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Congress is now back in session and, once again, focus has turned to health care. With all eyes on returning health care reform to the forefront, a flurry of activity has sparked new legislative efforts including the introduction of the Graham-Cassidy legislation, Medicare for All, and a Senate Finance Committee agreement to a five year reauthorization of the Children’s Health Insurance Program (CHIP). Here’s a summary of the efforts currently underway for Graham-Cassidy as well as a review of what is included in the bill. Subsequent posts will cover other congressional developments.
The Unveiling of the Graham-Cassidy Legislation
Legislation by Senators Lindsey Graham (R-LA) and Bill Cassidy (R-LA) was formally unveiled on September 13, 2017. A summary of the bill follows, but in its current form, Graham-Cassidy would block grant the funding in the Affordable Care Act (ACA) to states, make significant changes to the reforms in the ACA, and change the traditional Medicaid program into a per capita cap or block grant program.
The Graham-Cassidy legislation appears to be shy of the 50 votes required to pass the Senate, but its supporters are working hard to convince their colleagues to get behind what could be the chamber’s last opportunity to pass legislation that repeals and replaces the ACA. Senator Rand Paul (R-KY) – who supported earlier repeal and replace efforts – has been highly critical of the measure, but most Senators have been relatively quiet on their position. Without Paul’s vote, the measure will need to maintain support by the Senators who voted for earlier efforts, as well as flip two of the following: Senator Susan Collins (R-ME), Senator Lisa Murkowski (R-AK) or Senator John McCain (R-AZ). Graham is very close friends with Senator McCain (R-AZ), which could prove an interesting dynamic. Last week, Senate Republican Leader McConnell (R-KY) called on the Congressional Budget Office to expedite the score of the proposal, although he has not indicated whether he is willing to take up the measure on the Senate floor this month.
The Senate loses its reconciliation vehicle on September 30, 2017, after which the legislation will require 60 votes to pass the Senate, so it is unclear whether there would even be enough floor time to move this bill. That said, if the Republicans can secure enough votes for this measure, expect them to find a path forward before the end of the month.
The House Republicans have been closely tracking the Graham-Cassidy developments. If the Senate can get to the required 50 votes on a repeal/replace bill, the House is expected to take up the legislation.
A Review of the Graham-Cassidy Legislation
The Graham-Cassidy legislation would make drastic cuts to programs added or expanded by the ACA in 2020, including the termination of the Medicaid expansion, the premium support subsidies for individuals to buy health insurance, elimination of small business tax credits, the ending of cost sharing reduction subsidies for low-income Americans, and removing the individual and employer mandates. In lieu of these programs and requirements, the legislation would provide states with significant federal funds to develop market-based health care initiatives outside the parameters established by the ACA.
Federal Grants for Market-Based Health Care
The centerpiece of these efforts is the proposed appropriation of federal funding for seven years for market-based health care initiatives, starting at $146 billion in 2020 and increasing to $190 billion in 2026. This funding approaches but may not equal estimates of ACA federal spending nationwide. The funding would be apportioned among states in accordance with a statutory formula, and be available to states for expenditures the state makes consistent with a plan submitted to the federal government. Examples of permissible plans include:
- Programs to help high-risk individuals purchase insurance in the individual market
- Programs to stabilize insurance premiums and promote market participation
- Payments to health care providers for the provision of services
- Funding assistance to reduce out-of-pocket costs of individuals in individual market plans
- Reductions of premium cost for individual market plans and for individuals without access to employer coverage
- Insurance coverage for Medicaid beneficiaries through health insurance issuers;
- Coverage programs for individuals not eligible for Medicaid or CHIP through arrangements with managed care organizations.
In connection with these plans, states could receive waivers of ACA requirements, and could allow insurers to vary premium rates based on health status, age, or other considerations (not including sex or classes protected under the U.S. Constitution), or decline to offer the ACA’s “essential health benefits.” States could also waive medical loss ratio requirements for insurance plans.
The legislation would also retain and expand the authority under section 1332 of the ACA, which allows states to request waivers of the ACA’s insurance market requirements if they can demonstrate more effective approaches. The legislation would make approval of such requests mandatory if they meet the current statutory criteria related to cost-effectiveness, access and cost sharing for enrollees, and would extend the length of the waivers to 8 years.
Changes to the Medicaid Program
Similar to previous Republican health care efforts, the Graham-Cassidy legislation would make significant modifications to the Medicaid program. Notable program changes are as follows:
- Ends the Medicaid Expansion. While previous iterations of the legislation had gradually phased out support or allowed the expansion to continue without the enhanced federal matching rate provided for by the ACA, the Graham-Cassidy legislation would entirely remove authority from states to cover the Medicaid expansion population. This change would be effective January 1, 2020, with the exception of certain Native American beneficiaries. As a result, the 30 states that have already expanded their Medicaid programs would need to terminate coverage, and potentially could transition individuals in the expansion population to alternative initiatives funded under the market-based grants described above.
- Disproportionate Share Hospital (DSH) Payment Reductions. Scheduled reductions to state allotments for payments to hospitals that serve a disproportionate share of Medicaid and uninsured beneficiaries are retained, and would take effect as scheduled. In some cases, states could have a portion of their DSH cuts restored if they experience a “grant shortfall,” which occurs when the state’s allotment from the market-based health care grant amount increases slower than an inflation adjuster.
- Per Capita Cap. As in each of the prior Republican health care bills, Graham-Cassidy would create a new “per capita cap” financing structure that significantly reduces the growth in federal spending on the Medicaid program. The structure of this provision mirrors prior legislative efforts, with few modifications.
- Block grants. As in the prior legislation, states would have the option to apply for a block grant of federal funds in lieu of receiving funds under the normal Medicaid matching formula. Graham-Cassidy limits this option to non-elderly, non-disabled adults.
- Work Requirements. Allows states to impose work requirements on Medicaid recipients who are not pregnant, disabled, elderly, children, or caretakers of a child under the age of six or a child with disabilities. Exceptions exist for individuals who are sole parents or caretakers of a young child or a child with disabilities, for full-time students, or individuals participating in outpatient drug addiction or rehabilitation programs. Individuals that do not meet the work requirements imposed by the state would lose access to Medicaid coverage.
- Limitations on Provider Taxes. Would limit the scope of permissible health-care provider taxes that may be used to fund a state’s Medicaid program. If implemented, many states would need to restructure their provider tax programs or restructure the financing of Medicaid expenditures.
- Other Notable Changes:
- Option for states to earn quality performance bonus payments from FY 2023 through FY 2026. States would earn the payments by having lower than expected aggregate medical assistance expenditures; states would be required to distribute the bonus payments on quality improvement.
- Limits the scope of retroactive Medicaid coverage to two months before the date of application. Current law requires coverage three months before the date of application; other Republican proposals would have limited it to services in the month of application.
- New authority for four year Medicaid home and community based service demonstration projects.
- Option to expand coverage for psychiatric hospital services to individuals age of 21 to 65, notwithstanding the general Medicaid prohibition on payment for services for adults in an institution for mental disease (IMD).
- Expansion of federal support for services provided to eligible Native Americans who are Medicaid beneficiaries.
- Retains provisions in prior GOP health care bills that would prohibit federal funding to Planned Parenthood and other entities meeting certain designated criteria. The qualifying criteria have been modified in the Graham-Cassidy legislation so that other non-profit providers that are part of national chains and which provide abortion services outside the scope of the Hyde amendment could potentially be implicated.
The Graham-Cassidy legislation introduces the following insurance changes:
- Effectively eliminates employer mandate penalty, retroactive to calendar year 2016.
- Repeals the reduction of the employer deduction for retiree prescription drug plans receiving Part D subsidies, effective for tax years after December 31, 2016.
- Eliminates age restriction on the sale of catastrophic coverage plans (currently cut off at age 30), effective for plan years beginning on or after January 1, 2019.
Health Savings Account (HSA) Changes
The following HSA changes are also included in the legislation:
- HSA contribution limits will increase to the High Deductible Health Plan (HDHP) out-of-pocket limits and consumers will be permitted to use HSA funds to pay premiums for certain HDHPs, effective tax years after December 31, 2017.
- Will not allow HSA funds to be used for a HDHP that covers abortion, effective for plan years beginning after December 31, 2017.
- Allows HSAs to be used to pay for primary care service arrangements (concierge medicine), effective tax years after December 31, 2016.
- Allows HSAs to be used to pay for expenses of children under age 27, effective tax years after December 31, 2017.
- Establishes a 60-day grace period after enrollment in an HDHP to establish an HSA and also allows reimbursement of medical expenses incurred during that period from new HSA, effective for HDHP plan coverage beginning after December 31, 2017.
- Allows both spouses to make catch-up contributions to the same HSA account, effective tax years after December 31, 2017.
- HSA and FSA funds will be able to be used on over-the-counter medications, effective tax years after December 31, 2016.
- Reduces tax on non-qualified HSA and Archer MSA distributions, effective for distributions made after December 31, 2016.
Other Notable Tax Changes Introduced by Graham-Cassidy
- Eliminates the individual mandate penalty, retroactive to calendar year 2016.
- Eliminates premium tax credits, effective tax years after December 31, 2019.
- Eliminates small business tax credits, effective tax years after December 31, 2019.
- Repeals cost-sharing reduction subsidy program, effective for plan years beginning after December 31, 2019.
- Repeals the medical device tax, effective for sales after December 31, 2017.
- Excludes from definition of “Qualified Health Plan” those plans that cover abortion, effective tax years after December 31, 2017.
Stay tuned as subsequent posts will cover the other activities currently happening including efforts to stabilize the insurance exchanges, Medicare for All, and the CHIP program reauthorization.
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Is Telemedicine Change Coming to Congress? The Medicare Telehealth Parity Act of 2017 Among Several New Federal Bills
Congress is reconsidering a nationwide telehealth coverage bill, named the Medicare Telehealth Parity Act of 2017, designed to introduce an incremental, though significant, expansion of coverage for telehealth services under the Medicare program. The bipartisan Act is sponsored by Representative Mike Thompson (D-CA), with seven co-sponsors to date (four Republican, three Democrat). If enacted, the Act would modernize the way Medicare reimburses telehealth services by expanding the number of qualifying geographic locations and expanding coverage of telehealth services in a series of three phases.
A previous incarnation of the Act failed to advance, but has been given new life by the recently-formed bipartisan Congressional Telehealth Caucus. The Caucus was founded by Representatives Thompson, Gregg Harper (R-MS), Diane Black (R-TN), and Peter Welch (D-VT), and has garnered additional members in the last couple weeks.
Here is a summary of the key provisions in the Act, aligned according to its three implementation phases.
Phase 1 expands qualifying originating sites to include all federally qualified health centers and all rural health clinics, and the qualifying geographic location also includes counties in Metropolitan Statistical Areas with populations fewer than 50,000. Additionally, Phase 1 expands telehealth coverage to include services provided by certified diabetes educators, respiratory therapists, audiologists, occupational therapists, speech language therapists, and physical therapists. Phase 1 also provides Medicare coverage of asynchronous (store & forward) telehealth services across the country (not just Alaska and Hawaii).
Phase 2 expands qualifying originating sites to include a home telehealth site, and the qualifying originating geographic location include counties in Metropolitan Statistical Areas with populations of 50,000-100,000.
Phase 3 expands qualifying originating geographic locations to include counties in Metropolitan Statistical Areas with populations above 100,000. Additionally, the Act authorizes the Centers for Medicare & Medicaid Services to develop and implement new payment methods for these telehealth services.
The Act also includes provisions for Medicare coverage of remote patient monitoring services (RPM) for covered chronic care conditions, and home dialysis services for those with end stage renal disease.
Several Congressional Telehealth Proposals at Play
The Medicare Telehealth Parity Act of 2017 is just one of a growing number of bills filed this year that seek to remove Medicare coverage restrictions on telehealth services and improve access. Several notable bills are as follows:
- The Chronic Kidney Disease Improvement in Research and Treatment Act of 2017 (CKDIRT) would, among other things, eliminate restrictions on telemedicine to treat kidney patients in their homes.
- The Creating Opportunities Now for Necessary and Effective Care Technologies for Health Act (CONNECT Act) seeks to expand the use of telehealth among Medicare beneficiaries.
- The Helping Expand Access to Rural Telehealth Act (HEART Act) seeks to remove barriers to the adoption of telehealth services in rural areas, expand telehealth services to rural clinics and Metropolitan Statistical Areas of 70,000 people or fewer, and add Medicare coverage for remote patient monitoring of congestive heart failure and chronic obstructive pulmonary disorder.
- The Creating High-Quality Results and Outcomes Necessary to Improve Chronic Care Act of 2017 (CHRONIC Act) would seek to reduce Medicare costs by improving chronic disease management services and care coordination at home, shifting the patient site of service.
The introduction of the Medicare Telehealth Parity Act of 2017, coupled with other telehealth related bills and the creation of the Congressional Telehealth Caucus, represents continued progress towards expanded telehealth coverage and hopefully portends increasing support for and understanding of telehealth benefits among federal lawmakers. Health care providers and telemedicine companies should recognize the importance of this progress, as it is an opportunity to contribute their voices and help shape public policy on telehealth and virtual care services.
Copyright 2017, American Health Lawyers Association, Washington, DC. Reprint permission granted.
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With Congress returning to Washington, D.C. from its Memorial Day work period, Senators are focusing heavily on the timeline and details of legislation that would significantly alter the Affordable Care Act (ACA). Over the last week, many senior Senators have expressed skepticism regarding whether they can pass a bill, but Senate Republican Leader Mitch McConnell (R-KY) has laid out an aggressive timeline. Specifically, he would like the chamber to vote on a bill before the July 4th recess and use the rest of July to reconcile the House and Senate versions, leading to a final vote before the August recess. Congressional Republicans are eager to move beyond health care in order to take up tax reform and FY2018 federal government funding.
The Great Medicaid Expansion Divide
Senate Republicans are in agreement that their bill will be significantly different from what the House passed earlier this year, but that is where consensus ends. The main sticking point is how to appease Senators on both sides of the expansion – states that expanded and those that did not – in order to cobble together 50 votes (with Vice President Pence delivering the 51st). Those that did expand their Medicaid population don’t want to see their expansion population lose coverage, and those that did not expand, believe they are entitled to an additional financial benefit so they are not at a disadvantage as compared to the expansion states.
Achieving the required savings under reconciliation, while appeasing both factions, is proving extremely difficult. At this point, Democrats are not expected to vote for any Senate bill that significantly modifies the ACA so Republicans must rely entirely on their own Conference. Senators are also concerned about the alarming number of Americans projected to lose coverage under the House passed bill, and are developing a plan that would provide more generous tax subsidies for purchasing coverage. At this point, there is very little interest in including changes to the Essential Health Benefits package as was done in the House bill.
Still Awaiting the House-Passed Bill
In an interesting twist, the Senate parliamentarian is still in the process of reviewing the House-passed bill to make sure it does not violate Senate rules. Therefore, the legislative vehicle has still not officially been delivered to the Senate from the House. A ruling is expected this week.
Stay tuned for further updates as we eagerly await the first draft of the Senate bill, which could come as early as this week.
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