Hart Health Strategies provides a comprehensive policy briefing on a weekly basis. This in-depth health policy briefing is sent out at the beginning of each week. The health policy briefing recaps the previous week and previews the week ahead. It alerts clients to upcoming congressional hearings, newly introduced bills, regulatory announcements, and implementation activity related to the Patient Protection and Affordable Care Act (PPACA) and other health laws.


Negotiations Begin in Earnest to Avoid Damage From Fiscal Cliff

The barriers to arriving at a pre-Christmas compromise to avoid federal discretionary spending cuts pursuant to the BCA sequestration mandate and tax increases under the expiring Bush-era tax cuts were ratcheted up as Congress returns to work this week.  In a signal that Republicans will not easily cave into Democrat budget demands, House Speaker John Boehner repeated his mantra to “repeal and replace” the PPACA.  He said as part of the negotiations to reduce long-term federal deficits that “We can’t afford [the PPACA law], and we can’t afford to leave it intact.  That’s why I’ve been clear that the law has to stay on the table as both parties discuss ways to solve our nation’s massive debt challenge.”

States that refuse to establish state-run health insurance exchanges or expand Medicaid under the PPACA present significant challenges to the full implementation of the health care law.  In this connection, Speaker Boehner praised Ohio Governor John Kasich for his decision not to establish a state-run exchange.

After House Minority Leader Nancy Pelosi and Senator Dick Durbin took a hard line on making tax increases for the “wealthy” part of any budget deal, Senator Jeff Sessions undoubtedly spoke for many Republicans when he cautioned against a panicked rush to pass an 11th hour, 59th minute budget deal. 

Another barrier that negotiators will have to confront is the new stance taken by AARP against raising the Medicare eligibility age as part of any fix to avoid the program’s impending insolvency.  These and other hurdles to a quick resolution of the differing views of Republican and Democrat leaders makes it increasingly likely that a short-term (six-month or so) deficit reduction alternative of around $700 billion may be adopted in order to avoid the fiscal cliff, provide a Medicare physician payment fix for six-months or a year, and set up another round of negotiations on a ten-year deficit reduction plan next year.

Key PPACA Regulations Proposed

HHS and the IRS released proposed regulations giving insurers and employers guidance regarding their PPACA duties and requirements.  A 131-page proposed rule relating to health insurance markets and premium rate reviews would prohibit health insurers from discriminating against individuals because of a pre-existing or chronic conditions beginning in 2014. 

In particular the non-discrimination rules would:

  • require insurers of non-grandfathered individual and small group plans to sell policies to all consumers, regardless of their health status;
  • prohibit insurers in the individual and small group markets from varying premiums by more than a 3-to-1 ratio, based on age (21-63), tobacco use, and family size (insurers would not be able to charge more based on pre-existing conditions, gender, occupation or other factors);
  • reinforce guaranteed renewability provisions, already in effect under HIPPA;
  • require insurers to maintain a single, statewide risk pool for each of their individual and small group markets to ensure that the cost of coverage would be spread among all consumers;
  • ensure that young adults and people for whom coverage would otherwise be unaffordable would have access to a catastrophic plan in the individual market; and
  • require insurers to report premium rates.


CMS is also seeking comment on health plan quality management reporting standards that are to apply in 2014.  Another 119-page proposed rule relating to health insurance exchanges and health insurance issuer standards defines the essential health benefits (EHBs) that must be covered by all non-grandfathered individual and small group plans.  This rule requires plans to compute and disclose the actuarial value of plan benefits in an effort to make it easier for individuals and small businesses to compare health plan coverage.


The proposed rule would require prescription drug coverage with either at least one drug in each class or, if greater, the number of drugs that the benchmark plan offers.


Another IRS/HHS/DOL proposed rule relating to employment-based wellness programs would ensure that individuals are protected from unfair underwriting practices that could otherwise reduce benefits based on health status.


Qualified wellness programs would fall into one of two categories, participatory wellness programs or health contingent wellness programs; with the latter limited to a 30% reward for participation (a 50% reward could be given for programs helping to reduce the use of tobacco products).


Comments on the above proposed rules are due within 30 days.  CMS has also requested comment on data that will be required to initially certify qualified health plans (QHPs).


Also, notice was given that the National Committee for Quality Assurance and URAC will be recognized as accrediting entities for QHP certification.


CMS also provided guidance to state Medicaid directors providing details as to the types of benefits (along the lines of EHBs and DRA benchmark plans) that must be provided in connection with expanded Medicaid coverage under the PPACA.  CMS said that states that do not establish their own state-run exchanges will still have to coordinate with the default federal exchange which will determine Medicaid eligibility and individual subsidies.


In addition, HHS Secretary Kathleen Sebelius pledged to fully implement the default federal exchange and to also sit down with governors to ensure that states are given every incentive to establish their own state exchanges before open season begins in October 2013.

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