CBO Publishes Reports on Health Care Law, Increases Estimate of Uninsured Following Supreme Court Decision – On July 24, 2012, the Congressional Budget Office (CBO) released two reports on the Affordable Care Act (ACA). One report (the Insurance Coverage Report) analyzes the budgetary effects of the ACA in light of last month’s Supreme Court decision. The other report (the H.R. 6079 Report) considers the direct spending and revenue effects of H.R. 6079—the “Repeal of Obamacare Act”—which the House of Representatives passed on July 11, 2012.
In the Insurance Coverage Report, CBO updates estimates previously published in a March 2012 report and specifically focuses on the impact of the Court’s decision to make the expansion of Medicaid a state option rather than a requirement. CBO had previously estimated that from 2012 to 2022, the ACA’s insurance coverage provisions would have a net cost of $1.252 trillion. After the Court’s decision, CBO has lowered its cost estimate over the same period by $84 billion, to $1.168 trillion. In particular, CBO now predicts that by 2022:
- Medicaid and Children’s Health Insurance Program (CHIP) enrollment will not increase as greatly as previously estimated (In March 2012, CBO estimated 13 million new enrollees, but CBO’s current estimate includes only 7 million new enrollees, representing a decrease of 6 million enrollees from CBO’s prior estimate.);
- 3 million more people than previously estimated will obtain health insurance through the ACA’s insurance exchanges; and
- The total number of uninsured nonelderly people will decrease under the Affordable Care Act by approximately 30 million people, which represents an increase of 3 million uninsured individuals over CBO’s March 2012 estimate.
CBO attributes the projected decrease in coverage set out in the Insurance Coverage Report—and the associated increase in savings—to the anticipated decision by some states to not expand Medicaid coverage to the “full extent authorized by the [law]” or to opt out of expansion entirely. CBO’s March 2012 projections were based in part on the assumption that, under the ACA, states would expand Medicaid eligibility (because states choosing not to would have risked forfeiting their federal matching funds).
Under the ACA, certain individuals and families are eligible to receive federal subsidies to purchase health insurance through exchanges. One might initially assume that, as a result of the Court’s decision (and the subsequent decision of states not to expand their Medicaid programs), that those ineligible for Medicaid or CHIP would migrate to the exchanges, resulting in more subsidies at an equal (or even greater) cost to the government. The Insurance Coverage Report explains, however, that such an assumption would be incorrect. In fact, many of those not eligible for Medicaid coverage also will not be eligible to participate in the exchanges, and the number of additional people participating in the exchanges after the Court’s decision is projected to be approximately half the number who will not qualify for Medicaid coverage. Consequently, even though the government’s average cost per individual participating in the ACA’s insurance exchanges is higher than its average savings per individual not enrolled in Medicaid, CBO believes that the savings attributable to lower Medicaid enrollment will more than offset the increased costs of providing subsidies to those who purchase insurance in the exchanges, thus resulting in lower projected costs. (CBO points out, however, that its revised projections take into account the law’s insurance coverage provisions only, and do not consider other provisions, which are projected to reduce budget deficits.)
In the H.R. 6079 Report, CBO estimates that repeal of the ACA would result in a net increase in federal budget deficits during the period between 2013 and 2022. This estimate is based on the assumption that H.R. 6079 is enacted near the beginning of fiscal year 2013. Specifically, CBO predicts that enactment of H.R. 6079 would result in the following budgetary impacts during the first decade:
- An estimated savings of $1.171 trillion due to repeal of the ACA’s provisions expanding health insurance coverage through increased Medicaid and CHIP outlays and the payment of insurance exchange subsidies.
- An increase in spending by an estimated $711 billion due to repeal of the ACA’s cost-cutting provisions.
- A reduction in revenues by an estimated $569 billion due to repeal of certain revenue-generating provisions, such as the increase in the Hospital Insurance payroll tax and the imposition of fees or excise taxes on certain manufacturers and insurers.
- A total increase of $109 billion to federal budget deficits.
Click here to view CBO’s Insurance Coverage Report, and here to view its H.R. 6079 Report.
Reporter, Greg Sicilian, Atlanta, +1 404 572 2810, gsicilian@kslaw.com.
New Public-Private Partnership Seeks to Combat Fraud – On July 26, 2012, in further efforts to combat healthcare fraud, HHS Secretary Kathleen Sebelius and Attorney General Eric Holder announced a new partnership among the federal government, state officials, private healthcare organizations, and anti-fraud units. The collaborative effort will unite various entities to share information and best practices to detect fraudulent healthcare billing practices that affect both public and private payers, with members of the partnership planning to share information on geographical “fraud hotspots,” commonly used billing codes, and fraudulent schemes. A number of entities have already joined the partnership, including, among others, Blue Cross and Blue Shield Association, Humana Inc., UnitedHealth Group, U.S. Department of Health and Human Services, U.S. Department of Justice, and WellPoint, Inc. One of the keys to the new partnership is that it will seek to analyze trends in healthcare fraud to combat fraud before it occurs rather than after money has been paid. With the partnership uniting public and private insurers against healthcare fraud, Secretary Sebelius acknowledged that the joint efforts will help combat fraud fueled by a “fragmented” healthcare industry. A budget must still be set for this partnership, and planning efforts, which have already begun, are expected to last into the fall. The CMS news release is available by clicking here.
Reporter, Christina A. Gonzalez, Houston, +1 713 276 7340, cagonzalez@kslaw.com.
CMS Announces FY 2013 Payment Rates for Skilled Nursing Facilities – On July 27, 2012, CMS posted the FY 2013 per diem payment rates for skilled nursing facilities (SNFs). CMS announced that the market basket increase for FY 2013 is 2.5 percent and the productivity adjustment for FY 2013 is 0.7 percent, resulting in a net market basket increase of 1.8 percent. CMS estimates that this net 1.8 percent increase will result in an additional $670 million to SNFs during FY 2013. In calculating the updated per diem rates, CMS used the full RUG-IV case-mix classification system, which the agency finalized in the FY 2010 SNF prospective payment system (PPS) final rule and fully implemented beginning in FY 2011. These payment rate updates take effect on October 1, 2012.
CMS implemented various policy changes in FY 2012, including recalibrating the FY 2011 SNF parity adjustment, implementing changes to the MDS 3.0 patient assessment instrument, and allocating group therapy time to pay for group therapy services based on cost and utilization of resources. CMS has monitored the impact of these changes and discusses its findings in the notice as well.
The notice will be published in the Federal Register on August 2, 2012. In the meantime, the display copy may be accessed by clicking here.
Reporter, Kate Stern, Atlanta, +1 404 572 4661, kstern@kslaw.com.
Inpatient Rehabilitation Facility PPS Payments Increase 2.1 Percent for FY 2013 – CMS’s notice updating the inpatient rehabilitation facility (IRF) prospective payment system (PPS) for discharges occurring during FY 2013 was published in today’s Federal Register (July 30, 2012). IRF PPS payment rates will be increased by an adjusted market basket increase factor of 1.9 percent for FY 2013, which includes a 2.7 percent market basket update less a 0.1 percentage point reduction and a 0.7 percent productivity adjustment mandated by the Affordable Care Act. In addition to the 1.9 percent net market basket increase, CMS will increase total outlier payments by 0.2 percent for a total estimated increase in payments to IRFs of 2.1 percent. CMS estimates $140 million in increased payments to IRFs during FY 2013.
In this notice, CMS updates the IRF PPS relative weights, average length of stay values, payment rates, outlier threshold, and cost-to-charge ratio (CCR) ceilings and urban/rural CCRs. There are no policy changes or regulatory revisions proposed in this notice. The IRF PPS notice is available by clicking here.
Reporter, Susan Banks, Washington, D.C., +1 202 626 2953, sbanks@kslaw.com.
CMS Publishes Hospice Wage Index for FY 2013 – CMS published the updated hospice wage index for FY 2013 in the Federal Register on Friday, July 27, 2012, announcing a net increase of 0.9 percent in hospice payments in FY 2013. This increase is a result of a 1.6 percent net market basket increase that is offset by a 0.7 percent reduction due to the updated wage data and budget neutrality adjustment. CMS arrives at the 1.6 percent net market basket increase by offsetting the 2.6 percent inpatient hospital market basket percentage increase by a 0.7 percent productivity adjustment and a 0.3 percentage point reduction in effect from FY 2013 through FY 2019. The publication is available by clicking here.
Reporter, Kate Stern, Atlanta, +1 404 572 4661, kstern@kslaw.com.
CMS Begins Audits of Successful Meaningful Users – CMS has published an FAQ on its Web site confirming that it has begun audits of eligible hospitals and eligible professionals who have received incentive payments under the Medicare and Medicaid EHR Incentive Programs. A contractor hired by CMS, Figliozzi and Company, has sent letters appearing on CMS letterhead to selected eligible providers informing them of the audit. Neither CMS nor the contractor has provided additional details on the mechanics of the audit or the exact number of providers selected for audit; however, preamble language in the Stage 1 Meaningful Use Rule and other program guidance have advised providers to maintain sufficient supporting documentation to verify attestation data submitted during Stage 1.
The CMS FAQ is available here.
Reporter, Christopher Kenny, Washington, D.C., + 1 202 626 9253, ckenny@kslaw.com.
Proposed Regulations Under 501(r) Affecting Tax-Exempt Hospitals Webinar Roundtable – On Tuesday, July 31, 2012, King & Spalding LLP will be hosting a Roundtable Webinar focused on the proposed regulations recently published by the Treasury Department and the IRS concerning certain additional requirements imposed on charitable hospitals by Section 501(r) of the Internal Revenue Code.
The Roundtable will include the following topics related to requirements of Internal Revenue Code Section 501(r) and the new proposed regulations:
- Financial assistance policy (FAP) requirements, including what is required to satisfy the obligation to “widely publicize” the FAP
- Emergency medical care policy requirements
- Limitations on charges, including permitted methods of calculating “amounts generally billed”
- Billing and collection restrictions, including those imposed on “extraordinary collection actions”
- Requirement to make “reasonable efforts” to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy
- Update on the status of IRS guidance concerning the requirement for charitable hospitals to conduct a community health needs assessment
This Roundtable will only be presented as a Webinar. You do not have to be a client to attend, and there is no charge. You can register to participate by clicking here.
This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.
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