Health Care Reform Implementation Update November 25, 2013

Though administration officials are now downplaying the date, the November 30 deadline government consultants set for fixing HealthCare.gov is this week. Some Democrats who have gone to the mat for the Affordable Care Act (ACA), especially those who are up for reelection, are getting worried the deadline will not be met, and Wall Street analysts are predicting November 30 to be a telling day, not only in terms of how Congress will treat the law going forward but also for health care stocks. Late last week, the Department of Health and Human Services (HHS) announced it plans to delay the start of year two (2015) ACA enrollment by one month, which would fall right after the November midterm elections. Another delay was announced this week as well; due to the continued trouble withHealthCare.gov as well as plan cancellations, HHS announced a one-week delay in the deadline to apply for January 1 coverage, from December 15 to December 23. Finally, the Senate Finance Committee scheduled a markup of the sustainable growth rate (SGR) formula proposal for December 12; however, no decisions have been made on offsets for the cost of repeal.

ON THE HILL

On November 21, the Senate voted to change Senate rules, abolishing the chamber’s filibuster for most presidential appointments. The Senate’s rule change is likely to raise partisan tension and further frustrate the ability for agreement. With respect to health care, the change should make it significantly easier for President Obama to fill the Independent Payment Advisory Board (IPAB), the panel created by the ACA tasked with slowing the growth of Medicare spending, and other executive appointments and federal judicial openings, but not legislation or Supreme Court nominations.

On November 13, the Congressional Budget Office (CBO) issued its annual report citing five health care reform possibilities that could reduce the federal deficit. These options are: converting Medicaid to a block grant program, converting Medicare to a premium support model, imposing restrictions on Medigap plans, bundling Medicare’s payments, and reducing tax preference for employment-based health insurance.

The Senate Finance Committee will hold a markup to consider legislation to repeal the sustainable growth rate system and health care extenders on December 12. If Congress does not act, Medicare pay cuts of 24.4 percent are set to take effect on January 1.

During a Senate Small Business and Entrepreneurship Committee hearing on November 20, members agreed that small business owners shopping for health plans need assistance from brokers and agents. Consumer Information and Insurance Oversight (CCIIO) Director Gary Cohen testified before the committee on SHOP exchanges, and when asked, said he was neither surprised nor unsurprised by the cancelled insurance policies.

Congressmen Paul Ryan (R-Wis.) and Tom Price (R-Ga.), as well as other House Republicans, are pushing a plan to limit the amount of federal funding that can be used toward Medicaid expansion. The federal government has currently pledged to cover 100 percent of newly eligible Medicaid beneficiaries for the first three years. While this proposal is not officially being considered by the budget conference committee, it is being widely discussed by Republicans on the hill. Though such a plan has very little chance of passing in the Senate, the very reintroduction of the concerns may dissuade governors still deciding on Medicaid expansion from expanding.

The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations hosted a hearing on November 19 at which the Centers for Medicare and Medicaid Services’ deputy chief information officer, Henry Chao, testified. Mr. Chao said that making HealthCare.gov work for the vast majority of users by November 30 was an attainable goal, but he would not give a guarantee. In a play on what many have charged is a broken promise by President Obama, Chairman Tim Murphy (R-Pa.) began the hearing by saying that the website “screams to those trying to break in to the system if you like my health care information, you can steal it.”

On November 14, Democratic House members met with HHS Sec. Sebelius to discuss options for legislation to supplement President Obama’s policy unveiled earlier that day to allow insurers to offer existing coverage to consumers despite not meeting ACA minimum standards.

Senators John Thune (R-S.D.), Lamar Alexander (R-Tenn.), Orrin Hatch (R-Utah), and eight of their Republican colleagues introduced the Union Tax Fairness Act (S.1724) on November 19. The bill would prevent union health care plans, known as Taft-Hartley plans, from being exempted from the ACA reinsurance tax, which is scheduled to begin in 2014 and would require all self-insured plans to pay a tax for each person covered under a health plan. Additionally, last week, Sens. Thune, Alexander and Hatch led 18 of their Senate colleagues in sending a letter urging the Obama administration not to move forward with a proposed regulation to exempt unions from the reinsurance tax.

On November 15, the House voted 261-157 in favor of a bill sponsored by Energy and Commerce Chairman Fred Upton (R-Mich.), the Keep Your Health Plan Act. The bill would allow plans that existed on the individual market on January 1, 2013 to stay in effect through 2014. Thirty-nine House Democrats voted with Republicans to support the legislation to allow health insurers to continue selling plans canceled under the ACA through 2014. Meanwhile, interest and momentum are growing for a bill introduced by Senator Mary Landreiu (D-La.) and seven others, the Keeping the Affordable Care Act Promise Act, to allow individuals to keep their individual market plans that have been canceled as a result of ACA requirements. President Obama has threatened a veto to the House legislation.

The House Science, Space and Technology Committee held a hearing on the security of information on HealthCare.gov, titled “Is my Data on HealthCare.gov Secure?”

The Medicare Payment Advisory Commission, MedPAC, the independent body that advises Congress on issues affecting the Medicare program, is next scheduled to meet on December 12 and 13. We will provide further information on the agenda when it becomes available.

The Medicaid and CHIP Payment and Access Commission, MACPAC, a non-partisan federal agency charged with providing policy and data analysis to the Congress on Medicaid and CHIP, is next scheduled to meet on December 14 and 15. We will provide further information on the agenda when it becomes available.

AT THE AGENCIES

As we noted last week, the administration released enrollment numbers for the Affordable Care Act (ACA) health insurance exchanges on November 13. The results came in far below the administration’s predictions, with 106,185 people signed up for health insurance plans through the ACA in October.

Top administration technology officials, as well as contract workers, say that they are making progress on HealthCare.gov; however, it is unlikely to be functioning perfectly by November 30, the day contractors and the administration had set in early October. On November 13, the government's top information technology experts testified before the House Oversight Committee. At the hearing, White House Chief Technology Officer Todd Park told a House panel that the ACA enrollment website still needed a lot of work. Government and contract workers have been reporting that HealthCare.gov can handle only half its projected volume. On November 15, Jeff Zients, whom President Obama named to fix the HealthCare.gov problems, said that 50 top-priority items remained on the list of tech fixes that were needed.

During a House Committee on Homeland Security hearing on November 13, Roberta Stempfley, acting assistant secretary of the Department of Homeland Security's Office of Cybersecurity and Communications, said that her agency was aware of about 16 reports of cybersecurity threats related to HealthCare.gov.

Centers for Medicare and Medicaid Services (CMS) spokeswoman Julie Bataille said the Spanish-language federal health insurance exchange website will be accepting applications by the end of November.

In reaction to the malfunctioning website, CMS contacted about 275,000 people who unsuccessfully attempted to enroll in coverage onHealthCare.gov, and encouraged them to try again. Additionally, the administration is now working with insurers to allow those who qualify for premium subsidies to enroll directly with insurance companies. CMS Communications Director Julie Bataille said HealthCare.gov can now determine subsidies for consumers signing up for coverage directly through insurers, as opposed to through the federal website.

Due to health plan cancellations and HealthCare.gov difficulties, HHS is delaying the deadline to apply for January 1 coverage from December 15 to December 23.

On November 22, CMS released calendar year 2014 payment rules for end stage renal disease facilities and home health agencies.

AT THE WHITE HOUSE

As we addressed in last week’s update, on November 14, President Obama announced that health insurers would be able to extend existing plans for individuals through 2014 that would otherwise have been cancelled due to changes under the ACA. This proposed fix does not guarantee that extensions will be available, but rather allows insurers to offer the extension and for state regulators to approve it. Several Republicans, including House Speaker John Boehner, spoke out afterwards arguing that the president might not have legal authority to enact this administrative fix.

On November 20, President Obama, Secretary Sebelius, and CCIIO Director Gary Cohen met with state insurance commissioners about the president’s proposal to prevent or undo plan cancellations. President Obama acknowledged the diversity of states’ needs in the meeting, and state insurance commissioners may decide on their own whether to go along with the president’s proposal. As many states continue to make their decisions, Washington State, Rhode Island and Massachusetts have already said that they will not go along with the plan. Florida said it would, and California said it would go along with the administrative fix; however, California health insurers are opposing the plan citing risk pool distortion concerns. Other insurers and state regulators also are citing concerns that the fix will undermine the ACA and hike premium prices.

On October 21, the White House released a letter for insurers to circulate to their customers providing information on health coverage options.

On November 21, the Obama administration confirmed that it is planning to delay the ACA’s second-year enrollment period to provide insurers with more time to set rates after considering their plan experiences during 2014. This also pushes open enrollment period until just after the November midterm elections.

On November 15, President Obama and senior administration officials met with the CEOs of several big insurance companies, along with leadership from America’s Health Insurance Plans (AHIP). In attendance were CMS Administrator Marilyn Tavenner, Director of the Health Reform Office at HHS Mike Hash, the White House Chief of Staff Denis McDonough, White House Senior Advisor and Assistant to the President for Intergovernmental Affairs and Public Engagement Valerie Jarrett, White House Deputy Assistant to the President for Health Policy and Coordinator for Health Reform Chris Jennings, as well as the CEOs from Aetna, Humana, CareFirst, Cigna Healthcare, Health Net, Inc., Blue Shield of Florida, Health Care Services Corporation, Independence Blue Cross, America’s Health Insurance Plans, Molina Healthcare, Tufts Health Plan, Blue Cross Blue Shield Association, Wellpoint, Kaiser Permanente and Blue Cross Blue Shield North Carolina. The group discussed best ways to eliminate disruption for consumers as they transition to new coverage.

On November 14, the White House announced that President Obama plans to nominate Vivek Hallegere Murthy to succeed Regina Benjamin as surgeon general. He is the co-founder and president of Doctors for America, which was originally Doctors for Obama in 2008.

IN THE STATES

On November 14, Wisconsin Governor Scott Walker said he was planning to delay for three months his state’s plan to move 77,000 low-income people into the health law’s new marketplace.

On November 15, Alaska Gov. Sean Parnell said his state would not expand its Medicaid program under the ACA due to a new report estimating that the expansion would cost Alaska around $200 million over seven years.

The D.C. city government named Chester A. McPherson the new acting insurance commissioner, following the former commissioner, William White’s termination. The day before he was fired, former insurance commissioner White had released a statement titled, “White says president's announcement undercuts exchanges."

IN THIRD PARTIES

Leaders from the insurance industry, including CEO of America’s Health Insurance Plans (AHIP) Karen Ignagni, continue to say that the “fix” could destabilize the health insurance market.

A new poll from Gallup shows that 56 percent of adults do not believe that the government has a responsibility to ensure Americans have health insurance, and 42 percent say it is the government’s responsibility.

Last week, the American Medical Association (AMA) submitted 12 pages of recommendations for revamping the SGR replacement proposal of Senate Finance and Ways Means. The recommendations include: reduce penalties, increase pay, make CMS determine prospectively whether doctors are in alternate pay models, compare doctor performance among practices of similar size, and put in context data on what Medicare pays doctors.

 

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