House PPACA Hearings

At a House Energy and Commerce Health Subcommittee hearing, the representative from the state of Pennsylvania testified that the Patient Protection and Affordable Care Act (PPACA) dictates health care policies to the states and that the Medicaid expansion fails to treat states as true partners (e.g. by supplanting the successful State Children’s Health Insurance Program (SCHIP) program in that state). As a result, he said the PA Governor would not establish a state-based health insurance exchange and will delay deciding whether to adhere to the Medicaid expansion dictated by the law.

Republican members were critical of the U.S. Department of Health and Human Services (HHS) for not providing “critical information to members of Congress, to the states, or to the health plans” regarding the implementation of the exchanges. On the other hand the Center for Consumer Information and Insurance Oversight (CCIIO) Director testified that the Administration has provided ample guidance and $2.1 billion in grants to the states to help them establish their health insurance exchanges. A consulting firm also testified that current estimates show that only about one-third of all exchange enrollees will be covered under state-run exchanges and that the remainder will be covered under the default federally-run exchange.

In related news, HHS announced that six states--Colorado, Connecticut, Massachusetts, Maryland, Oregon and Washington--have received “conditional” approval to operate their own health insurance exchanges and that eight states--California, Hawaii, Kentucky, Minnesota, Mississippi, New York, Rhode Island and Vermont--and the District of Columbia have applied to do so. The Governor of Idaho recently announced his state will attempt to set up its own state-run health insurance exchange while the Tennessee Governor said he will not.

In response to the call for more guidance on health insurance exchanges, the HHS Secretary sent a letter to governors which includes 39 Frequently Asked Questions on Exchanges, market reforms and Medicaid, e.g. how state partnerships and the Federal Exchange will work, including how they will interact with state insurance departments and Medicaid programs; how exchanges and Medicaid administrative costs will be paid for; how states can provide premium assistance for exchange plans, as well as adopt “bridge” plans that will allow individuals and families to keep the same health plans and providers if their eligibility changes for Medicaid and exchange coverage; how multistate insurance plans will be managed by the Office of Personnel Management; and how HHS will supplement coverage to ensure that all “essential health benefits” are covered. HHS also said that so-called “blueprint applications” for state-based exchanges expired on December 14th and that partnership exchange applications are due by February 15th.

HHS Disallows Partial Medicaid Expansion Under PPACA

HHS/CMS announced that states will not receive enhanced federal funding if they expand Medicaid at a level below the levels set under the PPACA. However, CMS said the agency will consider a state’s proposal for a “partial Medicaid expansion” in accordance with the agency’s federal authority to approve demonstration projects. Federal funding at 100% will be provided to states that expand Medicaid coverage to 133% of the federal poverty level in 2014-2016, but the matching rate will scale down to 90% by 2020. In addition, the SCHIP/Medicaid “blended” federal matching rate will no longer be available to state programs. By eliminating the chance for states to receive such a blended matching rate, Senators Orrin Hatch and Rep. Fred Upton accused the Administration of employing a “bait and switch” tactic.

PPACA Medical Device Tax in Crosshairs

Senator Joseph Lieberman (CT-I) and 17 senate Democrats sent a letter to Senate Majority Leader Harry Reid (D-NV) urging him to take up legislation to delay the implementation of the 2.3% PPACA medical device tax which takes effect on January 29, 2013. However, Senate Finance Committee Chairman Max Baucus (D-MT) was cool to the idea given the major hurdle to find revenues to offset the cost of the delay.

Senator Rockefeller Opposes Managed Care for Dual-Eligibles

At a Senate Finance Committee hearing, “Improving Care for Dually-Eligible Beneficiaries: A Progress Update,” Senator John D. Rockefeller (D-WV) said the CMS Financial Alignment Initiative designed to improve care for Medicare/Medicaid eligibles is a failed approach in that it is pushing dual-eligibles into managed care plans which he said have not demonstrated success in improving care for such beneficiaries.

GAO Recommends Changes to ESRD Payments

The Government Accountability Office (GAO) issued a report, “End-Stage Renal Disease: Reduction in Drug Utilization Suggests Bundled Payment Is Too High,” which recommends that Congress consider requiring HHS to “rebase the ESRD bundled payment rate as soon as possible and on a periodic basis thereafter, using the most current available data….”. The GAO said the current framework may have resulted in $650-800 million in 2011 overpayments.

Medicare PET Scan Coverage

CMS issued a proposal under which local Medicare Administrative Contractors (MACs) would be allowed to determine coverage of FDA approved imaging agents used in positron emission tomography (PET) scans. The proposal would not preclude a CMS national coverage decision on the matter in the future.

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