Category — Insurance/Medicare Advantage

The Center for Consumer Information and Insurance Oversight within the Department of Health and Human Services (HHS) issued a bulletin on December 16 to provide information and solicit comments on HHS’s approach to defining Essential Health Benefits (EHB) under the Patient Protection and Affordable Care Act (ACA).  The ACA requires non-grandfathered plans in the individual and small group markets, Medicaid benchmark and benchmark-equivalent, and Basic Health Programs to cover EHB beginning in 2014.  The scope of EHB, as defined by HHS, must equal the scope of benefits provided under a “typical” employer plan.  In the bulletin, HHS stated that it intends to define EHB through a benchmark plan that each state selects.  Significantly, HHS intends to allow states to select a benchmark plan from among the following existing health plans: 

• One of the three largest small group plans in the state;
• One of the three largest state employee health plans;
• One of the three largest federal employee health plan options; or
• The largest health maintenance organization in the state’s commercial market. 

If a state fails to select a benchmark, the default would be the state’s largest small group market plan.  Comments on the intended approach are due by January 31, 2012.

On November 14, 2011, the Supreme Court announced that it will hear challenges related to the Affordable Care Act (ACA) during its spring term. The Court has chosen to address four specific issues with respect to legal challenges of the health reform law:

(1) the constitutionality of the law’s requirement that all individuals purchase insurance (i.e., the Minimum Essential Coverage provision, also referred to as the individual mandate);

(2) whether the Anti-Injunction Act, a law which requires individuals to refrain from suing the federal government for the imposition of a tax until after the tax has been paid, bars a pre-enforcement challenge to the individual mandate until 2014 when the provision goes into effect;

(3) the constitutionality of the law’s Medicaid expansion requiring states to provide coverage to all adults under 65 with household incomes below 133 percent of the poverty level; and

(4) the issue of severability, as the Court must determine whether the law must be struck down in its entirety if one of the provisions is found unconstitutional, or whether that provision may be removed while the remainder of the ACA remains intact.

An extraordinary five-and-a-half hours for oral arguments have been granted: two hours on the constitutionality of the individual mandate, 90 minutes on the issue of severability, one hour on whether the Anti-Injunction Act bars some or all of the challenges to the insurance mandate, and one hour on the constitutionality of the Medicaid expansion.  Observers speculate that the arguments will be held in March and a decision may be issued by the Court by late June, well in advance of the 2012 Presidential election.

On November 8, 2011, the D.C. Circuit Court of Appeals upheld the individual mandate provision of the Affordable Care Act (ACA) as constitutional. The opinion, authored by Judge Silberman, is the fourth  appellate court ruling on the ACA and the second to uphold the law.  Recall that the 6^th Circuit also found the mandate constitutional in June. The 11^th Circuit has declared the individual mandate unconstitutional, and the 4^th Circuit has stated that the Anti-Injunction Act is a bar on its ruling until 2014. The Justice Department has already petitioned for review of the 11^th Circuit decision by the Supreme Court. According to observers, the growing split among appellate decisions makes it increasingly likely that the Court will consider taking on this issue during the fall term.

On October 7, 2011, the Institute of Medicine (IOM) released a report setting forth the methodology it recommends that the Department of Health and Human Services (HHS) use to determine the essential health benefits package.  The Affordable Care Act requires plans participating in the insurance exchanges to, at minimum, provide coverage for a  defined set of benefits, known as essential health benefits.  While the statute provides a set of ten broad categories of services to be included in the benefits package, HHS asked the IOM to recommend a process by which the Secretary could define and update the essential health benefits.  In its report, the IOM concluded that the federal government should consider cost as a factor in deciding what benefits should be included.  Although HHS is not bound by the IOM recommendations, Secretary Sebelius said in a statement that HHS would consider IOM’s report and anticipates issuing its proposed rule on the benefits package “soon.”   Before publication of such rule, however, HHS plans to hold a series of listening sessions to gain input from relevant stakeholders.  The IOM report is available through the IOM web site: http://www.nap.edu/catalog.php?record_id=13234

Today, the Office of Management and Budget (OMB) received the long-awaited Medicare Shared Savings Program: Accountable Care Organization (ACO) final rule.  Observers speculate that this means that the rule could be made publicly available very soon.  The Affordable Care Act requires that the ACO program be established no later than January 1, 2012.

On September 28, 2011, the U.S. Department of Justice (DOJ) petitioned the Supreme Court to decide the constitutionality of the individual insurance mandate in the Affordable Care Act (ACA). The DOJ is petitioning for review of the 11th Circuit decision issued by a three-member panel on August 12, 2011, which struck down the individual insurance mandate as unconstitutional under the Commerce Clause while upholding the remainder of the ACA. DOJ petitioned the Supreme Court in lieu of requesting a hearing by the 11^th Circuit en banc, and well in advance of the 90-day deadline for appeal. The effect of the DOJ’s timing, should the Supreme Court accept the petition, will be to push the decision in advance of the 2012 Presidential election. Twenty-six states have filed a joint petition for certiorari requesting that the entire law be struck down.

On September 28, 2011, the Center for Medicare & Medicaid Innovation announced a request for applications for the Comprehensive Primacy Care initiative, a program focusing on improving collaboration between public and private health payers in the primary care arena.  The initiative will test two models: 1) a service delivery model that promotes care coordination and 2) a payment model that would pay selected primary care practices monthly care management fees for their Medicare fee-for-service beneficiaries; providers may then share in any Medicare savings generated by the model while still receiving compensation from private insurers.   CMS anticipates that five to seven models will be tested across the country.  The Innovation Center is accepting letters of intent from public and private payers through November 15, 2011.  All final application must be received before January 17, 2012. 

 Solicitation – http://innovations.cms.gov/documents/pdf/cpc_initiative_solicitation.pdf

Earlier this week the House Ways and Means Committee minority staff released a list of Medicare issues for the Super Committee’s consideration.  The list identifies more than $500 billion in potential savings from the Medicare program, achieved through a variety of cuts across a number of health care industries.  In addition, the document contains brief discussion regarding anticipated proposals relating to the Affordable Care Act. 

The Super Committee had its first meeting on Thursday, September 8, where the Committee adopted rules governing the hearings and proceedings going forward.  The Super Committee’s next hearing is scheduled for September 13.

The Department of Health and Human Services (HHS) recently issued a proposed rule regarding the establishment of non-profit CO-OP insurance plans as required by the Affordable Care Act.  CO-OPs must operate with a strong consumer focus and use profits to lower premiums, improve benefits or improve the quality of care delivered to plan members.  The proposed rule sets forth the eligibility standards to become a CO-OP, stating that health insurance issuers and government entities are not eligible to directly participate in the program.   The proposed rule also provides standards for CO-OP governance and describes loan eligibility criteria  that will help achieve the agency’s goal of having at least one CO-OP in every state.

Organizations seeking to establish a CO-OP are also eligible to apply for a portion of the $3.8 billion in repayable loans available to cover start-up and capitalization costs.  Along with the proposed rule, CMS announced a funding opportunity that provides two types of loan opportunities: 1) joint start-up and solvency loans; or 2) solvency loans only.  Loan recipients will be allowed to draw down funds as they reach “milestones” proposed in their loan application.  HHS anticipates that the first round of loans will be awarded to 51 applicants by January 12, 2012.  All CO-OP loans must be repaid with interest and loan recipients will be subject to audits and reporting requirements.   Start-up loans must be repaid within five years and solvency loans must be repaid within 15 years.

Link to proposed rule.

Link to funding opportunity.

On August 12, 2011, the Department of Health and Human Services (HHS) awarded a total of over $185 million to 13 states and the District of Columbia in Exchange Establishment grants.  States can use the Exchange Establishment grants to develop their Insurance Exchanges and Small Business Health Options Program (“SHOP”) through activities such as conducting background research, consulting with stakeholders, making necessary legislative and regulatory changes, establishing information technology (“IT”) systems, performing oversight, and ensuring program integrity.  States may apply for single (Level One) or multi-year (Level Two) funding through the Exchange Establishment grant process depending on their progress in establishing Exchanges.  All awards in this cycle were single-year grants. 

HHS previously distributed Exchange Establishment grants to three states in May 2011.  Additionally, 49 states and the District of Columbia received Exchange Planning grants in March 2011 to conduct studies on the feasibility of Exchanges and to hold community forums on how Exchanges should be established.  Six states and one multi-state consortium (led by the University of Massachusetts Medical School) received Early Innovator grants to develop model Exchange IT systems.

Additional opportunities to apply for Exchange Establishment grants will be available through June 2012.  Future applications for grants will be accepted quarterly, with the last deadline on June 29, 2012.  Awards will be made approximately 45 days after the application due date.