Health Policy Report

August 17, 2015

The Week in Review
The House and Senate were in recess last week.
The Week Ahead
Both chambers of Congress are in recess until Tuesday, September 8. When the Senate reconvenes, members are set to immediately consider a measure which would disapprove of President Obama’s nuclear deal with Iran. For a full rundown on the major legislative issues due to be considered after the summer break, please refer to TRP’s  Fall Legislative Outlook.

CMS: Nearly 1 Million Shopped for ACA Coverage Since February
Last Thursday, CMS reported that nearly 1 million additional people shopped for health insurance and picked a plan on the federally-run Affordable Care Act (ACA) exchanges since the regular sign-up season ended. Federal officials did not indicate how many of those new possible enrollees have actually paid for an insurance plan yet. The 2015 enrollment period concluded in February, but consumers who experienced a qualifying major life change, such as having a baby or getting married, were still able to sign up after that. Other life events that qualify a person to enroll beyond the regular season include losing health coverage or losing Medicaid eligibility. CMS said that nearly 944,000 people selected a plan on between Feb. 23 and June 30. CMS didn't include data on the 13 states plus the District of Columbia, which are running their own exchanges.
CMS officials said that 50 percent of the new plan selections were due to people losing their existing plans. Forty-seven percent were people younger than 34 years old, a key demographic the White House has targeted for enrolling in ACA coverage because younger, healthier people can help lower overall premiums. Officials have said between 80 and 90 percent of people who select a plan will eventually buy it. At the end of the last regular enrollment period, 11.7 million people selected a plan, and 10.2 million people actually purchased those plans. Based on that trend, another 800,000 people may be added during the special enrollment period. The next open enrollment period for coverage through the exchanges set up under the health care law begins Nov. 1 for coverage beginning in January.
ACA Enrollment Spiked Ahead of Mandate Tax Deadline
In related news, the CMS’ new enrollment data showed sharp spike in ACA sign-ups just before the health law’s April 30 individual mandate deadline. The numbers suggest that the mandate penalty, set to increase again in 2016, might be starting to have the desired effect. The health law allowed people facing the mandate penalty in 2014 to sign up for insurance coverage through, which serves 30-plus states, through April 30 in what's known as a special enrollment period. The idea was that Americans would be paying the mandate penalty for the first time when they filed their 2014 taxes this year, and this would give them a chance to avoid the penalty for most of 2015 and going forward. According to CMS, just 143,707 people chose to sign up for coverage because of the mandate. But more than 38,000 people enrolled on April 30 – the biggest sign-up day since regular enrollment ended Feb. 15. The daily average from Feb. 23 to March 14 had been 5,000, and it fell back to 6,000 from May 1 to June 30. While ACA enrollment surged in prior to the tax deadline, the raw number of 143,707 was viewed as underwhelming by many industry insiders. That could be because the mandate penalty for 2014, which is what people were paying this tax filing, was relatively small: $95 or 1 percent of income, whichever is greater. The penalty increases to $325 or 2 percent of income for 2015. Experts say the real test will be in 2016, when the full mandate penalty kicks in: $695 or 2.5 percent of income. Analysts are waiting to see if that compels more of the 20 million-plus uninsured Americans remaining to sign up.
Uninsured Rate Declined by 15 Million Since 2013, CDC Says
According to a new report from the Centers for Disease Control and Prevention (CDC), the number of people without health insurance has declined by 15.8 million—or one-third—since the ACA’s coverage expansion took effect. Released last Wednesday, the CDC survey found that the number of uninsured has declined from 44.8 million in 2013, before the health law’s coverage expansion took effect, to 29 million in the first quarter of 2015. The data comes on the heels of a Gallup-Pathways survey that found about 11.7 percent of people in the U.S. did not have health coverage in the first half of 2015. That's down from about 18 percent of residents at the start of 2014, when the health care law’s major coverage expansions took effect. Democrats are likely to tout the data as a sign that the health care overhaul is working as Republicans attempt to use budget reconciliation and other legislative vehicles to dismantle the law.
The CDC said some of the most significant coverage gains since 2013 were found among low-income people and Latinos. The report also notes that he percentage of children with private coverage increased from 52.6 percent in 2013 to 56.3 percent in the first quarter of 2015, reversing a 14-year trend of declining rates of private coverage. In states that expanded Medicaid, 10.6 percent of people age 18 to 64 were uninsured in the first quarter of this year, down from 18.4 percent in 2013, the report said. In states that chose not to expand Medicaid, 16.8 percent of such adults were uninsured in the first quarter of this year, down from 22.7 percent in 2013. The Gallup study found that Texas was the only state where at least 20 percent of people were uninsured. By contrast, it said, in 2013, people without coverage accounted for at least 20 percent of the population in 14 states. Arkansas, California and Kentucky were among the states showing the largest reductions in the proportion of people without insurance.
CMS Extends Two-Midnights Enforcement Delay
Last Wednesday, CMS extended its partial enforcement delay of the two-midnight policy to last through the end of the year. Hospitals had been pushing CMS to extend the enforcement delay and healthcare analysts said CMS needed to extend the delay in order to align its enforcement with changes to the two-midnight policy in the proposed 2016 outpatient pay rule that go into effect in January. The law replacing the flawed Medicare SGR formula extended the enforcement delay through September. Both CMS and lawmakers had previously extended the delay, which has been in place since the two-midnight policy was implemented in fiscal 2014.
The two-midnight policy says that doctors must expect beneficiaries will stay in the hospital at least two-midnights when admitting them. Shorter stays must be considered observation, for which hospitals are paid at the lower outpatient rate. The Medicare Administrative Contractors have audited hospitals through a “probe and educate” effort to make sure they are complying with the admissions policy. CMS in the proposed outpatient pay rule relaxed the policy to recognize some hospital stays that last less than two-midnights as legitimate inpatient stays, and also indicated it planned to change how audits would occur. Hospitals and other provider groups plan to keep working with CMS as it finalizes the changes to the two-midnight policy. Still, others say the proposed rule does not go far enough, and want CMS to eliminate the two-midnight policy completely. Comments on the proposed rule are due at the end of the month
House Republicans Eye Medicare Overhaul in 2016
In an effort to overhaul Medicare, key House Republicans will start drafting a Medicare "premium-support" bill next year. Leading the legislative effort is Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX) who said his premium-support bill would be the third step to save Medicare. The first two steps include the SGR repeal, which Congress passed this spring, and plans to simplify Medicare hospital payments and introduce pay-for-performance to post-acute care. Specifically, Brady plans to combine Medicare's hospital and physician coverage with an out-of-pocket spending cap, which would allow seniors to pay one deductible for both Part A and Part B care. Brady said his panel wants to start the work of creating actual legislative text, likely in preparation for 2017 under a new Congress and President. The details of how the policy would actually work are what Brady and his staff plan to start crafting next year. Premium support generally means that Medicare would provide seniors with a set amount of money to purchase a private health plan. In some iterations, the traditional Medicare program would continue as an option. President Obama reportedly expressed an openness to the idea during the 2011 budget negotiations. But the proposal has also been criticized by others who allege that, by combining the two deductibles, it would increase costs for seniors who don't use hospital care.