The U.S. Supreme Court's ruling on the healthcare reform law sets up a tight window for industry players to shape the law and their operations ahead of major provisions rolling out in the coming months and years. They'll work under the cloud of states threatening to opt out of Medicaid coverage expansions and Republicans vowing to dismantle the law if they win the White House and enough votes in Congress. Here are the to-do lists in major healthcare sectors in the months until that picture clarifies with the Nov. 6 elections.
Administration officials are poised to release an array of complicated regulations implementing the law, including ones establishing a framework for minimum benefits that health plans will be required to provide.
HHS has released two bulletins to offer the industry some guidance on essential health benefits, but those were not actual regulations. It's unclear whether the next step will be a proposed or final rule.
The American Hospital Association has expressed some concern with the government's intention to allow state officials to base the minimum benefits on benchmark plans in their states, arguing that patients may end up with less coverage and higher out-of-pocket costs. America's Health Insurance Plans supports the state flexibility as a transition approach but has called for HHS to evaluate the clinical effectiveness and costs of the packages.
Another pending rule would require Medicare Advantage plans to have medical-loss ratios no lower than 85% starting in January 2014, bringing them in line with a Patient Protection and Affordable Care Act rule already in effect for plans in the large-group market.
Hospitals have turned their attention to the parts of the Affordable Care Act set to go into effect this year, including new programs aimed at improving quality and curbing patient harm.
The first phase of the CMS' value-based purchasing will begin this fall, tying a portion of hospitals' annual payment update to performance on 12 clinical process-of-care measures—covering areas such as heart failure care and prevention of healthcare-associated infections—as well as a composite measure of patient satisfaction. How well hospitals scored during the initial performance period, which ran from July 1, 2011, through March 31, will determine their value-based incentive payments, affecting all discharges beginning Oct. 1.
Also on Oct. 1, the CMS will kick off its Readmissions Reductions Program, which will penalize hospitals whose readmission rates put them in the bottom-performing quartile. Using 30-day readmissions data for heart failure, heart attack and pneumonia, the agency will calculate “excess readmission ratios,” based on hospital discharges from July 1, 2008, through June 30, 2011. Hospitals with high readmission rates stand to face a penalty of up to 1%, increasing to 3% in 2015.
For insurers, the court's decision to uphold the reform law's individual mandate as a tax on the uninsured was only the first step toward the sweeping coverage changes sought in the commercial market.
AHIP President and CEO Karen Ignagni, said the decision kicks off a concerted effort to show Congress that increasing premiums by about 2% in 2014 as a result of the legislation may work against the goal of expanding coverage. “People haven't really gotten in under the hood of the legislation.”
One provision insurers are targeting greatly restricts how much they can raise premiums for elderly beneficiaries in individual and small-group plans, which Ignagni said will have the effect of increasing what younger adults will pay. Under existing age-rating policies, the elderly may pay rates as much as 85 times more than a young adult beneficiary, but the law compresses that ratio and says no adult can be charged more than three times as much as any other.
Also not widely discussed has been the tax that is imposed on high-cost employer-sponsored plans—the provision dubbed the “Cadillac tax” during Congressional debate on the law—at 40% of the value of the plan worth more than $10,200 for an individual or $27,500 for families, starting in 2018.
Physician advocates say they'll keep lobbying to get things omitted from the law, as well as to remove some parts of it and extend provisions they like but see as too temporary.
Their first priority is to establish a Medicare reimbursement system to replace the sustainable growth-rate formula that the ACA left intact and puts doctors on perennial collision course with drastic rate cuts. Most physician groups also remain committed to killing the Independent Payment Advisory Board, a panel established by the law to find ways to restrict Medicare cost growth.
Meanwhile, many are also hoping to persuade the administration to extend a program that brings Medicaid payment for primary-care physicians in line with what Medicare pays, which expires after 2014. A spokeswoman for the California Medical Association said extending the rate bump is key to drawing enough physicians to care for patients newly covered under the law's Medicaid expansion.
Dr. Glen Stream, president of the American Academy of Family Physicians, said he's most interested in the CMS Innovation Center's Comprehensive Primary Care Initiative, which is recruiting practices to participate in seven markets testing a combination of fee-for-service, care-management fees and shared-savings incentives.
The home healthcare industry's first move after the ACA was upheld was to renew efforts to prevent Medicare reimbursement cuts from Congress as it continues on its cost-cutting efforts.
The home-health industry has taken greater cuts relative to its size than other segments, such as hospitals, and can't handle any more, said Val Halamandaris, president of the National Association for Home Care & Hospice. By the NAHC's calculations, the home healthcare segment is in line to receive cuts of more than $77 billion from Medicare over the next 10 years. The ACA will cut $39.7 billion through 2019, the CMS will cut an estimated additional $32 billion through 2013 as a result of its annual rule-setting and the effect of sequestration will reduce payments by $6 billion over the next 10 years, according to the NAHC.
To cut further or implement patient copayments—an idea said to be under consideration by congressional staffers—would be unfair, Halamandaris said. If Congress wants to cut spending, it should delay implementation of the ACA. “A couple of years delay would save significant amounts of money.”
Medical device manufacturers continue to push for a repeal of an excise tax mandated by the healthcare reform law before it goes into effect in January. Starting in 2013, manufacturers will be required to pay a 2.3% excise tax on the sales of medical devices. It's expected to cost the industry up to $29 billion over the next decade.
The expansion of insured patients is expected to have only a “modest benefit” on the medical technology industry, according to Citi analyst Matthew Dodds. “While the expansion of insured patients will help the hospital sector, we doubt this will alleviate initiatives to reduce supplier costs,” Dodds said in a research note.
The industry's trade groups adamantly oppose the tax, which has also raised concerns with providers who worry that the cost of the tax will instead by passed along to hospitals that purchase medical supplies.
The House of Representatives passed legislation last month that would repeal the tax. However, the White House has indicated it would veto the bill.
While the ACA has few provisions specifically targeting health information technology, there are significant health IT implications in the reform law.
State governments, for example, have to set up enrollment infrastructures for the health insurance exchanges unless they cede the responsibility to HHS. In just five months, HHS will decide who will operate a state's exchange, and by late summer next year, the exchanges are to start taking applications for coverage starting Jan. 1, 2014. Among the IT requirements are a Web portal for customer support.
Dozens of healthcare organizations, meanwhile, have set up accountable care organizations to participate in Medicare programs encouraging the model, while some others are experimenting with patient-centered medical homes under the law. Both require advanced IT infrastructure to coordinate care and measure outcomes.
Many more hospitals and physicians have a lot of work to do, according to Dave Roberts, vice president of government relations for the Chicago-based Health Information and Management Systems Society. “They're going to need access to information from various sources and to be able to pull all of the disparate information together, exchange information between local facilities and regions, so there is going to be a lot of use for IT,” Roberts said.
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