The ACA and Rural America (and other workings of the

Federal Government)

David LeeNational Rural Health Association

The National Rural Health Association is a national membership organization with more than 21,000 members whose mission is to provide leadership on rural issues through advocacy, communications, education and research.

NRHA Mission

Today

• The Federal Budget—Are we open or are we closed? What about default?

• What does it mean for the ACA?• What does the ACA mean for rural?• What is the future of the ACA?

Disclaimers:

• NRHA did NOT take a position on full passage of the ACA

• NRHA actively sought for the inclusion of rural-relevant funding and program enhancements in the ACA

• Since passage, NRHA’s Rural Health Congress has passed policy encouraging states to expand Medicaid

Disclaimers

• NRHA is actively working to help members take advantage of ACA programs and grants, help State Associations advocate for Medicaid expansion, and enroll in the various provider-side programs established in the Act, including 340B, ACOs, and being listed as Essential Community Providers

The Current Federal Budget Situation

• Sept. 20: House approves legislation (a Continuing Resolution or CR) denying money for much of President Barack Obama's health care law while keeping the government open through Dec. 15.

• Sept. 24-25: Sen. Ted Cruz, R-Texas, and other conservatives speak on the Senate floor for more than 21 consecutive hours against the health care law in attempt to delay votes.

• Sept. 27: The Senate sends a bill keeping agencies open through Nov. 15 back to the House, after removing House-approved provision defunding the health care law.

• Sept. 29: House shifts its demands for restricting the health care law. It votes to delay implementation of the health care overhaul by a year and to repeal the “medical device tax”. Separately, the House votes to pay active duty troops, and some Defense Department civilian workers and defense contractors, in case of a shutdown. The next day, the Senate approves the second bill and Obama signs it into law.

• Sept. 30: Senate removes House provisions postponing the health care law and erasing the medical device tax. The House reworks its shutdown bill, delaying for a year the health care law's requirement that individuals buy health insurance and requiring members of Congress and their staff to pay the full expense of health insurance, without the government paying part of the costs. The Senate quickly kills the House health care provisions.

• Oct. 1: The government's new fiscal year begins and the partial federal shutdown starts. The House stands by its language delaying required individual health coverage and blocking federal health insurance subsidies for Congress, and requests formal negotiations with the Senate. The Senate rejects the House effort for a formal conference committee.

• Oct. 2: Embarking on a strategy of voting to restart popular programs, the House passes smaller bills to reopen national parks and the National Institutes of Health and letting the District of Columbia municipal government spend money. House Democrats mostly vote "no" and Senate leaders ignore the measures, saying the entire government must reopen.

• Oct. 3: House votes to pay members of the National Guard and Reserves and finance veterans' programs.

• Oct. 4: House votes to finance federal disaster aid programs and feeding programs for infants and pregnant women. The shutdown fight is increasingly tied to the need for Congress to renew federal borrowing authority by Oct. 17 or risk an economy-rattling government default. House leaders increasingly shift their conditions for passage of the shutdown and debt limit bills to deficit reduction.

• Oct. 5: House votes to pay furloughed federal workers when the shutdown ends. DOD recalls 350,000 furloughed workers back to work immediately.

• Oct. 6: House Speaker John Boehner says House won't pass bills ending shutdown or raising debt limit without negotiations on GOP demands.

• Oct. 7: House votes to fund Food and Drug Administration programs.

• Oct. 8: House votes to finance Head Start, pay civil servants working during the shutdown and create a panel of lawmakers to negotiate on deficit reduction. Obama and Boehner suggest they might consider short-term bills ending the shutdown and extending the debt limit to give them time to negotiate. The Senate refuses to take up these measures.

• Oct. 9: House votes to pay halted death benefits to families of fallen troops and to finance the Federal Aviation Administration.

• Oct. 10: Boehner proposes a six-week extension of the debt limit, conditions it on Democrats bargaining over spending cuts and reopening the government. Treasury Secretary Jack Lew repeats warning that government borrowing authority expires Oct. 17, threatening a damaging federal default. Senate passes bill providing death benefits for slain troops and sends to Obama, House votes to fund border security programs.

• Oct. 12: Boehner tells House Republicans that negotiations with White House have stalled. Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., begin talks. Senate rejects Democratic effort to debate debt limit extension through 2014.

• Oct. 13: Senator Susan Collins (R-ME) proposes a compromise to reopen the government and extend the debt ceiling beyond CY 2013 while delaying the medical device tax and establishing a joint committee for long-term budgeting.

• Oct. 14-15: Senators Harry Reid (D-NV) and Mitch McConnell (R-KY) modify the Collins proposal and start receiving feedback from the House, the White House, and their Caucuses.

• Oct. 15 a.m.: House announces it will move its own debt ceiling legislation that will include a longer medical device tax delay, install income verification for ACA subsidies, and cancel health insurance subsidies for members of Congress and the presidential Cabinet.

• Oct 15 p.m.: Speaker Boehner pulls his proposal from the House floor indicating that there is not enough support to pass the bill. Aides indicate that conservative members of his caucus joined with Democrats to defeat his compromise solution

• October 16: Senator Harry Reid and Mitch McConnell agree to a plan that would reopen the Federal Government and lift the debt ceiling.

Final Compromise

• The plan passed by Congress LATE last night and signed into law by the President will raise the debt ceiling until Feb. 7, restore funding (a CR) for all government operations until Jan. 15, and establish a long term budget conference committee that must report proposals by Dec. 13.

• It is unlikely that further efforts to derail the ACA will succeed prior to Jan. 1, 2014 effective date.

Why do we care?

• This challenge was the last chance for Republicans to gain concessions on the implementation of the individual mandate prior to its statutory implementation date.

• This saga has largely distracted the nation’s attention from significant problems with the new Health Insurance Exchanges (Marketplaces).

The ACA in Rural America

The Law

• The Patient Protection and Affordable Care Act was signed into law on March 10, 2010.

• Amendments and full engrossment was accomplished through the Education and Health Care Reconciliation Act of 2010 signed on March 30, 2010

• It is divided into 9 titles and contains provisions that became effective immediately, 90 days after enactment, and six months after enactment, as well as provisions phased in at various points through to 2020

The Politics in 2009 and 2010

• VERY limited bipartisan support and opposition. Fewer than five House Democrats supported the legislation and fewer than five House Republicans supported

• Only one Senate Republican voted in favor at ANY point during the process

• No Senate Democrats voted against at any point

The Law

• The law is over 2,000 pages long and creates new programs, modifies existing programs and payment methodologies, authorizes pilot programs, reauthorizes existing payments and pilot projects, and establishes new rules for Medicaid and insurance markets

• HHS, DOD, VA, IHS, and IRS have released tens-of-thousands of pages of regulations implementing the law

The Legal Challenge(s)

• Almost immediately, private individuals, institutions, and states challenged various provisions of the bill

• Challenges include the individual mandate, employer mandate, Medicaid expansion, mandatory contraceptive coverage, etc.

• In July 2012, the Supreme Court issued its ruling on the most divisive and prevalent legal questions

The Ruling

• The individual mandate is a valid exercise of Congress’s Taxing Power.

• The mandate is not a valid exercise of the Commerce Clause.

• Other major provisions, including ALL rural provisions will be implemented as outlined in the bill.

• One major exception: Medicaid.

The Ruling• The federal government cannot rescind ALL

Medicaid funding if states don’t comply with new requirements.

• The federal government can refuse NEW funds if states don’t meet NEW Medicaid Rules.

The Ruling• "Simply put, Congress may tax and

spend. This grant gives the federal government considerable influence even in areas where it cannot directly regulate.

• “Congress may use this power to establish cooperative state-federal Spending Clause programs. The legitimacy of Spending Clause legislation, however, depends on whether a State voluntarily and knowingly accepts the terms of such programs.”

The Ruling

• “The framers created a federal government of limited powers and assigned to this court the duty of enforcing those limits. The court does so today. But the court does not express any opinion on the wisdom of the Affordable Care Act. Under the constitution, that judgment is reserved to the people."

The Ruling• Dissent: “The Act before us here exceeds

federal power both in mandating the purchase of health insurance and in denying nonconsenting states all Medicaid funding. These parts of the Act are central to its design and operation, and all the Act’s other provisions would not have been enacted without them. In our view it must follow that the entire statute is inoperative.”

Major Provisions

• Major expansion of Medicaid:• States may choose to expand Medicaid

eligibility up to 138% of the federal poverty level.

• The federal government will pay 100% of expansion for the first three years of expansion and then phase down to 90% of the costs of newly covered recipients by 2020.

Medicaid Expansion

• 25 states have agreed to expand their Medicaid roles in accordance with the ACA

• Most of the expansion has taken place in geographic pockets: New England, Upper Midwest, and West Coast

• The Mountain West, Lower Midwest, and South have mostly forgone expansion. Exceptions: Colorado, New Mexico, Iowa, Arizona, Kentucky, Arkansas

Medicaid Expansion

• States still have the option to expand Medicaid whenever they see fit

• The three-year, 100% coverage by the Federal government, is time limited

• By statute, the Federal government will only cover all new costs for CYs 2014, 2015, and 2016

Major Provisions

• Establishment of Health Insurance Exchanges• States have the option of operating their own exchange or partnering with

the federal government to run an exchange. States choosing neither option will default to a federally-facilitated exchange. All exchanges, regardless of how they are administered, must be ready to begin enrolling consumers into coverage on October 1, 2013 and must be fully operational on January 1, 2014.

• Insurance Guarantee Issue and Renewability• Essential Health Benefit Minimum• Employer-based wellness programs

The Exchanges

• There have been significant challenges with the exchanges, specifically the Federal Marketplace at healthcare.gov, in the first two weeks of administration

• Congress and the Administration have demanded fixes and progress reports from the two main contractors that designed the site

• State exchanges are having varying levels of success. The more successful states usually are those with less web traffic

The Exchanges

• Healthcare.gov was established to serve two purposes:• Clearing house for information related the Affordable Care

Act.• Serve as the federal exchange for all those residing in

states that do not set up an independent marketplace.

• Federal government spent $400 million to set up using contracts with health IT firms.

The Exchanges

• Members of both parties, from both chambers have called the current federal exchange a “train wreck”.

• Due to poor design, software malfunctions, and traffic to the site, very few people have been able to create an account or enroll in a health plan.

• HHS stated earlier this week that parts of the site may have to be rebuilt.

The Exchanges

• While over 9,000,000 distinct users have visited Healthcare.gov, fewer than 100,000 have actually enrolled in a health plan

• Web traffic to the federal exchange dropped 88% between October 1 and October 13

• State exchanges have had some better results. Utah and Massachusetts have had better results since their exchanges were already established.

The Health IT in Exchanges

• The contracting process led to one contractor building the user-interface inside of healthcare.gov while another contractor built the “back-end,” technical components.

• Early indications are that these two aren’t talking to each other.

• The problem is similar to EHRs that won’t talk to each other over health information exchanges in MU.

The Exchanges

• In the hours since the passage of the Debt Ceiling/CR compromise, a number of House Committees have indicated that they intend to hold hearings on the Federal exchange.

• In addition to the interoperability challenges, many committees in both chambers have questioned the fraud protections built into the cite.

Medicaid and the Exchanges in states that do NOT expand

• Because the Supreme Court ruled that Medicaid expansion was OPTIONAL, many states have not expanded their eligibility requirements

• This has left a coverage gap or “donut hole” for those ineligible for Medicaid but too poor to qualify for coverage through the exchange

Medicaid “Donut Hole”

• Current Alabama statute offers Medicaid to adults with children up to 16% of the federal poverty level. Alabama is not expanding Medicaid

• In Alabama, 191,320 people are in this donut hole. This represents 36% of all currently uninsured Alabama adults (non-Medicare). It represents 88% of adults under 100% of the federal poverty level

• More information: http://kaiserfamilyfoundation.files.wordpress.com/2013/10/8505-the-coverage-gap-uninsured-poor-adults1.pdf

Rural concerns with Exchange products:

• As part of the rating system established under the law, insurers must show that their products provide access to local providers. The law calls these the “essential community provider” lists.

• Because of a desire to increase the number of products available in the exchange, insurers receive a significant amount of deference.

ECPs in Rural

• Some of the insurers offering products in the exchanges are new to rural. Others are offering new products in the rural space.

• In order to establish an “easy” reference for who would be an ECP, many insurers used pre-made lists to define these providers.

• Most insurers defaulted to the 340B eligibility list for rural determinations.

Concerns

• Some rural providers, like Rural Health Clinics, are not 340B eligible and may not be included in a insurers ECP list. This effectively makes visits to these facilities “out of network”.

• While the list is what is commonly used, it is not universal. If you have not talked to insurers offering products in your state, CALL THEM NOW. Make sure you are an ECP.

Health Reform? Or Health Insurance Reform?

• “You’re a health care lobbyist? What do you think about Obamacare?”

• There is MORE to the ACA than Medicaid and the Individual Mandate!!!!!

Rural ACA Provisions• Increase NHSC Funding/Slots

• Residency reallocation • Expansion of 340B program (CAH/SCH)• Community Health Center funding/grants• Medicare Accountable Care Organizations• Increase AHEC funding authorization• Establishment of Rural Physician Training

Grants

Rural ACA Provisions

• Establishment of CMMI• Pharmacy Reimbursement Increases• Primary Care Incentive Payments• 1.0 Floor on the Hospital Wage Index for

Frontier States • Community Transformation Grants

Rural ACA Provisions

• “Extenders”• Establishment/Extension of Rural

Demonstration Projects• Modification of the Low Volume Hospital

Adjustment• Payment increases for Hospitals in

counties with the lowest Medicare spending

LVH and MDH

• A straight extension of MDH was included in the ACA. This extension was temporary, though, and expired AGAIN on September 30.

• The LVH adjustment was dramatically expanded from affecting only 3-4 hospitals per-year to over 600. This modification was temporary and has expired again.

• Note on LVH: The FAH and other interested parties are working on a lawsuit challenging the implementation of the permanent adjustment.

Rural Provisions in Practice

• Accountable Care Organizations: • An ACO must meet the threshold of 5,000 Medicare beneficiaries who

receive a plurality of their services at a participating/qualifying provider• For purposes of rural they can include individual/group practices (must be

DO or MD), CAHs billing under method 2 and subsection D hospitals including SCH and MDH

• RHC, FQHC, CAHs billing under method 1 may all participate but beneficiaries receiving a plurality of their services in these facilities are not counted for the 5,000 threshold

• ACOs are paid a standard FFS payment and then share in the savings they produced based on:o Amount of savings against prior, base year; ando Number of beneficiaries in their ACO—more beneficiaries=more possible

sharing.

• There are now 153 MSSP ACOs

Rural Provisions in Practice

“Pioneer” ACOs• Program administered by the Center for Medicare and

Medicaid Innovation (CMMI) and, therefore, not subject to the DO/MD requirements

• Intended for facilities and groups that have experience doing this type of activity and are at a place to take more risk and share in more savings

• Savings and loss caps applicable in the original MSSP are not applicable here.

• There are now 32 Pioneer ACO• Some of these ACOs have indicated they will terminate their

contract with CMMI because of an inability to produce savings in sufficient quantities

Rural Provisions in Practice

Advance Payment Model• Program administered by CMMI• Intended to target groups that would like to participate but

are unable because of the high start up costs of ACOs. Therefore only physician groups and rural facilities can apply.

• Like Pioneer ACOs, they are exempt from SOME of the strictest requirements for assignment and staffing.

• CMMI will loan the ACO funds to start the ACO and will recoup the money later. This will be done either through the ACO savings accrued or FFS payments withheld if no savings accrue.

• As of July, there are 20 Advance Payment ACOs

Challenges to Rural Participation in ACOs:

• Beneficiary threshold• NPs, PAs ineligible for beneficiary assignment• Low sharing rate for low-beneficiary ACOs• Cost to establish with no guarantee of return on

investment• Benchmarking savings against yourself• Participation limited to one ACO leading to transfer

challenges

Affects of ACOs in the health care marketplace

• The Medicare Payment Advisory Commission (MedPAC) reports that consolidation, acquisitions, and mergers are rising across the health care market.

• The Rural Policy and Research Institute (RUPRI) notes that this trend is increasing in rural areas as well. The caution that the trend may be pre-existing and unrelated to ACO development.

• Some argue that there are larger market trends and ACOs are not to blame. Most cite ACOs as a primary driver of this trend.

Rural Provisions in Practice

• Increase NHSC Funding/Slots• Residency reallocation

• While these work workforce programs have been funded, there has been some limited success in actual implementation. Residency reallocation is behind schedule. NHSC is shortage based, not rural based so all new slots not automatically going to rural.

• Community Transformation Grants• Despite language in the ACA that 20% of the funds had to go

to rural communities, the CDC definition of a “rural community” was any place under 50,000 people. This precluded a number of rural communities from successfully receiving grants

Rural Provisions in Practice

• Establishment of Rural Physician Training Grants • Increased funding authorization of Area Health

Education Centers• Establish a National Health Care Workforce

Commission• All three of these programs were “authorized” for significant

federal funding through the ACA. Unfortunately, Congress has never “appropriated” money for these programs at the same levels as contemplated in the ACA

• Again, another problem with failing to pass year-long appropriation bills.

Rural Provisions in Practice

• Pharmacy Reimbursement Increases• Starting in CY 2013, rural pharmacies will see a temporary

increase in payments; NRHA supports permanency of change

• Primary Care Incentive Payments• Starting in CY 2013, all Medicaid providers will get

increased payments meant to mirror Medicare rates; there have been challenges in these payments being processed by the feds.

• 1.0 Floor on the Wage Index for Frontier States • All three of these payments have been targeted for repeal

as possible offsets for other spending, specifically SGR.

Direct rural provider concerns

• Modifications to DSH payments (2014)• Bad Debt Reimbursement reduction* (2013)• Failure to expand Medicaid

Rural provider concerns

• Lack of mandatory funding for rural health appropriations

• Temporary extension of rural health programs• Exclusion from ECP lists

What is the future of the ACA?

• Politically, it will be VERY hard to gain repeal at this point. Assuming that Republicans win a majority in the Senate AND the White House and maintain a majority in the House through 2016, the ACA’s provisions will already be pervasive throughout the nation’s delivery systems.

What is the future of the ACA?

• Some tweaking will likely continue. There are a number of concerns that members of both parties continue to bring up:• Wage index change to benefit Massachusetts• Medical device tax• Technical components of grant and pilot programs• Technicalities of Medicaid and insurance products in the

exchanges

Tools

• http://www.ruralhealthweb.org/go/left/government-affairs/health-reform-and-you

• http://healthreform.kff.org/• http://www.healthcare.gov/

Thank You – Stay involved NRHA doesn’t have a PAC Website: ruralhealthweb.org Depends solely on grassroots advocacy Members have access to:

Periodic Washington Updates (webinars): join-grassroots@lists.wisc.edu

Rural Health Blog http://blog.ruralhealthweb.org

Join NRHA today at ruralhealthweb.org

David Leedlee@nrharural.org(202) 639-0550