Four Rules and Regs Health Policy Experts Can’t Wait To Read

by Dan Diamond, California Healthline Contributing Editor

Health policy is notoriously wonky, but industry experts have had extra reason to keep their reading glasses on these days.

Beyond the fine print surrounding the health reform law, a new rule, regulation or ruling has seemed to hit the health policy world like a newly discovered Harry Potter novel every few weeks.

When CMS released its eagerly awaited accountable care organization proposal on March 31, “just about everyone in Washington who deals with health care policy [was] reading through the 429-page proposed rule” within 24 hours — with so much demand on the Federal Register, the government’s website slowed to a crawl, Politico noted.

This summer’s reading list already includes Judge Jeffrey Sutton’s circuit court ruling in favor of the Affordable Care Act and CMS’ plan for fast-track ACOs, as well as the normal passel of payment schedules governing the industry.

CMS has developed a habit of releasing its rules either months behind schedule or when policy analysts least want to see them — say, at 4:15 p.m. on the Friday of a holiday weekend — so to better plan your own calendar, here’s what health reform experts say they’re waiting to read.

1. Regulations on State Health Insurance Exchanges

Every expert that spoke with California Healthline noted that one rule is hanging over the industry: the soon-to-be-released proposal to govern state health insurance exchanges.

There’s already some clarity around the exchanges, as the federal health reform law did specify a number of key provisions. Under the ACA, states by January 2014 must create insurance exchanges that provide coverage options for individuals and small businesses. States can choose to administer their own exchanges — for which they must have some infrastructure in place by January 2013 — or ask the federal government to run the exchanges for them.

However, the uncertainty over how HHS will approve and vet exchanges is clouding officials’ choice about whether to prioritize work on their own marketplace, particularly given strapped state budgets, and contributing to fears that the exchanges are well behind schedule.

“It’s like going to a wedding [dinner] and having a choice between … the chicken, or something else — and we can’t tell you what that something else is,” Matt Salo, the executive director of the National Association of Medicaid Directors, told California Healthline. “There’s no sense of what the world will look like if HHS steps in and runs the exchange,” he added.

On its new “Capsules” blog, Kaiser Health News surveyed experts on what’s imperative to the exchanges’ success. According to Edmund Haislmaier of the Heritage Foundation, the regulations must answer the question, “What exactly do we have to do by January 1, 2013?”

Rule’s ETA: Next week

2. Minimum Essential Benefits

One important element of the exchange rules — the essential health benefits — won’t be included in the soon-to-be-released basic requirements for plan certification. Instead, those are expected to be finalized across the next three months, with the Institute of Medicine continuing to hammer out its own recommendations for HHS consideration.

Last year’s federal health reform law specified a number of minimum benefits for qualifying health plans, such as basic inpatient and outpatient care and prescription drugs. IOM is reviewing other aspects of how insurers determine coverage and crafting guidance for HHS on which additional criteria must be added.

The minimum benefits also are heavily anticipated for their wide-reaching, market-altering impact. Michael Turpin of USI Insurance Services notes that HHS’ proposed benefits may become the national “floor as well as the ‘mean’ to which many employers will gravitate their current medical coverage levels.” As a result, there’s a risk that establishing minimum benefits could lead to employer dumping.

According to Robert Zirkelbach, spokesperson for America’s Health Insurance Plans, health insurers are closely watching whether HHS will tightly define what makes for a qualifying health plan and how the agency handles risk adjustment for plans that take on less healthy populations.

NAMD’s Salo notes that “our general sense is we don’t know where the IOM is going to go, but where they should go is … to define an essential benefits package fairly flexibly.” For example, a state like Maryland has a fairly comprehensive benefit mandate, where health plans are required to cover services like chiropractics; meanwhile, a state like Montana tends to have bare-bones requirements, reflecting its own demographics and legislature, Salo added. To better accommodate the varying approaches, the proposal should allow Maryland, Montana and other states to define benefits “the way that meets their needs,” he said.

ETA: September

3. Final Shared Savings Program Rule

As with the exchange proposal, regulations governing ACOs have been heavily anticipated because many providers are still weighing whether to participate in the federal program.

However, the proposed shared savings rule already sparked a huge industry backlash. Will the final ACO rule receive a better reception?

Many providers say that the ACO proposal creates too many bureaucratic and legal hurdles and that the number of quality standards will require excessive data management. Other groups are worried that potential savings are limited, especially when considering startup costs. California providers say that the state’s law on the corporate practice of medicine creates particular challenges in aligning physicians and hospitals.

One silver lining for officials and providers is that the ACO rule is likely nowhere near its final form. CMS had asked for comment on nearly every aspect of its proposal — making it clear that the regulations are “very much subject to change … in the final rule,” health lawyers at Reed Smith note.

ETA: This fall

4. Meaningful Use Stage 2

Although the 2009 federal economic stimulus package has been overshadowed by last year’s health reform law, the earlier law also incorporated a number of important provisions, including a potentially transformative measure for health IT.

Under the stimulus package, health care providers who demonstrate meaningful use of certified electronic health records can qualify for Medicaid and Medicare incentive payments. The provision is designed as a carrot to rapidly speed EHR implementation — but many health care providers fear that the meaningful use plan is too aggressive and are pushing to delay the law’s crucial Stage 2.

For example, organizations such as the American Hospital Association have expressed concern that hospitals and physicians will not have enough time to implement new functionalities under Stage 2. They also are concerned that vendors will not have enough time to upgrade their required products

As a result, the Health IT Policy Committee’s meaningful use work group has been debating whether to delay the start of Stage 2 until 2014. Experts expect to find out the government’s decision within the next six months.

ETA: End of year or early 2012

Of course, there are many other rules — from regulations that govern Medicare Advantage to Medicaid eligibility — that are slated for release in coming months, and California Healthline will continue to track how they affect the industry. Meanwhile, here’s a review of what else is making news around the nation.

Rolling Out Reform

  • A glitch in the federal health reform law might cause some seniors with similar medical histories and incomes to pay drastically different amounts for private health insurance. Under the federal health reform law, Social Security benefits are not considered income when determining whether a resident can receive federal tax credits for purchasing health coverage through insurance exchanges. As a result, adults who retire between ages 62 and 65 — when they are eligible for Social Security but not yet eligible for Medicare — would receive a break on insurance premiums that employed adults of the same age would not receive. Obama administration officials are aware of the problem and say they are exploring ways to resolve it (Alonso-Zaldivar, AP/Seattle Times, 6/30).
  • CMS recently issued an interim final rule on standardized electronic transactions designed to reduce administrative burdens and costs for health care providers and insurers. The federal health reform law mandates the development and implementation of new operating rules for HIPAA administrative and financial transactions. The interim final rule aims to make it easier to determine a patient’s eligibility for health care benefits and the status of a health care provider’s payment claims. The rule will be published in the Federal Register on July 8, and CMS will accept public comment until Sept. 6. The rule is scheduled to go into effect on Jan. 1, 2013 (Walker, MedPage Today, 7/1).
  • The federal health reform law saved 478,272 Medicare beneficiaries affected by the “doughnut hole” coverage gap more than $260 million on prescription drugs in the first five months of 2011, CMS officials recently announced. The savings amounted to roughly $545 per beneficiary. The health reform law called for Medicare beneficiaries in 2010 to receive one-time, $250 rebates when they reached the doughnut hole. This year, the rebate was replaced by a 50% discount on brand-name drugs. The overhaul will increase that discount gradually until 2020, when the coverage gap will be closed (Petrochko, MedPage Today, 6/28).
  • Health care consultants and vendors are expected to receive a substantial amount of new business as states take steps to roll out health insurance exchanges under the federal health reform law. States already have received more than $300 million in federal grants for the exchanges and stand to receive more funds in coming months as they begin to execute their plans. In Indiana and Washington — two of three states that so far have received federal grants to establish exchanges — vendors that have received overhaul funding include Deloitte Consulting, Mathematica Policy Research Group, Milliman and Wakely Consulting Group (Kliff, Politico, 6/27).

Eye on the Courts

  • Last week, 49 House Republicans sent a letter to House Judiciary Committee leaders, urging them to investigate whether U.S. Supreme Court Justice Elena Kagan played a role in developing the Obama administration’s defense against the many lawsuits challenging the constitutionality of the federal health reform law. The letter — sent to Committee Chair Lamar Smith (R-Texas) and ranking member John Conyers (D-Mich.) — included signatures from 2012 Republican presidential candidates Michele Bachmann (Minn.) and Ron Paul (Texas), as well as several House GOP members who also are doctors (Seper, Washington Times, 6/30).
  • Also last week, Republican-appointed Judge Jeffrey Sutton of the Sixth U.S Circuit Court of Appeals in Cincinnati drew national attention for voting in favor of upholding a lower court’s ruling that the health reform law’s individual mandate is constitutional, a move that experts say would make it easier for conservative judges in the U.S. Supreme Court to do the same. In his concurring opinion to the majority opinion, Sutton — who was appointed by President George W. Bush and had clerked for U.S. Supreme Court Justice Antonin Scalia — agreed that the mandate is constitutionally sound and that Congress acted within the parameters of the expanding Commerce Clause to implement the coverage requirement (Haberkorn, Politico, 7/1).

Spotlight on ACOs

  • Last week, former CMS Administrator Mark McClellan said the widespread criticism of a proposed rule governing the creation of accountable care organizations under the federal health reform law shows that health care providers are serious about creating ACOs. McClellan also predicted that the government would sign the first Medicare ACO contracts by spring 2012. He said, “I think the storm of criticisms is an indication of how much it matters” for health care providers and other organizations to have the correct guidance in developing ACOs. He added that the “fundamental need for those reforms … is not going away” (Reichard, CQ HealthBeat, 6/27).
  • As the debate on the role of ACOs continues to expand, some U.S. employers want to be sure that they will be able to participate in those discussions on structuring the ACO model, according to David Lansky of the Pacific Group on Health. Lansky — president and CEO of the 50-member, California-based business coalition — recently said that employers are “lukewarm” about the ACO concept, so health care providers will be challenged to demonstrate the levels of positive performance that employers hope the ACO model can produce (Zigmond, Modern Healthcare, 6/27).

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