MAJOR PROVISIONS OF THE AFFORDABLE CARE ACT provides a summary of the 46 major action items of the ACA (Centers for Medicare & Medicaid Services, 2013c). The key features of the law include: rights and protection of healthcare consumers, insurance choice and insurance costs, benefits for those 65 and older, and employer requirements of providing healthcare benefits. The law itself is divided into 10 titles or areas of healthcare reform. This chapter will provide a summary of each title and an update on the implementation of these areas of healthcare reform.
Title 1–Affordability and Accessibility of Healthcare
The following are some of the major reforms that were implemented in 2010:
Create small business tax credits for employers who provide health insurance.
Eliminate lifetime and unreasonable annual caps or limits on healthcare reimbursement with annual limitations prohibited by 2014.
Provide assistance for the uninsured with pre-existing conditions and prohibit denial of insurance coverage for pre-existing conditions for children.
Develop a temporary national high-risk pool for health insurance for individuals with pre-existing conditions who have no insurance.
Extend dependent coverage up to age 26.
Establish www.healthcare.gov for consumers to access information about healthcare insurance.
Create a reinsurance program for retirees who are not yet eligible for Medicare.
TABLE 2-1 Timeline for Affordable Care Act Regulations
|2010||Affordable Care Act Signed into Law|
|Small Business Health Insurance Tax Credits (deferred until 2015)|
|States to Increase Medicaid coverage|
|One-Time $250 rebate for Medicare Part D Donut Hole|
|Target Healthcare Fraud|
|Early Retiree Reinsurance Program (ERRP)|
|Insurance for Pre-Existing Conditions|
|Online Information for Healthcare Consumers at http://www.healthcare.gov|
|Extend Age for Young Adults Coverage to 26|
|Free Preventive Care|
|Prohibit Insurance from Dropping Coverage|
|Appeal of Insurance Coverage Denials|
|Eliminate Lifetime Limits on Insurance Coverage|
|Regulate Annual Limits on Insurance Coverage|
|Ban of Coverage Denial of Children with Pre existing Conditions|
|Accountability of Insurance for High Rate Hikes|
|Focus on Primary Health Workforce|
|Establish State Consumer Assistance Programs|
|Prevent Disease and Illness Initiatives|
|Strengthen Community Health Centers|
|Increased Payments for Rural Health|
|2011||Prescription Drug Discounts|
|Free Preventive Care for Seniors|
|Reduce Healthcare Premiums|
|Strengthen Medicare Advantage|
|Improve Quality and Efficiency of Health Care|
|Improve Senior Care Post Discharge from Hospital|
|Innovation to Reduce Costs|
|Increase Home and Community Health Services|
|2012||Encourage Integrated Healthcare Systems|
|2012||Decrease Health Disparities|
|Reduce Administrative Costs|
|Link Payment to Quality Care|
|2013||Increase Preventive Care Coverage|
|Increase Medicaid Payments to Primary MDs|
|Expanding Bundled Payments|
|Open Enrollment in Health Insurance Marketplace|
|2014||Establish Health Insurance Marketplace|
|Promote Individual Responsibility|
|Increase Access to Medicaid|
|Make Care More Affordable|
|Coverage for Participants in Clinical Trials|
|Eliminate Annual Limits of Insurance Coverage|
|Anti-Discrimination of Pre-Existing Conditions or Gender|
|Increase of Small Business Health Insurance Tax Credit|
|2015||Payment to Physicians Based on Quality Care|
Source: Data from Centers for Medicare & Medicaid Services. Timeline of the health care law. Retrieved from https://www.healthcare.gov/timeline-of-the-health-care-law/#part=1
The ACA establishes tax credits for small businesses to assist them with providing employee insurance benefits. This is a multi-phase program. The first phase provides a credit up to 35% of the employer’s contribution to the employee’s health insurance. Although there are up to 4 million small businesses eligible for these credits, according to a U.S. General Accountability Office (GAO) 2012 report, less than 200,000 small businesses have claimed the tax credit because it was not large enough to incentivize small businesses to offer health insurance. There are also complicated administrative procedures that limited claims. The government is reviewing the procedures to streamline the application process. Due to business input, this mandate has been deferred to 2015. (U.S. General Accountability Office, 2012).
In the past, health insurance companies would establish an annual or lifetime cap on reimbursement of consumers’ healthcare insurance claims. This practice would be eliminated. Unlike the past, health insurance companies would also be prohibited from dropping individuals and children with certain conditions or not providing insurance to those individuals with pre-existing conditions This Pre-Existing Condition Insurance Plan (PCIP) provides new healthcare coverage options to individuals who have a pre-existing condition and have had no insurance for the last 6 months. This serves as a bridge to 2014, when all discrimination against pre-existing conditions will be prohibited.
Prior to the ACA, dependent coverage stopped at age 25. The act requires insurance companies to cover young adults on their parents’ insurance until age 26, even if they are not living with their parents, are not declared dependents on their parents’ taxes, or are no longer students. However, this would not apply to individuals who have employer-based coverage (U.S. Department of Labor, 2010).
In July 2010, the federal government established a Web portal, www.healthcare.gov, to increase consumer awareness about their eligibility for specific healthcare insurance company information and about government programs. The Web portal will be developed in phases. Also, a government temporary reinsurance program for employers who provide coverage to retirees over age 55 who are not yet eligible for Medicare will reimburse the employer 80% of the retiree claims of $50,000–$90,000. The act created a $5 billion program to provide needed financial assistance for employment-based plans to supply this coverage. This program will be effective through January 2014, when the state-based Health Insurance Marketplaces will be in place and retirees not yet eligible for Medicare can buy their own insurance (U.S. General Accountability Office, 2012).
The following are selected major reforms that must be implemented by 2014:
Insurance companies will be prohibited from setting insurance rates based on health status, medical condition, genetic information, or other related factors.
Private health insurance coverage offered in the Marketplaces must offer the same essential health benefits (EHBs).
By October 1, 2013, states must establish the Health Insurance Marketplaces, which are marketplaces where consumers can obtain information and buy health insurance. Open enrollment for health insurance also begins on October 1 for health insurance that will become effective January 1, 2014. Most individuals who are uninsured must enroll in an insurance plan by January 1, 2014 that has minimum essential healthcare coverage or pay an annual fee.
In the past, there were issues with health insurance companies denying coverage based on health status or other conditions. Premiums now will be based on family type, geography, tobacco use, and age. In 2014–2016, only individuals and small group employers are eligible to participate in the Marketplaces. In 2017, states may permit large group employers to participate. States may also organize regional exchanges. On May 8, 2013, the Department of Labor (DOL) issued guidance for employers regarding the requirement to notify employees of coverage options available through the exchanges. (United Health Care, 2013). The ACA also established a Summary of Benefits and Coverage (SBC) which offers consumers the opportunity to easily compare health insurance plans.
There will also be Consumer Operated and Oriented Plans (CO-OPs), which are member-run health organizations in all 50 states and must be consumer focused with profits targeted to lowering premiums and improving benefits.
There is enrollment assistance for the Health Insurance Marketplaces. The Centers for Consumer Information and Insurance Oversight awarded nearly $70 million in cooperative agreements to 105 organizations to provide assistance to insurance marketplaces.
The Small Business Health Options Program (SHOP) is available to small businesses with up to 100 employers to purchase health coverage. These programs are required to maintain a call center for customer service. Employers who have 50 or more employers must automatically enroll new full-time employees in healthcare coverage. Employers would pay a fee of $3,000 if they did not offer affordable insurance. Employers will also receive tax credits depending on the size of the company. Based on input from business groups, this mandate has been delayed until 2015.
Health insurance plans in the Marketplaces must offer at a minimum the following essential health benefits:
Ambulatory patient services (outpatient care you get without being admitted to a hospital)
Hospitalization (such as surgery)
Maternity and newborn care (care before and after your baby is born)
Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
Preventive and wellness services and chronic disease management
Pediatric services (Centers for Medicare & Medicaid Services, 2013d)
Health Insurance Marketplaces, run by state or federal government, are central locations for healthcare consumers to purchase health insurance coverage. They provide standardized information on the different types of health insurance coverage to suit consumer needs. Consumers complete an application to determine what types of coverage are available to them, based on their need. Health insurance coverage is provided by private health insurance companies. Open enrollment for 2014 started on October 1, 2013.
If individuals do not apply for health insurance coverage by March 31, 2014, which is when open enrollment ends, they will be required to pay a fee and cannot obtain coverage until the next annual open enrollment. However, if there is a life qualifying event such as job change or geographic change, they could be eligible to enroll. The 2014 fee is 1% of the individual’s yearly income or $95 per person, whichever is higher. The fee for an uninsured child is $47.50. The maximum amount a family would pay is $285. The fee does increase every year. In 2016, it is 2.5% of income or $695, whichever is higher. Individuals who have very low income, participate in a religious sect that does not believe in health insurance, or are part of a federally recognized Indian tribe, will not be charged a fee (Centers for Medicare & Medicaid Services, 2013e).
The SBC was developed as a result of the ACA. This summary allows the consumer to compare the different types of benefits offered by health insurance companies. A consumer can compare price, benefits, and other features. This is required for all health insurance companies.
Recognizing that in some states only a small number of insurance companies offer coverage for individuals and small businesses, the Centers for Medicare and Medicaid Services has awarded nearly $2 billion in loans to help create 24 new CO-OPs in 24 states. The CO-OP sponsors—consumer-run groups, membership associations, and other nonprofit organizations—are now moving forward to offer health coverage in competition with established commercial and nonprofit insurance companies. As of June 2013, the CO-OPs were hiring staff and obtaining licensure. The success of these CO-OPs may be dependent on the state Marketplaces. (Health Affairs, 2013; Office of Inspector General, 2013).
The Health and Human Services Administration’s Centers for Consumer Information and Insurance Oversight is responsible for the oversight of the health insurance provisions of the ACA. They will work with state governments to ensure the Marketplaces are being implemented properly. They will also help states with reviews of any unreasonable rate increases by insurance companies and other social regulations (Centers for Medicare & Medicaid Services, 2013b). The Health Resources and Services Administration also awarded $150 million to 1,200 community health centers to enroll uninsured individuals.
A Public Plan Option was also authorized to create a government-run health insurance agency that would compete with other health insurance companies. This would provide health insurance for those who could not afford private health insurance premiums. This program has not been implemented. However, in 2013, this type of program has been reintroduced by the Senate as an amendment to the ACA. The purpose of these programs is to increase the number of consumers who have access to affordable health care.
Title II–The Role of Public Programs: Medicaid, CHIP, Medicare
Medicaid eligibility has been expanded to cover lower incomes. The baseline is all individuals under 133% of the federal poverty level. States will receive matching funds to expand their Medicaid services, increasing accessibility to more consumers. As of September 2013, 24 states have opted to expand their Medicaid programs. More states are expected to adopt the expansion because the federal government is willing to pay 100% of the state’s costs through 2016 for the expansion.
Children’s Health Insurance Program (CHIP) will be required to maintain income level eligibility through 2019.
A new Medicaid benefit, Community First Choice, has been created to offer community services.
In 2010, a onetime $250 rebate was given to Medicare Part D beneficiaries who enter the coverage gap or donut hole in 2010. There are approximately 4 million seniors impacted by this financing gap.
Medicare beneficiaries will receive an annual wellness visit with no cost sharing.
Medicaid will expand to increase coverage for consumers who are not Medicare eligible. As discussed earlier, this mandate was contentious because states felt that the federal government was forcing them to expand their programs by withholding federal aid if states refused to expand. The federal government has limited the withholding mandate to certain newly eligible populations. From 2014 to 2016, the federal government will assist the states with payment of the newly eligible individuals. The CHIP program will maintain its existing coverage for children through 2015. It also simplifies enrollment for both individuals and families. The federal government will increase its payments to the states through 2019. Individuals will be able to enroll in these programs through the exchange and state websites. Community First Choice is an optional Medicaid benefit that focuses on community health services to Medicaid enrollees with disabilities. This will enable consumers to receive care at home or at community health centers rather than going to a hospital or their facility. This option became available on October 1, 2011 and provides a 6% increase in federal matching payments to states for expenditures related to this option (Medicaid.gov, 2013). These mandates will enable lower income consumers and children to have access to healthcare at an affordable cost.
There is an issue with the Medicare Part D coverage gap, more commonly known as the “donut hole” for Medicare Part D beneficiaries that this act should remedy. A typical beneficiary for Part D pays 25% of drug costs, including the deductible during the first part of the drug coverage phase. Once you reach the threshold of $2,830, the donut hole is activated, which means the beneficiary pays 100% of the drug costs until both the plan and beneficiary costs reach the maximum of $6,440. This maximum changes annually. Once this threshold is reached, which is called the catastrophic threshold limit, Medicare Part D will cover the costs of the drugs (approximately 95%), with the beneficiary paying $2.40 for generic drugs and $6.00 for brand drugs for the remainder of the year (Allsup, 2010). However, this donut hole restarts every year. This increase in beneficiary payout was very expensive for those enrolled and often resulted in individuals not obtaining necessary medication because of cost. In 2010, those beneficiaries that fall into the donut hole received a $250 rebate check from Medicare (Bihari, 2010). Since the passage of the ACA, 6.6 million Medicare enrollees who were impacted by the donut hole have saved over $7 billion on prescription drugs, which averages $1,061 per beneficiary. In addition to the $250 rebate check, those impacted received discounts and increased coverage. They will continue to receive these benefits until the coverage gap is closed in 2020 (Centers for Medicare & Medicaid Services, 2013a).
Title III–Improving the Quality and Efficiency of Health Care
The Independent Payment Advisory Board was established to develop quality improvement proposals
Establishment of a Patient-Centered Outcomes Research Institute
Creation of an Independence at Home program
Medicare payments will be linked to the quality of care. Long-term care hospitals, rehabilitation services, cancer hospitals, and hospice providers will participate in quality performance measures. A federal interagency Working Group on Healthcare Quality was established to develop national initiatives on quality performance. They collaborate with other federal agencies to implement the National Quality Strategy developed by the U.S. Department of Health and Human Services. They convened in March and October 2011 to discuss the collaboration of federal agencies in the implementation of the national healthcare strategy (Agency for Healthcare Research and Quality, 2012). Also, a new Center for Medicare and Medicaid Innovation will research different payment and delivery systems. Effective 2012, hospital reimbursements will be based on the hospital’s percentage of preventable Medicare readmissions of patients. The Center for Medicare and Medicaid Innovation’s goal is to support the development and testing of innovative healthcare payment and service delivery models. They currently have 41 demonstration projects for payment and care models, including accountable care organizations, value-based purchasing, and coordinated and prevention care.
The 15-member Independent Payment Advisory Board will present to Congress proposals for cost savings and quality performance measures. This 15-member board, appointed by the President and confirmed by the Senate, will have the authority in 2014 to make recommendations to reduce Medicare spending, which will be implemented by the U.S. Department of Health and Human Services. This is the first time Congress has established a mechanism to set a cap on future Medicare spending (Moffitt, 2011).
The community health teams will increase access to community-based coordinated health care. Local healthcare providers will be encouraged to develop medication management services to assist with chronic disease management. These measures increase the efficiency and effectiveness of Medicare. Also, there is a continued focus on community health activities that reduce the cost of healthcare services.
The Patient-Centered Outcomes Research Institute (PCORI) will compare the outcomes of disease treatments. A nonprofit private organization established in 2010, the PCORI, is responsible for providing assistance to physicians, patients, and policy makers in improving health outcomes. They will perform research that targets quality and efficiency of care. A trust fund has been established to pay for the administration and research of the PCORI (Sullivan, 2012).
The Independence at Home program will provide Medicare beneficiaries with at-home primary care and allocate any cost savings of this type of care to the healthcare professionals if they reduce hospital admissions and improve health outcomes (American Association of Nurse Practitioners, 2010). This 3-year demonstration program, starting in January 2012, assesses home health care for Medicare beneficiaries who are chronically ill. Medical care is administered by a team of providers and is available 7 days a week around the clock. The goal of the program is to compare the cost of this type of care to hospital care of those Medicare beneficiaries who are chronically ill (Home Caregiver Services, 2012).
Title IV–Prevention of Chronic Disease and Improving Public Health
The National Prevention, Health Promotion, and Public Health Council (National Prevention Council) is established to develop a national health prevention strategy.
To waive copayments or cost sharing for most preventive services, Medicare will cover 100% of the total cost.
Require Medicaid coverage for counseling and drug therapy for pregnant women for tobacco cessation and incentives for enrollees who participate in healthy lifestyles.
The National Health Prevention, Health Promotion, and Public Health Council, commonly called the National Prevention Policy, published a report in 2011 that focused on six health priorities to improve the health of the United States. The National Prevention Council is an interagency council of 17 federal organizations chaired by the U.S. Surgeon General to promote health policies and assess infrastructures. The health priorities include: tobacco-free living, drug and alcohol prevention programs, injury and violence-free living, active lifestyle for all ages, mental and sexual health, and healthy eating. The Prevention and Public Health Fund was established to provide funding for public health programs. As of 2013, there is approximately $616 million to fund activities. Research indicates that these types of funding programs have the potential to improve health outcomes and reduce healthcare costs (American Public Health Association, 2013).
In addition, there will be no copayment for Medicare annual wellness visits and the development of a patient prevention program (discussed in Title II). Medicaid will also expand its coverage for prevention activities such as drug or tobacco cessation programs. There will be additional federal funding to Medicaid programs if they provide free immunizations or other clinical preventive services.
Title V–Healthcare Workforce
Establish a National Health Care Workforce Commission to review healthcare workforce and projected needs.
Develop programs to increase the supply of healthcare workers by training and education incentives.
Develop a Primary Care Extension Program (PCEP) to educate and provide assistance to primary care providers about preventive medicine.