Affordable Care Act and State Subsidies

State Role

  • Individual states create an American Health Benefit Exchange and a Small Business Health Options Program (SHOP) Exchange for individuals and small businesses and provide oversight of health plans with regard to
    the new insurance market regulations, consumer protections, rate reviews, solvency, reserve fund
    requirements, premium taxes, and to define rating areas.
  • States are required to enroll newly eligible Medicaid beneficiaries into the Medicaid program no later than January 2014 (states have the option to expand enrollment beginning in 2011), coordinate enrollment with the new Exchanges, and implement other specified changes to the Medicaid program. In addition, states are required to maintain current Medicaid and CHIP eligibility levels for children until 2019 and maintain current Medicaid eligibility levels for adults until the Exchange is fully operational. A state will be exempt from the maintenance of effort requirement for non-disabled adults with incomes above 133% Federal Poverty Level (FPL) for any year from January 2011 through December 31, 2013 if the state certifies that it is experiencing a budget deficit or will experience a deficit in the following year.
  • States must establish an office of health insurance consumer assistance or an ombudsman program to serve as an advocate for people with private coverage in the individual and small group markets. (Federal grants available beginning fiscal year 2010)
  • States are permitted to create a Basic Health Plan for uninsured individuals with incomes between 133%
    and 200% FPL in lieu of these individuals receiving premium subsidies to purchase coverage in the
    Exchanges. (Effective January 1, 2014) States are permitted to to obtain a five-year waiver of certain new health insurance requirements if the state can demonstrate that it provides health coverage to all residents that is at least as comprehensive as the coverage required under an Exchange plan and that the state plan does not increase the federal budget deficit. (Effective January 1, 2017)

 

Administrative Simplification

Health insurance administration must be simplified by adopting a single set of operating rules for eligibility
verification and claims status (rules adopted July 1, 2011; effective January 1, 2013), electronic funds
transfers and health care payment and remittance (rules adopted July 1, 2012; effective January 1,
2014), and health claims or equivalent encounter information, enrollment and disenrollment in a health
plan, health plan premium payments, and referral certification and authorization (rules adopted July 1,
2014; effective January 1, 2016). Health plans must document compliance with these standards or face a
penalty of no more than $1 per covered life. (Effective April 1, 2014)

 

Medicare

  • Payments to Medicare Advantage (MA) plans are restructured by setting different percentages
    of Medicare fee-for-service (FFS) rates, with higher payments for areas with low FFS rates and
    lower payments (95% of FFS) for areas with high FFS rates. Payments revisions beginning 2011 will be phased in over a 3 year time period for plans in most areas; however in other areas payment revisions will be phased in over a 4-6 year time period. Bonuses are provided to plans receiving 4 or more stars, based on the current 5-star quality rating system for Medicare Advantage plans, beginning in 2012; qualifying plans in qualifying areas receive double bonuses. Rebate are system with rebates allocated based on a
    plan’s quality rating. Adjustments to plan payments for coding practices related to the health
    status of enrollees will be phased-in, with adjustments equaling 5.7% by 2019. Total payments, including bonuses, are capped at current payment levels. Medicare Advantage plans are required to remit partial payments to the Secretary if the plan has a medical loss ratio of less than 85%, beginning 2014. The Secretary is required to suspend plan enrollment for 3 years if the medical loss ratio is less than 85% for 2 consecutive years and to terminate the plan contract if the medical loss ratio is less than 85% for 5 consecutive years.
  • Annual market basket updates are reduced for inpatient hospital, home health, skilled nursing facility,
    hospice and other Medicare providers, and adjust for productivity. (Effective dates vary)
  • The threshold for income-related Medicare Part B premiums for 2011is frozen through 2019, and reduce
    the Medicare Part D premium subsidy for those with incomes above $85,000/individual and $170,000/
    couple. (Effective January 1, 2011)
  • An Independent Payment Advisory Board comprised of 15 members is established to submit legislative
    proposals containing recommendations to reduce the per capita rate of growth in Medicare spending
    if spending exceeds a target growth rate. Beginning April 2013, the Chief Actuary of CMS is required to
    project whether Medicare per capita spending exceeds the average of CPI-U and CPI-M, based on a five
    year period ending that year. If so, beginning January 15, 2014, the Board will submit recommendations
    to achieve reductions in Medicare spending. Beginning January 2018, the target is modified such that
    the board submits recommendations if Medicare per capita spending exceeds GDP per capita plus one
    percent. The Board will submit proposals to the President and Congress for immediate consideration.
    The Board is prohibited from submitting proposals that would ration care, increase revenues or
    change benefits, eligibility or Medicare beneficiary cost sharing (including Parts A and B premiums),
    or would result in a change in the beneficiary premium percentage or low-income subsidies under
    Part D. Hospitals and hospices (through 2019) and clinical labs (for one year) will not be subject to cost
    reductions proposed by the Board. The Board must also submit recommendations every other year to
    slow the growth in national health expenditures while preserving quality of care by January 1, 2015.
  • Medicare Disproportionate Share Hospital (DSH) payments are to be reduced initially by 75% and subsequently increase payments based on the percent of the population uninsured and the amount of
    uncompensated care provided (Effective fiscal year 2014)
  • The Medicare Improvement Fund is to be eliminated. (Effective upon enactment)
  • Providers organized as accountable care organizations (ACOs) that voluntarily meet quality
    thresholds are allowed to share in the cost savings they achieve for the Medicare program. To qualify as an ACO, organizations must agree to be accountable for the overall care of their Medicare beneficiaries, have
    adequate participation of primary care physicians, define processes to promote evidence-based
    medicine, report on quality and costs, and coordinate care. (Shared savings program established
    January 1, 2012)
  • An Innovation Center is to be created within the Centers for Medicare and Medicaid Services to test, evaluate, and expand in Medicare, Medicaid, and CHIP different payment structures and methodologies to
    reduce program expenditures while maintaining or improving quality of care. Payment reform models
    that improve quality and reduce the rate of cost growth could be expanded throughout the Medicare,
    Medicaid, and CHIP programs. (Effective January 1, 2011)
  • Medicare payments that would otherwise be made to hospitals are to be reduced by specified percentages to account for excess (preventable) hospital readmissions. (Effective October 1, 2012)
  • Medicare payments to certain hospitals are to be reduced for hospital-acquired conditions by 1%. (Effective fiscal year 2015)
  • The Medicaid drug rebate percentage for brand name drugs is to be increased to 23.1 (except the rebate for clotting factors and drugs approved exclusively for pediatric use increases to 17.1%); increase the
    Medicaid rebate for non-innovator, multiple source drugs to 13% of average manufacturer price.
    (Effective January 1, 2010) The drug rebate will be extended to Medicaid managed care plans . (Effective upon enactment)
  • Aggregate Medicaid DSH allotments are to be reduced by $.5 billion in 2014, $.6 billion in 2015, $.6 billion in 2016, $1.8 billion in 2017, $5 billion in 2018, $5.6 billion in 2019, and $4 billion in 2020. The Secretary is required to develop a methodology to distribute the DSH reductions in a manner that imposes the largest
    reduction in DSH allotments for states with the lowest percentage of uninsured or those that do not
    target DSH payments, imposes smaller reductions for low-DSH states, and accounts for DSH allotments
    used for 1115 waivers. (Effective October 1, 2011)
  • Federal payments to states for Medicaid services related to health care acquired conditions is prohibited.
    (Effective July 1, 2011)

Prescription Drugs

The Food and Drug Administration will be authorized to approve generic versions of biologic drugs and grant
biologics manufacturers 12 years of exclusive use before generics can be developed. (Effective upon
enactment)

 

Waste, Fraud and Abuse

Waste, fraud, and abuse in public programs is to be reduced by allowing provider screening, enhanced oversight periods for new providers and suppliers, including a 90-day period of enhanced oversight for initial
claims of DME suppliers, and enrollment moratoria in areas identified as being at elevated risk of fraud
in all public programs, and by requiring Medicare and Medicaid program providers and suppliers to
establish compliance programs. A database will be developed to capture and share data across federal and state programs, increase penalties for submitting false claims, strengthen standards for community mental
health centers and increase funding for anti-fraud activities. (Effective dates vary)

 

 



Need Help?
Chat with a specialist with our:
OR
Call us at: 1.800.693.3420