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Everything You Need to Know About Health Care Reform (But Are Afraid to Ask)
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Transcript of Everything You Need to Know About Health Care Reform (But Are Afraid to Ask)
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Copyright 2010
Everything You Need to Know About Health Care Reform
(But Are Afraid to Ask)
Barry F. Rosen, Esq.Catherine A. Bledsoe, Esq.
Cynthia A. Shay, Esq.
233 E. Redwood StreetBaltimore, Maryland 21202
410-576-4224 • [email protected]
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Health Care Reform
• Patient Protection and Affordable Care Act of 2010 (PPACA)– Passed by Senate on Dec. 24, 2009– Passed by House on March 21, 2010– Signed March 23, 2010
• Health Care and Education Reconciliation Act of 2010 (Reconciliation Act)– House passed with PPACA to eliminate or modify
certain provisions of PPACA– Signed March 30, 2010
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A Little Bit of Everything
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Introduction
Impact on Employers & Medicaid Expansion
Impact on Insurance & Tax Changes
Quality & Cost Containment
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Health Care Reform
What are the requirements on employers?
How has Medicaid been expanded?
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Employers – Overview
• New programs and incentives
• New employment-related requirements
• New requirements for group health plans
• 2014 reforms
• Reporting and disclosure
requirements
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Employers – New Programs
Temporary Reinsurance Programfor Early Retirees (Sec. 1102)
• $5 billion reinsurance fund for employer-based plans that provide coverage for eligible early retirees (pre-Medicare retirees ages 55 through 64)
• Fund reimburses participating plans 80% of the cost of benefits provided per enrollee in excess of $15,000 and below $90,000
• Employers must apply to HHS to participate
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Employers – New Programs
Small Business Tax Credit for Providing Employee Health Insurance (Sec. 1421)
• Qualified small employers (no more than 25 FTEs; average salary ≤ $50,000)
• Tax credit of up to 50% (35% for tax-exempt) of employer’s contribution toward cost of health insurance for employees
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Employers – New Programs
Closing the Donut Hole in Medicare Part D Prescription Coverage
• Donut hole between $2,830 and $6,440
• Effective 2010 – $250 rebate (Sec. 3315)
• Effective 2011 – 50% discount on brand name drugs and additional discounts and generic drug coverage (Sec. 3301)
• Effective 2013, repeal of Medicare Part D subsidy deduction (Sec. 9012)
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Employers – New Requirements
Reasonable Unpaid Breaks for Nursing Mothers (Sec. 4207)
• Employer must give nursing mothers reasonable break times to express milk
for one year after child’s birth and must provide a private place, other than a bathroom, for this purpose
• Employers with fewer than 50 employees may be exempt if requirement would impose an undue hardship
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Employers – New Requirements
Whistleblower Protection (Sec. 1558) Employer cannot discharge or discriminate against employee because employee
• receives federal tax credit or subsidy
• provided, or is about to provide, information relating to a violation or what employee
reasonably believes to be a violation of Title 1 of PPACA
• objects to or refuses to participate in any activity employee reasonably believes to be a violation
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Employers – New Requirements
Simple Cafeteria Plans for Small Employers (Sec. 9022)
• Effective 1/1/2011
• Eligible small employers (100 or fewer employees in either of last two years)
• Simple cafeteria plan to provide employees with tax-free benefits
• Exempt from nondiscrimination requirements applicable to cafeteria plans of larger employers
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Employers – 2014 Reforms
“Play or pay” mandate (Sec. 1513)• Large employers (at least 50 FTEs)• Offer “minimum essential coverage” or pay
penalty of $2,000 per FTE (minus first 30 FTEs)
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Employers – 2014 Reforms
Penalty for offering coverage that does not
satisfy minimums:
$3,000 per FTE who receives federal subsidy; maximum penalty of $2,000 times total number of FTEs (minus first 30 FTEs)
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Employers – 2014 Reforms
“Free choice vouchers” (Sec. 10108)
• Offered to qualified employees
• Cost is 8% – 9.8% of household income
• Household income ≤ 400% FPL
• Doesn’t participate in employer’s plan
• Employee uses voucher to purchase alternative coverage through exchange
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Employers – 2014 Reforms
Automatic enrollment (Sec. 1511)
Required for employers
with over 200 FTEs offering
health coverage; subject
to opt-out
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Employers – 2014 Reforms
Expanded Wellness Incentives
• Employers may offer employees incentives of up to 30% of premium cost for participating in a workplace wellness program and meeting healthcare-related standards (HHS could permit incentives up to 50%)
• $200 million program to award grants to small employers (< 100 employees) to initiate workplace wellness programs (Sec. 10408)
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Employer – Reporting Requirements
Reports to the Federal Government
• 2011 – Report cost of employer-sponsored health, dental, and vision coverage and employer HSA and HRA contributions on employee’s W-2 form (Sec. 9002)
• 2014 – Report health insurance coverage information for each participant and beneficiary (Sec. 1514)
• 2018 – Report excess amounts subject to “Cadillac Plan” excise tax (Sec. 9001)
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Employer – Reporting Requirements
Disclosures to Participants
• March 2011 – HHS to draft standards for summary of benefits and explanation of coverage (Sec. 1001)
• March 2012 – Employers provide summary of benefits and explanation of coverage consistent with new standards (Sec. 1001)
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Employer – Disclosure Requirements
Notices to Participants – Effective 2014
• Explanation of exchange coverage options and premium subsidy rights (Sec. 1512)
• Notice of health insurance coverage information employer provided to IRS (Sec. 1514)
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Medicaid Expansion
How is Medicaid expanded?
• Provides a national floor for coverage
• Eliminates exclusion of childless adults from coverage
• Provides states with significant new federal resources to fund the expansion
• Provides coverage to an additional16 million by 2019
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Medicaid Expansion
Who is eligible?
• National floor of 133% FPL in 2014
• No categorical restrictions for those under 65
• Those eligible as of 3/23/2010 continue to be eligible until 2014 (adults) and 2019 (children)
• Those with incomes between 133% and 400% FPL are eligible for subsidies through state-based Health Benefit Exchanges
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Medicaid Expansion
How is the expansion financed?
• 100% federal financing for the newly eligible from 2014 through 2016 (phased down to 90% by 2020)
• States receive current match rates for those currently eligible
• States that have already expanded eligibility to adults receive phased-in increase
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Medicaid Expansion
What benefits will Medicaid cover?
• Newly eligible adults get benchmark package that meets minimum essential health benefits
• States can provide more comprehensive packages
• The elderly and disabled continue to receive broader package
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Medicaid Expansion
How is access to care improved?• States must make it easier to enroll
• Medicaid payments for primary care physicians and services are increased to 100% of Medicare rates for 2013 and 2014 (with full federal financing for increase)
• Significant investments in community health centers
• $100 million in grant funding for states to establish programs to help recipients cease tobacco use, control weight, lower cholesterol and blood pressure and/or avoid or improve management of diabetes
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Medicaid Expansion
What happens to CHIP?
• Provides funding through 2015
• Provides authority through 2019
• Requires states to maintain eligibility standards for children in Medicaid and CHIP through 2019
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Medicaid Expansion
What will the expansion cost?• $434 billion federal cost for coverage-related
changes 2010-2019
• $8.3 billion federal cost for increased payments to primary care physicians
• $6.09 billion federal cost for Community First Choice Option
• $20 billion increased state cost 2010-2019
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Medicaid Expansion
What are the savings?
• Medicaid prescription drug coverage ($38.14 billion)
• Reduction in Medicaid disproportionate share hospital ($14 billion)
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Health Care Reform
• Individual responsibilities/subsidies
• Changes to private insurance
• Health insurance exchanges
• Financing
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Data Sharing
• Creation of “new program”
• Data sharing/coordination between– IRS– HHS– State Insurance Commissioners– State Exchanges– Employers– Private Plans– Employees
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Individual Responsibilities
• Starting in 2014 everyone must have “essential minimum coverage”– Government programs, employer coverage,
grandfathered plans, exchange plans
• Persons exempt– prisoners, undocumented aliens, religious
objectors
• No coverage = tax penalty (“shared responsibility payment”)
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Individual Responsibilities
“[the mandate] . . . will broaden the health
insurance risk pool to include healthy individuals . .
. [and] is essential to creating effective health
insurance markets in which improved health
insurance products that are guaranteed issue and
do not exclude coverage of pre-existing conditions
can be sold”
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Individual Responsibilities
Penalties• Penalties phased in over 3 years, max $695 or
2.5% of income• Average cost of policy?• Not paying is not a crime• IRS may not use liens or levies to collect• Undocumented aliens not subject to mandate
– “The [mandate] achieves near-universal coverage. . .”
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Individual Subsidies
• Premium credits to purchase insurance through a health insurance exchange
• Eligible - income between 100% - 400% of FPL
• Sliding scale, credit = excess of premium over percentage of monthly income, which varies from 2% to 9.5%
• Credits may be paid in advance
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Individual Subsidies
Subsidies• Also may be eligible for cost-sharing subsidies
• One-Third to Two-Thirds based on FPL
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Changes to Private Insurance
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Changes to Private Insurance
Temporary Risk Pool• Temporary national high risk pool for people with pre-
existing conditions– Uninsured for 6 months
– Subsidized premiums
– Ends 2014 when insurance exchanges come in
• Employers and insurers must reimburse pool for medical expenses incurred forthose people they “encouraged”to leave their plans
• Effective immediately
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Changes to Private Insurance
Grandfathered Plans
• Generally plans in effect on March 23, 2010, and plans maintained pursuant collective bargaining agreements
• PPACA exempted from most reforms• Reconciliation Act made them subject to certain
reforms (prohibitions on excessive waiting periods, lifetime limits, rescissions, and extensions of dependent coverage)
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Changes to Private Insurance
Immediate Changes (by 9/23/10)
All Individual and Group policies must:
• Offer dependent coverage for dependents under 26 (married or not)
• May not rescind coverage except for fraud• Applies to grandfathered and non-grandfathered
plans
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Changes to Private Insurance
More immediate changes…• Coverage for preventive health and
immunizations (without cost share)• No discrimination in favor of highly compensated
employees• Implement appeals process with external review• Patient protections (primary care, emergency
room visits, OB and GYN care)• Apply to non-grandfathered plans only
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Changes to Private Insurance
Lifetime and annual limits• No lifetime limits on benefits
– Effective 9/23/2010, grandfathered/non-grandfathered
• No annual limits– Effective 1/1/2014, non-grandfathered and
grandfathered group plans– Restricted annual limits prior to 2014
• Both only apply to essential health benefits
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Changes to Private Insurance
Preexisting Condition Exclusions
• 9/23/10, prohibited for children under age 19
• January 2014, prohibited generally
• Applies to non-grandfathered plans and grandfathered group plans
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Changes to Private Insurance
Clinical Services - Rebates
• Effective 9/23/2010– Plans required to report loss ratios and proportion of
premiums spent on clinical services, quality and other
• Effective 1/1/2011– Rebates to consumers if premium spent on costs
other than clinical services and quality is less than • 85% for large group plans• 80% for individual and small group plans
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Changes to Private Insurance
Quality of Care• Beginning 1/1/2012, plans must report on
whether their benefits and policies satisfy four criteria:
1. Improve health outcomes
2. Prevent hospital readmissions
3. Improve patient safety and reduce medical errors
4. Improve wellness and health promotion
• No gun control
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Changes to Private Insurance
Changes effective January 1, 2014
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Changes in Private Insurance
Fair Health Insurance Premiums
• Individual and small group markets (not grandfathered)
• Premium rates may vary only by family structure, rating area, age (ratio of 3 to 1), and tobacco use (ratio of 1.5 to 1)
• If state allows large group in Exchange, also applies to large group
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Changes to Private Insurance
Guaranteed availability of coverage
• Each health insurer that offers coverage in the individual or group market in a State must accept every individual and employer in that State that applies for coverage
• Must also continue in force such coverage at option of plan sponsor or individual
• May restrict for open or special enrollment
• Non-grandfathered only
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Changes to Private Insurance
No discrimination on health status
• May not set eligibility based on health status, claims experience, medical history, or genetic information
• Employers may vary insurance premium subsidies up to 30% for employee participation in wellness programs
• Non grandfathered only
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Changes to Private Insurance
Comprehensive Coverage
• Individual and small group plans must include coverage for essential health benefits determined by Secretary
• Limits cost-sharing
• Grandfathered plans excluded
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Changes to Private Insurance
Other changes effective 2014
• No preexisting conditions (for everyone)
• Non-discrimination in health care
• No waiting periods over 90 days (group plans only)
• Coverage for participation in clinical trials
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Health Benefit Exchanges
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Health Benefit Exchanges
American Health Benefit Exchanges
• Each state must have an exchange for individuals and small businesses (may combine into one) by January 1, 2014
• Beginning in 2016, states can create Health Care Choice Compacts to facilitate purchase of individual insurance over state lines
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Health Benefit Exchanges
• Exchanges to be administered by government agency or non-profit
• Exchanges only open to qualified health plans (QHPs)
• Funding available to states to establish exchanges – Begin by 3/23/11– End by 1/1/15
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Health Benefit Exchanges
Qualified Health Plans (“QHPs”)• Requirements:
– Certified by a state exchange (secretary to set standards)
– Must offer package of Essential Health Benefits– Insurer must be licensed in exchange state– One silver and one gold plan in each exchange– Insurer must agree to charge same premium for QHP
whether offered directly or on exchange
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Health Benefit Exchanges
Exchange certification of QHPs
• Secretary to set standards, such as marketing, network adequacy, inclusion of essential community providers, quality improvement, uniform forms, and standardized benefit presentation format for consumer comparisons
• Exchanges to encourage incentives for improved health outcomes such as quality reporting, care coordination and chronic disease management (“medical home” model), and evidence-based medicine
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Health Benefit Exchanges
Essential Benefit Package• Set by Secretary
– Ambulance, emergency, prescription drug, mental health, rehabilitative and habilitative, maternity, laboratory, wellness and preventative
– What would be in “typical” employer plan• Benefits may not discriminate based on age,
disability or expected length of life• States are discouraged from requiring more
benefits – if require them, state must pay for them
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Health Benefit Exchanges
Exchange for Small Business (Small Business Health Options Program (SHOP)
• For employers with from 1 to 100 employees– States can elect to change 100 to 50 until 2016– Once in exchange employer can stay even if grows
• To participate, must make all full-time employees eligible for coverage
• Beginning in 2017, states may open up to larger businesses
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Health Benefit Exchanges
Individual Market Exchange• To qualify for an Exchange QHP, individual
must:– Live in exchange state– Not be incarcerated – Be a citizen or alien lawfully in country for entire
enrollment period
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Health Benefit Exchanges
Risk Pools• For each insurer, all individual market
enrollees in State are considered one risk pool• All small group enrollees (except
grandfathered plans) are considered one risk pool
• Exchange and direct offered pooled together
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Health Benefit Exchanges
State Flexibility• States may contract to offer standard health plans to low
income individuals in lieu of offering coverage through exchange
• HMOs, health insurers or network of health care providers eligible to offer standard plan
• State must demonstrate that premiums do not exceed Exchange premiums for silver plans
• HHS to provide funding at 95% of premium tax credits and cost share subsidies under Exchange
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Financing
Estimated Costs
• Cost of coverage components$940B over 10 years
• Discretionary spending $115B
• All in cost of $1.2 trillion over 10 years
• Reduce the deficit by $143B over 10 years
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Financing
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Financing
Costs to be financed by:
• Savings in Medicare and Medicaid• Increases to Medicare Tax• Excise tax on “cadillac plans”• Other excise taxes• Fees on insurance and drug companies
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Financing
New FICA Taxes
• Effective 2013• Additional .9% of employee portion of Medicare
tax on income over $200k/$250k– Also applies to self employed
• New 3.8% Medicare tax on investment income for high income individuals, estates, and trusts– Tax imposed on lesser of investment income or
excess income over threshold
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Financing
Excise Tax on Cadillac Plans
• Effective for tax years after 12/31/2017• 40% excise tax on employer-sponsored high
cost plans– Value over $10,200 individual or $27,500 family– Additional value threshold for retired or high risk jobs– Tax on excess value over threshold
• Tax imposed on the issuer/plan administrator
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Financing
Taxes on Individuals• Imposed on those without insurance• Phased in over 3 years
– 2014 $95 or 1% of income– 2015 $325 or 2% of income– 2016 $695 or 2.5% of income
• No penalty if premiums from lowest cost plan > 8% of income, or income below federal tax filing levels
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Financing
Reinsurance Fees• States to establish reinsurance program• Premiums collected from insurers and group
health plans to be paid out to plans that cover high risk individuals in the individual market
• Aggregate payments - $10B for 2014, $6B for 2015, and $4B for 2016 and after
• Additional $2B in 2014, $2B in 2015 and $1B in 2016 for general fund
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Financing
Pharmaceutical Industry Fees• Beginning 2011, annual fee on drug
manufacturers and importers based on sales– $2.5B in 2011, $2.8B in 2012 and 2013, $3B in 2014-
2016, $4B in 2017, $4.1B in 2018 and $2.8B after 2018
• Non deductible• Does not apply if sales < $5M
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Financing
Health Insurance Industry Fees• Beginning in 2014, annual fee on health insurers
– Excludes self funded plans, government plans
• Allocated based on premiums written, only to insurers with net premiums > $25M– $8B in 2014, $11.3B in 2015 and 2016, $13.9B in
2017, and $14.3B in 2018 and beyond (adjusted for rate of premium growth)
• Non deductible
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Financing (Taxes)
Other New Excise Taxes and Fees• 2.3% tax on sale of taxable medical devices
(effective 1/1/2013)
• 10% tax on indoor tanning services (effective 7/1/10)
• 5% tax on elective cosmetic surgery (effective 7/1/10)
• $2 participant fee for insured and self-insured plans (for plan years ending after 9/30/12)
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Financing
Other Tax Changes• Increase in income threshold for claiming
medical expense deductions – from 7.5% of AGI to 10% of AGI, for tax years after 12/31/2012
• Limitation on excess remuneration paid by health insurance providers– Deductibility of executive compensation generally
limited to $500,000 per year
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Financing
Other tax changes…• Tax on distributions from HSAs not used for
medical expenses increased from 10% to 20%
• Tax on distributions from Archer MSA’s not used for medical exp. increased from 15% to 20%
• Limitations on health FSAs limited to $2500 per year
• Effective after 12/31/2012
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Other New Initiatives
• Investment in training programs for primary care doctors, nurses, other health professionals
• Investments in community health centers
• Expansion of loan programs for health students
• Establishment of non-profit institute for research on clinical effectiveness of treatments
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Quality & Cost Containment
1. New Programs
2. New Reimbursements
3. Fraud & Abuse
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New Programs
3022 – Accountable Care Organizations
ACO becomes accountable for the quality, cost and overall care of 5,000+ Medicare fee-for-service beneficiaries for 3 years
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New Programs
3022- Accountable Care Organizations
ACO providers get Part A & Part B
Plus “shared savings” (waiver)
Program to be established by 1/1/12
(Independence at home providers ineligible)
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New Programs
3022 – Accountable Care Organizations
BIG Questions:
How does ACO whack up the shared savings?
How does Secretary assign people to an ACO?
Interruption of referral patterns?
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New Programs
3023 – Payment Bundling
1 to 8 selected conditions
3 days before admit to 30 days after discharge
One bundled payment (no more than would otherwise be paid) paid to multi-specialty entity
5 year pilot program established by 1/1/13
Expansion, if working by 2016
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New Programs
3023 – Payment Bundling
BIG Questions:
How does entity whack up the money? (waiver)
How does Secretary assign the people to an entity?
The entity must give beneficiary sufficient choice of providers
Interruption of referral patterns?
Downstream risk?
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New Programs
3024 – Independence at Home
1/1/12
Doctors and/or nurse practitioners who have:
EMR Remote monitoring Mobile diagnostic
and willing to provide services at home 24/7
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New Programs
3024 – Independence at Home
Beneficiary must
1. Have 2 or more chronic illnesses
2. Have been admitted to a hospital within the last 12 months (non-elective)
3. Have received acute or sub-acute rehab services
4. Have 2 or more functional dependencies (bathing, dressing, walking, feeding, toileting)
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New Programs
3024 – Independence at Home
Target expenditures for Part A & Part B
Doctors/nurses share savings below target (waiver, referral patterns)
If no savings for 2 consecutive years, doctor/nurse is out of the Program
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New Programs
3024 – Independence at Home
200+ fee for service Medicare beneficiaries in each Program
But capped at 10,000 nationwide
So only 50 Programs with 200 people in each
(§3502 also lets Secretary contract with or give grants to state-designated health teams to support patient-centered medical homes)
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New Reimbursements
3007 – Value-Based Payment Modifier
Higher reimbursement based on quality of care compared to cost
Rules by 1/1/12
Information 2013 – 2014
Implementation by 2015
Revenue neutral
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New Reimbursements
5501 - 10% Monthly or Quarterly Bonus on Primary Care Services
99201 – 9921599304 – 9934099341 – 99350
IF 60% of allowed charges are primary
1/1/11 through 1/1/16
(Same for surgeons in shortage areas)
5502 – FQHC – Prospective payment system
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New Reimbursements
4103, 4104, 4105 - Annual Wellness Visits
Including personalized prevention plan (health risk assessment) & screening schedule
Include telephonic and web-based
No co-pays for annual wellness visit and other prevention services in certain circumstances
2011
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New Reimbursements
3134 - “Misvalued” codes
3135 - In 2011, 75% utilization to be assumed for Advanced Imaging
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New Reimbursements
3403 – Independent Medicare Advisory Board
Purpose: Reduce the per capita growth in Medicare spending
1. Chief Actuary says projection above target2. Then Board recommends savings strategies
from .5% to 1.5% (starting 1/15/2014)3. Then Secretary implements4. Unless Congress stops it
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New Reimbursements
3403 – Independent Medicare Advisory Board
Proposals may not
1. Ration health care2. Increase co-pays3. Restrict benefits4. Modify eligibility, or5. Reduce payments to providers
before 2019
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Fraud & Abuse
6002 – Gifts from Manufacturers
Beginning in 2013
Drug & Device Manufacturers must
Disclose the names of doctors to whom they give anything of value ($10) (other than samples and education materials, for example)
and what they gave and its value
Physician ownership also disclosed
All information to be publicly available
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Fraud & Abuse
6003 – MRI, CAT, PET
1/1/10
Doctors must disclose alternative provider at time of in-office ancillary referrals for MRI, CAT & PET
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Fraud & Abuse
6407 – Home Health - DME
1/1/10
Face-to-face patient encounter before referral for home health services or DME
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Fraud & Abuse
6402 - Overpayments
Medicare overpayments must be returned in 60 days
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Fraud & Abuse
6404 – Claims Deadline
Medicare claims must be submitted within 1 (not 3) years of service
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Fraud & Abuse
6411 - RAC
Expansion of RAC to Medicaid
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Questions