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National Health Reform Overview and Update

Cost, Coverage,

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National Health Reform Overview and Update

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    2. Cost, Coverage, & Financing Cost: $938 billion over 10 years Coverage: 32 of 54 million uninsured covered 24 million in Exchange 16 million in Medicaid Loss of 8 million from individual and group coverage Financing: Half from reduced spending in Medicare and Medicaid and half from tax provisions Medicare/Medicaid: Medicare FFS payments, Medicare Advantage, Part D pharmaceutical discounts, Medicaid drug rebates, DSH, and small amount from payment reform Tax Provisions: Medicare FICA tax, insurer and pharmaceutical assessments, medical device tax, “Cadillac” tax, FSA and HSA tax changes, tax deductibility of medical expenses to 10%, and tanning bed tax

    3. New Federal Health Reform Structure New “Office of Consumer Information and Insurance Oversight” established within HHS on April 19th, with four programs: Office of Oversight Office of Insurance Programs Office of Consumer Support Office of Health Insurance Exchanges Established to implement private market reforms and work with CMS to ensure coordination between public and private market reforms

    4. NAIC Health Reform Committees HHS is required to consult with the National Association of Insurance Commissioners (NAIC). The NAIC has developed the following committees to provide recommendations to HHS on: Medical Loss Ratio (MLR) Premium Rate Review Rescission Procedures Medigap Reform Exchanges Individual Market Reform Group Market Reform Uniform Fraud Reporting Reinsurance and Risk Adjustment Interstate Compacts HHS and State Data Collection Uniform Enrollment, Standard Definitions, and Disclosures MEWA Fraud Provisions Cost Containment Commerce is represented on most of the committees, with advisory assistance from Health.

    5. Insurance Market: 2010 Effective Immediately: Annual process set by HHS and States for premium rate review. $250 million available to States from FY 2010 through FY 2014 UPDATE: Commerce staff have been involved in the process. Commerce also represented on NAIC committee, with advisory assistance from Health. Effective Within 90 Days: Temporary High Risk Pool through December 2013 for those uninsured for at least 6 months with a pre-existing condition. Premiums not to exceed 100% of standard individual rate, with 4 to 1 rating range allowed for age. UPDATE: Of the $5 billion appropriated, HHS has allocated $68 million to cover eligible Minnesotans (over the length of the program). - MCHA expressed reluctance to participate citing financing and equity. - Governor opted out of the federal program citing financial concerns (see CMS Actuary report that program will run out of funding in 2011-2012) - State will coordinate with HHS to ensure that people are aware of both state and federal program.

    6. Insurance Market: 2010 Effective Plan Years on or After 6 Months Post Enactment: (Provisions apply to fully-insured and self-insured) No lifetime benefit limits and “restricted” annual benefit limits Dependent coverage to age 26 Coverage of preventive services without cost-sharing No pre-ex for kids under 19 No rescissions, except in cases of fraud UPDATE: Commerce and Health staff have started meeting with health plans to discuss implementation. Likely plan is to promulgate a standard mandatory endorsement that each plan will adopt.

    7. Insurance Market: 2011 Effective January 2011: 80% MLR for individual and small group, 85% MLR for large group. NAIC is to develop definition and methodologies for MLR calculation. Clinical to include “activities that improve health care quality.” Taxes and regulatory fees excluded from non-clinical. UPDATE: Commerce staff have been involved in the process. Commerce also represented on NAIC committee, with advisory assistance from Health. HHS has requested recommendations from the NAIC by June 1, 2010.

    8. Insurance Market: 2014 Effective January 2014: Small group definition increased to size 100, unless State acts to reduce to size 50 on or before January 2016. Premium variation based on health status prohibited for individual and small group. Rating variation for individual and small group limited to tobacco use (1.5:1), age (3:1), geography (State defined), and family composition. Wellness discounts allowed under HIPAA for group plans increased from 20% to 30% (HHS may increase to 50%). 10-State Demonstration to apply to individual market. Guarantee issue (and renewal) required for individual and small group plans during an open enrollment period. Pre-existing condition exclusions prohibited for fully-insured and self-funded plans Annual limits prohibited for all fully-insured and self-insured plans. UPDATE: Commerce represented on relevant NAIC committees. Commerce and Health staff have started meeting with health plans to discuss implementation.

    9. Exchanges: 2010 Effective July 2010: HHS with States to establish internet portal to identify coverage options. Information to be provided for individual and group plans, Medicaid, CHIP, and high risk pools. By June 2010, HHS to develop format for comparison of options including MLR, eligibility, availability, premium rates, and cost-sharing. UPDATE: The new HHS “Office of Consumer Information and Insurance Oversight” will compile and maintain information for the internet portal. They have promulgated an initial rule that the Interagency Communications Subgroup is reviewing. Rule will require information on insurers (from Commerce), HMOs (from Health) and public plans (from DHS).

    10. Exchanges: 2014 Effective 2014: States to establish Exchange to facilitate comparison shopping, enrollment, and subsidy administration for qualified health plans or HHS will establish. Standards: “As soon as practical,” HHS to consult with NAIC to set standards for plan certification, marketing, network adequacy, plan rating, “Navigators”, and risk sharing. States to create electronic interchange for eligibility for Medicaid and subsidies. Funding: Within 1 year of enactment, $2 billion to States for Exchange start-up. Structure: State may create separate or combined Exchange for individuals and small groups. Regional and subsidiary Exchanges for distinct State geographies also allowed. Operated by governmental or non-profit entity (not Medicaid agency or health plan). Eligibility: Individuals not eligible for “affordable” employer coverage and small groups. States may allow large groups starting 2017. Outside Market: Benefit rules, rating rules, and risk sharing apply inside and outside Exchange. Subsidies only available for plans inside Exchange. Section 125: May only be used by employers offering “group plan” through Exchange. UPDATE: Commerce represented on NAIC committee, with advisory assistance from Health. Interagency subgroup on Exchanges and Risk Adjustment.

    11. Payment Reform & Care Coordination CMS Innovation Center: Created in 2011 to test and expand Medicare and Medicaid payment models, including State all-payer models and other state proposals. Medicaid and Medicare efforts, pilots and demonstrations, for example: Medicaid Global Payment Demonstration (5 states) for capitation payments for safety net hospitals. (2010) 90% FMAP for Medicaid “medical home” for those with chronic conditions. States to develop payment method. (2011) Medicaid Bundled Payment Demonstration (8 states). (2012) Value-Based Purchasing for a variety of Medicare providers with percent of payment tied to quality (Development starting in 2011) Medicare payment incentives/penalties to reduce hospital readmissions. (2012) Medicare Bundled Payment Pilot. (2013) UPDATE: Health staff may participate in NAIC Cost Containment Committee that is facilitating State discussion of payment reform pilots. The process for State involvement in payment reform pilots is unclear at this point.

    12. Quality Strategy National Strategy: HHS to develop a national strategy to improve health care quality, the delivery of health care services, patient health outcomes, and population health by January 2011 and update annually thereafter. A federal interagency workgroup is established in 2010 to coordinate and streamline quality activities and align public and private sector initiatives. HHS to identify gaps in quality measurement and may award contracts for the development of quality measures. Stakeholder group to advise. HHS to collect, aggregate, and publicly report data on quality and resource use. Processes to be developed with stakeholders (including States) for the selection of quality measures to be used in federal programs. HHS to develop and report on 10 quality measures for acute and chronic care and 10 measures on primary and preventive care for physicians and hospitals by 2012. UPDATE: The process for stakeholder involvement is unclear at this point.

    13. Prevention and Public Health Prevention Strategy: National Prevention, Health Promotion, and Public Health Council established to develop and implement a national prevention and health promotion strategy. First report due July 2010. Prevention Trust Fund: New $13 billion Trust Fund to expand and sustain funding for prevention and public health programs. Grants to States to start in 2010, to for example: Reduce the incidence of chronic disease for the 55 to 64 year old population Promote community activities to reduce chronic disease and health disparities Reduce the preventable burden of diabetes Improve immunization levels Strengthen lab capacity and outbreak control strategies UPDATE: Funds “as may be necessary” have been authorized. No guidance from HHS has been released.

    14. Other Public Health Issues Workforce: Effective September 2010, a National Health Care Work Force Commission is established to review health care workforce needs. In 2010, States may apply to HHS for competitive grant to carry out comprehensive health care workforce development strategies. Starting in 2010, various loan and grant programs are available to increase the supply of the health care and public health workforce. Nursing Homes and LTC: Starting in 2010, the new federal law modifies federal compliance requirements, for example: HHS is to develop a standardized complaint form for use by residents. HHS is given the authority to reduce civil monetary penalties for certain facilities that self-report and promptly correct deficiencies. HHS is to develop, test, and implement an oversight program for interstate and intrastate nursing facilities. A nationwide program is established to conduct background checks in LTC facilities. UPDATE: Health staff have started initial discussions with CMS to evaluate impact.

    15. Medicaid Reform Early Medicaid Adoption Childless Adults; Under 65; Up to 133% of FPG; 50% Federal Match Option available until 2014, when mandatory Received initial guidance from CMS on terms relating to eligibility and benefits Converting an existing program not an option New Medicaid Category Required

    16. Financing Issues Extended “Maintenance of Effort” States may not change eligibility standards, methodologies or procedures until 2014 for any Medicaid program MOE for children in place until 2019 Sole exemption; parents above 133% after 2010 if state is projecting a deficit No increase in local portion of non-federal share Loss of Rx Rebates Increased Federal Financing 23 point increase (up to 88%) in CHIP funding from 2013 to 2019 100% federal match for primary care rate increases for 2013, 2014 a 90% federal match for health care home services (coordination fees) for 2 years beginning in 2011

    17. New Mandates/Opportunities Requires coverage of freestanding birthing centers effective July, 2011 Strengthens hospice coverage for children Allows states to develop pediatric ACO demonstrations Allows states to participate in payment reform demonstrations for bundled and global payments Strengthens program integrity efforts to prevent and detect fraud and abuse – both Medicaid and private insurance market

    18. Long Term Care Creates incentives for providing home and community-based services, developing the Community First Choice Option Directs CMS to remove barriers and promote the delivery of home and community-based services Develops the CLASS Act, a national long term care insurance program on a voluntary basis, funded by premiums with the ability to opt out.

    19. Agency Efforts Internal Agency Analysis: Ongoing evaluation and communication with federal agencies on the immediate and long-term requirements and options under the new law. Interagency Work Group: Participation by Human Services, Commerce, Health, Labor & Industry, Management & Budget, and Revenue Communications Subgroup: Developing communications strategy and internet portal for consumers, employers, health plans, brokers, and providers. Evaluating $30 million available to States for “Office of Health Insurance Consumer Assistance.” Exchange and Risk Adjustment Subgroup: Evaluating requirements, options, and questions not addressed by new law to lay out options/decision points and potential broad market implications. Stakeholder Engagement: Ongoing discussions are occurring with the health plans regarding the insurance market reforms. Future engagement of other stakeholders is envisioned as more details become available from the federal government.

    20. Resources Websites With More Information: Minnesota Specific: www.insurance.mn.gov/healthreform (will be replaced with new website) National Governor’s Association: www.nga.org - “Health Reform Implementation” section: http://tiny.cc/yvrho National Association of Insurance Commissioners: http://naic.org/index_health_reform_section.htm HHS Office of Consumer Information and Insurance Oversight: http://www.hhs.gov/ociio/

    21. Contacts April Todd-Malmlov State Health Economist Director, Health Economics Program Minnesota Department of Health April.Todd-Malmlov@state.mn.us 651.201.3561 Manny Munson-Regala Deputy Commissioner Minnesota Department of Commerce Manny.Munson-Regala@state.mn.us 651.296.4051 Brian Osberg State Medicaid Director Minnesota Department of Human Services Brian.Osberg@state.mn.us 651.431.2189

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