Which Direction Health Reform? Timeline for 2011–2018

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.

2011

INSURANCE REFORMS:

• Health insurance providers that do not dedicate 85 percent (large-group market) or 80 percent (individual and small-group markets) of revenue to direct patient care must provide a rebate to enrollees.

LONG-TERM CARE INSURANCE:

• National, voluntary, long-term care insurance program established.

TORT REFORM:

• Five-year demonstration grants awarded to states to develop, implement, and evaluate alternatives to current tort litigations. (NOTE: NOT APPLICABLE FOR CALIFORNIA)

MEDICARE PRESCRIPTION DRUG:

• Pharmaceutical manufacturers required to provide a 50 percent discount on brand-name prescriptions filled in the Medicare Part D coverage gap beginning in 2011.
• Federal subsidies for generic prescriptions filled in the Medicare Part D coverage gap begun to be phased in.

REIMBURSMENTS TO PHYSICIANS:

• Ten percent primary care bonus for internists, geriatricians, family physicians, and pediatricians for five years for whom primary care services account for at least 60 percent of Medicare-allowed charges over a designated period of time.
• Ten percent general surgeon bonus for general surgeons practicing in health professional shortage areas for five years. (NOTE: NOT APPLICABLE FOR CALIFORNIA)

REIMBURSEMENTS TO HOSPITALS:

• Medicare payments to qualifying hospitals in counties with the lowest quartile Medicare spending for 2011 and 2012 provided. (NOTE: NOT APPLICABLE FOR CALIFORNIA)

MEDICAL HOMES:

• Demonstration program for primary care medical homes for patients with multiple chronic conditions established.
• Physicians eligible for shared savings bonus payments for medical homes.
• Nurse practitioners and physician assistants may lead medical homes but only if state scope of practice laws allow it. (NOTE: NOT APPLICABLE FOR CALIFORNIA)
• New Medicaid state plan option created to permit Medicaid enrollees with at least two chronic conditions, one condition and risk of developing another, or at least one serious and persistent mental health condition to designate a provider as a medical home.
• States taking up the option provided with 90 percent FMAP for two years for health home related services, including care management, care coordination, and health promotion.

MEDICAID:

• Coverage for preventive services, and preventive services cost-sharing eliminated.
• Federal payments to states for Medicaid services related to healthcare-acquired conditions eliminated.
• State Balancing Incentive Program in Medicaid created to provide enhanced federal matching payments to increase non-institutionally based long-term care services.
• Community First Choice Option in Medicaid created to provide community-based attendant support services to certain people with disabilities.

FEDERALLY QUALIFIED HEALTH CENTERS:

• Access to care improved by increasing funding by $11 billion for community health centers and the National Health Service Corps over five years; new programs to support school-based health centers and nurse-managed health clinics established.

PHYSICIAN-OWNED HOSPITALS:

• Physician-owned hospitals banned after December 31, 2010, with exception for those in place this date.

WELLNESS:

• Preventive services covered and cost sharing for Medicare preventive services eliminated. Medicare payments for certain preventive services increased. FMAP increased by 1 percent for these services for states that provide Medicaid coverage for preventive services and remove cost sharing for preventive services.
• Medicare beneficiaries provided access to comprehensive health risk assessments and personalized prevention plans. Incentives provided to Medicare and Medicaid beneficiaries to complete behavior modification programs.
• Grants for up to five years provided to small employers that establish wellness programs.
• National strategy established to improve the nation’s health.
• Chain restaurants and food sold from vending machines required to disclose the nutritional content of each item.

PHYSICIAN WORKFORCE:

• Graduate medical education changes phased in, including redistributing unused residency slots for primary care and general surgery, allowing training in outpatient settings, and allowing teaching health centers to expand primary care residency programs.
• National Health Care Workforce Commission to examine barriers to primary care careers, to authorize state grants, to increase funding for NHSC scholarship and loan repayment program; access to loans for primary care providers eased, health professions and diversity programs funded.

QUALITY:

• Medicare quality reporting program continued. Physician bonuses of 0.5 percent to 1 percent provided in 2011–13. Participation mandatory in 2014 with penalties for nonparticipation.
• ICD-9 to ICD-10 crosswalk. Secretary required to hold stakeholder meetings.
• National quality improvement strategy developed.
• Community-based Collaborative Care Network Program established to support consortiums of healthcare providers to coordinate and integrate healthcare services for low-income uninsured and underinsured populations.
• New trauma center program established to strengthen emergency department and trauma center capacity.

REDUCE MEDICARE EXPENSES:

• Phase-in of fiscal neutrality for Medicare Fee-for-Service and Medicare Advantage (MA) started. Quality bonus for care coordination, care management, and quality established.
• Medicare payment cuts to health insurance providers, pharmaceutical companies, medical device manufacturers, hospitals, home health, and nursing homes begun.
• Income threshold for income-related Medicare Part B premiums for 2011–19 frozen at 2010 levels; Medicare Part D premium subsidy for those with incomes above $85,000 per individual and $170,000 per couple reduced.
• Phase-in of multiple initiatives to curb fraud and abuse started.
• Five percent penalty for physician utilization outliers eliminated. Current program to provide confidential feedback to physicians comparing their utilization and resources use to their peers continued.

INCREASE REVENUES:

• Some revenue provisions, including the fees on health insurance providers, pharmaceutical and device manufacturers, and the Medicare tax start to phase in.
• Tax on non-medical distributions from HSA or MSA increased.
• New annual fees on the pharmaceutical manufacturing sector imposed.

REDUCED TAX BREAKS:

• Costs for OTC drugs excluded from being reimbursed by HRA, health FSA, HSA, or MSA.

2012

TORT REFORM:

• GAO reports whether the new practice guidelines and payments policies would create causes of action against physicians.

QUALITY:

• Enhanced collection and reporting of data on race, ethnicity, sex, primary language, disability status, and for underserved rural and frontier populations required.

REIMBURSEMENTS TO HOSPITALS:

• Medicare payments to hospitals reduced to account for (preventable) excess hospital readmissions.
• Hospital value-based purchasing program in Medicare established.
• Plans to implement value-based purchasing programs for skilled nursing facilities, home health agencies, and ambulatory surgical centers developed.
• Medicaid demonstration projects for bundled payments for episodes of care that include hospitalizations: to make global capitated payments to safety net hospital systems (effective fiscal years 2010–12); to allow pediatric medical providers organized as accountable care organizations to share in cost-savings (effective January 1, 2012, through December 31, 2016); and to provide Medicaid payments to institutions of mental disease for adult enrollees who require stabilization of an emergency condition (effective October 1, 2011, through December 31, 2015).

MEDICARE:

• Bonus payments to high–quality Medicare Advantage plans provided.
• Rebates for Medicare Advantage plans reduced.

ACCOUNTABLE CARE ORGANIZATIONS (ACOs):

• CMS required to establish ACOs to allow groups of physicians who report on quality and coordinate care to share in the savings — particularly from preventing unnecessary ER visits or hospitalizations — achieved in their region. ACOs can be small groups of loosely affiliated physicians or large organized groups. ACOs do not have to involve a hospital. Because ACOs will be groups of physicians who are clinically and financially integrated, a path to physician antitrust relief to be established.

2013

INSURANCE REFORMS:

• Program to foster nonprofit, member-run health insurance companies created.
• Health insurance provider administration simplified by adopting a single set of operating rules for eligibility verification and claims status (rules adopted July 1, 2011; effective January 1, 2013), electronic funds transfers and healthcare payment and remittance (rules adopted July 1, 2012; effective January 1, 2014), and health claims or equivalent encounter information, enrollment, and disenrollment in a health plan, health plan premium payments, and referral certification and authorization (rules adopted July 1, 2014; effective January 1, 2016). Health insurance providers required to document compliance with these standards or face a penalty of no more than $1 per covered life, effective April 1, 2014.

MEDICAID REIMBURSEMENTS:

• Medicaid payments to primary care doctors increased for 2013 and 2014 with 100 percent federal funding.

QUALITY:

• Disclosure of financial relationships between health entities required — includes physicians, hospitals, pharmacists, other providers, and manufacturers and distributors of covered drugs, devices, biologicals, and medical supplies.

MEDICARE:

• Public reporting of Medicare physician and private payer performance information related to quality (PQRI) and other factors such as care coordination, resource use, and patient satisfaction required. Data would meet certain safeguards (valid, risk-adjusted), and physicians would have prior opportunity to review the data. Appropriate attribution methodology, timely feedback, and accurate systems that can provide reliable data required. AMA and CMA worked to include multiple amendments to protect physician information and ensure that it is accurate based on the CCHRI experience in California. Further protections need to be addressed in clean-up legislation.
• Administrative simplification requires health insurance plans to certify that their information systems comply with standards. New operating rules for eligibility and health plan claim status transactions to take effect.

INCREASED REVENUE:

• Threshold increased for itemized deduction for unreimbursed medical expenses from 7.5 percent to 10 percent of AGI, but waived for individuals age 65 and older for tax years 2013–16.
• Medicare Part A (hospital insurance) tax rate on wages increased by 0.9 percent (from 1.45 percent to 2.35 percent) on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly; 3.8 percent assessment on unearned income imposed for higher-income taxpayers.
• Contributions to flexible spending accounts for medical expenses limited to $2,500 per year.
• Excise tax of 2.3 percent on the sale of any taxable medical device imposed.
• Tax deduction for employers who receive Medicare Part D retiree drug subsidy payments eliminated.

MEDICARE:

• Federal subsidies for brand-name prescriptions filled in the Medicare Part D coverage gap (to 25 percent in 2020, in addition to the 50 percent manufacturer brand-name discount) begun to be phased in.
• Medicare pilot program to develop and evaluate paying a bundled payment for acute, inpatient hospital services, physician services, outpatient hospital services, and post-acute care services for an episode of care established.

2014

INSURANCE COVERAGE:

• Individual mandate for uninsured individuals to purchase health insurance begun. Penalties of up to 10 percent of income for those who do not purchase insurance. Tax credits and cost sharing subsidies for low-income individuals.
• Substantial fees on large employers who do not provide coverage, but no employer mandate.
• State-based health insurance exchanges where individuals and small businesses with up to 100 employees can purchase qualified coverage with a choice of private health insurance providers, benefits packages, and doctors.
• At least two multi-state plans in each exchange required. At least one plan must be offered by a nonprofit entity, and at least one plan must not provide coverage for abortions beyond those permitted by federal law.
• Refundable and advanceable premium credits and cost-sharing subsidies to eligible individuals and families with incomes 133–400 percent FPL to purchase insurance through the exchanges.
• Health insurance providers prohibited from denying coverage to adults with pre-existing conditions.
• Rating variation based only on age (limited to 3 to 1 ratio), premium rating area, family composition, and tobacco use (limited to 1.5. to 1 ratio) allowed.
• Health insurance providers required to limit waiting periods for coverage to 90 days.
• Out-of-pocket limits for those with incomes up to 400 percent FPL reduced.
• Deductibles for small-group market health plans limited to $2,000 for individuals and $4,000 for families.
• Essential health insurance package that provides a comprehensive set of services, covers at least 60 percent of the actuarial value of the covered benefits, limits annual cost sharing to the current law HSA limits ($5,950 per individual and $11,900 per family in 2010), and is not more extensive than the typical employer plan created.

MEDICAID:

• Medicaid expanded to all non-Medicare-eligible individuals under age 65 (children, pregnant women, parents, and adults without dependent children) with incomes up to 133 percent FPL. Enhanced federal matching for new eligibles provided. 1.7 million Californians covered in Medi-Cal.

PREVENTION AND WELLNESS:

• Employers may offer rewards of up to 30 percent — increasing to 50 percent if appropriate — of the cost of health insurance coverage for participating in a wellness program and meeting certain health-related standards. Establish pilot programs to permit participating states to apply similar rewards for participating in wellness programs in the individual market.

MEDICAID REIMBURSEMENT:

• Increase in Medicaid reimbursement rates for primary care physicians (internists, family physicians, and pediatricians) up to Medicare levels for E&M services and immunizations provided in 2013 and 2014.

MEDICARE REIMBURSEMENT:

• Independent Payment Advisory Board established to submit legislative proposals containing recommendations to reduce the per-capita rate of growth in Medicare spending if spending exceeds a target growth rate.
• Out-of-pocket amount that qualifies an enrollee for catastrophic coverage in Medicare Part D reduced.

INSURANCE:

• Medicare Advantage plans required to have medical loss ratios no lower than 85 percent.
• Administrative simplification operating rules for electronic funds transfers (EFT) and healthcare payment and remittance advice to take effect. Physicians also required to comply with the EFT standards for Medicare payments.

HOSPITALS:

• Medicare Disproportionate Share Hospital (DSH) payments reduced initially by 75 percent and payments subsequently increased based on the percent of the population uninsured and the amount of uncompensated care provided. States’ Medicaid Disproportionate Share Hospital (DSH) allotments reduced.

2015

MEDICARE:

• Value Index Modifier to modify physician payments based on level of spending and quality reporting. Physicians who spend less than national average will be paid a higher rate. Physicians who spend more than the national average will be paid a lower rate. Rate adjusted for geographic practice expense and socioeconomic status of the patients.

2016

COST:

• Multi-state compacts to allow insurers to sell policies across state lines implemented. Implementation regulations due by 2013.
• Additional Administrative Simplification rules to take effect. Operating rules for claims, (dis)enrollment, and health claims attachment standards.
• Medicare payments to certain hospitals for hospital-acquired conditions reduced by 1 percent.

2018

COST:

• Cadillac tax on health insurance plans offering high-end benefits implemented. Excise tax on insurers of employer-sponsored health plans with aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage imposed.