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 Post-Election 2012 Health Care Reform

Post-Election Health Care Reform and the Road Ahead for Physicians and Patients: What’s Next for ACA Implementation?

Implications of the Election
With the re-election of President Barack Obama and continued Democratic control of the Senate, the Affordable Care Act (ACA) is the law of the land and its implementation has moved into high gear.  Key areas of focus will be on the launch of health insurance exchanges in the states by January 1, 2014, and expanding Medicaid coverage to millions of low-income individuals.  Regulations are expected to be issued by the Administration soon that will provide detailed guidance on implementation of federal exchanges, standards related to essential health benefits, health insurance and exchange responsibilities with regard to actuarial value, quality, and accreditation, employer requirements, and health insurance market rules.  States have important decisions to make soon about whether to establish their own state-based health insurance exchanges, operate exchanges in partnership with the federal government, or allow the federal government to operate federally-facilitated exchanges in the states; and whether to expand Medicaid to cover more low-income individuals and families. 
The Supreme Court decision on the Individual Mandate and Medicaid
The Supreme Court decision on the ACA announced on June 28, 2012, addressed two key policy questions: 
  • Does Congress have the power to require virtually all Americans to obtain health insurance or pay a penalty?
  • Did Congress exceed its powers by conditioning federal Medicaid funding on a state’s implementation of the ACA’s expansion of Medicaid coverage?
The Court upheld the insurance coverage mandate as a reasonable exercise of Congressional authority to tax and spend.  In 2006, 2010, and 2011, the AMA House of Delegates voted to support an individual responsibility to obtain health insurance for those who can afford it, as well as tax credits and subsidies to help lower-income individuals obtain it. 
With respect to the Medicaid expansion, the Court ruled that Congress exceeded its authority by threatening to withhold existing Medicaid funds from states that fail to expand their programs to cover all non-elderly Americans with incomes up to 133 percent of the Federal Poverty Level (FPL).  In practical terms, this means Medicaid expansion pursuant to the ACA is optional.  States that choose not to expand their Medicaid programs will maintain their existing federal funding without any penalties.  States that expand their programs will receive 100 percent federal funding for newly eligible beneficiaries (expansion population) from 2014 through 2016, phasing down to 90 percent in later years.
In response to questions received from the nation’s governors, state Medicaid directors, and the AMA and other stakeholders, the Centers for Medicare and Medicaid Services (CMS) has indicated that 1) a state may choose whether and when to expand coverage; 2) those states that expand may later drop coverage when the federal funding percentage drops to below 100 percent; and 3) additional funds are available for upgrading state Medicaid IT systems even if a state does not expand its Medicaid program.
However, CMS has not yet indicated whether states can expand their Medicaid programs partially, for example to 100 percent of FPL, still receive enhanced federal funding, and place individuals and families with incomes between 100 to 133 percent FPL in the exchanges, where the federal government would provide tax subsidies and cost-sharing subsidies.  The agency has indicated that detailed information will be forthcoming.  However, officials have also noted that the court’s decision leaves all other aspects of the law intact, including those affecting Medicaid, such as maintenance of effort requirements and hospital disproportionate care cuts scheduled to begin in 2013.
Physicians and others also have questions about the implications of a Medicaid expansion on stretched state budgets as well as typically low payment rates that pose access problems for current program participants.  Moreover, state governors are concerned about probable Medicaid cuts as part of any deficit reduction deal passed by Congress.  Some states may wait to make any decision until after January when state legislatures reconvene.
Implementation of the ACA
Regulatory steps to implement the ACA, on both the federal and state levels, began almost immediately after the law was signed in the Spring of 2010.  The AMA has been engaged in an aggressive advocacy campaign, responding to and shaping over 60 regulatory proposals to-date.  The principal aim of these efforts has been to assure that all physician specialties in their broad array of practice settings and communities have real opportunities to lead and succeed as our health care system continues to evolve. 
Some examples of AMA advocacy achievements in ACA implementation efforts include:
  • Regulations were improved significantly to ensure physicians can successfully lead in Accountable Care Organization (ACO) formation and implementation, and advance funding for infrastructure investments is being provided at the AMA’s urging to enable small physician practices to lead and participate in ACOs
  • Barriers to physician-led health care delivery innovations were removed by securing Medicare program integrity law waivers and eased antitrust restrictions
  • Physician representation was secured on the health insurance exchanges
  • Uniform operating roles for eligibility and claims status electronic transactions and standards for electronic funds transfers were successfully promoted to ease administrative burdens on physician practices
  • Design enhancements were made in the Physician Quality Reporting System and the Physician Compare Web Site
  • The expanded Form 1099 information reporting requirement was repealed, which would have required most businesses, including physician practices, to file a Form 1099-MISC with the IRS for certain transactions of $600 or more
The next focus of implementation will be getting the exchanges up and running by January 1, 2014, and enrolling millions of individuals beginning October 1, 2013.  While states were originally supposed to notify CMS of their exchange plans by November 16, CMS has extended the deadline: states now have until December 14 to submit a letter of intent and an application to operate its own exchange.  The deadline for declaration letters and applications for state-federal partnership exchanges has been extended until February 15, 2013.  As of November 16, eighteen states and the District of Columbia have indicated they will run their own exchanges, a handful of states have indicated they are planning for a partnership exchange, and fifteen states have opted for a federally-facilitated exchange.  Key exchange issues for physicians include the following:
  • the AMA prefers “open marketplace exchanges” where all plans meeting exchange standards can participate rather than “active purchaser” exchanges where a state chooses which plans can participate;
  • physicians should be able to participate on exchange governing boards;
  • physicians need “real-time” information on patients’ coverage, especially as they move back and forth between exchange and Medicaid (“churn” issue); and
  • there is a need for robust provider networks.
Additional ACA changes currently advocated by the AMA
While the ACA represents a tremendous step forward on the path toward meaningful health system reform, some important changes are needed and issues that were omitted must be addressed.  Key issues that the AMA is pursuing include:
  • Elimination of the Independent Payment Advisory Board, or IPAB, which the AMA opposes because of its broad scope and authority, and its potential for subjecting physicians to double jeopardy for Medicare payment cuts
  • Significant revision or elimination of the cost/quality value index scheduled for implementation in 2015
  • Restoration of full physician hospital ownership rights
  • Elimination or clarification of provider antidiscrimination provisions pertaining to health plans
  • Clarification that high deductible health plans coupled with health savings accounts can be offered in the health insurance exchanges
  • Elimination of prescription requirements for over-the-counter medications purchased with tax-preferred health spending accounts

Some of the key issues pre-dating enactment of the ACA that must be resolved include:

  • Elimination of Medicare’s sustainable growth rate (SGR) formula, which annually calls for impossibly steep cuts in physician payments
  • Passage of the Medicare Patient Empowerment Act to remove existing barriers to private payment agreements between patients and physicians
  • Enactment of meaningful medical liability reforms to improve care and reduce health care costs