States to Enforce PPACA Standards in FFMs

According to guidance released by the Centers for Medicare and Medicaid Services’ (CMS) Center for Consumer Information and Insurance Oversight (CCIIO), the agency is encouraging states to enforce the PPACA standards applicable to health insurers with respect to plans offered under federally facilitated marketplaces (FFMs). CMS said that if states do not agree to enforce the standards that the federal government would enforce them by means of civil money penalties and the decertification of plans. In the 17 states (and DC) electing to run their own state-based exchanges, the CCIIO said it intends to propose that such entities submit annual reports, including but not limited to financial statements and summaries of eligibility determinations, enrollments, appeals, errors, privacy safeguards, fraud and abuse determinations, as well as data on financial sustainability, efficiency, consumer satisfaction and quality of care. The CCIIO also posted a guide, Navigators and Other Marketplace Assistance Programs, providing information about assistance and outreach under the PPACA.

PCIP Provider Reimbursements Lowered to Medicare Rates

CMS issued an interim final regulation which requires the PPACA’s Pre-Existing Condition Insurance Plans (PCIPs) to lower payments for medical services to those allowed under Medicare. Due to higher than expected claims costs, CMS is attempting to keep PCIP high-risk enrollees from having their coverage terminated before 2014 as the $5 billion cap on PCIP funding approaches.

New Bundled Payment Model Initiative

CMS’ Center for Medicare and Medicaid Innovation (CMMI) announced that additional acute care hospitals and organizations that seek to convene acute care hospitals in a facilitator convener role are eligible to participate in Model 1 of the Bundled Payments for Care Improvement Initiative. Submissions are due by July 31.

PPACA Health Care Innovation Awards

CMS announced that up to $1 billion will be awarded to applicants demonstrating that they can improve care for those with specialized needs, rapidly reduce outpatient/post-acute care costs and test ways for providers to transform their financial and clinical models within three years under Medicare, Medicaid and CHIP. Letters of intent to participate in the second round of the Health Care Innovation Awards are due from June 14 to August 15.

Final Medical Loss Ratio Rules Issued

CMS issued final regulations defining the medical loss ratio (MLR) rules applicable under the PPACA to Medicare Advantage and Medicare Part D Rx plan sponsors. In general, under the rule such entities must pay out a minimum of 85% of premium revenue to clinical services, prescription drugs and other benefits. Penalties for noncompliance include enrollment sanctions and contract termination under various circumstances.

New CBO Estimate of Insured Under PPACA

The CBO released new estimates of the impact on the number left uninsured under the PPACA after considering the latest regulations that will exempt 500,000 to one million individuals from penalties otherwise imposed under the law’s individual mandate. CBO estimated that about 25 million U.S. residents will gain coverage, two million fewer than estimated in February, and that 31 million will remain uninsured, one million more than previously estimated. The CBO also said that 24 million will enroll under health insurance exchanges, one million fewer than previously estimated, and that 13 million will enroll in Medicaid and SCHIP, one million more than previously estimated.

Permanent CMS Administrator Confirmed

Last week the Senate voted 91-7 to confirm Marilyn Tavenner as the permanent CMS Administrator.

Medicare Doc Fix This Year?

At a Senate Finance Committee hearing held to discuss problems and solutions with respect to the current Medicare physician payment sustainable growth rate (SGR) formulation, Chairman Max Baucus said “We must permanently repeal this broken formula and we need to do it this year….” He said the revised CBO cost estimate of the doc fix, about $138 billion over ten years, provides a window of opportunity to install short-term, ready-to-go solutions that will allow Congress to transition the current system into a value-based model. The Medicare Payment Advisory Commission’s (MedPAC) executive director said the organization’s previous recommendations could be modified so as to repeal the SGR, reduce reimbursements for specialty physicians annually by 3% or less for three years followed by a freeze for primary care physicians, and set a schedule of fee updates over ten years. A witness from the Brooking Institution testified that a transition to a new system could be aided by merging the various Medicare incentive payment programs into a “care coordination payment.”

DSH Payment Reductions Proposed

CMS issued a proposed rule implementing the PPACA-mandate that aggregate reductions to state Medicaid disproportionate share hospital (DSH) allotments be made annually from FY 2014 through FY 2020. Under the proposed reduction methodology, that might be refined after two years, the statewide DSH allotments for all states would be reduced as follows: $500 million in FY 2014; $600 million in FY 2015; $600 million in FY 2016; $1.8 billion in FY 2017; $5 billion in FY 2018; $5.6 billion in FY 2019; and $4 billion in FY 2020. The reductions for particular states would vary depending on the level of DSH expenditures, uninsured individuals, section 1115 adjustments and other factors. With respect to another Medicaid issue, the GAO issued a report to Senator Orrin Hatch (R-UT) and Rep. Fred Upton (R-MI) which includes a finding that the current funding formula for Medicaid state payments does not take into account geographic cost differences and demand for services. The report suggests that the Federal Medical Assistance Percentage (FMAP) payments can be made more equitable by incorporating such data from additional sources.

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