Category — Department of Health and Human Services

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 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

On August 23, 2011, the Center for Medicare & Medicaid Innovation (Innovation Center) announced a new initiative regarding bundled payments for care improvement.  The new bundled payment models combine payments for physician, hospital, and other provider services into a single, predetermined payment amount for all services furnished to a beneficiary during a defined episode of care.  The Innovation Center offers four different payment models for interested applicants.  Akin Gump has put together a Comparison of Bundled Payment Models Chart comparing some of the features of each of these models.  Further detail is available in the full request for applications (RFA), available at the Innovation Center website: http://innovations.cms.gov/documents/payment-care/Request_for_Applications.pdf.

Important Dates

Entities interested in applying for any of these models should note the following program deadlines:

Model 1

• Interested organizations must submit a non-binding letter of intent by September 22, 2011
• Applications must be submitted to the Innovation Center by October 21

Models 2-4

• Interested organizations must submit a non-binding letter of intent by November 4, 2011
• Organizations who want to be considered for receipt of data must submit a Research Request Packet containing specific information about their study design (including how they will use data to construct an episode definition and develop care episode redesign protocols) by November 4, 2011
• Potential applicants must also submit a Data Use Agreement by November 4, 2011
• Applications must be submitted by March 15, 2012

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.

The Department of Health and Human Services and the Department of the Treasury issued three Notices of Proposed Rulemaking (“NPRMs”) on August 12, 2011 on eligibility and enrollment in Insurance Exchanges and the Small Business Health Options Program (“SHOP”), health insurance premium tax credits, and eligibility changes to Medicaid and the Children’s Health Insurance Program (“CHIP”).  

• The Exchange Functions in the Individual Market: Eligibility Determinations and Exchange Standards for Employers (“Exchange Eligibility and Employers”) NPRM proposes processes for individual enrollment in qualified health plans (“QHPs”) and insurance affordability programs as well as standards for employer participation in SHOP. 
   
• The Health Insurance Premium Tax Credit (“Tax Credit”) NPRM outlines proposed eligibility standards for the premium tax credits for coverage purchased through the Exchanges (available to taxpayers with household incomes between 100 percent and 400 percent of the Federal Poverty Level (“FPL”) starting in 2014) and explains how such tax credits will be calculated.  
   
• The Medicaid Program: Eligibility Changes under the Affordable Care Act of 2010 (“Medicaid Eligibility”) NPRM proposes to expand Medicaid  to most adults under  the age of 65 with incomes up to 133 percent of the FPL and consolidate eligibility categories into four groups:  children, pregnant women, parents, and a new adult group.  The NPRM would also increase the Federal Matching Assistance Percentage (“FMAP”) for newly eligible individuals and to states that expanded Medicaid coverage for adults before enactment of the Affordable Care Act. 

Together, the three NPRMs establish coordination across Medicaid, CHIP and the Exchanges and create a system in which Exchanges would conduct eligibility determinations for Medicaid and premium tax credits as well as facilitate enrollment in insurance affordability program.  Comments on all three NPRMs are due by October 31, 2011.

The U.S. Department of Health and Human Services (HHS) issued two Notices of Proposed Rulemaking (NPRMs) on July 11, 2011 relating to state health insurance exchanges.  Both NPRMs will be published in the Federal Register on July 15, 2011.  Comments on both NPRMs are due by September 26, 2011.

The Patient Protection and Affordable Care Act (PPACA) requires each state to establish by January 2014 an American Health Benefit Exchange and a Small Business Health Options Program (“SHOP”) to facilitate health insurance purchasing by individuals and small employers.  Under PPACA, if a state fails to establish an Exchange and/or a SHOP by January 1, 2014, the Secretary of HHS must establish and operate the Exchange and/or SHIP  in that state.  PPACA provides that each Exchange will:  certify health plans that can offer coverage through the Exchange; assign ratings to each plan based on price and quality; provide consumer information on each plan (including an electronic calculator that consumers can use to assess the cost of coverage); determine eligibility for the Exchange, tax credits and cost-sharing programs, public health coverage programs (including Medicare, Medicaid, and CHIP), and exemptions from the individual mandate; and establish a “Navigator” program to assist consumers in making choices about their health care.

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On May 19, the Department of Health and Human Services (HHS) issued a final regulation implementing section 1003 of the Patient Protection and Affordable Care Act that requires review of certain health insurance premium increases.  Starting September 1, 2011,  premium increases of ten percent or more for non-grandfathered individual and small group health plans must be disclosed and reviewed by relevant officials.  States will primarily have the responsibility for reviewing rate increases and have already been awarded approximately $44 million in grants to obtain the necessary resources to conduct the reviews.  In September 2012, the ten-percent threshold will be replaced by state-specific percentages based on state cost trends.  The final rule also requires insurance companies to provide consumers with information and justifications for the rate increases in order to ensure transparency about consumer costs.  The rule does not provide HHS and states with authority to approve or reject the rate increases, but instead allows officials to enhance transparency in the insurance marketplace.

Section 4205 of the Patient Protection and Affordable Care Act of 2010 (PPACA) requires chain restaurants and vending machine operators with 20 or more locations or machines to provide calorie and other nutrition information to consumers.  Although FDA’s statutory deadline to publish the proposed rules was March 23, 2011 (within one year of PPACA’s enactment), the rules, entitled Food Labeling; Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments and Food Labeling; Calorie Labeling of Articles of Food in Vending Machines were published in the April 6, 2011 Federal Register and the public is invited to submit comments by July 5, 2011.

On March 31, 2011, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule to implement the Medicare Shared Savings Program and Accountable Care Organization (ACO) provisions of the Patient Protection and Affordable Care Act (PPACA).  See Medicare Shared Savings Program: Accountable Care Organizations and Medicare Program, 76 Fed. Reg. 19,528 (proposed Apr. 7, 2011) (to be codified at 42 C.F.R. pt. 425).  This update provides an overview of how the proposed rule’s data sharing provisions implicate the Health Insurance Portability and Accountability Act (HIPAA) and its implementing regulations.  Comments on the rulemaking must be submitted to CMS by June 6, 2011. [Read more →]