Health Care Reform for the Behavioral Health Task Force

1. Health Care Reform for the Behavioral Health Task Force April 14, 2010

2. Spring is in the air

3. The Health Care Reform Bills • HR 3590: Public Law No: 111-148 Signed by President March 23, 2010 • HR 4872: Public Law No: 111-152 Signed by President March 30, 2010

4. Mandate to Be Insured • Require U.S. citizens and legal residents to have qualifying health coverage. • The new law gives small firms (10 or fewer workers and average annual wages of less than $25,000) tax credits as incentives to provide coverage, starting this tax year. • A new tax on individuals who don't obtain adequate health coverage by 2014. The tax is be phased in over three years, starting at the greater of $95, or 1% of income, in 2014, and rising to the greater of $695, or 2.5% of income, in 2016. • Providing a refundable tax credit, once the individual mandate takes effect in 2014, to help low-income people purchase coverage. To be eligible, a person's household income must be between 100% and 400% of the federal poverty level. • A nondeductible fee charged to businesses with 50 or more employees if the firms fail to offer adequate coverage. Though it won’t count the first 30 workers in that calculation. • Exempt employers with 50 or fewer employees from any of the above penalties. Require employers with more than 200 employees to automatically enroll employees into health insurance plans offered by the employer. Employees may opt out of coverage.

5. Exchanges • Create state-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges, administered by a governmental agency or non-profit organization, where Individuals and small businesses with up to 100 employees can purchase qualified coverage. • States may form regional Exchanges or allow more than one Exchange to operate in a state as long as each Exchange serves a distinct geographic area. • Insurers selling policies through regional exchanges will be subject to the laws and regulations of the state where the policy is written or issued. Exceptions to this: for rules pertaining to market conduct, unfair trade practices, network adequacy, and consumer protections • Federal funding is available to states to establish Exchanges through 2015. • In addition, the Federal Office of Personnel Management will contract with insurers to offer at least two multi-state plans in each Exchange. At least one plan must be offered by a non-profit entity and at least one plan must not provide coverage for abortions beyond those permitted by federal law. • Create the Consumer Operated and Oriented Plan (CO-OP) program to foster the creation of non-profit, member-run health insurance companies. To be eligible to receive funds, an organization must not be an existing health insurer or sponsored by a state or local government.

7. Insurance Policy Reforms • Provide dependent coverage for children up to age 26 for all individual and group policies. • Prohibit individual and group health plans from placing lifetime limits on the dollar value of coverage. • Prohibit insurers from rescinding coverage except in cases of fraud. • Prohibit pre-existing condition exclusions for children. • Eliminate waiting periods for coverage of greater than 90 days. • Limits deductibles for health plans in the small group market to $2,000 for individuals and $4,000 for families. • Establish an internet website to help residents identify health coverage options and develop a standard format for presenting information on coverage options.

8. What Insurance Will Look Like • The reform packages create four benefit categories of plans plus a separate catastrophic plan to be offered through the Exchange, and in the individual and small group markets: • Each plan will have out-of-pocket limits equal to the Health Savings Account (HSA) current law limit ($5,950 for individuals and $11,900 for families in 2010). • – Bronze plan represents minimum creditable coverage and provides the essential health benefits, cover 60% of the benefit costs of the plan. • – Silver plan provides the essential health benefits, covers 70% of the benefit costs of the plan. • – Gold plan provides the essential health benefits, covers 80% of the benefit costs of the plan. • – Platinum plan provides the essential health benefits, covers 90% of the benefit costs of the plan. • – Catastrophic plan available to those up to age 30 or to those who are exempt from the mandate to purchase coverage. This plan is only available in the individual market.

9. Mandatory Benefits • Require qualified health plans to provide at a minimum coverage without cost-sharing for preventive services rated A or B by the U.S. Preventive Services Task Force, recommended immunizations, preventive care for infants, children, and adolescents, and additional preventive care and screenings for women. • Essential benefit requirements – includes emergency services, prescription drugs, mental health and substance abuse services • Parity requirement in state based exchanges all plans offered through an exchange must comply with mental health and addiction equity act of 2008. • New demonstration authority for grants to co-locate primary care in a CMHC.

10. Work Force Development • Provide incentives to Medicare and Medicaid beneficiaries to complete behavior modification/wellness programs. • Provide grants for up to five years to small employers that establish wellness programs. • Increase workforce supply and support training of health professionals through scholarships and loans. • Support primary care training and capacity building. • Provide state grants to providers in medically underserved areas; train and recruit providers to serve in rural areas; establish a public health workforce loan repayment program; • Provide medical residents with training in preventive medicine and public health; promote training of a diverse workforce; and promote cultural competence training of health care professionals. • Support the development of interdisciplinary mental and behavioral health training programs and establish a training program for oral health professionals.

11. Part D • Provide a $250 rebate to Medicare beneficiaries who reach the Part D coverage gap in 2010 (Effective January 1, 2010) • Phase down gradually the beneficiary coinsurance rate in the Medicare Part D coverage gap from 100% to 25% by 2020. • Require pharmaceutical manufacturers to provide a 50% discount on brand-name drugs filled in the Medicare Part D coverage gap beginning in 2011. • For generic drugs, provide federal subsidies of 75% of the generic drug cost by 2020 for prescriptions filled in the Medicare Part D coverage gap (phased in beginning in 2011). • Between 2014 and 2019, reduce the out-of-pocket amount that qualifies an enrollee for catastrophic coverage

12. State Option and Reporting • Permit states the option to create a Basic Health Plan for uninsured individuals with incomes between 133-200% FPL who would otherwise be eligible to receive premium subsidies in the Exchange. • States opting to provide this coverage will contract with one or more standard plans to provide at least the essential health benefits and must ensure that eligible individuals do not pay more in premiums than they would have paid in the Exchange (along with other cost sharing limitations). • States will receive 95% of the funds that would have been paid as federal premium and cost-sharing subsidies for eligible individuals to establish the Basic Health Plan. Individuals with incomes between - 133-200% FPL in states creating Basic Health Plans will not be eligible for subsidies in the Exchanges. • Require health plans to report the proportion of premium dollars spent on clinical services, quality, and other costs and provide rebates to consumers for the amount of the premium spent on clinical services and quality that is less than 85% for plans in the large group market and 80% for plans in the individual and small group markets. • Require disclosure of financial relationships between health entities, including physicians, hospitals, pharmacists, other providers, and manufacturers and distributors of covered drugs, devices, biologicals, and medical supplies.

13. I gotta straighten this lad out. Thing like this could warp his mind for life.

14. Expansion of Medicaid • Starting January 1, 2014 a new mandatory coverage category is created for people with income of 133% or less of the federal poverty level and are under the age of 65 who are non-pregnant adults, not eligible for Medicare and not within any other mandatory Medicaid eligibility category. • The law requires that the new eligibles be provided a benchmark or benchmark equivalent benefit package. • The benchmark plans are: - the federal employees Blue Cross preferred provider plan - any plan offered to and generally available to state employees - the health insurance plan of the HMO in the state with the largest non-Medicaid commercial enrollment, or any other plan approved by the Secretary. • States are required to maintain eligibility standards, methodologies and procedures that were in place as of March 23, 2010. This requirement for adults will expire when the state exchange system is operational. • For children, the maintenance of effort requirement is retained until the end of 2019.

15. Oklahoma’s Mandated Population

17. Determining Medicaid Eligibility • For new eligibles, the reform bill bases income determination on a modified adjusted gross income (MAGI) basis, which is based on the Internal Revenue Code definition of adjusted gross income. • Income disregards currently in use would no longer apply, but under the reconciliation bill, states would be required to reduce countable income by 5% of the upper income limit for the eligibility category. Effectively increasing the expansion to 138% FPL. • Current Medicaid eligibility rules would continue to apply to certain exempted populations such as the elderly and disabled. • Reform permits hospitals participating in Medicaid (with state verification of capability) to make presumptive eligibility determinations and allows hospitals and other providers to make presumptive eligibility determinations for all Medicaid eligible populations. • Requires states to: enable individuals to apply or renew Medicaid coverage through a website with electronic signature; establish procedures to enable individuals to apply for Medicaid, CHIP or the Exchange through a State-run website that must be in operation by January 1, 2014. Enrollment website must be operational by January 1, 2014.

18. Other Medicaid Provisions • Payment for primary care services furnished in 2013 and 2014 must be 100% of the Medicare Rate. The statute defines “primary care” as those services provided by a primary specialty designation of family medicine, general internal medicine, or pediatric medicine and the bill lists out the CPT Codes. • The federal match for the difference in the 2 rates will be 100% (state rate year beginning July 1, 2009). In 2015, states would either have to maintain the higher reimbursement rates without additional federal funding or reduce their rates. • The reform bill adds a new mandatory coverage category, effective January 1, 2014, covering children who have aged out of the foster care program and who were receiving Medicaid while in foster care, up to age 26. • The definition of adult preventive services is expanded, effective January 1, 2013, to include vaccines and any service assigned a grade of A or B by the United States Preventive Services Task Force. States that provide them with no cost-sharing requirements will receive a one percentage point increase in FMAP for all such preventive services.

19. Medicaid Payment Options • Create a new Medicaid state plan option to permit Medicaid enrollees with at least two chronic conditions, one condition and risk of developing another, or at least one serious and persistent mental health condition to designate a provider as a health home. • Provide states taking up the option with 90% FMAP for two years for home health-related services, including care management, care coordination, and health promotion. (Effective January 1, 2011) • Create new demonstration projects in Medicaid to: • - pay bundled payments for episodes of care that include hospitalizations (effective January 1, 2012 through December 31, 2016); • - make global capitated payments to safety net hospital systems (effective fiscal years 2010 through 2012); • - allow pediatric medical providers organized as accountable care organizations to share in cost- savings (effective January 1, 2012 through December 31, 2016); • -to provide Medicaid payments to institutions of mental disease for adult enrollees who require stabilization of an emergency condition (effective October 1, 2011 through December 31, 2015).

20. Medicaid Payment Options (Cont.) • “Community First Choice Option” which allows states to offer, as a state plan option under section 1915, attendant supports and services to disabled Medicaid eligibles with income no greater than 150% of the poverty level. • An enhancement of six percentage points in the FMAP rate is available for expenditures in this program. The option becomes available as of October 1, 2011 and would sunset as of December 31, 2015. • Extend the Medicaid Money Follows the Person Rebalancing Demonstration program through September 2016 • Provide states with new options for offering home and community-based services through a Medicaid state plan rather than through a waiver for individuals with incomes up to 300% of the maximum SSI payment and who have a higher level of need and permit states to extend full Medicaid benefits to individual receiving home and community-based services under a state plan. • Create the State Balancing Incentive Program to provide enhanced federal matching payments to eligible states to increase the proportion of non-institutionally-based long-term care services. Selected states will be eligible for FMAP increases for medical assistance expenditures for non-institutionally based long-term services and supports.

21. Some of the Major Public Financing • For the first three calendar years of the mandated Medicaid expansion (2014-2016), the federal government bears the full cost of coverage for the new eligibles. • The federal share reduces gradually to 90% by 2020. (The percentages during the step-down years are 95% for 2017, 94% for 2018 and 93% for 2019. and 90% in 2020). • The reform bill allows states to begin coverage of the expansion population (non-pregnant under 65 childless adults with income up to 133% of poverty), or to do so on a phase-in basis. A state electing to do so will receive its regular FMAP for this coverage until calendar year 2014. • Federal Medicaid DSH payments will be reduced based on a formula created by the Secretary of HHS. The Reform package includes target dollar amount reductions for each year beginning in 2014 so that the total amount of federal funds available to states will be reduced from $11 billion per year to $7 billion (or 36.4%) • Reduce Medicare Disproportionate Share Hospital (DSH) payments initially by 75% and subsequently increase payments based on the percent of the population uninsured and the amount of uncompensated care provided (Effective fiscal year 2014)

22. Wake up it is almost over!

23. Medicare Financing • Reduce annual market basket updates for inpatient hospital, home health, skilled nursing facility, hospice and other Medicare providers, and adjust for productivity. • Allow providers organized as accountable care organizations (ACOs) that voluntarily meet quality thresholds to share in the cost savings they achieve for the Medicare program. • To qualify as an ACO, organizations must agree to be accountable for the overall care of their Medicare beneficiaries, have adequate participation of primary care physicians, define processes to promote evidence-based medicine, report on quality and costs, and coordinate care. (Shared saving program established January 1, 2012) • Reduce Medicare payments that would otherwise be made to hospitals by specified percentages to account for excess (preventable) hospital readmissions. • Reduce Medicare payments to certain hospitals for hospital-acquired conditions by 1%. (Effective fiscal year 2015) • Award five-year demonstration grants to states to develop, implement, and evaluate alternatives to current tort litigations.

24. Medicare Initiatives • Establish a national Medicare pilot program to develop and evaluate paying a bundled payment for acute, inpatient hospital services, physician services, outpatient hospital services, and post-acute care services for an episode of care that begins three days prior to a hospitalization and spans 30 days following discharge. • Create the Independence at Home demonstration program to provide high-need Medicare beneficiaries with primary care services in their home and allow participating teams of health professionals to share in any savings if they reduce preventable hospitalizations, prevent hospital readmissions, improve health outcomes, improve the efficiency of care, reduce the cost of health care services, and achieve patient satisfaction. • Establish a hospital value-based purchasing program in Medicare to pay hospitals based on performance on quality measures and extend the Medicare physician quality reporting initiative beyond 2010. • Develop plans to implement value-based purchasing programs for skilled nursing facilities, home health agencies, and ambulatory surgical centers.

25. Sources • HEALTH REFORM LEGISLATION—THE (PRESUMPTIVE) FINAL VERSION March 24, 2010; Covington & Burling LLP. • ISSUE BRIEF 10-10 Health Care Reform Becomes Law, Reconciliation Bill to Follow, March 29, 2010 FFIS Federal Funds Information for States. • Summary of the New Health Reform Law; Kaiser Family Foundation’s publication (#8061) available on the website at www.kff.org. • Kiplinger Business Report, http://kiplinger.com/businessresource/forecast/archive/health-care-bill-may-eventually-curb-costs.html • Date : April 8, 2010 Title : "What Did We Do in Health Refortm“mms://ph-ms.ouhsc.edu/video/PH/video/COPH_grandrounds_040810.wmv • Presenter :  David M. Cutler, PhD • http://healthreform.kff.org/SubsidyCalculator.aspx