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Health Law Developments for 2017
March 15, 2017
Jenifer M. Brown
Kris M. Dawley
Margaret R. Emmert
Sherry A. Fabina-Abney
David L. Nie
Myra C. Selby
Christopher S. Sears
Kevin C. Woodhouse
This presentation is intended for general information purposes only and does not and is not intended to constitute legal
advice. You should consult with legal counsel to determine how laws, decisions and other matters discussed herein
apply to specific circumstances.
Copyright© 2017
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Introduction
U.S. Immigration Law and Policy in 2017 (Jenifer Brown)
Year in Review (Kris Dawley)
Margaret Explains MACRA in 10 minutes (Margaret Emmert)
Changes to Provider-Based Rules (Margaret Emmert)
Areas Unlikely to Change in 2017 (Myra Selby)
New IRS Rules on Private Use of Tax-Exempt Financed Space (David Nie)
Protections for Peer Review Activities in Physician Groups, CINs and Other Healthcare Entities (Sherry Fabina-Abney)
Repeal and Replacement of the Affordable Care Act (Chris Sears and Kevin Woodhouse)
Conclusion
Agenda
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U.S. Immigration Law and Policy in 2017
Jenifer M. Brown
317 236 2242
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Executive Order on Immigration
Protecting the Nation from Foreign Terrorist Entry into
the United States (Signed 3/6/2017, revoking and
replacing prior suspended order)
90 day suspension of entries for Iran, Libya, Somalia,
Sudan, Syria and Yemen with exceptions and waivers
Global review of information needed from all countries
Suspension of visa interview waiver program
Current judicial challenges
Immigration benefits
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Protecting American Jobs and Workers (PENDING)
Employment based regulation review
H-1B visa allocation improvements
Reform OPT
Business visitors
E-verify expansion
Improve immigrant visa allocation
Executive Order on Immigration
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Suspension of Premium Processing for H-1B
Possible Changes to H-1B
H-4 EAD
OPT STEM
I-9 Employment Verification/ E-Verify
Subpoenas/ Warrants
3 day notice
USCIS Site Visits
DOL Audits
Other (Possible) Changes
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Confirm and maintain passport validity
Confirm current I-94 admission record with CBP
https://i94.cbp.dhs.gov/I94/#/home
International travel
Domestic travel
Properly maintain immigration status – primary
purpose, employment, protect documents
Check news sources/ watch for rumors
Contact members of Congress
What Can You Do?
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American Immigration Lawyers Association
American Immigration Council
National Immigration Law Center
Immigrant Welcome Center, Indianapolis
Resources
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The Immigrant Doctors Project
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Year in Review
Kris M. Dawley
614 462 2290
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Yate’s Memo (Sept. 9, 2015)
A company must turn over all non-privileged relevant
information about the individuals involved in the
misconduct in order to receive any consideration for
cooperation credit.
Individual Accountability Implementation
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Examples of Individual Accountability
NAHC Chairman of the Board ($1M) and Sr. VP of
Reimbursement Analysis ($500,000) (Sept. 2016)
Former Tuomey CEO - $1M (Sept. 2016)
Former senior executive of Tenet indicted (Feb. 2017)
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Individual Accountability Implementation (cont’d)
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DOJ’s Individual Accountability Policy
www.justice.gov/dag/individual-accountability
FAQs
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Individual Accountability Implementation (cont’d)
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Lexington Medical Center (Jul. 2016)
Acquisition of physician practices/employment of 28
physicians
Allegations of violations of Stark Law and the False
Claims Act
Agreed to pay $17 million
Whistleblower was formerly employed neurologist
(one of the 28)
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Fair Market Value
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Statistical Sampling
Fourth Circuit declined to decide whether statistical
sampling can be used to prove False Claims Act
liability. US ex rel. Michaels v. Agape Senior
Community (Feb. 2017)
Split in district courts.
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False Claims Cases
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Dramatic increase in HIPAA breach enforcement activity
U of Mississippi Medical Center (Jul. 2016)
$2.75 million
Investigation started with stolen laptop (relatively small breach)
Presence Health (Jan. 2017)
$475,000
First HIPAA enforcement action for lack of timely
breach notification
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HIPAA Breach Enforcement
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Memorial Healthcare System (Feb. 2017)
$5.5 million
Failure to implement audit controls
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HIPAA Breach Enforcement Action (cont’d)
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OCR announced plans to expand investigations of
reported HIPAA breaches < 500 individuals (Aug.
2016)
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HIPAA Breach Investigations
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Hollywood Presbyterian Medical Center (Feb. 2016)
$17,000
OCR Fact Sheet on Ransomware (Jul. 2016)
Is the presence of ransomware a breach under HIPAA?
Emory Healthcare’s Orthopaedic & Spine Center and Brain Health Center (Jan. 2017)
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HIPAA – Ransomware
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“Mistress of Mayhem” Tweets
Trauma Nurse at Chicago hospital
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Employee’s Use of Social Media
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60-Day Overpayment Rule (Feb. 2016)
Nondiscrimination – Section 1557 of the ACA (May
2016)
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Miscellaneous Regulations
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Margaret Explains MACRA in 10 Minutes
Margaret R. Emmert
317 236 2169
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Medicare Access and CHIP Reauthorization Act of
2015. Final Rule published 11/4/16.
Repealed the Sustainable Growth Rate formula for
Part B physician compensation
Establishes the Quality Payment Program (QPP)
Furthers CMS‘s goals of tying payments to quality,
cost and outcomes
MACRA Basics
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Rate increases are standardized at 0.5% through
2019
Fee Schedule rates will remain constant from 2020
through 2025 (basis for +/- MIPS adjustments)
In 2026, rate increases will be dependent on the
designated track
Immediate Benefits
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Two pathways:
The QPP
Merit Based Incentive Payment System
(MIPS)
Advanced Alternative Payment Model
(AAPM)
Modified fee for service payment (+/- performance
adjustments)
Payment under AAPM (Includes downside risk)
Scored on 4 Performance Categories Eligible APM-specific rewards plus automatic 5% bonus
Budget Neutral Bigger annual updates
Potential for Exceptional Performance Bonus
Annual Updates
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QPP Financial Forecast:
The QPP
2017 2018 2019 2020 2021 2022 2023 2024 2025
Fee Schedule +0.5% +0.5% +0.5% No Change No Change No Change No Change No Change No Change
MIPS Max Adjustment
(+/-)
4% 5% 7% 9% 9% 9% 9%
AAPM +5%
Bonus
+5%
Bonus
+5% Bonus +5% Bonus +5% Bonus +5% Bonus +5% Bonus
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Combines several legacy programs
Physician Quality Reporting System
Physician Value Based Modifier
EHR meaningful use
MIPS
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MIPS will measure and incentivize performance
across 4 key categories
Quality
Cost/Resource Use (replaces cost portion of Value
Based Modifier)
Clinical Practice Improvement Activities
Advancing Care Information (interoperability and
information exchange)
The relative weight of these categories will
change over time
MIPS - Performance Categories
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In addition, CMS will factor in:
Exceptional performance factors
Availability and applicability of measures for different
types of providers
Special circumstances of small practices, rural
practices and non-patient-facing providers
Performance data will be publicly reported on the
Physician Compare website with a 30-day review
period
MIPS - Composite Score
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CMS will use these measurements to develop your
composite score
CMS will compare your score to their performance
threshold
MIPS - Composite Score
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Those clinicians above the performance threshold
receive a positive payment adjustment
$500 million available for distribution among
exceptional performers each year 2019-2024
Those below the performance threshold will see a
negative payment adjustment
Those in the lowest 25% will receive the maximum
reduction
MIPS - Adjustments
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Who are eligible clinicians under MIPS?
Physicians (includes podiatrists, doctors of dental medicine
or surgery, doctors of optometry)
Nurse Practitioners
Physician Assistants
Certified Registered Nurse Anesthetists
Clinical Nurse Specialists
Groups of such clinicians who bill under Part B (2 or more
eligible clinicians who have assigned billing rights to a TIN)
This may broaden in subsequent years as CMS determines
appropriate
MIPS - Eligible Clinicians
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Who is excluded from the MIPS?
Medicare enrollees enrolling for the first time during a
performance period are exempt until the following
performance period
Providers who see less than 100 Medicare Part B
patients per year or Part B allowed charges are
$30,000 or less
Providers who see 20% of their patients through an
AAPM or receive 25% of Medicare payments through
participation in an AAPM
MIPS - Eligible Clinicians
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MIPS Reporting
First performance period is 2017 (performance data due by March 31, 2018)
Options for 2017 (these options are only available for the 2019 payment year):
Don't report any data and receive a - 4% payment adjustment in 2019
Report minimal data -- 1 quality measure, 1 activity in the improvement activities category or the required advancing care coordination measures (90 day data not required) and receive no bonus, but no penalty either in 2019
MIPS - Reporting for 2017
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Report on data for a full, continuous 90 day period for more than 1 quality measure, improvement activity or required measure in the advancing care information category to avoid the -4% penalty and possibly receive a positive MIPS payment adjustment (depending on score)
Report all of the required measures for a minimum of a continuous 90-day period to avoid penalty and be eligible for a moderate positive adjustment (depending on score)
If reporting continuous 90 day data, can start as late as October 2, 2017
MIPS - Reporting for 2017
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MIPS Considerations
Infrastructure costs related to collecting and reporting
data
Readiness assessment –infrastructure and culture
Organizational characteristics
Will other payors follow Medicare in this model?
MIPS - Are You Ready?
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AAPMs are a subset of advanced payment models (APM)—APMs provide incentives to clinicians to provide high-quality and cost-efficient care (i.e., ACOs, pay for performance models, patient centered medical homes)
AAPMs bear more than a nominal amount of risk for monetary losses or is a medical home model expanded by CMS
AAPM criteria include:
Certified EHR technology used for at least 50% of eligible participants
If provider meets participation and performance targets, an incentive is awarded
Risk of reimbursement denial, reduction or payment recoupment if provider underperforms
No administrative or judicial review possible
AAPMs
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Incentives for participation in an AAPM:
5% lump sum bonus potential each year (minimum thresholds for number of patients seen or payment amounts received through the AAPM during the applicable performance year will apply—and will increase through 2022)
Avoid MIPS fluctuations
Avoid other payment adjustments
2017 AAPMs:
Comprehensive ESRD Care
Comprehensive Primary Care Plus
Next Generation ACO Model
Shared Savings Program –tracks 2 and 3
Oncology Care Model
AAPMs (Cont’d)
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Margaret R. Emmert
317 236 2169
Changes to Provider-Based
Rules
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Historically, Medicare payment for services was
higher when furnished in an outpatient hospital
setting than in a freestanding setting (i.e., physician
office or freestanding surgery center)
Hospitals and providers incentivized to open off-
campus hospital departments and provider based
entities in order to receive the higher reimbursement
rates paid under the outpatient prospective payment
system (OPPS)
History of Provider Based Entities
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Interim final regulations implementing Section 603 of
the Bipartisan Budget Act of 2015, which provides for
"site neutrality" with regard to payments for outpatient
services
Certain items and services furnished by new off-
campus PBDs will not be considered covered
outpatient department services for purposes of OPPS
payment and will instead be paid “under the
applicable payment system” beginning January 1,
2017
Interim Final Regulations
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The "applicable payment system", as anticipated, is
the Medicare Physician Fee Schedule
Those off-campus HODs or PBDs NOT billing as
such prior to November 2, 2015 (the implementation
date of the BBA of 2015), and not meeting an
exception will be paid under the MPFS
Interim Final Regulations
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Items and services are still payable under the OPPS
if provided
By an off-campus provider based department that was
billing for covered services and items prior to
November 2, 2015
In a provider based department that is on the campus
(i.e., within 250 yards) of the hospital or a remote
location of the hospital, or
By a dedicated emergency department (including
nonemergency services)
Exceptions
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CMS had proposed that it would not pay OPPS rates
for items and services provided at existing off-
campus provider based entities that had not been
provided at that location prior to November 2, 2015
(i.e., no expansion of service lines)
Did not finalize its proposed rule. Instead, CMS will
monitor the addition of services and items at PBDs
and consider potential limitations on service line
expansions
Expansion of Service Line
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Except under "extraordinary circumstances outside of
the hospital's control", PBD must provide items and
services at the same physical address
Grandfathered status remains if a CHOW occurs and
the new owner accepts the existing Medicare
provider number of the prior owner
Will lose status if individual PBDs are purchased by
another hospital
Changes at Existing PBDs
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Combining two hospitals under one Medicare
provider agreement will most likely result in loss of
status for any off-campus PBDs not enrolled and
billing as a PBD of the resulting combined hospital by
Nov. 2, 2015 (CMS suggests in commentary)
Changes at Existing PBDs
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If a PBD was in "mid-build" as of Nov. 2, 2015, it may
achieve provider based status if
the hospital files a provider-based attestation
updates its 855A to include the new off-campus PBD
as a practice location and
sends CMS a written certification by the CEO/COO
that the hospital had a binding written contract with an
outside, unrelated party for the construction of the new
PBD before November 2, 2015
Mid-Build
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Areas Unlikely to Change in 2017
Myra C. Selby
317 236 5903
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FTC and DOJ enforcement policies and priorities
Medicare Fraud Strike Force
Law Enforcement’s Use of Data Analytics
What are the areas not likely to see change in 2017?
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FTC and DOJ Enforcement Policies and Priorities
FTC and DOJ will continue to enforce antitrust laws
around healthcare merger and joint ventures
Mergers: hospital + hospital
health insurance + health insurance
provider + health insurance
Q: Does the proposed merger lessen competition?
What are the areas not likely to see change in 2017?
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Aetna and Humana merger – DOJ challenge focused on the merger’s
impact on the Medicare Advantage product market. D.C. District
Court enjoined the merger on the grounds that it would lessen
competition and it believed that the divestiture of some MA assets
was insufficient to alleviate those concerns and enjoined the merger.
After Aetna announced it would withdraw from the marketplace in 11
states and in 17 complaint counties, the court determined that such
withdrawal was a litigation tactic designed to evade judicial scrutiny.
Cigna and Anthem merger – proposed merger to combine two of the
largest health insurance companies in the country, $54 billion deal.
D.C. District Court enjoined the merger finding that it would decrease
competition and lessen choices in the health care market.
What are the areas not likely to see change in 2017? (Cont’d)
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Joint Ventures:
between providers;
physician networks;
health plan and providers
Q: Is the proposed joint venture a novel solution or
collusion in disguise?
Healthcare mergers and joint ventures are unique:
rapidly changing industry
role of Medicare and Medicaid in defining the market
What are the areas not likely to see change in 2017? (Cont’d)
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Medicare Fraud Strike Force
The Strike Force teams combine the efforts of the
Office of Inspector General (OIG), the Department of
Justice (DOJ), Offices of United States Attorneys
(AUSAs) and the Federal Bureau of Investigation (FBI)
and local law enforcement. The teams use data
analytics and intelligence to investigate possible fraud
in order to bring prosecutions.
Strike Force take downs for 2016: more than 1,500
criminal actions resulting in the return to government
of in excess of $1.98 billion.
What are the areas not likely to see change in 2017? (Cont’d)
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Strike Force targets for 2017 include:
Target industries: compounding pharmacies, certain
genetic testing kits companies
Warning signs for Strike inquiry: rapid growth, no fear
of health regulations, no experience with health
regulations, excessive control by venture capital,
vulnerable/sympathetic payer
What are the areas not likely to see change in 2017? (Cont’d)
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Government Agency/Law Enforcement Use of Data Analytics
Hospital Payment Monitoring Programs through tools like the PEPPER report provide CMS with data on a provider specific basis
PEPPER – Medicare claims by provider type, payer data, manufacturer claims data, practice pattern data, provider financial data
PEPPER report can support compliance efforts – identify risk areas, outliers, benchmarking
However, the government uses these same reports to analyze data by focusing in on key data elements by provider type and this analysis can form the basis of the DOJ’s case in various types of Medicare improper payment and False Claim Act cases
What are the areas not likely to see change in 2017? (Cont’d)
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NEW IRS RULES ON PRIVATE USE
OF TAX-EXEMPT FINANCED SPACE
David L. Nie
317 236 2377
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Background
Rev. Proc. 1997-13 ("97-13")
Notice 2014-67
Rev. Proc. 2016-44
Rev. Proc. 2017-13
New IRS Rules on Private Use of Tax-Exempt Financed Space
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Rev. Proc. 2017-13 - applies to any contract entered into on or after January 17, 2017 and to existing contracts materially modified or extended on or after August 18, 2017
reasonable compensation and no sharing of net profits or net losses
control of property
term limit - lesser of 30 years or 80% of weighted average life property
no inconsistent tax position
no related persons
bearing risk of property loss
New IRS Rules on Private Use of Tax-Exempt Financed Space (cont’d)
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Call your Bond Counsel if:
Entering into a new management contract involving
tax-exempt financed space
Amending an existing management contract in a
manner other than a unilateral renewal option of the
qualified user
Reporting private use on Schedule K to the Form 990
New IRS Rules on Private Use of Tax-Exempt Financed Space (cont’d)
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Protections for Peer Review Activities in Physician
Groups, CINs, and Other Healthcare Entities
Sherry A. Fabina-Abney
317 236 2446
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Indiana Statute Purpose
Peer Review Statute
Improve quality
patient care
Foster candid
discussions
Encourage participation
Policing without
retaliatory suit fears
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Confidential
Strong Evidentiary Privilege
Not discoverable
Not admissible
Must be invoked
Waived only in writing
Limited Waivers
Limited Ability to Share
Immunity for Actions/Information Provided
Ability to Use for Internal Purposes
Indiana Statute Protections
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Evaluation of
Qualifications of a professional health care professional;
Patient care rendered by a professional health care; or
The merits of a complaint against a professional health care provider . . . based on the competence or professional conduct of an individual health care provider, whose competency or conduct affects or could affect adversely the health or welfare of a patient or patients
Peer Review Activities
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Communications to,
Records of, determinations
Incident or occurrence reports
Minutes related to peer review subject matter
Committee work product
Interviews, timelines
Quality improvement activities
Adverse event report to State
Root cause analysis
Internal and external case reviews
Examples of Information That May Be Protected
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Medical records
Billing records
Bylaws, policies, and procedures
Human resource files
Information otherwise discoverable or admissible
from original sources
Matters within a person’s knowledge
Final determination of the governing body
Information Not Protected
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Hospital
State, regional or local organization of PHCPs or
nonprofit foundation
Health care facility
Professional health care organization
Nonprofit heath care organization
Preferred provider organization
Health maintenance organization
Medical school in Indiana
Indiana Statute Covered Entities
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Must be performed within the peer review structure
“Peer Review Committee”
50% “professional health care providers’’ or the governing
board
Organization
Authority
State privilege generally does not apply in federal case
Protects certain health care entities
Shared among delineated health care entities and
agencies
Limits of State Statute
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Patient Safety and Quality Improvement Act
PSQIA
Improve patient safety
Reduce medical errors
“Culture of Safety”
Promote accountability
and transparency
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Federal Statute - 42 USC 299B-21
Enacted in 2005
42 CFR Part 3 Implementing Regulations (2008)
Evidentiary Privilege for “Patient Safety Work
Product” (PSWP)
Patient Safety Evaluation System (PSES)
Patient Safety Organization (PSO)
Patient Safety and Quality Improvement Act
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Information which could improve patient safety,
health care quality, or health care outcomes and
assembled or developed by a “provider” for reporting
to and reported to a Patient Safety Organization
(PSO);
Deliberations, analysis of, or identifies the fact of
reporting to a Patient Safety Evaluation System
(PSES); or
PSO developed information for the conduct of patient
safety activities
Patient Safety Work Product
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Not prepared for reporting to PSO
Not reported to a PSO
Not assembled or collected within the provider’s PSES
Medical records
Billing records
Original source information
Prepared for external obligations, i.e., mandatory
reporting by federal and state
PSWP cannot fulfill external purposes
Documents used to prepare an external report
Not Patient Safety Work Product (PSWP)
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PSWP assembled or developed by “provider”
Individual or entity licensed under state law to
provide health care services or which the state
otherwise permits to provide such services
Agencies and organizations that deliver health care
Non-licensed corporate entity that owns, controls,
manages or has veto authority over a licensed
provider is considered a provider
PSO
PSQIA Covered Entities
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What activities do you seek to protect?
Are you seeking state or federal protections?
Can the protected information be shared without waiving the privilege?
What licensed professionals and licensed entities are eligible for protection under state/federal statutes?
What committee structure is required?
Are your committees duly authorized or organized?
Do your bylaws, policies, rules and regulations support the structure needed to support privilege?
What are your mandatory reporting obligations?
Does case law impact analysis?
Analysis
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Repeal and Replacement of the Affordable Care Act
Christopher S. Sears
317 236 5891
Kevin C. Woodhouse
317 236 2154
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Employer mandate
Individual mandate
Market reforms
ACA reporting
Additional taxes
Medicaid expansion
General Outline of ACA Provisions Affecting
Employers and Health Care Providers
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U.S. House of Representatives
241 Republicans
194 Democrats
Legislation moves with simple majority
U.S. Senate
52 Republicans
46 Democrats
2 Independent
Legislation can be stopped if 60 votes do not exist
Exception is budget reconciliation matters
Election Results
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President Trump cannot:
Immediately rescind existing regulations – requires notice and comment under Administrative Procedures Act
President Trump can:
Propose new regulations (complying with his “2 for 1” rule?)
Impose moratorium on new regulations
Freeze progress on currently proposed regulations
Review existing regulations
Rescind executive orders
Exercise discretion in enforcing existing regulations
ACA interpretations in FAQs
Initial Review of Presidential Power
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Repeal the Affordable Care Act
How far? Indicated willingness to keep ban on pre-existing
conditions and coverage of kids to age 26
Who loses coverage?
Since inception, uninsured rate has fallen to 8.6%
20 million Americans have gained coverage
$32.8 billion in tax credits for coverage for 9.4 million people
Expansion:
40%: Premium tax credits
30%: Medicaid expansion
30%: Woodwork effect
President Trump’s Position on Health Coverage
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Work with states to create high risk pools
Increase competition by allowing sale of insurance across state lines
Allow individuals to fully deduct health insurance premiums (like employees can do now) in place of premium tax credits
Expand health savings accounts
Require greater price transparency from health care providers
Block-grant Medicaid to the states to cover low-income uninsured
Indiana HIP 2.0 as a model? Pence and Verma built it.
Allow prescription drug importation and Medicare to negotiate drug process
President Trump’s Position on Health Coverage
(cont’d)
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Policy is to repeal ACA
Until then:
Executive branch to ensure that ACA is efficiently
implemented
To take actions to minimize unwarranted economic
and regulatory burdens of the ACA
Prepare to afford States more flexibility and control to
create a more free and open healthcare market
President Trump’s January 20 Executive Order
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“To the maximum extent permitted by law,” Secretary of
HHS and other department heads to:
Exercise all discretion and authority to waive, defer, grant
exemptions from, or delay implementation of ACA that
would impose fiscal burdens
Provide greater flexibility to States and cooperate with them
in implementing healthcare programs
Encourage free and open market in interstate commerce
for the offering of healthcare services and insurance to
achieve and preserve maximum options for consumers
Acknowledges that Administrative Procedures Act will
apply to regulations
President Trump’s January 20 Executive Order
(cont’d)
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Expand “hardship” exceptions to individual mandate
Be more receptive to Medicaid waivers
Stop defending lawsuit challenging cost-sharing subsidies
Stop enforcing the individual mandate
Stop enforcing the employer mandate
Delay or stop enforcing ACA reporting requirements
Require up-front verification of special enrollment periods resulting in savings on Premium Tax Credit
Commence revocation or relaxing of regulations:
Essential health benefits requirements
Rating rules on insurance
Stop enforcing ADA and GINA wellness rules and/or commence regulatory modifications
Actions the President / Executive Agencies Might
Take
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Repeals ACA individual and employer mandates as of 2016
Repeals standards for health plan actuarial values (e.g., gold, silver, bronze levels) (2020)
ACA rating rules continue except age ratio increases from 3:1 to 5:1
Essential health benefit requirements and other benefit “mandated benefits” unchanged (for now) Retains ACA’s Exchanges, annual open enrollment and special enrollment periods, ban on pre-existing condition exclusions, and community rating requirements
American Health Care Act (3/6/17)
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Repeals premium tax credits and cost-sharing
subsidies (2020)
Cost-sharing subsidies not replaced in any way
Premium tax credits will modified (see next slide)
Modifies ACA premium tax credits for 2018 and 2019
Increases for younger adults above 150% of FPL and
reduces for older adults above %150 FPL
Credits can apply to off-Exchange and catastrophic
policies
Cannot be used for plans that cover abortion
American Health Care Act (3/6/17) (cont’d)
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Creates new tax credit structure in 2020 based on income and adjusted for age that can be used for any individual health insurance policies and unsubsidized COBRA (not excepted benefits)
U.S. citizens and legal immigrants who are not eligible for employer plan, Medicare, Medicaid, TRICARE, or CHIP
Credits starts phasing out at $75,000 and is eliminated at $95,000 for single individuals up to age 29 and $115,000 for individual age 60 and older.
Annual monthly credits are (indexed annually to CPI plus 1%):
2,000 per individual up to age 29
$2,500 per individual age 30-39
$3,000 per individual age 40-49
$3,500 per individual age 50-59
$4,000 per individual age 60 and older
Families can claim credits for up to 5 oldest members, up to limit of $14,000 per year.
Excess credit above cost of insurance contributed to HSA
American Health Care Act (3/6/17) (cont’d)
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Imposes a 30% penalty on individuals who do not maintain continuous coverage in the prior 12 months
Gap of no more than 63 days (old HIPAA standard) is allowed
Generally effective in 2019 (effective for 2018 special enrollments)
Establishes State Innovation Grants and Stability Program
$100 billion over 9 years
Can be used for high-risk individuals, promote access to preventive service, provide cost-sharing subsidies, and other purposes
States that do not apply default to have funds allocated to a reinsurance program
Repeals funding for Prevention and Public Health Fund at end of 2018 fiscal year
American Health Care Act (3/6/17) (cont’d)
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Encourages use of health savings accounts
Increases annual contribution limit to equal the
maximum out-of-pocket allowed under a high
deductible health plan ($6,550/S and $13,100/F in
2017)
Allows catch-up contributions to a spouse’s HSA
Allows OTC drugs to be reimbursed under HSA
Reduces penalty for non-qualified expenses back to
10%
Removes annual limit on FSAs
American Health Care Act (3/6/17) (cont’d)
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Repeals and Delays ACA Taxes
Repeals Medicare health insurance payroll tax
increase (imposed on those making $250,000 or
more)
Repeals annual fee paid by branded prescription drug
manufacturers
Delays “Cadillac” tax through 2024
Repeals the 3.8% tax on unearned income for high-
income taxpayers
Repeals tax on tanning beds, health insurers, medical
devices, pharmaceuticals
American Health Care Act (3/6/17) (cont’d)
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Removes annual limit on deduction for salaries in
excess of $1 million paid to employees of publically
traded corporations
Removes annual limit on deduction for salaries in
excess of $500,000 for health insurers
Prohibits federal Medicaid funding for Planned
Parenthood clinics for one year, effective upon date
of enactment
American Health Care Act (3/6/17) (cont’d)
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Eliminates enhanced federal matching dollars for Medicaid expansion as of 1/1/20 except for those enrolled as of 12/31/19 who do not have a break in eligibility of more than one month
Converts federal Medicaid funding to a per capita allotment and limit growth beginning in 2020 for five groups: elderly, blind and disabled, children, expansion adults, and other adults
Repeals Medicaid DSH cuts
Provides safety-net funding for non-expansion states
Provides for a number of other eligibility rollbacks
American Health Care Act (3/6/17) (cont’d)
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American Health Care Act: Provider Reaction
Uniformly Negative and Vocal
AHA, AMA, AHCA, Leading Age, AOA, etc.
Before CBO Analysis
Several Concerns
Will credits be sufficient to allow people to purchase coverage
Roll back of Medicaid expansion
Change Medicaid funding to a per capita system
Millions will lose coverage
CBO estimate only bolsters these arguments
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More uninsured
14 million more uninsured than under ACA by 2018
24 million more uninsured under ACA by 2026
Repealing individual mandate penalties
Reductions in Medicaid enrollment
CBO estimates that more younger people and fewer
older people will be covered
Employers will reduce coverage
No more employer mandate
Tax credits available to a broader range of incomes
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Congressional Budget Office Cost Estimate
(3/13/17)
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Reduction of federal deficit by $337 billion over 10 years
Savings generally come from:
Reducing coverage and costs in Medicaid spending
14 million fewer covered by 2026
Lower and fewer tax credits to individuals
Shift in mix of taxable and nontaxable income as many workers lose health coverage at work (where premiums are not taxable) and now will take home those amounts in taxable income
Costs generally come from:
Lost revenue due to numerous tax cuts from tax cuts for corporations and high income individuals
Lost revenue from individual and employer mandate penalties
Higher DSH payments
Patient and State Stability Fund grant program
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Congressional Budget Office Cost Estimate
(3/13/17)
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Overall reduction in premiums over time for those that have coverage
Higher until 2020, then lower thereafter
Lower because
Patient and State Stability Fund
Elimination of “metal” levels of policies
Younger mix of enrollees
Premiums will be lower for younger people and substantially higher for older people
However, likely that cost-sharing (co-pays, deductibles, etc.) will increase because insurers will start offering more plans of lesser value (due to elimination of “metal” level requirements)
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Congressional Budget Office Cost Estimate
(3/13/17) (cont’d)
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Sherry A. Fabina-Abney
317 236 2443
Jenifer M. Brown
317 236 2242
Kris M. Dawley
614 462 2290
Myra C. Selby
317 236 5903
David L. Nie
317 236 2377
Christopher S. Sears
317 236 5891
Margaret R. Emmert
317 236 2169
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Conclusion
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