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Health reform 101

The past few years have presented us with a complicated web of health reform policy. Read on for a brief explanation of the major events that have ushered us into a new era in health care. For more audience-specific information, check out the summaries we have assembled for consumers, providers and administrators.

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Recent Activity

Bipartisan Budget Act of 2015

On November 2, 2015, President Obama signed into law the Bipartisan Budget Act of 2015, legislation that raised the nation’s debt limit and set spending targets for the federal budget for the next two fiscal years. Section 603 of the BBA partially offsets new spending by implementing "site-neutral" Medicare payments for new provider-based hospital outpatient departments (HOPDs). A “new” off-campus HOPD is defined as an off-campus department that started billing for Medicare outpatient services under the Outpatient Prospective Payment System (OPPS) on or after November 2, 2015, the date of enactment of the law.

Under Section 603, effective January 1, 2017, when an item or service is furnished at an off-campus outpatient department of a provider, unless that location was billing as a department of a hospital prior to the date of enactment, Medicare will pay for that service under either the Medicare Physician Fee Schedule (PFS) or Ambulatory Surgery Center (ASC) fee schedule, as applicable to the service provided. The limitation will not apply to payments for items and services until January 1, 2017. Additionally, any facility billing as a hospital outpatient department service prior to the date of enactment would be exempt from this limitation, and would continue to bill and be paid by Medicare under the OPPS.

Read the Section 603 of the Bipartisan Budget Act of 2015 on the U.S. Congress website.

Significant Legislation

Medicare Access and CHIP Reauthorization Act of 2015

On April 16, 2015, President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The law permanently repeals the flawed Sustainable Growth Rate (SGR) formula for determining Medicare payments for clinicians’ services, establishes a new framework for rewarding clinicians for value over volume, and streamlines other existing quality reporting programs into one new system.

MACRA sunsets the payment adjustments associated with the Physician Quality Reporting System, the Value-based Payment Modifier, and the Medicare Electronic Health Record (EHR) incentive program, and combines those efforts into a single consolidated program known as the Merit-Based Incentive Payment System (MIPS). MACRA also provides incentives for participation in certain Alternative Payment Models (APMs). Under the new law, qualifying APM participants will not be subject to MIPS adjustments and will receive a lump sum incentive payment equal to five percent of the prior year’s estimated aggregate expenditures under the fee schedule.

Read the full text of the Medicare Access and CHIP Reauthorization Act on the U.S. Congress website.

The Affordable Care Act (2010)

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act of 2010 (PPACCA). This legislation, along with the Health Care and Education Reconciliation Act of 2010 (HCERA) are collectively known as the Affordable Care Act (ACA). Aimed primarily at decreasing the number of uninsured Americans and reducing the overall costs of health care, the ACA represents the most significant government expansion and regulatory overhaul of the U.S. health care system since the passage of Medicare and Medicaid in 1965.

» Read the full text of the Affordable Care Act and the Reconciliation Act on the U.S. House of Representatives’ website.
» Read the certified full-text version of the Affordable Care Act on the U.S. Department of Health and Human Services’ website.
» Read the certified full-text version of the Reconciliation Act on the U.S. Department of Health and Human Services’ website.

Significant Court Cases

King v. Burwell (2015)

On March 4, 2015, the Supreme Court heard oral arguments regarding the interpretation of Section 36B of the ACA. At issue were four words: established by the State. Section 36B provides that federal tax credits “shall be allowed” for any “applicable taxpayer,” but only if the taxpayer has enrolled in an insurance plan through “an Exchange established by the State under [42 U.S.C. §18031].” A July 2014 IRS regulation interpreted that language as making tax credits available on “an Exchange, regardless of whether the Exchange is established and operated by a State… or by HHS.” The petitioners (four residents of Virginia) challenged the IRS interpretation, arguing that the words “established by the State” made federal tax credits available only to eligible individuals whose plans were purchased in state-run exchanges (not through An estimated 6.4 million people stood to lose health insurance subsidies if the Court ruled in favor of the petitioners.

On June 25, 2015, the Supreme Court upheld ACA Section 36B’s tax credit, reasoning that “a fair reading of legislation demands a fair understanding of the legislative plan.” In the majority opinion by Chief Justice John Roberts, the Court explained, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them… Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.”

Read the complete King v. Burwell decision on the U.S. Supreme Court’s website.

Burwell v. Hobby Lobby Stores, Inc. (2014)

On March 25, 2014, the Supreme Court heard oral arguments on regulations promulgated by HHS under Section 300gg of the ACA, which require employers to include coverage for the 20 FDA-approved contraceptive methods, including four that may prevent an already fertilized egg from developing any further. Religious employers, such as churches, are exempt from this contraceptive mandate, as are certain religious nonprofit organizations. At issue in this case is whether closely held (i.e., more than 50% of the stock value is owned by 5 or fewer individuals) for-profit corporations with “sincerely held” religious beliefs that conflict with the contraceptive requirement should be exempt as well.

On June 30, 2014, the Supreme Court held that the HHS regulations “substantially burden” the exercise of religion by the owners of closely held corporations with sincerely held religious beliefs, and that these entities do not have to provide the four contraceptive methods in question. In August 2014, HHS proposed (and later finalized) regulations that require insurers (not applicable employers) to pay for contraceptive services for women who otherwise receive coverage through their employer.

Read the complete Burwell v. Hobby Lobby decision on the U.S. Supreme Court’s website.

National Federation of Independent Business v. Sebelius (2012)

On June 28, 2012, the Supreme Court upheld the individual mandate component of the Affordable Care Act as a valid exercise of Congress’s power to “lay and collect taxes.” The court did, however, limit the expansion of Medicaid initially proposed under the PPACA. The text of the law expands Medicaid eligibility to include all individuals and families with incomes up to 133 percent of the poverty level, effectively 138 percent, and simplifies the CHIP enrollment process. The Supreme Court decision allowed states to opt out of this expansion.

Read the complete NFIB v. Sebelius decision on the U.S. Supreme Court’s website.

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