Health system reform and its impact on West Virginia.
(Laws, regulations and rules)
Health care reform (Laws, regulations and rules)
Health care reform (Political aspects)
|Publication:||Name: West Virginia Medical Journal Publisher: West Virginia State Medical Association Audience: Academic Format: Magazine/Journal Subject: Health Copyright: COPYRIGHT 2010 West Virginia State Medical Association ISSN: 0043-3284|
|Issue:||Date: May-June, 2010 Source Volume: 106 Source Issue: 3|
|Topic:||Event Code: 930 Government regulation; 940 Government regulation (cont); 980 Legal issues & crime; 970 Government domestic functions Advertising Code: 94 Legal/Government Regulation Computer Subject: Insurance industry; Government regulation|
|Persons:||Named Person: Obama, Barack|
|Geographic:||Geographic Scope: West Virginia Geographic Code: 1U5WV West Virginia|
President Barack Obama signed the Patient Protection and Affordable
Care Act (H.R. 3590) into law on March 23, 2010. This law is being
proclaimed by many to be the most significant health reform legislation
passed by congress in generations. The monumental bill is expected to
bring down health care costs for American families and small businesses,
expand coverage to millions of Americans and end bad practices of
insurance companies. So how does this legislation impact West Virginians
and more specifically West Virginia's practicing physicians?
The information below is a compilation of information obtained from a variety of sources including the American Medical Association (www.AMA-Assn.org) and the Department of Health and Human Services (www.HealthReform.gov).
Under the reform legislation, the Obama administration at the Department of Health and Human Services is projecting the following:
* 256,000 West Virginia residents who do not currently have insurance and 41,000 residents who have non-group insurance could get affordable coverage through the health insurance exchange.
* 204,000 West Virginia residents could qualify for premium tax credits to help them purchase health coverage.
* 372,000 West Virginia seniors would receive free preventive services.
* 66,000 West Virginia seniors would have their brand-name drug costs in the Medicare Part D "doughnut hole" halved.
* 20,000 small West Virginia businesses could be helped by a small business tax credit to make premiums more affordable.
There has been a great deal of talk about what this 2,400+ page bill covers and doesn't. The following is a basic summary of the core components of the legislation and the impact on patients, physicians, businesses and insurers. There are many great sources of information available for consumers and physicians to find out more on the impact of this bill. The WVSMA is compiling information into a one stop shop on our website please visit www.WVSMA.com for more detailed and up-to-date information.
Many components of the bill immediately go into effect while others are phased in over the next four years.
* Health insurance coverage is significantly expanded and competition in the marketplace is improved;
* Pre-existing condition limitations are removed and other health insurance market reforms are implemented;
* Patient-physician relationship is protected;
* Investments and incentives are provided for quality improvement, prevention and wellness initiatives; and,
* Insurance claims processing is streamlined and standardized to eliminate unnecessary costs and administrative burdens.
Medical Liability Reform
Many have asked the question "what is included in the bill relating to medical liability reform?" The short answer is "not much". There is no liability reform component of this legislation but the following points are included:
* Does establish a competitive grant program for states to develop, implement and evaluate innovative medical malpractice reforms.
* Does extend medical liability protections under the Federal Tort Claims Act to officers, governing board members, employees and contractors of free clinics.
* Does authorize a Government Accountability Office (GAO) study and report on whether the development or implementation of guidelines, standards, or payment adjustments (e.g., health care acquired conditions) specified in multiple sections of the bill would result in new causes of action or claims against health care providers.
How the Bill Expands Health Insurance Coverage
The legislation is projected to expand insurance coverage to an additional 32 million persons by 2019, equating to coverage of 59 percent of the uninsured. The following is a synopsis of the mechanisms through which this will be accomplished:
1. Expanding Medicaid eligibility to all individuals under age 65 (including childless adults) up to 133 percent of the federal poverty level (FPL).
* Federal government will cover 100 percent funding for the expansion of Medicaid coverage to all individuals from 2014 to 2016, diminishing to 90 percent in 2020 and thereafter.
* Projected 16 million uninsured Americans will become covered under Medicaid and the Children's Health Insurance Program by 2019.
* The legislation requires Medicaid payment rates to primary care physicians providing primary care services be no less than 100% of Medicare payment rates for 2013 and 2014, and provides 100 percent federal funding for the incremental costs to states of meeting this requirement.
2. Provides "premium" credits to individuals and families up to 400 percent of FPL ($88,200 per year for a family of four) for the purchase of private health insurance.
3. Provides dependent coverage for children up to age 26 under all individual and group policies.
4. Requires coverage of children with pre-existing conditions in 2010 & insurers can't drop insureds if they get sick.
5. Establishes a temporary "High Risk Pool" for adults with pre-existing conditions--until 2014 when all insurers are required to cover pre-existing conditions for adults.
6. Disallows lifetime financial limits on benefits.
7. Preventive services (mammograms, immunizations) covered by insurers with no co-payments or deductibles.
8. Medicare patients who hit "doughnut hole" will receive $250 rebate from Medicare and after 2011 will receive 50% discount on prescription drugs.
9. State based health insurance exchanges will begin in 2010 for persons without access to employer-based insurance coverage.
10. In 2011 states can require insurers to justify premium increases and impose penalties for excess increases.
Requirement for Insurance Coverage
A core component of the success of the reforms is that most Americans will have some sort of health care coverage. If coverage isn't available either through a persons' employer or by qualifying for government run programs (Medicaid, CHIP, Medicare) individuals will be required to purchase coverage. There are various exemptions for different income levels but basically, by 2014 individuals will be required to obtain health insurance coverage or pay a penalty to the government which incrementally rises over time. That penalty is: $95 in 2014, $325 in 2015, $695 in 2016 or as a % of income in the amount of 1% in 2014, 2% in 2015, and 2.5% in 2016. After 2016, the penalty will increase annually by the cost-of-living adjustment.
Impact on Insurance Company Practices
Insurance companies are prohibited from denying coverage based on pre-existing conditions. Premiums may not be based on gender and health status. Insurers may not drop coverage if policyholders get sick, and once insured, individuals and families will be guaranteed renewal of their health insurance policies.
Impact on Insurance Premiums for Insured
* Health insurance premiums will not rise for most people.
* The Congressional Budget Office (CBO) predicts that premiums in the large group market (nearly 70 percent of the non-elderly covered population) would drop 0 to 3% in 2019.
* Premiums in the small group market (13 percent of those with insurance coverage) may fall--CBO predicts a change from -2% to + 1% compared to current law.
* Premiums in the non-group market (17 percent of those with insurance coverage) are expected to rise by an estimated 10 to 13%. While premiums will likely rise in this market, such policies will contain richer benefits. Additionally 57% of the non-group enrollees will likely receive a subsidy making their actual contribution 56 to 59% lower.
Impact on Physician Practices: the Positive
* Physicians will continue to exercise considerable control over the practice of medicine and the care that they provide to their patients.
* By covering the uninsured it cuts into the $24 billion plus annually in charity care provided by physicians.
* The financial impact is particularly acute when private and public payments are declining or flat, and physicians are less able to cover the cost of treating uninsured patients with revenue from insured patients.
* The time and cost burden of physicians' practices interactions with health plans is large. Administrative simplification provisions will reduce these costs. Physicians spend on average about 140 hours and $68,000 a year just dealing with health insurance bureaucracy. The Obama Administration estimates this adds up to 754,200 hours and $366 million in costs to West Virginia physicians. By simplifying and standardizing paperwork and computerizing medical records, doctors will be able to focus on caring for their patients instead of dealing with bureaucracy.
* Many payment improvements are included in the legislation that when combined will result in immediate and significant Medicare payment increases for many physicians.
() 10 % incentive payments for primary care physicians.
() 10 % incentive payments for general surgeons performing major surgery in health professional shortage areas.
() 5 % incentive payment for mental health services.
() Medicare quality reporting incentive payments extended. Incentive payments of 1 percent in 2011 and 0.5 percent from 2012-2014 will continue for voluntary participation in Medicare's Physician Quality Reporting Initiative (PQRI).
() Administrative simplification--national rules are to be implemented between 2013-2016 to standardize and streamline claims processing.
Impact on Physician Practices: the Negative
* Value index adjustments to individual physician payments based on cost and quality outcomes by 2015.
* Potential penalties on physicians who do not successfully participate in the Physician Quality Reporting Initiative (PQRI) by 2015.
* Public reporting of physician claims data to develop performance reports.
* Independent Payment Advisory Board (IPAB) to develop proposals to cut Medicare spending if the target rate of growth is exceeded. The Secretary of HHS required to implement the proposals unless a statutory override (Projected cuts would total $13 billion over 10 years.)
* Utilization assumption for high-cost imaging equipment will be increased to 75 percent effective Jan. 1, 2011 (Net cuts $2.3 billion over 10 years).
* New physician-owned hospitals will be banned from participating in Medicare and limits are placed on growth of existing physician-owned facilities (net cuts $500 million over 10 years).
Impact on the States
State budgets are expected to be relieved from rising health care costs as reform:
Reduces state employee premiums: Coverage would immediately be expanded to the uninsured, decreasing the amount of uncompensated care costs that gets shifted to the premiums of state employees. For states that provide early retiree health benefits to their state employees, a reinsurance program would provide premium relief of up to $1,200 per family policy per year for all employees.
Reduces uncompensated care: The Obama Administration estimates that West Virginia providers lose $482 million in uncompensated care each year, which states subsidize at least in part. Under the reform, uncompensated care would begin to be reduced immediately as more uninsured people gain coverage.
Invests in the health care workforce: The Obama Administration estimates approximately 169,000 people, or 9 percent of West Virginia's population, cannot access a primary care provider due to shortages in their communities. Health insurance reform will expand and improve programs to increase the number of health care providers, including doctors, nurses, and dentists, especially in rural and other underserved areas.
Impact on Employers
Small Business Tax Credit: Businesses with 50 or less employees which contribute at least 50 percent of the total premium cost of their employees, who have average annual wages below $50,000 will be eligible for the tax credits of up to 35 percent (for tax years 2010-2013) of the premium paid for their employees. The credit phases out as firm size and average wage increase. In tax years 2014 and later, for eligible small businesses purchasing coverage through the state exchanges, the tax credit increases to 50 percent of the employer's contribution toward the premium. According to the IRS, the wages and hours of physician business owners and partners will not be counted in calculating either the number of full-time employees or the average annual wages.
Large Businesses would have no "employer mandate" but "employer responsibility": Businesses with more than 50 employees which do not offer health insurance to their employees must reimburse the government for subsidies provided to their employees who use the exchange to purchase health insurance. The penalty amounts to $2,000 multiplied by the number of full-time employees in excess of 30.
40 percent excise tax ("Cadillac" tax) on high-cost health plans: Beginning in 2018, an excise tax will be imposed on the coverage provider (i.e., insurer, plan administrator or employer depending on the type of coverage) of high-cost employer-sponsored health plans with aggregate values exceeding $10,200 for individual coverage and $27,500 for family coverage. The tax is equal to 40 percent of the value of the plan that exceeds these threshold amounts.
Expenses allocable to Medicare Part D subsidy: Effective 2013, employers that currently sponsor retiree prescription drug plans will no longer be able to deduct amounts contributed to them. However, future Medicare Part D subsidies will continue to be tax-free to the employer.
Limitation on excessive health insurance company compensation: Effective 2013, the deduction for executive and employee compensation for health insurance providers is limited to $500,000 per applicable individual. The limit applies to all officers, employees, directors and other workers.
Taxes and Credits
Annual fee on health insurance providers: Beginning in 2014, a fee will be applied on net premiums of all health insurers based on their market share. For non-profit insurers, only 50 percent of net premiums will be taken into account in calculating the fee. Exemptions are granted.
Annual fee on pharmaceutical companies and medical device manufacturers: New annual fees on certain manufacturers and importers of branded prescription drugs (including biological products, but excluding orphan drugs) would be imposed beginning in 2011 based on annual sales and set to reach a certain revenue target each year. Beginning in 2013, an annual excise tax of 2.3 percent will also be imposed on the sale of Class I medical devices by manufacturers, producers or importers. Class I includes the vast majority of orthotics and prosthetics, as well as durable medical equipment. Exemptions are provided for eyeglasses, contact lenses, hearing aids and any device that is generally purchased at retail for individual use.
Excise tax on indoor tanning services: Effective July 1, 2010, an excise tax of 10 percent will be imposed on the amount paid for indoor tanning services.
|Gale Copyright:||Copyright 2010 Gale, Cengage Learning. All rights reserved.|