PPACA Proposed Contraception Coverage Rule

The Department of Health and Human Services (HHS), the Internal Revenue Service (IRS) and the Department of Labor (DOL) issued a proposed regulation which in general would require most health plans to cover women’s preventive services, including contraception, without charging a co-pay or deductible as recommended by the Institute of Medicine (IOM). Differing from a previous advance notice, the rule would allow third-party administrators of self-insured health plans operated by employers affiliated with religious groups that object to contraception to contract with individual insurers that would offer separate plans to cover the services (such plans would receive deductions in the user fees they would otherwise pay to participate in the federally facilitated exchange (FFE) markets as compensation). HHS said that under the rule “ “insurance companies, not churches or other religious organizations, will cover contraceptive services….No nonprofit religious institutions will be forced to pay for or provide contraceptive coverage, and churches and houses of worship are specifically exempt….”

PPACA Basic Health Program Delayed

HHS announced that, because of the lack of time to provide guidance this year, the implementation of the PPACA Basic Health Program will be delayed a year until 2015. Beginning that year, the program will be designed to help individuals with incomes up to twice the federal poverty level, who are not Medicaid eligible, to get affordable health coverage.

Bundled Payments Initiative

CMS announced that more than 500 health care organizations have been selected to participate in the PPACA’s Bundled Payments for Care Improvement program. The new payment model will test whether paying providers a lump sum for a patient’s entire episode of care will result in a reduction in the overall cost of care. The first model, the Retrospective Acute Care Hospital Stay Only will begin in April. The other three models include: the Retrospective Acute Care Hospital Stay Plus Post-Acute Care (Model 2); the Retrospective Post-Acute Care Only (Model 3); and the Acute Care Hospital Stay Only (Model 4).

CBO Estimates Costs of PPACA

The CBO released a report on the effects of the PPACA which estimates: that the number of individuals with coverage under health insurance exchanges will increase from 7 million in 2014 to 24 million in 2016; that the number of people added to Medicaid will rise from 8 million in 2014 to 11 million in 2016; that the 2013-2022 cost of subsidies for individuals obtaining health insurance through the exchanges is about $32 billion; that 7 million fewer people will have employment-based health insurance by 2022 (an increase from an earlier estimate of 4 million); that $130 billion in revenue (penalties) will be raised in 2013-2022 from employers who do not provide health coverage; and that $45 billion in revenue (penalties) will be raised in 2013-2022 from uninsured individuals who are required to meet the individual mandate.

PPACA Reduces Part D Beneficiary Costs

HHS announced that, since the beginning of 2011, about $5.7 billion in drug costs have been reduced for Medicare Part D beneficiaries who have benefited from the PPACA provision reducing such costs for those reaching the so-called “doughnut hole.”

PPACA Medicaid Incentives

CMS told state Medicaid directors that their Medicaid programs are eligible to receive a 1% increase in their federal medical assistance percentage (FMAP) if they cover certain preventive services, including routine screenings and adult immunizations.

Fix for Medicare Physician Payment System Proposed

The chairmen of the House Ways and Means and House Energy and Commerce Committees released a conceptual outline of legislation that would repeal the sustainable growth rate (SGR) formula used under the current Medicare physician payment system and replace it with a performance-based system using physician-endorsed quality of care measures. Under “phase one” the SGR would be repealed and replaced by “stable” payments over an unspecified period, such as 5 years. Under “phase two” physician payments would be based on quality of care measures. Under “phase three” the fee-for-service (FFS) payment system would be reformed to allow for incentive payments based on the “efficiency of care” provided. Republicans will pursue completing the details of the proposal under the assumption that any legislation will be made budget neutral. Comments on the proposal are due by February 25th. In the meantime, physician groups are being asked about whether different medical specialties should be financially rewarded for the care they deliver and how a new quality reporting system might be structured. Details on a related hearing to be held by the House Energy and Commerce on February 14th are shown below. Of note, CBO released an updated cost estimate of a 10-year freeze of physician payments showing that the total cost is $138 billion, a reduction from an earlier estimate of $245 billion due to lower than expected increases in physician service costs. In addition, Reps. Allyson Schwartz (D-PA) and Joe Heck (R-NV) introduced bipartisan legislation, H.R. 574, the Medicare Physician Payment Innovation Act (MPPIA), which would repeal the SGR and replace it with a system that rewards coordinated care. In related news, HHS Secretary Kathleen Sebelius said that “Far too many patients still experience a health care system that’s fragmented, unreliable, and often prohibitively expensive” and called on physicians and other providers to “speed up the rate of change” by adopting new delivery methods.

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