I.
ACA Highlights (as of early 2015, prior to King v. Burwell outcome)
A. Patient Protection and Affordable Care Act (PPACA)/Healthcare Reform Bill
PPACA, in the healthcare finance industry referred to as ACA, also not-so-affectionately
known as Obamacare
B. Expanded Insurance Coverage
1. Coverage for young adult dependent children extended to age 26
2. No exclusion for pre-existing conditions beginning 2014; meanwhile high-risk
insurance pool program for individuals previously denied and without
insurance due to pre-existing condition exclusion – separate program for
children denied coverage due to preexisting conditions
3. States must identify affordable health insurance coverage options; HHS
website at www.healthcare.gov provides resources for individuals, small
business owners, and retirees
4. Community Living Assistance Services and Supports Program (CLASS Act).
Voluntary long-term care insurance program for disabled adults. (Repealed by
legislation enacted on January 2nd, 2013 to avoid the “fiscal cliff”.)
5. Enrollment and premium payment rules for the CLASS Act were to be
established in 2012, but program was suspended in late 2011 due to concerns
regarding fiscal sustainability and affordability (and recently repealed, as
noted in 4).
C. Health Insurance Reform
1. Reinsurance through employer health plans for early retirees, spouses, and
eligible dependents of same – temporary program funded with $5 billion
dollars was opened and closed within the calendar year of 2011 due to fund
exhaustion
2. Preventive care coverage without cost-sharing (no copays, deductibles, or
coinsurance billing)
3. No retroactive cancellation of coverage unless fraud or intentional
misrepresentation is discovered
4. No imposition of lifetime coverage limits and no unreasonable annual limits
on essential health benefits
5. Expanded preventive care for women, including contraceptives and
contraceptive counseling; there are exceptions for religious employers.
6. Health insurance providers must accept all employers and individuals within
the state market that applies for coverage and must renew coverage at the
option of the employer (plan sponsor) or individual.
7. Absolute moratorium on excluding any covered individual for pre-existing
condition/s.
8. Premium rates cannot be higher due to health status, gender or other factors.
Variability is permissible based on age (limited to 3:1 ratio maximum
difference), geography, family size, and use of tobacco.
The Future of ACA; What We Still Don’t Know about Healthcare Reform in America in Twenty Minutes or Less
LaDonna Waugh, MD, JD, FACS
American Muslim Healthcare Conference 5/9/2015
9. Absolute moratorium on discontinuation of eligibility for coverage based on
health status.
10. Absolute moratorium on discrimination against care providers (does not apply
to requirements to contract with any willing provider or prevention of tiered
networks) by insurance plans.
11. Absolute moratorium on annual limits on coverage of essential health
benefits.
12. No waiting periods of more than 90 days for coverage will be allowed.
13. No termination of coverage if a covered individual elects to participate in a
clinical trial for life-threatening disease/cancer and no denial of coverage for
routine care of that individual.
14. Essential benefits/minimum coverage requirements will be expected of
provider plans in the individual and small group market that are required of
insurance exchange plans.
15. Limits on cost-sharing and out-of-pocket costs will be imposed on the plans
and providers in the small group market, with exemptions on self-funded
plans or those in the larg group markets.
16. Risk-spreading measures must be implemented to allocate risk groups across
the insurance market and prevent any insurance provider from targeting low
risk groups to insure and burdening other insurance providers with high risk
populations.
D. Health Plan Administration
1. Claims and appeals process
a. must provide full and fair review
b. must provide information in appropriate cultural context/language
c. comply with content requirements for denial notices
d. continue coverage to beneficiary pending outcome of appeal process
2. Implement external review process that meets government requirements at
State and Federal levels
3. Fully insured group health plans are subject to nondiscrimination rules
governing plan eligibility and benefits (effective date of this provision has
been delayed indefinitely)
4. Improvement in Medical Loss Ratios. Health insurance issuers must report
yearly on the share of premium dollars spent on healthcare and provide
consumer rebates for excessive ratios.
5. Definition of Qualified Medical Expenses is now standardized with the
definition used for itemized tax deductions, removing over-the-counter
medications without a prescription from the definition while continuing
deductions for over-the-counter medical supplies and devices without a
prescription.
6. Support for small businesses to provide tax free benefit of cafeteria plan
sponsorship.
7. Uniform summary of benefits and coverage must be provided to plan
participants in language easy to understand and be no longer than a maximum
of eight pages.
The Future of ACA; What We Still Don’t Know about Healthcare Reform in America in Twenty Minutes or Less
LaDonna Waugh, MD, JD, FACS
American Muslim Healthcare Conference 5/9/2015
8. Health plans must implementation uniform standards and operating rules for
the electronic sharing of health information (reduction in paperwork) and
comply with HHS regulation regarding electronic transactions for eligibility
coverage and claim status.
9. Health flexible savings account (FSA) contributions will be limited to $2500
yearly
10. Employees must be provided notice by employers of the availability of
insurance exchanges (final effective date has been pushed back from March
1, 2013, to estimated date of late summer/fall of 2013)
11. Employers with group health plans must certify compliance with HIPAA rules
regarding electronic transactions.
E. Government Insurance
1. Medicare Rebates for the ‘donut hole’, or coverage gap in the Medicare Part D
plans (once beneficiary/plan have paid about $2900, the beneficiary is in the
coverage gap until $4700 has been paid out-of-pocket for drug costs). These
costs create a burden on Medicare beneficiaries – the reform calls for
discounts on brand name drugs and generic drug insurance coverage while in
the gap, and the gap will be eliminated altogether by the year 2020.
2. Medicaid Expansion – States have the option (mandate ruled unconstitutional)
to cover additional lives with Medicaid to include the working poor (childless
adults who were traditionally excluded from Medicaid coverage and often
could not afford insurance, including the employer sponsored coverage) who
live within 133 percent of the Federal Poverty Level
3. Preventive care services for Medicare Beneficiaries. The annual wellness
visit and personalized prevention plans are free (cost-sharing eliminated).
F. Fees and Taxes
1. Small business tax credit for contributions to purchase health insurance for
employees (up to 35% of cost immediately, and up to 50% of premiums once
health insurance exchanges are in operation)
2. A 10% tax on amounts paid for indoor suntanning services.
3. Increased tax on health spending account (HSA) withdrawals prior to age 65
that are not used for qualified medical expenses (increased to 20 percent from
10 percent).
4. Comparative Effectiveness Research fees must be paid by self-insured health
plan issuers to fund healthcare research. The fee is $1 for each of the average
number of lives covered within the calendar year, and will increase to $2 for
plan years ending after October 1, 2013.
5. Employers that receive Medicare Part D retiree drug subsidy will no longer be
allowed a tax deduction for prescription drug costs.
6. Income threshold for Medical Expense Deductions will increase to 10 percent
(from 7.5 percent) before allowable itemized deductions can be claimed for
persons under 65 (those over 65 can continue to itemize at 7.5 percent of
income through 2016).
The Future of ACA; What We Still Don’t Know about Healthcare Reform in America in Twenty Minutes or Less
LaDonna Waugh, MD, JD, FACS
American Muslim Healthcare Conference 5/9/2015
7. Medicare Tax for high wage workers will increase the Medicare hospital
insurance tax rate by just under 1% for any individual/married couple filing
jointly with income over $200,000/$250,000. The tax is expanded to include a
3.8% tax on net investment income for the same earning levels.
8. A medical device excise tax will be assessed on the first sale for use of a
medical device (with the exception of eyeglasses, contact lenses, hearing aids,
and other such devices purchased by the general public at retail).
9. Individual and small employer tax credits will be made available for
purchasing healthcare insurance through state insurance exchanges.
Individuals who have incomes above the Medicaid eligibility ceiling and
below 400 percent of the FPL will qualify for these credits that can be used to
cover premiums and cost-sharing.
10. Health Insurance Provider fees will be assessed across the industry according
to a provider’s market share on a yearly basis (companies whose net
premiums are $25 million or less will be exempt from the fees).
G. Coverage Mandates
1. Individual coverage mandates will be enforced. Individuals that do not obtain
acceptable health insurance coverage will pay a tax penalty which will be a
graduated penalty beginning in 2014 (pushed back to 2015). There is an
exemption for a showing that affordable coverage cannot be obtained.
2. Legal challenges to this provision were found constitutional and upheld by the
Supreme Court on June 28, 2012.
3. Employers with at least 50 employees must offer coverage to their employees
or they will be subject to significant tax penalties if any employee receives a
government subsidy for health coverage, and fines for employees who must
receive tax credits due to unaffordable plans. Employers must provide reports
to the federal government on provided healthcare coverage.
H. Health Insurance Exchanges
1. Individuals and small business employers (initial status of 100 employees or
fewer) will have access to insurance exchanges to purchase healthcare
insurance. Larger employers will gain access to exchanges in 2017.
2. States can run state-based insurance exchanges, have HHS establish a
federally facilitated exchange (FFE) for their residents, or partner with HHS to
create a hybrid FFE with some functions administered by the State.
I. Employer Wellness Programs
Existing wellness programs under HIPAA call for incentives of up to 20 percent
of the total premium paid for insurance, if the program meets specific conditions.
This incentive increases to 30 percent under the ACA for employee participation
in the program/attainment of a health standard (with an alternative standard for
employees for whom the standard is unreasonable or inadvisable). The incentive
could increase to as much as 50 percent of premium paid (based on governmental
findings regarding the effectiveness of wellness programs in reducing healthcare
costs).
The Future of ACA; What We Still Don’t Know about Healthcare Reform in America in Twenty Minutes or Less
LaDonna Waugh, MD, JD, FACS
American Muslim Healthcare Conference 5/9/2015
J. High Cost Plan Excise Tax (2018)
A 40 percent tax will be assessed on excess benefits of high cost employer
sponsored health insurance plans with annual limits in excess of $10,200 for
individuals and $27,500 for other types of coverage. The tax is assessed against
the provider of coverage, which may be the insurer, employer, or a third-party
administrator.
Key Terms
Accountable Care Organization (ACO) – A group of healthcare providers (doctors, hospitals,
and others) who consolidate efforts to provide coordinated care to Medicare patients with
benchmark goals of total cost containment and quality. Critics of the approach suggest that ACO
is a euphemism for capitation. Under the ACA, all Medicare programs will ideally be
administered under this model.
Health Outcomes – Ultimately, this is the end result of patient and caregiver interaction to treat
acute illness, manage disease, and maintain optimized health. Positive and negative outcomes
are possible, and both types can be instructive in creating quality, cost-efficient, safe programs
for patients.
Managed Care – A broad term which refers to a myriad of approaches that are employed to
reduce the cost of providing health benefits to a group of patients. The term can also refer to
insurance companies, healthcare management organizations, or doctor-hospital affiliations that
provide comprehensive care and coverage in a manner that attempts to fairly allocate limited
healthcare resources across a broad population.
Payer – A payer provides payment for healthcare services. Medicare and Medicaid are
government insurance payers. Blue Cross, Aetna, and United Healthcare are examples of
commercial insurance payers.
Provider – A provider is an entity who provides a service. This term is used interchangeably in
healthcare to refer to physicians/hospitals/other healthcare personnel and insurers (insurance
providers).
(Pharmacy Benefit Managers) PBMs – A PBM is a third party administrator responsible for the
processing and payment of prescription drug claims. They also maintain insurance formularies
and negotiate pharmacy contracts as well as discounting/rebates with pharmaceutical companies.
Network Types
Open – Health insurance network with a minimum of plan restrictions regarding and
member accessible locations for care (usually more expensive).
Narrow – Health insurance network with plan restrictions that provide fewer options in
healthcare providers and are associated with significant reductions in insurance premium
costs.
The Future of ACA; What We Still Don’t Know about Healthcare Reform in America in Twenty Minutes or Less
LaDonna Waugh, MD, JD, FACS
American Muslim Healthcare Conference 5/9/2015
Preferred – Health insurance network where preferred healthcare providers provide care
at an incentive rate over other providers not designated ‘preferred’ by the insurance
provider organization.
Restricted – Health insurance network that provides little or no coverage if care is sought
outside the network of healthcare providers/physicians.
Medicare
Part A – coverage for inpatient acute care services
Part B – coverage for outpatient services, durable medical equipment, and other ancillary care
Part C – Medicare supplement plans/Managed Care Organizations that administer programs that
cover Parts A and B for beneficiaries (enrollment process has deadlines, and Part C coverage
coordinates payment for all aspects of care). These programs are often more expensive and more
restricted in coverage terms than straight Medicare, and behave more like commercial insurance
plans (because they are often administered by such plans).
Part D – Medicare prescription drug benefit plans
CMS – Centers for Medicare/Medicaid Services, a program administered by Health and Human
Services to administer government insurance programs. The Secretary of HHS is empowered by
Congress to administer healthcare programs specified by legislation, and he/she appoints a
Director of CMS who is instructed to enact a plan to administer Medicare/Medicaid programs.
Gain-sharing – A practice in which resources conserved (money) are shared with the entity that
created a solution to conserve resources. Often one entity creates a plan which recovers or saves
money for another entity and then becomes entitled to a percentage of what was gained (thus,
shares in the gain, or gain-sharing). Accountable Care Organizations will be eligible for gainsharing in any Medicare program resources they can conserve through healthcare administration
and will be eligible for actual monetary awards for sustainable cost-savings in the face of
improvements in over 30 quality care measures.
The Future of ACA; What We Still Don’t Know about Healthcare Reform in America in Twenty Minutes or Less
LaDonna Waugh, MD, JD, FACS
American Muslim Healthcare Conference 5/9/2015
II.
ACA 2015 and Beyond
A. Your guess is as good as mine…
B. Major factors could influence outcome
1. Political
a. Elections
b. Judicial activism – King v. Burwell
c. Further Challenges
d. Legislative amendments
e. Partisanship
2. State Sovereignty
a. Remember the Medicaid Expansion mandate?
b. Lately? Florida sues HHS…likely more to come…
3. One certainty – CHANGE
III.
Responsive Provider Action
A. Look to existing reforms for guidance and preparation for healthcare future
B. Maintain cornerstone principles for success
1. Quality (don’t forget Process)
2. Safety
3. Efficiency
4. Cost Effectiveness
C. Create and Maintain a Culture of Accountability
1. Gainsharing
2. Data gathering and analysis/response cycle
D. Plan for worst case scenarios
1. Return to historic system
2. More complicated reforms
E. Expect payer shifts to Pay for Performance, Episodic Payment, Bundling (pick
your euphemism)
F. Anticipate other potential payer developments
1. Concrete pricing platforms
2. Single payer system
3. All payer system – see Maryland/ Medicare/and nearly 40 years without
federal interference – pros and cons
G. Maintain a Culture of Accountability to Patients and Your Community
1. Patients – the human factor (consider common pitfalls like noncompliance,
which can adversely affect readmissions rates, and disease processes with
The Future of ACA; What We Still Don’t Know about Healthcare Reform in America in Twenty Minutes or Less
LaDonna Waugh, MD, JD, FACS
American Muslim Healthcare Conference 5/9/2015
courses that are difficult to predict, such as heart failure, that confound many a
process improvement initiative)
2. Medical Home
3. Self Pay (speaking of pricing)
4. Diversity
The Future of ACA; What We Still Don’t Know about Healthcare Reform in America in Twenty Minutes or Less
LaDonna Waugh, MD, JD, FACS
American Muslim Healthcare Conference 5/9/2015