Colorado Receives $43 Million HHS Grant to Continue Building Exchange

Colorado was one of five states selected to receive a Level 1 funding grant this week from the Department of Health and Human Services.  The Level One Exchange Establishment Grant is a one-year grant designed to help states develop their health insurance exchanges.  Colorado applied for and received a $43 million grant which will "support planning activities, including the initial acquisition of technology services to begin building the online shopping portal."  This is Colorado's second Level 1 grant; it first received an award of $17.9 million in February 2012. 


Supreme Court upholds the ACA

The Supreme Court issued it opinion today on the Affordable care Act.  In an opionion drafted by Chief Justuce Roberts, to which the other Justices, in various combinations, agreed in part and disagreed in part, the majority of the Court, in various combinations, ruled  on the key issues as follows:

1,  The individual "mandate" to purchase insurance was a valid exercise of the taxing power of Congress, a condition that if you do not buy an insurance policy with the minimum essential benefit package, you must pay the IRS money as an alternative.  Though the ACA called the payment a "shared responsibility payment" and a " penalty", not a "tax", C.J. Roberts wrote that Congress's choice of terms only affected whether the lawsuit was premature under the Anti-Injunction Act (which prevents lawsuits to stop a tax until such time as the tax has actually been assessed and paid -- Roberts saying that since Congress didn't call it a tax the AIA didn't apply), and was not determinative on the Constitutional question of whether the assessment of the penalty payment was a "tax" within the scope of Congressional powers.  Roberts concluded that it was such a tax and was therefore a constitutional exercis of Congresses enumerated taxing power.  Four other Justices agreed with that postion, while four opposed it.  Therefore the mandate to purchase insurance stands as being Constitutional.

     Though it was not necessary for C.J. Roberts to go any further, having decided the ACA was a Constitutuional exercise of taxing power, he wrote at length on the main arguments that had been made in the case:  whether the commerce clause or the "necessary and proper" clause permitted the "mandate."  His opinion stated that neither of these would be a Constitutional justification for the mandate provisiuon and that but for the taxing power of Congress, the mandate would have been unconstitutional and not permitted under those enumerated poweers.  Four Justuices agreed with that position (the four who did not agree with the taxing power ruling and who would have invalidated the entire ACA) and the other four did not.  Unfortunately, since this discussion was not a necessary part of the final opinion, the 5-4  agreement that the mandate was not a valid exercise of these two powers is not an actual decision on the merits of the scope of those Congressional powers, and it is likely to be an issue in the future in some other case.  Congress is not known for restricting its actions based on a non-precedential statement by the Court.

2. C.J. Roberts' opinion then held that the expansion of the Medicaid program, which he described as a major change in the purpose and scope of the program, was a permissible exercise of Congressional authority, but that it was not pernissible for Congress to threaten to take away current funding going to a State for the existing scope of Medicaid as a penalty if the State did not agree to expand its current Medicaid program.  Most of the other Justices agreed that this funding could not be withheld as a penalty for non-expansion, for a variety of reasons (some because they wanted to invalidate everything in the ACA and some because they  thought that to be an apprpriate restriction of the required expansion in the ACA).

So we end up with approval of the Constitutionality of the ACA because the individual mandate penalty is really a tax (one where an individual can choose to either buy insurance or pay the tax)  and a permissible "required " expansion of medicaid that may have no penalty to a State that chooses not to expand its program.  What happens if the next Congress decides to eliminate the tax penalty if an individual doesn't buy insurance - does the litigation start over?


Vermont Moves One Step to Closer to a Single-Payer System

All eyes turned to Vermont today as Governor Peter Schumlin signed into law a bill creating a board to oversee the planning and development of a state-sponsored insurance plan, Green Mountain Care.  With the stroke of a pen, Vermont  became the first state to move significantly toward a single-payer insurance system.  One hurdle standing in Vermont's way is the need to secure a waiver from PPACA, which won't be available until 2017 under current law.  Although there appears to be support for moving that deadline up to 2014, it remains to be seen how strong that support really is.  

Colorado Chosen by CMS to Develop Dual Eligible Integrated Care Model

The new CMS Innovation Center, in cooperation with the Federal Coordinated Health Care Office, announced recently that it is partnering with fifteen states across the U.S. in an effort to design new approaches to better coordinate care for dual eligibile patients (i.e., those patients eligible for both Medicare and Medicaid). 

Colorado and fourteen other states were each awarded up to $1 million to develop a model describing how the state would structure a patient-centered approach to coordinate care across primary, acute, behavioral health, and long-term supports and services for dual eligible individuals.  This initiative is funded by the Affordable Care Act.

CMS has explained that the goal of this demonstration program is to identify delivery system and payment coordination models that eliminate duplication of services, expand access to care, and lower costs for dual eligibles.   After federal review of the proposals, CMS will work with states to implement the plans that hold the most promise, eventually testing them and replicating them in other states.

For more information on this new initiative, see the CMS Innovation Center's announcement or CMS's website and press release.

Proposed Regs for ACOs Leave Many Questions Unanswered

On March 31, 2011 the Centers for Medicare & Medicaid Services (“CMS”) released the much-anticipated proposed regulations for the creation of Accountable Care Organizations (“ACOs”), which were published in the Federal Register on April 7. ACOs are a key component of the Patient Protection and Affordable Care Act (“PPACA”) and are referenced in PPACA as part of the Medicare Shared Savings Program. Section 3022 of the Patient Protection and Affordable Care Act, Pub. L. 111-148 (Mar. 23, 2010), codified at 42 U.S.C. 1395jjj. Following the launch of the ACO program on January 1, 2012, CMS expects 5 million Medicare beneficiaries to eventually receive care through an ACO. 

ACOs are coordinated healthcare delivery systems in which provider reimbursements are tied to quality measures and overall reductions in the cost of healthcare. In theory, ACOs will be able to maximize value by using a patient-centered team approach to care. In the ACO model, providers regularly communicate and collaborate on various aspects of patient care, ensuring continuity and consistency in care delivery. This approach stands in stark contrast to many current delivery models in which providers operate in silos, often creating disjointed or uncoordinated patient care. 

Structurally, an ACO will consist of a group of healthcare providers – physicians, physician groups, hospitals, and other suppliers of health services or provisions – contracting with each other and with CMS to provide comprehensive care for patients. While providers will still receive Medicare fee-for-service payments, the ACO will share in any savings it achieves for the Medicare program. At the same time, however, ACOs would be liable for any losses to Medicare. This “blended” reimbursement model eliminates incentives for overutilization inherent in a traditional fee-for-service system, yet also disincentivizes underutilization because some fee-for-service reimbursement remains.

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Florida Court finds PPACA to be unconstitutional

In a 78 page opinion issued today by the U.S. District Court in Florida,the Patient Protection and Affordable Care Act was found to be unconstitutional.  The lawsuit was originally filed by the Florida State Attorney General immediately after PPACA became law, and 25 other state Governors or Attorneys General later joined as plaintiffs.  

Judge Vinson, who ruled in the case, made it clear at the outset that this decision was not about health care or the health care system, but was really a case about federalism and the limitations on the powers of the federal government under the Constitution.  The  opinion contains a detailed review of the history of the Supreme Court's interpretations of the Commerce Clause of the Constitution, and then applies that foundation to the question of whether or not the statute's mandate for individuals to purchase health insurance is a permissible exercise of Congressional power.  After lengthy analysis, Judge Vinson determined that it was beyond the scope of the commerce clause, as it was an attempt to regulate what was effectively individual "inactivity", that is to say a decision by an individual not to participate in commerce, rather than an "activity" related to interstate commerce. The Court wisely recognized that ultimately this is an issue that the Supreme Court must decide.   The discussion of this question is, for someone with an interest in politics or the law, really quite fascinating.


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CMS Introduces Innovation Center

The Centers for Medicare and Medicaid Services ("CMS") announced today the creation of its Center for Medicare and Medicaid Innovation (the "Innovation Center").  The Innovation Center was established in the health care reform law, the Patient Protection and Affordable Care Act.  CMS explains that the purpose of the Innovation Center is "to explore new approaches to the way we pay for and deliver care to patients so that we have better results both in terms of the quality of care and the affordability of coverage."  At first, the Innovation Center will focus on the following three key areas: (1) improving care for patients, making it more efficient, effective and safer; (2) developing new models of care to ensure health care providers work together to coordinate care for patients; and (3) fighting public health problems such as obesity and smoking at the community level.

CMS has also unveiled a website in conjunction with the Innovation Center.  CMS describes the website as not only a way to obtain information from CMS about various innovative approaches to health care, but also as a way in which people from a variety of backgrounds can share their knowledge with one another.  At the moment, the website contains little information, but we expect it will expand considerably over the coming months.  For a link to the Innovation Center's blog, click here.

A Big Day in Health Care Reform

Today marks six months from the date that the Patient Protection and Affordable Care Act was enacted.  Several key provisions of the law become effective today, September 23, 2010, including:

  • Expansion of coverage for dependents up to 26 years old. 
  • Elimination of annual or lifetime dollar limits to the amount of money spent on health care services.
  • Prohibition of denials of coverage to children under 19 years old for preexisting conditions.
  • Coverage for all preventative services with no co-pays.
  • Free preventative care (for all new plans).

These changes take effect immediately for any new policies bought after today.  For those with existing policies, however, the changes will take effect either during the next open enrollment period (for employer-based plans) or at the time a policy is renewed (for individually-purchased plans).  

To read more about these changes, CNN has posted this article and the government's new health care reform website has posted this article.


CDPHE Awarded $300,000 For Public Health Improvement

In an effort to strengthen the nation's public health infrastructure, the Centers for Disease Control and Prevention has awarded $42.5 million in funding to public health groups as part of the National Public Health Improvement Program.  Funding is courtesy of the Prevention and Public Health Fund created by the Affordable Care Act.  The only award in Colorado went to the Colorado State Department of Public Health and Environment ("CDPHE"), which received $300,000 to develop a "performance management" program for evaluating the effectiveness of the agency.  All award recipients must designate or hire someone to oversee the performance management program and participate in a national network of performance improvement professionals. 

HHS issues final regulations on "meaningful use"

Final regulations on "meaningful use" of electronic health records were released today by HHS. The 863-page rule specifies the initial criteria that hospitals and physicians hoping to obtain incentive support payments under the ARRA for their use of EHRs must meet.  The regulations will be published in the Federal Register on July 28, 2010.

HHS Launches New Website -

There is a brand new resource for navigating health care reform - a website managed by HHS called  According to the website, it is "designed to help you take control over your health care and make the choices that are right for you."  Currently, the content is focused on four primary areas:  finding health insurance options, learning about preventative health care, comparing hospital quality, and learning more about the Affordable Care Act.  Admittedly a work in progress, HHS welcomes user comments to improve the site and make it more useful for the public.  This coming October, look for the website to include private health insurance pricing information. 

Grandfathered Health Plans: New Interim Regulations

Last week the United States Departments of Treasury, Labor and Health and Human Services issued Interim Final Rules providing guidance on “grandfathered health plans” under health care reform. The Patient Protection and Affordable Care Act (“PPACA”) set different standards for grandfathered health plans than for those plans not grandfathered. According to these regulations, health plans that existed on March 23, 2010 will be significantly restricted in the changes they can make to copayments, deductibles and benefits covered if the plans want to maintain grandfathered status and avoid the new requirements of PPACA.

Most plans will fail to qualify for grandfathered status over the next three years, according to the Departments’ analysis in the Interim Final Rules. The greatest impact will be on small employers with between 3 and 99 employees. The Departments estimate that between 49% and 80% of small employer plans will relinquish their grandfathered status by 2013. In addition, the Departments estimate that between 34% and 64% of large employer plans will relinquish their grandfathered status by 2013.

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PPACA - The Starting Point for Reform

I recently led a class on the new health care reform law, the Patient Protection and Affordable Care Act (PPACA), and have attched the powerpoint presentation from that class.  I hope this provides a good start on understanding the scope of the this legislation.  A good overall detailed summary of the statute, which incorporates the Reconciliation changes into the PPACA provisions, is here.  The whole law, including the Reconciliation Act changes, is here.

PPACA is the start of a decades long process of remaking the health care system in the United States.The law calls for many new state or federal agencies, commissions, and other institutions, as well as scores of new federal rules and regulations, and will most likely require changes to other existing federal and state laws if it is to be fully implemented.  Congress has already begun talking about amending some of the provisions in PPACA due to "unintended consequences."

Cost estimates for the reformation are continually changing as well, and it now appears the purported $1 Trillion cap on cost will be significantly surpassed. 

For a timeline on when the various changes become effective, the Kaiser Family Foundation's is a good reference.

IRS Begins Issuing Regulations Under PPACA

The Internal Revenue Service has begun issuing regulations implementing the Patient Protection and Affordable Care Act (PPACA), the federal health reform law.  You can expect to see new regulations under the law coming out monthly for the remainder of the year.  At a recent speech to the American Health Lawyers Association, a spokesperson for CMS said that HHS is presently drafting 18 sets of new regulations that have to be in effect duri ng 2010, compared to its normal output of 2 - 3 sets.

The IRS's first rules relate to extending dependent coverage under a parent's health insurance to include children up to age 26.

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Colorado Begins to Implement National Health Care Reform

Colorado Governor Bill Ritter has begun implementing health care reform in Colorado.  By executive order, he has created a new task force called the Interagency Health Reform Implementing Board to oversee this process and has appointed his health care policy expert, Lorez Meinhold, to the newly created position of Director of Health Reform Implementation.  On a roll, he also has signed four bills into law that his press release states are designed to "enhance the state's nationally recognized health reform initiatives." 

"Mission Accomplished"?

Here is one timeline for the many actions needed to implement the new health care reform law. 

No one would contend that the new law provides a "turnkey" solution to changes in the health care system.  There will be scores of new government commissions and panels that will be set up, major new regulations promulgated, and systems developed for coordination with state regulatory bodies and legislative action.  It is likely that every step along this path will be a contested battle, as it seems clear that this law is a incubator for unintended consequences, and there is a strong public opposition to the centralized regulation of health care in Washington.  It would be premature to start hanging any "Mission Accomplished" banners on health care reform.

Every time I hear a politician in Washington praise this law for "cutting" the deficit by $130 Billion over ten years and saving money on Medicare, I wonder if that politician will be voting against the "physician fix" that takes back over $250 Billion in the hoped for savings under the new law and thereby results in a net increase in the deficit over that ten year period.

Update:  Another timeline here.


Health Care and Education Affordability Reconciliation Act of 2010

Here's the text of the 153 page House Bill called the Heath Care Education and Affordability Reconciliation Act of 2010.  We'll be reading it too and posting our thoughts on how it affects you and your business.

House Passes Health Care Reform

No longer a question of will it pass, here are links to a variety of articles discussing this issue:

Wall Street Journal

New York Times

Los Angeles Times

Denver Post

National Public Radio


Comparative Effectiveness Research

Regardless of what happens to the current health care reform legislation, it appears that the government's push for more research into the comparative effectiveness of treatments will get continued emphasis in 2011.  In the recently proposed 2011 budget, the Administration has requested almost $300 Million for the Agency for Healthcare Research and Quality (AHRQ) to conduct comparative effectiveness studies.  This would be on top of a little over $300 Million authorized in the current year.

I don't think many people would disagree that innovations and new treatment options are occurring very rapidly in the medical field and that it is difficult for physicians to keep on top of these developments and make informed recommendations to their patients as to the best alternatives for them.  Understanding and then following "best evidence" medicine is not easy for the busy practitioner.  Better research on comparative effectiveness will certainly help this situation.

But as we saw in 2009, a change in recommended treatment based on comparative effectiveness studies is not an easy pill to swallow.  The proposed revision in the use of screening mammography exams caused an uproar, as it was seen as a possible justification for third party payors to deny payment for routine screening exams for younger women with no history or indications of problems. 

The bad press and angry reactions surrounding that relatively simple proposed modification in recommended treatment highlight the difficulty of gaining general acceptance to "best evidence" medicine in the United States.  We are accustom to being entitled to get whatever we want in medical care, without consideration of comparative effectiveness.  While physicians overwhelmingly may want to recommend what they think to be the best treatment for the specific patient, there is not a good support system in place for a doctor who wants to follow "best evidence" medicine  if payors will permit anything the patient or doctor want to try and if the doctor has to worry about liability for his or her recommended course of care.  Managed care in the 1990's tried to control expensive treatments that had no proven degree of effectiveness, and were shut down in those efforts by media and political uproar based primarily on the isolated anecdotal story of the effects of a denial of coverage.     

We can spend $300 Million each year on comparative effectiveness research, which undoubtedly will benefit practicing physicians as they consider treatment options, but until we as a society start to discuss and come to a consensus on what it means for an individual to have access to appropriate health care, expect more outrage every time some panel suggests that the benefit of a test or treatment is not effective enough to justify its use. 


Senate's final health care reform bill

For those interested in learning more about the final version of the Bill passed by the Senate on December 24, this offers a guide for getting through the 2074 pages.  Scroll down the page and click the link offers help on understanding the Bill, and it has summaries and a full PDF copy of the Bill to review and search online.   

A Return to the Dreaded Capitation?

A recent Wall Street Journal article discusses a new contract between Blue Cross Blue Shield of Massachusetts and the Caritas Christi Health Sytem based on a new approach to payments.  Under Massachusetts near-universal coverage, there has been a significant escalation of health care costs, and BCBS is making an effort to rein in that cost spiral.  It has begun entering in "alternative quality contracts" with networks of hospitals and physicians in Massachusetts  to replace the traditional fee-for-service payment system.

Under the new arrangements, Caritas, a system of hospitals and over 1000 employed or affiliated physicians, will be paid a fixed amount to provide all the care for 60,000 patients.  This is reminiscent of the 1990's capitation payments, a flat monthly payment per patient (known as a per member per month, or "PMPM", payment) assigned to the providers.  Under a capitation contract, providers could have higher revenues if less care was rendered, as the PMPM amount didn't vary with actual services provided.  Health care plans and providers were widely criticized for capitation payments, as it was perceived that this would result in withholding needed care or cherry picking only healthy patients.  By the end of the decade, most plans had eliminated capitation contracts and returned to fee-for-service arrangements.

In order to avoid the seeds of criticism, the BCBS methodology pays a monthly fee per patient, but also rewards providers with bonuses if they meet certain quality targets.  The goal is to refocus profit-potential from capitation's less care being provided to having better patient outcomes.  These new contracts are for hospital-physician networks, to encourage coordinated efforts.

The WSJ article suggests that today's information technology might make this goal of cost-saving and outcome improvement reachable.  To make this incentive system work, though, it will require that hospitals, primary care doctors and specialists collaborate to determine appropriateness of  care and a fair division of the payments.  This has been an unresolved problem for prior efforts to reform health care delivery and payment.  It may be easier in a unified system of hospitals and employed physicians, but it has proven to be a real dilemma in most networks of independent physicians.  I guess if it were easy, we would have health care reform twenty years ago.   



How Do They Compare? House Vs. Senate Health Care Proposals

If you're looking for some clarification on what the House and the Senate are bringing to the table in terms of health care reform, the New York Times provides an informative, click-through guide that will provide some insight.  With a bulleted, issue-by-issue comparison, the guide highlights some of the key differences between the House and Senate health care proposals, including insurance mandates, employee contributions and total coverage and cost.

Reform Update - Full Text of America's Healthy Future Act of 2009

In case you are looking for a little light reading, the Senate Committee on Finance has released the full text of their proposed bill for healthcare reform - all 1504 pages - as well as its Committee Report.   

Crunch Time

A story in today's Wall Street Journal talks about the hospital and insurance sectors preparing to fight the latest Congressional efforts to reduce or eliminate penalties for individuals who do not purchase health insurance, on the grounds that it will mean millions of individuals, many of whom will be healthier young adults (the  "invincibles"), going without coverage.  Hospitals contend that their industry's agreement to accept lower reimbursement from the government in order provide funding to cover the uninsured was conditioned upon insurance mandates to assure that all patients would have insurance coverage.  The insurance companies' willingness to support guaranteed issue for all applicants was based on having universal required coverage as well, so people cannot put off buying insurance until they became sick, an insurer's nightmare about guaranteed issue.

We have been hearing recently about the union opposition to taxes on "Cadillac" insurance plans, too, as the realization sinks in that these high-benefit plans are more prevalent in collective bargaining agreements than in most businesses.  In short, the more the details of proposed legislation become known (and it is still rare to find anyone who has been struggling through the various versions of the draft bills, all of which are in the 1000-page range), the more the special interests are surfacing to defend their turf and  fight anything that will negatively change their worlds. 

Health care reform sounds good to everyone in the abstract.  There are even some pieces of the puzzle that most everyone seems to agree would be good, mostly things that require little additional funding and little federal regulatory control.  Trying to fund hundreds of billions of dollars in new commitments in a budget neutral way means somebody is going to have to pay more, and adding scores of new government commissions and regulatory bodies to control the insurance industry and the delivery of health care services means some people's livelihood and careers are going to be disrupted or marginalized.  An open debate over these issues would mean a fight in Washington like we haven't seen in some years, as there is more at stake when you are making radical changes to 16% of our economy.  Is there any wonder that Congress prefers to deal only with vague 200-page "plain English" summaries of the massive changes they are considering?  I don't think we have even seen the start of the battle.  It will be an interesting Fall.


Finally, the Baucus bill emerges.

On September 16, Senator Baucus released a 230 page summary of his version of a health care reform bill.  [See: with a PDF link]  The actual 1000 page draft of the legislation will be released today.  While the Finance Committee had hoped to have a bi-partison bill from its subcommittee of 6 Senators, that group had been unable to reach an agreement and Senator baucus submitted his own draft for full Committee review starting next week.

Criticism of Baucus's draft bill has already begun, with Senators from both parties expressing concerns over its various provisions.  It appears he has found a way to anger every special interest group.  Maybe that will motivate all the factions in this debate to find a middle ground that can actually pass both Houses.  

Congress Proposes Health Care Reform Bills

On July 14, House Democrats unveiled a comprehensive health care reform bill, referred to as America's Affordable Health Choices Act of 2009, a 1000+ page document that radically changes the way Americans obtain health insurance and the current approaches for reimbursement to providers, as well as adding new taxes to help fund the program.  The 10-year cost to implement this bill has been estimated at over $1Trillion.  The draft bill will now go to three House Committees for review and mark-ups.  A summary and discussion of the draft bill's major provisions has been posted.  The Energy and Commerce Committee, chaired by Rep. Waxman, is also posting regular updates on its mark-up activities.

On the 15th, the Senate Health, Education, Labor and Pensions (HELP) Committee released its version of the Affordable Health Choices Act, only 650 pages, with its summary of the key provisions.  While somewhat shorter than the House draft, it also is a comprehensive overhaul of all aspects of the present health care payment and delivery system.  The Senate Finance Committee, chaired by Senator Baucus, is expected to release its proposed bill within a few days. 

Opposition to the various bills began to be expressed immediately from all across the political spectrum, and from members of both parties.  The most widespread concerns focus on the costs of the reforms and the government control over all aspects of health care.  It looks doubtful for any serious developments occurring by the August recess of Congress as had been sought by the President.

It's going to be an interesting Summer.