• Physician fee schedule will implement many PPACA changes
• “Money follows the person” program expands
• New process starts to ID terminated providers
• Health reform’s temporary high risk program begins operation
• Early retiree reinsurance program applications may be submitted now
• Supreme Court denies review of San Francisco health care ordinance

• Virginia defends lawsuit against federal health reform in court

• Only one in five employers plan to extend coverage to adult children before mandate starts
• Model notices released for dependent coverage, lifetime limits under health reform

Physician fee schedule will implement many PPACA changes

A Proposed rule would implement key provisions of the Patient Protection and Affordable Care Act (PPACA) (PubLNo 111-148) affecting Medicare physician services in 2011. An advance release of the Proposed rule was made available by CMS this week, along with supporting fact sheets. The changes for 2011 include: improved payments for primary care services and access to health care services in rural areas; changes to the physician quality reporting initiative and the electronic prescribing incentive program; and improved payment accuracy.

The proposed policies would apply to payments under the Medicare Physician Fee Schedule (MPFS) for services furnished on or after January 1, 2011.

The Proposed rule would implement provisions in PPACA to eliminate out-of-pocket costs for beneficiaries for most preventive services, including the new annual wellness visit. This visit would augment the benefits of the Initial Preventive Physical Examination with an annual wellness visit that would allow the physician and patient to develop a personalized prevention plan that includes not only the preventive services generally available to the Medicare population, but additional services that may be appropriate because of the patient’s individual risk factors.

Incentive payments would apply to primary care services furnished by primary care practitioners such as physicians, nurse practitioners, clinical nurse specialists and physician assistants. Another incentive program would (1) apply to general surgeons performing major surgery in areas designated by the Secretary as Health Professional Shortage Areas (HPSAs), (2) allow physician assistants to order post-hospital extended care services in skilled nursing facilities, and (3) pay certified nurse midwives for their services under the MPFS at the same rates as physicians.

The Proposed rule projects a negative 6.1 percent reduction to physician payment rates in 2011 under the sustainable growth rate (SGR) formula. The SGR has been the subject of recent actions in Congress which would reverse negative updates to the fee schedule rates. To date, Congress has given temporary relief from application of the SGR formula, but that relief currently extends only to the end of November 2010.

CMS Fact Sheets, June 25, 2010.

“Money follows the person” program expands

Section 2403 of the Patient Protection and Affordable Care Act (PPACA) (PubLNo 111-148) extended the Money-Follows the Person (MFP) demonstration project for five years, through 2016. States currently operating MFP demonstrations that wish to continue the same program will receive funding for the additional five years by submitting a written request; they need not compete for funding. However, states are encouraged to begin or expand MFP demonstrations under the increased flexibility of PPACA. Individuals in institutions may qualify for assistance with their return to the community after 90 days of continuous residence. Days spent at a facility for the purpose of receiving short-term rehabilitation services do not count toward the residence requirement. Assistance under the MFP demonstration is available to the beneficiary for one year. States are reimbursed at an enhanced FMAP rate for qualifying services and administrative expenses. Free technical assistance is available from contracted experts in long-term care as well as from CMS.

CMS Letter to State Medicaid Directors, No. SMDL-1-012, June 22, 2010.

New process starts to ID terminated providers

A new process to provide states with information on providers and suppliers that have been terminated from Medicare, Medicaid programs, and the Children’s Health Insurance Programs, (CHIP) in accordance with §6401(b)(2) of the Patient Protection and Affordable Care Act of 2010(PPACA) (PubLNo 111-148) is being implemented. Beginning January 1, 2011, PPACA §6501 requires states to terminate from participation in their Medicaid or CHIP program providers that have been terminated by another state’s Medicaid or CHIP program or from Medicare. CMS is making available to states a list of providers terminated from the Medicare program since 1985 and will disseminate updates of this information to states via email and on a secure website sponsored by the Medicaid Integrity Institute. Currently each state only has one user license for the website, and during the initial process no new licenses will be awarded. States are strongly encouraged to evaluate providers that have been terminated by other states prior to the 2011 deadline.

CMS Memorandum, No. CPI-B 10-01, June 21, 2010.

Health reform’s temporary high risk program begins operation

On July 1, Kathleen Sebelius, Secretary of Health and Human Services (HHS) announced the implementation of “a new Pre-existing Condition Insurance Plan (PCIP) that will offer coverage to uninsured Americans who have been unable to obtain health coverage because of a pre-existing health condition.”

The PCIP implements Sec. 1011 of the Patient Protection and Affordable Care Act, which established a temporary high risk insurance pool program for individuals who have been uninsured for six months or who have been denied a policy because they have preexisting.

The funding for this high risk pool program is capped at $5 billion. The program is set to end on Jan. 1, 2014.

HHS provided states with the option of running a PCIP themselves or having HHS run the plan. Twenty-one states have elected to have HHS administer the plans, while 29 states and the District of Columbia have chosen to run their own programs.

Starting on July 1, the national PCIP opened up to applicants in these 21 states where HHS is operating the program: Alabama, Arizona, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Virginia, and Wyoming.

The remaining 29 states, which are operating their own PCIP, will begin enrollment by the end of the summer, with many beginning enrollment today.

In order to facilitate enrollment in a PCIP, HHS on July 1 set up a consumer Web site, http://www.HealthCare.gov. Individuals who live in a state where the HHS is running the PCIP will be linked directly to the federal application page. Those living in states running their own programs will also find information on how and where to apply.

On July 2, HHS’s Office of Consumer Information and Insurance Oversight (OCIIO) also issued a notice in the Federal Register proposing a new system of records titled Pre-Existing Condition Insurance Plan (PCIP), System No. 09-90-0275. Such a system of record is required by the Privacy Act of 1974.

Where HHS contracts with a State to administer the temporary high risk program, HHS will make available a PCIP under arrangements with the U.S. Office of Personnel Management, the U.S. Department of Agriculture’s National Finance Center (NFC), and one or more nonprofit entities to serve as a third-party administrator (TPA) responsible for maintaining a network of health care providers and adjudicating claims for covered services.

The purpose of the PCIP system of records is to collect and maintain information on individuals who apply for enrollment in the temporary high risk program. This information will enable HHS acting through NFC, OPM, and any third-party administrator(s) to determine applicants’ eligibility, enroll eligible individuals into the program, adjudicate appeals of eligibility and coverage determinations, bill and collect premium payments, and process and pay claims for covered health care items and services furnished to eligible individuals.

For more information on this notice, contact OCIIO’s Jill Gotts ((202) 690-5894 or jill.gotts@cms.hhs.gov).

Early retiree reinsurance program applications may be submitted now

Applications for reimbursements from the Early Retiree Reinsurance Program (ERRP) may be submitted now, the U.S. Department of Health and Human Services’ (HHS) Office of Consumer Information and Insurance Oversight (OCIIO) has announced. The OCIIO on June 29 published the official ERRP program application, the address for submitting the application, official ERRP application instructions, and application “dos and don’ts.”

Links to these documents and to other pertinent information are available at http://www.hhs.gov/ociio/regulations/index.html#early_retiree. Plans are encouraged to check this Web page periodically for HHS announcements on upcoming program-related training events.

Applications to the program must be signed and submitted in hard copy to HHS ERRP Application Center, 4700 Corridor Place, Suite D, Beltsville, MD 20705.

The Patient Protection and Affordable Care Act, P.L. 111-148, established a temporary reinsurance program to reimburse part of the claims costs for participating employment based plans that provide health insurance coverage for early retirees ages 55 through 64, and their eligible spouses, surviving spouses, and dependents. The ERRP will reimburse for 80% of a plan’s individual claims that are between $15,000 and $90,000, indexed for inflation. The program is effective June 1, 2010, and ends on the earlier of Jan. 1, 2014, or when the $5 billion appropriated for the program is exhausted. Program participants will be able to submit claims for medical care going back to June 1, 2010, HHS added.

Supreme Court denies review of San Francisco health care ordinance

On June 28, the Supreme Court refused to hear an appeal by the Golden Gate Restaurant Association that the San Francisco Health Ordinance is preempted by ERISA (Golden Gate Restaurant Association v. San Francisco, 08-1515).

In 2009, the U.S. Court of Appeals for the Ninth Circuit ruled that the San Francisco Health Ordinance is not an ERISA plan, and does not “relate” to employers’ ERISA plans. However, the Golden Gate Restaurant Association maintained that the mandatory employer fee conflicts with ERISA and will hurt businesses already struggling due to the economy.

The law mandates that businesses provide private health care for their employees, set up health reimbursement arrangements, or pay the city a fee to defray the cost of providing care to uninsured workers. In 2010, employers with 20 to 99 workers must pay the city $1.31 per hour worked, and companies with more than 100 employees must pay $1.96 per hour worked.

For more information, visit http://www.sfgov.org/site/olse_index.asp?id=45168.

Virginia defends lawsuit against federal health reform in court

Virginia's Attorney General Ken Cuccinelli and his legal team made their first defense of the state's lawsuit against the federal government’s new health care act on July 1, 2010. Federal District Court Judge Henry E. Hudson listened to Virginia’s and the federal government’s arguments on U.S. Health and Human Services Secretary Kathleen Sebelius’s motion to dismiss the suit.

The federal government argued that Virginia lacks the standing to bring a suit, that the suit is premature, and that the federal government has the power under the U.S. Constitution’s Commerce Clause to mandate that citizens must be covered by health insurance or pay a civil penalty. The government also made alternative arguments based upon its taxing power and the Necessary and Proper Clause.

"The government can’t draft an unwilling citizen into commerce just so it can regulate him under the Commerce Clause," argued Virginia Solicitor General E. Duncan Getchell, Jr.

When questioned by the judge whether the individual insurance mandate was a tax or a penalty, the attorney for the federal government said it was both, even though members of Congress specifically said they did not pass it as a tax, and President Obama has stated it was not a tax, to appear to keep the president’s promise not to raise taxes on the middle class.

"If the government prevails and Congress may use the Commerce Clause to order Americans to buy private health insurance, then Congress will have been granted a virtually unlimited power to order you to buy anything. That would amount to the end of federalism and our more than 220 years of constitutional government," Cuccinelli said following the hearing.

"One mile from the U.S. courthouse where we just argued this case is St. John’s Church, where Patrick Henry gave his famous "Give me liberty or give me death" speech. So it’s fitting that in that courtroom today, just one mile down the road, we were fighting the greatest erosion of our liberty since our country’s founding," Cuccinelli remarked.

Judge Henry E. Hudson said he would likely issue his ruling in 30 days. If the case, Commonwealth of Virginia v. Kathleen Sebelius, survives, a summary judgment hearing is scheduled for October 18, 2010, to decide if the federal health care law is unconstitutional.

Source: Virginia Attorney General's Press Release, July 1, 2010.

Only one in five employers plan to extend coverage to adult children before mandate starts

Only one in five employers (19.5%) plan to extend health care coverage for dependents to adult children before required to do so by the Patient Protection and Affordable Care Act, according to a survey from the International Foundation of Employee Benefit Plans (IFEBP). The Affordable Care Act requires that group health plans that provide dependent coverage to children must make coverage available for an adult child until the child turns 26 years old. This provision is effective for plan years beginning on or after Sept. 23, 2010. The IFEBP survey, Health Care Reform: What Employers Are Considering, found that two-thirds of employers will not extend coverage to adult children until legally required.

More than 45% of employers reported being unsure how they will address cost-sharing for dependent coverage in light of the health reform changes. However, one in ten employers do plan to add new tiers to their cost-sharing structure, according to IFEBP. In addition, 53.4% are not sure if they will change the eligibility requirements for dependents on the other plans they offer (such as dental, vision, and life insurance plans) to maintain the same definition of dependent children for all plans offered or if they will only apply the new rules to the primary medical plan.

IFEBP asked employers about how they will handle several other provisions in the Affordable Care Act, as follows:

• Lifetime and annual maximums. Approximately 80% of employers indicated that their plans currently include lifetime maximum provisions on essential benefits. Only 4.4% reported they will remove lifetime maximums before they are required to do so. In addition, IFEBP found that 70% of employers reported that their plans currently set annual maximums, and of these, only 3.6% plan to remove annual maximums before they are required to do so. The effective date of these provisions is plan years beginning on or after Sept. 23, 2010.
• Preexisting condition exclusions. Almost half of employers provide health care plans that include preexisting condition exclusions. Of these, IFEBP found that only 4.5% will remove the exclusions before required to do so by law, for plan years beginning on or after Jan. 1, 2014, except for children younger than age 19, for whom the effective date is for plan years beginning on or after Sept. 23, 2010.
• Early Retiree Reinsurance Program. More than 50% of employers that currently offer retiree medical plans to early retirees plan to apply for the temporary Early Retiree Reinsurance Program.
• CLASS Act. Most employers (56.8%) are not sure whether they will offer Community Living Assistance Services and Support (CLASS) Act benefits, awaiting further clarification of premiums and regulations before they decide.

The survey contains responses from 1,021 employers. For more information, visit http://www.ifebp.org.

Model notices released for dependent coverage, lifetime limits under health reform

The Department of Labor has released two model notices to help employers to comply with the dependent coverage for adult children and lifetime limits provisions of the Patient Protection and Affordable Care Act.

In May, interim final regulations provided guidance for the new requirement that plans provide dependent coverage for adult children until age. The regulations require a plan or issuer to give the parent of such a child an opportunity to enroll that child within a period that continues for at least 30 days (including written notice of the opportunity to enroll). This enrollment opportunity (including the written notice) must be provided not later than the first day of the first plan year beginning on or after Sept. 23, 2010. The notice may be included with other enrollment materials that a plan distributes, provided the statement is prominent.

The following model language can be used to satisfy the notice requirement:

“Individuals whose coverage ended, or who were denied coverage (or were not eligible for coverage), because the availability of dependent coverage of children ended before attainment of age 26 are eligible to enroll in [Insert name of group health plan or health insurance coverage]. Individuals may request enrollment for such children for 30 days from the date of notice. Enrollment will be effective retroactively to [insert date that is the first day of the first plan year beginning on or after Sept. 23, 2010]. For more information contact the [insert plan administrator or issuer] at [insert contact information].”

Lifetime limits. In June, interim final regulations provided guidance for the new requirement that plans no longer place lifetime limits on health benefits.

Under the rules, plans are required to give written notice that the lifetime limit on the dollar value of all benefits no longer applies and that an individual, if covered, is once again eligible for benefits under the plan. The notice and enrollment opportunity must be provided beginning not later than the first day of the first plan year beginning on or after Sept. 23, 2010. For individuals who enroll under this opportunity, coverage must take effect not later than the first day of the first plan year beginning on or after Sept. 23, 2010.

The following model language can be used to satisfy the lifetime limit notice requirement:

“The lifetime limit on the dollar value of benefits under [insert name of group health plan or health insurance issuer] no longer applies. Individuals whose coverage ended by reason of reaching a lifetime limit under the plan are eligible to enroll in the plan. Individuals have 30 days from the date of this notice to request enrollment. For more information contact the [insert plan administrator or issuer] at [insert contact information].”