Supreme Court Ruling of June 28, 2012
In an historic decision, the U.S. Supreme Court upheld the Patient Protection and Affordable Care Act (ACA), ruling 5-4 that the law's individual mandate to purchase health insurance was within Congress's taxing authority. The Court also upheld the ACA's expansion of the Medicaid program, but ruled that potential termination of Medicaid funding was unconstitutional if states refuse to participate in the expansion.
The ruling clears the way for implementation of the ACA to proceed. This includes expanded access to health insurance coverage for up to 32 million Americans and fundamental insurance and delivery system reforms. Among the most notable delivery system reforms are: establishment of the value-based purchasing (VBP) program, accountable care organizations (ACOs) and related demonstration projects, and other innovative efforts to improve quality and efficiency, such as the Hospital Engagement Network (HEN) project, which assists hospitals in adopting practices that reduce readmissions. The law's restrictions on physician self-referral to hospitals in which there is an ownership interest also remain in place.
The single change in the ACA that results from the Court's decision is the demise of the penalty – the potential loss of all of a state's existing Medicaid funding – for states that decline to participate in the Medicaid expansion. Governors in several states have already indicated that they will not participate in the expansion.
As a result, the Court's decision on Medicaid has opened up many new questions related to whether a state opts for the expansion as well as whether it does not. The National Governors Association and the National Association of Medicaid Directors have each posed questions to the USDHHS regarding process, funding, scope and timelines for the Medicaid expansion. At the state level, House Speaker Bill O'Brien sent a letter to HHS Commissioner Nick Toumpas with numerous questions regarding both implementation of the Medicaid expansion as well as the opt-out.
AHA's Member Advisory describes the Court's decision, the potential impact on the Medicaid expansion and includes a partial list of the ACA's major insurance and delivery system reforms, all of which remain unaffected.
Previous Dialogue and Documentation
Hospitals are committed to being engaged partners in the health care reform effort; getting coverage to more people must be a top priority. To help you navigate the course of this historic debate and how legislation could affect you, NHHA offers links to the latest news, resources and advocacy.
Information on health care reform and some of its impact on New Hampshire is available HERE.
Recap of health care reform in 2010
On March 23, President Obama signed into law the Patient Protection and Affordable Care Act. Some of the major provisions of the law went into effect in 2010 and are currently in the process of being implemented:
- Pre-existing condition insurance plan. New Hampshire is modifying their High Risk Plan to create this additional plan for individuals with pre-existing medical conditions who have been uninsured for at least six months.
- Extends dependent coverage for adult children up to age 26 for all individual and group policies.
- Requires new health plans to provide at a minimum coverage without cost-sharing for preventive services to include immunizations, preventive care for infants, children and adolescents, and additional preventive care and screenings for women.
- Review of health plan premium increases. NH Department of Insurance is in the process, through federal grant funds, of establishing a process to ensure that premium increases are reviewed and justified.
- Consumer Protections in Insurance. Prohibits individual and group health plans from placing lifetime limits on the dollar value of coverage, rescinding coverage and from denying children coverage based on pre-existing medial conditions.
- Medicare Beneficiary Drug Rebate that provides a $250 rebate to Medicare beneficiaries who reach the Part D coverage gap in 2010. Further subsidies and discounts that ultimately close the coverage gap begin in 2011.
- Expansion of the 340B Drug Discount Program to sole-community hospitals, critical access hospitals, certain children’s hospitals and other entities.
- Non-profit Hospital Requirements to conduct community needs assessments and develop a financial assistance policy and impose a tax of $50,000 per year for failure to meet these requirements.
- Medicare Provider Rate reductions to the annual market basket update for inpatient
- and outpatient hospital services, inpatient rehabilitation facilities, long-term care hospitals and psychiatric hospitals and units
Summary of 2010 Health Care Reform Legislation
The Patient Protection and Affordable Care Act (H.R. 3590) and Health Care and Education Reconciliation Act (H.R. 4872)
On March 23, President Obama signed into law the Patient Protection and Affordable Care Act. The following week, the president signed into law the Health Care and Education Reconciliation Act of 2010. Together, this historic legislation constitutes the largest change to America's health care system since the creation of Medicare and Medicaid. The Congressional Budget Office estimates that the law will expand coverage to 32 million individuals (95 percent of all those legally residing in the U.S., or 92 percent of all those residing in the country) at a cost of $940 billion over 10 years (federal fiscal years 2010-2019).
Coverage: The new law expands coverage to 32 million people through a combination of public program and private-sector health insurance expansions. Its key provisions include: insurance reforms, including administrative simplification provisions; a mandate for individuals to have insurance; employer responsibility to provide or contribute to health insurance; low-income subsidies to help individuals purchase insurance; an expansion of those eligible for Medicaid; and the creation of state-based health insurance "exchanges." It also calls for new, non-profit, consumer-owned and -oriented plans (or CO-OPs), as well as multi-state health plans overseen by the Federal Office of Personnel Management to compete with other private health plans in the state insurance exchanges.
Key Delivery System Reforms: The law adopts several key delivery system reforms to better align provider incentives to improve care coordination and quality and reduce costs. These reforms include a value-based purchasing system for hospitals; voluntary pilot projects to test bundled Medicare payments; voluntary pilot programs where qualifying providers - including hospitals - can form Accountable Care Organizations and share in Medicare cost savings; and financial penalties for hospitals with "excessive" readmissions. In addition, the law creates a Center for Medicare and Medicaid Innovation to test innovative payment and service delivery models.
Medicare and Medicaid Payment Changes: The law takes a number of steps to reduce the rate of increase in Medicare and Medicaid spending. Hospitals are estimated to contribute $155 billion in savings over 10 years through reduced payment updates, decreases in Medicare and Medicaid disproportionate share hospital payments, and financial penalties. The law also provides enhanced payments to rural hospitals, extends a number of expiring Medicare provisions, expands the 340B drug discount program, and provides additional payments to primary care physicians.
Workforce and Graduate Medical Education: The law provides grants and loans to enhance workforce education and training, to support and strengthen the existing workforce, and to help ease health care workforce shortages. It creates the National Health Care Workforce Commission to analyze the supply, distribution, diversity and skill needs of the health care workforce of the future. Most importantly, the law does not reduce indirect medical education funding to teaching hospitals, and allows for a redistribution of unused residency positions as a way to encourage increased training of primary care physicians and general surgeons. Unfortunately, it does not increase sufficiently the overall number of residency training positions, which the AHA will continue to pursue.
Wellness and Prevention: The law invests resources in prevention and wellness, including allocating $12.9 billion over 10 years to the Prevention and Public Health Fund. It requires public and private insurers to cover recommended preventive services, immunizations and other screenings with zero enrollee cost sharing (no co-payment or deductible). It also initiates policies to encourage wellness in schools, workplaces and communities, and takes steps to modernize the public health care system.
Quality, Disparities and Comparative Effectiveness: The law takes steps toward paying for quality rather than volume of services by implementing "pay-for-reporting" systems across all providers and moving many providers toward value-based purchasing systems in the future. It also applies financial penalties to hospitals with "high" rates of hospital-acquired conditions. The law establishes a national quality improvement strategy, creates a public-private institute to analyze the comparative effectiveness of treatments, and creates a patient safety research center to promote the adoption of best practices. In addition, it contains a number of provisions to improve the delivery of health care services, particularly to low-income, underserved, uninsured minority and rural populations.
Regulatory Oversight and Program Integrity: The law includes a significant number of provisions to reduce waste, fraud and abuse in the Medicare and Medicaid programs. These include extending the Recovery Audit Contractor (RAC) program to Medicare Parts C and D and Medicaid, and implementing additional policies to enhance program integrity in Medicaid. Several new reporting requirements are imposed on tax-exempt hospitals.
Revenue Provisions: In addition to Medicare and Medicaid provider payment reductions, the new law is financed by taxing high-premium health insurance plans, raising the Medicare tax for high-income individuals and imposing annual fees on the pharmaceutical, medical device, clinical laboratory and health insurance industries.
For more information, and for additional provisions, you can read the American Hospital Association's entire detailed summary.
Click HERE to view time line of health care reform news items.