Weekly Washington Healthcare Update

October 21, 2013

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1. Congress

2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

Government Accountability Office (GAO)

1. Congress

Agreement Reached to Restore Government Operations, Raise Debt Limit

After days of gridlock following the expiration of appropriated funds necessary to keep the federal government operating, Congress passed a short-term resolution to the government shutdown and the Treasury’s need to borrow money to avoid default. However, all this agreement really does is push the bigger issues off (for background information, see our previous alert).

The proposal, which originated from the Senate, contains the following:

  • Funds the federal government through a Continuing Resolution (CR) until Jan. 15;
  • Raises the national debt limit until Feb. 7 and allows the Treasury to use “extraordinary measures should Congress not raise the debt limit by Feb. 7;
  • Requires bicameral budget negotiations that must be concluded by Dec. 13; and,
  • Requires certification that individuals receiving subsidies for insurance purchased on the exchanges meet the required income levels.

It is important to note that the short-term continuing resolution does not repeal or replace the across-the-board cuts in place as a result of sequestration.

Upcoming Energy and Commerce Hearing on ACA Implementation

The Committee on Energy and Commerce has scheduled a hearing entitled “PPACA Implementation Failures: Didn’t Know or Didn’t Disclose?” The hearing will be held on Thursday, Oct. 24, 2013, at 9 a.m., in 2123 Rayburn House Office Building. Chairman Upton invited HHS Secretary Sebelius to testify; however, to the disappointment of Republicans, Sebelius has declined the invitation. Witnesses are yet to be announced. For more information, or to view the hearing, please visit: energycommerce.house.gov

2. Administration

ACA Enrollment Hindered by Ongoing Website Glitches

Though millions of individuals have visited the federal web portal designed to help consumers compare and purchase qualified health insurance products, few have actually been able to successfully complete the enrollment process. In addition, insurers have found that they are unable to directly enroll consumers who choose to bypass the web portal and deal directly with insurers. According to the White House, nearly 8 million unique visits to Healthcare.gov were made in the first four days following the Oct. 1 open enrollment, with a total of 17 million visits to date. However, the administration has avoided giving any specific figures on how many individuals have actually enrolled in coverage, though some states have begun to release their enrollment data, with Washington enrolling nearly 25,000 residents in its health plan finder. Beginning Jan. 1 2014, individuals will be required to possess qualified health coverage or face a penalty.

3. State Activities

Oregon Enrolls 56,000 to Date in Medicaid Expansion

As a result of the new fast-track enrollment for the Oregon Health Plan, the number of uninsured Oregon residents has fallen significantly. According to the Oregon Health Authority, Oregon Health Plan — a low-income, Medicaid-funded program — has enrolled 56,000 new beneficiaries, cutting the state’s number of uninsured by 10 percent. This is in spite of the verity that Oregon’s health insurance exchange Cover Oregon is not running yet. Eligibility rules for Oregon Health Plan state that individuals in 2014 must earn 138 percent of the federal poverty line or less to quality, with savings or property no longer a bar to membership. Given the technical problems faced by Covered Oregon, the state’s usage of the new-fast track system allows these beneficiaries to bypass exchange enrollment, which Judy Mohr Peterson, Director of Medical Assistance Programs for Oregon, says allows “the state to minimize reliance on new systems during the crucial start-up period and to save on outreach efforts.”

Rhode Island Exchange Stops Reporting Key Enrollment Stat

The figure for “completed and processed” applications will no longer be included in weekly metrics reports from HealthSource RI, Rhode Island’s state-based exchange. The statistic was left out of the most recent written report following an “internal policy decision,” and in the future the exchange plans to announce those figures monthly, not weekly. At a news conference on Saturday, Oct. 12, HealthSource RI director Christine Ferguson said that there had been 1,698 completed and processed applications as of Friday, Oct. 11.

New Hampshire Will Convene Special Session for Medicaid Expansion Vote

New Hampshire legislators will meet November 7-21 to hash out what leaders hope will be a bipartisan agreement to expand the Medicaid program for low-income adults up to 138 percent of the federal poverty line. This is the result of the state’s Executive Council voting Wednesday to allow Gov. Maggie Hassan (D) to call a special session on the matter. “I fully agree with the commission’s recommendation that New Hampshire should move forward with expansion prior to Jan. 1…. After consulting with Senate President Morse and Speaker Norelli, I am confident that a November special session will allow for thorough consideration and enactment of a New Hampshire plan for expansion in time for federal approval before Jan. 1,” said Gov. Hassan. State officials guesstimate that approximately 49,000 low-income adults would be eligible for Medicaid under the expansion and would receive $2.4 billion in benefits over the next seven years.

Connecticut Exchange Attracts Older Enrollees While Young Receive Medicaid

In a detailed briefing given by representatives of Connecticut’s state exchange, Access Health CT’s Peter Van Loon, the marketplace’s chief executive officer, expressed some concerns about the state’s exchange enrollment pool thus far. “We want a nice bell curve,” Van Loon said, as a mixed sampling of ages to balance the risk pool. Enrollment data collected showed that older people “have jumped on this in a big way” and that only one-third of new enrollees were between the ages of 18-34. Furthermore, most of the younger customers had enrolled in the government-funded Medicaid. In its first 15 days of operations, Connecticut’s new insurance marketplace signed 3,847 people up for health care coverage. Officials at Access Health CT hope to enroll 100,000 Connecticut residents during the enrollment period, which ends March 31. Enrollment participation is, however, expected to rise as marketing and outreach efforts pick up statewide.

4. Regulations Open for Comment

Basic Health Plan Proposed Rule

On Sept. 20, CMS issued a proposed rule to guide the introduction of Basic Health Plans, as required by Section 1331 of the Affordable Care Act. The Basic Health Program provides states the flexibility to establish a health benefits coverage program for low-income individuals who would otherwise be eligible to purchase coverage through the state’s Affordable Insurance Exchange (Exchange, also called a Health Insurance Marketplace). The Basic Health Program would complement and coordinate with enrollment in a Qualified Health Plan (QHP) through the Exchange, as well as with enrollment in Medicaid and the Children’s Health Insurance Program (CHIP). This proposed rule sets forth a framework for Basic Health Program eligibility and enrollment, benefits, delivery of health care services, transfer of funds to participating states and federal oversight. Additionally, this rule would amend other rules issued by the Secretary of the Department of Health and Human Services (Secretary) in order to clarify the applicability of those rules to the Basic Health Program. Comments are due by Nov. 25, 2013.

CMS Proposed Rule for Federally Qualified Health Center Payments

On Sept. 18, CMS released a proposed rule that establishes a new Prospective Payment System (PPS) and increases Medicare reimbursement payments for federally qualified health centers (FQHC). In the rule, Medicare payments would increase 30 percent for FQHC services provided to beneficiaries in medically underserved areas. Under the PPS, Medicare would pay the FQHCs a single encounter-based rate per beneficiary per day for all services provided. The proposed rate would be calculated based on an average cost per encounter, which is estimated to be $155.90, adjusted for geographic variation, with additional consideration given to new Medicare beneficiaries.

“These health centers serve some of our most vulnerable populations,” HRSA Administrator Mary Wakefield said in a Sept. 18 statement. “We are excited about our collaboration with CMS to create a payment system that enables these vital health centers to keep doing such important work.” CMS estimates that during the first five years of implementation, the annual Medicare spending for the FQHCs would be $33 million in 2014, increasing to at least $200 million every year afterward until 2018. Comments on the proposed rule are due on Nov. 18, 2013.

IRS Proposed Rule — ACA Employer Information Reporting Mandates

On Sept. 5, the IRS issued proposed regulations providing guidance to employers that are subject to the information reporting requirements under Section 6056 of the Internal Revenue Code (Code), enacted by the Affordable Care Act. Section 6056 requires those employers to report to the IRS information about their compliance with the employer shared responsibility provisions of Section 4980H of the Code and about the health care coverage they have offered employees. Section 6056 also requires those employers to furnish related statements to employees so that employees may use the statements to help determine whether, for each month of the calendar year, they can claim on their tax returns a premium tax credit under Section 36B of the Code (premium tax credit). In addition, that information will be used to administer and ensure compliance with the eligibility requirements for the employer shared responsibility provisions and the premium tax credit. The proposed regulations affect applicable large employers (generally meaning employers with 50 or more full-time employees, including full-time equivalent employees, in the prior year), employees and other individuals.

IRS will accept comments on specific aspects of the proposed rule, such as whether the proposed collection of information is necessary for the proper performance of the functions of the IRS, including whether the information will have practical utility, and how the quality, utility and clarity of the information to be collected may be enhanced. A public hearing will be held at 10 a.m. on Nov. 18.

IRS Proposed Rule — Reporting On ACA Minimum Essential Coverage

On Sept. 5, the IRS issued proposed regulations providing guidance to providers of minimum essential health coverage that are subject to the information reporting requirements of Section 6055 of the Internal Revenue Code (Code), enacted by the Affordable Care Act. Health insurance issuers, certain employers and others that provide minimum essential coverage to individuals must report to the IRS information about the type and period of coverage and furnish related statements to covered individuals. These proposed regulations affect health insurance issuers, employers, governments and other persons that provide minimum essential coverage to individuals. Under the proposed rules, health insurance issuers are not required to submit Section 6055 information returns on minimum essential coverage they provide in the individual market through the ACA health insurance exchanges, or marketplaces; however, sponsors of self-insured group health plans are required to report minimum essential coverage under the proposed rule. In addition, self-insured group health plans or arrangements covering employees of related corporations are treated as sponsored by more than one employer and each employer must report for its employees.

IRS will accept comments on specific aspects of the proposed rule, such as whether the proposed collection of information is necessary for the proper performance of the functions of the IRS, whether the information will have practical utility, and how the quality, utility and clarity of the information to be collected may be enhanced. A public hearing will be held at 10 a.m. on Nov. 19.

IRS Proposed Rule — ACA Small Business Tax Credit

The IRS has issued proposed rules on the ACA’s small-business tax credit, available only to certain businesses with 25 or fewer full-time employees purchasing health coverage through a SHOP exchange. Under the proposed rule, for taxable years beginning during or after 2014, the maximum credit for an eligible small employer other than a tax-exempt eligible small employer is 50 percent of the eligible small employer’s premium payments made on behalf of its employees under a qualifying arrangement for QHPs offered through a SHOP exchange. For a tax-exempt eligible small employer for those years, the maximum credit is 35 percent. The employer’s tax credit is subject to several adjustments and limitations as set forth in this preamble.

In addition, all employees (determined under the common law standard) who perform services for the employer during the taxable year are taken into account in determining FTEs and average annual wages, including those who are not performing services in the employer’s trade or business. An employee’s hours of service for a year include hours for which the employee is paid, or entitled to payment, for the performance of duties for the employer during the employer’s taxable year. Hours of service also include hours for which the employee is paid for vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. Hours of service do not include the hours of seasonal employees who work for 120 or fewer days during the taxable year, nor do they include hours worked for a year in excess of 2,080 for a single employee.

Comments are due Nov. 21, 2013.

5. Reports

GAO

Medicare Information Technology: Centers for Medicare and Medicaid Services Needs to Pursue a Solution for Removing Social Security Numbers from Cards

According to the GAO, the health insurance claims number on Medicare beneficiaries’ cards includes as one component the beneficiary’s (or other eligible person’s, such as a spouse’s) SSN. This introduces risks to beneficiaries’ personal information, as the number may be obtained and used to commit identity theft. CMS is currently examining ways to remove SSNs from Medicare cards, and the GAO studied CMS’s efforts related to the removal. GAO found that CMS has not taken the necessary steps, such as designating a business owner and establishing a business case for an information technology (IT) project, that would result in a solution for removing SSNs. However, CMS has examined alternative approaches, the costs and risks, as well as assessing the different approaches’ impact on the existing IT systems. GAO recommended that CMS initiate an IT project to develop a solution for SSN removal and incorporate such a project into plans for ongoing IT modernization initiatives.

If you have any questions, please contact Stephanie Kennan, Senior Vice President, or Brian Looser, Assistant Vice President, at McGuireWoods Consulting.

Founded in 1998, McGuireWoods Consulting LLC (MWC) is a full-service public affairs firm offering state and federal government relations, national/multistate strategies, infrastructure and economic development, strategic communications and grassroots issue management services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLP law firm and in 2010 was ranked in the Top 20 of The National Law Journal‘s “The Influence 50,” an annual report of the top public affairs firms in Washington, D.C.

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