Which Direction Health Reform? How Health Reform Will Affect …

The following health reform legislation changes are scheduled to be implemented between 2011 and 2018. To access a health reform timeline for 2010, please visit the June 2010 issue of San Diego Physician.

How Health Reform Will Affect Physicians

• 2010: Medicare will increase payment for psychotherapy services by 5%.
• 2010: Medical liability protections under the Federal Tort Claims Act will be extended to officers, governing board members, employees, and contractors of free clinics. <THIS ONE WAS AT THE END OF THIS LIST. I ADDED THE “2010” DATE AND MOVED IT TO THIS POSITION.>
• The federal government may award five-year demonstration grants to states to develop, implement, and evaluate alternative medical liability reform initiatives, such as health courts and early offer programs, beginning in 2011. (NOTE: NOT APPLICABLE FOR CALIFORNIA)
• Physicians will receive incentive payments of 1% in 2011 and 0.5% from 2012 to 2014 for voluntary participation in Medicare’s Physician Quality Reporting Initiative (PQRI). An additional 0.5% incentive payment will be made to physicians who participate in a qualified Maintenance of Certification Program (quality practice-based learning programs through specialty boards). In 2015, physician payments will be reduced by 1.5% if they do not participate in the PQRI program. In 2016 and beyond, the PQRI non-participation penalty will be 2.0%.
• 2011–2016: Physicians in family medicine, internal medicine, geriatrics, and pediatrics whose Medicare charges for office, nursing facility, and home visits comprise at least 60% of their total Medicare charges will be eligible for a 10% bonus payment for these services.
• 2011–2016: General surgeons who perform major procedures (with a 10- or 90-day global service period) in a health professional shortage area will be eligible for a 10% bonus payment for these services. (NOTE: NOT APPLICABLE FOR SAN DIEGO COUNTY)
• National rules will be developed and implemented between 2013 and 2016 to standardize and streamline health insurance claims processing requirements.

How Health Reform Will Affect Patient With Respect to Private Health Insurance Changes

• 2010: Insurer can no longer drop patients if they get sick.
• 2010: Insurers can no longer impose lifetime financial limits on benefits.
• 2010: Children ages 18 and younger can no longer be denied private insurance coverage if they have a pre-existing medical condition. (While some ambiguities have been raised about the application of this provision, implementing regulations will clarify that the prohibition on pre-existing condition exclusions for children will begin as planned in September. America’s Health Insurance Plans has stated it will fully comply with the regulations.)
• 2010: Young adults up to age 26 can remain as a dependent on their parents’ private health insurance plan.
• 2010: For adults with pre-existing medical conditions who cannot obtain private insurance coverage, a temporary national “high-risk pool” will be established to provide coverage, with financial subsidies to make premiums more affordable, until all insurers are required to cover people with preexisting conditions in 2014.
• 2010: Preventive services for women, such as mammograms, and immunizations for children must be covered by insurers, with no co-payments or deductibles required.
• 2011: States can require insurance companies to submit justification for premium increases and can impose penalties for excessive increases.
• 2014: U.S. citizens and legal residents cannot be denied private health insurance coverage for any reason.
• 2014: All U.S. citizens and legal residents must obtain health insurance coverage or pay a tax penalty (with some exemptions).
• 2014: State-based health insurance exchanges (where those without access to employer-based insurance can shop and compare the benefits/costs of private health insurance plans) will begin. All insurance companies in the exchange must provide at least a minimum benefit package, as well as additional coverage options beyond a basic plan.
• 2014: Federal subsidies through tax credits or vouchers will be provided for those who cannot afford the full cost of coverage provided by state-based health insurance exchanges.

How Health Reform Will Affect Patients With Respect to Medicare and Medicaid Changes

• 2010: Medicaid will be required to cover tobacco cessation services for pregnant women.
• 2010: Medicare patients whose prescription expenses reach the so-called Medicare Part D coverage “doughnut hole” ($2,700 to $6,150) in 2010 will receive a $250 rebate. During the following 10 years, the beneficiary co-insurance rate for this coverage gap will be narrowed in phases from the current 100% to 25% in 2020.
• 2011: Cost-sharing for proven preventive services will be eliminated in Medicare and Medicaid. Medicare payments for certain preventive services will be increased to 100% of payment schedule rates (that is, co-payments will be eliminated), and incentives will be available to encourage Medicare and Medicaid beneficiaries to complete behavior modification programs.
• 2014: Medi-Cal coverage expanded to all eligible children, pregnant women, parents, and childless adults under age 65 who have incomes at or below 133% of the federal poverty level.

How Health Reform Will Affect the Healthcare Sector

• 2010: Excise tax of 10% imposed on the amount paid for indoor tanning services.
• 2011: Annual fee on certain manufacturers and importers of branded prescription drugs (including biological products, but excluding orphan drugs) based on annual sales and set to reach a certain revenue target each year.
• 2013: Annual excise tax of 2.3% imposed on the sale of Class I (vast majority of orthotics and prosthetics, as well as durable medical equipment medical devices by manufacturers) with exemptions for eyeglasses, contact lenses, hearing aids, and any device that is generally purchased at retail for individual use.
• 2014: Annual fee on health insurance providers applied on net premiums of all health insurers based on their market share. For nonprofit insurers, only 50% of net premiums will be taken into account in calculating the fee. Exemptions are granted for: nonprofit plans that receive more than 80% of their income from government programs targeting low-income or elderly populations, or people with disabilities; voluntary employees’ beneficiary associations (VEBAs) not established by an employer; certain nonprofit insurers with medical loss ratios within specific limits; and self-insured plans and federal, state or other government entities. (The fee does apply to companies that underwrite government-funded insurance, such as Medicaid managed care plans and the Federal Employee Health Benefits Program.)
• 2018: Excise tax imposed on the coverage provider (i.e., insurer, plan administrator, or employer depending on the type of coverage) of high-cost, employer-sponsored health plans with aggregate values exceeding $10,200 for individual coverage and $27,500 for family coverage. The tax is equal to 40% of the value of the plan that exceeds these threshold amounts. For insured plans, the coverage provider will be the health insurance issuer; for self-insured plans, the coverage provider will generally be the plan administrator. Employers that make contributions to a health savings account (HSA) or medical savings account (MSA) must pay the excise tax if those contributions exceed the thresholds. The tax is not imposed on the individual enrollee. The dollar thresholds are indexed to inflation.

How Health Reform Will Affect Individuals

• 2010: Payments made under any state loan repayment or loan forgiveness program that is intended to provide for the increased availability of healthcare services in underserved or health professional shortage areas will be excluded from gross income.
• 2011: Tax on distributions from a Health Savings Account (HAS) raised to 20%.
• 2011: Cost of over-the-counter/nonprescibed medicines not reimbursed by FSA or HSA.
• 2013: For high-income individuals earning more than $200,000 and joint filers earning more than $250,000, Medicare payroll tax will increase by 0.9%, and a 3.8% Medicare tax will be imposed on net investment income from interest, dividends, annuities, royalties, rents, and taxable net gain.
• 2013: The threshold for claiming the itemized tax deduction for unreimbursed medical expenses will increase from 7.5% to 10% for taxpayers under 65. The increased threshold applies to individuals 65 years and older in 2017.
• 2013: Contributions to Flexible Savings Accounts (FSAs) capped at $2,500.
• 2014: Tax penalties for failure to obtain health insurance coverage. Individuals must obtain minimum essential coverage for themselves and their dependents, with certain exemptions (i.e., hardship, religious reasons). Those without coverage will pay a tax penalty of the greater of $695 per year up to a maximum of three times that amount ($2,085) per family, or 2.5% of household income. The penalty will be phased in according to the following schedule: $95 in 2014, $325 in 2015, and $695 in 2016 for the flat fee; or 1.0% of taxable income in 2014, 2.0% in 2015, and 2.5% in 2016.