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Archive: December 2012

IRS releases guidance for large employers

Posted on December 29, 2012

On Friday, the Internal Revenue Service (IRS) of the Department of Treasury issued a notice of proposed rulemaking (NPRM) addressing the Affordable Care Act’s (ACA’s) employer mandate. The IRS also released a series of questions and answers, highlighting the key provisions in the NPRM. The 144-page document explains how to determine which companies constitute large employers and which employees qualify as full-time. In the guidance, IRS also said that large employers must offer coverage not only to employees, but to their families as well. 

Comments on the proposed rule are not due until March 18, 2013, and a public hearing will be held on the proposal on April 23, 2013. This comment period contrasts the 30-day comment periods imposed on the proposed market reform and essential health benefits rules recently released by the Department of Health and Human Services (HHS).

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CMS releases guidance on MAGI

Posted on December 28, 2012

The Department of Health and Human Service’s (HHS’s) Centers for Medicare & Medicaid Services (CMS) today announced new guidance to help states as they begin to plan converting current net income eligibility thresholds to equivalent modified adjusted gross income (MAGI) thresholds in the Medicaid program and Children’s Health Insurance Program (CHIP). The CMS publication describes the conversion methodology and the timeframe for executing the conversions.

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SCOTUS denies contraceptive coverage emergency injunction

Posted on December 27, 2012

Hobby Lobby, a Christian-run arts and crafts chain, filed for an emergency injunction on December 21, 2012 with the Supreme Court to block President Obama’s birth control coverage rules. Hobby Lobby’s complaint surrounds the Affordable Care Act’s (ACA’s) requirement that most employers cover contraception without copay.

Yesterday, the Supreme Court today denied Hobby Lobby’s request, which was joined by the Christian book company, Mardel. The U.S. Supreme Court said it will not decide the case before lower courts have ruled. Justice Sonia Sotomayor argued that the petitioners did not meet the standards requisite for a preliminary injunction. The court also denied the request that the court take up the entire case, in which they argue that the ACA’s contraceptive coverage requirement forces them to violate their religious beliefs.

The case will return to the district court for a ruling on the merits of whether the Obama administration can require employers who have religious objections to contraceptive coverage to provide said insurance coverage in their employer plan.

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GAO releases report on the Medicare physician payment rule

Posted on December 27, 2012

The Middle Class Tax Relief and Job Creation Act of 2012 required that the Government Accountability Office (GAO) examine private-sector initiatives that base or adjust physician payment rates on quality and efficiency, and the applicability of these initiatives to the Medicare program. The resulting GAO report provides information on private entities with payment incentive initiatives, physician perspectives on themes within those initiatives, and the extent to which CMS’s financial incentive initiatives for Medicare physicians reflect such themes.

The report identifies several common themes among private entities that provide incentives for high-quality, efficient care, and selected physician organizations generally support these themes:

  • Private entities generally measure performance and make incentive payments at the physician-group level rather than at the individual-physician level. Physician organizations favor this approach.
  • Private entities use nationally endorsed performance metrics and noted the need for a standardized set of metrics across all payers. Physician organizations concur that a standardized set of metrics would be less administratively complex.
  • Most private entities in GAO’s study provide financial incentives tied to meeting absolute benchmarks–fixed performance targets–or a combination of absolute benchmarks and performance improvement. Physician organizations prefer incentives tied to absolute benchmarks over those based on how physicians perform relative to their peers. Physician organizations also favored incentives that reward improvement because baseline levels of performance vary.
  • While private entities’ incentive payments vary in size and in method, private entities typically provide such payments within 7 months of the end of the performance measurement period. Physician organizations stated that financial incentives should be distributed soon after the measurement period to have the greatest effect on performance.

The Centers for Medicare & Medicaid Services (CMS) is currently making efforts to transform the physician payment system in Medicare reflect the themes that GAO identified among selected private entities with physician payment incentives.

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Update to Employer Wellness Programs: Notice of Proposed Rulemaking

Posted on December 20, 2012

As described in a previous Implementation Brief, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) generally prohibits group health plans and group health insurance issuers operating in the group health market from discriminating against similarly situated individuals with regard to premiums, benefits or eligibility based on a health factor. HIPAA recognized an exception…

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Update: CMS FAQs on Exchanges, Market Reforms and Medicaid

Posted on December 19, 2012

This Update summarizes the CMS Frequently Asked Questions (FAQ) document issued on December 10, 2012.

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Most employees will keep employer-sponsored coverage after 2014

Posted on December 19, 2012

According to a new study for the National Institute for Health Care Reform (NIHCR), offering employer-sponsored health insurance will continue to make fiscal sense for businesses employing most workers (81%) now offered insurance. The study found that the economic incentives to offer coverage will remain strong under the Affordable Care Act (ACA) for most larger, higher-wage firms,  but will weaken for small and low-wage employers. These smaller firms are the companies already more likely to drop coverage to due rising costs.

Pre-ACA, all businesses had the option to offer health insurance coverage. After 2014, employer premium contributions remain tax exempt, and two new policies will take effect. First,  larger employers that do not offer affordable health insurance will be penalized and second, premium tax credits for lower-income people to purchase insurance in new state exchanges if they lack access to affordable employer coverage will be available.

The economic incentive to cover employees is calculated by adding the dollar value of the employer-sponsored insurance tax subsidy and the value of avoiding the penalty for not offering insurance, and then subtracting the value of the premium tax credits that eligible workers could use in an exchange if their employer does not offer coverage. After 2014, the largest firms (500 or more workers) will continue to have a strong economic incentive, with an average incentive of $2,503 per employee. However, the smallest firms (fewer than 50 workers) will face lower economic incentives because they are exempt from the penalty. Certain industries, such as food service, entertainment, agriculture, forestry and fishing, will have less incentive to offer employer coverage, as their workers will be eligible for exchange subsidies.

The study draws on data from the 2008-2010 Medical Expenditure Panel Survey.

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GAO report finds CMMI overlapping with CMS

Posted on December 18, 2012

A new report released by the Government Accountability Office (GAO) found that the new Innovation Center needs to work harder to avoid duplicating efforts of the rest of the Centers for Medicare & Medicaid Services (CMS). Senators Tom Coburn, Orrin Hatch and Mike Enzi  asked GAO to look at what the Innovation Center has accomplished over the past two years and to determine whether it’s sufficiently executing quality measures.

According to the GAO report, both the Innovation Center and CMS are conducting experiments regarding Medicare and Medicaid payment models and methods for reducing hospital readmissions. CMS officials defended the similar projects, arguing that they are meant to complement each other. GAO warned that the agency still needs to put a complete process in place for reviewing and eliminating any areas of repetitive work.

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Commonwealth study finds premiums, deductibles on the rise

Posted on December 17, 2012

A Commonwealth Fund analysis of state trends in private employer-based health insurance from 2003 to 2011 reveals that premiums for family coverage increased 62 percent across states. This increase was far steeper for middle and low-income families. Researchers also found that deductibles more than doubled in large and small firms. Thus, workers are paying more, but receiving less-protective benefits. If trends continue increasing at this rate, the average premium for family coverage will reach nearly $25,000 by 2020. The Affordable Care Act (ACA) should begin to moderate costs while improving coverage. With private insurance costs projected to grow at a rate faster than income, more efforts to rein in costs are necessary, according to the study.

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Report finds states spending more on Medicaid due to drop in federal funding

Posted on December 16, 2012

According to a report released by the National Association of State Budget Officers (NASBO) and the National Governors Association (NGA), state Medicaid spending increased by an estimated 16.2 percent in fiscal year 2012, due in part to a decrease in enhanced federal funding available to states during the recession. The report found that Medicaid accounted for 24% of total state spending in 2012. The significant increase reflects the termination of the temporary increase in federal match rate, enacted as part of the American Recovery and Reinvestment Act of 2009, which was in effect from October 2008 to June 2011. Compounded with the end of the increased federal matching rates, the recession also resulted in a significant increase in Medicaid enrollment. In response, 33 states have enacted Medicaid funding increases for FY 2013 and 12 states have enacted cuts in their Medicaid programs for FY 2013.

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