PATIENT PROTECTION AND AFFORDABLE CARE ACT - WHAT'S UP FOR 2011?

The following provisions of the Patient Protection and Affordable Care Act as amended by the Healthcare and Education Reconciliation Act of 2010 ("PPACA") will become effective in 2011:

Payment Provisions Affecting Hospitals' and Other Health Care Providers' Bottom Line:

Market Basket Updates  Medicare providers including hospitals can expect a reduction in annual market basket updates as set forth in Section 3401 of PPACA.   

Qualifying Hospital Bonus Payments  Section 1109 of the Reconciliation Act provides payments totaling $400,000,000 for fiscal years 2011 and 2012 to general, acute care, short-term hospitals (subsection (d) hospitals) in counties with the lowest quartile Medicare spending, adjusted for age, sex and race ("Qualifying Hospitals").  A Qualifying Hospital will receive a percentage of the $400,000,000 fund over and above its regular Medicare reimbursement based on its proportionate share of the aggregate 2009 Medicare reimbursement paid to all such Qualifying Hospitals.

Medicaid Payment Adjustment for Health Care-Acquired Conditions  Section 2702 of PPACA prohibits federal Medicaid payments to states for any amounts expended for providing medical assistance for certain "health care-acquired conditions" specified by regulations, effective July 1, 2011. 

Physician Bonus Payments  Primary care physicians (internists, pediatricians, geriatricians and family practice physicians) as well as other primary care practitioners (nurse practitioners, clinical nurse specialists and physician assistants) for whom primary care services account for at least 60% of Medicare allowed charges over a specified period of time will receive 10% bonus payments under Medicare for five years beginning in 2011.  (Query: how many pediatricians will be able to benefit from this incentive?)  Likewise, general surgeons practicing in health professional shortage areas will receive 10% bonus payments.  (Section 5501 of PPACA)

Extension of "Reasonable Cost" Payments for Lab Tests Furnished in Rural Hospitals
Section 3122 of PPACA extends reasonable cost payment for clinical diagnostic lab services for rural hospitals with fewer than fifty (50) beds until July 1, 2011.

Insurance Provisions:

Premium Rebates Tied to Medical Loss Ratios  Beginning in 2011, private insurers must, in addition to reporting their "medical loss ratios" (percentage of health insurance premiums spent on health care), issue rebates to consumers for the amount of premiums spent on clinical services and health care quality that is less than 85% (or higher pursuant to State regulation) for plans in the large group market, and less than 80% (or higher pursuant to State regulation) for plans in the individual and small group markets.  (Section 1001 of PPACA)

CLASS Insurance Program  Title VIII, Sections 8001 and 8002 of PPACA provide for a new national voluntary insurance program for purchasing community living assistance services and supports or "CLASS."  Cash benefits paid into a "Life Independence Account" of an eligible beneficiary with functional limitations may be used to purchase nonmedical services and supports that the beneficiary needs to maintain independence at home or in another residential setting in the community, including, but not limited to, home modifications, assistive technology, accessible transportation, homemaker services, respite care, personal assistance services, home care aides, and nursing support.  Under the CLASS program financed by payroll deductions, all working adults may be automatically enrolled unless they opt out of the benefit program.  After a five-year vesting period, eligible beneficiaries may receive approximately $50/day.  The effective date is January 1, 2011.

Medicare Changes:

Medicare Advantage Restructuring  2011 marks the beginning of phased-in restructuring of payments to Medicare Advantage plans to more closely approximate payments under the traditional Medicare fee-for-service rates.  In the past, the government has paid more to Medicare Advantage plans than under the Medicare fee-for-service program and PPACA aims to reign in excessive Medicare expenditures. 

Medicare Premiums  Section 3402 of PPACA provides for a freeze on the threshold for (higher) income-related Medicare Part B premiums at the 2010 level, for the years 2011 through 2019.  Under Section 3308, individuals whose annual incomes exceed $85,000 and couples whose annual income exceeds $170,000 will see their Medicare Part D premium subsidies reduced. 

Center for Medicare and Medicaid Innovation  Section 3021 of PPACA establishes within CMS a new "Center for Medicare and Medicaid Innovation" or "CMI" whose purpose it is "to test innovative payment and service delivery models to reduce program expenditures...while preserving or enhancing the quality of care furnished to individuals" within the Medicare, Medicaid and CHIP programs.  PPACA provides a number of examples of the potential "models" to be tested and sets forth factors to consider in choosing models for testing such as: (i) "whether the model utilizes technology, such as electronic health records and patient-based remote monitoring systems, to coordinate care over time and across settings"; and (ii) "whether the model relies on a team-based approach to interventions, such as comprehensive care assessments, care planning, and self-management coaching."  The Secretary of HHS is required to ensure that CMI is operational no later than January 1, 2011. 

Medicaid Changes:

Development of "Health Homes" under Medicaid  Section 2703 of PPACA provides that a state may amend its Medicaid plan to provide for medical assistance to eligible individuals with chronic health conditions who select a designated provider, team of health care professionals or health team to function as the individual's "health home" for the provision of home health services.  During the first two years that the State Medicaid Plan amendment is in effect, the federal medical assistance percentage or "FMAP" (the federal government's share of a State's expenditures for Medicaid) is 90%. Beginning January 1, 2011, the Secretary of HHS may award grants to States for purposes of developing a State plan amendment under PPACA.  Section 2703 provides a State plan amendment must:

• Require hospitals to establish procedures to refer eligible individuals with chronic conditions to designated providers;
• Include a methodology for tracking avoidable hospital readmissions and cost savings realized from improved chronic care coordination; and
• Include a proposal for use of health information technology in providing home health services.