waterways Council, and Dave Kronsteiner, President of the Board of Commissioners for the Port of Coos Bay, Oregon.


On July 2, the Coast Guard finalized rules for navigation in inland waterways. The rule aligns the Inland Navigation Rules in the Code of Federal Regulations with the Convention on the International Regulations for Preventing Collisions at Sea and incorporates recommendations from the Navigation Safety Advisory Council. The rule will go into effect on August 1.

The Federal Railroad Administration has eliminated a reporting requirement that requires each railroad carrier to file a signal system status report with the FRA every five years. As the FRA receives more updated data about railroad signal systems through alternative sources, it considers the rule unnecessary. The final rule is effective on September 2.

The Federal Maritime Commission raised its maximum fine amount for each statutory civil penalty subject to FMC jurisdiction by adjusting for inflation. The new fines will be effective as of July 11.

The Highway Trust Fund Ticker currently indicates that the Highway Account is estimated to be depleted by the end of August and the Mass Transit Account is estimated to decrease to approximately $1 billion by the end of September.

On June 27, President Obama nominated Christopher Hart to a two-year term as Chairman of the National Transportation Safety Board. He is currently the NTSB’s Acting Chairman and Vice Chairman. Former NTSB Chairman Deborah Hersman resigned in April to become President and CEO of the National Safety Council.

On June 25, the Government Accountability Office (GAO) published a report titled “Aviation Safety: Additional Oversight Planning by FAA Could Enhance Safety Risk Management.” The report details the FAA’s Air Traffic Organization’s Safety Management System (SMS) implementation. GAO recommended that FAA develop a plan to oversee industry SMS implementation.


California: At the Ports of Los Angeles and Long Beach, independent truck drivers are on strike against three trucking firms that operate at the ports: Total Transportation Services Inc., Green Fleet Systems, and Pacific 9 Transportation Inc. In addition to this labor disagreement, 20,000 International Longshore and Warehouse Union workers are currently renegotiating their labor agreement after a six-year deal with West Coast longshoremen expired on July 1. Any potential strike of these workers would be expected to be short, especially considering the emergency provisions in the Taft-Hartley Act that allow the President to end such a strike. The National Association of Manufacturers and the National Retail Association estimates that such a strike, however, could cost the U.S. economy as much as $1.9 billion a day for a five-day strike, $2.1 billion a day for a 10-day strike, and $2.5 billion a day for a 20-day strike.

Mississippi: On July 5, Mississippi Department of Transportation announced that it would wait to see whether Congress would be able to fund the Highway Trust Fund before putting future maintenance projects up for bidding in July.

New York: On June 26, the Environmental Facilities Corp.’s Board of Directors unanimously voted to approve the $511 million loan to the Thruway Authority to dredge the Hudson River and dismantle the current bridge to make way for the replacement Tappan Zee Bridge. State Senator John DeFrancisco, a voting member of the Public Authorities Control Board that must still unanimously approve the loan for it to be executed, has not ruled out voting against the loan. The board will meet next on July 16, and Sen. DeFrancisco wants a full financing plan in place before voting for the loan. The $3.9 billion Tappan Zee Bridge replacement secured a $1.6 billion TIFIA loan in December of 2013, the largest in program history.

Texas:The Federal Railroad Administration has announced that it and the Texas Department of Transportation will prepare an environmental impact statement for the proposed construction and operation of the Dallas-to-Houston high-speed rail line. The Central Texas High-Speed Rail Corridor project was proposed by a private company, the Texas Central High-Speed Railway. The Federal Railroad Administration is currently accepting comments.

Health Care Reform Implementation Update - June 27, 2014

Secretary Burwell continues to settle in to her new position as the Department of Health and Human Services (HHS), this week making a number of management changes at the department; CMS released the long awaited proposed rule on Annual Eligibility Redeterminations for Exchange Participation and Insurance Affordability Program; and CMS also announced that it would create a five-star ratings program for hospitals, home health agencies and end-stage renal disease providers.


On June 19, Senators Orrin Hatch (R-Utah) and Chuck Grassley (R-Iowa) released a report that details their investigation into HHS’ oversight of The report finds that HHS wasted millions of dollars by failing to responsibly oversee the IT development of, and that political pressure from the White House to go live on October 1, 2013 trumped operational realities. According to the report, White House and CMS officials were warned that was not ready for its November 2013 release.

On June 19, a bipartisan group of senators introduced a bill that would require CMS to account for the socioeconomic status of a hospital’s patients when calculating penalties for readmission rates. The bill, the “Hospital Readmission Accuracy and Accountability Act,” is intended to maintain accountability in Medicare while mandating that CMS does not “let differences in income serve as an obstacle to improving health conditions,” according to one of the bill’s sponsors, Senator Joe Manchin (D-W.Va.). The American Hospital Association and the American Medical Association support the bill.

Secretary of Health and Human Services Sylvia Burwell sent the House Energy and Commerce (E&C) Committee a justification document outlining HHS’s legal authority to make payments in connection with CMS’s risk corridor program. Both the Government Accountability Office (GAO) and leadership from the House E&C committee had requested that HHS provide legal justification for these payments. In the justification documents to both GAO and E&C, Secretary Burwell claims that these payments are being treated as a user fee and therefore are allowable by law. The chairman of the House E&C committee Fred Upton (R-Mich.) pushed back stating that “risk corridors were not listed as a user fee in President Obama’s own FY2015 budget.”

The GAO released a report on June 18 that reveals CMS paid out $14.4 billion in improper Medicaid payments to managed care providers. According to the report, there are two main issues with CMS oversight of Medicaid payments that directly led to the improper payments. First, CMS has not updated its program integrity guidance to the states since 2000. Second, CMS does not require states to audit managed care payments, and states have requested additional guidance from CMS on how to obtain integrity monitor oversight.

In a letter to HHS, Congresswoman Tammy Baldwin (D-Wis.) and Ron Kind (D-Wis.) are requesting that the agency consider delaying the ACA employer mandate for Medicaid-dependent provider groups. The letter argues that these provider groups would see an increase in costs between 15 and 50 percent if they were subject to the mandate. The letter does not request repeal but asks HHS to work with stakeholders, such as Medicaid providers and facility directors, to discuss a solution to this problem, thus implying a request for a delay of the mandate.


On June 26, CMS released a proposed rule and guidance documents regarding re-enrollment in ACA exchanges in the upcoming enrollment period. Under the proposed rule, most current enrollees would be automatically re-enrolled unless they choose to select new coverage in the new enrollment period that begins in November. Only those enrollees who have had changed life circumstances, such as marriage or employment status, would have to update their information on The guidance documents that were released with the proposed rule give insurers suggestions for informing their customers about the upcoming enrollment period.

A statement posed on the Health Resources and Services Administration’s (HRSA’s) website says that it does not view a recent court decision regarding the ACA’s orphan drug exclusion as an invalidation of its interpretation of the statute, and that the agency would continue to stand by its interpretation. In May, the U.S. District Court for the District of Columbia ruled that HRSA did not have the authority to allow certain types of safety net providers to purchase orphan drugs at a discounted rate when they are not used as treatment for rare diseases. Last year, HRSA issued a rule that said that the ACA’s exemption did not apply to situations where the drugs were used to treat common diseases.

In an agency blog post by Patrick Conway, CMS’s deputy administrator for innovation and quality and its chief medical officer, CMS announced that it would create a “five star” ratings program for hospitals, home health agencies and end-stage renal disease providers. The program will be implemented later in 2014 and early in 2015 and be based on “established scientific standards of rigor and accuracy.” Currently, CMS has star ratings programs in place to compare nursing homes, Medicare Advantage plans, and certain physician group practices.

Last week, newly confirmed HHS Secretary Sylvia Matthews Burwell made several announcements concerning CMS staffing. She announced that a new position within CMS would be created for a “marketplace CEO” who would be responsible for both running the Center for Consumer Information and Insurance Oversight (CCIIO) and heading up management of the federally facilitated exchange. There will also be a new position for a chief technology officer.Burwell also announced that Andy Slavitt would serve as the agency’s principal deputy administrator. Slavitt was formerly with Optum/Quality Software Services Inc. (QSSI), the principal contractor for the federally facilitated exchange.

According to the Bureau of Economic Analysis (BEA), an office in the Department of Commerce, health spending slowed by an annual rate of 1.4 percent in the first quarter of 2014. This is in stark contrast to the BEA’s April estimate that it would actually increase by 9.9 percent. In the April report that predicted this increase, BEA did note that it would not be able to provide final numbers for the first quarter of 2014 until June. These new June numbers, reported by BEA on June 25, that illustrated this decline in health spending was a “surprise” to BEA and the Department of Commerce.

During an Open Door Forum on June 17, CMS officials told stakeholders that it would implement two new demonstrations to test whether a prior authorization process can be used for Medicare part B beneficiaries receiving non-emergency ambulance services and hyperbaric oxygen therapy. The non-emergency ambulance demonstration is scheduled to begin in the fall of 2014 in three states and run for three years. The oxygen therapy demonstration is scheduled to begin in early 2015 in three states. In both demonstrations, Medicare Administrative Contractors (MACs) will be required to respond to prior authorization requests within 10 days, the same timeframe that was required for the power wheelchair prior authorization demonstration. During the forum, CMS officials said that claims that have gone through prior authorization will typically not be subject to additional audits from MACs or from recovery audit contractors.


On June 20, Massachusetts state officials reached a deal with their former state exchange website contractor, CGI, to recover funds after the website experienced numerous problems. The deal includes up to $12 million in recovered funds from CGI as long as the state pledges not to pursue further legal action against the contractor.

In Virginia on June 20, Governor Terry McAuliffe vetoed portions of the budget that was passed by the state’s general assembly on June 12. The governor did sign off on most of the budget to avoid a government shut-down, but used his line-item veto power to strike language that would have prevented Medicaid expansion in the state. On June 23, using a procedural move that did not require a vote, the Virginia General Assembly was able to finalize and pass a budget without Governor McAuliffe’s line-item vetoes.


On June 19, the Kaiser Family Foundation released a new survey of ACA insurance enrollees. The survey asked 742 ACA enrollee respondents whether they had insurance before they enrolled in an ACA plan. More than half of the respondents, 57 percent, said that they did not have insurance before they enrolled. This contradicts the HHS estimate from May 1 that claimed that 87 percent of new ACA enrollees had lacked coverage before they signed up.

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.

Health Care Reform Implementation Update - June 3, 2014

Affordable Care Act (ACA) action on Capitol Hill this past week centered on investigations into improper ACA subsidy payments, a potential constitutional amendment proposal, and support for an appeal of the ACA in favor of a Republican-sponsored replacement. At the agencies, a high-level official departed the Department of Veterans Affairs amidst controversy, and the Centers for Medicare and Medicaid Services (CMS) announced that there will be more physician payment data releases in the future. Also this week, many states announced new contracts to assist with their state-run ACA exchange websites.


This week the Senate will vote on the nomination of Sylvia Burwell for Secretary of Health and Human Services (HHS).Burwell enjoys bipartisan support for her nomination, and it is expected that she will be confirmed.

In a May 27 letter to the HHS Office of the Inspector General (IG), Senators Orrin Hatch (R-Utah), Mitch McConnell (R-Ky.) and Tom Coburn (R-Okla.) requested an investigation into whether certain individuals were being given improper tax subsidies for their health care costs. Under the ACA, low-income individuals can apply for tax subsidies to help pay for their health care plans. The letter expresses concern that there is insufficient IRS oversight of these subsidies. Citing reports from The Washington Post and the Treasury Inspector General for Tax Administration, the senators expressed concern that the IRS has not fully implemented the systems needed to “verify the accuracy of applicant information” for the tax subsidies. The HHS IG is already required by Congress to produce a report to Congress on the subsidies by July 1, 2014.

During a Memorial Day speech, Senator Orrin Hatch (R-Utah) told a crowd of veterans and their families that he might propose a constitutional amendment that would give employers the right to deny contraception coverage to their employees if the Supreme Court does not rule in favor of Hobby Lobby in its current ACA contraception-mandate case against HHS. The Hobby Lobby suit against HHS alleges that the ACA violates the First Amendment by requiring companies to cover specific types of contraception in their health care plans. Hatch stated that if the Supreme Court did not find in favor of Hobby Lobby, its ruling would “foul up the First Amendment again.”

This past week House members from the Republican Study Committee (RSC) wore pins to highlight their support for a bill that would replace the ACA with a Republican devised alternative. The alternative bill, H.R. 3121, “American Health Care Reform Act,” is co-sponsored by 130 House Republicans. The bill was introduced by Congressman Phil Roe (R-Tenn.), who is also a physician, and would replace the ACA with an expansion of health savings accounts, medical liability reform and permission for individuals to purchase health care plans across state lines. Supporters of the bill are pushing Republican leadership to bring the bill up for a House vote in the next two months.


Amid growing controversy regarding improper record keeping and extensive wait times for veterans seeking health care in VA facilities, Secretary of Veterans Affairs Eric Shinseki resigned from his post on Friday. President Obama accepted Shinseki’s resignation but has not announced his choice for a replacement nominee. In the interim, Deputy Secretary of Veterans Affairs, Sloan Gibson, will oversee the agency.

Fabien Levy, one of the press secretaries for HHS, announced his departure from the agency on May 28. Levy worked for the department for two years and resigned via email, writing that his work at HHS was the “most important work of my life.”

CMS Administrator Marilyn Tavenner, CMS Deputy Administrator for Innovation & Quality Patrick Conway, and CMS Acting Director of the Offices of Enterprise Management Niall Brennan, published an article in the New England Journal of Medicine on May 28 in which they state their support for the agency’s recent release of data on Medicare payments to individual physicians. The officials also reported that the agency will provide additional data and that the perceived harm to physicians is mitigated by the value of providing transparency to consumers.

On May 29, the HHS Inspector General released a report finding that in 2010, the Medicare program paid out $6.7 billion for health care visits that were improperly coded or that lacked proper documentation. The report found that 42 percent of diagnostic and assessment claims were improperly coded and that 19 percent of these types of claims were improperly documented. The report noted that though many coding errors are the result of legitimate mistakes, these errors tend to result in higher payments for physicians. On a related note, CMS recently conducted a “test-run” of the new ICD-10 coding system and reported that it accepted 90 percent of the claims using the new coding from the test participants. CMS will be conducting other ICD-10 test-runs before its full implementation in October of this year.


Two patient advocacy groups filed an administrative complaint on May 29 with HHS’s Office of Civil Rights alleging discrimination against patients with HIV/AIDS. The complaint claims that four Florida health insurance companies,CoventryOne, Cigna, Humana and Preferred Medical Plan, are charging higher out-of-pocket costs for HIV/AIDS medications and requests that the federal government take action to end what it calls discrimination against individuals with HIV/AIDS. The complaint argues that these higher prescription drug costs violate provisions of the ACA that prohibit insurance companies from discriminating against enrollees based on “race, color, national origin, sex, age or disability.”

On May 29, the governor of Oregon said that he asked the state’s attorney general to bring suit against Oracle, the contractor it used to build its exchange website. The governor said that the suit would be brought under the False Claims Act and that the state would seek recovery of attorneys’ fees, funds spent on building the website, and damages. Oregon paid Oracle more than $134 million to develop the Cover Oregon website, which never functioned properly.

The Center for Public Integrity (CPI), a news organization, is suing CMS for withholding public documents. CPI is requesting that CMS release information regarding program audits, billing data, and any documents that pertain to investigations of health insurance plans that may be overcharging the federal government under Medicare Advantage payments. The suit alleges that CMS has ignored CPI’s request since May 2013.


New York state is finalizing a contract with Xerox to have the company take over management of its Medicaid management system. The $500 million contract was confirmed by a New York State Department of Health spokesman. This announcement came just a week after Nevada severed its contract with Xerox over the company’s inability to effectively implement and manage the state’s ACA exchange.

Some California lawmakers would like the state to subsidize their Farmer Health Care Program so that it can continue to operate. The Farmer Health Program currently covers 10,700 farm workers in California but does not meet all of the requirements for health care plans under the ACA. In order to meet those requirements the state would need to purchase $3.2 million in supplemental insurance. Some state lawmakers do not support this subsidy, and a decision on the future of the plan will be made by June 15.

The Center for Consumer Information & Insurance Oversight (CCIIO) at CMS is requesting that Rhode Island provide the agency with a report on the sustainability of the state’s ACA exchange after the next enrollment period. The CCIIO cited media reports claiming that there are issues with the state-run exchange as the basis for their request.

Connecticut’s Chief Information Officer for its state-run exchange, James Wadleigh, announced that the state is launching a smartphone app for its exchange website. The state-sponsored smartphone app would be the first in the country and is intended to encourage young people to enroll for health plans under their ACA exchange.

Oregon announced that it will be seeking services from companies to transfer its now defunct state-run ACA exchange website to the federal exchange website, The state plans to solicit bids from 10 companies for the estimated $35 million in work to integrate the two systems.

Maryland has approved more than $43 million in contracts to assist with improving its state-run ACA exchange website. Xerox was awarded $29.3 million to develop new technology similar to that used in the Connecticut exchange, and Deloitte was awarded $14.2 million for software development.


The Journal of the America Medical Association released HHS’s review of the nation’s overall health, which is conducted by the agency and reported on every decade. The results were mixed. On the positive side, the review found improvements in decreasing health inequity gaps between whites and minorities, infant mortality rates and adult cigarette smoking. On the negative side, adult obesity, diabetes and dental care showed no improvement over the last decade. HHS authors of the review wrote that the ACA would assist with improving the nation’s overall health over the next decade.

On May 29, the Comptroller General (CG) of the U.S. Government Accountability Office announced the appointment of three new members to the Medicare Payment Advisory Commission. The new members are Kathy Buto, Francis Crosston and Warner Thomas. The CG also reappointed two existing members and designated the commission’s vice chairman.

A report released on May 28 showed that the health care industry had a higher risk of cybersecurity breaches than any other industry. BitSight Technologies, a security ratings firm, drafted the report and claims that those in the health care industry do not make cybersecurity a priority in comparison to financial, retail and utility industries. According to the report’s findings, cyber-events in health care lasted almost a full day longer on average than cyber-events in any other industry.

The Robert Wood Johnson Foundation released data on May 28 showing that more than half of the uninsured in the United States are eligible for ACA subsidies, Medicaid or the Children’s Health Insurance Program (CHIP). Findings in the report suggest that 27 million people who would have been previously uninsured will be covered under the ACA by 2016.

A study released by the National Bureau of Economic Research found that the ACA requirement on health plans to allow adults under age 26 to remain on their parents’ policies has primarily benefited college graduates. The study authors noted that while all categories of young adults had increases in insurance coverage, only those who were college educated had “substantial new investments” in their health.

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

Health Care Reform Implementation Update - May 27, 2014

Congress held several hearings last week ranging from Sylvia Burwell’s nomination for Secretary of the Department of Health and Human Services (HHS), to Medicare payment oversight, to post-acute care in Medicare. The Centers for Medicare & Medicaid Services (CMS) released final and proposed rules on the use of electronic health records, Medicare payments for medical devices, and new requirements for health plans wishing to participate in Affordable Care Act (ACA) exchanges. Also this past week, Nevada announced that it will abandon its state-run health exchange website, and Oregon is now facing a formal investigation regarding its management of its ACA exchange website.


On May 21, the Senate Finance Committee voted 21-3 to move Sylvia Burwell’s nomination for Secretary of HHS out of committee and to the Senate floor. The three Republican senators to vote against her nomination were Senator Pat Roberts (R-Kan.), Senator John Cornyn (R-Texas) and Senator John Thune (R-S.D.). The full Senate is expected to vote on her nomination during the first week of June.

The House Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements and the House Ways and Means Subcommittee on Health each held hearings on May 19 regarding Medicare payment oversight. The hearings focused on Recovery Audit Contractors (RAC) and the apparent flaws in the Medicare claim auditing process. There was bipartisan consensus in both committees that the Medicare audit system is overwhelmed and inefficient. Citing a backlog of more than 1 million audit appeals and the large number of overturned audit decisions by administrative law judges, there was a strong push from many congressional members to reform the system. Lawmakers representing small provider groups and rural hospitals in both committees expressed particular concern that the Medicare audit process is cumbersome and undermines the financial stability of these types of health care providers.

On May 21, the House Energy and Commerce Committee held a hearing titled “Keeping the Promise: Site of Service Medicare Payment Reforms.” The hearing focused on post-acute care Medicare payments systems, and congressional members highlighted current and proposed legislation that would help to “streamline” these payment models. Among the legislation discussed, a bill that would bundle Medicare payments for post-acute care services received the most attention and bipartisan support.

Also on May 21, Republicans on the House Ways and Means Committee sent a letter to Treasury Secretary Jack Lew asking that subsidies to insurers under the ACA be suspended. Subsidies to insurers are based on income information provided to the federal government directly from individuals receiving health insurance through the ACA exchanges. In the letter, the legislators cite a report from The Washington Post that claims there may be 1.5 million cases of inaccurate income reporting from individuals, leading to fraudulent subsidy payments to insurance companies.


CMS provided prospective qualified health plans (QHPs) with new instructions on network information requirements. According to these instructions, health plans applying to CMS to provide coverage in the federal exchange in 2015 will be required to provide the agency with a list of providers that will be in their networks. Additionally, all QHPs will be required to maintain what is referred to as “adequate” provider networks, both in terms of numbers and types of providers and must attest they meet this network adequacy standard as part of the certification and recertification process for QHPs. Along with the list of providers, QHPs will also have to provide information on the providers’ specialty type, address and national provider identifier number. CMS initially proposed the network adequacy reporting requirement in its draft 2015 letter to QHPs, but had not specifically included the requirement in the final letter.

HHS sent a letter to the American Hospital Association (AHA) on May 21 confirming that nonprofit foundations can, under certain circumstances, pay for ACA premiums of individuals enrolled in qualified health plans. The letter, which was in response to the AHA’s April 28 letter to HHS asking for additional guidance, said that the payments are not prohibited, so long as they comply with guidance issued in a frequently-asked-questions document by HHS on February 7 of this year. The letter also stated that HHS would not issue additional guidance on the matter.

HHS decided to stop releasing monthly updates of exchange enrollment, as it had done during the exchange open enrollment period from last October through March of this year. Because only individuals who meet certain special requirements can now enroll in exchanges, an HHS spokesperson said that the agency will look for other opportunities to share information about exchange enrollment.

On May 22, the Department of Health and Human Services announced it had selected 12 recipients to receive up to $110 million in grants under the ACA for projects designed to test innovative delivery system models. The grants were awarded under the Center for Medicare and Medicaid Innovation’s Health Innovation Awards program and range in size from $2 to 18 million over a three-year period. The projects are intended to deliver better health, improve patient care and lower costs for individuals enrolled in Medicare, Medicaid and the Children’s Health Insurance Program. Two additional rounds of awardees under the program will be announced by HHS in the coming months.

On May 22, CMS issued a proposed rule that will require prior authorizations for Medicare coverage of certain types of medical equipment, such as power wheelchairs, and will require prepayment reviews for certain types of medical equipment such as prosthetics. Under the proposed rule, prior authorizations will be required for power wheelchairs in 19 states and prepayment reviews will be required for a proposed master list of more than 130 items that are said to be frequently unnecessarily utilized. The proposed rule is expected to save the government between $100 and $740 million over the next 10 years.

On May 20, CMS unveiled a proposed rule regarding the electronic health record (EHR) incentive program. The proposed rule, if enacted, would ease restrictions on providers and hospitals on the certification year for using EHRs under the program. Many provider groups have informed CMS that the current EHR incentive program requirements are technically burdensome and discourage providers from participating. Under the proposal, CMS would allow providers and hospitals to use EHRs certified in 2011 as opposed to requiring them to use EHRs certified in 2014, a requirement that was supposed to begin this year. CMS would also delay Stage 3 of the EHR incentive program until 2017.

In a Q&A publication released mid-May on its website, the Internal Revenue Service (IRS) provided further guidance to employers seeking clarification regarding employer-sponsored health care plans. Under this guidance, the IRS informed larger employers that they may face tax penalties if they choose not to provide health insurance and simply direct their employees to sign up for health insurance using ACA exchanges, even if the employers provide funds to pay for the premiums. According to the guidance, this type of action would not satisfy the ACA, which requires large employers to offer coverage to full-time employees or pay tax penalties.


President Obama’s nominee for Surgeon General Dr. Vivek Murthy will likely not be appointed before the November elections. Although the Senate Health, Education, Labor & Pensions Committee voted in February to proceed with a full Senate vote on Dr. Murthy’s nomination, opposition from pro-gun advocate groups have stalled progress on the vote. In the past, Dr. Murthy has expressed strong support for gun control efforts and has been known to cite gun violence as a health issue. Groups including the National Rifle Association (NRA) have expressed their opposition to his nomination, energizing many Senate Republicans to express their opposition to Dr. Murthy’s nomination as well.


Nevada decided to abandon its state ACA exchange website and transition to the federal exchange website, On May 20, the Nevada exchange board decided that it could not fix the numerous technical glitches of the state’s exchange website in time for the next open-enrollment period. The vendor that ran the state’s exchange, Xerox, received $75 million under its contract. Nevada plans to use for at least a year but will revisit the issue after the next open enrollment period concludes.

Louisiana state legislators passed a measure to advance Republican Governor Bobby Jindal’s national health care plan. After voting down three separate attempts to expand Medicaid in the state, support for Governor Jindal’s“America Next” plan was strong with a vote of 35-1 in its favor. GovJindal’s America Next is a national health plan, which would provide $100 billion to states that devise their own health care systems as long as plans cover people with pre-existing conditions. The vote in the Louisiana legislature directs the state health agency to develop its health plan in accordance with America Next.


The U.S. Attorney’s Office in Portland, Ore., issued grand jury subpoenas on May 13 to Cover Oregon and the Oregon Health Authority, demanding all records related to the application or receipt of federal funds that may have been used in developing, building or administering the state’s troubled exchange website. The state received more than $300 million in federal grants for the website; however, the exchange was so flawed that residents were unable to use it to enroll in coverage causing the state to abandon the state-run exchange altogether. On May 20, the governor of Oregon publicly released the subpoenas.

The American Hospital Association (AHA) filed a complaint against HHS on May 22, seeking to compel HHS to meet statutory deadlines for administrative review of Medicare claims that are denied reimbursement. Providers have a right to contest denials through a multilevel appeals process and decisions are required to be made within certain time frames for each level of review. At the third level of appeal, an HHS administrative law judge (ALJ) reviews contested claims, and the statutory deadline for holding a hearing and issuing a decision is 90 days. AHA’s complaint alleges that there is currently a 20- to 24-week delay in simply docketing cases and that the average wait time for a hearing is approximately 16 months. AHA’s complaint also noted that the delays are expected to increase, particularly since HHS’s December 2013 announcement of a moratorium on provider appeals assignments to ALJs for at least two years.

An HHS rule that was intended to help rural and cancer hospitals gain greater access to specialized drugs for “off label” treatments was struck down by a federal judge on May 23. The ACA expanded the 340B (of the Public Health Service Act) drug discount program for certain types of hospitals, specialized clinics and facilities that provide care to underserved populations by requiring pharmaceutical companies to provide prescription drugs to these facilities at a lower cost than they would have otherwise been required to pay. So-called “orphan drugs,” which are used only for rare diseases and do not enjoy the same federal support as pharmaceuticals that are used for a wide-range of uses, are extremely costly. HHS had published a rule in 2013 that expanded the 340B program to include these orphan drugs and allow the facilities to purchase them at discounted rates when used for off-label purposes. Last week, the federal court held that Congress did not grant HHS the authority to modify the 340B program in this way.


The National Bureau of Economic Research, a nonpartisan research organization, released last week a study authored by MIT economist Jonathan Gruber and others finding that limited competition in ACA exchanges resulted in higher premium prices. For example, United Healthcare, the largest health plan in the country, did not offer any health plans in the federal exchange and only offered a few in state based exchanges, and Cigna only offered plans in less than six states. The study said that if competition was higher, the federal government would have saved approximately $1.7 billion in subsidies.

Former Republican Senator Trent Lott and former Democratic Senators John Breaux and Tom Daschle, have teamed up to promote the use of telemedicine. The three former senators are now registered lobbyists and are representing the Alliance for Connected Care, a nonprofit formed by numerous stakeholders in the health care industry to promote the use of remote health care. The former Senators are pushing for legislative and regulatory changes that would ease restrictions on the use of digital technology to assist with greater access to telemedicine to communities and patients nationwide.

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Health Care Reform Implementation Update - May 5, 2014

Congress returned from its Spring recess and got right to work on a number of Affordable Care Act (ACA) related issues including a bipartisan bill regarding health insurance for Americans living abroad, Medicare oversight, reports on ACA enrollee data and meetings with Health and Human Services (HHS) Secretary nominee Sylvia Burwell, whose first confirmation hearing is scheduled for next Thursday before the Senate Health, Education, Labor and Pensions (HELP) Committee. The Centers for Medicare and Medicaid Services (CMS) also had a busy week releasing a number of proposed rules regarding Medicare payment rates at hospitals and other types of health facilities for fiscal year 2015. On Friday, another HHS high-level employee announced their departure from the agency. In the states, Oregon, California and Nevada made announcements about their state-run ACA exchanges. Last week also saw a number of reports from various organizations regarding projections for ACA enrollment, polling numbers for ACA approval and disapproval, and a request for clarification on HHS’s position on charitable contributions for medical payments.


On Wednesday, HHS Secretary Nominee Sylvia Burwell met with Senate Finance Committee Chairman Ron Wyden (D-Ore.). Though no date has been set for Burwell’s confirmation hearing at the Senate Finance Committee, Senate Finance is the committee that will have to vote for her nomination to go to the Senate floor. On Tuesday, Burwell met with Senate HELP Committee Chairman Tom Harkin (D-Iowa). Burwell is scheduled to testify at a Senate HELP Committee hearing regarding her confirmation on May 8. Both Wyden and Harkin have expressed their support for Burwell’s nomination. Burwell is expected to face tough scrutiny from some Republicans on both committees who continue to express concern over ACA implementation. 

On April 29, the House of Representatives passed a bill that would change requirements for insurance company coverage for Americans living abroad. Some insurers claim that ACA-compliant health plans for American expatriates would be too costly. The bill, titled the “Expatriate Health Coverage Clarification Act of 2014,” passed by a bipartisan vote of 268-150 and would exempt U.S. health plans sold to expatriates from having to comply with some ACA requirements. The White House expressed its opposition to the bill in its current form but did not definitively say that it would veto it if it made it to the president’s desk. At this time, however, a Senate vote appears unlikely.

Also on April 29, the House Ways and Means Health Subcommittee held a hearing on Medicare oversight. The HHS Deputy Inspector General for Audit Services Gloria Jarmon testified that CMS paid out $50 billion in improper payments in 2013. In her testimony, Jarmon provided details on the amount of improper payments for three major Medicare programs: $36 billion to the Medicare fee-for-service program, $11.8 billion to Medicare Advantage and $2.1 billion to the Medicare Part D program.

On April 30, the House Energy and Commerce Committee reported it had collected data illustrating that only 67 percent of ACA exchange enrollees had paid their first month’s premium by April 15. In light of these findings, the House Energy and Commerce Oversight and Investigations Subcommittee will hold a hearing on May 7 titled “Patient Protection and Affordable Care Act Enrollment and Insurance Industry.” Insurance providers and their trade groups have been asked to testify. President Obama and other Democrats pushed back against the significance of the figure highlighting that premium payments are not due until May 1. 


CMS released a lengthy proposed rule regarding hospital payments on April 29 that implements several provisions included in the ACA. Under the proposed rule, hospitals would be required to release a standard list of prices for the medical services they provide or give the public access to such information after an inquiry. Payment rates for general acute care hospitals paid under the inpatient prospective payment system would also be increased by 1.3 percent, while aggregate payments would be reduced by $241 million in fiscal year 2015 due to increased oversight and penalty provisions included in the proposed rule. The proposed rule would also increase Medicare payments to long term care hospitals by $44 million, an increase of 0.8 percent during fiscal year 2015. The proposed rule also solicits comments from hospitals regarding payments for short hospital stays. Comments regarding the proposed rule are due by June 30, 2014. The hospital payment proposed rule also contains several references to an October 1, 2015 implementation date for ICD-10, leading many to comment that CMS is tipping its hand regarding the new implementation date for the coding system. Last month, Congress delayed implementation of ICD-10 in the “doc fix” rule, but did not set a new implementation date. On May 1, an HHS spokesperson stated that the agency expects to release an interim final rule soon that will require the use of ICD-10 by October 1, 2015.

On May 1, CMS released proposed rules regarding prospective payment systems for inpatient psychiatric facilities, skilled nursing facilities (SNFs) and inpatient rehabilitation facilities (IRFs). Under the proposed rules, which would set payments for fiscal year 2015, payment rates for inpatient psychiatric facilities would increase by 2.1 percent, payment rates for SNFs would increase by approximately 2 percent, and payment rates for IRFs would increase by about 2.2 percent. Under the proposed rules, inpatient psychiatric facilities would be required to report on additional quality measures, and modifications would be made to the IRF quality reporting program and the reconsideration and extraordinary waiver circumstances processes that currently affect IRF payment rates. Under the SNF proposed rule, minor adjustments would be made to the classification system that is used to set payments.

On April 30, the Bureau of Economic Analysis released data showing that consumer spending on health care surged in the first quarter of the year, resulting in its fastest growth in more than 30 years. Growth in health care spending increased by 9.9 percent in the first quarter of 2014 compared to the last quarter of 2013. Many are attributing the surge to implementation of the ACA. Without the health care-attributed increase, the nation’s gross domestic product would have fallen for the first time in three years. The analysis included ACA enrollments through February 15, 2014.

On May 2, Mike Hash, the director of the HHS Office of Health Reform, announced that he will be retiring at the end of May. He had been with the Office of Health Reform since 2011. Hash is the third high-level HHS official to announce their departure from the agency in the last month.


On Thursday, the Obama administration released a report showing that between October 1, 2013 and April 19, 2014, 8,019,763 people enrolled in ACA exchange plans and that Medicaid and CHIP added 4.8 million people. This same report also provided further details regarding ACA exchange enrollees: 28 percent of enrollees are young adults, 54 percent of enrollees are women, 65 percent of enrollees chose a silver-level plan, 20 percent chose a bronze-level plan, 9 percent chose a gold-level plan, 17 percent are African-American, 11 percent are Latino, 8 percent are Asian and 63 percent are Caucasian. Outgoing HHS Secretary Kathleen Sebelius attributed the enrollment figures to an “unprecedented outreach” effort in which she said she visited 100 cities.


The Oregon Legislative Counsel says that the Cover Oregon’s board of directors does not have the right to dismantle the technical-glitch plagued state-run exchange in Oregon and enroll the state in the federal health exchange. It is unclear whether the counsel’s decision is legally binding.

In Nevada, the board that runs the Silver State Health Insurance exchange delayed a decision on whether to abandon the state-run exchange and instead requested a cost analysis report on its “feasibility.” 

A proposal from the Obama administration would shift responsibility from the federal government to the states for determining who would receive a waiver from the individual mandate in the 2015 enrollment period. Seven states that run their own exchanges have protested that they do not have the technical capability for this and ask that this responsibility remain with the federal government.

A report drafted by the Robert Wood Johnson Foundation found that states that used the federal marketplace instead of creating their own state-run exchanges spent far less on outreach and enrollment efforts. The 16 states that ran their own exchanges paid an average of $17.15 per uninsured resident, while states that used the federal marketplace spent only $5.42 per resident.

The California Senate Health Committee advanced a bill that would expand the state Medi-Cal plan to include undocumented immigrants.


A new report issued by S&P Capital IQ argues that large companies will be encouraged to drop employee health plans by 2020 in favor of sending their employees to ACA exchanges. The report claims that companies would save money by paying the ACA employer penalty instead of providing their employees with health coverage. The report estimates that by 2025, publicly traded companies could save $700 billion by dropping employee health plans. 

On April 28, the American Hospital Association and Catholic Health Charities sent a letter to HHS asking it to clarify CMS guidance from February 7 and an interim final rule from March 14 regarding ACA premium subsidies provided by charitable organizations. The two organizations requested clarification in light of seemingly conflicting guidance from CMS regarding such third-party premium assistance payments.

The second-biggest health insurer in the United States, WellPoint Inc., has increased its profit forecast for 2014 and lowered its premium increase estimates due to new customers who have signed up through ACA exchanges. NewWellPoint, Inc., customers who enrolled in ACA exchanges are younger than had been anticipated and thus decreased the expected health insurance costs to the company overall. 

A Kaiser Family Foundation poll released on April 29 shows that public opinion regarding the ACA has remained largely unchanged. The poll was conducted April 15-21 and surveyed more than 1,500 adults. Overall support for the ACA remains at the exact level as the previous month’s poll with 38 percent of respondents stating a favorable view for the law

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 ActDatabook.