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HHS Secretary Kathleen Sebelius
Preventive health coverage for women, which HHS Secretary Kathleen Sebelius spoke about in July, has led to lawsuits from several groups.
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ACA takes shape, but not without questions


By Modern Healthcare
Posted: December 22, 2012 - 12:01 am ET
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Officials in many states defy or act warily on key provisions of the Patient Protection and Affordable Care Act as they wait for the U.S. Supreme Court and then for voters to deliver a verdict on whether the law will survive.

State officials, providers and insurers grumble that HHS is failing to answer important questions and appears to be waiting until after the election to issue regulations on key parts of the law, including health insurance exchanges and the “essential health benefits” that the law will require individual and small-group health plans to cover beginning in 2014.

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The Obama administration finally begins laying the groundwork for those core provisions as 2014 draws closer, and many other parts of the law begin to subtly reshape how healthcare is delivered and how the government pays for it.
  • After the November election, HHS gives states an extra four weeks to say whether they intend to operate their own insurance exchanges. By the Dec. 14 deadline, 18 states and Washington, D.C., sign on. The rest must decide by Feb. 15 whether they want to be partners with the federal government or let HHS run the exchange.

  • With the Supreme Court concluding that HHS can't make a state's Medicaid funding contingent upon its willingness to significantly broaden the population eligible for the program, state officials begin exploring their options. If a state raises the eligibility threshold in 2014, when the federal government promises to cover 100% of the cost of the new coverage, can the state then lower the threshold in subsequent years if the obligation is too much of a burden? Can states draw the sweetened federal match for newly covered residents if they raise eligibility but not all the way to 133% of the federal poverty level? Will hospitals escape cuts to disproportionate-share payments if they are in states that decline to expand Medicaid? In December, HHS issues a letter attempting to clarify many of those questions, but the course most states will take remains unclear.

  • Medicare officially launches its experiment with accountable care, a delivery model that attaches financial risk and reward to quality and efficiency targets. Thirty-two ACOs begin contracts Jan. 1 under the Pioneer model of the Center for Medicare and Medicaid Innovation, which was created by the reform law. As the year continues, the CMS adds another 116 ACOs under the Medicare shared-savings program, also a provision in the Affordable Care Act. A Supreme Court challenge and the uncertainty tied to the presidential election do little to deter hospitals and physicians from vying to participate. The CMS accepts applications in August and early September for another wave of Medicare ACOs in 2013.

  • The CMS moves forward with value-based purchasing under the reform law. As of Oct.1, Medicare ties a portion of hospitals' payment to performance on a set of clinical process-of-care measures and patient experience metrics. Funds for the program, estimated at $850 million for 2013, came from an across-the-board 1% cut in base operating DRG payments.

  • On Oct. 1, the CMS kicks off its Readmissions Reduction Program, which imposes financial penalties of up to 1% of base operating DRG payments on hospitals with greater-than-expected readmission rates for heart failure, heart attack and pneumonia. The CMS data show that about 2,200 hospitals face a penalty in fiscal 2013, and more than 270 of them will get docked the full 1%. The ceiling for penalties, which are based on three previous years of Medicare data, will spike to 2% in 2014 and 3% in 2015. The prospect triggers a flurry of hospital prevention programs aimed at more effectively coordinating care and preparing patients to manage their health after discharge. The program prompts criticism from hospital officials and policy experts who say it unfairly penalizes safety net providers.

  • Under intense pressure from religious groups, the Obama administration says insurers would be on the hook to shoulder the cost of providing contraception if employers object to the coverage, which HHS included among preventive services that must be available with no out-of-pocket cost under the Affordable Care Act. The Catholic Health Association of the United States—an ally of the White House on the healthcare law but also an advocate for hospitals faced with covering services that violate their ethical directives—at first offers vague praise for the White House's efforts to find middle ground but later formally opposes the regulation. Three Roman Catholic health systems join separate lawsuits that are among dozens challenging the law.

  • The 5th U.S. Circuit Court of Appeals, for jurisdictional reasons, dismisses an attempt by physician-owned hospitals to challenge a provision of the reform law that blocks Medicare from paying ones that open or expand after March 2010.

  • The CMS issues regulations raising Medicaid pay for primary-care providers to Medicare rates in 2013 and 2014, carrying out a provision of the ACA intended to help address an expected primary-care shortage as millions more Americans get Medicaid coverage under the law.

  • The Center for Medicare and Medicaid Innovation launches the 500-practice medical home demonstration project called the Comprehensive Primary Care Initiative.


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