Obama Care: Article 2

OVERVIEW

A non-profit Patient-Centered Outcomes Research Institute is established, independent from government, to undertake comparative effectiveness research.[45] This is charged with examining the “relative health outcomes, clinical effectiveness, and appropriateness” of different medical treatments by evaluating existing studies and conducting its own. Its 19-member board is to include patients, doctors, hospitals, drug makers, device manufacturers, insurers, payers, government officials and health experts. It will not have the power to mandate or even endorse coverage rules or reimbursement for any particular treatment. Medicare may take the Institute’s research into account when deciding what procedures it will cover, so long as the new research is not the sole justification and the agency allows for public input.[46] The bill forbids the Institute to develop or employ “a dollars per quality adjusted life year” (or similar measure that discounts the value of a life because of an individual’s disability) as a threshold to establish what type of health care is cost effective or recommended. This makes it different from the UK’s National Institute for Health and Clinical Excellence.

Creation of task forces on Preventive Services and Community Preventive Services to develop, update, and disseminate evidenced-based recommendations on the use of clinical and community prevention services.[45]

The Indian Health Care Improvement Act is reauthorized and amended.[45]

Chain restaurants and food vendors with 20 or more locations are required to display the caloric content of their foods on menus, drive-through menus, and vending machines. Additional information, such as saturated fat, carbohydrate, and sodium content, must also be made available upon request.[47] But first, the Food and Drug Administration has to come up with regulations, and as a result, calories disclosures may not appear until 2013 or 2014.[47]

States can apply for a ‘State Plan Amendment” to expand family planning eligibility to the same eligibility as pregnancy related care (above and beyond Medicaid level eligibility), through a state option rather than having to apply for a federal waiver.[48][49][50]

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Effective June 21, 2010

Adults with existing conditions became eligible to join a temporary high-risk pool, which will be superseded by the health care exchange in 2014.[42][51] To qualify for coverage, applicants must have a pre-existing health condition and have been uninsured for at least the past six months.[52] There is no age requirement.[52] The new program sets premiums as if for a standard population and not for a population with a higher health risk. Allows premiums to vary by age (4:1), geographic area, and family composition. Limit out-of-pocket spending to $5,950 for individuals and $11,900 for families, excluding premiums.[52][53][54]

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Effective July 1, 2010

The President established, within the Department of Health and Human Services (HHS), a council to be known as the National Prevention, Health Promotion and Public Health Council to help begin to develop a National Prevention and Health Promotion Strategy. The Surgeon General shall serve as the Chairperson of the new Council.[55][56]

A 10% sales tax on indoor tanning took effect.[57]

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Effective September 23, 2010

Insurers are prohibited from imposing lifetime dollar limits on essential benefits, like hospital stays, in new policies issued.[58]

Dependents (children) will be permitted to remain on their parents’ insurance plan until their 26th birthday,[59] and regulations implemented under PPACA include dependents that no longer live with their parents, are not a dependent on a parent’s tax return, are no longer a student, or are married.[60][61]

Insurers are prohibited from excluding pre-existing medical conditions (except in grandfathered individual health insurance plans) for children under the age of 19.[62][63]

All new insurance plans must cover preventive care and medical screenings[64] rated Level A or B by the U.S. Preventive Services Task Force.[65] Insurers are prohibited from charging co-payments, co-insurance, or deductibles for these services.[66]

Individuals affected by the Medicare Part D coverage gap will receive a $250 rebate, and 50% of the gap will be eliminated in 2011.[67] The gap will be eliminated by 2020.

Insurers’ abilities to enforce annual spending caps will be restricted, and completely prohibited by 2014.[42]

Insurers are prohibited from dropping policyholders when they get sick.[42]

Insurers are required to reveal details about administrative and executive expenditures.[42]

Insurers are required to implement an appeals process for coverage determination and claims on all new plans.[42]

Enhanced methods of fraud detection are implemented.[42]

Medicare is expanded to small, rural hospitals and facilities.[42]

Medicare patients with chronic illnesses must be monitored/evaluated on a 3-month basis for coverage of the medications for treatment of such illnesses.

Companies which provide early retiree benefits for individuals aged 55–64 are eligible to participate in a temporary program which reduces premium costs.[42]

A new website installed by the Secretary of Health and Human Services will provide consumer insurance information for individuals and small businesses in all states.[42]

A temporary credit program is established to encourage private investment in new therapies for disease treatment and prevention.[42]

All new insurance plans must cover childhood immunizations and adult vaccinations recommended by the Advisory Committee on Immunization Practices (ACIP) without charging co-payments, co-insurance, or deductibles when provided by an in-network provider.[68]

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Effective January 1, 2011

Insurers must spend 80% (for individual or small group insurers) or 85% (for large group insurers) of premium dollars on health costs and claims, leaving only 20% or 15% respectively for administrative costs and profits, subject to various waivers and exemptions. If an insurer fails to meet this requirement, there is no penalty, but a rebate must be issued to the policy holder. This policy is known as the ‘Medical Loss Ratio’.[69][70][71][72]

The Centers for Medicare and Medicaid Services is responsible for developing the Center for Medicare and Medicaid Innovation and overseeing the testing of innovative payment and delivery models.[73]

Flexible spending accounts, Health reimbursement accounts and health savings accounts cannot be used to pay for over-the-counter drugs, purchased without a prescription, except insulin.[74]

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Effective September 1, 2011

All health insurance companies must inform the public when they want to increase health insurance rates for individual or small group policies by an average of 10% or more. This policy is known as ‘Rate Review’. States are provided with Health Insurance Rate Review Grants to enhance their rate review programs and bring greater transparency to the process.[75][76]

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Effective January 1, 2012

Employers must disclose the value of the benefits they provided beginning in 2012 for each employee’s health insurance coverage on the employee’s annual Form W-2’s.[77] This requirement was originally to be effective January 1, 2011, but was postponed by IRS Notice 2010–69 on October 23, 2010.[78] Reporting is not required for any employer that was required to file fewer than 250 Forms W-2 in the preceding calendar year.[79]

New tax reporting changes were to come in effect. Lawmakers originally felt these changes would help prevent tax evasion by corporations. However, in April 2011, Congress passed and President Obama signed the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 repealing this provision, because it was burdensome to small businesses.[80][81] Before PPACA businesses were required to notify the IRS on form 1099 of certain payments to individuals for certain services or property over a reporting threshold of $600.[82][83] Under the repealed law, reporting of payments to corporations would also be required.[84][85] Originally it was expected to raise $17 billion over 10 years.[86] The amendments made by Section 9006 of PPACA were designed to apply to payments made by businesses after December 31, 2011, but will no longer apply because of the repeal of the section.[81][83]

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Effective August 1, 2012

All new plans must cover certain preventive services such as mammograms and colonoscopies without charging a deductible, co-pay or coinsurance. Women’s Preventive Services – including: well-woman visits; gestational diabetes screening; human papillomavirus (HPV) DNA testing for women age 30 and older; sexually transmitted infection counseling; human immunodeficiency virus (HIV) screening and counseling; FDA-approved contraceptive methods and contraceptive counseling; breastfeeding support, supplies and counseling; and domestic violence screening and counseling – will be covered without cost sharing. [87] This is also known as the contraceptive mandate.[64][88][89]

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Effective by October 1, 2012

The Centers for Medicare & Medicaid Services (CMS) will begin the Readmissions Reduction Program, which requires CMS to reduce payments to IPPS hospitals with excess readmissions, effective for discharges beginning on October 1, 2012. The regulations that implement this provision are in subpart I of 42 CFR part 412 (§412.150 through §412.154).[90] Starting in October, an estimated total of 2,217 hospitals across the nation will be penalized; however, only 307 of these hospitals will receive this year’s maximum penalty, i.e., 1 percent off their base Medicare reimbursements. The penalty will be deducted from reimbursements each time a hospital submits a claim starting Oct. 1. The maximum penalty will increase after this year, to 2 percent of regular payments starting in October 2013 and then to 3 percent the following year. As an example, if a hospital received the maximum penalty of 1 percent and it submitted a claim for $20,000 for a stay, Medicare would reimburse it $19,800. Together, these 2,217 hospitals will forfeit more than $280 million in Medicare funds over the next year, i.e., until October 2013, as Medicare and Medicaid begin a wide-ranging push to start paying health care providers based on the quality of care they provide. The $280 million in penalties comprises about 0.3 percent of the total amount hospitals are paid by Medicare.[91]

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Effective by January 1, 2013

Income from self-employment and wages of single individuals in excess of $200,000 annually will be subject to an additional tax of 0.9%. The threshold amount is $250,000 for a married couple filing jointly (threshold applies to joint compensation of the two spouses), or $125,000 for a married person filing separately.[92] In addition, an additional Medicare tax of 3.8% will apply to unearned income, specifically the lesser of net investment income or the amount by which adjusted gross income exceeds $200,000 ($250,000 for a married couple filing jointly; $125,000 for a married person filing separately.)[93]

Beginning January 1, 2013, the limit on pre-tax contributions to healthcare flexible spending accounts will be capped at $2,500 per year. [94][95][96]

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Effective by August 1, 2013

Religious organizations that were given an extra year to implement the contraceptive mandate are no longer exempt. Certain non-exempt, non-grandfathered group health plans established and maintained by non-profit organizations with religious objections to covering contraceptive services may take advantage of a one-year enforcement safe harbor (i.e., until the first plan year beginning on or after August 1, 2013) by timely satisfying certain requirements set forth by the U.S. Department of Health & Human Services.[97]

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Effective by January 1, 2014

 

 

Maximum Out-of-Pocket Premium Payments Under PPACA by Family Size and federal poverty level.[13] (Source: CRS)

Insurers are prohibited from discriminating against or charging higher rates for any individuals based on gender or pre-existing medical conditions.[98]

Impose an annual penalty of $95, or up to 1% of income over the filing minimum,[99] whichever is greater, on individuals who are not covered by an acceptable insurance policy; this will rise to a minimum of $695 ($2,085 for families), or 2.5% of income over the filing minimum,[99] by 2016.[19][100] Exemptions to the mandatory coverage provision and penalty are permitted for religious reasons or for those for whom the least expensive policy would exceed 8% of their income.[101]

Insurers are prohibited from establishing annual spending caps.[42]

In participating states, Medicaid eligibility is expanded; all individuals with income up to 133% of the poverty line qualify for coverage, including adults without dependent children.[19][102] As written, PPACA withheld all Medicaid funding from states declining to participate in the expansion. However, the Supreme Court ruled, in National Federation of Independent Business v. Sebelius, that this withdrawal of funding was unconstitutionally coercive, and that individual states had the right to opt out of the Medicaid expansion without losing pre-existing Medicaid funding from the federal government. As of July 10, 2012, the governors of five states: Texas, Florida, Mississippi, Louisiana, and South Carolina, had announced that they would decline to participate in the Medicaid expansion.[103]

Two years of tax credits will be offered to qualified small businesses. In order to receive the full benefit of a 50% premium subsidy, the small business must have an average payroll per full-time equivalent (“FTE”) employee of no more than $25,000 and have no more than 10 FTEs. For the purposes of the calculation of FTEs, seasonal employees, and owners and their relations, are not considered. The subsidy is reduced by 3.35 percentage points per additional employee and 2 percentage points per additional $1,000 of average compensation. As an example, a 16 FTE firm with a $35,000 average salary would be entitled to a 10% premium subsidy.[104]

Impose a $2,000 per employee penalty on employers with more than 50 employees who do not offer health insurance to their full-time workers (as amended by the reconciliation bill).[30]

For employer sponsored plans, set a maximum of $2,000 annual deductible for a plan covering a single individual or $4,000 annual deductible for any other plan (see 111HR3590ENR, section 1302). These limits can be increased under rules set in section 1302.

The CLASS Act provision would have created a voluntary long-term care insurance program, but in October 2011 the Department of Health and Human Services announced that the provision was unworkable and would be dropped, although an Obama administration official later said the President does not support repealing this provision.[105][106][107][108]

Pay for new spending, in part, through spending and coverage cuts in Medicare Advantage, slowing the growth of Medicare provider payments (in part through the creation of a new Independent Payment Advisory Board), reducing Medicare and Medicaid drug reimbursement rate, cutting other Medicare and Medicaid spending.[44][109]