Bullet by Bullet: Health Reform Impacts All

AAPC received a bullet by bullet summary of the Patient Protection and Affordable Care Act (health reform bill) from Washington. This comprehensive review helps answer many questions about the new law’s scope.

by David Connolly

The goal of this health care legislation was to expand coverage to the millions of Americans who do not presently have health care coverage, to improve the health care delivery system in the United States, and to control the rising cost of health care.

Health Insurance Coverage Provisions For Individuals

  • Requires every American to have health care coverage through private insurance or a government run program.
  • Failure to obtain coverage will subject a person to a minimum tax penalty of the greater of $695 per year to a maximum of three times that amount ($2,085) per family or 2.5 percent of household income.
  • The penalty will be phased in over the period of 2014 through 2016 and then it will have an annual cost of living adjustment.

Health Insurance Credits For Individuals

  • Limited to U.S. citizens and legal immigrants within certain income limits. 
  • Must not be covered by an employer plan unless that plan does not have an actuarial value of at least 60 percent of an approved exchange plan or if the employee portion of the premium exceeds 9.5 percent of income. 
  • Provide refundable and advanceable premium credits on a sliding scale to individuals and families whose income is between 133 and 400 percent of the Federal Poverty Line (FPL) to purchase insurance on the Exchanges.  
  • Individuals will have to verify both their income and citizenship status to receive the credit.

 Health Insurance Coverage Provisions For Employers

  • Exempts employers with 50 or fewer workers from any penalty. 
  • If an employer does not offer any coverage and at least one of its full-time employees receives a premium tax credit, they will pay a penalty calculated at the rate of the number of employees minus 30 times $2,000.
  • If an employer does offer coverage but has at least one full-time employee receiving a premium tax credit, they will pay a penalty of the lesser of $3,000 per employee receiving a premium credit or $2,000 for each full time employee.
  • Requires employers with more than 200 employees to automatically enroll employees in their health plan, though the employees can then opt out of this coverage if they so desire.
  • For those employees whose income is less than 400 percent of the FPL whose share of the insurance premium exceeds 8 percent but is less than 9.8 percent of their income and who choose to enroll in a plan in the Exchange, their employer must offer them a voucher in an amount equal to what the employer would have paid on their behalf in its plan. If an employer provides vouchers, they will not be subject to the penalties for an employee’s use of premium tax credit.

Employer Subsidies For Small Businesses

  • Small business employers are defined as those with no more than 25 employees and the annual average wage of their employees is less than $50,000.
  • For tax years 2010 through 2013, a credit of up to 35 percent of the employer’s contribution to the premium if that employer is contributing at least 50 percent of the total premium.
  • Employers with 10 or fewer employees who have average annual wages of less than $25,000 will be eligible for a full credit. This credit will phase out as firm size and average salary increases until the small business threshold.
  • Tax exempt small employers that meet these requirements are eligible for a 25 percent refundable credit.  
  • For tax years 2014 and later, employers that purchase their coverage through the Exchange will be eligible for a period of two years, a credit of up to 50 percentof the employer’s contribution to the premium if that employer is contributing at least 50 percent of the total premium.
  • As was the case for 2010 through 2013, employers with 10 or fewer employees who have average annual wages of less than $25,000 will be eligible for a full credit. This credit will phase out as firm size and average salary increases until the small business threshold.
  • Tax exempt small employers that meet these requirements are eligible for a 35 percent refundable credit.
  • Creates a re-insurance program through January, 1, 2014 for those employers who are providing health coverage for retirees who are not yet eligible for Medicare. The program will cover 80 percent of the cost of claims between $15,000 and $90,000 incurred by the retirees and thus reduce the cost to enrollees in the plan.

Tax Changes Effecting Individuals

  • As stated above, failure to obtain coverage will subject a person to a minimum tax penalty of the greater of $695 per year to a maximum of three times that amount ($2,085) per family or 2.5 percent of household income.
  • Effective January 1, 2011, the cost of over-the-counter drugs will not be reimbursed through a Health Reimbursement Account (HRA) or Flexible Spending Account (FSA), or Health Savings Account (HAS) or Archer Medical Savings Account.
  • Effective January 1, 2011, increases the tax on distributions from a HSA or Archer account not used for qualified medical expenses to 20 percent (presently, 10 percent for HSAs and 15 percent for Archer).
  • Effective January 1, 2013, limits the amount of contributions to a FSA to $2,500 per year, increased annually by a cost of living factor.
  • Effective January 1, 2013, increases the threshold for the itemized deduction for  unreimbursed medical expenses from 7.5 percent to 10 percent.
  • Increase the Medicare Part A (hospital insurance) tax rate on wages by 0.9 percent (from 1.45 percent to 2.35 percent) on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly and impose a 3.8% tax on unearned income for higher-income taxpayers, effective January 1, 2013.

Cadillac Plan Tax

  • Effective January 1, 2018.
  • Imposes an excise tax on insurers of employer-sponsored health plans with aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage (these threshold values will be indexed to the consumer price index for urban consumers (CPI-U) for years beginning in 2020. The threshold amounts will be increased for retired individuals age 55 and older who are not eligible for Medicare and for employees engaged in high-risk professions by $1,650 for individual coverage and $3,450 for family coverage.
  • The threshold amounts may be adjusted upwards if health care costs rise more than expected prior to implementation of the tax in 2018.
  • The threshold amounts will be increased for firms that may have higher health care costs because of the age or gender of their workers.
  • The tax is equal to 40 percent of the value of the plan that exceeds the threshold amounts and is imposed on the issuer of the health insurance policy or in some cases the employer.
  • The aggregate value of the health insurance plan includes reimbursements under a  FSA or HRA, employer contributions to a HSA, and coverage for supplementary health insurance coverage, excluding dental and vision coverage.

Tax Changes Made to Finance Health Reform

  • Imposes new annual fees onthe pharmaceutical manufacturing sector, starting with  $2.8 billion in 2012-2013; $3.0 billion in 2014-2016; $4.0 billion in 2017; $4.1 billion in 2018; and $2.8 billion in 2019 and later.
  •  Imposes an annual fee on the health insurance sector, starting with $8 billion in 2014; $11.3 billion in 2015-2016; $13.9 billion in 2017; $14.3 billion in 2018. For subsequent years, the fee shall be the amount from the previous year increased by the rate of premium growth.
  • For non-profit insurers, only 50 percent of net premiums are taken into account in calculating the fee. Exemptions granted for non-profit plans that receive more than 80 percent of their income from government programs targeting low-income or elderly populations, or people with disabilities, and voluntary employees’ beneficiary associations (VEBAs) not established by an employer, effective January 1, 2014.
  • Imposes an excise tax of 2.3 percent on the sale of any taxable medical device, effective for sales after December 31, 2012.
  • Limits the deductibility of executive and employee compensation to $500,000 per applicable individual for health insurance providers, effective January 1, 2009.
  • Impose a 10 percent tax on the amount paid for indoor tanning services, effective July 1, 2010.
  • Excludes unprocessed fuels from the definition of cellulosic biofuel for purposes of applying the cellulosic  biofuel producer credit, effective January 1, 2010.
  • Clarifies application of the economic substance doctrine and increase penalties for underpayments attributable to a transaction lacking economic substance,effective March 24, 2010. 

Health Insurance Exchanges

  • Creates state based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges, administered by a governmental agency or non-profit organization for individuals and businesses to obtain coverage.
  • Unless otherwise noted, provisions relating to the American Health Benefit Exchanges are effective January 1, 2014.
  • Businesses with up to 100 employees can participate.
  • Beginning in 2017, states may allow businesses with more than 100 employees to purchase coverage in the SHOP Exchanges.
  • States may form regional Exchanges or allow more than one Exchange to exist in the state as long as it serves a distinct geographic area. 
  • Federal funding is available to states to establish Exchanges within one year from enactment until January 1, 2015. 
  • Only U.S. citizens and legal immigrants can utilize the Exchanges. 
  • In each Exchange, the Office of Personnel Management (OPM) will contract with at least two multi-state plans in each exchange, one non-profit, and one must not provide coverage for abortions beyond those permitted by federal law. They are separate from the Federal Employees Health Benefit Program and must be licensed in each state. If a state has a lower age rating requirement than 3:1, the state may require the insurer to meet these more protective age rating rules.

Health Plans That Must Be Offered By The Exchanges

  • There are four benefit categories of plans plus a separate catastrophic plan that must be offered through the Exchange, and in the individual and small group markets.
    • Bronze plan represents minimum creditable coverage and provides the essential health benefits, cover 60 percent of the benefit costs of the plan, with an out-of-pocket limit equal to the HSA current law limit ($5,950 for individuals and $11,900 for families in 2010);
    • Silver plan provides the essential health benefits, covers 70 percent of the benefit costs of the plan, with the HSA out-of-pocket limits;
    • Gold plan provides the essential health benefits, covers 80 percent of the benefit costs of the plan, with the HSA out-of-pocket limits;
    • Platinum plan provides the essential health benefits, covers 90 percent of the benefit costs of the plan, with the HSA out-of-pocket limits;
    • Catastrophic plan available to those up to age 30 or to those who are exempt from the mandate to purchase coverage and provides catastrophic coverage only with the coverage level set at the HSA current law levels except that prevention benefits and coverage for three primary care visits would be exempt from the deductible. This plan is only available in the individual market.
  • For those with incomes up to 400 percent the FPL, their out of pocket limits are reduced  to the following levels:

–   100-200% FPL: one-third of the HSA limits ($1,983/individual and $3,967/family);

–    200-300% FPL: one-half of the HSA limits ($2,975/individual and $5,950/family);

–   300-400% FPL: two-thirds of the HSA limits ($3,987/individual and $7,973/family).

Consumer Operated and Oriented Plan (CO-OP)

  • Aids the creation of member owned and operated health insurance companies.
  • Authorizes $6 billion to finance program and award loans and grants to establish co-ops by July 1, 2013.
  • Must be operated by its members.
  • Cannot be an existing health insurer or sponsored by a state or local government.
  • Must have a strong consumer focus.
  • Any profits must be used to lower premiums, improve benefits, or improve the quality of the health care delivered.
  • Must be subject to a majority vote of its members.

Private Health Insurance

High risk pools

  • Establish a temporary national high-risk pool to provide health coverage to individuals with pre-existing medical conditions.
  • Persons who have a pre-existing medical condition and who have been uninsured for at least six months will be eligible to enroll in the high-risk pool and receive subsidized premiums.
  • Premiums for the pool will be established for a standard population and may vary by no more than 4 to 1 due to age; maximum cost-sharing will be limited to the current law HSA limit ($5,950/individual and $11,900/family in 2010). Effective date: June 22, 2010.

Medical loss ratio

  • Requires health plans to report the proportion of premium dollars spent on clinical services, quality, and other costs and provide rebates to consumers for the amount of the premium spent on clinical services and quality that is less than 85 percent for plans in the large group market and 80 percnet for plans in the individual and small group markets.
  • Requirement to report medical loss ratio effective plan year 2010; requirement to provide rebates effective January 1, 2011.
  • Establishes a process for reviewing increases in health plan premiums and require plans to justify increases.
  • Requires states to report on trends in premium increases and recommend whether certain plan should be excluded from the Exchange based on unjustified premium increases. Effective beginning plan year 2010.

Dependent Coverage

  • Provides dependent coverage for children up to age 26 for all individual and group policies. Effective September 24, 2010.

Prohibited Insurance Practices

  • Prohibit individual and group health plans from placing lifetime limits on the dollar value of coverage.
  • Prohibit insurers from rescinding coverage except in cases of fraud.
  • Prohibit pre-existing condition exclusions for children. Effective September 24, 2010.
  • Beginning in January 2014, prohibit individual and group health plans from placing annual limits on the dollar value of coverage.
  • Prior to January 2014, plans may only impose annual limits on coverage as determined by the Secretary of Health and Human Services (HHS).
  • Grandfathers existing individual and group plans with respect to new benefit standards, but requires these grandfathered plans to extend dependent coverage to adult children up to age 26, prohibits rescissions of coverage, and eliminate waiting periods for coverage of greater than 90 days.
  • Requires grandfathered group plans to eliminate lifetime limits on coverage and beginning in 2014, eliminate annual limits on coverage. Prior to 2014, grandfathered group plans may only impose annual limits as determined by the Secretary.
  • Require grandfathered group plans to eliminate pre-existing condition exclusions for children by September 24, 2010 and by 2014 for adults.  
  • Impose the same insurance market regulations relating to guarantee issue, premium rating, and prohibitions on pre-existing condition exclusions in the individual market, in the Exchange, and in the small group market. Effective January 1, 2014.

Administrative Simplification

  • A non-profit entity is created to make recommendations for the establishment of standards for financial and administrative transactions which will expedite and simplify the claims submission and payment process.
  • These standards shall be adopted not later than July 1, 2012, in a manner ensuring that such operating rules are effective not later than January 1, 2014. 
  • Health plans must certify compliance with these standards or be subject to a civil penalty starting on April 1, 2014 of $1 per covered life.
  • Health plan administration will be simplified by adopting a single set of operating rules for eligibility verification and claims status, electronic funds transfers and health care payment and remittance. Also included will be health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, and referral certification and authorization.

Policy Requirements

  • All new policies including those offered through the Exchanges and those offered outside of the Exchanges, to comply with one of the four benefit categories. (See section on Health Insurance Exchanges.)
  • Existing individual and employer-sponsored plans do not have to meet the new benefit standards.
  • Limits deductibles for health plans in the small group market to $2,000 for individuals and $4,000 for families.
  • Limits any waiting periods for coverage to 90 days. Effective January 1, 2014.
  • Create a temporary reinsurance program to collect payments from health insurers in the individual and group markets to provide payments to plans in the individual market that cover high-risk individuals. Finances the reinsurance program through mandatory contributions by health insurers totaling $25 billion over three years. Effective January 1, 2014 through December 2016.
  • Allows states the option of merging the individual and small group markets. Effective January 1, 2014.

Consumer Protections

  • Establishes an Internet website to help residents identify health coverage options, effective July 1, 2010 and  then the insurers must develop a standard format for presenting information on coverage options by May 24, 2010.
  • The Secretary will develop standards for insurers to use in providing information on benefits and coverage.
  • These standards will be developed March 24, 2011 and the  insurer must comply with standards within March 24, 2012.

State Compacts

  • Permits states to form health care choice compacts and allow insurers to sell policies in any state participating in the compact.
  • Insurers selling policies through a compact would only be subject to the laws and regulations of the state where the policy is written or issued, except for rules pertaining to market conduct, unfair trade practices, network adequacy, and consumer protections.
  • Compacts may only be approved if it is determined that the compact will provide coverage that is at least as comprehensive and affordable as coverage provided through the state Exchanges.
  • Compacts may not take effect before January 1, 2016.

Abortion Coverage

  • Requires plans that choose to offer coverage for abortions beyond those for which federal funds are permitted (to save the life of the woman and in cases of rape or incest) in states that allow such coverage to create allocation accounts for segregating premium payments for coverage of abortion services from premium payments for coverage for all other services to ensure that no federal premium or cost-sharing subsidies are used to pay for the abortion coverage. Plans must also estimate the actuarial value of covering abortions by taking into account the cost of the abortion benefit (valued at no less than $1 per enrollee per month) and cannot take into account any savings that might be reaped as a result of the abortions.
    • Prohibits plans participating in the Exchanges from discriminating against any provider because of unwillingness to provide, pay for, provide coverage of, or refer for abortions.

Medicaid Expansion

Expands Medicaid to all individuals under age 65 with incomes up to 133% of the FPL starting in 2014.

  • All newly eligible adults will be guaranteed a benchmark benefit package that will supply essential health benefits.
  • The cost of covering these new groups of individuals by the states will be subsidized by the federal government at a rate of 100 percent for 2014 through 2016, 95 percent for 2017, 94 percent for 2018, 93 percent for 2019, and 90 percent for 2020 and subsequent years.
  • Increases the rates for primary care physicians (family medicine, internal medicine, pediatrics) to 100 percent of the Medicare payment rates with a 100 percent federal subsidy for the increased rates.

CHIP Program

  • States must maintain current eligibility levels of children in the program until 2019.
  • Extends funding for CHIP until 2015.
  • In 2015, states will receive a 23 percent increase in the match rate up to a cap of 100 prcent.
  • Children who are unable to enroll in the program due to enrollment caps will be eligible for tax credits in the state Exchanges to obtain coverage.

Medicaid Savings Initiatives

  • Increases the Medicaid rebate for brand name drugs to 23.1 percent (except the rebate for clotting factors and drugs approved exclusively for pediatric use increases to 17.1 percent); increase the Medicaid rebate for non-innovator, multiple source drugs to 13 percent of average manufacturer price (AMP). Effective January 1, 2010.
  • Extends the drug rebate to Medicaid managed care plans. Effective March 22, 2010.
  • Reduces aggregate Medicaid Disproportionate Share (DSH) allotments by $.5 billion in 2014, $.6 billion in 2015, $.6 billion in 2016, $1.8 billion in 2017, $5 billion in 2018, $5.6 billion in 2019, and $4 billion in 2020.
  • Requires the Secretary to develop a methodology to distribute the DSH reductions in a manner that imposes the largest reduction in DSH allotments for states with the lowest percentage of uninsured or those that do not target DSH payments, imposes smaller reductions for low-DSH states, and accounts for DSH allotments used for 1115 waivers. Effective October 1, 2011.
  • Prohibits federal payments to states for Medicaid services related to health care acquired conditions. Effective July 1, 2011.

Changes to the Medicare Program

Medicare Advantage

  • Restructures payments to Medicare Advantage (MA) plans by setting payments to different percentages of Medicare fee-for-service (FFS) rates, with higher payments for areas with low FFS rates and lower payments (95 percent of FFS) for areas with high FFS rates.
  • Phases in revised payments over 3 years beginning in 2011, for plans in most areas, with payments phased-in over longer periods (4 years and 6 years) for plans in other areas.
  • Provides bonuses to plans receiving four or more stars, based on the current five-star quality rating system for Medicare Advantage plans, beginning in 2012; qualifying plans in qualifying areas receive double bonuses.
  • Modifies rebate system with rebates allocated based on a plan’s quality rating.
  • Phases in adjustments to plan payments for coding practices related to the health status of enrollees, with adjustments equaling 5.7 percent by 2019.
  • Caps total payments, including bonuses, at current payment levels.
  • Requires MA plans to remit partial payments to the Secretary if the plan has a medical loss ratio of less than 85 percent, beginning 2014.
  • Requires the Secretary to suspend plan enrollment for 3 years if the medical loss ratio is less than 85 percent for 2 consecutive years and to terminate the plan contract if the medical loss ratio is less than 85 percent for 5 consecutive years.

Independent Payment Advisory Board

  • Establishes an Independent Payment Advisory Board comprised of 15 members to submit legislative proposals containing recommendations to reduce the per capita rate of growth in Medicare spending if spending exceeds a target growth rate.
  • Beginning April 2013, the Chief Actuary of CMS is required to project whether Medicare per capita spending exceeds the average of CPI-U and CPI-M, based on a five year period ending that year. If so, beginning  January 15, 2014, the board will submit recommendations to the president and Congress to achieve reductions in Medicare spending which will take effect on August 15 of that year unless modified by both Houses of Congress.
  • Beginning January 2018, the target is modified such that the board submits recommendations if Medicare per capita spending exceeds GDP per capita plus one percent.
  • The board is prohibited from submitting proposals that would ration care, increase revenues or change benefits, eligibility or Medicare beneficiary cost sharing including Parts A and B premiums, or would result in a change in the beneficiary premium percentage or low-income subsidies under Part D.
  • Hospitals and hospices through 2019 and clinical labs for one year]will not be subject to cost reductions proposed by the Board.
  • The Board must also submit recommendations every other year to slow the growth in national health expenditures while preserving quality of care by January 1, 2015.

Part D Drug Program

  • Provides a $250 rebate to Medicare beneficiaries who reach the Part D coverage gap in 2010 Effective January 1, 2010.
  • Phases down gradually the beneficiary coinsurance rate in the Medicare Part D coverage gap from 100 percent to 25 percnt by 2020: For brand-name drugs, require pharmaceutical manufacturers to provide a 50% discount on prescriptions filled in the Medicare Part D coverage gap beginning in 2011, in addition to federal subsidies of 25 percent of the brand-name drug cost by 2020 (phased in beginning in 2013).
  • For generic drugs, provides federal subsidies of 75 percent of the generic drug cost by 2020 for prescriptions filled in the Medicare Part D coverage gap (phased in beginning in 2011.
  • Between 2014 and 2019, reduces the out-of-pocket amount that qualifies an enrollee for catastrophic coverage.
  • Makes Part D cost-sharing for full-benefit dual eligible beneficiaries receiving home and community ­based care services equal to the cost-sharing for those who receive institutional care (effective no earlier than January 1, 2012).

Other changes to program

  • Reduces annual market basket updates for inpatient hospital, home health, skilled nursing facility, hospice and other Medicare providers, and adjust for productivity. Effective dates vary.
  • Freezes the threshold for income-related Medicare Part B premiums for 2011 through 2019, and reduces the Medicare Part D premium subsidy for those with incomes above $85,000/individual and $170,000/ couple, Effective January 1, 2011.
  • Reduces DSH payments initially by 75 percent and subsequently increases payments based on the percent of the population uninsured and the amount of uncompensated care provided. Effective fiscal year 2014.
  • Eliminates the Medicare Improvement Fund. Effective March 22, 2010.
  • Allows providers organized as accountable care organizations (ACOs) that voluntarily meet quality thresholds to share in the cost savings they achieve for the Medicare program. To qualify as an ACO, organizations must agree to be accountable for the overall care of their Medicare beneficiaries, have adequate participation of primary care physicians, define processes to promote evidence-based medicine, report on quality and costs, and coordinate care. Shared savings program established January 1, 2012.
  • Creates an Innovation Center within CMS to test, evaluate, and expand in Medicare, Medicaid, and CHIP different payment structures and methodologies to reduce program expenditures while maintaining or improving quality of care. Payment reform models that improve quality and reduce the rate of cost growth could be expanded throughout the Medicare, Medicaid, and CHIP programs. Effective January 1, 2011.
  • Reduces Medicare payments that would otherwise be made to hospitals by specified percentages to account for excess (preventable) hospital readmissions. Effective October 1, 2012.
  • Reduces Medicare payments to certain hospitals for hospital-acquired conditions by 1 percent. Effective fiscal year 2015.
  • Expands Medicare coverage to individuals who have been exposed to environmental health hazards from living in an area subject to an emergency declaration made as of June 17, 2009 and who have developed certain health conditions as a result (effective March 22, 2010).

Prescription Drugs

  • Authorizes the Food and Drug Administration (FDA) to approve generic versions of biologic drugs and grant biologics manufacturers 12 years of exclusive use before generics can be developed. Effective March 22, 2010.

Fraud and Abuse Prevention

  • Reduces waste, fraud, and abuse in public programs by allowing provider screening, enhanced oversight periods for new providers and suppliers, including a 90-day period of enhanced oversight for initial claims of Durable Medical Equipment (DME) suppliers, and enrollment moratoria in areas identified as being at elevated risk of fraud in all public programs, and by requiring Medicare and Medicaid program providers and suppliers to establish compliance programs.
  • Develops a database to capture and share data across federal and state programs, increases penalties for submitting false claims, strengthens standards for community mental health centers and increases funding for anti-fraud activities. Effective dates vary.

Individual State Responsibilities

  • Creates an American Health Benefit Exchange and a SHOP Exchange for individuals and small businesses and provide oversight of health plans with regard to the new insurance market regulations, consumer protections, rate reviews, solvency, reserve fund requirements, premium taxes, and to define rating areas.
  • Enrolls newly eligible Medicaid beneficiaries into the Medicaid program no later than January 2014 (states have the option to expand enrollment beginning in 2011, but will not receive the increase in funding ), coordinates enrollment with the new Exchanges, and implements other specified changes to the Medicaid program.
  • Maintains current Medicaid and CHIP eligibility levels for children until 2019 and maintain current Medicaid eligibility Levels for adults until the Exchange is fully operational.
  • Exempt states from the maintenance of effort requirement for non-disabled adults with incomes above 133 percent FPL for any year from January 2011 through December 31, 2013 if the state certifies that it is experiencing a budget deficit or will experience a deficit in the following year.
  • Establishes an office of health insurance consumer assistance or an ombudsman program to serve as an advocate for people with private coverage in the individual and small group markets. Federal grants will be available beginning fiscal year 2010.
  • Permits states to create a basic health plan for uninsured individuals with incomes between 133 percent and 200 percent FPL in lieu of these individuals receiving premium subsidies to purchase coverage in the Exchanges. Effective January 1, 2014.
  • Permits states to obtain a 5-year waiver of certain new health insurance requirements if the state can demonstrate that it provides health coverage to all residents that is at least as comprehensive as the coverage required under an Exchange plan and that the state plan does not increase the federal budget deficit. Effective January 1, 2017.

Health System Quality and Performance


  • Requires disclosure of financial relationships between health entities, including physicians, hospitals, pharmacists, other providers, and manufacturers and distributors of covered drugs, devices, biologicals, and medical supplies. (Report due to Congress April 1, 2013.)
  • Supports comparative effectiveness research by establishing a non-profit Patient-Centered Outcomes Research Institute to identify research priorities and conduct research that compares the clinical effectiveness of medical treatments. The Institute will be overseen by an appointed multi-stakeholder Board of Governors and will be assisted by expert advisory panels.
  • Establishes a grant program to support the delivery of evidence-based and community-based prevention and wellness services aimed at strengthening prevention activities, reducing chronic disease rates and addressing health disparities, especially in rural and frontier areas. (Funds appropriated for five years beginning in FY 2010)
    • Findings from comparative effectiveness research may not be construed as mandates, guidelines, or recommendations for payment, coverage, or treatment or used to deny coverage.
  • Develops a national quality improvement strategy that includes priorities to improve the delivery of health care services, patient health outcomes, and population health. Creates processes for the development of quality measures involving input from multiple stakeholders and for selecting quality measures to be used in reporting to and payment under federal health programs. (National strategy due to Congress by January 1, 2011).
  • Establishes the Community-based Collaborative Care Network Program to support consortiums of health care providers to coordinate and integrate health care services, for low-income uninsured and underinsured populations.
  • Requires enhanced collection and reporting of data on race, ethnicity, sex, primary language, disability status, and for underserved rural and frontier populations. Also requires collection of access and treatment data for people with disabilities.
  • Requires the Secretary to analyze the data to monitor trends in disparities. Effective March 22, 2012.
  • Establishes the National Prevention, Health Promotion and Public Health Council to coordinate federal prevention, wellness, and public health activities. Develops a national strategy to improve the nation’s health. (Strategy due March 22, 2011.)
  • Creates a Prevention and Public Health Fund to expand and sustain funding for prevention and public health programs.
  • Creates task forces on Preventive Services and Community Preventive Services to develop, update, and disseminate evidenced-based recommendations on the use of clinical and community prevention services. Effective March 22, 2010.
  • Requires chain restaurants and food sold from vending machines to disclose the nutritional content of each item. (Proposed regulations issued by March 22, 2011.)


  • Provides a 10 percent bonus payment to primary care physicians in Medicare from 2011 through 2015. Effective for five years beginning January 1, 2011.
  • Establishes a national Medicare pilot program to develop and evaluate paying a bundled payment, inpatient hospital services, physician services, outpatient hospital services, and post-acute care services for an episode of care that begins three days prior to a hospitalization and spans 30 days following discharge.
  • If the pilot program achieves stated goals of improving or not reducing quality and reducing spending, develops a plan for expanding the pilot program. Establishes pilot program by January 1, 2013; expands program, if appropriate, by January 1, 2016.
  • Creates the Independence at Home demonstration program to provide high-need Medicare beneficiaries with primary care services in their home and allow participating teams of health professionals to share in any savings if they reduce preventable hospitalizations, prevent hospital readmissions, improve health outcomes, improve the efficiency of care, reduce the cost of health care services, and achieve patient satisfaction. Effective January 1, 2012.
  • Establishes a hospital value-based purchasing program in Medicare to pay hospitals based on performance on quality measures and extends the Medicare physician quality reporting initiative beyond 2010. Effective October 1, 2012.
  • Develops plans to implement value-based purchasing programs for skilled nursing facilities, home health agencies, and ambulatory surgical centers. Reports to Congress due January 1, 2011.
  • Improves care coordination for dual eligibles by creating a new office within CMS, the Federal Coordinated Health Care Office, to more effectively integrate Medicare and Medicaid benefits and improve coordination between the federal government and states in order to improve access to and quality of care and services for dual eligibles.
  • Increases Medicare payments for certain preventive services to 100 percent of actual charges or fee schedule rates. Effective January 1, 2011.
  • Provides Medicare beneficiaries access to a comprehensive health risk assessment and creation of a personalized prevention plan. (Health risk assessment model developed within 18 months of March 22, 2010.)
  • Provides a 10 percent bonus payment to primary care physicians and to general surgeons practicing in health professional shortage areas, from 2011 through 2015.
  • Provides payments totaling $400 million in FY 2011 and 2012 to qualifying hospitals in counties with the lowest quartile Medicare spending.
  • Prohibits MA plans from imposing higher cost-sharing requirements for some Medicare covered benefits than is required under the traditional FFS program. (Effective January 1, 2011.)


  • Creates a new Medicaid state plan option to permit Medicaid enrollees with at least two chronic conditions, one condition and risk of developing another, or at least one serious and persistent mental health condition to designate a provider as a health home. Provide states taking up the option with 90 percent FMAP for 2 years. Effective January 1, 2011.
  • Creates new demonstration projects in Medicaid to pay bundled payments for episodes of care that include hospitalizations (effective January 1, 2012 through December 31, 2016).
  • Makes global capitated payments to safety net hospital systems (effective FY2010 – 2012).
  • Allows pediatric medical providers organized as accountable care organizations to share in cost-savings (effective January 1, 2012 – December 31, 2016).
  • Provides Medicaid payments to institutions of mental disease for adult enrollees who require stabilization of an emergency condition (effective October 1, 2011 – December 31, 2015).
  • Expands the role of the Medicaid and CHIP Payment and Access Commission to include assessments of adult services (including those dually eligible for Medicare and Medicaid.  
  • Increases Medicaid payments inFFS and managed care for primary care services provided by primary care doctors (family medicine, general internal medicine or pediatric medicine) to 100 percent of the Medicare payment rates for 2013 and 2014. States will receive 100 percent federal financing for the increased payment rates. Effective January 1, 2013. 
  • For states that provide Medicaid coverage for and remove cost-sharing for preventive services recommended by the US Preventive Services Task Force and recommended immunizations, provides a one percentage point increase in the FMAP for these services.
  • Provides Medicaid coverage for tobacco cessation services for pregnant women. Effective October 1, 2010.


  • Provides grants for up to 5 years to small employers that establish wellness programs. Funds appropriated for 5 years beginning in FY 2011.
  • Provides technical assistance and other resources to evaluate employer-based wellness programs.
  • Conducts a national worksite health policies and programs survey to assess employer-based health policies and programs. (Conducts study within 2 years following March 22, 2010.)
  • Permits employers to offer employees rewards in the form of premium discounts, waivers of cost-­sharing requirements, or benefits that would otherwise not be provided up to 30 percent of the cost of coverage for participating in a wellness program and meeting certain health-related standards. Employers must offer an alternative standard for individuals for whom it is unreasonably difficult or inadvisable to meet the standard. The reward limit may be increased to 50 percent of the cost of coverage if deemed appropriate. Effective January 1, 2014.
  • Establishes 10-state pilot programs by July 2014 to permit participating states to apply similar rewards for participating in wellness programs in the individual market and expand demonstrations in 2017 if effective.
  • Requires a report on the effectiveness and impact of wellness programs. (Report due March 22, 2013.)


  • Awards 5-year demonstration grants to states to develop, implement, and evaluate alternatives to current tort litigations.
    • Preference will be given to states that have developed alternatives in consultation with relevant stakeholders and that have proposals that are likely to enhance patient safety by reducing medical errors and adverse events and are likely to improve access to liability insurance.

Long Term Care

  • Establishes a national, voluntary insurance program for purchasing community living assistance services and supports (CLASS program).
  • Following a 5-year vesting period, the program will provide individuals with functional limitations a cash benefit of not less than an average of $50 per day to purchase non-­medical services and supports necessary to maintain community residence.
  • The program is financed through voluntary payroll deductions: all working adults will be automatically enrolled in the program, unless they choose to opt-out. (Effective January 1, 2011.)
  • Extends the Medicaid Money Follows the Person Rebalancing Demonstration program through September 2016 (effective April 23, 2010) and allocate $10 million per year for five years to continue the Aging and Disability Resource Center initiatives (funds appropriated for FY 2010 – 2014).
  • Provides states with new options for offering home and community-based services through a Medicaid state plan rather than through a waiver for individuals with incomes up to 300 percent of the maximum SSI payment and who have a higher level of need and permit states to extend full Medicaid benefits to individual receiving home and community-based services under a state plan. (Effective October 1, 2010)
  • Establishes the Community First Choice Option in Medicaid to provide community-based attendant supports and services to individuals with disabilities who require an institutional level of care. Provides states with an enhanced federal matching rate of an additional six percentage points for reimbursable expenses in the program. Sunsets the option after 5 years. (Effective October 1, 2011).
  • Creates the State Balancing Incentive Program to provide enhanced federal matching payments to eligible states to increase the proportion of non-institutionally-based tong-term care services. Selected states will be eligible for FMAP increases for medical assistance expenditures for non-institutionally‑based long-term services and supports. (Effective October 1, 2011 through September 30, 2015.)
  • Requires skilled nursing facilities under Medicare and nursing facilities under Medicaid to disclose information regarding ownership, accountability requirements, and expenditures.
  • Publishes standardized information on nursing facilities to a website so Medicare enrollees can compare the facilities.

Workforce Initiatives

  • Establishes a multi-stakeholder Workforce Advisory Committee to develop a national workforce strategy. Appointments made by September 30, 2010.
  • Increases the number of Graduate Medical Education (GME) training positions by redistributing currently unused slots, with priorities given to primary care and general surgery and to states with the Lowest resident physician-to-population ratios (effective July 1, 2011).
  • Increases flexibility in laws and regulations that govern GME funding to promote training in outpatient settings (effective July 1, 2010).
  • Ensures the availability of residency programs in rural and underserved areas.
  • Establishes teaching health centers, defined as community-based, ambulatory patient care centers, including federally qualified health centers and other federally-funded health centers that are eligible for Medicare payments for the expenses associated with operating primary care residency programs.
  • Increases workforce supply and support training of health professionals through scholarships and loans; support primary care training and capacity building; provide state grants to providers in medically underserved areas; train and recruit providers to serve in rural areas; establish a public health workforce loan repayment program; provide medical residents with training in preventive medicine and public health; promote training of a diverse workforce; and promote cultural competence training of health care professionals.
  • Supports the development of interdisciplinary mental and behavioral health training programs (effective FY 2010) and establish a training program for oral health professionals.
  • Addresses the projected shortage of nurses and retention of nurses by increasing the capacity for education, supporting training programs, providing loan repayment and retention grants, and creating a career ladder to nursing.
  • Provides grants for up to 3 years to employ and provide training to family nurse practitioners who provide primary care in federally qualified health centers and nurse-managed health clinics.
  • Supports the development of training programs that focus on primary care models such as medical homes, team management of chronic disease, and those that integrate physical and mental health services.
  • Establishes a commissioned Regular Corps and a Ready Reserve Corps for service in time of a national emergency.

Aid to Certain Health Centers

  • Improves access to care by increasing funding by $11 billion for community health centers and the National Health Service Corps over five years (effective FY 2011).
  • Establishes new programs to support school-based health centers (effective FY 2010) and nurse-managed health clinics (effective FY 2010).
  • Establishes a new trauma center program to strengthen emergency department and trauma center capacity. Funds research on emergency medicine, including pediatric emergency medical research, and develops demonstration programs to design, implement, and evaluate innovative models for emergency care systems. (Funds appropriated beginning in FY 2011).

Non Profit Hospitals


  • Imposes additional requirements on non-profit hospitals to conduct a community needs assessment every 3 years and adopts an implementation strategy to meet the identified needs, adopt and widely publicize a financial assistance policy that indicates whether free or discounted care is available and how to apply for the assistance, limit charges to patients who qualify for financial assistance to the amount generally billed to insured patients, and make reasonable attempts to determine eligibility for financial assistance before undertaking extraordinary collection actions.
  • Imposes a tax of $50,000 per year for failure to meet these requirements. (Effective for taxable years following 2010.)

Latest posts by admin aapc (see all)

6 Responses to “Bullet by Bullet: Health Reform Impacts All”

  1. Celsa Garcia says:

    I think this is great to offer, but it would have been better if it had been in PDF format so that we could have saved it and later shared with chapter members.

  2. Karen says:

    Just select the information you want, copy it, and paste it into a Microsoft Word document. That’s what I did and it worked fine.

  3. mary says:

    Celsa, you can download the CutePDFWriter for free on-line. After you do, select that as your printer location, then you can print this page to that printer, save/name the document to a location on your computer. It will automatically convert it to a PDF document.

    Thanks AAPC for posting this! There are lots of bullets to read. I’ve got a headache from looking at it, though it is a condensed form.

    I wonder if this means Walmart will begin funding insurance for their employees with less than full time status that are on Medicaid.

  4. Mike Grambo says:

    Great summary.

    Can you tell me what happened to the provision that was called “Death Panels” by some opponents of the law ? I believe that this provision involved counseling for patients at “end-of-life.”

    Was it removed from the final law (Public Law 111-148), and if so, what was its section number in earlier versions of the bill ?

    Thank you. 8-26-2010

  5. Confused says:

    What are the provisions for requiring a certified coder for a facility in order to file Medicare?

  6. Donna says:

    I don’t believe this comes close to the entire bill!! A lot has been left out. We will never really know what’s in it until it hits. There was a lot in the bill that had nothing to do with healthcare. It was over 10,000 pages!

Leave a Reply

Your email address will not be published. Required fields are marked *