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Breaking Down the Three Health Reforms Taking Effect Today

Several key dates are looming as the Affordable Care Act continues its steady transition from legislation to law. There’s Jan. 1, when 10 major provisions are slated to go live. Or Nov. 6 — Election Day — when the ACA’s fate may be decided yet again.

Aug. 1, 2012, probably wasn’t circled on many calendars, but a pair of key reforms — a new set of preventive care measures for women and new insurance company rebates — are taking effect today. Oregon also is rolling out an ACA-inspired, if unrelated, pilot project to reform Medicaid care delivery.

The timing is a fluke, according to one CMS source; there’s no connection between the two national measures or any deeper significance behind Aug. 1. Federal officials announced the preventive care guidelines a year ago today, and the reforms going into effect are a one-time measure.

Meanwhile, the rebates under new medical-loss ratio requirements will recur every Aug. 1, so long as the ACA stands, because insurance companies must submit their annual MLR reports by June 1; that will give officials several months to get rebate paperwork in order.

Here’s a quick rundown on the provisions, as well as an overview of Oregon’s efforts to transform care for Medicaid beneficiaries. 

Preventive Care

The ACA’s Section 1001 created a new provision in the Public Health Service Act, mandating that insurers cover certain preventive care services under guidelines offered by the U.S. Preventive Services Task Force. Thanks to that reform, known as the “Mikulski provision” in honor of sponsor Sen. Barbara Mikulski (D-Md.), women will have access to a package of health benefits at no additional cost, including annual Pap tests, and breastfeeding consultation and supplies.

But a requirement that health plans cover contraception has captured most of the attention — and sparked the most controversy. The White House initially exempted only religious employers, such as houses of worship, from the mandate, but later issued an accommodation for employers with religious affiliations, like universities and hospitals.

And while the legal challenges to the Affordable Care Act’s individual mandate have been resolved, the contraception mandate remains in the crosshairs. As the Washington Post‘s Sarah Kliff reports, several lawsuits against the measure are winding their way through the legal system, raising the possibility that the reform could ultimately be overturned.

Medical-Loss Ratio Provisions

There’s been less debate over the ACA’s Section 2718, which formally imposes new medical-loss ratios on insurers. Legislators in both parties have been more supportive of the MLRs, intended to force private payers to put more funds toward medical care and devote less to administrative overhead.

Under the new provision, private insurers are required to spend at least 80% in the individual market or 85% in the group market of premium dollars on direct medical costs — or issue rebates to consumers.

Nearly two million Californians stand to get rebates, but as David Gorn writes on California Healthline‘s Capitol Desk, those rebate checks aren’t expected to be particularly large — just $65 on average in California, compared with $151 across the nation. For example, Anthem Blue Cross Life and Health Insurance Company is expected to issue a $1.3 million rebate to its 400,000-plus individual policyholders … which translates to just $3.16 in rebates per subscriber.

However, any refund could still be a benefit to small-business employers, Anthony Wright, executive director of Health Access California, told Gorn.

“If you’re a small business providing coverage for 30 or 40 folks, [that] can add up to a decent amount of premium relief,” Wright said.

Oregon’s Coordinated Care Experiment

The ACA’s value isn’t just a series of top-down changes, its defenders say. The law also has sparked a number of other health system innovations, from private-side pilots to state-level experiments, like Oregon’s own set of reforms.

The state’s first Medicaid “coordinated care organizations” (CCOs), an approach that some experts say could serve as a national model, go into effect today. Each CCO will adopt a patient-centered medical home model and be charged with caring for Medicaid patients in a given area.

Using a global Medicaid budget, the CCOs will determine the best way to provide comprehensive health care for their patients — including dental and mental health care — with a particular focus on patients with chronic conditions, addiction problems and mental illnesses.

The CCOs are part of Oregon’s goal to better care for its residents, as well as become a nationwide template. “If this works, I think other states are going to be looking at this as a way to manage that patient population,” according to former emergency department physician and Oregon Gov. John Kitzhaber (D).

The model essentially received a $1.9 billion endorsement from the Obama administration earlier this year. The federal funding is expected to reduce planned provider payment cuts and help fund the state’s overhaul before savings kick in.

Looking Forward

One challenge for defenders of the Affordable Care Act: The law’s slow-and-steady implementation has made it hard to point to transformative reforms.

Even today’s measures — while intended to offer immediate benefits and affecting considerably more people than many other provisions that have been implemented, like the insurance plans for patients with pre-existing conditions — will need some time to take effect. Employer health plans won’t have to comply with the contraception mandate until their new policy year begins, which in most cases will be Jan. 1. In Oregon, patients in the new CCOs will hardly notice a difference today.

“Road to Reform” will keep an eye on how these measures play out, and continue to track the fight over the contraception provision. Meanwhile, here’s what’s happening around the nation.

Administration Actions

  • CMS is preparing to launch a hospital value-based purchasing program for Medicare that will reward facilities that provide high quality patient care. Starting Oct. 1, the program — which is required under the Affordable Care Act — calls for hospital Medicare payments to be based on quality. On Aug. 1, about 3,000 hospitals will receive an “estimated payment adjuster” based on quality scores for a nine-month period that ended in March. Seventy percent of the score is based on clinical data, while the remaining 30% is based on patient perception of care (Reichard, CQ HealthBeat, 7/27).
  • The federal health reform law reduced prescription drug costs by $687 million for more than one million Medicare beneficiaries in the “doughnut hole” in the first half of 2012, according to new data released by HHS. The savings amounted to about $629 per beneficiary. The bulk of the savings in the first six months of the year included about $88 million for diabetes medications, $65 million for asthma treatments and $58 million for autoimmune system drugs (Kennedy, USA Today, 7/25).

In the Courts

  • During a recent interview on “Fox News Sunday,” U.S. Supreme Court Justice Antonin Scalia renewed his criticism of the court’s majority ruling to uphold the Affordable Care Act, highlighting what he believed was a misinterpretation of the health reform law’s individual mandate (Vogel, “Politico Now,” Politico, 7/29). Scalia said, “There is no way to regard this penalty as a tax,” adding, “You don’t interpret a penalty to be a pig. It can’t be a pig” (Dunham, Reuters, 7/29).
  • Last week, a federal judge in Colorado on granted a temporary injunction sought by the Catholic owners of a Colorado for-profit company who sued over the federal contraceptive coverage rules, which implement a provision in Affordable Care Act that requires health plans to cover preventive services without copayments or deductibles. The decision marks the first time a federal court has ruled against the provision (Baker, “Healthwatch,” The Hill, 7/27). The decision only applies to the plaintiff and does not affect other entities (Kliff, “Wonkblog,” Washington Post, 7/28).

On the Hill

  • During a House Oversight and Government Reform Committee hearing last week, House Republicans accused the Obama administration of using a demonstration program authorized by the Affordable Care Act that provides quality bonus payments to Medicare Advantage plans to win votes in the election (Winfield Cunningham, Washington Times, 7/25). Committee Chair Darrell Issa (R-Calif.) alleged that the program was a political move to offset cuts to MA plans that were included in the overhaul (Clark, National Journal, 7/25).

Studying Its Effects

  • The Internal Revenue Service should revise its definition of “affordable health insurance” under the Affordable Care Act to help more children obtain coverage, according to a Government Accountability Office report. The ACA provides income-based tax credits to U.S. residents to subsidize the cost of health coverage offered through the law’s health insurance exchanges. In May, IRS released a rule that defined the term as insurance offered by an employer to an individual employee, not family coverage (Adams, CQ HealthBeat, 7/24).

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