Earlier today the Senate voted 78-17 in Executive Session to confirm the nomination of Ms. Sylvia Mathews Burwell to be the new Secretary of The Department of Health and Human Services (HHS). Ms. Burwell was most recently the head of President Obama’s Office of Management and Budget before being nominated for her new role. Ms. Burwell takes the helm of HSS from the former Secretary Kathleen Sebelius. A native of Hinton, West Virginia—a town of roughly 3,000, Ms. Burwell held the position of Deputy Chief of Staff working with Erskine Bowles in President Bill Clinton’s second administration. Ms. Burwell becomes the 22nd Secretary of HHS, an agency of over 70,000 federal employees across a number of important departments: the Food and Drug Administration (FDA); the National Institutes of Health (NIH); the Health Resources and Services Administration (HRSA); the Centers for Disease Control and Prevention (CDC); and the Administration on Aging among others. The largest portion of the agency’s near trillion dollar annual budget is dedicated to funding the Centers for Medicare and Medicaid Services (CMS) charged with running the Medicare and Medicaid programs nationwide.
The first day of the federal government shutdown occurred on October 1, 2013, the same day as the start of the open enrollment period for the health insurance exchanges. This blog post focuses on some of the top issues impacting health care policy on this date.
HHS Operating Status
Despite the government shutdown, most Medicare fee-for-service reimbursement will continue as scheduled.
On October 1, 2013, the Medicare Administrative Contractors (MACs) indicated they would “continue to perform all functions related to Medicare fee-for-service claims processing and payment.” However, according to the HHS contingency plan, health care fraud and abuse efforts will cease during the government shutdown. In addition, CMS will be curtailing the number of recertification and initial surveys for Medicare and Medicaid providers.
Despite the HHS furlough, October 1st marked the first day of open enrollment for the health insurance exchanges. Initially individuals were reporting that many of the individual state-based health insurance exchange sites were not working properly and the healthcare.gov website and toll-free number were experiencing problems or longer than average wait times. However, as of yesterday afternoon, HHS informed reporters that more than 2.8 million individuals had visited the healthcare.gov website since it launched earlier that morning, the call centers received more than 81,000 calls, and there were more than 61,000 live chat requests. HHS did not announce how many individuals had successfully enrolled in a health insurance plan offered through the exchange on this first day.
Medicare and Medicaid Provider Policies
In addition to the establishment of the new health insurance exchanges, the ACA also mandated certain Medicare and Medicaid cuts to begin on October 1, 2013, including:
- Medicare readmissions reductions: Under the Hospital Readmissions Reduction Program (HARP) hospitals are assessed a penalty for patients with certain conditions who return to the hospital within 30 days of discharge. When the program began on October 1, 2012, hospitals were assessed a maximum penalty of one percent of total revenue. As of October 1, 2013, the penalty increases to two percent of total revenue. CMS data suggests that more than 2,200 hospitals will have their Medicare payments reduced under this program. (More information on the program is available here.)
- Medicaid Disproportionate Share Hospital (DSH) payments: The Medicaid program provides additional payments—DSH payments—to hospitals that see a higher than average share of low-income beneficiaries. The ACA reduced the overall level of Medicaid DSH payments beginning October 1, 2013 when cumulatively states will receive a $500 million cut in DSH payments.
Under the ACA, states who choose to do so may expand their Medicaid programs to cover uninsured individuals up to 133 percent of the federal poverty level (2013 federal poverty level figures are available here). More than half the states have chosen to expand their Medicaid programs, as seen in this map. Expanded Medicaid coverage begins in most states on January 1, 2014.
On Friday, June 14th, the Medicaid and CHIP Payment and Access Commission (MACPAC) released its annual report to Congress. MACPAC was created to assess the adequacy of Medicaid and Children’s Health Insurance Program (CHIP) payments, much the way the Medicare Payment Advisory Commission (MedPAC) reports on the adequacy of Medicare payments. (More information on MedPAC’s June 2013 report to Congress is available here.)
Highlights of MACPAC’s June 2013 report include:
- Medicaid and CHIP eligibility and coverage for maternity services: The MACPAC report discussed the Affordable Care Act’s (ACA’s) mandated maternity care coverage provisions and its impact on current Medicaid eligibility. The report also discussed trends related to Medicaid- and CHIP-covered benefits and services.
- Increased payments to primary care providers under Medicaid: The ACA mandated that in 2013 and 2014, Medicaid reimbursement for primary care services must be increased to Medicare rates, with the federal government funding the full cost of this increase. MACPAC interviewed six states – Alabama, California, Indiana, Massachusetts, Oregon, and Rhode Island – and the District of Columbia and identified some challenges related to implementation of this provision.
- Persons with Disabilities’ access to care: MACPAC examined access to care for Medicaid-only disabled adults under age 65 who are living in the community. Generally, existing research suggests this population’s access to care is similar to that of disabled individuals who have other insurance. However, MACPAC identified three areas of concern for the low-income disabled population: (1) challenges with adequate training in medical schools to address this unique population, (2) access to necessary equipment and services, and (3) access to dental services.
- Update on Medicaid and CHIP data: MACPAC discussed CMS’ efforts to improve the availability, accuracy, and timeliness of Medicaid and CHIP data to be available to researchers.
- Medicaid program integrity update: MACPAC discussed federal and state efforts of reducing waste, fraud, and abuse in the Medicaid program. MACPAC noted there are some federal and state programs which are duplicative and other areas where additional attention may be warranted.
- Medicaid and CHIP program statistics: Because of the challenges in collecting Medicaid and CHIP data, MACPAC included data pertaining to Medicaid enrollment and spending trends, characteristics of the Medicaid and CHIP populations, and Medicaid managed care trends.
A copy of MACPAC’s press release announcing its June 2013 report is available here.
Earlier this month, the Lobbying and Advocacy Group’s Medicare Reimbursement and Health Policy Director, Anna Schwamlein Howard, partnered with Drinker Biddle attorneys Jeremy Shapiro-Barr and Douglas Swill on a client alert. The alert examines the Department of Health and Human Services’ (HHS’s) Office of the Inspector General’s (OIG’s) updated bulletin, “Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs.” The client alert can be accessed on the Drinker Biddle website.
With all the talk in Washington about deficit reduction and efforts to craft a “grand bargain,” entitlement “reform” or changes to entitlement programs, such as Medicare and Medicaid, are on the table. Taken together, Medicare, Medicaid, and the Children’s Health Insurance Programs are an estimated 21% of the federal budget while Social Security is approximately 20%.[i] According to the Pew Research Center, beginning January 2011 and for the next 19 years, 10,000 people a day are turning 65 – making them eligible for entitlement programs, such as Medicare and Social Security.[ii] In turn, this demographic reality will cause those slices of the federal budget pie to grow at break-neck speed, unless the Congress does something to stem the tide. Hence, the growing bipartisan interest in discussing entitlement reform.
So, what does that really mean? One usual favorite for reducing entitlement spending being touted is cracking down on “fraud, waste, and abuse,” which supporters say could potentially save billions each year (though the independent Congressional Budget Office (CBO) tends to think otherwise). In addition to that old stand-by, here is a sampling of some of the other changes to Medicare and Medicaid currently under consideration:
– Reforming Medicare cost-sharing rules
– Restricting first-dollar coverage in Medicare supplemental insurance (Medigap)
– Extending Medicaid drug rebates to dual eligibles in Medicare Part D
– Cutting Medicare payments to hospitals for bad debts
– Accelerating Medicare home health savings in health reform
– Eliminating state Medicaid provider tax (a mechanism used by a majority of states to increase their federal Medicaid matching funds)
– Placing dual eligibles in Medicaid managed care
– Block granting the Medicaid program
– Moving some or all of Medicare into a “Premium Support” program
– Combining Medicare Part A&B deductibles
– Expanding use of competitive bidding under Medicare
– Bundling Medicare payments (e.g., moving away from fee-for-service)
– Increasing the eligibility age for Medicare
– Increasing means-testing for high-income Medicare beneficiaries