NATIONAL HEALTH REFORM
AND WHAT IT MEANS FOR PSYCHOANALYSTS

Jim Pyles, Principal
Theresa Morgan, Legislative Director
Powers, Pyles, Sutter and Verville, P.C.
1501 M Street, N.W.
Washington, D.C. 20005
(202) 466-6550
jim.pyles@ppsv.com
January 13, 2012

I. THE SIGNIFICANCE OF HEALTH REFORM LEGISLATION

On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act (PPACA), Pub. L. 111-148 (H.R. 3590), and on March 30, he signed into law the Health Care and Education Reconciliation Act (H.R. 4872) which made several revisions to the prior legislation. Together, the two bills comprise the most sweeping health reform legislation ever enacted in the United States.

When fully implemented they will provide health insurance for an additional 34 million Americans and reduce the deficit by $143 billion over the 2010-2019 period, principally by cutting projected payments to Medicare providers reducing payments to Medicare Advantage programs and increasing taxes.

In mid-November, the U.S. Supreme Court granted three of five separate appeals cases on the constitutionality of the historic healthcare reform bill passed in 2010, the Patient Protection and Affordable Care Act (ACA). To date the Court has scheduled five and a half hours (as opposed to the usual one) in March of 2012 for oral argument, and the entire case will be argued over two days. The Court will likely have a decision in June, meaning the outcome could significantly affect the politics of the 2012 presidential election.
The Court will hear arguments on whether the Anti-Injunction Act bars challenges to the requirement for individuals to obtain insurance (the individual mandate) until the mandate is implemented in 2014; the constitutionality of the individual mandate; whether the individual mandate, if found unconstitutional, is severable from the rest of the ACA; and on the constitutionality of the Medicaid eligibility expansion to a new segment of the population. The appeals cases are brought by the federal government, the National Federation of Independent Business and 26 states. The Court declined to hear challenges regarding new employer requirements in the ACA.

PPACA prohibits health insurance companies from limiting their risk by denying coverage for preexisting conditions, imposing lifetime or unreasonable annual limits on total payments, determining premium rates based on health status or rescinding coverage for enrollees. It also increases competition by establishing “Health Benefit Exchanges” in each state for qualifying insurance plans to compete for enrollees beginning in 2014 and confers authority on the states and federal government to review and approve or disapprove premium increases.

Qualified health insurance plans must contain an essential benefits package that must include coverage of “mental health and substance use disorder services, including behavioral health treatment.”1 Further, the mental health parity law will apply to all qualified health insurance plans.2 So insurers will no longer be able to avoid individuals with mental health disorders. This is likely to make health insurers much more interested in approaches that reduce costs.

One such mechanism that insurers are likely to adopt is more stringent reviews of claims and the use of organizations that are paid a percentage of the claims they deny. Health plans are to have both an internal and external appeals process which allow an enrollee to present evidence and testimony and receive continued coverage pending the outcome of the appeal. The external appeal process must include consumer protections set forth in the Uniform External Review Model Act promulgated by the National Association of Insurance Commissioners.3

II. DELIVERY REFORMS FOCUSED ON IMPROVING CARE AND REDUCING COSTS

Creation of Centers for Medicare and Medicaid Innovation and new Dual Eligibles Office
Partnership for Patients (CMMI receives $1 billion to administrate through the ACA). The two goals of this new partnership are to:
1. By the end of 2013, decrease preventable hospital-acquired conditions by 40% compared to 2010
2. By the end of 2013, decrease preventable complications during a transition from one care setting to another by 20% compared to 2010
  1. (Section 3026 of the Affordable Care Act) Community Based Care Transitions Program
    1. Interested CBOs must provide care transition services across the continuum of care and have formal relationships with acute care hospitals and other providers along the continuum of care
    2. An eligible CBO must be physically located in the community it proposes to serve, must be a legal entity that can accept payment for services, and have a governing body with representation from multiple healthcare stakeholders including consumers
Accountable Care Organizations
1. Medicare Shared Savings Program
  1. Section 3022 of the Affordable Care Act requires CMS to establish a shared savings program
  2. The ACO must take responsibility for at least 5,000 beneficiaries for a period of three years
  3. CMS is implementing two models:
    1. A one-sided shared savings model, in which providers only share in savings; and
    2. A two-sided shared savings and losses model, in which providers also share in losses if growth in costs go up
2. Advance Payment Initiative
  1. Under the Advance Payment ACO Model, participating ACOs will receive three types of payments:
    1. An upfront, fixed payment: Each ACO will receive a fixed payment
    2. An upfront, variable payment: Each ACO will receive a payment based on the number of its historically-assigned beneficiaries
    3. A monthly payment of varying amount depending on the size of the ACO: Each ACO will receive a monthly payment based on the number of its historically-assigned beneficiaries
3. Pioneer ACO Model
  1. In the first two performance years, the Pioneer Model tests a shared savings and shared losses payment arrangement with higher levels of reward and risk than in the Shared Savings Program
  2. In year three of the program, those Pioneer ACOs that have shown savings over the first two years will be eligible to move to a population-based payment model
Independence at Home Demonstration
1. Authorized by Section 3024 of the Affordable Care Act
2. CMS Innovation Center will work with medical practices to test the effectiveness of delivering comprehensive primary care services at home and if doing so improves care for Medicare beneficiaries with multiple chronic conditions
3. Eligible participants will work with CMS to provide home-based primary care to targeted chronically ill beneficiaries for a three-year period
4. This demonstration will include primary care practices and associated multidisciplinary teams that:
  1. Are led by physicians or nurse practitioners; Are organized to provide primary medical care services,
  2. Have experience providing home-based primary care to patients with multiple chronic conditions, and
  3. Serve at least 200 beneficiaries with multiple chronic conditions during each year of the demonstration
5. The Demonstration will provide chronically ill Medicare beneficiaries a broader array of services they can receive at home. Medicare beneficiaries who wish to participate must:
  1. Have multiple chronic conditions
  2. Be covered by original, fee-for-service Medicare
  3. Require someone’s assistance with two or more activities of daily living such as bathing, dressing, eating or walking. Have had a medically-necessary hospital admission within the last 12 months
  4. Have received rehabilitation services in the last 12 months
Comprehensive Primary Care Initiative
1. Multi-payer initiative fostering collaboration between public and private health care payers
2. The payment model includes a monthly per beneficiary care management fee and, in years 2-4 of the initiative, the potential to share in any savings to the Medicare program
3. Practices will also receive compensation from other payers participating in the initiative, including private insurance companies and other health plans (such as state Medicaid managed care programs)
4. Medicare will reimburse practices a risk-adjusted per beneficiary monthly fee for non-visit based support of primary care services. The fee will be $20 the first two years of the initiative, and Medicare will reduce the fee in the last two years from $20 to $15
5. Individual private and state insurance payers will submit their payment levels to CMMI with their application to participate in the program
Bundled Payments for Care Improvement
1. Will utilize four broadly defined models of care
  1. Three models involve a retrospective bundled payment arrangement, and one model would pay providers prospectively
  2. Applicants required to identify the clinical condition(s) through MS-DRGs, define the time period for the episode of care, and identify the services included in the bundled payment, among other criteria

III. INSURANCE REFORMS OF IMPORTANCE TO INDIVIDUALS

High-risk insurance pools for individuals without insurance for 6 months and have a pre-existing condition. Section 1101
1. Effective July 1, 2010 through Jan. 1, 2014
2. $5 billion in funding
3. As of October, 2011, about 41,400 people were enrolled in a pre-existing condition insurance plan nationwide
Federal reinsurance for early retirees age 55 or older but not eligible for Medicare. Section 1102
1. Effective July 1, 2010 through Jan. 1, 2014
2. Only $5 billion in funding
3. Through December 31, 2010, the program issued $535 million in reimbursements to 253 approved plans
No lifetime limits on the dollar value of benefits and no “unreasonable” annual limits. Section 1001. (Items 3-6 are effective for plan years beginning on or after October 2010)
No rescission of health plan or coverage other than in cases of fraud or intentional misrepresentation of a material fact. Section 1001
Health plans must provide coverage for and not impose cost sharing for preventive health services approved by the United States Preventive Services Task Force. Section 1001
A plan that provides dependent coverage of children must make the coverage available to unmarried children until they turn 26 years of age. Section 1001
1. HHS estimates show that from September 2010 to June 2011, the percentage of adults 19 to 25 with insurance coverage increased from 64% to 73%, or 2.5 million additional young adults covered
HHS in conjunction with the States shall review health insurance premium increases to ensure that they are not “unreasonable.” Section 1001
1. The ACA provides States with $250 million in Health Insurance Rate Review Grants through Federal Fiscal Year 2014
2. According to HHS, as of August 22, 2011, 44 States, the District of Columbia, and 1 U.S. territory have Effective Rate Review Programs in at least one insurance market, and 42 States, the District of Columbia, and the U.S. Virgin Islands have effective review for all insurance markets and issuers
3. Examples of early actions, from HHS data:
  1. In July 2011, Oregon forced an insurer to lower its request for a rate hike by nearly 10 percent
  2. In March 2011, Rhode Island’s Insurance Commissioner reduced a proposed increase by a major insurer in that State from 7.9 percent to 1.9 percent
No exclusion of coverage based on pre-existing condition. Section 1201. (Items 9-16 apply to “qualified” health plans beginning on or after January 1, 2014)
Rating (price) of insurance premiums may be based only on whether the plan covers an individual or a family, the geographic rating area (to be established by the States), age (no more than 3 to 1), tobacco use (no more than 1.5 to 1). Section 1201
Insurers must guarantee acceptance of every employer and individual. Section 1201
Insurers must guarantee renewability of coverage at the option of the plan sponsor or individual. Section 1201
Insurers are prohibited from discriminating in eligibility based on health status or medical history including “medical condition (including both physical and mental illness).” Section 1201
Insurers are prohibited from discriminating against any provider acting within the scope of the provider’s license or certification under state law. Section 1201
Insurers must offer coverage that includes at least the essential benefits package containing coverage of ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorders, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, laboratory services, preventive and wellness services, and pediatric services, including oral and vision care. Section 1302
1. In December, HHS issued an essential health benefits “pre-rule” bulletin outlining how the agency plans to regulate the essential health benefits package. Comments are due January 31
Health plans in existence on the date of enactment do not have to comply with new insurance requirements, and nothing in the Act requires individuals to relinquish that coverage. Section 1251
Requirements for “qualified health plans”
1. Contains the “essential benefits package” including coverage of mental health and substance use disorder services including behavioral health treatment. Section 1302
2. Deductibles for plans in the small group market may have annual deductibles no higher than $2,000 for an individual and $4,000 for others. Also limits on all cost sharing and premium adjustments. Section 1302(c)
3. Levels of coverage
  1. Bronze—coverage equivalent to 60% of full actuarial value of benefits
  2. Silver—coverage equivalent to 70% of full actuarial value of benefits
  3. Gold—coverage equivalent to 80% of full actuarial value of benefits
  4. Platinum-- coverage equivalent to 90% of full actuarial value of benefits. Section 1302(d)
4. Mental health parity requirements apply. Section 1311(j)
Tax credits for small business (no more than 25 FTE employees) of up to 50% of contributions to cost of health plan. Section 1421
Individual mandate—Beginning January 1, 2014, an individual will be liable for a penalty for any month in which the individual (and any dependents) do not have minimum essential health insurance in the amount of 1/12 of $95 for 2014, $350 for 2015, and $750 thereafter increased by the increase in the cost of living. For individuals under the age of 18, the amount is reduced by 50%. The maximum penalty is 300% of the amount for an individual. Minimum essential coverage is coverage under Medicare, Medicaid, the CHIP program, TRICARE, an employer-sponsored program, plans in the individual market, grandfathered plans and other plans recognized by the Secretary of HHS. The penalty is payable on the individual’s tax return. Section 1501

IV. INSURANCE REFORMS OF IMPORTANCE TO MENTAL HEALTH PRACTITIONERS

Mental health and substance use disorder services (including behavioral health treatment) are included in the essential health benefits package. Section 1302
1. HHS intends to extend mental health parity to individual and small group markets
2. To define the EHB package, HHS proposes to allow each state to choose a benchmark plan from four options:
  1. The largest plan by enrollment in any of the three largest small group insurance products in the State’s small group market; or
  2. Any of the three largest State employee health benefit plans by enrollment; or
  3. Any of the three largest national plan options offered to federal employers (FEHBP); or
  4. The largest insured commercial non-Medicaid Health Maintenance Organization (HMO) operating in the State
3. For state mandates, HHS proposes a “transition period” in 2014 and 2015 during which HHS will assess how states incorporate mandates into the EHB. During those two years, if a state chooses a benchmark subject to state mandates – such as a small group market plan – that benchmark would include those mandates in the state EHB package, meaning federal subsidies would help cover the cost of the state mandate those first two years
Mental health parity required is in coverage. Section 1311(j)
1. In the EHB bulletin, HHS states that all benchmark plans must include coverage for mental health and substance use disorder services, including behavioral health treatment
Medicaid coverage will be expanded to individuals up to 133% of the federal poverty line (adding a projected 18 million individuals to the Medicaid rolls) and Medicaid coverage must include the essential benefits package (including mental health coverage) and mental health parity. Section 2001
1. Effective January 1, 2014
Beginning October 1, 2011, under the “Community First Option,” states may amend their Medicaid plans to provide home and community-based attendant services and supports for individuals whose income does not exceed 150% of the poverty level if the individuals require a level of care that, but for this program, would be provided in a facility for the mentally retarded or an institution for mental disease. Covered services must be designed to assist the individual in accomplishing activities of daily living , instrumental activities of daily living (meal planning, managing finances, etc.) and health related tasks (those delegated or assigned by a licensed healthcare professional). The state may elect also to cover the costs (such as rent and transportation costs) necessary to allow an individual to make the transition to the home or community from an institution for mental illness or an intermediate care facility for the mentally retarded. As an incentive to adopt such options, the federal match for funding such programs is increased by 6%. Section 2401
Beginning January 1, 2011, states may amend their Medicaid plans to add coverage for “health homes” for individuals with chronic conditions which may include “1 serious and persistent mental condition.” These services can be provided by a designated provider, a team of health care professionals operating with such a provider or a health team that meets the requirements issued by the Secretary of HHS. The federal government will pay 90% of the costs of these programs for two years, and provide $25 million to the states in planning grants. Section 2703

V. REGULATION OF THE PRACTICE OF PSYCHOANALYSIS

A qualified health plan eligible to participate in a health insurance Exchange “may contract with. . . “a health care provider only if such provider implements such mechanisms to improve health care quality as the Secretary may by regulation require.” Section 1311(h)(1)(B). The Secretary may establish reasonable exceptions. Section 1311(h)(2)
1. Effective January 1, 2015
The Secretary cannot promulgate any regulation that:
1. Creates any unreasonable barriers to the ability of individuals to obtain appropriate medical care;
2. Impedes timely access to health care services;
3. Interferes with communications regarding a full range of treatment options between the patient and the provider;
4. Restricts the ability of health care providers to provide full disclosure of all relevant information to patients making health care decisions;
5. Violates the principles of informed consent and the ethical standards of health care professionals; or
6. Limits availability of health care treatment for the full duration of a patient’s medical needs. Section 1554
No individual, company, business, nonprofit entity, or health insurance issuer shall be required to participate in any Federal health insurance plan created under the Act or any amendments to it or any such program expanded by the Act or any amendments. Section 1555
A Patient-Centered Outcomes Research Institute has been established to assist patients, clinicians, purchasers and policy-makers in making informed health decisions. The Secretary can only use the findings and recommendations of the Institute to make coverage determinations under Medicare if such use is “through an iterative and transparent process which includes public comment and considers the effect on subpopulations”
1. None of the findings and recommendations of the Institute may be construed as “authorizing the Secretary to deny coverage of items or services under [Medicare] solely on the basis of comparative clinical effectiveness research. Section 6301
HIPAA Audits
1. ARRA (HITECH Act) requires HHS to provide for periodic audits to ensure covered entities and business associates are complying with the HIPAA Privacy and Security Rules and Breach Notification standards
2. To implement this mandate, OCR is piloting a program to perform up to 150 audits of covered entities to assess privacy and security compliance
3. Audits during the pilot phase began November 2011 and will conclude by December 2012
4. OCR will audit as wide a range of types and sizes of covered entities as possible; including covered individual and organizational providers of health services, health plans of all sizes and functions, and health care clearinghouses. (Business Associates will be included in future audits)
5. In this pilot phase, every audit will include a site visit and result in an audit report
HR 1700, the Medicare Patient Empowerment Act
1. Would allow any Medicare beneficiary to enter into a contract with a non-participating (as well as with a participating) physician or practitioner for any item or service covered by Medicare.
2. Preempts state laws from limiting the amount of charges for physician and practitioner services for which Medicare payment is made.
3. Introduced by Representative Tom Price on May 6, and as S, 1042 in the Senate by Senator Murkowski on May 23
4. Hill staff have indicated that there is an opportunity to include the bill in bigger legislation this year, such as the SGR fix.
5. Any attempt to include the Act in such a bill would require a lot of advocacy on the part of providers and patients.

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